Document:

Exhibit

10.1

AMENDMENT

NO. 4 TO

SUBORDINATED

BRIDGE NOTE PURCHASE AGREEMENT

 

 

                                THIS

AMENDMENT NO. 4 TO SUBORDINATED BRIDGE NOTE PURCHASE AGREEMENT (this “Fourth

Amendment”) is dated as of May 15, 2002, by and between CTN Media

Group, Inc., a Delaware corporation (the “Company”), and U–C

Holdings, L.L.C., a Delaware limited liability company (the “Purchaser”).

The Company and the Purchaser are sometimes referred to herein as the “Parties.”

 

WHEREAS, the

Parties are party to the Subordinated Bridge Note Purchase Agreement (as

amended, herein referred to as the “Note Purchase Agreement”), dated as

of November 26, 2001.

 

WHEREAS, the

Parties amended the Note Purchase Agreement on March 4, 2002,

March 19, 2002 and April 3, 2002 and desire to further amend the Note

Purchase Agreement to change the Commitment Termination Date and increase the

aggregate principal amount of Additional Notes purchasable by the Purchaser,

subject to the terms and conditions of the Note Purchase Agreement.

 

NOW THEREFORE, in

consideration of the premises and covenants hereinafter contained, the Parties,

intending to be legally bound, hereby agree as follows:

 

1.             Defined Terms.  Terms defined (directly or indirectly by

reference) in the Note Purchase Agreement and used without other definition

herein shall have the respective meanings assigned to such terms in the Note

Purchase Agreement. The rules of interpretation set forth in the Note Purchase

Agreement shall likewise govern this Fourth Amendment.

 

2.             Amendment to

Section 2.04.

 

(a)           Clause (a) of Section 2.04 of the

Note Purchase Agreement shall be amended to delete the text of clause (a)

in its entirety and to replace such text with “August 31, 2002 (the “Commitment

Termination Date”).”

 

(b)           Clause (b) of Section 2.04 of the

Note Purchase Agreement shall be amended to delete and replace all references

therein to “3,500,000” with “5,000,000”.

 

3.             Amendment to Section 2.06(b).  The third sentence of Section 2.06(b) of the

Note Purchase Agreement shall be amended to delete and replace the reference

therein to “June 30, 2002” with “August 31, 2002”.

 

1

 

 

4.             Representations.

 

(a)           The Purchaser hereby represents and

warrants that, as of the date hereof, the representations and warranties set forth

in Article III of the Note Purchase Agreement (except that the term “Agreement”

where used therein shall be read as “Fourth Amendment”) are true and correct.

 

(b)           The Company hereby

represents and warrants that, as of the date hereof, the representations and

warranties set forth in Sections 4.02, 4.03 and 4.05 of the Note Purchase

Agreement (except that the term “Agreement” where used therein shall be read as

“Fourth Amendment”) are true and correct.

 

5.             Effect of Fourth

Amendment. Except as provided herein, the Note Purchase Agreement shall

continue in full force and effect in accordance with its terms.  Reference to this specific Fourth Amendment

need not be made in the Note Purchase Agreement, or any other instrument or

document executed in connection therewith, or in any certificate, letter or

communication issued or made pursuant to or with respect to the Note Purchase

Agreement, any reference in any of such items to the Note Purchase Agreement

being sufficient to refer to the Note Purchase Agreement as amended hereby.

 

6.             Incorporation by

Reference. Sections 10.01, 10.02, 10.06, 10.07, 10.09, 10.11 and 10.13

of the Note Purchase Agreement shall be incorporated herein by reference except

that the term “Agreement” where used in such sections shall be read as “Fourth

Amendment.”

 

*     *     *    

*

 

2

IN WITNESS

WHEREOF, the Parties hereto have executed this Fourth Amendment on the day and

year first above written.

 

 

	

  U-C HOLDINGS, L.L.C.

  
	

   

  	

   

  
	

  By: 

  	

  WILLIS STEIN &

  PARTNERS, L.P.

  
	

  Its: 

  	

  Managing Member

  
	

   

  	

   

  
	

  By: 

  	

  Willis Stein &

  Partners, L.L.C.

  
	

  Its: 

  	

  General Partner

  
	

   

  	

   

  
	

  By: 

  	

  /s/Avy H. Stein

  
	

  Name:

  	

  Avy H. Stein

  
	

  Its: 

  	

  Managing Partner

  
	

   

  	

   

  
	

  CTN MEDIA GROUP, INC.

  
	

   

  	

   

  
	

  By: 

  	

  /s/Patrick Doran

  
	

  Name:

  	

  Patrick Doran

  
	

  Its: 

  	

  Chief Financial Officer

  

 

3

(SIGNATURE PAGE TO AMENDMENT NO. 4

TO

SUBORDINATED BRIDGE NOTE PURCHASE

AGREEMENT)

 

 

	

  Consented to on this 15th day

  	 

	

  of May, 2002 by:

  	 

	

   

  	

   

  
	

  LASALLE

  BANK NATIONAL ASSOCIATION,

  a national banking association

  	 

	

   

  	

   

  	 

	

  By:

  	

  /s/ James D Thompson

  	 

	

  Name:

  	

  James D Thompson

  	 

	

  Its:

  	

  Group Senior Vice

  President

  	 

				

 

 

 

 

4CREDIT AGREEMENT

EXHIBIT 4.1

 

Execution Copy

 

CREDIT AGREEMENT

 

Dated as of June 20, 2002

 

Among

 

MANUFACTURERS’ SERVICES LIMITED

as a Borrower and Guarantor,

 

MANUFACTURERS’ SERVICES SALT LAKE CITY OPERATIONS, INC.,

as a Borrower and Guarantor,

 

MANUFACTURERS’ SERVICES WESTERN U.S. OPERATIONS, INC.,

as a Borrower and Guarantor,

 

MANUFACTURERS’ SERVICES CENTRAL U.S. OPERATIONS, INC.,

as a Borrower and Guarantor,

 

MSL LOWELL OPERATIONS, INC.,

as a Borrower and Guarantor,

 

MSL MIDWEST OPERATIONS, INC.

as a Borrower and Guarantor,

 

MSL SPV SPAIN, INC.,

as a Guarantor,

 

THE FINANCIAL INSTITUTIONS NAMED HEREIN

as the Lenders,

 

BANK OF AMERICA, N.A.

as the Administrative Agent,

 

BANC OF AMERICA SECURITIES LLC

as Co–Lead Arranger and Co–Book Manager,

 

GENERAL ELECTRIC CAPITAL CORPORATION

as Documentation Agent,

 

and

 

 

CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH

as Syndication Agent, Co–Lead Arranger and Co–Book Manager

 

2

 

TABLE OF CONTENTS

 

	

  Section

  	

   

  
	

   

  	

   

  
	

  ARTICLE 1

  	

  LOANS AND LETTERS

  OF CREDIT

  
	

   

  	

  1.1

  	

  Total Facility

  
	

   

  	

  1.2

  	

  Revolving Loans

  
	

   

  	

  1.3

  	

  Term Loans

  
	

   

  	

  1.4

  	

  Letters of

  Credit

  
	

   

  	

  1.5

  	

  Bank Products

  
	

   

  	

  1.6

  	

  Increase

  in the Aggregate Revolving Credit Commitments

  
	

   

  	

   

  
	

  ARTICLE 2

  	

  INTEREST AND FEES

  
	

   

  	

  2.1

  	

  Interest

  
	

   

  	

  2.2

  	

  Continuation and

  Conversion Elections

  
	

   

  	

  2.3

  	

  Maximum

  Interest Rate

  
	

   

  	

  2.4

  	

  Closing

  and Other Fees

  
	

   

  	

  2.5

  	

  Unused Line Fee

  
	

   

  	

  2.6

  	

  Letter

  of Credit Fee

  
	

   

  	

  2.7

  	

  Agency Fee

  
	

   

  	

  2.8

  	

  Term Fees

  
	

   

  	

   

  
	

  ARTICLE 3

  	

  PAYMENTS AND

  PREPAYMENTS

  
	

   

  	

  3.1

  	

  Revolving Loans

  
	

   

  	

  3.2

  	

  Termination

  of Facility

  
	

   

  	

  3.3

  	

  Repayment of the Term Loans

  
	

   

  	

  3.4

  	

  Mandatory Prepayment

  of the Loans

  
	

   

  	

  3.5

  	

  LIBOR Rate

  Revolving Loan Prepayments

  
	

   

  	

  3.6

  	

  Payments

  by the Borrower

  
	

   

  	

  3.7

  	

  Payments as Revolving Loans

  
	

   

  	

  3.8

  	

  Apportionment,

  Application and Reversal of Payments

  
	

   

  	

  3.9

  	

  Indemnity for Returned

  Payments

  
	

   

  	

  3.10

  	

  Administrative

  Agent’s and Lenders’ Books and Records; Monthly Statements

  
	

   

  	

   

  
	

  ARTICLE

  4

  	

  TAXES,

  YIELD PROTECTION AND ILLEGALITY

  
	

   

  	

  4.1

  	

  Taxes

  
	

   

  	

  4.2

  	

  Illegality

  
	

   

  	

  4.3

  	

  Increased Costs

  and Reduction of Return

  
	

   

  	

  4.4

  	

  Funding Losses

  
	

   

  	

  4.5

  	

  Inability to Determine

  Rates

  
	

   

  	

  4.6

  	

  Certificates

  of Agent

  
	

   

  	

  4.7

  	

  Replacement of a

  Revolving Lender

  

 

i

 

	

   

  	

  4.8

  	

  Survival

  
	

   

  	

   

  
	

  ARTICLE

  5

  	

  BOOKS

  AND RECORDS; FINANCIAL INFORMATION; NOTICES

  
	

   

  	

  5.1

  	

  Books and

  Records

  
	

   

  	

  5.2

  	

  Financial

  Information

  
	

   

  	

  5.3

  	

  Notices

  to the Lenders

  
	

   

  	

   

  
	

  ARTICLE

  6

  	

  GENERAL

  WARRANTIES AND REPRESENTATIONS

  
	

   

  	

  6.1

  	

  Authorization,

  Validity, and Enforceability of this Agreement and the Loan Documents.

  
	

   

  	

  6.2

  	

  Validity and

  Priority of Security Interest

  
	

   

  	

  6.3

  	

  Organization and

  Qualification

  
	

   

  	

  6.4

  	

  Corporate Name;

  Prior Transactions

  
	

   

  	

  6.5

  	

  Subsidiaries and Affiliates

  
	

   

  	

  6.6

  	

  Financial

  Statements and Projections

  
	

   

  	

  6.7

  	

  Capitalization

  
	

   

  	

  6.8

  	

  Solvency

  
	

   

  	

  6.9

  	

  Debt

  
	

   

  	

  6.10

  	

  Distributions

  
	

   

  	

  6.11

  	

  Real

  Estate; Leases

  
	

   

  	

  6.12

  	

  Proprietary

  Rights

  
	

   

  	

  6.13

  	

  Trade Names

  
	

   

  	

  6.14

  	

  Litigation

  
	

   

  	

  6.15

  	

  Labor Disputes

  
	

   

  	

  6.16

  	

  Environmental

  Laws

  
	

   

  	

  6.17

  	

  No

  Violation of Law

  
	

   

  	

  6.18

  	

  No Default

  
	

   

  	

  6.19

  	

  ERISA

  Compliance

  
	

   

  	

  6.20

  	

  Taxes

  
	

   

  	

  6.21

  	

  Regulated

  Entities

  
	

   

  	

  6.22

  	

  Use of Proceeds;

  Margin Regulations

  
	

   

  	

  6.23

  	

  Copyrights,

  Patents, Trademarks and Licenses, etc.

  
	

   

  	

  6.24

  	

  No Material Adverse Change

  
	

   

  	

  6.25

  	

  Full Disclosure

  
	

   

  	

  6.26

  	

  Material

  Agreements

  
	

   

  	

  6.27

  	

  Bank Accounts

  
	

   

  	

  6.28

  	

  Governmental Authorization

  
	

   

  	

  6.29

  	

  Sale of the Parent’s

  Capital Stock

  
	

   

  	

   

  
	

  ARTICLE 7

  	

  AFFIRMATIVE

  AND NEGATIVE COVENANTS

  
	

   

  	

  7.1

  	

  Taxes and Other Obligations

  

 

ii

 

	

   

  	

  7.2

  	

  Legal Existence and

  Good Standing

  
	

   

  	

  7.3

  	

  Compliance

  with Law and Agreements; Maintenance of Licenses

  
	

   

  	

  7.4

  	

  Maintenance

  of Property; Inspection of Property

  
	

   

  	

  7.5

  	

  Insurance

  
	

   

  	

  7.6

  	

  Insurance and

  Condemnation Proceeds

  
	

   

  	

  7.7

  	

  Environmental

  Laws

  
	

   

  	

  7.8

  	

  Compliance

  with ERISA

  
	

   

  	

  7.9

  	

  Landlord Waivers

  and Bailee Letters.

  
	

   

  	

  7.10

  	

  Interest

  Rate Hedging

  
	

   

  	

  7.11

  	

  Mergers, Consolidations

  or Sales

  
	

   

  	

  7.12

  	

  Distributions;

  Capital Change; Restricted Investments

  
	

   

  	

  7.13

  	

  Intentionally

  Omitted

  
	

   

  	

  7.14

  	

  Guaranties

  
	

   

  	

  7.15

  	

  Debt

  
	

   

  	

  7.16

  	

  Prepayment

  
	

   

  	

  7.17

  	

  Transactions with

  Affiliates

  
	

   

  	

  7.18

  	

  Investment Banking

  and Finder’s Fees

  
	

   

  	

  7.19

  	

  Business

  Conducted

  
	

   

  	

  7.20

  	

  Liens

  
	

   

  	

  7.21

  	

  Sale and Leaseback

  Transactions

  
	

   

  	

  7.22

  	

  New

  Subsidiaries

  
	

   

  	

  7.23

  	

  Fiscal Year

  
	

   

  	

  7.24

  	

  Intentionally

  Omitted.

  
	

   

  	

  7.25

  	

  Fixed Charge Coverage Ratio

  
	

   

  	

  7.26

  	

  EBITDA

  
	

   

  	

  7.27

  	

  Intentionally

  Omitted.

  
	

   

  	

  7.28

  	

  Intentionally

  Omitted.

  
	

   

  	

  7.29

  	

  Use of Proceeds

  
	

   

  	

  7.30

  	

  Adjusted Tangible Net Worth

  
	

   

  	

  7.31

  	

  Foreign

  Subsidiaries

  
	

   

  	

  7.32

  	

  Further

  Assurances

  
	

   

  	

  7.33

  	

  Pledge

  of Capital Stock of Foreign Subsidiaries

  
	

   

  	

  7.34

  	

  Salt Lake City Real Estate

  
	

   

  	

  7.37

  	

  Spanish Financing

  Intercompany Debt

  
	

   

  	

   

  
	

  ARTICLE 8

  	

  CONDITIONS OF LENDING

  
	

   

  	

  8.1

  	

  Conditions

  Precedent to Making of Loans on the Closing Date

  
	

   

  	

  8.2

  	

  Conditions Precedent

  to Each Loan

  
	

   

  	

   

  
	

  ARTICLE 9

  	

  DEFAULT; REMEDIES

  
	

   

  	

  9.1

  	

  Events of Default

  

 

iii

 

	

   

  	

  9.2

  	

  Remedies

  
	

   

  	

   

  
	

  ARTICLE 10

  	

  TERM AND TERMINATION

  
	

   

  	

  10.1

  	

  Term

  and Termination

  
	

   

  	

   

  
	

  ARTICLE

  11

  	

  AMENDMENTS;

  WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

  
	

   

  	

  11.1

  	

  Amendments

  and Waivers

  
	

   

  	

  11.2

  	

  Assignments; Participations

  
	

   

  	

   

  
	

  ARTICLE

  12

  	

  THE

  AGENTS

  
	

   

  	

  12.1

  	

  Appointment and

  Authorization

  
	

   

  	

  12.2

  	

  Delegation

  of Duties

  
	

   

  	

  12.3

  	

  Liability of

  Administrative Agent

  
	

   

  	

  12.4

  	

  Reliance by

  Administrative Agent

  
	

   

  	

  12.5

  	

  Notice of

  Default

  
	

   

  	

  12.6

  	

  Credit Decision

  
	

   

  	

  12.7

  	

  Indemnification

  
	

   

  	

  12.8

  	

  Administrative

  Agent in Individual Capacity

  
	

   

  	

  12.9

  	

  Successor Administrative

  Agent

  
	

   

  	

  12.10

  	

  Withholding Tax

  
	

   

  	

  12.11

  	

  Collateral

  Matters

  
	

   

  	

  12.12

  	

  Restrictions

  on Actions by Lenders; Sharing of Payments

  
	

   

  	

  12.13

  	

  Agency

  for Perfection

  
	

   

  	

  12.14

  	

  Payments by

  Administrative Agent to Lenders

  
	

   

  	

  12.15

  	

  Settlement

  
	

   

  	

  12.16

  	

  Letters of Credit; Intra-Revolving

  Lender Issues

  
	

   

  	

  12.17

  	

  Concerning

  the Collateral and the Related Loan Documents

  
	

   

  	

  12.18

  	

  Field

  Audit and Examination Reports; Disclaimer by Lenders

  
	

   

  	

  12.19

  	

  Relation

  Among Lenders

  
	

   

  	

  12.20

  	

  The

  Arrangers, the Syndication Agent and the Documentation Agent

  
	

   

  	

   

  
	

  ARTICLE

  13

  	

  GUARANTEES

  
	

   

  	

   

  
	

  ARTICLE

  14

  	

  MISCELLANEOUS

  
	

   

  	

  14.1

  	

  No Waivers; Cumulative

  Remedies

  
	

   

  	

  14.2

  	

  Severability

  
	

   

  	

  14.3

  	

  Governing

  Law; Choice of Forum; Service of Process

  
	

   

  	

  14.4

  	

  WAIVER

  OF JURY TRIAL

  
	

   

  	

  14.5

  	

  Survival of

  Representations and Warranties

  
	

   

  	

  14.6

  	

  Other Security and

  Guaranties

  

 

iv

 

	

   

  	

  14.7

  	

  Fees and

  Expenses

  
	

   

  	

  14.8

  	

  Notices

  
	

   

  	

  14.9

  	

  Waiver of

  Notices

  
	

   

  	

  14.10

  	

  Binding Effect

  
	

   

  	

  14.11

  	

  Indemnity

  of the Administrative Agent and the Lenders by the Borrower

  
	

   

  	

  14.12

  	

  Limitation

  of Liability

  
	

   

  	

  14.13

  	

  Final Agreement

  
	

   

  	

  14.14

  	

  Counterparts

  
	

   

  	

  14.15

  	

  Captions

  
	

   

  	

  14.16

  	

  Right of Setoff

  
	

   

  	

  14.17

  	

  Confidentiality

  
	

   

  	

  14.18

  	

  Conflicts with

  Other Loan Documents

  

 

v

 

ANNEXES, EXHIBITS AND SCHEDULES

 

	

  ANNEX A

  	

  DEFINED TERMS

  
	

   

  	

   

  
	

  EXHIBIT

  A

  	

  FORM

  OF TERM LOAN NOTE

  
	

   

  	

   

  
	

  EXHIBIT

  B

  	

  FORM

  OF BORROWING BASE CERTIFICATE

  
	

   

  	

   

  
	

  EXHIBIT

  C

  	

  FINANCIAL

  STATEMENTS

  
	

   

  	

   

  
	

  EXHIBIT

  D

  	

  FORM

  OF NOTICE OF BORROWING

  
	

   

  	

   

  
	

  EXHIBIT

  E

  	

  FORM

  OF NOTICE OF CONTINUATION/CONVERSION

  
	

   

  	

   

  
	

  EXHIBIT

  F

  	

  FORM

  OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

  
	

   

  	

   

  
	

  SCHEDULE

  1.l

  	

  ASSIGNED

  CONTRACTS (ANNEX A– DEFINED TERMS)

  
	

   

  	

   

  
	

  SCHEDULE

  1.2

  	

  LENDERS’

  COMMITMENTS (ANNEX A –DEFINED TERMS)

  
	

   

  	

   

  
	

  SCHEDULE

  1.4(h)

  	

  CONTINUING

  LETTERS OF CREDIT

  
	

   

  	

   

  
	

  SCHEDULE

  6.3

  	

  ORGANIZATION

  AND QUALIFICATIONS

  
	

   

  	

   

  
	

  SCHEDULE

  6.4

  	

  PRIOR

  CORPORATE NAMES AND TRANSACTIONS

  
	

   

  	

   

  
	

  SCHEDULE

  6.5

  	

  SUBSIDIARIES

  AND AFFILIATES

  
	

   

  	

   

  
	

  SCHEDULE

  6.9

  	

  DEBT

  
	

   

  	

   

  
	

  SCHEDULE

  6.11

  	

  REAL

  ESTATE; LEASES

  
	

   

  	

   

  
	

  SCHEDULE

  6.12

  	

  PROPRIETARY

  RIGHTS

  
	

   

  	

   

  
	

  SCHEDULE

  6.13

  	

  TRADE

  NAMES

  
	

   

  	

   

  
	

  SCHEDULE

  6.14

  	

  LITIGATION

  
	

   

  	

   

  
	

  SCHEDULE

  6.15

  	

  LABOR

  DISPUTES

  
	

   

  	

   

  
	

  SCHEDULE

  6.16

  	

  ENVIRONMENTAL

  LAWS

  
	

   

  	

   

  
	

  SCHEDULE

  6.26(a)

  	

  MATERIAL

  AGREEMENTS

  
	

   

  	

   

  
	

  SCHEDULE

  6.26(b)

  	

  INTERCOMPANY

  AGREEMENTS

  
	

   

  	

   

  
	

  SCHEDULE

  6.27

  	

  BANK

  ACCOUNTS

  
	

   

  	

   

  
	

  SCHEDULE

  7.14

  	

  CONTINGENT

  OBLIGATIONS

  

 

vi

 

	

  SCHEDULE

  7.17

  	

  AFFILIATE

  TRANSACTIONS

  
	

   

  	

   

  
	

  SCHEDULE 7.34

  	

  SALT LAKE CITY REAL

  PROPERTY

  

 

vii

 

CREDIT AGREEMENT

 

This Credit Agreement, dated as of June 20, 2002 (this “Agreement”),

among the financial institutions listed on the signature pages hereof (such

financial institutions, together with their respective successors and assigns,

are referred to hereinafter each individually as a “Lender” and

collectively as the “Lenders”), Bank of America, N. A. with an office at

335 Madison Avenue, New York, New York, as administrative agent for the Lenders

(in its capacity as administrative agent, together with any successor

administrative agent, the “Administrative Agent”), Banc of America

Securities LLC and Credit Suisse First Boston, Cayman Islands Branch, as

co–book managers and co–lead arrangers (in such capacity, the “Arrangers”),

Credit Suisse First Boston, Cayman Islands Branch, as syndication agent

(in its capacity as syndication agent, the “Syndication Agent”), General

Electric Capital Corporation, as documentation agent (in its capacity as

documentation agent, the “Documentation Agent”), Manufacturers’ Services

Limited, a Delaware corporation, with offices at 300 Baker Avenue, Concord,

Massachusetts (the “Parent”), Manufacturers’ Services Salt Lake City

Operations, Inc., a Delaware corporation, with offices at 300 Baker Avenue,

Concord, Massachusetts (“MSSLCO”), Manufacturers’ Services Western U.S.

Operations, Inc., a California corporation, with offices at 300 Baker Avenue,

Concord, Massachusetts (“MSWUSO”), Manufacturers’ Services Central U.S.

Operations, Inc., a Minnesota corporation, with offices at 300 Baker Avenue,

Concord, Massachusetts (“MSCUSO”), MSL Lowell Operations, Inc., a

Delaware corporation, with offices at 300 Baker Avenue, Concord,

Massachusetts  (“MSLLO”) and MSL

Midwest Operations, Inc., a Delaware corporation, with offices at 300 Baker

Avenue, Concord, Massachusetts  (“MSLMO”;

and together with the Parent, MSSLCO, MSWUSO, MSCUSO and MSLLO, each a

“Borrower” and collectively, the “Borrowers”) and the Guarantors (as

defined herein).

 

W I T N E S S E T H:

 

WHEREAS, the Borrowers have requested the Revolving Lenders to make

available to the Borrowers a revolving line of credit for loans and letters of

credit in an aggregate amount not to exceed $100,000,000, as such amount may be

increased from time to time in accordance with Section 1.6, and the

Term Lenders to make term loans to the Borrowers in the aggregate principal

amount of $10,500,000, and which extensions of credit the Borrowers will use

for the purposes permitted hereunder;

 

WHEREAS, capitalized terms used in this Agreement and not otherwise

defined herein shall have the meanings ascribed thereto in Annex A which

is attached hereto and incorporated herein; the rules of construction contained

therein shall govern the interpretation of this Agreement, and all Annexes,

Exhibits and Schedules attached hereto are incorporated herein by reference;

and

 

WHEREAS, the Revolving Lenders have agreed to make available to the

Borrowers a revolving credit facility and the Term Lenders have agreed to make

available to the Borrowers term loans, in each case, upon the terms and

conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual conditions and

agreements set forth in this Agreement, and for good and valuable

consideration, the receipt of which is hereby acknowledged, the parties hereto

hereby agree as follows.

 

 

ARTICLE 1

LOANS AND LETTERS OF

CREDIT

 

1.1           Total

Facility.  Subject to all of the

terms and conditions of this Agreement, the Lenders agree to make available a

total credit facility of up to $110,500,000, as such amount may be increased

from time to time in accordance with Section 1.6 (the “Total

Facility”) to the Borrowers from time to time during the term of this

Agreement.  The Total Facility shall be

composed of a revolving line of credit consisting of Revolving Loans and

Letters of Credit and the Term Loans described herein.

 

1.2           Revolving

Loans.

 

(a)           Amounts.  Subject to the satisfaction of the

conditions precedent set forth in Article 8, each Revolving Lender

severally, but not jointly, agrees, upon a Borrower’s request from time to time

on any Business Day during the period from the Closing Date to the Termination

Date, to make revolving loans (the “Revolving Loans”) to such Borrower

in amounts not to exceed such Revolving Lender’s Pro Rata Share of Availability

of such Borrower, except for Non–Ratable Loans and Agent Advances.  The Revolving Lenders, however, in their

unanimous discretion and with the prior written consent of the Majority Term

Lenders (subject to Section 12.21), may elect to make Revolving Loans to

a Borrower or issue or arrange to have issued Letters of Credit for the account

of a Borrower in excess of the Borrowing Base of such Borrower on one or more

occasions, but if they do so, neither the Administrative Agent nor the

Revolving Lenders shall be deemed thereby to have changed the limits of the

Borrowing Base of such Borrower or to be obligated to exceed such limits on any

other occasion; provided, that nothing herein shall in any way limit the

Administrative Agent’s authority, in its sole discretion, to make Agent

Advances pursuant to the terms of Section 1.2(i).  If the Administrative Agent has actual

knowledge that any Borrowing by a Borrower would exceed Availability of such

Borrower, the Revolving Lenders shall not, without the prior written consent of

the Majority Term Lenders, make such Borrowing to such Borrower until such

excess has been eliminated, subject to the Administrative Agent’s authority, in

its sole discretion, to make Agent Advances pursuant to the terms of

Section 1.2(i).

 

(b)           Procedure

for Borrowing.

 

(i)            Each

Borrowing by a Borrower shall be made upon such Borrower’s irrevocable written

notice delivered to the Administrative Agent in the form of a notice of

borrowing (“Notice of Borrowing”) in the form of Exhibit D

attached hereto and made a part hereof, which must be received by the

Administrative Agent prior to (i) 12:00 noon (New York time) three

Business Days prior to the requested Funding Date, in the case of LIBOR Rate Revolving

Loans and (ii) 11:00 a.m. (New York time) on the requested Funding Date,

in the case of Base Rate Revolving Loans, specifying:

 

(A)          the amount of the Borrowing, which in

the case of a LIBOR Rate Revolving Loan must equal or exceed $1,000,000 (and increments

of $1,000,000 in excess of such amount);

 

(B)           the requested Funding Date, which

must be a Business Day;

 

2

 

(C)           whether the Revolving Loans requested

are to be Base Rate Revolving Loans or LIBOR Rate Revolving Loans (and if not

specified, it shall be deemed a request for a Base Rate Revolving Loan); and

 

(D)          the duration of the Interest Period

for LIBOR Rate Revolving Loans (and if not specified, it shall be deemed a

request for an Interest Period of one month);

 

provided,

however, that with respect to any Borrowing to be made on the Closing Date,

such Borrowings will consist of Base Rate Revolving Loans only.

 

(ii)           After

giving effect to any Borrowing, there may not be more than eight (8) different

Interest Periods in effect.

 

(iii)          In

lieu of delivering a Notice of Borrowing, a Borrower may give the

Administrative Agent telephonic notice of such request for advances to the

Designated Account on or before the deadline set forth above.  The Administrative Agent at all times shall

be entitled to rely on such telephonic notice in making such Revolving Loans,

regardless of whether any written confirmation is received.

 

(iv)          A

Borrower shall have no right to request a LIBOR Rate Revolving Loan while a Default

or Event of Default has occurred and is continuing.

 

(c)           Appointment

of Borrower Representative; Reliance upon Authority.    Each Borrower hereby designates

the Parent as its representative and agent on its behalf (the “Borrower

Representative”) for the purposes of issuing on such Borrower’s behalf

Notices of Borrowing and Notices of Continuation/Conversion, giving

instructions with respect to the disbursement of the proceeds of the Loans to

be made to such Borrower, selecting interest rate options for such Borrower,

requesting Letters of Credit for the account of such Borrower, giving and

receiving on such Borrower’s behalf all other notices and consents hereunder or

under any of the other Loan Documents and taking all other actions (including

in respect of compliance with covenants) on behalf of such Borrower under the

Loan Documents.  The Borrower

Representative hereby accepts such appointment.  The Administrative Agent and each Lender may regard any notice or

other communication pursuant to any Loan Document from the Borrower

Representative as a notice or communication from the applicable Borrower or

Borrowers, and may give any notice or communication required or permitted to be

given to any Borrower or Borrowers hereunder to the Borrower Representative on

behalf of such Borrower or Borrowers. 

Each Borrower agrees that each notice, election, representation and

warranty, covenant, agreement and undertaking made on its behalf by the

Borrower Representative shall be deemed for all purposes to have been made by

such Borrower and shall be binding upon and enforceable against such Borrower

to the same extent as if the same had been made directly by such Borrower.

 

(2)           Prior to the Closing Date, the

Borrowers shall deliver to the Administrative Agent a notice setting forth an

account of the Borrowers (the “Designated Account”) to which the

Administrative Agent is authorized to transfer the proceeds of the Revolving

Loans requested by

 

3

 

a Borrower

hereunder.  The Borrowers may designate

a replacement account from time to time by written notice.  The Designated Account must be reasonably

satisfactory to the Administrative Agent. 

The Administrative Agent is entitled to rely conclusively on any

person’s request for Revolving Loans on behalf of a Borrower, so long as the

proceeds thereof are to be transferred to the Designated Account.  The Administrative Agent has no duty to

verify the identity of any individual representing himself or herself as a

person authorized by a Borrower to make such requests on its behalf. The

Borrower Representative shall cause the proceeds of each Revolving Loan

requested by or on behalf of a Borrower which is deposited into the Designated

Account to be promptly remitted to such Borrower.

 

(d)           No

Liability.  The Administrative Agent

shall not incur any liability to any Borrower as a result of acting upon any

notice referred to in Sections 1.2(b) and (c) which the

Administrative Agent believes in good faith to have been given by an officer or

other person duly authorized by such Borrower to request Revolving Loans on its

behalf.  The crediting of Revolving

Loans to the Designated Account conclusively establishes the obligation of such

Borrower to repay such Revolving Loans as provided herein.

 

(e)           Notice

Irrevocable.  Any Notice of

Borrowing (or telephonic notice in lieu thereof) made pursuant to Section 1.2(b)

shall be irrevocable.  The applicable

Borrower shall be bound to borrow the funds requested therein in accordance

therewith.

 

(f)            Administrative

Agent’s Election.  Promptly after

receipt of a Notice of Borrowing (or telephonic notice in lieu thereof), the

Administrative Agent shall elect to have the terms of Section 1.2(g)

or the terms of Section 1.2(h) apply to such requested Borrowing.  If the Bank declines in its sole discretion

to make a Non–Ratable Loan pursuant to Section 1.2(h), the

terms of Section 1.2(g) shall apply to the requested Borrowing.

 

(g)           Making

of Revolving Loans.  If the

Administrative Agent elects to have the terms of this Section 1.2(g)

apply to a requested Borrowing, then promptly after receipt of a Notice of

Borrowing or telephonic notice in lieu thereof, the Administrative Agent shall

notify the Revolving Lenders by telecopy, telephone or e–mail of the

requested Borrowing.  Each Revolving

Lender shall transfer its Pro Rata Share of the requested Borrowing available

to the Administrative Agent in immediately available funds, to the account from

time to time designated by Administrative Agent, not later than 12:00 noon (New

York time) on the applicable Funding Date. 

After the Administrative Agent’s receipt of all proceeds of such

Revolving Loans, the Administrative Agent shall make the proceeds of such

Revolving Loans available to the applicable Borrower on the applicable Funding

Date by transferring same day funds to the account designated by such Borrower;

provided, however, that the amount of Revolving Loans so made on

any date to a Borrower shall not exceed the Availability of such Borrower on

such date.

 

(h)           Making

of Non–Ratable Loans.

 

(i)            If the Administrative Agent elects,

with the consent of the Bank, to have the terms of this Section 1.2(h)

apply to a requested Borrowing, the Bank shall make a Revolving Loan in the

amount of that Borrowing available to the applicable Borrower on the applicable

 

4

 

Funding Date by

transferring same day funds to the Designated Account.  Each Revolving Loan made solely by the Bank

pursuant to this Section is herein referred to as a “Non–Ratable

Loan”, and such Revolving Loans are collectively referred to as the “Non–Ratable

Loans.”  Each Non-Ratable Loan shall

be subject to all the terms and conditions applicable to other Revolving Loans

except that all payments thereon shall be payable to the Bank solely for its

own account.  The aggregate amount of

Non–Ratable Loans outstanding at any time shall not exceed

$10,000,000.  The Administrative Agent

shall not request the Bank to make any Non–Ratable Loan if (1) the

Administrative Agent has received written notice from any Revolving Lender that

one or more of the applicable conditions precedent set forth in Article 8

will not be satisfied on the requested Funding Date for the applicable

Borrowing, or (2) the requested Borrowing would exceed Availability of the

applicable Borrower on that Funding Date.

 

(ii)           The Non–Ratable Loans shall be

secured by the Agent’s Liens in and to the Collateral and shall constitute Base

Rate Revolving Loans and Obligations hereunder.

 

(i)            Agent

Advances.

 

(i)            Subject to the limitations set forth

below, the Administrative Agent is authorized by the Borrowers and the Lenders,

from time to time in the Administrative Agent’s sole discretion, (A) after

the occurrence of a Default or an Event of Default, or (B) at any time

that any of the other conditions precedent set forth in Article 8

have not been satisfied, to make Base Rate Revolving Loans to one or more of

the Borrowers on behalf of the Revolving Lenders in an aggregate amount

outstanding at any time not to exceed, with respect to any Borrower, 10% of the

Borrowing Base of such Borrower but not in excess in the aggregate for all the

Borrowers of the lesser of (x) the Maximum Revolver Amount and

(y) $3,000,000 in excess of the aggregate Borrowing Bases of all the

Borrowers at such time, which the Administrative Agent, in its reasonable

business judgment, deems necessary or desirable (1) to preserve or protect

the Collateral, or any portion thereof, (2) to enhance the likelihood of,

or maximize the amount of, repayment of the Loans and other Obligations, or

(3) to pay any other amount chargeable to any Borrower pursuant to the

terms of this Agreement, including costs, fees and expenses as described in Section 14.7

(any of such advances are herein referred to as “Agent Advances”); provided,

that the Required Lenders may at any time revoke the Administrative Agent’s

authorization to make Agent Advances. 

Any such revocation must be in writing and shall become effective

prospectively upon the Administrative Agent’s receipt thereof.

 

(ii)           The Agent Advances shall be secured

by the Agent’s Liens in and to the Collateral and shall constitute Base Rate

Revolving Loans and Obligations hereunder.

 

5

 

1.3           Term Loans.

 

(a)           Amounts

of Term Loans.  Each Term Lender

severally agrees to make a term loan (any such term loan being referred to as a

“Term Loan” and such term loans being referred to collectively as the “Term

Loans”) to the Borrowers on the Closing Date, upon the satisfaction of the

conditions precedent set forth in Article 8, in an amount equal to

such Term Lender’s Term Loan Commitment.

 

(b)           Making

of Term Loans.  Each Term Lender

shall make the amount of such Term Lender’s Term Loan available to the

Administrative Agent in same day funds, to the Administrative Agent’s

designated account, not later than 12:00 noon (New York time) on the Closing

Date.  After the Administrative Agent’s

receipt of the proceeds of such Term Loans, upon satisfaction of the conditions

precedent set forth in Article 8, the Administrative Agent shall

make the proceeds of such Term Loans available to the Borrowers on such Funding

Date by transferring same day funds equal to the proceeds of such Term Loans

received by the Administrative Agent to an account or accounts of one or more

of the Borrowers designated in writing by the Borrowers or as the Borrowers

shall otherwise instruct in writing.

 

(c)           Term

Loan Notes.  The Borrowers shall

execute and deliver to the Administrative Agent on behalf of each Term Lender,

on the Closing Date, a promissory note, substantially in the form of Exhibit A

attached hereto and made a part hereof (such promissory notes, together with

any new notes issued pursuant to Section 11.2 upon the assignment

of any portion of any Term Lender’s Term Loan, being hereinafter referred to

collectively as the “Term Loan Notes” and each of such promissory notes

being hereinafter referred to individually as a “Term Loan Note”). The

Term Loan Notes shall evidence each Term Lender’s Term Loan, in an original

principal amount equal to that Term Lender’s Term Loan Commitment and with

other appropriate insertions. Each Term Loan Note shall be dated the Closing

Date and stated to mature on the Stated Termination Date.  The Borrowers shall repay the outstanding

principal balance of the Term Loans, plus all accrued but unpaid interest

thereon, on the Termination Date. 

Payments or prepayments of the Term Loans may not be reborrowed.  The liability of the Borrowers with respect

to the Term Loans shall be joint and several.

 

1.4           Letters of

Credit.

 

(a)           Agreement

to Issue or Cause to Issue.  Subject

to the terms and conditions of this Agreement, the Administrative Agent agrees

(i) to cause the Letter of Credit Issuer to issue for the account of a Borrower

one or more commercial/documentary and standby letters of credit (“Letter of

Credit”) and/or (ii) to provide credit support or other enhancement to

a Letter of Credit Issuer acceptable to the Administrative Agent which issues a

Letter of Credit for the account of a Borrower (any such credit support or

enhancement being herein referred to as a “Credit Support”) from time to

time during the term of this Agreement.

 

(b)           Amounts;

Outside Expiration Date.  The

Administrative Agent shall not have any obligation to (and solely in the case

of clause (ii) below, the Administrative Agent shall not without the prior

written consent of the Majority Term Lenders if the Administrative Agent has

actual knowledge that such clause (iii) would be violated) issue or cause to be

issued any Letter of Credit or to provide Credit Support

 

6

 

for any Letter of Credit at any time if:  (i) the maximum face amount of the requested Letter of

Credit is greater than the Unused Letter of Credit Subfacility at such time;

(ii) the maximum undrawn amount of the requested Letter of Credit and all

commissions, fees and charges due from the requesting Borrower in connection

with the opening thereof would exceed the Availability of such Borrower at such

time; or (iii) such Letter of Credit has an expiration date less than 30

days prior to the Stated Termination Date or more than 12 months from the date

of issuance for standby letters of credit and 180 days for documentary letters

of credit.  With respect to any Letter

of Credit which contains any “evergreen” or automatic renewal provision, each

Revolving Lender shall be deemed to have consented to any such extension or

renewal unless any such Revolving Lender shall have provided to the Administrative

Agent, written notice that it declines to consent to any such extension or

renewal at least thirty (30) days prior to the date on which the Letter of

Credit Issuer is entitled to decline to extend or renew the Letter of Credit.  If all of the requirements of this Section 1.4

are met and no Default or Event of Default has occurred and is continuing, no

Revolving Lender shall decline to consent to any such extension or renewal.

 

(c)           Other

Conditions.  In addition to

conditions precedent contained in Article 8, the obligation of the

Administrative Agent to issue or to cause to be issued any Letter of Credit or

to provide Credit Support for any Letter of Credit is subject to the following

conditions precedent having been satisfied in a manner reasonably satisfactory

to the Administrative Agent:

 

(i)            The applicable Borrower shall have

delivered to the Letter of Credit Issuer, at such times and in such manner as

such Letter of Credit Issuer may prescribe, an application in form and

substance satisfactory to such Letter of Credit Issuer and reasonably

satisfactory to the Administrative Agent for the issuance of the Letter of

Credit and such other documents as may be required pursuant to the terms

thereof, and the form, terms and purpose of the proposed Letter of Credit shall

be reasonably satisfactory to the Administrative Agent and the Letter of Credit

Issuer; and

 

(ii)           As of the date of issuance, no order

of any court, arbitrator or Governmental Authority shall purport by its terms

to enjoin or restrain money center banks generally from issuing letters of

credit of the type and in the amount of the proposed Letter of Credit, and no

law, rule or regulation applicable to money center banks generally and no

request or directive (whether or not having the force of law) from any

Governmental Authority with jurisdiction over money center banks generally

shall prohibit, or request that the proposed Letter of Credit Issuer refrain

from, the issuance of letters of credit generally or the issuance of such

Letters of Credit.

 

(d)           Issuance

of Letters of Credit.

 

(i)            Request for Issuance.  The Borrower for whose account the Letter of

Credit is to be issued must notify the Administrative Agent of a requested

Letter of Credit at least three (3) Business Days prior to the proposed

issuance date.  Such notice shall be

irrevocable and must specify the original face amount of the Letter of Credit

requested, the Business Day of issuance of such requested Letter of Credit,

whether such Letter of Credit may be drawn in a single

 

7

 

or in partial draws, the

Business Day on which the requested Letter of Credit is to expire, the purpose

for which such Letter of Credit is to be issued, and the beneficiary of the

requested Letter of Credit.  The

applicable Borrower shall attach to such notice the proposed form of the Letter

of Credit.

 

(ii)           Responsibilities of the

Administrative Agent; Issuance.  As

of the Business Day immediately preceding the requested issuance date of the

Letter of Credit, the Administrative Agent shall determine the amount of the

applicable Unused Letter of Credit Subfacility and Availability of the

applicable Borrower as of such date.  If

(A) the face amount of the requested Letter of Credit is less than the

Unused Letter of Credit Subfacility and (B) the amount of such requested

Letter of Credit and all commissions, fees, and charges due from the requesting

Borrower in connection with the opening thereof would not exceed Availability

of such Borrower, the Administrative Agent shall cause the Letter of Credit

Issuer to issue the requested Letter of Credit on the requested issuance date

so long as the other conditions hereof are met.

 

(iii)          No Extensions or Amendment.  The Administrative Agent shall not be

obligated to cause the Letter of Credit Issuer to extend or amend any Letter of

Credit issued pursuant hereto unless the requirements of this Section 1.4

are met as though a new Letter of Credit were being requested and issued.

 

(e)           Payments

Pursuant to Letters of Credit.  Each

Borrower agrees to reimburse immediately the Letter of Credit Issuer for any

draw under any Letter of Credit issued for the account of such Borrower and the

Administrative Agent for the account of the Revolving Lenders upon any payment

pursuant to any Credit Support related to such Letter of Credit, and to pay the

Letter of Credit Issuer the amount of all other charges and fees payable to the

Letter of Credit Issuer in connection with any Letter of Credit issued for the

account of such Borrower immediately when due, irrespective of any claim,

setoff, defense or other right which such Borrower may have at any time against

the Letter of Credit Issuer or any other Person.  Each drawing under any Letter of Credit shall constitute a

request by the Borrower for whose account such Letter of Credit was issued to

the Administrative Agent for a Borrowing of a Base Rate Revolving Loan in the

amount of such drawing.  The Funding

Date with respect to such borrowing shall be the date of such drawing.

 

(f)            Indemnification;

Exoneration; Power of Attorney.

 

(i)            Indemnification.  In addition to amounts payable as elsewhere

provided in this Section 1.4, each Borrower agrees to protect,

indemnify, pay and save the Revolving Lenders and the Administrative Agent

harmless from and against any and all claims, demands, liabilities, damages,

losses, costs, charges and expenses (including reasonable attorneys’ fees)

which any Revolving Lender or the Administrative Agent (other than a Revolving

Lender in its capacity as Letter of Credit Issuer) may incur or be subject to

as a consequence, direct or indirect, of the issuance of any Letter of Credit

for the account of such Borrower or the provision of any Credit Support or

enhancement in connection therewith. 

Each Borrower’s obligations under this Section shall survive

payment of all other Obligations.

 

8

 

(ii)           Assumption of Risk by the

Borrowers.  As among the Borrowers,

the Revolving Lenders and the Administrative Agent, each Borrower assumes all

risks of the acts and omissions of, or misuse of any of the Letters of Credit

by, the respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the

foregoing, the Revolving Lenders and the Administrative Agent shall not be

responsible for:  (A) the form,

validity, sufficiency, accuracy, genuineness or legal effect of any document

submitted by any Person in connection with the application for and issuance of

and presentation of drafts with respect to any of the Letters of Credit, even

if it should prove to be in any or all respects invalid, insufficient,

inaccurate, fraudulent or forged; (B) the validity or sufficiency of any

instrument transferring or assigning or purporting to transfer or assign any

Letter of Credit or the rights or benefits thereunder or proceeds thereof, in

whole or in part, which may prove to be invalid or ineffective for any reason;

(C) the failure of the beneficiary of any Letter of Credit to comply duly

with conditions required in order to draw upon such Letter of Credit;

(D) errors, omissions, interruptions, or delays in transmission or

delivery of any messages, by mail, cable, telegraph, telex or otherwise,

whether or not they be in cipher; (E) errors in interpretation of technical

terms; (F) any loss or delay in the transmission or otherwise of any

document required in order to make a drawing under any Letter of Credit or of

the proceeds thereof; (G) the misapplication by the beneficiary of any

Letter of Credit of the proceeds of any drawing under such Letter of Credit;

(H) any consequences arising from causes beyond the control of the

Revolving Lenders or the Administrative Agent, including any act or omission,

whether rightful or wrongful, of any present or future de jure

or de facto Governmental Authority or (I) the Letter of

Credit Issuer’s honor of a draw for which the draw or any certificate fails to

comply in any respect with the terms of the Letter of Credit.  None of the foregoing shall affect, impair

or prevent the vesting of any rights or powers of the Administrative Agent or

any Revolving Lender under this Section 1.4(f).

 

(iii)          Exoneration.  Without limiting the foregoing, no action or

omission whatsoever by the Administrative Agent or any Revolving Lender

(excluding any Revolving Lender in its capacity as a Letter of Credit Issuer)

shall result in any liability of the Administrative Agent or any Revolving

Lender to any Borrower, or relieve any Borrower of any of its obligations

hereunder to any such Person.

 

(iv)          Rights Against Letter of Credit

Issuer.  Nothing contained in this

Agreement is intended to limit any Borrower’s rights, if any, with respect to

the Letter of Credit Issuer which arise as a result of the letter of credit

application and related documents executed by and between such Borrower and the

Letter of Credit Issuer.

 

(v)           Account Party.  Each Borrower hereby authorizes and directs

any Letter of Credit Issuer to name such Borrower as the “Account Party”

therein and to deliver to the Administrative Agent all instruments, documents

and other writings and property received by the Letter of Credit Issuer

pursuant to the Letter of Credit issued or to be issued for the account of such

Borrower, and to accept and rely upon the Administrative Agent’s instructions

and

 

9

 

agreements with respect to all matters arising in

connection with such Letter of Credit or the application therefor.

 

(g)           Supporting

Letter of Credit; Cash Collateral. 

If, notwithstanding the provisions of Section 1.4(b) and Section 10.1,

any Letter of Credit or Credit Support is outstanding upon the termination of

this Agreement, then upon such termination each Borrower shall deposit with the

Administrative Agent, for the ratable benefit of the Administrative Agent and

the Revolving Lenders, with respect to each Letter of Credit issued for the

account of such Borrower or related Credit Support then outstanding, a standby

letter of credit (a “Supporting Letter of Credit”) in form and substance

satisfactory to the Administrative Agent, issued by an issuer satisfactory to

the Administrative Agent in an amount equal to the greatest amount for which

such Letter of Credit or such Credit Support may be drawn plus any fees and

expenses associated with such Letter of Credit or such Credit Support, under

which Supporting Letter of Credit the Administrative Agent is entitled to draw

amounts necessary to reimburse the Administrative Agent and the Revolving

Lenders for payments to be made by the Administrative Agent and the Revolving

Lenders under such Letter of Credit or Credit Support and any fees and expenses

associated with such Letter of Credit or Credit Support.  Such Supporting Letter of Credit shall be

held by the Administrative Agent, for the ratable benefit of the Administrative

Agent and the Revolving Lenders, as security for, and to provide for the

payment of, the aggregate undrawn amount of such Letters of Credit or such

Credit Support remaining outstanding.

 

(h)           Existing

Letters of Credit.  For purposes of

this Agreement, those letters of credit issued by the Bank for the account of

the Parent pursuant to that certain First Amended and Restated Credit

Agreement, dated as of September 29, 2000, among the Parent, the Bank, as

administrative agent, and the lenders party thereto, as amended, which are

described on Schedule 1.4(h) and are outstanding on the Closing Date,

shall be deemed to be Letters of Credit issued hereunder on the Closing Date.

 

1.5           Bank Products.  Each Borrower may request and the

Administrative Agent may, in its sole and absolute discretion, arrange for such

Borrower to obtain from the Bank or the Bank’s Affiliates Bank Products

although the Borrowers are not required to do so.  If Bank Products are provided by an Affiliate of the Bank to a

Borrower, such Borrower agrees to indemnify and hold the Administrative Agent,

the Bank and the Lenders harmless from any and all costs and obligations now or

hereafter incurred by the Administrative Agent, the Bank or any of the Lenders

which arise from any indemnity given by the Administrative Agent to its

Affiliates related to such Bank Products; provided, however,

nothing contained herein is intended to limit such Borrower’s rights with

respect to the Bank or its Affiliates, if any, which arise as a result of the

execution of documents by and between such Borrower and the Bank which relate

to Bank Products.  The agreement

contained in this Section shall survive termination of this Agreement.  Each Borrower acknowledges and agrees that

the obtaining of Bank Products from the Bank or the Bank’s Affiliates

(a) is in the sole and absolute discretion of the Bank or the Bank’s

Affiliates, and (b) is subject to all rules and regulations of the Bank or

the Bank’s Affiliates.

 

10

 

1.6           Increase in the Aggregate Revolving

Credit Commitments.  The

Borrowers may at any time prior to the Stated Termination Date, by written

notice to the Administrative Agent, request that the Administrative Agent

consent to an increase of the Maximum Revolver Amount (a “Revolver Increase”)

by (x) adding one or more new lenders to the revolving credit facility under

this Agreement (each a “New Revolving Lender”) or (y) increasing the

Revolving Credit Commitments of one or more Revolving Lenders party to this

Agreement who wish to participate in such Revolver Increase; provided, however,

that (i) no Default or Event of Default shall have occurred and be

continuing as of the date of such request or as of the effective date of such

Revolver Increase (the “Increase Date”), or shall occur as a result

thereof, (ii) the Revolving Credit Commitment of the Bank as of such Increase

Date shall not be greater than $25,000,000, (iii) any New Revolving Lender that

becomes party to this Agreement pursuant to this Section 1.6 shall be an

Eligible Assignee and shall be acceptable to the Administrative Agent, and (iv)

nothing contained herein shall require the Administrative Agent to consent to

such request. The Administrative Agent shall promptly inform the Lenders of any

such request made by the Borrowers.  The

Administrative Agent shall respond to any such request by the Borrowers within

30 days of receipt of such request and the failure to respond within such 30

days shall be deemed a refusal.  The

aggregate amount of Revolver Increases shall not exceed $25,000,000 and any

such Revolver Increase shall be in the minimum amount of $10,000,000 (or such

lesser amount as shall be equal to $25,000,000 minus the aggregate amount of

Revolver Increases theretofore made).

 

(b)           On

each Increase Date, (i) each New Revolving Lender that has chosen to

participate in such Revolver Increase shall become a Revolving Lender party to

this Agreement as of such Increase Date and shall have a Revolving Credit

Commitment in an amount equal to its share of the Revolver Increase and

(ii) each Revolving Lender that has chosen to increase its Revolving

Credit Commitment pursuant to this Section 1.6 will have its Revolving

Credit Commitment increased by the amount of its share of the Revolver Increase

as of such Increase Date; provided, however, that the

Administrative Agent shall have (x) approved of the amount of the Revolver

Increase and any other terms and conditions relating to the Revolver Increase,

(y) received from the Borrowers the fee payable to the Administrative Agent

pursuant to the Bank Fee Letter with respect to the Revolver Increase and

(z) received on or before such Increase Date the following, each dated

such date:

 

(i)            certified copies of resolutions of

the Board of Directors of each of the Borrowers approving the Revolver Increase

and the corresponding modifications to this Agreement;

 

(ii)           an assumption agreement from each New

Revolving Lender participating in the Revolver Increase, if any, in form and

substance satisfactory to the Administrative Agent (each, an “Assumption

Agreement”), duly executed by such New Revolving Lender, the Administrative

Agent and the Borrowers; and

 

(iii)          confirmation from each Revolving

Lender participating in the Revolver Increase of the increase in the amount of

its Revolving Credit Commitment, in form and substance satisfactory to the

Administrative Agent.

 

11

 

On

each Increase Date, upon fulfillment of the conditions set forth in the

immediately preceding sentence of this clause (b), the Administrative Agent

shall notify the Lenders, any New Revolving Lenders participating in the

Revolver Increase and the Parent, on or before 1:00 p.m. (New York time),

by telecopier or telex, of the occurrence of the Revolver Increase to be

effected on such Increase Date.

 

ARTICLE 2

INTEREST AND FEES

 

2.1           Interest.

 

(a)           Interest

Rates.  All outstanding Obligations

(other than Term Loans and interest thereon) shall bear interest on the unpaid

principal amount thereof (including, to the extent permitted by law, on

interest thereon not paid when due) from the date made or incurred until paid

in full in cash at a rate determined by reference to the Base Rate or the LIBOR

Rate plus the Applicable Margins as set forth below, but not to exceed

the Maximum Rate.  The Term Loans shall

bear interest on the unpaid principal amount thereof (including that portion

thereof constituting interest paid in kind and added to the unpaid principal

amount of the Term Loans pursuant to the proviso

in Section 2.1(b)(iii) and, to the extent permitted by law, on

interest thereon not paid when due) from the date made until paid in full in

cash at the Term Interest Rate as set forth below.  If at any time Revolving Loans are outstanding with respect to

which the applicable Borrower has not delivered to the Administrative Agent a

notice specifying the basis for determining the interest rate applicable

thereto in accordance herewith, those Revolving Loans shall bear interest at a

rate determined by reference to the Base Rate until notice to the contrary has

been given to the Administrative Agent by such Borrower in accordance with this

Agreement and such notice has become effective.  Except as otherwise provided herein, the outstanding Obligations

shall bear interest as follows:

 

(i)            For all Term Loans, at a fluctuating

per annum rate equal to the Term Interest Rate;

 

(ii)           For all Base Rate Revolving Loans and

other Obligations (other than Term Loans and LIBOR Rate Revolving Loans), at a

fluctuating per annum rate equal to the Base Rate plus the Applicable Margin;

and

 

(iii)          For all LIBOR Rate Revolving Loans, at

a per annum rate equal to the LIBOR Rate plus the Applicable Margin.

 

Each

change in the Base Rate shall be reflected in the interest rate applicable to

Base Rate Revolving Loans and Term Loans as of the effective date of such

change.  All interest charges shall be

computed on the basis of a year of 360 days and actual days elapsed (which

results in more interest being paid than if computed on the basis of a 365–day

year).

 

12

 

(b)           Interest

Payments.

 

(i)            Each Borrower shall pay to the

Administrative Agent, for the ratable benefit of the Revolving Lenders,

interest accrued on all Base Rate Revolving Loans made to such Borrower in

arrears on the first day of each month hereafter and on the Termination Date.

 

(ii)           Each Borrower shall pay to the

Administrative Agent, for the ratable benefit of the Revolving Lenders,

interest on all LIBOR Rate Revolving Loans made to such Borrower in arrears on

each LIBOR Interest Payment Date.

 

(iii)          The Borrowers shall pay to the

Administrative Agent, for the ratable benefit of the Term Lenders, interest on

all Term Loans in arrears on the first day of each month hereafter and on the

Termination Date; provided, that such portion of the interest

representing the Deferred Interest Amount due on each interest payment date

(other than the Termination Date) shall be added to the aggregate outstanding

principal balance of the Term Loans in lieu of cash payment and, subject to the

second sentence of Section 3.3, all such deferred interest shall be

due and payable on the Termination Date.

 

(c)           Default

Rate.  If any Event of Default

occurs and is continuing and the Administrative Agent or the Majority Revolving

Lenders (in the case of Obligations other than Term Loans or interest thereon)

or the Majority Term Lenders (in the case of Term Loans or interest thereon) in

their discretion so elect, then, while any such Default or Event of Default is

continuing, all of the applicable Obligations shall bear interest at the

Default Rate applicable thereto.

 

2.2           Continuation and Conversion

Elections.

 

(a)           Each

Borrower may:

 

(i)            elect, as of any Business Day, in

the case of Base Rate Revolving Loans made to such Borrower to convert any such

Base Rate Revolving Loans (or any part thereof in an amount not less than

$1,000,000, or that is in an integral multiple of $1,000,000 in excess thereof)

into LIBOR Rate Revolving Loans; or

 

(ii)           elect, as of the last day of the

applicable Interest Period, to continue any LIBOR Rate Revolving Loans made to

such Borrower having Interest Periods expiring on such day (or any part thereof

in an amount not less than $1,000,000 or that is in an integral multiple of $1,000,000

in excess thereof);

 

provided, that if at any time the aggregate amount of

LIBOR Rate Revolving Loans in respect of any Borrowing made to a Borrower is

reduced, by payment, prepayment, or conversion of part thereof to be less than

$1,000,000, such LIBOR Rate Revolving Loans shall automatically convert into

Base Rate Revolving Loans; provided  further that if the notice

shall fail to specify the duration of the Interest Period, such Interest Period

shall be one month.

 

13

 

(b)           A Borrower shall deliver a notice of

continuation/conversion (“Notice of Continuation/Conversion”) in the

form of Exhibit E attached hereto and made a part hereof to the

Administrative Agent not later than 12:00 noon (New York time) at least three

(3) Business Days in advance of the Continuation/Conversion Date, if the

Revolving Loans of such Borrower are to be converted into or continued as LIBOR

Rate Revolving Loans and specifying:

 

(i)            the proposed Continuation/Conversion

Date;

 

(ii)           the aggregate amount of Revolving

Loans of such Borrower to be converted or renewed;

 

(iii)          the type of Revolving Loans resulting

from the proposed conversion or continuation; and

 

(iv)          the duration of the requested Interest

Period, provided, however, such Borrower may not select an

Interest Period that ends after the Stated Termination Date.

 

(c)           If

upon the expiration of any Interest Period applicable to LIBOR Rate Revolving

Loans of a Borrower, such Borrower has failed to select timely a new Interest

Period to be applicable to LIBOR Rate Revolving Loans of such Borrower or if

any Default or Event of Default then exists, such Borrower shall be deemed to

have elected to convert such LIBOR Rate Revolving Loans into Base Rate

Revolving Loans effective as of the expiration date of such Interest Period.

 

(d)           The

Administrative Agent will promptly notify each Revolving Lender of its receipt

of a Notice of Continuation/Conversion. 

All conversions and continuations shall be made ratably according to the

respective outstanding principal amounts of the Revolving Loans with respect to

which the notice was given held by each Revolving Lender.

 

(e)           There

may not be more than eight (8) different LIBOR Rate Revolving Loans in effect

hereunder at any time.

 

2.3           Maximum

Interest Rate.  In no event

shall any interest rate provided for hereunder exceed the maximum rate legally

chargeable by any Lender under applicable law for such Lender with respect to

loans of the type provided for hereunder (the “Maximum Rate”).  If, in any month, any interest rate for any

Obligations, absent such limitation, would have exceeded the Maximum Rate, then

the interest rate for such Obligations for that month shall be the Maximum

Rate, and, if in future months, that interest rate would otherwise be less than

the Maximum Rate, then that interest rate for such Obligations shall remain at

a Maximum Rate until such time as the amount of interest paid hereunder for

such Obligations equals the amount of interest which would have been paid on such

Obligations if the same had not been limited by the Maximum Rate.  In the event that, upon payment in full of

the Obligations, the total amount of interest paid or accrued under the terms

of this Agreement for any Obligations is less than the total amount of interest

which would, but for this Section 2.3, have been paid or accrued

for such Obligations if the interest rate otherwise set forth in this Agreement

for such Obligations had at all times been in effect,

 

14

 

then the applicable Borrower shall, to the extent permitted by

applicable law, pay the Administrative Agent, for the account of the applicable

Lenders, an amount equal to the excess of (a) the lesser of (i) the

amount of interest which would have been charged for such Obligations if the

Maximum Rate had, at all times, been in effect or (ii) the amount of

interest which would have accrued for such Obligations had the interest rate

otherwise set forth in this Agreement, at all times, been in effect over

(b) the amount of interest actually paid or accrued under this Agreement

for such Obligations.  If a court of

competent jurisdiction determines that the Administrative Agent and/or any

Lender has received interest and other charges hereunder in excess of the

Maximum Rate, such excess shall be deemed received on account of, and shall

automatically be applied to reduce, the applicable Obligations other than

interest, in the inverse order of maturity, and if there are no applicable

Obligations outstanding, the Administrative Agent and/or such Lender shall

refund to the applicable Borrower, such excess.

 

2.4           Closing

and Other Fees.  The Borrowers

agree, jointly and severally, to pay the Administrative Agent a closing fee

(the “Closing Fee”) and those other fees and compensation as set forth

in the fee letter, dated the Closing Date, between the Administrative Agent and

the Borrowers (the “Bank Fee Letter”), such fees and other compensation

to be payable at such times as provided in the Bank Fee Letter.  The Closing Fee and other fees and

compensation set forth in the Bank Fee Letter shall be fully earned and non–refundable

for any reason upon payment thereof.

 

2.5           Unused Line

Fee.  On the first day of each

month and on the Termination Date the Borrowers agree, jointly and severally,

to pay to the Administrative Agent, for the account of the Revolving Lenders,

in accordance with their respective Pro Rata Shares, an unused line fee (the “Unused

Line Fee”) equal to one–half of one percent (0.5%) per annum times the

amount by which the Maximum Revolver Amount exceeded the sum of the average

daily outstanding amount of Revolving Loans and the average daily undrawn face

amount of outstanding Letters of Credit, during the immediately preceding month

or shorter period if calculated for the first month hereafter or on the

Termination Date.  The Unused Line Fee

shall be computed on the basis of a 360–day year for the actual number of

days elapsed.  All principal payments

received by the Administrative Agent shall be deemed to be credited to the

applicable Borrower’s Loan Account immediately upon receipt for purposes of

calculating the Unused Line Fee pursuant to this Section 2.5.

 

2.6           Letter

of Credit Fee.  Each Borrower

agrees to pay to the Administrative Agent, for the account of the Revolving

Lenders, in accordance with their respective Pro Rata Shares, for each Letter

of Credit issued for the account of such Borrower, a fee (the “Letter of

Credit Fee”) at a per annum rate equal to the Applicable Margin in effect

from time to time with respect to LIBOR Rate Revolving Loans on the undrawn

face amount of such Letter of Credit from time to time and to the

Administrative Agent for the benefit of the Letter of Credit Issuer a fronting

fee of one–quarter of one percent (0.25%) per annum of the undrawn face

amount of each Letter of Credit issued for the account of such Borrower, and to

the Letter of Credit Issuer, all out–of–pocket costs, fees and

expenses incurred by the Letter of Credit Issuer in connection with the

application for, processing of, issuance or extension of, drawing under or

amendment to, any Letter of Credit issued for the account of such Borrower,

which costs, fees and expenses shall include a “fronting fee” payable to the

Letter of Credit Issuer.  The Letter of

Credit Fee shall be payable monthly in arrears on the first day of each month

following any month in which a Letter of Credit

 

15

 

is outstanding and on the Termination Date.  The Letter of Credit Fee shall be computed on the basis of a 360–day

year for the actual number of days elapsed.

 

2.7           Agency Fee.  The Borrowers agree, jointly and severally,

to pay to the Administrative Agent for the Administrative Agent’s account an

annual agency fee (the “Agency Fee”) of $50,000, payable on the Closing

Date and on each Anniversary Date prior to the Termination Date.  The Agency Fee shall be fully earned and non–refundable

for any reason upon payment thereof.

 

2.8           Term Fees.  The Borrowers agree, jointly and severally,

to pay to Wingate Capital Ltd. for the benefit of the Term Lenders a closing

fee (the “Term Closing Fee”) and an annual term facility fee (the “Term

Facility Fee”) as set forth in the fee letter, dated the Closing Date,

between Citadel Investment Group, L.L.C. and the Borrowers (the “Citadel Fee

Letter”).  The Term Closing Fee and

Term Facility Fee shall be fully earned and non-refundable for any reason upon

payment thereof.

 

2.9           Syndication

Agency Fee.  The Borrowers agree,

jointly and severally, to pay to the Syndication Agent for the Syndication

Agent’s account a syndication agency fee (the “Syndication Agency Fee”)

as set forth in the fee letter, dated the Closing Date, between the Syndication

Agent and the Borrowers (the “Syndication Agency Fee Letter”).  The Syndication Agency Fee shall be fully

earned and non-refundable for any reason upon payment thereof.

 

ARTICLE 3

PAYMENTS AND PREPAYMENTS

 

3.1           Revolving

Loans.  Each Borrower

shall repay the outstanding principal balance of the Revolving Loans made to

it, plus all accrued but unpaid interest thereon, on the Termination Date.  Each Borrower may prepay Revolving Loans

made to it at any time, and reborrow subject to the terms of this Agreement.  In addition, and without limiting the

generality of the foregoing, (i) upon demand the Borrowers, jointly and

severally, shall pay to the Administrative Agent, for account of the Revolving

Lenders, the amount, without duplication, by which the Aggregate Revolver

Outstandings exceeds the lesser of the aggregate Borrowing Bases of all the

Borrowers or the Maximum Revolver Amount and (ii) each Borrower shall pay

to the Administrative Agent, for the account of the Revolving Lenders, the

amount, without duplication, by which the portion of the Aggregate Revolver Outstandings

relating to extensions of credit made to such Borrower exceeds the lesser of

(x) the Borrowing Base of such Borrower and (y) the Maximum Revolver

Amount minus the portion of the Aggregate Revolver Outstandings relating to

extensions of credit made to the other Borrowers.

 

3.2           Termination

of Facility.  The Borrowers may

terminate this Agreement upon at least ten (10) Business Days’ notice to the

Administrative Agent and the Lenders, upon (a) the payment in full of all

outstanding Revolving Loans, together with accrued interest thereon, and the

cancellation and return of all outstanding Letters of Credit, (b) the

prepayment in full of the Term Loans, together with accrued and unpaid interest

thereon, (c) the payment of the early termination fees set forth below,

(d) the payment in full in cash of all reimbursable expenses and other

Obligations, and (e) with respect to any LIBOR Rate Revolving Loans

prepaid, payment of the amounts due under Section 4.4, if any.  If this Agreement is 

 

16

 

terminated at any time prior to the Stated Termination Date, whether

pursuant to this Section or pursuant to Section 9.2, the

Borrowers, jointly and severally, shall pay to the Administrative Agent, for

the account of the Revolving Lenders, an early termination fee determined in

accordance with the following table:

 

	

  Period during which early termination occurs

  	

   

  	

  Early

  Termination Fee

  
	

   

  	

   

  	

   

  
	

  On

  or prior to the first Anniversary Date

  	

   

  	

  3.00%

  of the Maximum Revolver Amount

  
	

   

  	

   

  	

   

  
	

  After

  the first Anniversary Date but on or prior to the second Anniversary Date

  	

   

  	

  1.00%

  of the Maximum Revolver Amount

  
	

   

  	

   

  	

   

  
	

  After

  the second Anniversary Date but prior to the Stated Termination Date

  	

   

  	

  0.00%

  of the Maximum Revolver Amount

  

 

Notwithstanding

the foregoing, if this Agreement is terminated on or prior to the Stated

Termination Date and the Borrowers refinance the Obligations (other than the

Term Loans) outstanding under this Agreement immediately prior to such

termination with a credit facility agented or provided by the Bank or another

Revolving Lender, the Borrowers shall not be required to pay an early

termination fee under this Section 3.2 to those Revolving Lenders

that are lenders under such new credit facility and the amount of the early termination

fee otherwise payable under this Section 3.2 shall be reduced by the Pro

Rata Share of such Revolving Lenders.

 

3.3           Repayment

of the Term Loans.  The

Borrowers agree, jointly and severally, to repay the principal of the Term

Loans to the Administrative Agent, for the account of the Term Lenders, in

aggregate quarterly installments of $333,000 on the first Business Day of each

October, January, April and July of each calendar year, commencing on October

1, 2002, and to repay the aggregate outstanding principal balance of the Term

Loans on the Termination Date; provided, however, that unless

(i) the aggregate Availability of all the Borrowers in effect on the date

any payment of principal of the Term Loans is made and after giving effect to

such payment shall be equal to or greater than $5,000,000 and (ii) there

shall exist no Default or Event of Default either immediately prior to or after

giving effect to such payment, such payment shall not be made or required to be

made hereunder.  Notwithstanding

anything in this Agreement, unless and until the Revolving Credit Commitments

have been terminated and all Obligations owing to the Revolving Lenders have

been paid in full, the Borrowers shall not make any payments or prepayments on

account of interest or principal of the Term Loans (and the Term Lenders agree

that they shall not accept any such payments) other than as expressly permitted

under Section 2.1(b)(iii) and the first sentence of this Section

3.3.  If the aggregate outstanding

balance of the Term Loans is prepaid pursuant to Section 3.2, the

Borrowers shall at the time of such prepayment pay to the Administrative Agent,

for the account of the Term Lenders, a prepayment fee determined in accordance

with the following table (provided, that unless the Majority Revolving

Lenders consent in writing to such prepayment, such prepayment fee shall not be

paid until all Revolving Credit Commitments have been terminated and all

Obligations owing to the Revolving Lenders have been paid in full):

 

17

 

	

  Period during which prepayment occurs

  	

   

  	

  Prepayment

  Fee

  
	

   

  	

   

  	

   

  
	

  On

  or prior to the date that is eighteen (18) months after the Closing Date

  	

   

  	

  1.50%

  of the amount prepaid

  
	

   

  	

   

  	

   

  
	

  After

  the date that is eighteen (18) months after the Closing Date but on or prior

  to the Stated Termination Date

  	

   

  	

  0.00%

  of the amount prepaid

  

 

3.4           Mandatory Prepayment of the Loans.

 

(a)           Immediately

upon receipt by the Parent or any of its Domestic Subsidiaries of cash proceeds

of any asset disposition (excluding proceeds of asset dispositions permitted by

Section 7.11, except to the extent required under such Section 7.11)

or any sale of stock or other equity interests of the Parent or of any

Subsidiary of the Parent, the Borrowers shall prepay the Loans and other

Obligations in an amount equal to all such proceeds, net of

(A) commissions and other reasonable and customary transaction costs, fees

and expenses properly attributable to such transaction and payable by the

Parent or the applicable Subsidiary in connection therewith (in each case, paid

to non–Affiliates), (B) transfer taxes, (C) amounts payable to

holders of senior Liens (to the extent such Liens constitute Permitted Liens

hereunder), if any, and (D) an appropriate reserve for income taxes in

accordance with GAAP in connection therewith (“Net Proceeds”).  Any such prepayment shall be applied in

accordance with Section 3.8; provided, that if any sale

requiring such a prepayment shall be made by a Borrower, the Net Proceeds of

such sale shall be applied, as to Obligations referred to in each of clauses first

through and including seventh in the second sentence of Section 3.8,

first (as to each such relevant clause) to the Obligations referred to in such

clause owing by such Borrower until paid in full, then (as to each such

relevant clause) to the Obligations referred to in such clause owing by any

Subsidiary of such Borrower which is also a Borrower until paid in full and

then (as to each such relevant clause) to the Obligations referred to in such

clause owing by one or more of the other Borrowers and provided, further,

that if any sale requiring such a prepayment shall be made by a Subsidiary of

the Parent which is not a Borrower, the Net Proceeds of such sale shall be

applied, as to Obligations referred to in each of clauses first through

and including seventh in the second sentence of Section 3.8,

first (as to each such relevant clause) to the Obligations referred to in such

clause owing by those Borrowers which are direct or indirect parents of such

Subsidiary (as among such Borrowers in the order of the most immediate direct

or indirect relationship of such Borrower to such Subsidiary) until paid in

full and then (as to each such relevant clause) to the Obligations referred to

in such clause owing by one or more of the other Borrowers.

 

(b)           No

provision contained in this Section 3.4 shall constitute a consent

to an asset disposition that is otherwise not permitted by the terms of this

Agreement.

 

18

 

3.5           LIBOR Rate Revolving Loan Prepayments.  In connection with any prepayment, if any

LIBOR Rate Revolving Loan is prepaid prior to the expiration date of the

Interest Period applicable thereto, the Borrower which borrowed such Revolving

Loan shall pay to the Revolving Lenders the amounts described in Section 4.4.

 

3.6           Payments

by the Borrower.

 

(a)           All

payments to be made by the Borrowers shall be made without set–off,

recoupment or counterclaim.  Except as

otherwise expressly provided herein, all payments by the Borrowers shall be

made to the Administrative Agent for the account of the applicable Lenders, at

the account designated by the Administrative Agent and shall be made in Dollars

and in immediately available funds, no later than 12:00 noon (New York time) on

the date specified herein.  Any payment

received by the Administrative Agent after such time shall be deemed (for

purposes of calculating interest only) to have been received on the following

Business Day and any applicable interest shall continue to accrue.

 

(b)           Subject

to the provisions set forth in the definition of “Interest Period”, whenever

any payment is due on a day other than a Business Day, such payment shall be

due on the following Business Day, and such extension of time shall in such

case be included in the computation of interest or fees, as the case may be.

 

3.7           Payments

as Revolving Loans.  At the

election of the Administrative Agent, all payments of principal, interest,

reimbursement obligations in connection with Letters of Credit and Credit

Support for Letters of Credit, fees, premiums, reimbursable expenses and other

sums payable hereunder, may be paid from the proceeds of Revolving Loans made

hereunder.  Each Borrower hereby irrevocably

authorizes the Administrative Agent to charge the Loan Account of such Borrower

for the purpose of paying all amounts from time to time due by such Borrower

hereunder and agrees that all such amounts charged shall constitute Revolving

Loans (including Non–Ratable Loans and Agent Advances).  Any such charge made by the Administrative

Agent to such Borrower’s Loan Account shall be reflected in the applicable

monthly statement of such Borrower’s Loan Account delivered by the

Administrative Agent pursuant to Section 3.10 and the Administrative

Agent shall use reasonable efforts to give such Borrower prior or concurrent

notice of any such charge made in respect of reimbursable expenses; provided,

however, that the failure on the part of the Administrative Agent to

give such notice (or any delay in giving such notice) to such Borrower shall

not affect the Administrative Agent’s right to make such charge.

 

3.8           Apportionment, Application and

Reversal of Payments.  Principal

and interest payments shall be apportioned ratably among the applicable Lenders

(according to the unpaid principal balance of the Loans to which such payments

relate held by each applicable Lender) and payments of the fees shall, as

applicable, be apportioned ratably among the applicable Lenders, except for

fees payable solely to the Administrative Agent and the Letter of Credit Issuer

and except as provided in Section 11.1(b).  All payments shall be remitted to the

Administrative Agent (except as expressly provided herein otherwise) and all

such payments not relating to principal or interest of specific Loans, or not

constituting payment of specific fees or expenses, and all proceeds of Accounts

or other Collateral received by the Administrative Agent, shall be applied,

ratably, subject to the provisions of this Agreement, first, to 

 

19

 

pay any fees, indemnities or expense reimbursements then due to the

Administrative Agent, second, to pay any fees or expense reimbursements

then due to the Revolving Lenders from any of the Borrowers; third, to

pay interest due in respect of all Revolving Loans, including Non–Ratable

Loans and Agent Advances; fourth, to pay or prepay principal of the Non–Ratable

Loans and Agent Advances; fifth, to pay or prepay principal of the

Revolving Loans (other than Non–Ratable Loans and Agent Advances) and

unpaid reimbursement obligations in respect of Letters of Credit; sixth,

to pay an amount to the Administrative Agent equal to all outstanding Letter of

Credit Obligations to be held as cash collateral for such Obligations; seventh,

to the payment of any other Obligation (other than the Term Loans, interest

thereon, the Term Closing Fee, the Term Facility Fee or fees, indemnities or

expense reimbursements relating to Bank Products); eighth, to pay any

fees, indemnities or expense reimbursements then due to the Bank or any

Affiliate of the Bank from any of the Borrowers relating to Bank Products; and ninth,

after the Revolving Credit Commitments have been terminated and all Obligations

owing to the Revolving Lenders have been paid in full, to pay or prepay

principal of and interest owing on the Term Loans and any other Obligations

owing to the Term Lenders. 

Notwithstanding anything to the contrary contained in this Agreement,

unless so directed by the applicable Borrower, or unless an Event of Default

has occurred and is continuing, neither the Administrative Agent nor any

Revolving Lender shall apply any payments which it receives to any LIBOR Rate

Revolving Loan, except (a) on the expiration date of the Interest Period

applicable to any such LIBOR Rate Revolving Loan, or (b) in the event, and

only to the extent, that there are no outstanding Base Rate Revolving Loans

owing by the applicable Borrower and, in any event, the Borrowers shall pay

LIBOR breakage losses in accordance with Section 4.4.  The Administrative Agent and the Revolving

Lenders shall have the continuing and exclusive right to apply and reverse and

reapply any and all such proceeds and payments to any portion of the

Obligations.

 

3.9           Indemnity

for Returned Payments.  If after

receipt of any payment which is applied to the payment of all or any part of

the Obligations, the Administrative Agent, any Lender, the Bank or any

Affiliate of the Bank is for any reason compelled to surrender such payment or

proceeds to any Person because such payment or application of proceeds is

invalidated, declared fraudulent, set aside, determined to be void or voidable

as a preference, impermissible setoff, or a diversion of trust funds, or for

any other reason, then the Obligations or part thereof intended to be satisfied

shall be revived and continued and this Agreement shall continue in full force

as if such payment or proceeds had not been received by the Administrative

Agent, such Lender, the Bank or such Affiliate of the Bank, as the case may be,

and the applicable Borrower or Borrowers shall be liable to pay to the

Administrative Agent, the Lenders, the Bank and any Affiliate of the Bank, and

hereby does indemnify the Administrative Agent, the Lenders, the Bank and any

Affiliate of the Bank and hold the Administrative Agent, the Lenders, the Bank

and any Affiliate of the Bank harmless for the amount of such payment or

proceeds surrendered.  The provisions of

this Section 3.9 shall be and remain effective notwithstanding any

contrary action which may have been taken by the Administrative Agent, any

Lender, the Bank or any Affiliate of the Bank in reliance upon such payment or

application of proceeds, and any such contrary action so taken shall be without

prejudice to the Administrative Agent’s, the Lenders’, the Bank’s and its

Affiliates’ rights under this Agreement and shall be deemed to have been

conditioned upon such payment or application of proceeds having become final

and irrevocable.  The provisions of this

Section 3.9 shall survive the termination of this Agreement.

 

20

 

3.10         Administrative Agent’s and Lenders’

Books and Records; Monthly Statements. 

The Administrative Agent shall record the principal amount of the Loans

owing to each Lender, the undrawn face amount of all outstanding Letters of

Credit and the aggregate amount of unpaid reimbursement obligations outstanding

with respect to the Letters of Credit from time to time on its books.  In addition, each Lender may note the date

and amount of each payment or prepayment of principal of such Lender’s Loans in

its books and records.  Failure by the

Administrative Agent or any Lender to make such notation shall not affect the

obligations of the Borrowers with respect to the Loans or the Letters of

Credit.  Each Borrower agrees that the

Administrative Agent’s and each Lender’s books and records showing the

Obligations and the transactions pursuant to this Agreement and the other Loan

Documents shall be admissible in any action or proceeding arising therefrom,

and shall constitute rebuttably presumptive proof thereof, irrespective of

whether any Obligation is also evidenced by a promissory note or other

instrument.  The Administrative Agent

will provide to the Borrowers a monthly statement of Loans, payments and other

transactions pursuant to this Agreement. 

Such statement shall be deemed correct, accurate, and binding on the

Borrowers and an account stated (except for reversals and reapplications of

payments made as provided in Section 3.8 and corrections of errors

discovered by the Administrative Agent), unless the Borrowers notify the

Administrative Agent in writing to the contrary within thirty (30) days after

such statement is rendered.  In the event

a timely written notice of objections is given by a Borrower, only the items to

which exception is expressly made will be considered to be disputed by such

Borrower.  Each Term Lender agrees to

provide the Administrative Agent with such information as to the Term Loans and

other Obligations owing to such Term Lender as the Administrative Agent may

reasonably request in order for the Administrative Agent to properly and

accurately perform its duties under this Section 3.10.

 

ARTICLE  4

TAXES, YIELD PROTECTION AND ILLEGALITY

 

4.1           Taxes.

 

(a)           Any

and all payments by the Borrowers to each Lender or the Administrative Agent

under this Agreement and any other Loan Document shall be made free and clear

of, and without deduction or withholding for any Taxes.  In addition, the Borrowers shall pay all

Other Taxes.

 

(b)           The

Borrowers agree, jointly and severally, to indemnify and hold harmless each

Lender and the Administrative Agent for the full amount of Taxes or Other Taxes

(including any Taxes or Other Taxes imposed by any jurisdiction on amounts

payable under this Section) paid by any Lender or the Administrative Agent and

any liability (including penalties, interest, additions to tax and expenses)

arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes

were correctly or legally asserted. Payment under this indemnification shall be

made within 30 days after the date such Lender or the Administrative Agent

makes written demand therefor.

 

(c)           Subject

to Section 12.10 hereof, if a Borrower shall be required by law to

deduct or withhold any Taxes or Other Taxes from or in respect of any sum

payable hereunder to any Lender or the Administrative Agent, then:

 

21

 

(i)            the sum payable shall be increased

as necessary so that after making all required deductions and withholdings

(including deductions and withholdings applicable to additional sums payable

under this Section) such Lender or the Administrative Agent, as the case may

be, receives an amount equal to the sum it would have received had no such

deductions or withholdings been made;

 

(ii)           such Borrower shall make such

deductions and withholdings;

 

(iii)          such Borrower shall pay the full

amount deducted or withheld to the relevant taxing authority or other authority

in accordance with applicable law; and

 

(iv)          such Borrower shall also pay to each

Lender or the Administrative Agent for the account of such Lender, at the time

interest is paid, all additional amounts which the respective Lender specifies

as necessary to preserve the after–tax yield such Lender would have

received if such Taxes or Other Taxes had not been imposed.

 

(d)           At

the Administrative Agent’s request, within 30 days after the date of any

payment by a Borrower of Taxes or Other Taxes, such Borrower shall furnish the

Administrative Agent the original or a certified copy of a receipt evidencing

payment thereof, or other evidence of payment satisfactory to the

Administrative Agent.

 

(e)           If

a Borrower is required to pay additional amounts to any Lender or the

Administrative Agent pursuant to subsection (c) of this

Section or Section 4.3 below, then such Lender shall use reasonable

efforts (consistent with legal and regulatory restrictions) to change the

jurisdiction of its lending office so as to eliminate any such additional

payment by such Borrower which may thereafter accrue, if such change in the

judgment of such Lender is not otherwise disadvantageous to such Lender.

 

4.2           Illegality.

 

(a)           If

any Revolving Lender determines that the introduction of any Requirement of

Law, or any change in any Requirement of Law, or in the interpretation or

administration of any Requirement of Law, has made it unlawful, or that any

central bank or other Governmental Authority has asserted that it is unlawful,

for any Revolving Lender or its applicable lending office to make LIBOR Rate

Revolving Loans, then, on notice thereof by that Revolving Lender to the

Borrowers (or the Parent on behalf of the Borrowers) through the Administrative

Agent, any obligation of that Revolving Lender to make LIBOR Rate Revolving

Loans shall be suspended until that Revolving Lender notifies the

Administrative Agent and the Borrowers (or the Parent on behalf of the

Borrowers) that the circumstances giving rise to such determination no longer

exist.

 

(b)           If

a Revolving Lender determines that it is unlawful to maintain any LIBOR Rate

Revolving Loan, each Borrower shall, upon its receipt (or the Parent’s receipt

on behalf of such Borrower) of notice of such fact and demand from such

Revolving Lender (with a copy to the Administrative Agent), prepay in full such

LIBOR Rate Revolving Loans of that Revolving Lender owing by such Borrower then

 

22

 

outstanding, together with interest accrued thereon and amounts

required under Section 4.4, either on the last day of the Interest

Period thereof, if that Revolving Lender may lawfully continue to maintain such

LIBOR Rate Revolving Loans to such day, or immediately, if that Revolving

Lender may not lawfully continue to maintain such LIBOR Rate Revolving

Loans.  If a Borrower is required to so

prepay any LIBOR Rate Revolving Loans, then concurrently with such prepayment,

such Borrower shall borrow from the affected Revolving Lender, in the amount of

such repayment, a Base Rate Revolving Loan.

 

4.3           Increased Costs and Reduction of

Return.

 

(a)           If

any Revolving Lender determines that due to either (i) the introduction of

or any change in the interpretation of any law or regulation or (ii) the

compliance by that Revolving Lender with any guideline or request from any

central bank or other Governmental Authority (whether or not having the force

of law), there shall be any increase in the cost to such Revolving Lender of

agreeing to make or making, funding or maintaining any LIBOR Rate Revolving

Loans, then the applicable Borrower shall be liable for, and shall from time to

time, upon demand (with a copy of such demand to be sent to the Administrative

Agent), pay to the Administrative Agent for the account of such Revolving

Lender, additional amounts as are sufficient to compensate such Revolving

Lender for such increased costs.

 

(b)           If

any Lender shall have determined that (i) the introduction of any Capital

Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,

(iii) any change in the interpretation or administration of any Capital

Adequacy Regulation by any central bank or other Governmental Authority charged

with the interpretation or administration thereof, or (iv) compliance by

such Lender or any corporation or other entity controlling such Lender with any

Capital Adequacy Regulation, affects or would affect the amount of capital

required or expected to be maintained by such Lender or any corporation or

other entity controlling such Lender and (taking into consideration such

Lender’s or such corporation’s or other entity’s policies with respect to

capital adequacy and such Lender’s desired return on capital) determines that

the amount of such capital is increased as a consequence of its Commitments,

loans, credits or obligations under this Agreement, then, upon demand of such

Lender to the Borrowers (or the Parent on behalf of the Borrowers) through the

Administrative Agent, the Borrowers shall, jointly and severally, pay to such

Lender, from time to time as specified by such Lender, additional amounts

sufficient to compensate such Lender for such increase.

 

4.4           Funding

Losses.  Each Borrower shall

reimburse each Revolving Lender and hold each Revolving Lender harmless from

any loss or expense which such Revolving Lender may sustain or incur as a

consequence of:

 

(a)           the failure of such Borrower to make

on a timely basis any payment of principal of any LIBOR Rate Revolving Loan

made to such Borrower;

 

(b)           the failure of such Borrower to

borrow, continue or convert a Revolving Loan requested by or made to such

Borrower after such Borrower has given (or is deemed to have given) a Notice of

Borrowing or a Notice of Continuation/Conversion; or

 

23

 

(c)           the prepayment (other than a

mandatory prepayment made by such Borrower pursuant to Section 3.4(a)

for which (i) such Borrower has not directed the Administrative Agent or

the Revolving Lenders to apply such prepayment to one or more LIBOR Rate

Revolving Loans made to such Borrower or (ii) at the time of such

prepayment or thereafter there is continuing an Event of Default) or other

payment (including after acceleration thereof) of any LIBOR Rate Revolving

Loans made to such Borrower on a day that is not the last day of the relevant

Interest Period;

 

including

any such loss of anticipated profit and any loss or expense arising from the

liquidation or reemployment of funds obtained by it to maintain its LIBOR Rate

Revolving Loans requested by or made to such Borrower or from fees payable to

terminate the deposits from which such funds were obtained.  Each Borrower shall also pay any customary

administrative fees charged by any Revolving Lender in connection with the

foregoing.

 

4.5           Inability

to Determine Rates.  If the

Administrative Agent determines that for any reason adequate and reasonable

means do not exist for determining the LIBOR Rate for any requested Interest

Period with respect to a proposed LIBOR Rate Revolving Loan, or that the LIBOR

Rate for any requested Interest Period with respect to a proposed LIBOR Rate

Revolving Loan does not adequately and fairly reflect the cost to the Revolving

Lenders of funding such Loan, the Administrative Agent will promptly so notify

the Borrowers and each Revolving Lender. 

Thereafter, the obligation of the Revolving Lenders to make or maintain

LIBOR Rate Revolving Loans hereunder shall be suspended until the

Administrative Agent revokes such notice in writing.  Upon receipt of such notice, a Borrower may revoke any Notice of

Borrowing or Notice of Continuation/Conversion then submitted by it.  If such Borrower does not revoke such

Notice, the Revolving Lenders shall make, convert or continue the Revolving

Loans, as proposed by such Borrower, in the amount specified in the applicable

notice submitted by such Borrower, but such Revolving Loans shall be made,

converted or continued as Base Rate Revolving Loans instead of LIBOR Rate

Revolving Loans.

 

4.6           Certificates

of Agent.  If any Lender claims

reimbursement or compensation under this Article 4, the Administrative

Agent shall determine the amount thereof and shall deliver to the applicable

Borrowers (with a copy to the affected Lender) a certificate setting forth in

reasonable detail the amount payable to the affected Lender, and such

certificate shall be conclusive and binding on the Borrowers in the absence of

manifest error.

 

4.7           Replacement of a Revolving Lender.  In the event that any Revolving Lender other

than the Bank (x) incurs any increased costs pursuant to Section 4.3

(other than increased costs to the extent such increased costs are not a

recurring cost) or (y) becomes subject to any Taxes or Other Taxes

pursuant to Section 4.1(c), in either instance, for which such

Revolving Lender demands reimbursement or compensation pursuant to Section 4.6

that increases the effective lending rate of such Revolving Lender with respect

to its share of the Revolving Loans to greater than 25 basis points in excess

of the effective lending rate of the other Revolving Lenders and such Revolving

Lender has not mitigated such costs or amounts within 60 days after receipt by

such Revolving Lender from the Borrowers of a written notice that such

Revolving Lender’s effective lending rate has so exceeded the effective lending

rate of the other 

 

24

 

Revolving Lenders, then and in any such event so long as no Event of

Default shall have occurred and be continuing, the Borrowers may in accordance

with Section 11.2 substitute another financial institution for such

Revolving Lender which is an Eligible Assignee and reasonably acceptable to the

Administrative Agent to assume the Revolving Credit Commitment of such

Revolving Lender and to purchase the Revolving Loans of such Revolving Lender

hereunder, without recourse to or warranty by, or expense to, such Revolving

Lender for a purchase price equal to the outstanding principal amount of the

Revolving Loans owing to such Revolving Lender plus any accrued but unpaid

interest on such Revolving Loans and accrued but unpaid fees and other amounts

(including, without limitation, all reimbursement and compensation due to such

Lender pursuant to Section 4.6) in respect of that Revolving

Lender’s Revolving Credit Commitment and share of the Revolving Loans or

otherwise owing to such Revolving Lender hereunder.  Upon such purchase such Revolving Lender shall no longer be a

party hereto or have any rights or benefits hereunder (except for rights or

benefits that such Revolving Lender would retain hereunder and under the other

Loan Documents upon payment in full of all of the Obligations) and the

replacement Revolving Lender shall succeed to the rights and benefits, and

shall assume the obligations, of such Revolving Lender hereunder and

thereunder.  The Administrative Agent

and the Lenders shall cooperate with the Borrowers to amend the Loan Documents

to reflect such substitution.  In no

event may the Borrowers replace a Revolving Lender which is also an issuer of a

Letter of Credit or Credit Support or whose Affiliate has issued a Letter of

Credit or Credit Support unless (x) all Letters of Credit and Credit

Support issued by such Revolving Lender and its Affiliates have expired or have

been terminated or canceled and such Revolving Lender and/or Affiliate, as the

case may be, shall have been reimbursed for all payments made by it under the

Letters of Credit and Credit Support issued by it or (y) such Revolving

Lender and/or Affiliate, as the case may be, shall have been indemnified in a

manner satisfactory to it for any outstanding Letters of Credit and Credit

Support issued by it and other obligations, absolute or contingent, with

respect to Letters of Credit and Credit Support issued by it.

 

4.8           Survival.  The agreements and obligations of the

Borrowers in this Article 4 shall survive the payment of all other

Obligations.

 

ARTICLE 5

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

 

5.1           Books and

Records.  Each Borrower shall

maintain, at all times, correct and complete books, records and accounts in

which complete, correct and timely entries are made of its transactions in

accordance with GAAP applied consistently with the audited Financial Statements

required to be delivered pursuant to Section 5.2(a).  Each Borrower shall, by means of appropriate

entries, reflect in such accounts and in all Financial Statements proper

liabilities and reserves for all taxes and proper provision for depreciation

and amortization of property and bad debts, all in accordance with GAAP.  Each Borrower shall maintain at all times books

and records pertaining to the Collateral in which it has an interest in such

detail, form and scope as the Administrative Agent or any Lender shall

reasonably require, including, but not limited to, records of (a) all

payments received and all credits and extensions granted with respect to

Accounts; (b) the return, rejection, repossession, stoppage in transit,

loss, damage, or destruction of any Inventory; and (c) all other dealings

affecting the Collateral in which it has an interest.

 

25

 

5.2           Financial

Information.  Each Borrower

shall promptly furnish to each Lender, all such financial information as the

Administrative Agent shall reasonably request. 

Without limiting the foregoing, the Parent will furnish (or cause to be

furnished) to the Administrative Agent, in sufficient copies for distribution

by the Administrative Agent to each Lender, in such detail as the

Administrative Agent or the Lenders shall request, the following:

 

(a)           As soon as available, but in any

event not later than ninety (90) days after the close of each Fiscal Year,

consolidated audited and consolidating unaudited balance sheets, and income

statements, cash flow statements and changes in stockholders’ equity for the

Parent and its Subsidiaries for such Fiscal Year (it being understood that such

consolidating financial statements shall calculate each of Asia and Europe as a

whole) and the accompanying notes thereto, setting forth in each case in

comparative form figures for the previous Fiscal Year, all in reasonable

detail, fairly presenting the financial position and the results of operations

of the Parent and its consolidated Subsidiaries as at the date thereof and for

the Fiscal Year then ended, and prepared in accordance with GAAP.  Such statements shall be examined in

accordance with generally accepted auditing standards by and, in the case of

such statements performed on a consolidated basis, accompanied by a report

thereon unqualified in any respect of independent certified public accountants

selected by the Parent and reasonably satisfactory to the Administrative

Agent.  Each Borrower hereby authorizes

the Administrative Agent to communicate directly with its certified public

accountants and, by this provision, authorizes those accountants to disclose to

the Administrative Agent any and all financial statements and other supporting

financial documents and schedules relating to such Borrower and to discuss

directly with the Administrative Agent the finances and affairs of such Borrower;

provided, however, that (i) the Administrative Agent shall

notify the Parent on behalf of such Borrower of the Administrative Agent’s

intention to discuss with such Borrower’s certified public accountants the

finances and affairs of such Borrower and (ii) an officer of such Borrower

shall have the right to be present during any such discussion between its

certified public accountants and the Administrative Agent.

 

(b)           As soon as available, but in any

event not later than forty-five (45) days after the end of each of the first

three quarterly periods of each Fiscal Year, consolidated and consolidating

unaudited balance sheets of the Parent and its consolidated Subsidiaries as at

the end of such quarter (it being understood that such consolidating financial

statements shall calculate each of Asia and Europe as a whole) and consolidated

and consolidating unaudited income statements and cash flow statements for the

Parent and its consolidated Subsidiaries for such quarter and for the period

from the beginning of the Fiscal Year to the end of such quarter, all in

reasonable detail, fairly presenting the financial position and results of

operations of the Parent and its consolidated Subsidiaries as at the date

thereof and for such periods, and, in each case, in comparable form, figures

for the corresponding period in the prior Fiscal Year and, upon the reasonable

request of the Administrative Agent, in the Borrowers’ budget, and prepared in

accordance with GAAP applied consistently with the audited Financial Statements

required to be delivered pursuant to Section 5.2(a).  The Parent shall certify by a certificate

signed by its chief financial officer, chief accounting officer or treasurer

that all such statements have been prepared in accordance with GAAP and present

fairly the Parent’s and each of its Subsidiaries’ financial position as at the

dates 

 

26

 

thereof and its results of operations for the periods then ended,

subject to normal year-end adjustments.

 

(c)           As soon as available, but in any

event not later than thirty (30) days after the end of each calendar month,

consolidated unaudited balance sheets of the Parent and its consolidated

Subsidiaries as at the end of such calendar month, and consolidated unaudited

income statements and cash flow statements for the Parent and its consolidated

Subsidiaries for such calendar month and for the period from the beginning of

the Fiscal Year to the end of such calendar month, all in reasonable detail,

fairly presenting the financial position and results of operations of the

Parent and its consolidated Subsidiaries as at the date thereof and for such

periods, and, in each case, in comparable form, figures for the corresponding

period in the prior Fiscal Year and, upon the reasonable request of the

Administrative Agent, in the Borrowers’ budget, and prepared in accordance with

GAAP applied consistently with the audited Financial Statements required to be

delivered pursuant to Section 5.2(a). 

The Parent shall certify by a certificate signed by its chief financial

officer, chief accounting officer or treasurer that all such statements have

been prepared in accordance with GAAP and present fairly the Parent’s and each

of its Subsidiaries’ financial position as at the dates thereof and its results

of operations for the periods then ended, subject to normal year–end

adjustments.

 

(d)           With each of the audited Financial

Statements delivered pursuant to Section 5.2(a), a certificate of

the independent certified public accountants that examined such statement to

the effect that they have reviewed and are familiar with this Agreement and

that, in examining such Financial Statements, they did not become aware of any

fact or condition which then constituted a Default or Event of Default with

respect to a financial covenant, except for those, if any, described in

reasonable detail in such certificate.

 

(e)           With each of the annual audited

Financial Statements delivered pursuant to Section 5.2(a), and

within forty-five (45) days after the end of each fiscal quarter of the

Parent, a certificate of the chief financial officer, chief accounting officer

or treasurer of the Parent setting forth in reasonable detail the calculations

required to establish that the Borrowers were in compliance with the covenants

set forth in Sections 7.25, 7.26 and 7.30.  Within thirty (30) days after the end

of each month, a certificate of the chief financial officer or treasurer of the

Parent (A) stating that, except as explained in reasonable detail in such

certificate, all of the representations and warranties of each Borrower

contained in this Agreement and the other Loan Documents are correct and

complete in all material respects as at the date of such certificate as if made

at such time, except for those that speak as of a particular date,

(B) stating that, except as explained in reasonable detail in such

certificate, each Borrower is, at the date of such certificate, in compliance

in all material respects with all of its respective covenants and agreements in

this Agreement and the other Loan Documents, (C) stating that, except as

explained in reasonable detail in such certificate, no Default or Event of

Default then exists or existed during the period covered by the Financial

Statements for such month, (D) upon the request of the Administrative

Agent, describing and analyzing in reasonable detail all material trends,

changes, and developments in each and all Financial Statements; and

(E) upon the request of the Administrative Agent, explaining the 

 

27

 

variances of the figures in the corresponding

budgets and prior Fiscal Year financial statements.  If such certificate discloses that a representation or warranty

is not correct or complete, or that a covenant has not been complied with, or

that a Default or Event of Default existed or exists, such certificate shall

set forth what action the Parent or another Borrower has taken or proposes to

take with respect thereto.

 

(f)            No sooner than sixty (60) days

before and not more than thirty (30) days after the beginning of each

Fiscal Year, annual forecasts (to include forecasted consolidated and

consolidating balance sheets, income statements and cash flow statements) for

the Parent and its Subsidiaries as at the end of and for each month of such

Fiscal Year.

 

(g)           Promptly after filing with the PBGC

and the IRS, a copy of each annual report or other filing filed with respect to

each Plan of the Parent or any of its Subsidiaries.

 

(h)           Promptly upon the filing thereof, copies

of all reports, if any, to or other documents filed by the Parent or any of its

Subsidiaries with the Securities and Exchange Commission under the Exchange

Act, and all reports, notices, or statements sent or received by the Parent or

any of its Subsidiaries to or from the holders of any equity interests of the

Parent (other than routine non–material correspondence sent by

shareholders of the Parent to the Parent) or any such Subsidiary or of any Debt

of the Parent or any of its Subsidiaries registered under the Securities Act of

1933 or to or from the trustee under any indenture under which the same is

issued.

 

(i)            As soon as available, but in any

event not later than 15 days after the receipt thereof by the Parent or

any of its Subsidiaries, a copy of all management reports and management

letters prepared for the Parent or any of its Subsidiaries by any independent

certified public accountants of the Parent or any of its Subsidiaries.

 

(j)            Promptly after their preparation,

copies of any and all proxy statements, financial statements, and reports which

the Parent makes available to its shareholders.

 

(k)           If reasonably requested by the

Administrative Agent, promptly after filing with the IRS, a copy of each tax

return filed by the Parent or by any of its Subsidiaries.

 

(l)            Upon request by the Administrative

Agent, and in no event less frequently than once each month and not later than

15 days after the end of each month, a (i) monthly trial balance showing

Accounts of each Borrower outstanding aged from statement date as follows:  1 to 30 days, 31 to 60 days, 61 to 90 days

and 91 days or more, accompanied by such supporting detail and documentation as

shall be requested by the Administrative Agent in its reasonable discretion and

(ii) summary of Inventory of each Borrower by location and type

accompanied by such supporting detail and documentation as shall be requested

by the Administrative Agent in its reasonable discretion (in each case,

together with a copy of all or any part of such delivery requested by any

Revolving Lender in writing after the Closing Date).

 

28

 

(m)          On the date any Borrowing Base

Certificate is delivered pursuant to Section 5.2(n) or at such more

frequent intervals as the Administrative Agent may request from time to time

(together with a copy of all or any part of such delivery requested by any

Revolving Lender in writing after the Closing Date), a collateral report with

respect to each Borrower, including all additions and reductions (cash and

non-cash) with respect to Accounts of such Borrower, accompanied by such

supporting detail and documentation as shall be requested by the Administrative

Agent in its reasonable discretion.

 

(n)           On a weekly basis (not later than the

third Business Day after the last Business Day of the previous week with the

information thereon to be as of last Business Day of such previous week), or

more frequently if requested by the Administrative Agent, a Borrowing Base

Certificate for each Borrower.

 

(o)           (i) At the time of delivery of the

financial statements referred to in Section 5.2(a), an Appraisal of

the Inventory of each Borrower and its Subsidiaries, each such Appraisal to be

conducted by an appraiser acceptable to the Administrative Agent and to be in

form, scope and substance reasonably satisfactory to the Administrative Agent;

(ii) at the time of the delivery of the financial statements referred to

in Section 5.2(b), an update of the Appraisal conducted at the end

of the prior Fiscal Year conducted by the same appraiser that conducted such

Fiscal Year-end Appraisal; (iii) upon the occurrence and during the

continuance of an Event of Default and at the Administrative Agent’s request,

an Appraisal of the Inventory of each Borrower and its Subsidiaries, each such

Appraisal to be conducted by an appraiser acceptable to the Administrative

Agent and to be in form, scope and substance reasonably satisfactory to the

Administrative Agent and (iv)  upon the request of the Majority Term

Lenders, an appraisal of the machinery and equipment of each Borrower and its

Domestic Subsidiaries and, on an annual basis thereafter, an update of such

appraisal, such appraisal and each such update to be conducted by an appraiser

acceptable to the Majority Term Lenders and to be in form, scope and substance

satisfactory to the Majority Term Lenders, all of the foregoing to be at the

expense of the Borrowers.

 

(p)           Promptly upon its receipt or receipt

by the applicable Foreign Subsidiary thereof, a copy of any audited financial

statements prepared for any Foreign Subsidiary.

 

(q)           Such additional information as the

Administrative Agent and/or any Lender may from time to time reasonably request

regarding the financial and business affairs of the Parent or any of its

Subsidiaries.

 

5.3           Notices to the Lenders.  Each Borrower shall notify the

Administrative Agent in writing of the following matters at the following

times:

 

(a)           Promptly (but in any event not more

than 5 days) after becoming aware of any Default or Event of Default;

 

29

 

(b)           Promptly (but in any event not more

than 5 days) after becoming aware of the assertion by the holder of any capital

stock of the Parent or of any Subsidiary thereof or the holder of any Debt of

the Parent or any Subsidiary thereof in a face amount in excess of $100,000

that a default exists with respect thereto or that the Parent or such

Subsidiary is not in compliance with the terms thereof, or the threat or

commencement by such holder of any enforcement action because of such asserted

default or non–compliance;

 

(c)           Promptly (but in any event not more

than 5 days) after becoming aware of any event or circumstance which could have

a Material Adverse Effect;

 

(d)           Promptly (but in any event not more

than 5 days) after becoming aware of any pending or threatened action, suit, or

proceeding, by any Person, or any pending or threatened investigation by a

Governmental Authority, which could reasonably be expected to have a Material

Adverse Effect;

 

(e)           Promptly (but in any event not more

than 5 days) after becoming aware of any pending or threatened strike, work

stoppage, unfair labor practice claim, or other labor dispute affecting the

Parent or any of its Subsidiaries in a manner which could reasonably be

expected to have a Material Adverse Effect;

 

(f)            Promptly (but in any event not more

than 5 days) after becoming aware of any violation of any law, statute,

regulation, or ordinance of a Governmental Authority affecting the Parent or

any of its Subsidiaries which could reasonably be expected to have a Material

Adverse Effect;

 

(g)           Promptly (but in any event not more

than 5 days) after receipt of any notice of any violation by the Parent or any

of its Subsidiaries of any Environmental Law which could reasonably be expected

to have a Material Adverse Effect or that any Governmental Authority has

asserted in writing that the Parent or any Subsidiary thereof is not in

compliance with any Environmental Law or is investigating the Parent or such

Subsidiary’s compliance therewith;

 

(h)           Promptly (but in any event not more

than 5 days) after receipt of any written notice that the Parent or any of its

Subsidiaries is or may be liable to any Person as a result of the Release or

threatened Release of any Contaminant or that the Parent or any Subsidiary

thereof is subject to investigation by any Governmental Authority evaluating

whether any remedial action is needed to respond to the Release or threatened

Release of any Contaminant which, in either case, is reasonably likely to give

rise to liability in excess of $500,000;

 

(i)            Promptly (but in any event not more

than 5 days) after receipt of any written notice of the imposition of any

Environmental Lien against any property of the Parent or any of its

Subsidiaries;

 

30

 

(j)            Any change in a Borrower’s name as

it appears in the state of its incorporation or other organization, state of

incorporation or organization, type of entity, organizational identification

number, locations of Collateral, or form of organization, trade names under

which a Borrower will sell Inventory or create Accounts, or to which

instruments in payment of Accounts may be made payable, in each case at least

thirty (30) days prior thereto;

 

(k)           Within ten (10) Business Days after

any Borrower or any ERISA Affiliate knows or has reason to know, that an ERISA

Event or a prohibited transaction (as defined in Sections 406 of ERISA and

4975 of the Code) has occurred, and, when known, any action taken or threatened

by the IRS, the DOL or the PBGC with respect thereto;

 

(l)            Upon request, or, in the event that

such filing reflects a significant change with respect to the matters covered

thereby, within three (3) Business Days after the filing thereof with the

PBGC, the DOL or the IRS, as applicable, copies of the following:  (i) each annual report (form 5500

series), including Schedule B thereto, filed with the PBGC, the DOL or the

IRS with respect to each Plan, (ii) a copy of each funding waiver request

filed with the PBGC, the DOL or the IRS with respect to any Plan and all

communications received by any Borrower or any ERISA Affiliate from the PBGC,

the DOL or the IRS with respect to such request, and (iii) a copy of each

other filing or notice filed with the PBGC, the DOL or the IRS, with respect to

each Plan by any Borrower or any ERISA Affiliate;

 

(m)          Upon request, copies of each actuarial

report for any Plan or Multi–employer Plan and annual report for any

Multi–employer Plan; and within three (3) Business Days after

receipt thereof by any Borrower or any ERISA Affiliate, copies of the

following:  (i) any notices of the

PBGC’s intention to terminate a Plan or to have a trustee appointed to

administer such Plan; (ii) any favorable or unfavorable determination

letter from the IRS regarding the qualification of a Plan under

Section 401(a) of the Code; or (iii) any notice from a Multi–employer

Plan regarding the imposition of withdrawal liability;

 

(n)           Within three (3) Business Days after

the occurrence thereof:  (i) any

changes in the benefits of any existing Plan which increase the Borrowers’

aggregate annual costs with respect thereto by an amount in excess of $500,000,

or the establishment of any new Plan or the commencement of contributions to

any Plan to which any Borrower or any ERISA Affiliate was not previously

contributing; or (ii) any failure by any Borrower or any ERISA Affiliate

to make a required installment or any other required payment under

Section 412 of the Code on or before the due date for such installment or

payment;

 

(o)           Within three (3) Business Days after

any Borrower or any ERISA Affiliate knows or has reason to know that any of the

following events has or will occur: 

(i) a Multi–employer Plan has been or will be terminated;

(ii) the administrator or plan sponsor of a Multi–employer Plan

intends to terminate a Multi–employer Plan; or (iii) the PBGC has

instituted or will institute proceedings under Section 4042 of ERISA to

terminate a Multi–employer Plan; and

 

31

 

(p)           Promptly (but in any event not more

than 5 days) after becoming aware of any event of the type set forth in Section 6.26(c)

occurring after the Closing Date, notice thereof.

 

Each notice given under this Section shall describe the subject

matter thereof in reasonable detail, and shall set forth the action that the

applicable Borrower, its Subsidiary, or any ERISA Affiliate, as applicable, has

taken or proposes to take with respect thereto.

 

ARTICLE  6

GENERAL WARRANTIES

AND REPRESENTATIONS

Each Borrower warrants

and represents to the Administrative Agent and the Lenders that except as

hereafter disclosed to and accepted by the Administrative Agent and the

Majority Lenders in writing:

 

6.1           Authorization, Validity, and

Enforceability of this Agreement and the Loan Documents.  Such Borrower has the power and authority to

execute, deliver and perform this Agreement and the other Loan Documents to

which it is a party, to incur the Obligations, and to grant to the

Administrative Agent Liens upon and security interests in the Collateral in

which it has an interest.  Such Borrower

has taken all necessary action (including obtaining approval of its

stockholders or other equityholders if necessary) to authorize its execution,

delivery and performance of this Agreement and the other Loan Documents to

which it is a party.  This Agreement and

the other Loan Documents to which it is a party have been duly executed and

delivered by such Borrower, and constitute the legal, valid and binding

obligations of such Borrower, enforceable against it in accordance with their

respective terms.  Such Borrower’s

execution, delivery and performance of this Agreement and the other Loan

Documents to which it is a party do not and will not conflict with, or

constitute a violation or breach of, or result in the imposition of any Lien

upon the property of such Borrower or any of its Subsidiaries, by reason of the

terms of (a) any contract, mortgage, lease, agreement, indenture or

instrument to which such Borrower or any of its Subsidiaries is a party or

which is binding upon it or any of its Subsidiaries, (b) any Requirement

of Law applicable to such Borrower or any of its Subsidiaries, or (c) the

certificate or articles of incorporation or by–laws or the limited

liability company or limited partnership agreement or other organizational

documents of such Borrower or any of its Subsidiaries.

 

6.2           Validity and Priority of Security

Interest.  The provisions of

this Agreement, the Mortgage(s), and the other Loan Documents to which such

Borrower is a party create legal and valid Liens on all the Collateral in which

it has an interest in favor of the Administrative Agent, for the ratable

benefit of the Administrative Agent and the Lenders, and such Liens constitute

perfected and continuing Liens on all such Collateral, having priority over all

other Liens on such Collateral (except (i) for those Liens identified in clauses (c),

(d), (e), (q) and (r) (and clause (j),

solely  to the extent priority is given

as a matter of law) of the definition of Permitted Liens securing all the

Obligations and (ii) subject, in the case of any equity interests held by such

Borrower in any Foreign Subsidiary, to perfection of the Agent’s Lien on such

equity interests under the applicable laws of the relevant jurisdictions

outside of the United States, as provided in Section 7.33) and

enforceable against such Borrower and all third parties.

 

32

 

6.3           Organization and Qualification.  Such Borrower (a) is duly organized or

incorporated and validly existing in good standing under the laws of the state

of its organization or incorporation, (b) is qualified to do business and

is in good standing in the jurisdictions set forth on Schedule 6.3

which are the only jurisdictions in which qualification is necessary in order

for it to own or lease its property and conduct its business, except where the

failure to be so qualified has not and could not reasonably be expected to

result in a Material Adverse Effect and (c) has all requisite power and

authority to conduct its business and to own its property.

 

6.4           Corporate Name; Prior Transactions.  Except as otherwise disclosed on Schedule 6.4,

such Borrower has not, during the past five (5) years, been known by or

used any other corporate or fictitious name, or been a party to any merger or

consolidation, or acquired all or substantially all of the assets of any

Person, or acquired any of its property outside of the ordinary course of

business.

 

6.5           Subsidiaries and Affiliates.  Schedule 6.5 is a correct and

complete list of the name and relationship to such Borrower of each and all of

such Borrower’s Subsidiaries and other Affiliates.  Each Subsidiary of such Borrower is (a) duly incorporated or

organized and validly existing in good standing under the laws of its state of

incorporation or organization set forth on Schedule 6.5, and

(b) qualified to do business and in good standing in each jurisdiction in

which the failure to so qualify or be in good standing could reasonably be

expected to have a material adverse effect on any such Subsidiary’s business,

operations, prospects, property, or condition (financial or otherwise) and

(c) has all requisite power and authority to conduct its business and own

its property.

 

6.6           Financial Statements and Projections.

 

(a)           The Borrowers have delivered to the

Administrative Agent and the Lenders the audited balance sheet and related

statements of income, retained earnings, cash flows, and changes in

stockholders equity for the Parent and its consolidated Subsidiaries as of

December 31, 2001, and for the Fiscal Year then ended, accompanied by the

report thereon of the Borrowers’ independent certified public accountants,

PriceWaterhouseCoopers.  The Borrowers have

also delivered to the Administrative Agent and the Lenders the unaudited

balance sheet and related statements of income and cash flows for the Parent

and its consolidated Subsidiaries as of March 31, 2002.  Such financial statements are attached

hereto as Exhibit C.  All

such financial statements have been prepared in accordance with GAAP (subject

to normal year-end adjustments in the case of the unaudited financial

statements) and present accurately and fairly in all material respects the

financial position of the Parent and its consolidated Subsidiaries as at the

dates thereof and their results of operations for the periods then ended.

 

(b)           The Latest Projections when submitted

to the Lenders as required herein represent the Borrowers’ best estimate of the

future financial performance of the Parent and its consolidated Subsidiaries

for the periods set forth therein and have been prepared on the basis of the

assumptions set forth therein, which such Borrower believes are fair and

reasonable in light of current and reasonably foreseeable business conditions

at the time submitted to the Lenders (it being understood that forecasts and

forward looking statements are subject to significant uncertainties and

contingencies, many of which are 

 

33

 

beyond the Borrowers’

control and that no guarantee can be given that the Latest Projections will be

realized).

 

(c)           The pro forma balance sheet of the

Borrowers as at April 30, 2002 attached hereto as Exhibit C,

presents fairly and accurately the Borrowers’ financial condition as at such

date after giving effect to the (i) equity issuance by the Parent pursuant

to the Equity Agreements, (ii) Loans to be made on the Closing Date and

the use of proceeds thereof and (iii) payment of fees and expenses in

connection with the foregoing as if they had occurred on such date and the

Closing Date had been such date, and has been prepared in accordance with GAAP.

 

6.7           Capitalization. 

The authorized capital stock of the Parent consists of

(i) 150,000,000 shares of common stock, par value $0.001 per share,

of which 32,446,112 shares are validly issued and outstanding, fully paid and

non–assessable and (ii) 5,000,000 shares of preferred stock,

par value $0.001 per share, of which 830,000 shares (all 5.25% Series

A Convertible Preferred Stock) are validly issued and outstanding, fully paid

and non-assessable.

 

6.8           Solvency.  Each

of the Parent and its consolidated Subsidiaries are Solvent prior to and after

giving effect to the Borrowings to be made on the Closing Date and the issuance

of any Letters of Credit to be issued on the Closing Date, and shall remain

Solvent during the term of this Agreement; provided, that for purposes

of this Section 6.8, the Debt of Manufacturers’ Services Singapore

Pte Ltd. to the Parent in the aggregate principal amount of $48,000,000 (which

amount includes certain Debt of MSL Overseas Finance B.V. to the Parent)

outstanding on the Closing Date shall be excluded in the calculation of the

solvency of Manufacturers’ Services Singapore Pte Ltd.

 

6.9           Debt.  After giving

effect to the making of the Term Loans and the Revolving Loans to be made on

the Closing Date, such Borrower and its Subsidiaries will have no Debt, except

(a) the Obligations, and (b) Debt described on Schedule 6.9.

 

6.10         Distributions. 

Since December 31, 2001, no Distribution has been declared, paid,

or made upon or in respect of any capital stock or other securities of the

Parent or any of its Subsidiaries.

 

6.11         Real Estate; Leases.  Schedule 6.11 sets forth, as of the Closing Date, a

correct and complete list of all Real Estate owned by such Borrower and all

Real Estate owned by any of its Domestic Subsidiaries, all leases and subleases

of real or personal property held by such Borrower or any of its Domestic

Subsidiaries as lessee or sublessee (other than leases of personal property as

to which such Borrower or Domestic Subsidiary is lessee or sublessee for which

the value of such personal property in the aggregate is less than $500,000),

and all leases and subleases of real or personal property held by such Borrower

or any of its Domestic Subsidiaries as lessor, or sublessor.  Each of such leases and subleases is valid

and enforceable in accordance with its terms and is in full force and effect,

and no default by any party to any such lease or sublease exists.  Such Borrower and its Domestic Subsidiaries

has good and marketable title in fee simple to the Real Estate identified on Schedule 6.11

as owned by such Borrower or such Subsidiary, as the case may be, or valid

leasehold interests in all Real Estate designated therein as “leased” by such

Borrower or such Subsidiary, as the case may be, and such Borrower or such

Subsidiary, 

 

34

 

as the case may be, has

good, indefeasible, and merchantable title to all of its other property

reflected on the December 31, 2001 Financial Statements delivered to the

Administrative Agent and the Lenders, except as disposed of in the ordinary

course of business since the date thereof, free of all Liens except Permitted

Liens.

 

6.12         Proprietary Rights.  Schedule 6.12 sets forth a correct and complete list

as of the Closing Date of all of such Borrower’s material Proprietary

Rights.  None of the material

Proprietary Rights is subject to any licensing agreement or similar arrangement

except as set forth on Schedule 6.12.  To the best of such Borrower’s knowledge, as of the date hereof,

none of the Proprietary Rights infringes on or conflicts with any other

Person’s property, and no other Person’s property infringes on or conflicts

with the material Proprietary Rights. 

The Proprietary Rights of such Borrower described on Schedule 6.12

constitute all of the material property of such type necessary to the current

conduct of such Borrower’s business.

 

6.13         Trade Names. 

All material owned trade names or styles under which such Borrower or

any of its Subsidiaries will sell Inventory or create Accounts, or to which

instruments in payment of Accounts may be made payable, are listed on Schedule 6.13.

 

6.14         Litigation. 

Except as set forth on Schedule 6.14, there is no pending,

or to the best of such Borrower’s knowledge threatened, action, suit,

proceeding or counterclaim by any Person, or to the best of such Borrower’s

knowledge, investigation by any Governmental Authority, or any basis for any of

the foregoing, which could reasonably be expected to have a Material Adverse

Effect.

 

6.15         Labor Disputes. 

Except as set forth on Schedule 6.15, as of the Closing Date

(a) there is no collective bargaining agreement or other labor contract

covering employees of such Borrower or any of its Subsidiaries, (b) no

such collective bargaining agreement or other labor contract is scheduled to

expire during the term of this Agreement, (c) no union or other labor

organization is seeking to organize, or to be recognized as, a collective

bargaining unit of employees of such Borrower or any of its Subsidiaries or for

any similar purpose, and (d) there is no pending or (to the best of such

Borrower’s knowledge) threatened, strike, work stoppage, material unfair labor

practice claim, or other material labor dispute against or affecting such

Borrower or its Subsidiaries or their employees.

 

6.16         Environmental Laws.  Except as otherwise disclosed on Schedule 6.16:

 

(a)           Such Borrower and its Subsidiaries

have complied in all material respects with all Environmental Laws and neither

such Borrower nor any of its Subsidiaries nor any of their presently owned real

property or presently conducted operations, nor their previously owned real

property or prior operations, is subject to any enforcement order from or

liability agreement with any Governmental Authority or private Person

respecting (i) compliance with any Environmental Law or (ii) any

potential liabilities and costs or remedial action arising from the Release or

threatened Release of a Contaminant.

 

35

 

(b)           Such Borrower and its Subsidiaries

have obtained all permits necessary for their current operations under

Environmental Laws, and all such permits are in good standing and such Borrower

and its Subsidiaries are in compliance with all material terms and conditions

of such permits.

 

(c)           Neither such Borrower nor any of its

Subsidiaries, nor, to the best of such Borrower’s knowledge, any of its

predecessors in interest, has in violation of applicable law stored, treated or

disposed of any hazardous waste.

 

(d)           Neither such Borrower nor any of its

Subsidiaries has received any summons, complaint, order or similar written

notice indicating that it is not currently in compliance with, or that any

Governmental Authority is investigating its compliance with, any Environmental

Laws or that it is or may be liable to any other Person as a result of a

Release or threatened Release of a Contaminant.

 

(e)           To the best of such Borrower’s

knowledge, none of the present or past operations of such Borrower and its

Subsidiaries is the subject of any investigation by any Governmental Authority

evaluating whether any remedial action is needed to respond to a Release or

threatened Release of a Contaminant.

 

(f)            There is not now, nor to the best of

such Borrower’s knowledge has there ever been on or in any of the Real Estate:

 

(1)           any underground storage tanks or

surface impoundments,

 

(2)           any asbestos–containing

material, or

 

(3)           any polychlorinated biphenyls (PCBs)

used in hydraulic oils, electrical transformers or other equipment.

 

(g)           Neither such Borrower nor any of its

Subsidiaries has filed any notice under any requirement of Environmental Law

reporting a spill or accidental and unpermitted Release or discharge of a

Contaminant into the environment.

 

(h)           Neither such Borrower nor any of its

Subsidiaries has entered into any negotiations or settlement agreements with

any Person (including the prior owner of its property) imposing material

obligations or liabilities on such Borrower or any of its Subsidiaries with

respect to any remedial action in response to the Release of a Contaminant or

environmentally related claim.

 

(i)            None of the products manufactured,

distributed or sold by such Borrower or any of its Subsidiaries contain

asbestos-containing material.

 

36

 

(j)            No Environmental Lien has attached

to any of the Real Estate.

 

6.17         No Violation of Law.  Neither such Borrower nor any of its Subsidiaries is in violation

of any law, statute, regulation, ordinance, judgment, order, or decree

applicable to it, which violation could reasonably be expected to have a

Material Adverse Effect.

 

6.18         No Default. 

Neither such Borrower nor any of its Subsidiaries is in default with

respect to any note, indenture, loan agreement, mortgage, lease, deed, or other

agreement to which such Borrower or any of its Subsidiaries is a party or by

which it is bound, which default could reasonably be expected to have a

Material Adverse Effect.

 

6.19         ERISA Compliance.

 

(a)           Each Plan is in compliance in all

material respects with the applicable provisions of ERISA, the Code and other

federal or state law.  Each Plan which

is intended to qualify under Section 401(a) of the Code has received a

favorable determination letter from the IRS and to the best knowledge of such

Borrower, nothing has occurred which would cause the loss of such

qualification.  The Parent, each of its

Subsidiaries and each ERISA Affiliate has made all required contributions to

any Plan subject to Section 412 of the Code, and no application for a

funding waiver or an extension of any amortization period pursuant to

Section 412 of the Code has been made with respect to any Plan.

 

(b)           There are no pending or, to the best

knowledge of such Borrower, threatened claims, actions or lawsuits, or action

by any Governmental Authority, with respect to any Plan which has resulted or

could reasonably be expected to result in a Material Adverse Effect.  There has been no prohibited transaction or

violation of the fiduciary responsibility rules with respect to any Plan which

has resulted or could reasonably be expected to result in a Material Adverse

Effect.

 

(c)           (i)  No ERISA Event has occurred

or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded

Pension Liability; (iii) none of the Borrowers, any of their Subsidiaries

nor any ERISA Affiliate has incurred, or reasonably expects to incur, any

liability under Title IV of ERISA with respect to any Pension Plan (other

than premiums due and not delinquent under Section 4007 of ERISA);

(iv) none of the Borrowers, any of their Subsidiaries nor any ERISA

Affiliate has incurred, or reasonably expects to incur, any liability (and no

event has occurred which, with the giving of notice under Section 4219 of

ERISA, would result in such liability) under Section 4201 or 4243 of ERISA

with respect to a Multi–employer Plan; and (v) none of the

Borrowers, any of their Subsidiaries nor any ERISA Affiliate has engaged in a

transaction that could be subject to Section 4069 or 4212(c) of ERISA.

 

6.20         Taxes.  Such

Borrower and its Subsidiaries have filed all federal and other tax returns and

reports which it is required to file, and have paid all federal and other

taxes, assessments, fees and other governmental charges levied or imposed upon

them or their properties, income or assets otherwise due and payable unless

such unpaid taxes and assessments would constitute a Permitted Lien.

 

37

 

6.21         Regulated Entities.  None of the Borrowers, any Person controlling any of the

Borrowers, or any Subsidiary, is an “Investment Company” within the meaning of

the Investment Company Act of 1940.  No

Borrower nor any Subsidiary is subject to regulation under the Public Utility

Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce

Act, any state public utilities code or law, or any other federal or state

statute or regulation limiting its ability to incur indebtedness.

 

6.22         Use of Proceeds; Margin Regulations.  The proceeds of the Loans are to be used

solely to refinance certain indebtedness of the Borrowers on the Closing Date,

for working capital purposes and for general corporate purposes permitted hereunder.  Neither such Borrower nor any of its

Subsidiaries is engaged in the business of purchasing or selling Margin Stock

or extending credit for the purpose of purchasing or carrying Margin Stock.

 

6.23         Copyrights, Patents, Trademarks and

Licenses, etc. Such Borrower and each of its Subsidiaries owns or is

licensed or otherwise has the right to use all of the Patents, Trademarks,

Copyrights, Trademark Licenses, Patent Licenses, Copyright Licenses,

contractual franchises, rights of way, authorizations and other rights that are

reasonably necessary for the operation of its businesses, and to the best of

such Borrower’s knowledge, such rights do not conflict with the rights of any

other Person.  To the best knowledge of

such Borrower, no slogan or other advertising device, product, process, method,

substance, part or other material now employed, or now contemplated to be

employed, by such Borrower or any of its Subsidiaries infringes upon any rights

held by any other Person.  No claim or

litigation regarding any of the foregoing is pending or threatened, and no

patent, invention, device, application, principle or any statute, law, rule,

regulation, standard or code is pending or, to the knowledge of such Borrower,

proposed, which, in either case, could reasonably be expected to have a

Material Adverse Effect.

 

6.24         No Material Adverse Change.  No Material Adverse Effect has occurred

since December 31, 2001.

 

6.25         Full Disclosure.  None of the representations or warranties made by such Borrower

or any of its Subsidiaries in the Loan Documents as of the date such

representations and warranties are made or deemed made, and none of the

statements (other than statements constituting projections, as to which the

immediately succeeding sentence shall be applicable) contained in any exhibit,

report, statement or certificate furnished by or on behalf of such Borrower or

any of its Subsidiaries in connection with any of the Loan Documents (including

the offering and disclosure materials delivered by or on behalf of such Borrower

or any of its Subsidiaries to the Lenders prior to the Closing Date), when

taken as a whole, contains any untrue statement of a material fact or omits any

material fact required to be stated therein or necessary to make the statements

made therein, in light of the circumstances under which they are made, not

misleading as of the time when made or delivered.  Any projections contained in the materials referred to above have

been prepared on the basis of assumptions which such Borrower or its Subsidiary,

as the case may be, believes are fair and reasonable in light of current and

reasonably foreseeable business conditions at the time submitted to the

Administrative Agent and/or the Lenders (it being understood that forecasts and

forward looking statements are subject to significant uncertainties and

contingencies, many

 

38

 

of which are beyond such Borrower’s or such Subsidiary’s control and

that no guarantee can be given that the projections will be realized.

 

6.26         Material

Agreements  (a).  Schedule 6.26(a) hereto sets

forth as of the Closing Date all material agreements and contracts to which

such Borrower or any of its Subsidiaries is a party or is bound as of the date

hereof.

 

(b)           Schedule 6.26(b)

hereto sets forth as of the Closing Date all agreements and contracts between

such Borrower or any of its Domestic Subsidiaries and one or more Foreign

Subsidiaries.

 

(c)           As

of the Closing Date, such Borrower (i) has not received notice that a

default or event of default has occurred and is continuing under any

Significant Customer Contract to which such Borrower or any of its Subsidiaries

is party, (ii) is not aware that a notice of default has been delivered by

any party to a Significant Customer Contract to which such Borrower or any of

its Subsidiaries is party; and (iii) has not received notice that the

other party to a Significant Customer Contract to which such Borrower or any of

its Subsidiaries is party has terminated, has given notice of termination or has

threatened in writing to terminate such Significant Customer Contract prior to

the stated expiration date thereof.

 

6.27         Bank Accounts.  Schedule 6.27 contains as of the

Closing Date a complete and accurate list of all bank accounts maintained by

such Borrower with any bank or other financial institution.

 

6.28         Governmental

Authorization.  No approval,

consent, exemption, authorization, or other action by, or notice to, or filing

with, any Governmental Authority or other Person is necessary or required in

connection with the execution, delivery or performance by, or enforcement

against, such Borrower or any of its Subsidiaries of this Agreement or any

other Loan Document.

 

6.29         Sale

of the Parent’s Capital Stock. 

The sale and issuance of the Parent’s 5.25% Series A Convertible

Preferred Stock pursuant to and in accordance with the terms of the Equity

Agreements has been consummated.

 

ARTICLE 7

AFFIRMATIVE AND

NEGATIVE COVENANTS

 

Each Borrower covenants to

the Administrative Agent and each Lender that so long as any of the Obligations

remain outstanding or this Agreement is in effect:

 

39

 

7.1           Taxes

and Other Obligations.  Such

Borrower shall, and shall cause each of its Subsidiaries to, (a) file when

due all tax returns and other reports which it is required to file;

(b) pay, or provide for the payment, when due, of all taxes, fees,

assessments and other governmental charges against it or upon its property,

income and franchises, make all required withholding and other tax deposits,

and establish adequate reserves for the payment of all such items, and provide

to the Administrative Agent and the Lenders, upon request, satisfactory

evidence of its timely compliance with the foregoing; and (c) pay when due

all Debt owed by it and all claims (except to the extent the aggregate amount

of all such claims do not exceed $250,000 at any time outstanding) of

materialmen, mechanics, carriers, warehousemen, landlords, processors and other

like Persons, and all other indebtedness owed by it and perform and discharge

in a timely manner all other material obligations undertaken by it; provided,

however, so long as such Borrower has notified the Administrative Agent

in writing, neither such Borrower nor any of its Subsidiaries need pay any tax,

fee, assessment, or governmental charge (i) it is contesting in good faith

by appropriate proceedings diligently pursued, (ii) as to which such

Borrower or its Subsidiary, as the case may be, has established proper reserves

as required under GAAP, and (iii) the nonpayment of which does not result

in the imposition of a Lien (other than a Permitted Lien).

 

7.2           Legal Existence and Good Standing.  Except as otherwise permitted by Section 7.11,

such Borrower shall, and shall cause each of its Subsidiaries to, maintain its

legal existence and its qualification and good standing in all jurisdictions in

which the failure to maintain such existence and qualification or good standing

could reasonably be expected to have a Material Adverse Effect.

 

7.3           Compliance with Law and Agreements;

Maintenance of Licenses.  Such

Borrower shall comply, and shall cause each of its Subsidiaries to comply, with

all Requirements of Law of any Governmental Authority having jurisdiction over

it or its business (including the Federal Fair Labor Standards Act and all

Environmental Laws), except to the extent that failure to comply therewith

could not reasonably be expected to cause, individually or in the aggregate, a

Material Adverse Effect.  Such Borrower

shall, and shall cause each of its Subsidiaries to, obtain and maintain all

material licenses, permits, franchises, and governmental authorizations

necessary to own its property and to conduct its business as conducted on the

Closing Date.  Such Borrower shall not

modify, amend or alter its certificate or articles of incorporation, or its

limited liability company operating agreement or limited partnership agreement

or other organizational documents, as applicable, other than in a manner which

does not adversely affect the rights of the Lenders or the Administrative

Agent.

 

7.4           Maintenance of Property; Inspection

of Property.

 

(a)           Such

Borrower shall, and shall cause each of its Subsidiaries to, maintain all

material properties used or useful in the conduct of its business, in good

operating condition and repair, ordinary wear and tear and loss or damage from

casualty excepted.

 

(b)           Such

Borrower shall permit representatives and independent contractors of the

Administrative Agent (at the expense of the Borrowers not to exceed four

(4) times per year unless an Event of Default has occurred and is

continuing) to visit and inspect any of its properties, to examine its

corporate, financial and operating records, and make copies thereof or

abstracts therefrom and to discuss

 

40

 

its affairs, finances and accounts with its officers and independent

public accountants, at such reasonable times during normal business hours and

as soon as may be reasonably desired, upon reasonable advance notice to such

Borrower; provided, however, when an Event of Default exists, the

Administrative Agent or any Lender may do any of the foregoing at the expense

of the Borrowers at any time during normal business hours and without advance

notice.  Any amounts payable by the

Borrowers to the Administrative Agent or any Lender pursuant to this Section 7.4(b)

shall be the joint and several obligation of each of the Borrowers.

 

7.5           Insurance.

 

(a)           Such

Borrower shall maintain, and shall cause each of its Subsidiaries to maintain,

with financially sound and reputable insurers having a rating of at least A- by

Best Rating Guide, insurance against loss or damage by fire with extended

coverage; theft, burglary, pilferage and loss in transit; public liability and

third party property damage; larceny, embezzlement or other criminal liability;

business interruption; public liability and third party property damage; and

such other hazards or of such other types as is customary for Persons engaged

in the same or similar business, in amounts and under policies customary for

Persons engaged in the same or similar business.  Without limiting the foregoing, in the event that any improved

Real Estate of such Borrower covered by the Mortgages or any other Real Estate

on which is located any Inventory or Equipment of such Borrower is determined

to be located within an area that has been identified by the Director of the

Federal Emergency Management Agency as a Special Flood Hazard Area (“SFHA”),

such Borrower shall purchase and maintain flood insurance on the improved Real

Estate and any Equipment and Inventory located on such Real Estate.  The amount of said flood insurance will be

reasonably determined by the Administrative Agent, and shall, at a minimum,

comply with applicable federal regulations as required by the Flood Disaster

Protection Act of 1973, as amended. 

Such Borrower shall also maintain flood insurance for its Inventory and

Equipment which is, at any time, located in a SFHA.

 

(b)           Such

Borrower shall cause the Administrative Agent, for the ratable benefit of the

Administrative Agent and the Lenders, to be named as secured party or mortgagee

and sole loss payee (provided, however, that such Borrower shall

also be entitled to be a loss payee on each of its insurance policies, subject

in each case to the Agent’s Lien) or additional insured, in a manner acceptable

to the Administrative Agent.  Each

policy of insurance shall contain a clause or endorsement requiring the insurer

to give not less than thirty (30) days’ prior written notice to the

Administrative Agent in the event of cancellation of the policy for any reason

whatsoever and a clause or endorsement stating that the interest of the

Administrative Agent shall not be impaired or invalidated by any act or neglect

of any Borrower or any of its Subsidiaries or the owner of any Real Estate for

purposes more hazardous than are permitted by such policy.  All premiums for such insurance shall be

paid by such Borrower when due, and certificates of insurance and, if requested

by the Administrative Agent, photocopies of the policies, shall be delivered to

the Administrative Agent, in each case in sufficient quantity for distribution

by the Administrative Agent to each of the Lenders.  If a Borrower fails to procure such insurance or to pay the

premiums therefor when due, the Administrative Agent may, and at the direction

of the Majority Lenders shall, do so from the proceeds of Revolving Loans (it

being agreed by the Administrative Agent that the Administrative Agent shall

use reasonable efforts to give such Borrower prior or concurrent notice of the

making of any such Revolving Loans for such purpose but the failure on the part

of the Administrative Agent to give such notice

 

41

 

(or any delay in giving such notice) to such Borrower shall not affect

the Administrative Agent’s right to procure such insurance or pay the premiums

therefor or make any such Revolving Loans).

 

7.6           Insurance and Condemnation Proceeds.  Such Borrower shall promptly notify the

Administrative Agent and the Lenders of any loss, damage, destruction or

condemnation to any portion of the Collateral having a fair market value in

excess of $200,000 individually or in the aggregate, whether or not covered by

insurance.  The Administrative Agent is

hereby authorized to collect all insurance and condemnation proceeds in respect

of Collateral directly and to apply or remit them as follows:

 

(i)            With respect to insurance and

condemnation proceeds relating to Collateral other than Fixed Assets, after

deducting from such proceeds the reasonable expenses, if any, incurred by the

Administrative Agent in the collection or handling thereof, the Administrative

Agent shall apply such proceeds, ratably, to the reduction of the Obligations

in the order provided for in Section 3.8.

 

(ii)           With respect to insurance and

condemnation proceeds relating to Collateral consisting of Fixed Assets, the

Administrative Agent shall permit or require the applicable Borrower to use

such proceeds, or any part thereof, to replace, repair, restore or rebuild the

relevant Fixed Assets in a diligent and expeditious manner with materials and

workmanship of substantially the same quality as existed before the loss,

damage or destruction so long as (1) no Default or Event of Default has

occurred and is continuing, (2) (A) the aggregate proceeds do not

exceed $1,000,000 or (B) if the aggregate proceeds exceed $1,000,000, the

applicable Borrower or any of its Subsidiaries is required to repair, restore or

replace the Fixed Assets so destroyed, damaged or taken pursuant to the terms

of a lease relating to a leasehold property with respect to which such proceeds

were received, and such Borrower shall, or shall cause one or more of its

Subsidiaries to, promptly and diligently apply such proceeds to pay or

reimburse the costs of repairing, restoring or replacing the Fixed Assets in

respect of which such proceeds were received and (3) such Borrower first

(i) provides the Administrative Agent and the Majority Lenders with plans

and specifications for any such repair or restoration which shall be reasonably

satisfactory to the Administrative Agent and the Majority Lenders and

(ii) demonstrates to the reasonable satisfaction of the Administrative

Agent and the Majority Lenders that the insurance proceeds or condemnation

proceeds, as the case may be, available to it will be sufficient to complete

such project in the manner provided therein. 

In all other circumstances, the Administrative Agent shall apply such

insurance and condemnation proceeds, ratably, to the reduction of the

Obligations in the order provided for in Section 3.8.

 

7.7           Environmental

Laws.

 

(a)           Such

Borrower shall, and shall cause each of its Subsidiaries to, conduct its

business in compliance with all Environmental Laws applicable to it, including

those relating to the generation, handling, use, storage and disposal of any

Contaminant, unless the failure to do so could not reasonably be expected to

result in a Material Adverse Effect. 

Such Borrower shall, and shall cause each of its Subsidiaries to, take

prompt and appropriate action to respond to any non-compliance with

 

42

 

Environmental Laws (unless such non-compliance could not reasonably be

expected to result in a Material Adverse Effect) and shall regularly report to

the Administrative Agent on such response.

 

(b)           Without

limiting the generality of the foregoing, each Borrower shall submit to the

Administrative Agent and the Lenders annually, commencing on the first

Anniversary Date, and on each Anniversary Date thereafter, an update of the

status of each material environmental compliance or liability issue.  The Administrative Agent or any Lender may

request copies of technical reports prepared by any Borrower and its

communications with any Governmental Authority to determine whether such

Borrower or any of its Subsidiaries is proceeding reasonably to correct, cure

or contest in good faith any alleged non–compliance or environmental

liability.  Each Borrower shall, at the

Administrative Agent’s or the Majority Lenders’ reasonable request and at such

Borrower’s expense, (i) retain an independent environmental engineer

acceptable to the Administrative Agent to evaluate the site, including tests if

appropriate, where the non–compliance or alleged non–compliance

with Environmental Laws has occurred and prepare and deliver to the

Administrative Agent, in sufficient quantity for distribution by the

Administrative Agent to the Lenders, a report setting forth the results of such

evaluation, a proposed plan for responding to any environmental problems

described therein, and an estimate of the costs thereof, and (ii) provide

to the Administrative Agent and the Lenders a supplemental report of such

engineer whenever the scope of the environmental problems, or the response

thereto or the estimated costs thereof, shall increase in any material respect.

 

7.8           Compliance

with ERISA.  Such Borrower

shall, and shall cause each of its Subsidiaries and ERISA Affiliates to:  (a) maintain each Plan in compliance in

all material respects with the applicable provisions of ERISA, the Code and

other federal or state law; (b) cause each Plan which is qualified under

Section 401(a) of the Code to maintain such qualification; (c) make

all required contributions to any Plan subject to Section 412 of the Code;

(d) not engage in a prohibited transaction or violation of the fiduciary

responsibility rules with respect to any Plan; and (e) not engage in a

transaction that could be subject to Section 4069 or 4212(c) of ERISA.

 

7.9           Landlord Waivers and Bailee Letters.

 

(a)           Such

Borrower shall use its commercially reasonable efforts to obtain and deliver to

the Administrative Agent within 120 days after the Closing Date (or such

later date as the Administrative Agent shall agree to) consents, landlord

waivers, estoppel letters and bailee letters from landlords of each of the

premises leased by such Borrower or any of its Domestic Subsidiaries on the

Closing Date (other than, in the case of the Parent, the leased premises

located in Fremont, California) and from the public warehousemen at whose

warehouses any Collateral pledged by such Borrower or any of its Domestic

Subsidiaries is located on the Closing Date, in each case in form and substance

reasonably satisfactory to the Administrative Agent, duly executed by, as

appropriate, such landlords and warehousemen.

 

(b)           Such

Borrower shall use its commercially reasonable efforts to obtain and deliver to

the Administrative Agent consents, landlord waivers, estoppel letters and

bailee letters, in form and substance reasonably satisfactory to the

Administrative Agent, duly executed by, as appropriate, the landlords of each

of the premises leased by such Borrower or any of its Domestic Subsidiaries after

the

 

43

 

Closing Date and by the public warehousemen at whose warehouses any

Collateral pledged by such Borrower or any of its Domestic Subsidiaries is

located after the Closing Date, not later than 30 days after executing such

lease or locating Collateral at such warehouse.

 

7.10         Interest

Rate Hedging.  The Borrowers

shall obtain within 180 days of the Closing Date and maintain at all times

prior to the Stated Termination Date and the payment in full of the

Obligations, one or more Hedge Agreements, on terms acceptable to the Bank and

the Borrowers, with the Bank or another financial institution reasonably

acceptable to the Bank, covering a notional amount of not less than $10,000,000

of the Revolving Loans; provided, that upon the request of the

Administrative Agent, the Borrowers shall increase the amount covered by such

Hedge Agreement(s) up to an aggregate amount equal to 25% of the aggregate

outstanding balance of Revolving Loans at such time (but in no event shall the

aggregate amount covered by such Hedge Agreements at any time be required to

exceed $20,000,000).

 

7.11         Mergers,

Consolidations or Sales. 

Neither such Borrower nor any of its Subsidiaries shall enter into any

transaction of merger, reorganization or consolidation, or transfer, sell,

assign, lease or otherwise dispose of all or any part of its property, or wind

up, liquidate or dissolve, or agree to do any of the foregoing, except for:

 

(i)            sales

of Inventory in the ordinary course of its business;

 

(ii)           sales

or other dispositions of assets of Foreign Subsidiaries; provided, that

(A) the consideration received for such assets shall be in an amount at

least equal to the fair market value thereof, (B) no less than 90% of such

consideration shall be paid in cash and (C) no Default or Event of Default

shall have occurred and be continuing on the date of any such sale or other

disposition or would be caused upon the consummation thereof;

 

(iii)          the

sale of the Real Estate located in Salt Lake City, Utah and described in Schedule

7.34 hereto;

 

(iv)          if

required by applicable law, the sale of capital stock of any Subsidiary of a

Borrower in order to qualify members of the governing body of such Subsidiary;

 

(v)           subject

to Section 10 of the Security Agreement and Section 7.36

hereof, discounts or other compromises of notes or accounts receivable for less

than the face value thereof in order to resolve disputes that occur in the

ordinary course of business;

 

(vi)          sales

or transfers of (A) assets or capital stock of Foreign Subsidiaries in

connection with the European Operations Reorganization and (B) capital stock of

Domestic Subsidiaries (other than a Borrower) in connection with the European

Operations Reorganization;

 

(vii)         sales

of assets of Global Manufacturers’ Services Valencia S.A. in connection with

any Spanish Financing;

 

44

 

(viii)        sales

or other dispositions of Equipment in the ordinary course of business that are

obsolete in such Borrower’s business and no longer useable by such Borrower or

its Subsidiaries in its business with an orderly liquidation value not to

exceed (A) $800,000 in the aggregate for the Parent and its Domestic

Subsidiaries in any Fiscal Year and (B) $2,000,000 in the aggregate for

Foreign Subsidiaries in any Fiscal Year;

 

(ix)           sales

of Fixed Assets not otherwise permitted by this Section having a fair

market value not to exceed (i) $800,000 in the aggregate in any Fiscal

Year and (ii) $2,000,000 in the aggregate during the term of this

Agreement;

 

(x)            (A) the

merger of any wholly-owned Domestic Subsidiary of a Borrower with or into a

Borrower (other than the Parent) or the liquidation, winding up or dissolution

of a wholly-owned Domestic Subsidiary of a Borrower, or the conveyance, sale,

lease, transfer or other disposition of all or any part of a Domestic

Subsidiary’s business, property or assets in one or a series of transactions to

a Borrower (other than the Parent); provided, that in the case of a

merger, the surviving Person is a Borrower, (B) the merger of any

wholly-owned Domestic Subsidiary of a Borrower (other than a Borrower) with or

into a wholly-owned Domestic Subsidiary of a Borrower (other than a Borrower)

or the liquidation, winding up or dissolution of a wholly-owned Domestic

Subsidiary of a Borrower (other than a Borrower), or the conveyance, sale,

lease, transfer or other disposition of all or any part of a Domestic

Subsidiary’s (other than a Borrower’s) business, property or assets in one or a

series of transactions to a wholly-owned Domestic Subsidiary of a Borrower

(other than a Borrower), (C) the merger of a Borrower or any wholly-owned

Domestic Subsidiary of a Borrower with or into the Parent, or the liquidation,

winding up or dissolution of a wholly-owned Domestic Subsidiary of the Parent,

or the conveyance, sale, lease, transfer or other disposition of all or any

part of a Borrower’s or a Domestic Subsidiary’s business, property or assets in

one or a series of transactions to the Parent; provided, that in the

case of a merger, the surviving Person is the Parent, and (D) the merger

of any wholly-owned Foreign Subsidiary with or into any other wholly-owned

Foreign Subsidiary or the liquidation, winding up or dissolution of a

wholly-owned Foreign Subsidiary that is wholly-owned directly by a Foreign

Subsidiary, or the conveyance, sale, lease, transfer or other disposition of

all or any part of a wholly-owned Foreign Subsidiary’s business, property or

assets in one or a series of transactions to a wholly-owned Foreign Subsidiary;

and

 

(xi)           the

merger of any Person (other than a Borrower or a Subsidiary of a Borrower) with

or into a Borrower or any of its Subsidiaries; provided, that

(A) the acquisition of the capital stock or other equity interests of such

Person by such Borrower or Subsidiary would have been permitted under Section 7.12;

(B) in the case of any such merger involving a Borrower, such Borrower

shall be the continuing or surviving Person, (C) in the case of any such

merger involving any Domestic Subsidiary which is not a Borrower, if such

Domestic Subsidiary is not the surviving or continuing Person, the surviving

Person shall become a Subsidiary and a Guarantor hereunder, a grantor under the

Security Agreement and a party to all other applicable Loan Documents and

(D) no Event of Default shall have occurred and be continuing after giving

effect thereto.

 

45

 

Within 180 days following each sale or

disposition permitted under any of clauses (iii), (viii) or (ix) above,

the applicable Borrower shall either (i) reinvest the proceeds of that

sale or disposition in other Fixed Assets or (ii) apply such proceeds to

the Loans and other Obligations in accordance with Section 3.4(a).  All Fixed Assets purchased with such

proceeds shall be free and clear of all Liens, except the Agent’s Liens.

 

7.12         Distributions; Capital Change;

Restricted Investments.  Neither

such Borrower nor any of its Subsidiaries shall (i) directly or indirectly

declare or make, or incur any liability to make, any Distribution (or similar

distribution or act, if not a corporation), except (x) Distributions (or

similar distributions or acts, if not a corporation) to a Borrower by its

Subsidiaries, (y) Distributions contemplated or required under the Equity

Agreements and (z) repurchases of shares or options to purchase shares of

capital stock of the Parent from employees or former employees of a Borrower or

any Subsidiary pursuant to agreements or plans approved by the governing body

of such Borrower under which such individuals purchase or sell or are granted

the option to purchase or sell shares of such capital stock in an aggregate

amount not to exceed $1,000,000 in each Fiscal Year; provided, that with

respect to clauses (y) and (z), (A) no Default or Event of Default shall

have occurred and be continuing on the date of any such Distribution or

repurchase or would be caused as a result thereof, (B) as of the date of such

Distribution or repurchase, the Borrowers shall have made all payments of principal

in respect of the Term Loans required under the first sentence of Section

3.3 (without giving effect to the conditions set forth in the proviso to

such sentence) and (C) the Fixed Charge Coverage Ratio for the period of

four consecutive fiscal quarters of the Parent ended on the most recently ended

fiscal quarter of the Parent on a pro forma basis after giving effect to such

Distribution or repurchase (as if such Distribution or repurchase occurred on

the last day of the most recently ended fiscal quarter of the Parent) must be

equal to or greater than 1.25:1.00 and the Parent shall have provided to the

Administrative Agent evidence satisfactory to the Administrative Agent of

satisfaction of such requirement, (ii) make any change in its capital structure

which could have a Material Adverse Effect or (iii) make any Restricted

Investment.

 

7.13         Intentionally

Omitted.

 

7.14         Guaranties.  Neither such Borrower nor any of its

Subsidiaries shall make, issue, or become liable on any Guaranty, except:

 

(a)           a

Borrower or any of its Subsidiaries may enter into Guaranties of the

Obligations in favor of the Administrative Agent;

 

(b)           subject

to the proviso in Section 7.15(f)(ii), the Parent may enter into

unsecured Guaranties in favor of (i) suppliers or service providers in the

ordinary course of business with respect to any Domestic Subsidiaries or, with

respect to Foreign Subsidiaries, in an aggregate amount not to exceed

$5,000,000 at any time outstanding and (ii) landlords in the ordinary

course of business with respect to any Subsidiary;

 

46

 

(c)           a

Borrower or any of its Subsidiaries may become and remain liable on an

unsecured basis with respect to contingent obligations in respect of customary

indemnification and purchase price adjustment obligations incurred in

connection with acquisitions or sales of assets by such Borrower or Subsidiary,

as the case may be, permitted to be made under this Agreement;

 

(d)           a

Borrower or any of its Domestic Subsidiaries may become and remain liable on an

unsecured basis with respect to contingent obligations in respect of any Debt

of a Borrower or any of its Domestic Subsidiaries permitted by Section 7.15

and a Foreign Subsidiary may become and remain liable on an unsecured basis

with respect to contingent obligations in respect of any Debt of a Foreign

Subsidiary permitted by Section 7.15; provided, that a

Borrower or a Domestic Subsidiary shall not in any event become or remain

liable with respect to any contingent obligations in respect of any Debt of a

Foreign Subsidiary;

 

(e)           a

Borrower or any of its Subsidiaries, as applicable, may remain liable (as such

Borrower or Subsidiary, as applicable, remained liable on the Closing Date) on

an unsecured basis with respect to contingent obligations described in Schedule 7.14

hereto;

 

(f)            a

Borrower or any of its Domestic Subsidiaries may become and remain liable on an

unsecured basis with respect to contingent obligations in respect of Hedge

Agreements entered into by such Person and currency agreements that are Hedge

Agreements entered into by such Person or are otherwise entered into by such

Person in the ordinary course of business and not for speculative purposes;

 

(g)           a

Borrower or any of its Domestic Subsidiaries may become and remain liable on an

unsecured basis with respect to contingent obligations in respect of

performance bonds, surety bonds, appeal bonds or custom bonds required in the

ordinary course of business of such Person or in connection with the

enforcement of rights or claims of a Borrower or any of its Domestic

Subsidiaries or in connection with judgments against a Borrower or any of its

Domestic Subsidiaries that do not result in a Default or an Event of Default;

and

 

(h)           a

Borrower or any of its Domestic Subsidiaries may become and remain liable on an

unsecured basis with respect to other contingent obligations (other than

contingent obligations in respect of any obligations of a Foreign Subsidiary); provided,

that the maximum aggregate liability, contingent or otherwise, of a Borrower or

any of its Domestic Subsidiaries in respect of all such contingent obligations

shall at no time exceed $2,500,000.

 

7.15         Debt.  Neither such Borrower nor any of its

Subsidiaries shall incur or maintain any Debt, other than:

 

(a)           the

Obligations;

 

47

 

(b)           Debt

described on Schedule 6.9;

 

(c)           Guaranties

permitted by Section 7.14;

 

(d)           Capital

Leases of Equipment and purchase money secured Debt incurred to purchase Fixed

Assets; provided, that (i) Liens securing the same attach only to

the Fixed Asset acquired by the incurrence of such Debt, and (ii) the

aggregate amount of such Debt (including Capital Leases) outstanding does not

exceed at any time (A) during the period from the Closing Date through and

including the first Anniversary Date, $10,000,000; (B) during the period

from the first Anniversary Date through and including the second Anniversary

Date, $15,000,000; and (C) thereafter, $20,000,000.

 

(e)           Debt

evidencing a refunding, renewal or extension of the Debt described on Schedule 6.9;

provided, that (i) the principal amount thereof is not increased,

(ii) the Liens, if any, securing such refunded, renewed or extended Debt

do not attach to any assets in addition to those assets, if any, securing the

Debt to be refunded, renewed or extended, (iii) no Person that is not an

obligor or guarantor of such Debt as of the Closing Date shall become an

obligor or guarantor thereof and (iv) the terms of such refunding, renewal

or extension are no less favorable to the applicable Borrower, the

Administrative Agent or the Lenders than the original Debt;

 

(f)            unsecured

Debt of (i) a Borrower or Guarantor to any of its wholly-owned

Subsidiaries; provided, however, that the aggregate amount of

such Debt of all Borrowers and Guarantors to all Foreign Subsidiaries shall not

exceed $2,500,000 at any time outstanding (excluding the amount of Debt

outstanding pursuant to Section 7.15(l)), (ii) any

wholly-owned Subsidiary to a Borrower or Guarantor; provided, however,

that the aggregate amount of Debt of all Foreign Subsidiaries to all Borrowers

and Guarantors (excluding the $48,000,000 of Debt of Manufacturers’ Services

Singapore Pte Ltd. and MSL Overseas Finance B.V. to the Parent outstanding on

the Closing Date), together with the aggregate amount of any payments made by

the Parent under Guaranties with respect to Foreign Subsidiaries permitted to

be entered into by Section 7.14, shall not exceed $2,000,000  at any time outstanding; (iii) any

wholly-owned Foreign Subsidiary to any other wholly-owned Foreign Subsidiary;

and (iv) any wholly-owned Domestic Subsidiary to any other wholly-owned

Domestic Subsidiary;

 

(g)           unsecured

Debt which is subordinated to the Obligations on terms acceptable to the

Administrative Agent and the Majority Lenders and otherwise having terms and

conditions acceptable to the Administrative Agent and the Majority Lenders in

an aggregate principal amount not to exceed $10,000,000 at any time

outstanding;

 

(h)           Debt

of any Foreign Subsidiary (other than Debt outstanding pursuant to Section 7.15(f))

in an aggregate principal amount not to exceed (i) $1,500,000 with respect

to any single Foreign Subsidiary at any time outstanding and

(ii) $5,000,000 in the aggregate for all Foreign Subsidiaries at any time

outstanding; provided, that any such Debt of a Foreign Subsidiary shall

not be guaranteed by, or secured by any assets of, a Borrower, a Guarantor or a

Domestic Subsidiary of a Borrower or Guarantor;

 

48

 

(i)            Debt

of any Person assumed in connection with the acquisition by a Borrower or any

of its Subsidiaries of such Person permitted under Section 7.11 or 7.12;

provided, that (i) such acquired Person becomes a Subsidiary of

such Borrower or Subsidiary upon consummation of such acquisition,

(ii) such Debt exists at the time such Person becomes a Subsidiary and was

not created in anticipation of such acquisition, (iii) such Debt does not

exceed $5,000,000 in the aggregate and (iv) any such Debt that does not

consist of Capital Leases does not exceed $2,000,000 in the aggregate;

 

(j)            Debt

of Global Manufacturers’ Services Valencia S.A. related to the Spanish

Financing;

 

(k)           unsecured

subordinated Debt of a Borrower or a Subsidiary of a Borrower issued to the

seller of capital stock or assets acquired in a Permitted Acquisition to pay a

portion of the purchase price thereof (which Debt shall have such subordination

and other terms and conditions as are acceptable to the Administrative Agent

and the Majority Lenders);

 

(l)            unsecured

Debt of the Parent to Global Manufacturers’ Services Valencia S.A. (or to any

Foreign Subsidiary which provides funds to the Parent to repay such Debt

pursuant to the proviso in Section 7.37) in an aggregate principal

amount not to exceed at any time outstanding the  net cash proceeds received by Global Manufacturers’ Services

Valencia S.A. from the Spanish Financing which were loaned to the Parent; provided,

however, that such Debt shall be subordinated to the Obligations on

terms acceptable to the Administrative Agent and otherwise having terms and

conditions acceptable to the Administrative Agent; and

 

(m)          any

other unsecured Debt in an aggregate principal amount not to exceed $3,000,000

at any time outstanding.

 

7.16         Prepayment.  Neither such Borrower nor any of its

Subsidiaries shall voluntarily prepay any Debt, except the Obligations (other

than the Term Loans and interest thereon) in accordance with the terms of this

Agreement.

 

7.17         Transactions

with Affiliates.  Except as set

forth below or on Schedule 7.17 hereto, neither such Borrower nor

any of its Subsidiaries shall sell, transfer, distribute or pay any money or

property, including, but not limited to, any fees or expenses of any nature

(including, but not limited to, any fees or expenses for management services),

to any Affiliate, or lend or advance money or property to any Affiliate, or

invest in (by capital contribution or otherwise) or purchase or repurchase any

stock or indebtedness, or any property, of any Affiliate, or become liable on

any Guaranty of the indebtedness, dividends or other obligations of any

Affiliate.  Notwithstanding the

foregoing, while no Event of Default has occurred and is continuing, a Borrower

and its Subsidiaries may engage in transactions with Affiliates in the ordinary

course of business consistent with past practices, in amounts and upon terms

fully disclosed to the Administrative Agent and the Lenders, and no less

favorable to such Borrower and its Subsidiaries than would be obtained in a

comparable arm’s-length transaction with a third party who is not an Affiliate;

provided, that the foregoing restrictions shall not apply to

(i) any transaction between a Borrower or any of its wholly-owned Domestic

Subsidiaries or

 

49

 

between any wholly-owned Domestic Subsidiaries or between any

wholly-owned Foreign Subsidiaries, (ii) so long as no Default or Event of

Default shall have occurred and be continuing or would be caused as a result

thereof, reasonable and customary fees paid to members of governing bodies of a

Borrower or any of its Subsidiaries or (iii) any transaction contemplated

by the European Operations Reorganization.

 

7.18         Investment Banking and Finder’s Fees.  Neither such Borrower nor any of its

Subsidiaries shall pay or agree to pay, or reimburse any other party with

respect to, any investment banking or similar or related fee, underwriter’s

fee, finder’s fee, or broker’s fee to any Person in connection with this

Agreement.  Each Borrower shall jointly

and severally defend and indemnify the Administrative Agent and the Lenders

against and hold them harmless from all claims of any Person that any Borrower

is obligated to pay for any such fees, and all costs and expenses (including

attorneys’ fees) incurred by the Administrative Agent and/or any Lender in

connection therewith.

 

7.19         Business

Conducted.  Neither such

Borrower shall nor shall it permit any of its Subsidiaries to, engage directly

or indirectly, in any line of business other than the businesses in which such

Borrower is engaged on the Closing Date and related businesses.

 

7.20         Liens.  Neither such Borrower nor any of its

Subsidiaries shall create, incur, assume or permit to exist any Lien on any

property now owned or hereafter acquired by any of them, except Permitted

Liens.

 

7.21         Sale

and Leaseback Transactions. 

Neither such Borrower nor any of its Subsidiaries shall, directly or

indirectly, enter into any arrangement with any Person providing for such

Borrower or such Subsidiary to lease or rent property that such Borrower or

such Subsidiary has sold or will sell or otherwise transfer to such Person; provided,

that such Borrower or any of its Subsidiaries may become and remain liable as

lessee, guarantor or other surety with respect to any such lease (a) in

respect of equipment purchased by a Borrower or any of its Subsidiaries within

sixty (60) days prior to entering into such lease or (b) if and to the

extent that a Borrower or any of its Subsidiaries would be permitted to enter

into and remain liable under such lease under Section 7.15

(assuming the sale and leaseback transaction constituted Debt in a principal

amount equal to the gross proceeds of the sale) and provided, further,

that no Borrower or any Domestic Subsidiary may be a guarantor or surety with

respect to a transaction involving a Foreign Subsidiary and all of the

foregoing permitted guaranty or surety obligations shall be on an unsecured

basis.

 

7.22         New

Subsidiaries.  Such Borrower

shall not, directly or indirectly, organize, create, acquire or permit to exist

any Subsidiary other than those listed on Schedule 6.5; provided,

however, that:

 

(a)           a

Borrower or any of its Subsidiaries may organize, create or acquire a Foreign

Subsidiary after the Closing Date so long as (i) such Foreign Subsidiary

is formed in connection with the European Operations Reorganization or is

engaged in the same or a related line of business in which such Borrower is

engaged and if such Foreign Subsidiary is acquired by acquisition, such

acquisition is a Permitted Acquisition, (ii) no Borrower or Domestic

Subsidiary of a Borrower shall have contributed or will contribute any assets

to or made or will make any investments in such Foreign Subsidiary,

(iii) no

 

50

 

Borrower or Domestic Subsidiary of a Borrower has guaranteed or will

guarantee any obligations of such Foreign Subsidiary and (iv) within 30

days after such Person becomes a Foreign Subsidiary, (A) such Borrower or

the relevant Domestic Subsidiary (if the direct parent of such Foreign

Subsidiary) has executed and delivered to the Administrative Agent a new pledge

agreement or such amendments to the Pledge Agreement as the Administrative

Agent shall deem necessary or advisable to grant to the Administrative Agent,

for the benefit of the Lenders, a Lien on the capital stock or other equity

interests of such Foreign Subsidiary which is owned by such Borrower or

Domestic Subsidiary, as the case may be (provided that in no event shall more

than 65% of the capital stock or other equity interests of any such Foreign

Subsidiary be required to be so pledged), and (B) if such capital stock or

other equity interests is issued in certificated form, such Borrower or

Domestic Subsidiary, as the case may be, has delivered to the Administrative

Agent any certificates representing such capital stock or other equity

interests, together with undated stock powers executed and delivered in blank

by a duly authorized officer of such Borrower or Domestic Subsidiary,

(C) such Borrower or Domestic Subsidiary, as the case may be, has taken or

caused to be taken all such other actions under the law of the jurisdiction of

organization of such Foreign Subsidiary as the Administrative Agent may deem

necessary or advisable to perfect such Lien on such capital stock or other

equity interests, and (D) if requested by the Administrative Agent, such

Borrower shall have delivered or caused to be delivered to the Administrative

Agent legal opinions and other documents relating to matters described in this

clause (iv), which opinions and other documents shall be in form and substance,

and (in the case of legal opinions) from counsel, reasonably satisfactory to

the Administrative Agent; and

 

(b)           a

Borrower may acquire a Domestic Subsidiary pursuant to a Permitted Acquisition

or organize or create new Domestic Subsidiaries in connection with the European

Operations Reorganization so long as within 5 days of such acquisition or

formation (A) the direct owner of the capital stock or other equity

interests of such Domestic Subsidiary has executed and delivered to the

Administrative Agent a new pledge agreement or such amendments to the Pledge

Agreement as the Administrative Agent shall deem necessary or advisable to

grant to the Administrative Agent, for the benefit of the Lenders, a Lien on

all of the capital stock or other equity interests of such Domestic Subsidiary,

(B) if such capital stock or other equity interests is issued in

certificated form, such owner has delivered to the Administrative Agent any

certificates representing such capital stock or other equity interests,

together with undated stock powers executed and delivered in blank by a duly

authorized officer of such owner, (C) such Domestic Subsidiary shall become

a Guarantor hereunder and become a grantor under the Security Agreement and

under the other applicable Loan Documents, and (D) if requested by the

Administrative Agent, such owner and such Domestic Subsidiary shall have

delivered or caused to be delivered to the Administrative Agent legal opinions

and other documents relating to matters described in clauses (A), (B) and (C)

above, which opinions and other documents shall be in form and substance, and

(in the case of legal opinions) from counsel, reasonably satisfactory to the

Administrative Agent.

 

51

 

7.23         Fiscal Year.  Neither such Borrower nor any Subsidiary

thereof shall change its Fiscal Year.

 

7.24         Intentionally

Omitted.

 

7.25         Fixed

Charge Coverage Ratio.  The

Parent and its Subsidiaries will maintain a Fixed Charge Coverage Ratio for

each period of four consecutive fiscal quarters ended on the last day of each

fiscal quarter of not less than 1.05:1.

 

7.26         EBITDA.  The Parent and its Domestic Subsidiaries will

maintain EBITDA (excluding corporate overhead charges) for each period of four

consecutive fiscal quarters of not less than $22,000,000.

 

7.27         Intentionally

Omitted.

 

7.28         Intentionally

Omitted.

 

7.29         Use of

Proceeds.  Such Borrower shall

not, and shall not suffer or permit any of its Subsidiaries to, use any portion

of the Loan proceeds, directly or indirectly, (i) to purchase or carry

Margin Stock, (ii) to repay or otherwise refinance indebtedness of a

Borrower or others incurred to purchase or carry Margin Stock, (iii) to

extend credit for the purpose of purchasing or carrying any Margin Stock, or

(iv) to acquire any security in any transaction that is subject to

Section 13 or 14 of the Exchange Act.

 

7.30         Adjusted

Tangible Net Worth.  The Parent

and its Subsidiaries will maintain Adjusted Tangible Net Worth, determined as

of the last day of each fiscal quarter of the Parent, of not less than

$75,000,000.

 

7.31         Foreign

Subsidiaries.  Such Borrower

will cause each of its Foreign Subsidiaries to pay its share of corporate

overhead as reasonably allocated among such Borrower and its Foreign

Subsidiaries in amounts and percentages which are consistent with past

practice.  Upon the request of the

Administrative Agent at the end of each Fiscal Year, such Borrower shall

deliver to the Administrative Agent a report, in detail reasonably satisfactory

to the Administrative Agent, of the allocations and payments of corporate

overhead demonstrating compliance with this Section 7.31.

 

7.32         Further

Assurances.  Such Borrower shall

execute and deliver, or cause to be executed and delivered, to the

Administrative Agent and/or the Lenders such documents and agreements, and

shall take or cause to be taken such actions, as the Administrative Agent or

any Lender may, from time to time, reasonably request to carry out the terms

and conditions of this Agreement and the other Loan Documents.

 

52

 

7.33         Pledge of Capital Stock of Foreign

Subsidiaries.  Within the

earlier of (i) 180 days after the Closing Date or (ii) 90 days after

the date on which the European Operations Reorganization has become effective

or upon the occurrence and during the continuance of a Default or an Event of

Default, if earlier, each Borrower and Guarantor shall (A) cause to be

taken all such actions as the Administrative Agent shall deem necessary or

advisable under the applicable laws of jurisdictions outside of the United

States to perfect the Lien on the capital stock or other equity interests of each

Foreign Subsidiary of such Borrower or Guarantor granted by such Borrower or

Guarantor to the Administrative Agent pursuant to the Pledge Agreement and

(B) deliver to the Administrative Agent legal opinions relating to the

matters described in the immediately preceding clause (A), which opinions shall

be in form and substance, and from counsel, reasonably satisfactory to the

Administrative Agent.

 

7.34         Salt

Lake City Real Estate.  Within

180 days after the Closing Date, unless Manufacturers’ Services Salt Lake City

Operations, Inc. shall have sold the Real Property described on Schedule

7.34 (the “Salt Lake City Real Property”) prior to such time, the

Borrowers shall have caused Manufacturers’ Services Salt Lake City Operations,

Inc. to deliver to the Administrative Agent, in each case in form and substance

satisfactory to the Administrative Agent:

 

(a)           a

fully executed and notarized Mortgage encumbering the fee interest of

Manufacturers’ Services Salt Lake City Operations, Inc. in the Salt Lake City

Real Property;

 

(b)           an

American Land Title Association form survey of the Salt Lake City Real Property

performed by an independent professional licensed land surveyor, certified to

the Administrative Agent and the title insurance company issuing the policy

referred to in clause (c) below (the “Title Insurance Company”) and

dated a date reasonably satisfactory to each of the Administrative Agent and

the Title Insurance Company;

 

(c)           a

fully paid American Land Title Association mortgagee title insurance policy

with respect to the Mortgage on the Salt Lake City Real Property; and

 

(d)           a

legal opinion of special Utah counsel for Manufacturers’ Services Salt Lake

City Operations, Inc.

 

7.35         Richmond,

Virginia Real Estate.  Neither such

Borrower nor any of its Subsidiaries shall conduct any business at the facility

leased by Hewlett Packard Company in Richmond, Virginia, other than such

business directly related to Hewlett Packard Company

 

7.36         Setoff

Rights.  (a) Neither such Borrower

nor any of its Domestic Subsidiaries shall consent to any setoff of any amounts

owing by such Borrower or Domestic Subsidiary to any Person (other than a

Lender) party to any license, contract or agreement with such Borrower or

Domestic Subsidiary, unless (i) such setoff is in the ordinary course of

business, (ii) if the amount owing by such Borrower or Domestic Subsidiary is

being setoff against an Account of a Borrower, such Account is not included as

an Eligible Account of such Borrower, (iii) there shall exist no Default or

Event of Default either immediately prior to or after giving effect to such

setoff and (iv) such setoff is not in an amount greater than $50,000.

 

53

 

(b)           Such

Borrower shall not permit any of its Foreign Subsidiaries to consent to any

setoff of any amounts owing by such Foreign Subsidiary to any Person (other

than a Lender) party to any license, contract or agreement with a Borrower or

Domestic Subsidiary against any amounts owing to such Borrower or Domestic

Subsidiary by such Person.

 

7.37         Spanish Financing Intercompany Debt.  The Parent shall not make any cash  payments in respect of Debt permitted by Section

7.15(l) until the Commitments have been terminated and all Obligations have

been paid in full; provided, however, that the Parent may repay

such Debt with monies received from another Foreign Subsidiary (other than from

monies  received by the Parent in

respect of allocations of corporate overhead charges that are required to be

made pursuant to Section 7.31).

 

ARTICLE 8

CONDITIONS OF LENDING

 

8.1           Conditions Precedent to Making of

Loans on the Closing Date.  The

obligation of the Revolving Lenders to make the initial Revolving Loans and the

Term Lenders to make the Term Loans on the Closing Date, and the obligation of

the Administrative Agent to cause the Letter of Credit Issuer to issue any

Letter of Credit on the Closing Date, are subject to the following conditions

precedent having been satisfied in a manner satisfactory to the Administrative

Agent and each Lender:

 

(a)           This Agreement and the other Loan

Documents shall have been executed by each party thereto and each Borrower

shall have performed and complied with all covenants, agreements and conditions

contained herein and in the other Loan Documents which are required to be

performed or complied with by such Borrower before or on such Closing Date.

 

(b)           Upon making the Revolving Loans

(including such Revolving Loans made to finance the Closing Fee and other fees

payable hereunder on the Closing Date or otherwise as reimbursement for fees,

costs and expenses then payable under this Agreement) and with all its

obligations current, the Borrowers shall have Availability of at least

$10,000,000 in the aggregate for all Borrowers.

 

(c)           All representations and warranties made

hereunder and in the other Loan Documents shall be true and correct in all

material respects as if made on such date (or, to the extent any such

representation or warranty specifically relates to an earlier date, such

representation or warranty shall have been true and correct in all material

respects as of such earlier date).

 

(d)           No Default or Event of Default shall

have occurred and be continuing after giving effect to the Loans to be made and

any Letters of Credit to be issued on the Closing Date.

 

(e)           The Administrative Agent and the

Lenders shall have received such opinions of counsel for the Borrowers and

their Subsidiaries as the Administrative Agent or any Lender shall

 

54

 

request, each such opinion to be in a form, scope and

substance reasonably satisfactory to the Administrative Agent, the Lenders and

their respective counsel.

 

(f)            Intentionally Omitted.

 

(g)           The Administrative Agent shall have

received:

 

(i)            each document (including, without

limitation, any Uniform Commercial Code financing statement) required by the

Security Agreement or any other Loan Document or under law or reasonably

requested by the Administrative Agent to be filed, registered or recorded in

order to create in favor of the Administrative Agent, for the benefit of the

Lenders, a perfected Lien on the Collateral, prior and superior in right to any

other Person (other than Permitted Liens), and in proper form for filing,

registration or recordation;

 

(ii)           UCC–3 Termination Statements

authorized for filing by the appropriate Person and such other instruments, in

form and substance satisfactory to the Administrative Agent, as shall be

necessary to terminate and satisfy all Liens on the Property of the Borrowers

and their respective Subsidiaries except Permitted Liens; and

 

(iii)          the results of a search of tax and

other Liens, and judgments and of the Uniform Commercial Code filings made with

respect to each of the Borrowers in the juris­dic­tions in which each Borrower

is doing business and/or in which any Collateral is located and in which

Uniform Commercial Code filings have been made against any Borrower in

(i) hereinabove.

 

(h)           The Administrative Agent shall have

received a copy of the certificate or articles of incorporation or constitutive

documents, in each case amended to date, of each of the Borrowers, certified as

of a recent date by the Secretary of State or other appropriate official of the

state of its organization and dated as of a recent date; a certificate of the

Secretary of each of the Borrowers, dated the Closing Date and certifying

(A) that attached thereto is a true and complete copy of such Borrower’s

By–laws as in effect on the date of such certificate and at all times

since a date prior to the date of the resolution described in item

(B) below, (B) that attached thereto is a true and complete copy of a

resolution adopted by such Borrower’s Board of Directors authorizing the

execution, delivery and perfor­mance of this Agreement and the other Loan

Documents to which it is a party and that such resolution has not been

modified, rescinded or amended and is in full force and effect, (C) that

such Borrower’s certificate or articles of incorporation or constitutive

documents has not been amended since the date of the last amendment thereto

shown on the certificate of good standing furnished hereinabove, and

(D) as to the incumbency and specimen signature of each of such Borrower’s

officers executing this Agreement or any other Loan Document delivered in

connection herewith or therewith, as applicable; a certificate of another of

such Borrower’s officers as to incumbency and signature of its Secretary; and

such other documents as the Administrative Agent or any Lender may reasonably

request.

 

55

 

(i)            The Administrative Agent shall have

received certificates of good standing, existence or its equivalent with

respect to each Borrower certified as of a recent date by the appropriate

Governmental Authorities of the state or other jurisdiction of incorporation or

organization and in each other jurisdiction in which qualification is necessary

in order for such Borrower to own or lease its property and conduct its

business.

 

(j)            The Administrative Agent shall have

received evidence that the Parent has received net cash proceeds in the amount

of at least $37,800,000 from the issuance of its 5.25% Series A

Convertible Preferred Stock pursuant to the Equity Agreements.

 

(k)           The Administrative Agent shall have

received evidence that (i) the Spanish Financing has been consummated on

terms and conditions satisfactory to the Administrative Agent and in compliance

with applicable laws, (ii) Global Manufacturers’ Services

Valencia S.A. has received net cash proceeds in the amount of at least $6,700,000

from the Spanish Financing, (iii) 

Global Manufacturers’ Services Valencia S.A. has used a portion of such

net cash proceeds to repay the approximately $5,000,000 of Debt of Global

Manufacturers’ Services Valencia S.A. to the Parent and other Borrowers

outstanding on or prior to the Closing Date and (iv) Global Manufacturers’

Services Valencia S.A. has made a loan to the Parent in the amount of the  net cash proceeds received from the Spanish

Financing less such amounts applied to the repayment of the Debt referred to in

clause (iii) above, which loan is subordinated to the Obligations on terms

acceptable to the Administrative Agent and otherwise having terms and

conditions acceptable to the Administrative Agent.

 

(l)            The Administrative Agent shall have

received evidence that all requisite governmental and third party consents and

approvals (including, without limitation, consents with respect to each

Borrower and each of its Subsidiaries) to the transactions contemplated by this

Agreement and the other Loan Documents have been obtained, and remain in

effect; all applicable waiting periods shall have expired without any action

being taken by any competent authority; and no law or regulation shall be

applicable in the judgment of the Lenders that restrains, prevents or imposes

materially adverse conditions upon any of the Loan Documents or any of the

transactions contemplated thereby.

 

(m)          In the sole judgment of the

Administrative Agent and each Lender, no Material Adverse Effect shall have

occurred since delivery of the audited financial statements for the Fiscal Year

ended December 31, 2001.

 

(n)           There shall exist no action, suit,

investigation, litigation or proceeding pending or threatened in any court or

before any arbitrator or governmental instrumentality that, in the sole

judgment of the Administrative Agent and each Lender, would (i) reasonably

be expected to have a Material Adverse Effect or (ii) affect this

Agreement or any of the other Loan Documents or any of the transactions contemplated

hereby or thereby in a manner material and adverse to the Lenders or impair the

Borrowers’ ability to perform their obligations thereunder.

 

56

 

(o)           Each Borrower shall have established

a Payment Account and a related lock–box service for collections of

Accounts at a Clearing Bank acceptable to the Administrative Agent and, in each

case, subject to a Blocked Account Agreement and other documentation acceptable

to the Administrative Agent and shall instruct each Account Debtor to make all

payments directly to such Payment Account or to the address established for

such lock-box service and shall provide evidence to the Administrative Agent,

satisfactory to the Administrative Agent, that such instructions have been

given.

 

(p)           The Administrative Agent and each

Lender shall have received and been satisfied with the annual financial

statements and interim financial statements referenced in Section 6.6(a),

pro forma consolidated financial statements for the Parent and its

Subsidiaries, and forecasts prepared by management of the Borrowers, in form

and substance satisfactory to the Administrative Agent and each Lender,

including balance sheets, income statements and cash flow statements on a

monthly basis for the Fiscal Year ending December 31, 2002.

 

(q)           The Administrative Agent and each

Lender shall be satisfied with the corporate and legal structure and

capitalization of the Borrowers and their Subsidiaries, including, without

limitation, the charter and bylaws of each Borrower and its Subsidiaries and

each agreement and instrument relating thereto.

 

(r)            Intentionally Omitted.

 

(s)           The Administrative Agent shall have

received copies of each of the material agreements listed on Schedule 6.26,

which agreements shall be satisfactory to the Administrative Agent and the

Lenders.

 

(t)            The Administrative Agent shall have

received a copy of the Appraisal made with respect to the Inventory of each of

the Borrowers described therein.

 

(u)           The Administrative Agent shall have

received a copy, certified by a Responsible Officer of the Parent as true and

complete, of the Equity Agreements as originally executed and delivered,

together with all schedules and exhibits thereto, and every other agreement,

instrument and document entered into or executed in connection therewith.

 

(v)           The Borrowers shall have paid all

fees and expenses of the Administrative Agent, the Attorney Costs and all fees

and expenses of the Term Lenders (including reasonable fees, expenses and

disbursements of one law firm retained by the Term Lenders) incurred in

connection with any of the Loan Documents and the transactions contemplated

thereby to the extent invoiced.

 

(w)          The Administrative Agent shall have

received evidence, in form, scope and substance reasonably satisfactory to the

Administrative Agent, of all insurance coverage as required by this Agreement.

 

57

 

(x)            The Administrative Agent and the

Lenders shall have had an opportunity, if they so choose, to examine the books

of account and other records and files of the Borrowers and to make copies

thereof, and to conduct a pre–closing audit which shall include, without

limitation, verification of Inventory, Accounts, and the Borrowing Base of each

Borrower, and the results of such examination and audit shall have been

satisfactory to the Administrative Agent and the Lenders in all respects.

 

(y)           All proceedings taken in connection

with the execution of this Agreement, the Term Loan Notes, all other Loan

Documents and all documents and papers relating thereto shall be satisfactory

in form, scope and substance to the Administrative Agent and the Lenders.

 

(z)            Without limiting the generality of

the items described above, the Borrowers and each Person guarantying or securing

payment of the Obligations shall have delivered or caused to be delivered to

the Administrative Agent (in form and substance reasonably satisfactory to the

Administrative Agent) the financial statements, instruments, resolutions,

documents, agreements, certificates, opinions and other items set forth on the

“Closing Checklist” delivered by the Administrative Agent to the Borrowers

prior to the Closing Date.

 

(aa)         The Borrowers shall have satisfied such

other conditions precedent reasonably requested by the Administrative Agent or

the Lenders.

 

The acceptance by any of the

Borrowers of any Loans made or any Letters of Credit issued on the Closing Date

shall be deemed to be a representation and warranty made by each Borrower to

the effect that all of the conditions precedent to the making of such Loans or

the issuance of such Letters of Credit have been satisfied, with the same

effect as delivery to the Administrative Agent and the Lenders of a certificate

signed by a Responsible Officer of such Borrower, dated the Closing Date, to

such effect.

 

Execution and delivery to

the Administrative Agent by a Lender of a counterpart of this Agreement shall

be deemed confirmation by such Lender that (i) all conditions precedent in

this Section 8.1 have been fulfilled to the satisfaction of such

Lender, (ii) the decision of such Lender to execute and deliver to the

Administrative Agent an executed counterpart of this Agreement was made by such

Lender independently and without reliance on the Administrative Agent or any

other Lender as to the satisfaction of any condition precedent set forth in

this Section 8.1, and (iii) all documents sent to such Lender

for approval consent or satisfaction were acceptable to such Lender.

 

8.2           Conditions Precedent to Each Loan.  The obligation of the Revolving Lenders or

the Term Lenders, as the case may be, to make each Loan, including the initial

Revolving Loans on the Closing Date and the Term Loans, and the obligation of

the Administrative Agent to cause the Letter of Credit Issuer to issue any

Letter of Credit shall be subject to the further conditions precedent that on

and as of the date of any such extension of credit:

 

(a)           The following statements shall be

true, and the acceptance by any Borrower of any extension of credit shall be

deemed to be a statement to the effect set forth in clauses (i), (ii)

and (iii) with the same effect as the delivery to the Administrative

Agent and the Lenders of a certificate

 

58

 

signed by a Responsible Officer of such Borrower,

dated the date of such extension of credit, stating that:

 

(i)            The representations and warranties

contained in this Agreement and the other Loan Documents are correct in all

material respects on and as of the date of such extension of credit as though

made on and as of such date, other than any such representation or warranty

which relates to a specified prior date and except to the extent the

Administrative Agent and the Lenders have been notified in writing by the

Borrowers that any representation or warranty is not correct and the Majority

Lenders have explicitly waived in writing compliance with such representation

or warranty; and

 

(ii)           No event has occurred and is

continuing, or would result from such extension of credit, which constitutes a

Default or an Event of Default; and

 

(iii)          No event has occurred and is

continuing, or would result from such extension of credit, which has had or

would have a Material Adverse Effect.

 

(b)           No such Borrowing shall exceed

Availability of the applicable Borrower, provided, however, that

the foregoing conditions precedent are not conditions to each Revolving Lender

participating in or reimbursing the Bank or the Administrative Agent for such

Lender’s Pro Rata Share of any Non–Ratable Loan or Agent Advance made in

accordance with the provisions of Sections 1.2(h) and (i).

 

ARTICLE 9

DEFAULT; REMEDIES

 

9.1           Events of

Default.  It shall constitute an

event of default (“Event of Default”) if any one or more of the

following shall occur for any reason:

 

(a)           any failure by any of the Borrowers

to pay (i) the principal in respect of any Obligations or any amounts in

reimbursement of a drawing or payment under any Letter of Credit or Credit

Support, in each instance, when due, whether upon demand or otherwise,

(ii) interest or premium on any of the Obligations or any fee or other

amount (other than amounts referred to in clause (i) above) owing

hereunder within 5 days of when due, whether upon demand or otherwise or (iii)

principal in respect of the Term Loans due and payable on a scheduled payment

date more than once during any period of four consecutive fiscal quarters of

the Parent as a result of the Borrowers not satisfying the conditions to

payment set forth in the proviso to the first sentence of Section 3.3;

 

(b)           any representation or warranty made

or deemed made by any Borrower in this Agreement or by any Borrower or any of

its Subsidiaries in any of the other Loan Documents, any Financial Statement,

or any certificate furnished by any Borrower or any of its Subsidiaries at any

 

59

 

time to the Administrative Agent or any Lender shall

prove to be untrue in any material respect as of the date on which made, deemed

made, or furnished;

 

(c)           (i) any default shall occur in

the observance or performance of any of the covenants and agreements contained

in Sections 5.2(n), 5.3, 7.2, 7.5, 7.11–7.30, or Section 11 of

the Security Agreement (provided, that if the Administrative Agent

requests that a Borrowing Base Certificate be delivered more frequently than

once per week, then a default under Section 5.2(n) shall only be an

Event of Default if such default shall continue for two (2) days or more),

(ii) any default shall occur in the observance or performance of any of

the covenants and agreements contained in Section 5.2 (other

than 5.2(n)) and such default shall continue for five (5) days or

more; or (iii)any default shall occur in the observance or performance of any

of the other covenants or agreements contained in any other Section of

this Agreement or any other Loan Document, any other Loan Documents, or any

other agreement entered into at any time to which any Borrower or any

Subsidiary and the Administrative Agent or any Lender are party (including in respect

of any Bank Products) and such default shall continue for twenty–five

(25) days or more;

 

(d)           any default shall occur with respect

to any Debt (other than the Obligations) of any Borrower or any of its

Subsidiaries in an outstanding principal amount which exceeds $750,000, or

under any agreement or instrument under or pursuant to which any such Debt may

have been issued, created, assumed, or guaranteed by any Borrower or any of its

Subsidiaries, and such default shall continue for more than the period of

grace, if any, therein specified, if the effect thereof (with or without the

giving of notice or further lapse of time or both) is to accelerate, or to

permit the holders of any such Debt to accelerate, the maturity of any such

Debt; or any such Debt shall be declared due and payable or be required to be

prepaid (other than by a regularly scheduled required prepayment) prior to the

stated maturity thereof;

 

(e)           any Borrower or any of its

Subsidiaries shall (i) file a voluntary petition in bankruptcy or file a

voluntary petition or an answer or otherwise commence any action or proceeding

seeking reorganization, arrangement or readjustment of its debts or for any

other relief under the federal Bankruptcy Code, as amended, or under any other

bankruptcy or insolvency act or law, state, federal or foreign, now or

hereafter existing, or consent to, approve of, or acquiesce in, any such

petition, action or proceeding; (ii) apply for or acquiesce in the

appointment of a receiver, assignee, liquidator, sequestrator, custodian,

monitor, trustee or similar officer for it or for all or any part of its

property; (iii) make an assignment for the benefit of creditors; or

(iv) be unable generally to pay its debts as they become due;

 

(f)            an involuntary petition shall be filed

or an action or proceeding otherwise commenced seeking reorganization,

arrangement, consolidation or readjustment of the debts of any Borrower or any

of its Subsidiaries or for any other relief under the federal Bankruptcy Code,

as amended, or under any other bankruptcy or insolvency act or law, state,

federal or foreign, now or hereafter existing and such petition or proceeding

shall not be dismissed within forty-five (45) days after the filing or

commencement thereof or an order of relief shall be entered with respect

thereto;

 

60

 

(g)           a receiver, assignee, liquidator,

sequestrator, custodian, monitor, trustee or similar officer for any Borrower

or any of its Subsidiaries or for all or any part of its property shall be

appointed or a warrant of attachment, execution or similar process shall be

issued against any part of the property of any Borrower or any of its

Subsidiaries;

 

(h)           any Borrower or any of its

Subsidiaries shall file a certificate of dissolution under applicable state law

or shall be liquidated, dissolved or wound-up or shall commence or have

commenced against it any action or proceeding for dissolution, winding-up or

liquidation, or shall take any corporate action in furtherance thereof; provided,

however, that nothing in this clause (h) shall prohibit a

Borrower or any of its Subsidiaries from entering into any transaction

expressly permitted under Section 7.2 or Section 7.11;

 

(i)            all or any material part of the

property of any Borrower or any of its Subsidiaries shall be nationalized,

expropriated or condemned, seized or otherwise appropriated, or custody or

control of such property or of such Borrower or such Subsidiary shall be

assumed by any Governmental Authority or any court of competent jurisdiction at

the instance of any Governmental Authority, except where contested in good

faith by proper proceedings diligently pursued where a stay of enforcement is

in effect;

 

(j)            Intentionally Omitted;

 

(k)           one or more judgments, orders,

decrees or arbitration awards is entered against any Borrower involving in the

aggregate liability (to the extent not covered by independent third-party

insurance as to which the insurer does not dispute coverage) as to any single

or related or unrelated series of transactions, incidents or conditions, of

$500,000 or more, and the same shall remain unsatisfied, unvacated and unstayed

pending appeal for a period of thirty (30) days after the entry thereof;

 

(l)            any loss, theft, damage or

destruction of any item or items of Collateral or other property of any

Borrower or any of its Subsidiaries occurs which could reasonably be expected

to cause a Material Adverse Effect and is not adequately covered by insurance;

 

(m)          there is filed against any Borrower or

any of its Subsidiaries any action, suit or proceeding under any federal or

state racketeering statute (including the Racketeer Influenced and Corrupt

Organization Act of 1970), which action, suit or proceeding (i) is not

dismissed within one hundred twenty (120) days, and (ii) could reasonably

be expected to result in the confiscation or forfeiture of any material portion

of the Collateral;

 

(n)           for any reason other than the failure

of the Administrative Agent to take any action available to it to maintain

perfection of the Agent’s Liens, pursuant to the Loan Documents, any Loan

Document ceases to be in full force and effect or any Loan Document is

challenged by any Borrower or any other obligor or any Lien with respect to any

material portion of the Collateral

 

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intended to be secured thereby ceases to be, or is

not, valid, perfected and prior to all other Liens (other than Permitted Liens)

or is terminated, revoked or declared void;

 

(o)           an ERISA Event shall occur with

respect to a Pension Plan or Multi–employer Plan which has resulted or

could reasonably be expected to result in liability of any Borrower or any of

its Subsidiaries under Title IV of ERISA to the Pension Plan, Multi–employer

Plan or the PBGC in an aggregate amount in excess of $500,000; (ii) the

aggregate amount of Unfunded Pension Liability among all Pension Plans at any

time exceeds $500,000; or (iii) any Borrower, any of its Subsidiaries or

any ERISA Affiliate shall fail to pay when due, after the expiration of any

applicable grace period, any installment payment with respect to its withdrawal

liability under Section 4201 of ERISA under a Multi-employer Plan in an

aggregate amount in excess of $500,000;

 

(p)           there occurs a Change of Control; or

 

(q)           there occurs an event having a

Material Adverse Effect.

 

9.2           Remedies.

 

(a)           If

a Default or an Event of Default exists, the Administrative Agent may, in its

discretion, and shall, at the direction of the Majority Revolving Lenders, do

one or more of the following at any time or times and in any order, without

notice to or demand on the Borrowers: 

(i) reduce the Maximum Revolver Amount, or the advance rates

against Eligible Accounts and/or Eligible Inventory used in computing the

Borrowing Base of any of the Borrowers, or reduce one or more of the other

elements used in computing the Borrowing Base of any of the Borrowers;

(ii) restrict the amount of or refuse to make Revolving Loans; and

(iii) restrict or refuse to provide Letters of Credit or Credit Support.  If an Event of Default exists, the

Administrative Agent shall, at the direction of the Majority Lenders (except

with respect to clauses (A) and (C) below, which the Administrative

Agent will do at the direction of the Majority Revolving Lenders), do one or

more of the following, in addition to the actions described in the preceding

sentence, at any time or times and in any order, without notice to or demand on

the Borrowers:  (A) terminate the

Commitments and this Agreement; (B) declare any or all Obligations to be

immediately due and payable; provided, however, that upon the

occurrence of any Event of Default described in Sections 9.1(e), 9.1(f),

9.1(g), or 9.1(h), the Commitments shall automatically and

immediately expire and all Obligations shall automatically become immediately

due and payable without notice or demand of any kind; (C) require the

Borrowers to cash collateralize all outstanding Letter of Credit Obligations;

and (D) pursue its other rights and remedies under the Loan Documents and

applicable law.

 

(b)           In

the event that an Event of Default shall occur under Section 9.1(a)

as a result of principal or cash interest payable on the Term Loans not being

paid when due and such Event of Default shall continue for 60 or more

consecutive days, the Administrative Agent, at the direction of the Majority

Term Lenders, shall declare any and all of the Obligations with respect to the

Term Loans to be immediately due and payable and commence and pursue such other

Enforcement Actions as the Administrative Agent in its good faith judgment

deems appropriate; provided, that (i) such Event of Default has not been

cured or waived, (ii) in the good faith judgment of the Administrative Agent,

taking an

 

62

 

Enforcement Action is permitted under the terms of this Agreement, the

other Loan Documents and applicable law and (iii) in the good faith judgment of

the Administrative Agent, taking an Enforcement Action at such time would not

impair the values to be realized for the Borrowers or Guarantors or the

Collateral or diminish the likelihood of the Obligations being repaid in full

in the order of priority set forth in Section 3.8.

 

(c)           If

an Event of Default has occurred and is continuing:  (i) the Administrative Agent shall have for the benefit of

the Lenders, in addition to all other rights of the Administrative Agent and

the Lenders, the rights and remedies of a secured party under the Loan

Documents and the UCC; (ii) the Administrative Agent may, at any time,

take possession of the Collateral and keep it on any Borrower’s premises, at no

cost to the Administrative Agent or any Lender, or remove any part of it to

such other place or places as the Administrative Agent may desire, or the

Borrowers shall, upon the Administrative Agent’s demand, at the Borrowers’

cost, assemble the Collateral and make it available to the Administrative Agent

at a place reasonably convenient to the Administrative Agent; and

(iii) subject to the UCC or other applicable law, the Administrative Agent

may sell and deliver any Collateral at public or private sales, for cash, upon

credit or otherwise, at such prices and upon such terms as the Administrative

Agent deems advisable, in its sole discretion, and may, if the Administrative

Agent deems it reasonable, postpone or adjourn any sale of the Collateral by an

announcement at the time and place of sale or of such postponed or adjourned

sale without giving a new notice of sale. 

Without in any way requiring notice to be given in the following manner,

each Borrower agrees that any notice by the Administrative Agent of sale,

disposition or other intended action hereunder or in connection herewith,

whether required by the UCC or otherwise, shall constitute reasonable notice to

such Borrower if such notice is mailed by registered or certified mail, return

receipt requested, postage prepaid, or is delivered personally against receipt,

at least ten (10) days prior to such action to such Borrower’s address (or the

Parent’s address on behalf of such Borrower) specified in or pursuant to Section 14.8.  If any Collateral is sold on terms other

than payment in full at the time of sale, no credit shall be given against the

Obligations until the Administrative Agent or the Lenders receive payment, and

if the buyer defaults in payment, the Administrative Agent may resell the

Collateral without further notice to the Borrowers.  In the event the Administrative Agent seeks to take possession of

all or any portion of the Collateral by judicial process, each Borrower irrevocably

waives:  (A) the posting of any

bond, surety or security with respect thereto which might otherwise be

required; (B) any demand for possession prior to the commencement of any

suit or action to recover the Collateral; and (C) any requirement that the

Administrative Agent retain possession and not dispose of any Collateral until

after trial or final judgment.  Each

Borrower agrees that the Administrative Agent has no obligation to preserve

rights to the Collateral or marshal any Collateral for the benefit of any

Person.  The Administrative Agent is

hereby granted a license or other right to use, without charge, each Borrower’s

labels, patents, copyrights, name, trade secrets, trade names, trademarks, and

advertising matter, or any similar property, in completing production of,

advertising or selling any Collateral, and each Borrower’s rights under all

licenses and all franchise agreements shall inure to the Administrative Agent’s

benefit for such purpose.  The proceeds

of sale shall be applied first to all expenses of sale, including attorneys’

fees, and then to the Obligations.  The

Administrative Agent will return any excess to the Borrowers and the Borrowers

shall remain, jointly and severally, liable for any deficiency.

 

63

 

(d)           If

an Event of Default occurs, each Borrower hereby waives all rights to notice

and hearing prior to the exercise by the Administrative Agent of the

Administrative Agent’s rights to repossess the Collateral without judicial process

or to reply, attach or levy upon the Collateral without notice or hearing.

 

ARTICLE 10

TERM AND TERMINATION

 

10.1         Term and

Termination.  The term of this

Agreement shall end on the Stated Termination Date unless sooner terminated in

accordance with the terms hereof.  The

Administrative Agent upon direction from the Majority Revolving Lenders may

terminate this Agreement without notice upon the occurrence of an Event of

Default.  Upon the effective date of

termination of this Agreement for any reason whatsoever, all Obligations

(including all unpaid principal, accrued and unpaid interest and any early

termination or prepayment fees or penalties) shall become immediately due and

payable and the Borrowers for whose account Letters of Credit were issued shall

immediately arrange for the cancellation and return of any such Letters of

Credit then outstanding. 

Notwithstanding the termination of this Agreement, until all Obligations

are indefeasibly paid and performed in full in cash, each of the Borrowers shall

remain bound by the terms of this Agreement and shall not be relieved of any of

its Obligations hereunder or under any other Loan Document, and the

Administrative Agent and the Lenders shall retain all their rights and remedies

hereunder (including the Administrative Agent’s Liens in and all rights and

remedies with respect to all then existing and after-arising Collateral).

 

ARTICLE 11

AMENDMENTS;

WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

 

11.1         Amendments

and Waivers.

 

(a)           No

amendment or waiver of any provision of this Agreement or any other Loan

Document, and no consent with respect to any departure by a Borrower therefrom,

shall be effective unless the same shall be in writing and signed by the

Majority Lenders (or by the Administrative Agent at the written request of the

Majority Lenders), except as provided below, and the Borrowers and then any

such waiver or consent shall be effective only in the specific instance and for

the specific purpose for which given; except that:

 

(i)            any waiver, amendment or consent

which shall do any of the following shall be in writing and signed by all the

Lenders and the Borrowers and acknowledged by the Administrative Agent:

 

(A)          change this Section or any provision

of this Agreement providing for consent or other action by all Lenders;

 

(B)           release any Guaranties of the

Obligations or release Collateral other than as permitted by Section 12.11;

 

64

 

(C)           change the definitions of “Majority

Lenders” or “Required Lenders”;

 

(D)          change the percentage of the

Commitments or of the aggregate unpaid principal amount of the Loans or Term

Loans which is required for the Lenders or any of them to take any action

hereunder (other than any change to the definitions of “Majority Revolving

Lenders” or “Majority Term Lenders”);

 

(E)           change the order in which payments

are applied to the Obligations as set forth in Section 3.8;

 

(F)           consent to the assignment or transfer

by any Borrower of any of its rights and obligations under this Agreement;

 

(G)           extend the Stated Termination Date;

 

(H)          (i) increase any of the percentages

(in excess of the stated percentages in effect on the date hereof) set forth in

clauses (f) or (s) in the definition of Eligible Accounts or (ii) increase the

number of days (in excess of the number of days in effect on the date hereof)

which must elapse or for which a Borrower’s Account must be past due in order

for such Account to be classified as ineligible under clause (a) of the

definition of Eligible Accounts; or

 

(I)            increase any of the amounts (in

excess of the stated amounts in effect on the date hereof) set forth in the

definition of Maximum Inventory Loan Amount;

 

(ii)           any such waiver, amendment or consent

which shall do any of the following shall be in writing and signed by each of

the Revolving Lenders directly affected thereby and the Borrowers and

acknowledged by the Administrative Agent:

 

(A)          increase the Revolving Credit

Commitment of such Revolving Lender over the amount thereof then in effect (except

as provided in Section 1.6) or extend the Revolving Credit

Commitment of such Revolving Lender;

 

(B)           postpone or delay any date fixed by

this Agreement or any other Loan Document for any payment of principal,

interest, fees or other amounts due to such Revolving Lender hereunder or under

any other Loan Document;

 

(C)           reduce the principal of, or the rate

of interest specified herein on, any Revolving Loan owing to such Revolving

Lender or any fees or other amounts payable to such Revolving Lender hereunder

or under any other Loan Document;

 

(iii)          any such waiver, amendment or consent

which shall do any of the following shall be in writing and signed by each of

the Revolving Lenders and the Borrowers and acknowledged by the Administrative

Agent:

 

65

 

(A)          change the percentage of the Revolving

Credit Commitments or of the aggregate unpaid principal amount of the Revolving

Loans or other Obligations related to the revolving credit facility provided

hereunder which is required for the Revolving Lenders or any of them to take

any action hereunder;

 

(B)           change the definition of “Majority

Revolving Lenders”;

 

(C)           change any provision of this

Agreement providing for consent or other action by the Majority Revolving

Lenders; or

 

(D)          increase the Maximum Revolver Amount

(except as provided in Section 1.6) or the Letter of Credit

Subfacility; or

 

(E)           amend Section 11.2 to provide

for additional restrictions (other than those restrictions in effect on the

date hereof) on the ability of any Revolving Lender to assign and delegate all,

or any ratable part of all, of its Revolving Loans, Revolving Credit Commitment

and the other rights and obligations of such Revolving Lender under this

Agreement and the other Loan Documents;

 

(iv)          any such waiver, amendment or consent

which shall do any of the following shall be in writing and signed by each of

the Term Lenders directly affected thereby and the Borrowers and acknowledged

by the Administrative Agent:

 

(A)          increase the Term Loan Commitment of

such Term Lender over the amount thereof then in effect;

 

(B)           postpone or delay any date fixed by

this Agreement or any other Loan Document for any payment of principal,

interest, fees or other amounts due to such Term Lender hereunder or under any

other Loan Document;

 

(C)           reduce the principal of, or the rate

of interest specified herein on, any Term Loan owing to such Term Lender or any

fees or other amounts payable to such Term Lender hereunder or under any other

Loan Document; or

 

(D)          change Section 9.2(b);

 

(v)           any such waiver, amendment or consent

which shall do any of the following shall be in writing and signed by the

Majority Term Lenders and the Borrowers and acknowledged by the Administrative

Agent:

 

66

 

(A)          change the percentage of the Term Loan

Commitments or of the aggregate unpaid principal amount of the Term Loans which

is required for the Term Lenders or any of them to take any action hereunder;

 

(B)           change the definition of “Majority

Term Lenders”;

 

(C)           change any provision of this

Agreement providing for consent or other action by the Majority Term Lenders;

or

 

(D)          increase the Maximum Revolver Amount

to an amount greater than $137,500,000;

 

(vi)          any such waiver, amendment or consent

which shall do any of the following shall be in writing and signed by the

Majority Revolving Lenders, the Majority Term Lenders and the Borrowers and

acknowledged by the Administrative Agent:

 

(A)          increase the maximum principal amount

of Agent Advances permitted to be made to the Borrowers on an aggregate basis

under Section 1.2(i);

 

(B)           amend Section 7.11 to permit

additional sales or dispositions of assets or capital stock or other equity

interests of any Borrower or Subsidiary;

 

(C)           amend the definition of “Borrowing

Base” or amend any of the defined terms used therein so as to result in an

increase in the aggregate Availability of the Borrowers (provided, that

nothing herein shall be deemed to affect or limit the discretion granted to the

Administrative Agent pursuant to any of such defined terms or the exercise of

such discretion by the Administrative Agent from time to time);

 

(D)          amend paragraphs (a),  (b)

or (c) of Section 11 of the Security Agreement;

 

(E)           amend the definition of “Availability”;

or

 

(F)           amend Section 3.3 (except as

provided in subclauses (B) and (C) of clause (iv) above);

 

(vii)         any such waiver, amendment or consent

which shall amend Section 11.2 to provide for additional restrictions

(other than those restrictions in effect on the date hereof) on the ability of

any  Term Lender to assign and delegate

all, or any ratable part of all, of its Term Loans and the other rights and

obligations of such Term Lender under this Agreement and the other Loan

Documents shall be in writing and signed by each of the Term Lenders and the

Borrowers and acknowledged by the Administrative Agent;

 

67

 

provided, however,

the Administrative Agent may, in its sole discretion and notwithstanding the above

limitations (including, without limitation, those contained in clause

(iii)(D) above) and any other terms of this Agreement, make Agent Advances

in accordance with Section 1.2(i) and, provided  further,

that no amendment, waiver or consent shall, unless in writing and signed by the

Administrative Agent, affect the rights or duties of the Administrative Agent

under this Agreement or any other Loan Document and provided  further,

that Schedule 1.2 hereto (Commitments) may be amended from time to

time by the Administrative Agent alone to reflect assignments of Commitments in

accordance herewith and any increase in the Revolving Credit Commitment or Term

Loan Commitment of any Lender made in accordance herewith (including, without

limitation, in accordance with clause (ii)(A) or (iv)(A), as

applicable, or Section 1.6) and provided, even, further,

that this Agreement and the other Loan Documents may be amended from time to

time by the Administrative Agent and the relevant Borrowers or Guarantors alone

(i.e. without any Lender consent or approval) to add a Domestic Subsidiary of a

Borrower as a Guarantor hereunder or as a grantor under the Security Agreement

or other applicable Loan Documents or to subject to the Lien of the Pledge

Agreement capital stock or other equity interests not then subject to the Lien

of the Pledge Agreement or to effectuate a Revolver Increase pursuant to Section

1.6.

 

(b)           If any fees are paid

to the Lenders as consideration for amendments, waivers or consents with

respect to this Agreement, at the Administrative Agent’s election, such fees

may be paid only to those Lenders that agree to such amendments, waivers or

consents within the time specified for submission thereof.

 

(c)            If, in connection

with any proposed amendment, waiver or consent (a ”Proposed Change”):

 

(i)             requiring the

consent of all Lenders, the consent of the Majority Lenders is obtained, but

the consent of other Lenders is not obtained (any such Lender whose consent is

not obtained as described in this clause (i) or in either of clauses (ii)

or (iii) below being referred to as a “Non-Consenting Lender”), or

 

(ii)            requiring the

consent of all Revolving Lenders, the consent of the Majority Revolving Lenders

is obtained, or

 

(iii)           requiring the

consent of all Term Lenders, the consent of the Majority Term Lenders is

obtained,

 

then, so long as the Administrative Agent is not a Non-Consenting

Lender, at the Borrowers’ request, the Administrative Agent or an Eligible

Assignee shall have the right (but not the obligation) with the Administrative

Agent’s approval, to purchase from the Non-Consenting Lenders, and the

Non-Consenting Lenders agree that they shall sell, all the Non-Consenting

Lenders’ Commitments and Loans for an amount equal to the principal balances

thereof and all accrued interest and fees with respect thereto through the date

of sale pursuant to Assignment and Acceptance Agreement(s), without premium or

discount.

 

68

 

11.2         Assignments; Participations.

 

(a)           Any Lender may, with the written

consent of the Administrative Agent (which consent shall not be unreasonably

withheld) and (i) if prior to the date on which the Administrative Agent

has advised the Parent that the primary syndication of the revolving credit

facility has been completed (as determined by the Administrative Agent), in

consultation with the Parent or (ii) thereafter, so long as no Default or

Event of Default has occurred and is continuing, with the written consent of

the Parent (which consent shall not unreasonably be withheld), assign and

delegate to one or more Eligible Assignees (provided that no consent of the

Administrative Agent shall be required in connection with any assignment and

delegation by a Lender to an Affiliate of such Lender) (each an “Assignee”)

all, or any ratable part of all, of the Loans, the Commitments and the other

rights and obligations of such Lender hereunder, in a minimum amount of

$3,000,000 (provided that, unless an assignor Lender has assigned and delegated

all of its Loans and Commitments, no such assignment and/or delegation shall be

permitted unless, after giving effect thereto, such assignor Lender retains a

Commitment (or with respect to a Term Lender after the Closing Date, Term

Loans) in a minimum amount of $3,000,000; provided, however, that

the Borrowers and the Administrative Agent may continue to deal solely and

directly with such Lender in connection with the interest so assigned to an

Assignee until (i) written notice of such assignment, together with

payment instructions, addresses and related information with respect to the

Assignee, shall have been given to the Borrowers and the Administrative Agent

by such Lender and the Assignee; (ii) such Lender and its Assignee shall

have delivered to the Borrowers and the Administrative Agent an Assignment and

Acceptance in the form of Exhibit F (“Assignment and Acceptance”)

together with any note or notes subject to such assignment and (iii) the

assignor Lender or Assignee has paid to the Administrative Agent a processing

fee in the amount of $3,500.  Each of

the Borrowers agrees to promptly execute and deliver new promissory notes and

replacement promissory notes as reasonably requested by the Administrative

Agent to evidence assignments of the Loans and Commitments in accordance

herewith.

 

(b)           From and after the date that the

Administrative Agent notifies the assignor Lender that it has received an

executed Assignment and Acceptance and payment of the above-referenced

processing fee, (i) the Assignee thereunder shall be a party hereto and,

to the extent that rights and obligations, including, but not limited to, the

obligation to participate in Letters of Credit and Credit Support have been

assigned to it pursuant to such Assignment and Acceptance, shall have the

rights and obligations of a Term Lender or a Revolving Lender, as applicable,

under the Loan Documents, and (ii) the assignor Lender shall, to the

extent that rights and obligations hereunder and under the other Loan Documents

have been assigned by it pursuant to such Assignment and Acceptance, relinquish

its rights and be released from its obligations under this Agreement (and in

the case of an Assignment and Acceptance covering all or the remaining portion

of an assigning Lender’s rights and obligations under this Agreement, such

Lender shall cease to be a party hereto).

 

(c)           By executing and delivering an

Assignment and Acceptance, the assigning Lender thereunder and the Assignee

thereunder confirm to and agree with each other and the other parties hereto as

follows:  (i) other than as

provided in such Assignment and Acceptance, such assigning Lender makes no

representation or warranty and assumes no responsibility with respect to any

statements, warranties or representations made in or in connection with this Agreement

or the execution, legality, validity,

 

69

 

 

enforceability, genuineness, sufficiency or

value of this Agreement or any other Loan Document furnished pursuant hereto or

the attachment, perfection or priority of any Lien granted by a Borrower to the

Administrative Agent or any Lender in the Collateral; (ii) such assigning

Lender makes no representation or warranty and assumes no responsibility with

respect to the financial condition of the Borrowers or the performance or

observance by the Borrowers of any of their obligations under this Agreement or

any other Loan Document furnished pursuant hereto; (iii) such Assignee

confirms that it has received a copy of this Agreement, together with such

other documents and information as it has deemed appropriate to make its own

credit analysis and decision to enter into such Assignment and Acceptance;

(iv) such Assignee will, independently and without reliance upon the

Administrative Agent, such assigning Lender or any other Lender, and based on

such documents and information as it shall deem appropriate at the time,

continue to make its own credit decisions in taking or not taking action under

this Agreement; (v) such Assignee appoints and authorizes the Administrative

Agent to take such action as agent on its behalf and to exercise such powers

under this Agreement as are delegated to the Administrative Agent by the terms

hereof, together with such powers, including the discretionary rights and

incidental power, as are reasonably incidental thereto; and (vi) such

Assignee agrees that it will perform in accordance with their terms all of the

obligations which by the terms of this Agreement are required to be performed

by it as a Lender.

 

(d)           Immediately upon satisfaction of the

requirements of Section 11.2(a), this Agreement shall be deemed to

be amended to the extent, but only to the extent, necessary to reflect the

addition of the Assignee and the resulting adjustment of the Commitments, if

any, arising therefrom. The Commitment allocated to each Assignee shall reduce

such Commitments of the assigning Lender pro  tanto.

 

(e)           Any Lender may at any time sell to

one or more commercial banks, financial institutions, or other Persons not

Affiliates of the Borrowers (a “Participant”) participating interests in

any Loans, the Commitment of that Lender and the other interests of that Lender

(the “originating Lender”) hereunder and under the other Loan Documents; provided,

however, that (i) the originating Lender’s obligations under this

Agreement shall remain unchanged, (ii) the originating Lender shall remain

solely responsible for the performance of such obligations, (iii) the

Borrowers and the Administrative Agent shall continue to deal solely and

directly with the originating Lender in connection with the originating

Lender’s rights and obligations under this Agreement and the other Loan

Documents, and (iv) no Lender shall transfer or grant any participating

interest under which the Participant has rights to approve any amendment to, or

any consent or waiver with respect to, this Agreement or any other Loan

Document (except to the extent that such amendment, waiver or consent both

directly affects the Participant and would (x) increase or extend the

Commitment of the originating Lender, (y) postpone or delay any date fixed

by this Agreement or any other Loan Document for any payment of principal,

interest, fees or other amounts due to the originating Lender hereunder or

under any other Loan Document or (z) reduce the principal of, or the rate

of interest specified herein on, any Loan owing to the originating Lender or

any fees or other amounts payable to the originating Lender hereunder or under

any other Loan Document), and all amounts payable by the Borrowers hereunder

shall be determined as if such Lender had not sold such participation; except

that, if amounts outstanding under this Agreement are due and unpaid, or shall

have become due and payable upon the occurrence of an Event of Default, each

Participant shall be deemed to have the right of set–off in respect of

its participating interest in amounts owing under this Agreement to the same

extent 

 

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and subject to the same limitation as if the

amount of its participating interest were owing directly to it as a Lender

under this Agreement.

 

(f)            Notwithstanding any other provision

in this Agreement, any Lender may at any time create a security interest in, or

pledge, all or any portion of its rights under and interest in this Agreement

in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB

or U.S. Treasury Regulation 31 CFR § 203.14, and such Federal Reserve Bank

may enforce such pledge or security interest in any manner permitted under

applicable law.

 

ARTICLE  12

THE AGENTS

 

12.1         Appointment and Authorization.  Each Lender hereby designates and appoints

the Bank as its Administrative Agent under this Agreement and the other Loan

Documents and each Lender hereby irrevocably authorizes the Administrative

Agent to take such action on its behalf under the provisions of this Agreement

and each other Loan Document and to exercise such powers and perform such

duties as are expressly delegated to it by the terms of this Agreement or any

other Loan Document, together with such powers as are reasonably incidental

thereto.  The Administrative Agent

agrees to act as such on the express conditions contained in this Article 12.  The provisions of this Article 12

are solely for the benefit of the Administrative Agent and the Lenders and the

Borrowers shall have no rights as a third party beneficiary of any of the

provisions contained herein. 

Notwithstanding any provision to the contrary contained elsewhere in

this Agreement or in any other Loan Document, the Administrative Agent shall

not have any duties or responsibilities, except those expressly set forth

herein, nor shall the Administrative Agent have or be deemed to have any

fiduciary relationship with any Lender, and no implied covenants, functions,

responsibilities, duties, obligations or liabilities shall be read into this

Agreement or any other Loan Document or otherwise exist against the

Administrative Agent.  Without limiting

the generality of the foregoing sentence, the use of the term “agent” in this

Agreement with reference to the Administrative Agent is not intended to connote

any fiduciary or other implied (or express) obligations arising under agency

doctrine of any applicable law. 

Instead, such term is used merely as a matter of market custom, and is

intended to create or reflect only an administrative relationship between

independent contracting parties.  Except

as expressly otherwise provided in this Agreement, the Administrative Agent

shall have and may use its sole discretion with respect to exercising or refraining

from exercising any discretionary rights or taking or refraining from taking

any actions which the Administrative Agent is expressly entitled to take or

assert under this Agreement and the other Loan Documents, including

(a) the determination of the applicability of ineligibility criteria with

respect to the calculation of the Borrowing Base of a Borrower, (b) the

making of Agent Advances pursuant to Section 1.2(i), and

(c) the exercise of remedies pursuant to Section 9.2, and any

action so taken or not taken shall be deemed consented to by the Lenders.

 

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12.2         Delegation of Duties.  The Administrative Agent may execute any of

its duties under this Agreement or any other Loan Document by or through agents,

employees or attorneys–in–fact and shall be entitled to advice of

counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be

responsible for the negligence or misconduct of any agent or attorney–in–fact

that it selects as long as such selection was made without gross negligence or

willful misconduct.

 

12.3         Liability of Administrative Agent.  None of the Agent–Related Persons

shall (i) be liable for any action taken or omitted to be taken by any of

them under or in connection with this Agreement or any other Loan Document or

the transactions contemplated hereby (except for its own gross negligence or

willful misconduct) or (ii) be responsible in any manner to any of the

Lenders for any recital, statement, representation or warranty made by any

Borrower or any Subsidiary or Affiliate of such Borrower, or any officer

thereof, contained in this Agreement or in any other Loan Document, or in any

certificate, report, statement or other document referred to or provided for

in, or received by the Administrative Agent under or in connection with, this

Agreement or any other Loan Document, or the validity, effectiveness,

genuineness, enforceability or sufficiency of this Agreement or any other Loan

Document, or for any failure of any Borrower or any other party to any Loan

Document to perform its obligations hereunder or thereunder.  No Agent–Related Person shall be under

any obligation to any Lender to ascertain or to inquire as to the observance or

performance of any of the agreements contained in, or conditions of, this

Agreement or any other Loan Document, or to inspect any of the properties,

books or records of any of the Borrowers or any of the Subsidiaries or

Affiliates of the Borrowers.

 

12.4         Reliance by Administrative Agent.  The Administrative Agent shall be entitled

to rely, and shall be fully protected in relying, upon any writing, resolution,

notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or

telephone message, statement or other document or conversation believed by it

to be genuine and correct and to have been signed, sent or made by the proper

Person or Persons, and upon advice and statements of legal counsel (including

counsel to the Borrowers), independent accountants and other experts selected

by the Administrative Agent.  The

Administrative Agent shall be fully justified in failing or refusing to take

any action under this Agreement or any other Loan Document unless it shall

first receive such advice or concurrence of the Majority Lenders, the Majority

Revolving Lenders or the Majority Term Lenders, as appropriate, as it deems

appropriate and, if it so requests, it shall first be indemnified to its

satisfaction by the Lenders against any and all liability and expense which may

be incurred by it by reason of taking or continuing to take any such

action.  The Administrative Agent shall

in all cases be fully protected in acting, or in refraining from acting, under

this Agreement or any other Loan Document in accordance with a request or consent

of the Majority Lenders (or all Lenders or the Majority Revolving Lenders or

the Majority Term Lenders, as appropriate, if so required by Section 11.1)

and such request and any action taken or failure to act pursuant thereto shall

be binding upon all of the Lenders.

 

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12.5         Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or

notice of the occurrence of any Default or Event of Default, unless the

Administrative Agent shall have received written notice from a Lender or a

Borrower referring to this Agreement, describing such Default or Event of

Default and stating that such notice is a “notice of default.”  In the event that the Administrative Agent

shall receive such a notice, the Administrative Agent will notify the Lenders

of its receipt of any such notice.  The

Administrative Agent shall take such action with respect to such Default or

Event of Default as may be requested by the Majority Lenders (or the Majority

Revolving Lenders, if applicable) in accordance with Section 9; provided,

however, that unless and until the Administrative Agent has received any

such request, the Administrative Agent may (but shall not be obligated to) take

such action, or refrain from taking such action, with respect to such Default

or Event of Default as it shall deem advisable.

 

12.6         Credit Decision.  Each Lender acknowledges that none of the Agent–Related

Persons has made any representation or warranty to it, and that no act by the

Administrative Agent hereinafter taken, including any review of the affairs of

a Borrower or any Affiliate thereof, shall be deemed to constitute any

representation or warranty by any Agent-Related Person to any Lender.  Each Lender represents to the Administrative

Agent that it has, independently and without reliance upon any Agent-Related

Person and based on such documents and information as it has deemed

appropriate, made its own appraisal of and investigation into the business,

prospects, operations, property, financial and other condition and

creditworthiness of the Borrowers and their Affiliates, and all applicable bank

regulatory laws relating to the transactions contemplated hereby, and made its

own decision to enter into this Agreement and to extend credit to the

Borrowers.  Each Lender also represents

that it will, independently and without reliance upon any Agent-Related Person

and based on such documents and information as it shall deem appropriate at the

time, continue to make its own credit analysis, appraisals and decisions in

taking or not taking action under this Agreement and the other Loan Documents,

and to make such investigations as it deems necessary to inform itself as to

the business, prospects, operations, property, financial and other condition

and creditworthiness of the Borrowers. Except for notices, reports and other

documents expressly herein required to be furnished to the Lenders by the

Administrative Agent, the Administrative Agent shall not have any duty or

responsibility to provide any Lender with any credit or other information

concerning the business, prospects, operations, property, financial and other

condition or creditworthiness of any of the Borrowers which may come into the

possession of any of the Agent–Related Persons.

 

12.7         Indemnification.  Whether or not the transactions contemplated hereby are

consummated, the Lenders shall indemnify upon demand the Agent–Related

Persons (to the extent not reimbursed by or on behalf of the Borrowers and

without limiting the obligation of the Borrowers to do so), in accordance with

their Pro Rata Shares, from and against any and all Indemnified Liabilities as

such term is defined in Section 14.11; provided, however,

that no Lender shall be liable for the payment to the Agent–Related

Persons of any portion of such Indemnified Liabilities resulting solely from

such Person’s gross negligence or willful misconduct.  Without limitation of the foregoing, each Lender shall reimburse

the Administrative Agent upon demand for its Pro Rata Share of any costs or out–of–pocket

expenses (including Attorney Costs) incurred by the Administrative Agent in

connection with the preparation, execution, delivery, administration,

modification, amendment or enforcement (whether through negotiations, legal

proceedings or otherwise) of, or legal advice in respect of rights or

responsibilities under, this 

 

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Agreement, any other Loan Document, or any

document contemplated by or referred to herein, to the extent that the

Administrative Agent is not reimbursed for such expenses by or on behalf of the

Borrowers.  The undertaking in this

Section shall survive the payment of all Obligations hereunder and the

resignation or replacement of the Administrative Agent.

 

12.8         Administrative Agent in Individual

Capacity.  The Bank and its

Affiliates may make loans to, issue letters of credit for the account of,

accept deposits from, acquire equity interests in and generally engage in any

kind of banking, trust, financial advisory, underwriting or other business with

the Parent or its Subsidiaries or Affiliates as though the Bank were not the

Administrative Agent hereunder and without notice to or consent of the

Lenders.  The Bank or its Affiliates may

receive information regarding the Parent, its Subsidiaries, its Affiliates or

Account Debtors (including information that may be subject to confidentiality

obligations in favor of the Parent or such Subsidiary or Affiliate) and

acknowledge that the Administrative Agent and the Bank shall be under no

obligation to provide such information to them.  With respect to its Loans, the Bank shall have the same rights

and powers under this Agreement as any other Lender and may exercise the same

as though it were not the Administrative Agent, and the terms “Lender” and

“Lenders” include the Bank in its individual capacity.

 

12.9         Successor Administrative Agent.  The Administrative Agent may resign as

Administrative Agent upon at least 30 days’ prior notice to the Lenders and the

Borrowers, such resignation to be effective upon the acceptance of a successor

administrative agent to its appointment as Administrative Agent.  In the event the Bank sells all of its

Revolving Commitment and Revolving Loans as part of a sale, transfer or other

disposition by the Bank of substantially all of its loan portfolio, the Bank

shall resign as Administrative Agent and such purchaser or transferee shall

become the successor Administrative Agent hereunder.  Subject to the foregoing, if the Administrative Agent resigns under

this Agreement, the Majority Lenders shall appoint from among the Lenders a

successor administrative agent for the Lenders.  If no successor administrative agent is appointed prior to the

effective date of the resignation of the Administrative Agent, the

Administrative Agent may appoint, after consulting with the Lenders and the

Borrowers, a successor administrative agent from among the Lenders.  Upon the acceptance of its appointment as

successor administrative agent hereunder, such successor administrative agent

shall succeed to all the rights, powers and duties of the retiring

Administrative Agent and the term “Administrative Agent” shall mean such

successor administrative agent and the retiring Administrative Agent’s

appointment, powers and duties as Administrative Agent shall be terminated.

After any retiring Administrative Agent’s resignation hereunder as

Administrative Agent, the provisions of this Article 12 shall

continue to inure to its benefit as to any actions taken or omitted to be taken

by it while it was Administrative Agent under this Agreement.

 

12.10       Withholding Tax.

 

(a)           If any Lender is a “foreign

corporation, partnership or trust” within the meaning of the Code and such

Lender claims exemption from, or a reduction of, U.S. withholding tax under

Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of

the Administrative Agent, to deliver to the Administrative Agent:

 

74

 

 

(i)            if such Lender claims an exemption

from, or a reduction of, withholding tax under a United States of America tax

treaty, properly completed IRS Form W–8BEN before the payment of any

interest in the first calendar year, and if reasonably requested in writing by

the Borrowers and then permitted under applicable law, before the payment of

any interest in any succeeding calendar year, during which interest may be paid

to such Lender under this Agreement;

 

(ii)           if such Lender claims that interest

paid under this Agreement is exempt from United States of America withholding

tax because it is effectively connected with a United States of America trade

or business of such Lender, two properly completed and executed copies of IRS

Form W–8ECI before the payment of any interest is due in the first

taxable year of such Lender, and if reasonably requested in writing by the

Borrowers and then permitted under applicable law, in any succeeding taxable

year of such Lender, during which interest may be paid to such Lender under

this Agreement, and IRS Form W–9; and

 

(iii)          such other form or forms as may be

required under the Code or other laws of the United States of America as a

condition to exemption from, or reduction of, United States of America

withholding tax.

 

Such

Lender agrees to promptly notify the Administrative Agent of any change in

circumstances which would modify or render invalid any claimed exemption or

reduction.

 

(b)           If any Lender claims exemption from,

or reduction of, withholding tax under a United States of America tax treaty by

providing IRS Form W–8BEN and such Lender sells, assigns, grants a

participation in, or otherwise transfers all or part of the Obligations owing

to such Lender, such Lender agrees to notify the Administrative Agent of the

percentage amount in which it is no longer the beneficial owner of the

respective Obligations of the Borrowers to such Lender.  To the extent of such percentage amount, the

Administrative Agent will treat such Lender’s IRS Form W–8BEN as no

longer valid.

 

(c)           If any Lender claiming exemption from

United States of America withholding tax by filing IRS Form W–8ECI with

the Administrative Agent sells, assigns, grants a participation in, or

otherwise transfers all or part of the Obligations owing to such Lender, such

Lender agrees to notify the Administrative Agent of the percentage amount in

which it is no longer the beneficial owner of the respective Obligations of the

Borrowers to such Lender.  To the extent

of such percentage amount, the Administrative Agent will treat such Lender’s

IRS Form W–8ECI as no longer valid.

 

(d)           If any Lender is entitled to a

reduction in the applicable withholding tax, the Administrative Agent may

withhold from any interest payment to such Lender an amount equivalent to the

applicable withholding tax after taking into account such reduction.  If the forms or other documentation required

by subsection (a) of this Section are not delivered to the

Administrative Agent, then the Administrative Agent may withhold from any

interest payment to such Lender not providing such forms or other documentation

an amount equivalent to the applicable withholding tax.

 

75

 

(e)           If the IRS or any other Governmental

Authority of the United States of America or other jurisdiction asserts a claim

that the Administrative Agent did not properly withhold tax from amounts paid

to or for the account of any Lender (because the appropriate form was not

delivered, was not properly executed, or because such Lender failed to notify

the Administrative Agent of a change in circumstances which rendered the

exemption from, or reduction of, withholding tax ineffective, or for any other

reason) such Lender shall indemnify the Administrative Agent fully for all

amounts paid, directly or indirectly, by the Administrative Agent as Tax or

otherwise, including penalties and interest, and including any Taxes imposed by

any jurisdiction on the amounts payable to the Administrative Agent under this

Section, together with all costs and expenses (including Attorney Costs).  The obligation of the Lenders under this

subsection shall survive the payment of all Obligations and the resignation or

replacement of the Administrative Agent.

 

12.11       Collateral Matters.

 

(a)           The Lenders hereby irrevocably

authorize the Administrative Agent, at its option and in its sole discretion,

to release any Agent’s Liens upon any Collateral (i) upon the termination

of the Commitments and payment and satisfaction in full by the Borrowers of all

Loans and reimbursement obligations in respect of Letters of Credit and Credit

Support, and the termination of all outstanding Letters of Credit (whether or

not any of such obligations are due) and all other Obligations;

(ii) constituting property being sold or disposed of if a Borrower

certifies to the Administrative Agent that the sale or disposition is made in

compliance with Section 7.11 (and the Administrative Agent may rely

conclusively on any such certificate, without further inquiry);

(iii) constituting property in which each of the Borrowers certifies that

no Borrower owned an interest in such property at the time the Lien was granted

or at any time thereafter; (iv) constituting property leased to a Borrower

under a lease which has expired or been terminated in a transaction permitted

under this Agreement or (v) as provided in Section 31 of the Pledge

Agreement.  Except as provided above,

the Administrative Agent will not release any of the Agent’s Liens without the

prior written authorization of the Lenders; provided that the

Administrative Agent may, in its discretion, release the Agent’s Liens on

Collateral valued in the aggregate not in excess of $500,000 during each Fiscal

Year without the prior written authorization of the Lenders and the

Administrative Agent may release the Agent’s Liens on Collateral valued in the aggregate

not in excess of $500,000 during each Fiscal Year with the prior written

authorization of the Majority Revolving Lenders and the Majority Term

Lenders.  Upon request by the

Administrative Agent or a Borrower at any time, the Lenders will confirm in

writing the Administrative Agent’s authority to release any Agent’s Liens upon

particular types or items of Collateral pursuant to this Section 12.11.

 

(b)           Upon receipt by the Administrative

Agent of any authorization required pursuant to Section 12.11(a)

from the Lenders of the Administrative Agent’s authority to release Agent’s

Liens upon particular types or items of Collateral, and upon at least five (5)

Business Days prior written request by a Borrower, the Administrative Agent

shall (and is hereby irrevocably authorized by the Lenders to) execute such

documents as may be necessary to evidence the release of the Agent’s Liens upon

such Collateral; provided, however, that (i) the

Administrative Agent shall not be required to execute any such document on

terms which, in the Administrative Agent’s opinion, would expose the

Administrative Agent to liability or create any obligation or entail any

consequence other than the release of such Liens without recourse 

 

76

 

or warranty, and (ii) such release shall

not in any manner discharge, affect or impair the Obligations or any Liens

(other than those expressly being released) upon (or obligations of the

Borrowers in respect of) all interests retained by the Borrowers, including the

proceeds of any sale, all of which shall continue to constitute part of the

Collateral.

 

(c)           The Administrative Agent shall have

no obligation whatsoever to any of the Lenders to assure that the Collateral

exists or is owned by a Borrower or is cared for, protected or insured or has

been encumbered, or that the Agent’s Liens have been properly or sufficiently

or lawfully created, perfected, protected or enforced or are entitled to any

particular priority, or to exercise at all or in any particular manner or under

any duty of care, disclosure or fidelity, or to continue exercising, any of the

rights, authorities and powers granted or available to the Administrative Agent

pursuant to any of the Loan Documents, it being understood and agreed that in

respect of the Collateral, or any act, omission or event related thereto, the

Administrative Agent may act in any manner it may deem appropriate, in its sole

discretion given the Administrative Agent’s own interest in the Collateral in

its capacity as one of the Lenders and that the Administrative Agent shall have

no other duty or liability whatsoever to any Lender as to any of the foregoing.

 

12.12       Restrictions on Actions by Lenders;

Sharing of Payments.

 

(a)           Each of the Lenders agrees that it shall

not, without the express consent of all Revolving Lenders or the Administrative

Agent (or, in the event the Revolving Credit Commitments have been terminated

and all Obligations owing to the Revolving Lenders have been paid in full, all

Term Lenders), and that it shall, to the extent it is lawfully entitled to do

so, upon the request of all Revolving Lenders (or, in the event the Revolving

Credit Commitments have been terminated and all Obligations owing to the

Revolving Lenders have been paid in full, all Term Lenders), set off against

the Obligations, any amounts owing by such Lender to any of the Borrowers or

any accounts of any of the Borrowers now or hereafter maintained with such

Lender.  Each of the Lenders further

agrees that it shall not, unless specifically requested to do so by the

Administrative Agent, take or cause to be taken any action to enforce its

rights under this Agreement or against the Borrowers, including the

commencement of any legal or equitable proceedings, to foreclose any Lien on,

or otherwise enforce any security interest in, any of the Collateral.

 

(b)           If at any time or times any Lender

shall receive (i) by payment, foreclosure, setoff or otherwise, any

proceeds of Collateral or any payments with respect to the Obligations of a

Borrower to such Lender arising under, or relating to, this Agreement or the

other Loan Documents, except for any such proceeds or payments received by such

Lender from the Administrative Agent pursuant to the terms of this Agreement,

or (ii) payments from the Administrative Agent in excess of such Lender’s

ratable portion of all such distributions by the Administrative Agent with

respect to the applicable Obligations, such Lender shall promptly (1) turn

the same over to the Administrative Agent, in kind, and with such endorsements

as may be required to negotiate the same to the Administrative Agent, or in

same day funds, as applicable, for the account of all of the applicable Lenders

and for application to the Obligations in accordance with the applicable

provisions of this Agreement, or (2) purchase, without recourse or

warranty, an undivided interest and participation in the applicable Obligations

owed to the other applicable 

 

77

 

Lenders so that such excess payment received

shall be applied ratably as among the applicable Lenders in accordance with

their Pro Rata Shares; provided, however, that if all or part of

such excess payment received by the purchasing party is thereafter recovered

from it, those purchases of participations shall be rescinded in whole or in

part, as applicable, and the applicable portion of the purchase price paid

therefor shall be returned to such purchasing party, but without interest

except to the extent that such purchasing party is required to pay interest in

connection with the recovery of the excess payment.

 

12.13       Agency for Perfection.  Each Lender hereby appoints each other

Lender as agent for the purpose of perfecting the Lenders’ security interest in

assets which, in accordance with Article 9 of the UCC can be perfected

only by possession.  Should any Lender

(other than the Administrative Agent) obtain possession of any such

Collateral, such Lender shall notify the Administrative Agent thereof, and,

promptly upon the Administrative Agent’s request therefor shall deliver such

Collateral to the Administrative Agent or in accordance with the Administrative

Agent’s instructions.

 

12.14       Payments by Administrative Agent to

Lenders.  All payments to be

made by the Administrative Agent to the Lenders shall be made by bank wire

transfer or internal transfer of immediately available funds to each Lender

pursuant to wire transfer instructions delivered in writing to the

Administrative Agent on or prior to the Closing Date (or if such Lender is an

Assignee, on the applicable Assignment and Acceptance), or pursuant to such

other wire transfer instructions as each party may designate for itself by

written notice to the Administrative Agent. 

Concurrently with each such payment, the Administrative Agent shall

identify whether such payment (or any portion thereof) represents principal,

premium or interest on the Revolving Loans, Term Loans or otherwise.  Unless the Administrative Agent receives

notice from a Borrower prior to the date on which any payment is due to the

Lenders from such Borrower that such Borrower will not make such payment in

full as and when required, the Administrative Agent may assume that such

Borrower has made such payment in full to the Administrative Agent on such date

in immediately available funds and the Administrative Agent may (but shall not

be so required), in reliance upon such assumption, distribute to each Lender on

such due date an amount equal to the amount then due such Lender from such

Borrower.  If and to the extent a

Borrower has not made such payment in full to the Administrative Agent, each

Lender shall repay to the Administrative Agent on demand such amount

distributed to such Lender, together with interest thereon at the Federal Funds

Rate for each day from the date such amount is distributed to such Lender until

the date repaid.

 

12.15       Settlement.

 

(a)           (i)            Each

Revolving Lender’s funded portion of the Revolving Loans is intended by the

Revolving Lenders to be equal at all times to such Revolving Lender’s Pro Rata

Share of the outstanding Revolving Loans. 

Notwithstanding such agreement, the Administrative Agent, the Bank and

the other Revolving Lenders agree (which agreement shall not be for the benefit

of or enforceable by the Borrowers or the Term Lenders) that in order to

facilitate the administration of this Agreement and the other Loan Documents,

settlement among them as to the Revolving Loans, the Non-Ratable Loans and the

Agent Advances shall take place on a periodic basis in accordance with the following

provisions:

 

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(ii)           The Administrative Agent shall

request settlement (“Settlement”) with the Revolving Lenders on at least a

weekly basis, or on a more frequent basis at Administrative Agent’s election,

(A) on behalf of the Bank, with respect to each outstanding Non–Ratable

Loan, (B) for itself, with respect to each Agent Advance, and

(C) with respect to collections received, in each case, by notifying the

Revolving Lenders of such requested Settlement by telecopy, telephone or other

similar form of transmission, of such requested Settlement, no later than 12:00

noon (New York time) on the date of such requested Settlement (the “Settlement

Date”).  Each Revolving Lender (other

than the Bank, in the case of Non–Ratable Loans and the Administrative

Agent in the case of Agent Advances) shall transfer the amount of such

Revolving Lender’s Pro Rata Share of the outstanding principal amount of the

Non–Ratable Loans and Agent Advances with respect to each Settlement to

the Administrative Agent, to the Administrative Agent’s account, not later than

2:00 p.m. (New York time), on the Settlement Date applicable thereto.  Settlements may occur during the

continuation of a Default or an Event of Default and whether or not the

applicable conditions precedent set forth in Article 8 have then

been satisfied.  Such amounts made

available to the Administrative Agent shall be applied against the amounts of

the applicable Non–Ratable Loan or Agent Advance and, together with the

portion of such Non–Ratable Loan or Agent Advance representing the Bank’s

Pro Rata Share thereof, shall constitute Revolving Loans of such Revolving

Lenders.  If any such amount is not

transferred to the Administrative Agent by any Revolving Lender on the

Settlement Date applicable thereto, the Administrative Agent shall be entitled

to recover such amount on demand from such Revolving Lender together with

interest thereon at the Federal Funds Rate for the first three (3) days from

and after the Settlement Date and thereafter at the Interest Rate then

applicable to the Revolving Loans (A) on behalf of the Bank, with respect

to each outstanding Non-Ratable Loan, and (B) for itself, with respect to

each Agent Advance.

 

(iii)          Notwithstanding the foregoing, not

more than one (1) Business Day after demand is made by the Administrative

Agent (whether before or after the occurrence of a Default or an Event of

Default and regardless of whether the Administrative Agent has requested a

Settlement with respect to a Non–Ratable Loan or Agent Advance), each

other Revolving Lender (A) shall irrevocably and unconditionally purchase

and receive from the Bank or the Administrative Agent, as applicable, without

recourse or warranty, an undivided interest and participation in such

Non-Ratable Loan or Agent Advance equal to such Lender’s Pro Rata Share of such

Non-Ratable Loan or Agent Advance and (B) if Settlement has not previously

occurred with respect to such Non-Ratable Loans or Agent Advances, upon demand

by the Bank or the Administrative Agent, as applicable, shall pay to the Bank

or the Administrative Agent, as applicable, as the purchase price of such

participation an amount equal to one-hundred percent (100%) of such Revolving

Lender’s Pro Rata Share of such Non-Ratable Loans or Agent Advances.  If such amount is not in fact made available

to the Administrative Agent by any Revolving Lender, the Administrative Agent

shall be entitled to recover such amount on demand from such Revolving Lender

together with interest thereon at the Federal Funds Rate for the first three

(3) days from and after such demand and thereafter at the Interest Rate then

applicable to Base Rate Revolving Loans.

 

(iv)          From and after the date, if any, on

which any Revolving Lender purchases an undivided interest and participation in

any Non-Ratable Loan or Agent Advance pursuant to clause (iii)

above, the Administrative Agent shall promptly distribute to such Revolving

Lender, such Revolving 

 

79

 

Lender’s Pro Rata Share of all payments of

principal and interest and all proceeds of Collateral received by the

Administrative Agent in respect of such Non-Ratable Loan or Agent Advance.

 

(v)           Between Settlement Dates, the

Administrative Agent, to the extent no Agent Advances are outstanding, may pay

over to the Bank any payments received by the Administrative Agent, which in

accordance with the terms of this Agreement would be applied to the reduction

of the Revolving Loans, for application to the Bank’s Revolving Loans including

Non-Ratable Loans.  If, as of any

Settlement Date, collections received since the then immediately preceding

Settlement Date have been applied to the Bank’s Revolving Loans (other than to

Non-Ratable Loans or Agent Advances in which such Revolving Lender has not yet

funded its purchase of a participation pursuant to clause (iii) above), as

provided for in the previous sentence, the Bank shall pay to the Administrative

Agent for the accounts of the Revolving Lenders, to be applied to the

outstanding Revolving Loans of such Revolving Lenders, an amount such that each

Revolving Lender shall, upon receipt of such amount, have, as of such

Settlement Date, its Pro Rata Share of the Revolving Loans.  During the period between Settlement Dates,

the Bank with respect to Non-Ratable Loans, the Administrative Agent with

respect to Agent Advances, and each Revolving Lender with respect to the

Revolving Loans other than Non-Ratable Loans and Agent Advances, shall be

entitled to interest at the applicable rate or rates payable under this

Agreement on the actual average daily amount of funds employed by the Bank, the

Administrative Agent and the other Revolving Lenders.

 

(vi)          Unless the Administrative Agent has

received written notice from a Revolving Lender to the contrary, the

Administrative Agent may assume that the applicable conditions precedent set

forth in Article 8 have been satisfied and the requested Borrowing

will not exceed Availability of the applicable Borrower on any Funding Date for

a Revolving Loan or Non-Ratable Loan.

 

(b)           Lenders’ Failure to Perform.  All Revolving Loans (other than Non-Ratable

Loans and Agent Advances) shall be made by the Revolving Lenders simultaneously

and in accordance with their Pro Rata Shares. 

It is understood that (i) no Revolving Lender shall be responsible

for any failure by any other Revolving Lender to perform its obligation to make

any Revolving Loans hereunder, nor shall any Revolving Credit Commitment of any

Revolving Lender be increased or decreased as a result of any failure by any

other Revolving Lender to perform its obligation to make any Revolving Loans

hereunder, (ii) no failure by any Revolving Lender to perform its

obligation to make any Revolving Loans hereunder shall excuse any other Revolving

Lender from its obligation to make any Revolving Loans hereunder, and

(iii) the obligations of each Revolving Lender hereunder shall be several,

not joint and several.

 

(c)           Defaulting Lenders.  Unless the Administrative Agent receives

notice from a Revolving Lender on or prior to the Closing Date or, with respect

to any Borrowing after the Closing Date, at least one Business Day prior to the

date of such Borrowing, that such Revolving Lender will not make available as

and when required hereunder to the Administrative Agent that Revolving Lender’s

Pro Rata Share of a Borrowing, the Administrative Agent may assume that each

Revolving Lender has made such amount available to the Administrative Agent in

immediately available funds on the Funding Date.  Furthermore, the Administrative Agent may, in reliance upon such

assumption, make available to the applicable Borrower on such date a

corresponding amount.  If any Revolving

Lender has not transferred 

 

80

 

its full Pro Rata Share to the Administrative

Agent in immediately available funds and the Administrative Agent has

transferred corresponding amount to the applicable Borrower on the Business Day

following such Funding Date that Revolving Lender shall make such amount

available to the Administrative Agent, together with interest at the Federal

Funds Rate for that day.  A notice by

the Administrative Agent submitted to any Revolving Lender with respect to

amounts owing shall be conclusive, absent manifest error.  If each Revolving Lender’s full Pro Rata

Share is transferred to the Administrative Agent as required, the amount

transferred to the Administrative Agent shall constitute that Revolving

Lender’s Revolving Loan for all purposes of this Agreement.  If that amount is not transferred to the

Administrative Agent on the Business Day following the Funding Date, the

Administrative Agent will notify the applicable Borrower of such failure to

fund and, upon demand by the Administrative Agent, such Borrower shall pay such

amount to the Administrative Agent for the Administrative Agent’s account,

together with interest thereon for each day elapsed since the date of such

Borrowing, at a rate per annum equal to the Interest Rate applicable at the

time to the Revolving Loans comprising that particular Borrowing.  The failure of any Revolving Lender to make

any Revolving Loan on any Funding Date (any such Revolving Lender, prior to the

cure of such failure, being hereinafter referred to as a “Defaulting Lender”)

shall not relieve any other Revolving Lender of its obligation hereunder to

make a Revolving Loan on that Funding Date. 

No Revolving Lender shall be responsible for any other Revolving

Lender’s failure to advance such other Revolving Lenders’ Pro Rata Share of any

Borrowing.

 

(d)           Retention of Defaulting Lender’s

Payments.  The Administrative Agent

shall not be obligated to transfer to a Defaulting Lender any payments made by

any of the Borrowers to the Administrative Agent for the Defaulting Lender’s

benefit; nor shall a Defaulting Lender be entitled to the sharing of any

payments hereunder.  Amounts payable to

a Defaulting Lender shall instead be paid to or retained by the Administrative

Agent.  In its discretion, the

Administrative Agent may loan a Borrower the amount of all such payments

received or retained by it for the account of such Defaulting Lender.  Any amounts so loaned to such Borrower shall

bear interest at the rate applicable to Base Rate Revolving Loans and for all other

purposes of this Agreement shall be treated as if they were Revolving Loans,

provided, however, that for purposes of voting or consenting to matters with

respect to the Loan Documents and determining Pro Rata Shares, such Defaulting

Lender shall be deemed not to be a “Lender”.  Until a Defaulting Lender cures its failure to fund its Pro Rata

Share of any Borrowing (A) such Defaulting Lender shall not be entitled to

any portion of the Unused Line Fee and (B) the Unused Line Fee shall

accrue in favor of the Revolving Lenders which have funded their respective Pro

Rata Shares of such requested Borrowing and shall be allocated among such

performing Revolving Lenders ratably based upon their relative Revolving Credit

Commitments.  This Section shall remain effective

with respect to such Revolving Lender until such time as the Defaulting Lender

shall no longer be in default of any of its obligations under this

Agreement.  The terms of this Section

shall not be construed to increase or otherwise affect the Revolving Credit

Commitment of any Revolving Lender, or relieve or excuse the performance by any

Borrower of its duties and obligations hereunder.

 

(e)           Removal of Defaulting Lender.  At the Borrowers’ request, the

Administrative Agent or an Eligible Assignee reasonably acceptable to the

Administrative Agent and the Borrowers shall have the right (but not the

obligation) to purchase from any Defaulting Lender, and each Defaulting Lender

shall, upon such request, sell and assign to the Administrative Agent or such

Eligible Assignee, all of the 

 

81

 

Defaulting Lender’s outstanding Revolving

Credit Commitments and Revolving Loans hereunder.  Such sale shall be consummated promptly after the Administrative

Agent has arranged for a purchase by the Administrative Agent or an Eligible

Assignee pursuant to an Assignment and Acceptance, and at a price equal to the

outstanding principal balance of the Defaulting Lender’s Revolving Loans, plus

accrued interest and fees, without premium or discount.

 

12.16       Letters of Credit; Intra–Revolving

Lender Issues.

 

(a)           Notice of Letter of Credit Balance.  On each Settlement Date the Administrative

Agent shall notify each Revolving Lender of the issuance of all Letters of

Credit since the prior Settlement Date.

 

(b)           Participations in Letters of

Credit.

 

(i)            Purchase of Participations.  Immediately upon issuance of any Letter of

Credit in accordance with Section 1.4(d), each Revolving Lender

shall be deemed to have irrevocably and unconditionally purchased and received

without recourse or warranty, an undivided interest and participation equal to

such Revolving Lender’s Pro Rata Share of the face amount of such Letter of

Credit or the Credit Support provided through the Administrative Agent to the

Letter of Credit Issuer, if not the Bank, in connection with the issuance of

such Letter of Credit (including all obligations of the Borrowers with respect

thereto, and any security therefor or guaranty pertaining thereto).

 

(ii)           Sharing of Reimbursement

Obligation Payments.  Whenever the

Administrative Agent receives a payment from a Borrower on account of

reimbursement obligations in respect of a Letter of Credit or Credit Support as

to which the Administrative Agent has previously received for the account of

the Letter of Credit Issuer thereof payment from a Revolving Lender, the

Administrative Agent shall promptly pay to such Revolving Lender such Revolving

Lender’s Pro Rata Share of such payment from such Borrower.  Each such payment shall be made by the

Administrative Agent on the next Settlement Date.

 

(iii)          Documentation.  Upon the request of any Revolving Lender,

the Administrative Agent shall furnish to such Revolving Lender copies of any

Letter of Credit, Credit Support for any Letter of Credit, reimbursement

agreements executed in connection therewith, applications for any Letter of

Credit, and such other documentation as may reasonably be requested by such

Revolving Lender.

 

(iv)          Obligations Irrevocable.  The obligations of each Revolving Lender to

make payments to the Administrative Agent with respect to any Letter of Credit

or with respect to their participation therein or with respect to any Credit

Support for any Letter of Credit or with respect to the Revolving Loans made as

a result of a drawing under a Letter of Credit and the obligations of the

Borrower for whose account the Letter of Credit or Credit Support was issued to

make payments to the Administrative Agent, for the account of the Revolving

Lenders, shall be irrevocable and shall not be subject to any qualification or

exception whatsoever, including any of the following circumstances:

 

82

 

(1)           any lack of validity

or enforceability of this Agreement or any of the other Loan Documents;

 

(2)           the existence of any

claim, setoff, defense or other right which any Borrower may have at any time

against a beneficiary named in a Letter of Credit or any transferee of any

Letter of Credit (or any Person for whom any such transferee may be acting),

any Lender, the Administrative Agent, the issuer of such Letter of Credit, or

any other Person, whether in connection with this Agreement, any Letter of

Credit, the transactions contemplated herein or any unrelated transactions

(including any underlying transactions between any Borrower or any other Person

and the beneficiary named in any Letter of Credit);

 

(3)           any draft,

certificate or any other document presented under the 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;

 

(4)           the surrender or

impairment of any security for the performance or observance of any of the

terms of any of the Loan Documents;

 

(5)           the occurrence of

any Default or Event of Default; or

 

(6)           the failure of the

Borrowers to satisfy the applicable conditions precedent set forth in Article 8.

 

(c)           Recovery or Avoidance of Payments;

Refund of Payments In Error.  In the

event any payment by or on behalf of any of the Borrowers received by the

Administrative Agent with respect to any Letter of Credit or Credit Support

provided for any Letter of Credit and distributed by the Administrative Agent

to the Revolving Lenders on account of their respective participations therein

is thereafter set aside, avoided or recovered from the Administrative Agent in

connection with any receivership, liquidation or bankruptcy proceeding, the

Revolving Lenders shall, upon demand by the Administrative Agent, pay to the

Administrative Agent their respective Pro Rata Shares of such amount set aside,

avoided or recovered, together with interest at the rate required to be paid by

the Administrative Agent upon the amount required to be repaid by it.  Unless the Administrative Agent receives

notice from a Borrower prior to the date on which any payment is due to the

Revolving Lenders from such Borrower that such Borrower will not make such

payment in full as and when required, the Administrative Agent may assume that

such Borrower has made such payment in full to the Administrative Agent on such

date in immediately available funds and the Administrative Agent may (but shall

not be so required), in reliance upon such assumption, distribute to each

Revolving Lender on such due date an amount equal to the amount then due such

Revolving Lender from such Borrower.  If

and to the extent such Borrower has not made such payment in full to the

Administrative Agent, each Revolving Lender shall repay to the Administrative

Agent on demand such amount distributed to such Revolving Lender, together with

interest thereon at the Federal Funds Rate for each day from the date such

amount is distributed to such Revolving Lender until the date repaid.

 

83

 

(d)           Indemnification by Lenders.  To the extent not reimbursed by the

Borrowers and without limiting the obligations of the Borrowers hereunder, the

Revolving Lenders agree to indemnify the Letter of Credit Issuer ratably in

accordance with their respective Pro Rata Shares, for any and all liabilities,

obligations, losses, damages, penalties, actions, judgments, suits, costs,

expenses (including attorneys’ fees) or disbursements of any kind and nature

whatsoever that may be imposed on, incurred by or asserted against the Letter

of Credit Issuer in any way relating to or arising out of any Letter of Credit

or the transactions contemplated thereby or any action taken or omitted by the

Letter of Credit Issuer under any Letter of Credit or any Loan Document in

connection therewith; provided that no Revolving Lender shall be liable

for any of the foregoing to the extent it arises from the gross negligence or

willful misconduct of the Person to be indemnified.  Without limitation of the foregoing, each Revolving Lender agrees

to reimburse the Letter of Credit Issuer promptly upon demand for its Pro Rata

Share of any costs or expenses payable by any of the Borrowers to the Letter of

Credit Issuer, to the extent that the Letter of Credit Issuer is not promptly

reimbursed for such costs and expenses by such Borrower.  The agreement contained in this Section

shall survive payment in full of all other Obligations.

 

12.17       Concerning the Collateral and the

Related Loan Documents.  Each

Lender authorizes and directs the Administrative Agent to enter into the other

Loan Documents, for the ratable benefit and obligation of the Administrative

Agent and the Lenders.  Each Lender

agrees that any action taken by the Administrative Agent, the Majority Lenders,

the Required Lenders, the Majority Revolving Lenders or the Majority Term

Lenders, as applicable, in accordance with the terms of this Agreement or the

other Loan Documents, and the exercise by the Administrative Agent, the

Majority Lenders, the Required Lenders, the Majority Revolving Lenders or the

Majority Term Lenders, as applicable, of their respective powers set forth

therein or herein, together with such other powers that are reasonably

incidental thereto, shall be binding upon all of the Lenders.  The Lenders acknowledge that the Revolving

Loans, Term Loans, Agent Advances, Non-Ratable Loans, Hedge Agreements between

any of the Borrowers and the Administrative Agent or any Affliate of the

Administrative Agent, Bank Products and all interest, fees and expenses

hereunder constitute one Debt, secured pari  passu by all of the

Collateral.

 

12.18       Field Audit and Examination Reports;

Disclaimer by Lenders.  By

signing this Agreement, each Lender:

 

(a)           is deemed to have

requested that the Administrative Agent furnish such Lender, promptly after it

becomes available, a copy of each field audit or examination report (each a

“Report” and collectively, “Reports”) prepared by or on behalf of the

Administrative Agent;

 

(b)           expressly agrees and

acknowledges that neither the Bank nor the Administrative Agent (i) makes

any representation or warranty as to the accuracy of any Report, or

(ii) shall be liable for any information contained in any Report;

 

(c)           expressly agrees and

acknowledges that the Reports are not comprehensive audits or examinations,

that the Administrative Agent or the Bank or other party performing any audit

or examination will inspect only specific information regarding the Borrowers

and will rely significantly 

 

84

 

upon each

Borrower’s books and records, as well as on representations of each Borrower’s

personnel;

 

(d)           agrees to keep all

Reports confidential and strictly for its internal use, and not to distribute

except to its participants, or use any Report in any other manner; and

 

(e)           without limiting the

generality of any other indemnification provision contained in this Agreement,

agrees:  (i) to hold the

Administrative Agent and any such other Lender preparing a Report harmless from

any action the indemnifying Lender may take or conclusion the indemnifying

Lender may reach or draw from any Report in connection with any loans or other

credit accommodations that the indemnifying Lender has made or may make to any

of the Borrowers, or the indemnifying Lender’s participation in, or the

indemnifying Lender’s purchase of, a loan or loans of any of the Borrowers; and

(ii) to pay and protect, and indemnify, defend and hold the Administrative

Agent and any such other Lender preparing a Report harmless from and against,

the claims, actions, proceedings, damages, costs, expenses and other amounts

(including Attorney Costs) incurred by the Administrative Agent and any such

other Lender preparing a Report as the direct or indirect result of any third

parties who might obtain all or part of any Report through the indemnifying

Lender.

 

12.19       Relation Among Lender.  The Lenders are not partners or co–venturers,

and no Lender shall be liable for the acts or omissions of, or (except as

otherwise set forth herein in case of the Administrative Agent) authorized to

act for, any other Lender.

 

12.20       The Arrangers, the Syndication Agent

and the Documentation Agent. 

None of the Arrangers, the Syndication Agent or the Documentation Agent

in their respective capacities as such shall have any right, power, obligation,

liability, responsibility or duty under this Agreement

 

12.21       Revolving Loans and Letters of Credit

in Excess of Availability. 

Notwithstanding anything herein to the contrary (including, without

limitation, Section 1.2(a)), neither the Bank, any of the other

Revolving Lenders nor the Administrative Agent shall have any liability to the

Term Lenders if the Bank, any other Revolving Lender or the Administrative

Agent makes a Revolving Loan to a Borrower or issues or causes the issuance of

a Letter of Credit for the account of a Borrower in excess of the Availability

of such Borrower or if prior to or after giving effect thereto the aggregate

amount of the Revolving Loans and Letters of Credit issued to or for the

account of such Borrower exceeds or would exceed the Borrowing Base of such

Borrower (in either instance, subject to the Administrative Agent’s authority,

in its sole discretion, to make Agent Advances pursuant to the terms of Section

1.2(i)) if the Administrative Agent had no actual knowledge that making

such financial accommodation would result in any such excess occurring or that

any such excess existed at the time such financial accommodation was made; provided,

that in any event the relevant Borrower shall remain liable hereunder for any

such financial accommodation made to such Borrower.

 

85

 

ARTICLE 13

GUARANTEES

 

Each Guarantor party hereto unconditionally guarantees, as a primary

obligor and not merely as a surety, jointly and severally with each other

Guarantor party hereto, the due and punctual payment of the principal of and

interest on the Revolving Loans, the Term Loans and of all other Obligations,

when and as due, whether at maturity, by acceleration, by notice or prepayment

or otherwise.  Each Guarantor party

hereto further agrees that the Obligations may be extended and renewed, in

whole or in part, without notice to or further assent from it, and that it will

remain bound upon its guarantee notwithstanding any extension or renewal of any

Obligations.

 

To the fullest extent permitted by law, each Guarantor party hereto

waives presentment to, demand of payment from and protest to any of the

Borrowers or any other Person of any of the Obligations, and also waives notice

of acceptance of its guarantee and notice of protest for nonpayment.  To the fullest extent permitted by law, the

obligations of a Guarantor party hereto hereunder shall not be affected by

(a) the failure of the Administrative Agent or any Lender to assert any

claim or demand or to enforce any right or remedy against any Borrower or any

other Guarantor under the provisions of this Agreement or any of the other Loan

Documents or otherwise; (b) any rescission, waiver, amendment or

modification of any of the terms or provisions of this Agreement, any of the

other Loan Documents, any guarantee or any other agreement; (c) the

release of any security held by the Administrative Agent or any Lender for the

Obligations or any of them; or (d) the failure of the Administrative Agent

or any Lender to exercise any right or remedy against any other Guarantor of

the Obligations.

 

Each Guarantor party hereto further agrees that its guarantee

constitutes a guarantee of payment when due and not of collection, and waives

any right to require that any resort be had by the Administrative Agent or any

Lender to any security (if any) held for payment of the Obligations or to any

balance of any deposit account or credit on the books of the Administrative

Agent or any Lender in favor of any Borrower or any other Person.

 

To the fullest extent permitted by law, the obligations of each

Guarantor party hereto hereunder shall not be subject to any reduction,

limitation, impairment or termination for any reason, including, without

limitation, any claim of waiver, release, surrender, alteration or compromise,

and shall not be subject to any defense or setoff, counterclaim, recoupment or

termination whatsoever by reason of the invalidity, illegality or

unenforceability of any of the Obligations or otherwise.  Without limiting the generality of the

foregoing, to the fullest extent permitted by law, the obligations of each

Guarantor party hereto hereunder shall not be discharged or impaired or

otherwise affected by the failure of the Administrative Agent or any Lender to

assert any claim or demand or to enforce any remedy under this Agreement or

under any other Loan Document, any guarantee or any other agreement, by any

waiver or modification of any provision thereof, by any default, failure or

delay, willful or otherwise, in the performance of any of the Obligations, or

by any other act or omission which may or might in any manner or to any extent

vary the risk of such Guarantor or otherwise operate as a discharge of such

Guarantor as a matter of law or equity.

 

86

 

Each Guarantor party hereto further agrees that its guarantee shall

continue to be effective or be reinstated, as the case may be, if at any time

payment, or any part thereof, of principal or of interest on any Obligation or

any other Obligations is rescinded or must otherwise be returned by the

Administrative Agent or any Lender upon the bankruptcy or reorganization of any

Borrower or otherwise.

 

Each Guarantor party hereto hereby subordinates to the Obligations all

rights of subrogation against each Borrower and its property and all rights of

indemnification, contribution and reimbursement from each Borrower and its

property, in each case in connection with this guarantee and any payments made

hereunder, and regardless of whether such rights arise by operation of law,

pursuant to contract or otherwise.

 

The Guarantors hereby agree as among themselves that, if any Guarantor

shall make an Excess Payment (as defined below), such Guarantor shall have a

right of contribution from each other Guarantor in an amount equal to such

other Guarantor’s Contribution Share (as defined below) of such Excess

Payment.  The payment obligations of any

Guarantor under this paragraph shall be subordinate and subject in right of

payment to the Obligations until such time as the Obligations have been paid in

full and all Revolving Credit Commitments have been terminated, and none of the

Guarantors shall exercise any right or remedy under this paragraph against any

other Guarantor until the Obligations have been paid in full and all Revolving

Credit Commitments have been terminated. 

For purposes of this paragraph, (a) ”Excess Payment” shall

mean the amount paid by any Guarantor in excess of its Pro Rata Share of any

Obligations; (b) ”Pro Rata Share” shall mean, for any Guarantor in

respect of any payment of Obligations by such Guarantor, the ratio (expressed

as a percentage) as of the date of such payment of Obligations of (i) the

amount by which the aggregate present fair salable value of all of its assets

and properties exceeds the amount of all debts and liabilities of such

Guarantor (including contingent, subordinated, unmatured and unliquidated

liabilities, but excluding the obligations of such Guarantor hereunder) to

(ii) the amount by which the aggregate present fair salable value of all

assets and other properties of all of the Guarantors exceeds the amount of all

of the debts and liabilities (including contingent, subordinated, unmatured and

unliquidated liabilities, but excluding the obligations of the Guarantors

hereunder) of the Guarantors; provided, however, that, for

purpose of calculating the Pro Rata Shares of the Guarantors in respect of any

payment of Obligations, any Guarantor that became a Guarantor subsequent to the

date of any such payment shall be deemed to have been a Guarantor on the date

of such payment and the financial information for such Guarantor as of the date

such Guarantor became a Guarantor shall be utilized for such Guarantor in

connection with such payment; and (c) ”Contribution Share” shall

mean, for any Guarantor in respect of any Excess Payment made by any other

Guarantor, the ratio (expressed as a percentage) as of the date of such Excess

Payment of (i) the amount by which the aggregate present fair salable

value of all of its assets and properties exceeds the amount of all debts and

liabilities of such Guarantor (including contingent, subordinated, unmatured

and unliquidated liabilities, but excluding the obligations of such Guarantor

hereunder) to (ii) the amount by which the aggregate present fair salable

value of all assets and other properties of the Guarantors other than the maker

of such Excess Payment exceeds the amount of all of the debts and liabilities

(including contingent, subordinated, unmatured and unliquidated liabilities,

but excluding the obligations of the Guarantors hereunder) of the Guarantors

other than the maker of such Excess Payment; provided, however,

that, for purposes of calculating the Contribution Shares of the Guarantors in

respect of any Excess Payment, any Guarantor that became a Guarantor subsequent

to the 

 

87

 

date

of any such Excess Payment shall be deemed to have been a Guarantor on the date

of such Excess Payment and the financial information for such Guarantor as of

the date such Guarantor became a Guarantor shall be utilized for such Guarantor

in connection with such Excess Payment.

 

ARTICLE 14

MISCELLANEOUS

 

14.1         No Waivers; Cumulative Remedies.  No failure by the Administrative Agent or

any Lender to exercise any right, remedy or option under this Agreement or any

present or future supplement thereto, or in any other agreement between or

among any Borrower and the Administrative Agent and/or any Lender, or delay by

the Administrative Agent or any Lender in exercising the same, will operate as

a waiver thereof.  No waiver by the

Administrative Agent or any Lender will be effective unless it is in writing,

and then only to the extent specifically stated.  No waiver by the Administrative Agent or the Lenders on any occasion

shall affect or diminish the Administrative Agent’s and each Lender’s rights

thereafter to require strict performance by the Borrowers of any provision of

this Agreement.  The Administrative

Agent and the Lenders may proceed directly to collect the Obligations without

any prior recourse to the Collateral. 

The Administrative Agent’s and each Lender’s rights under this Agreement

will be cumulative and not exclusive of any other right or remedy which the

Administrative Agent or any Lender may have.

 

14.2         Severability.  The illegality or unenforceability of any

provision of this Agreement or any other Loan Document or any instrument or

agreement required hereunder shall not in any way affect or impair the legality

or enforceability of the remaining provisions of this Agreement, any other Loan

Document or any instrument or agreement required hereunder.

 

14.3         Governing Law; Choice of Forum;

Service of Process.

 

(a)           THIS AGREEMENT SHALL BE INTERPRETED

AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE

WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED

THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO

APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC)

OF THE STATE OF NEW YORK; PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE

LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITH

RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE

COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN

DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF

THE BORROWERS, THE ADMINISTRATIVE AGENT AND EACH OF THE LENDERS CONSENTS, FOR

ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON–EXCLUSIVE JURISDICTION

OF THOSE COURTS.  EACH OF THE BORROWERS,

THE ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION,

INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM

NON 

 

88

 

CONVENIENS, WHICH IT MAY NOW OR

HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION

IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.  NOTWITHSTANDING THE FOREGOING:  (1) THE ADMINISTRATIVE AGENT AND THE

LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY

BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE

ADMINISTRATIVE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO

REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND

(2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE

COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY

A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.

 

(c)           EACH

BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND

CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL

(RETURN RECEIPT REQUESTED) DIRECTED TO SUCH BORROWER AT ITS ADDRESS SET FORTH

IN SECTION 14.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5)

DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE

PREPAID.  NOTHING CONTAINED HEREIN SHALL

AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR THE LENDERS TO SERVE LEGAL

PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.

 

14.4         WAIVER OF

JURY TRIAL.  EACH BORROWER, EACH

LENDER AND THE ADMINISTRATIVE AGENT IRREVOCABLY WAIVES ITS RIGHTS TO A TRIAL BY

JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO

THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED

HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE

BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT–RELATED

PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT

CLAIMS, OR OTHERWISE.  EACH BORROWER,

EACH LENDER AND THE ADMINISTRATIVE AGENT AGREES THAT ANY SUCH CLAIM OR CAUSE OF

ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER

AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF

THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN

WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT

OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT

AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE

OTHER LOAN DOCUMENTS.

 

89

 

14.5         Survival of Representations and

Warranties.  All of each

Borrower’s representations and warranties contained in this Agreement shall

survive the execution, delivery and acceptance thereof by the parties,

notwithstanding any investigation by the Administrative Agent or the Lenders or

their respective agents.

 

14.6         Other

Security and Guaranties.  The

Administrative Agent, may, without notice or demand and without affecting the

Borrowers’ obligations hereunder, from time to time:  (a) take from any Person and hold collateral (other than the

Collateral) for the payment of all or any part of the Obligations and exchange,

enforce or release such collateral or any part thereof; and (b) accept and

hold any endorsement or guaranty of payment of all or any part of the

Obligations and release or substitute any such endorser or guarantor, or any

Person who has given any Lien in any other collateral as security for the

payment of all or any part of the Obligations, or any other Person in any way

obligated to pay all or any part of the Obligations.

 

14.7         Fees and

Expenses.  Each Borrower agrees,

jointly and severally, to pay to the Administrative Agent, for its benefit, on

demand, all reasonable costs and expenses that the Administrative Agent or the

Term Lenders pay or incur in connection with the negotiation, preparation,

syndication, consummation, administration, enforcement and termination of this

Agreement or any of the other Loan Documents, including:  (a) Attorney Costs and reasonable fees,

expenses and disbursements of one legal counsel retained by the Term Lenders;

(b)  reasonable costs and expenses (including reasonable attorneys’ and

paralegals’ fees and disbursements) for any amendment, supplement, waiver,

consent or subsequent closing in connection with the Loan Documents and the

transactions contemplated thereby; (c) costs and expenses of lien and

title searches and title insurance; (d) taxes, fees and other charges for

recording the Mortgages, filing financing statements and continuations, and other

actions to perfect, protect and continue the Agent’s Liens (including costs and

expenses paid or incurred by the Administrative Agent in connection with the

consummation of this Agreement); (e) sums paid or incurred to pay any

amount or take any action required of any Borrower under the Loan Documents

that such Borrower fails to pay or take; (f) costs of appraisals,

inspections and verifications of the Collateral, including travel, lodging and

meals for inspections of the Collateral and any Borrower’s operations by the

Administrative Agent plus the Administrative Agent’s then customary charge for

field examinations and audits and the preparation of reports thereof (such

charge is currently $750 per day (or portion thereof) for each Person retained

or employed by the Administrative Agent with respect to each field examination

or audit); and (g) costs and expenses of forwarding loan proceeds,

collecting checks and other items of payment, and establishing and maintaining

Payment Accounts and lock boxes, and costs and expenses of preserving and

protecting the Collateral.  In addition,

each Borrower agrees, jointly and severally, to pay costs and expenses incurred

by the Administrative Agent (including Attorneys’ Costs) to the Administrative

Agent, for its benefit, on demand, and to the other Lenders for their benefit,

on demand, and all reasonable fees, expenses and disbursements incurred by the

other Revolving Lenders for one law firm retained by such other Revolving

Lenders and all reasonable fees, expenses and disbursements incurred by the

Term Lenders for one law firm retained by the Term Lenders, in each case, paid

or incurred to obtain payment of the Obligations, enforce the Agent’s Liens,

sell or otherwise realize upon the Collateral and otherwise enforce the provisions

of the Loan Documents, or to defend any claims made or threatened against the

Administrative Agent or any Lender arising out of the transactions contemplated

hereby (including preparations for and consultations

 

90

concerning any such matters). 

The foregoing shall not be construed to limit any other provisions of

the Loan Documents regarding costs and expenses to be paid by the

Borrowers.  All of the foregoing costs

and expenses shall be charged to any one or more of the Borrowers’ Loan

Accounts as Revolving Loans as described in Section 3.7.

 

14.8         Notices.  Except as otherwise provided herein, all

notices, demands and requests that any party is required or elects to give to

any other shall be in writing, or by a telecommunications device capable of

creating a written record, and any such notice shall become effective

(a) upon personal delivery thereof, including, but not limited to,

delivery by overnight mail and courier service, (b) four (4) days after it

shall have been mailed by United States mail, first class, certified or

registered, with postage prepaid, or (c) in the case of notice by such a

telecommunications device, when properly transmitted, in each case addressed to

the party to be notified as follows:

 

If to the Administrative

Agent or to the Bank:

 

Bank of America, N.A.

335 Madison Avenue

New York, New York  10017

Attention:  Business Credit-

Account

Executive

Telecopy No.:  (212) 503–7350

 

with copies to:

 

Bank of America, N.A.

335 Madison Avenue

New York, New York  10017

Attention:  Legal Department

Telecopy No.:  (212) 503–7350

 

If to any Borrower or

Guarantor:

 

c/o Manufacturers’ Services

Limited

300 Baker Avenue

Concord, Massachusetts  01742-2121

Attention:  Sean Lannan

Telecopy No.:  (978) 287-5635

 

or to such other address as each party may

designate for itself by like notice. 

Failure or delay in delivering copies of any notice, demand, request,

consent, approval, declaration or other communication to the persons designated

above to receive copies shall not adversely affect the effectiveness of such

notice, demand, request, consent, approval, declaration or other communication.

 

91

 

14.9         Waiver of

Notices.  Unless otherwise

expressly provided herein, each Borrower waives presentment, protest and notice

of demand or dishonor and protest as to any instrument, notice of intent to

accelerate any or all of the Obligations and notice of acceleration of any or

all of the Obligations, as well as any and all other notices to which it might

otherwise be entitled.  No notice to or

demand on any Borrower which the Administrative Agent or any Lender may elect

to give shall entitle such Borrower to any or further notice or demand in the

same, similar or other circumstances.

 

14.10       Binding Effect.  The provisions of this Agreement shall be

binding upon and inure to the benefit of the respective representatives,

successors, and assigns of the parties hereto; provided, however,

that no interest herein may be assigned by any Borrower without prior written

consent of the Administrative Agent and each Lender.  The rights and benefits of the Administrative Agent and the

Lenders hereunder shall, if such Persons so agree, inure to any party acquiring

any interest in the Obligations or any part thereof.

 

14.11       Indemnity of the Administrative

Agent and the Lenders by the Borrowers.

 

(a)           Each

Borrower agrees, jointly and severally, to defend, indemnify and hold the Agent–Related

Persons and each Lender and each of its respective officers, directors,

employees, counsel, representatives, agents and attorneys-in-fact (each, an “Indemnified

Person”) harmless from and against any and all liabilities, obligations,

losses, damages, penalties, actions, judgments, suits, costs, charges, expenses

and disbursements (including Attorney Costs) of any kind or nature whatsoever

which may at any time (including at any time following repayment of the Loans

and the termination, resignation or replacement of the Administrative Agent or replacement

of any Lender) be imposed on, incurred by or asserted against any such Person

in any way relating to or arising out of this Agreement, any other Loan

Document or any document contemplated by or referred to herein or therein, or

the transactions contemplated hereby or thereby, or any action taken or omitted

by any such Person under or in connection with any of the foregoing, including

with respect to any investigation, litigation or proceeding (including any

Insolvency Proceeding or appellate proceeding) related to or arising out of

this Agreement, any other Loan Document, or the Loans or the use of the

proceeds thereof, whether or not any Indemnified Person is a party thereto (all

the foregoing, collectively, the “Indemnified Liabilities”); provided,

that the Borrowers shall have no obligation hereunder to any Indemnified Person

with respect to Indemnified Liabilities that are found by a final decision of a

court of competent jurisdiction to have resulted solely from the gross

negligence or willful misconduct of such Indemnified Person.  The agreements in this Section shall survive

payment of all other Obligations.

 

(b)           Each

Borrower agrees, jointly and severally, to indemnify, defend and hold harmless

the Administrative Agent and the Lenders from any loss or liability directly or

indirectly arising out of the use, generation, manufacture, production,

storage, release, threatened release, discharge, disposal or presence of a

hazardous substance relating to any Borrower’s operations, business or property.  This indemnity will apply whether the

hazardous substance is on, under or about any Borrower’s property or operations

or property leased to any Borrower.  The

indemnity includes but is not limited to Attorneys Costs.  The indemnity extends to the Administrative

Agent and the Lenders, their parents, affiliates, subsidiaries and all of their

directors, officers, employees, agents, successors, attorneys and assigns.

 

92

 

“Hazardous substances” means any substance, material or waste that is

or becomes designated or regulated as “toxic,” “hazardous,” “pollutant,” or

“contaminant” or a similar designation or regulation under any federal, state

or local law (whether under common law, statute, regulation or otherwise) or

judicial or administrative interpretation of such, including petroleum or

natural gas.  This indemnity will

survive repayment of all other Obligations.

 

14.12       Limitation

of Liability.  NO CLAIM MAY BE

MADE BY ANY BORROWER, ANY LENDER OR OTHER PERSON AGAINST ANY AGENT, ANY LENDER

OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES,

AGENTS OR ATTORNEYS–IN–FACT OF ANY OF THEM FOR ANY SPECIAL,

INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH

OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE

TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY

ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH BORROWER AND

EACH LENDER HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE UPON ANY CLAIM FOR SUCH

DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST

IN ITS FAVOR.

 

14.13       Final Agreement.  This Agreement and the other Loan Documents

are intended by each Borrower, the Administrative Agent and the Lenders to be

the final, complete and exclusive expression of the agreement between

them.  This Agreement and the other Loan

Documents supersedes any and all prior oral or written agreements relating to

the subject matter hereof except for that certain “fee letter” dated as of

April 11, 2002, between the Parent (on behalf of the Borrowers), the

Administrative Agent and Banc of America Securities LLC.  No modification, rescission, waiver, release

or amendment of any provision of this Agreement or any other Loan Document

shall be made, except by a written agreement signed by the Borrowers and a duly

authorized officer of each of the Administrative Agent and the requisite

Lenders.

 

14.14       Counterparts.  This Agreement may be executed in any number

of counterparts, and by the Agents, the Arrangers, each Lender and each

Borrower in separate counterparts, each of which shall be an original, but all

of which shall together constitute one and the same agreement; signature pages

may be detached from multiple separate counterparts and attached to a single

counterpart so that all signature pages are physically attached to the same

document.

 

14.15       Captions.  The captions contained in this Agreement are

for convenience of reference only, are without substantive meaning and should

not be construed to modify, enlarge, or restrict any provision.

 

93

 

14.16       Right of Setoff.  In addition to any rights and remedies of

the Lenders provided by law, if an Event of Default exists or any or all of the

Loans have been accelerated, each Lender is authorized at any time and from

time to time, without prior notice to any Borrower, any such notice being

waived by each of the Borrowers to the fullest extent permitted by law, to set

off and apply any and all deposits (general or special, time or demand,

provisional or final) at any time held by, and other indebtedness at any time

owing by, such Lender or any Affiliate of such Lender to or for the credit or

the account of any Borrower against any and all Obligations owing to such

Lender, now or hereafter existing, irrespective of whether or not the

Administrative Agent or such Lender shall have made demand under this Agreement

or any Loan Document and although such Obligations may be contingent or

unmatured.  Each Lender agrees promptly

to notify the Borrowers and the Administrative Agent after any such set-off and

application made by such Lender; provided, however, that the

failure to give such notice shall not affect the validity of such set-off and

application.  NOTWITHSTANDING THE

FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER’S LIEN OR THE

LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY BORROWER HELD OR MAINTAINED

BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE REVOLVING

LENDERS (OR, IN THE EVENT THE REVOLVING CREDIT COMMITMENTS HAVE BEEN TERMINATED

AND ALL OBLIGATIONS OWING TO THE REVOLVING LENDERS HAVE BEEN PAID IN FULL, THE

TERM LENDERS).

 

14.17       Confidentiality.

 

(a)           Each

Borrower hereby consents that the Agents and each Lender may issue and

disseminate to the public general information describing the credit

accommodation entered into pursuant to this Agreement, including the name and

address of each Borrower and a general description of each Borrower’s business

and may use any Borrower’s name in advertising and other promotional material.

 

(b)           Each

Lender severally agrees to take normal and reasonable precautions and exercise

due care to maintain the confidentiality of all information identified as

“confidential” or “secret” by the Borrowers and provided to the Administrative

Agent or such Lender by or on behalf of the Borrowers under this Agreement or

any other Loan Document, except to the extent that such information (i) was

or becomes generally available to the public other than as a result of

disclosure by the Administrative Agent or such Lender or (ii) was or

becomes available on a nonconfidential basis from a source other than a

Borrower, provided that such source is not bound by a confidentiality agreement

with such Borrower known to the Administrative Agent or such Lender; provided,

however, that the Administrative Agent and any Lender may disclose such

information (1) at the request or pursuant to any requirement of any Governmental

Authority to which the Administrative Agent or such Lender is subject or in

connection with an examination of the Administrative Agent or such Lender by

any such Governmental Authority; (2) pursuant to subpoena or other court

process; (3) when required to do so in accordance with the provisions of

any applicable Requirement of Law; (4) to the extent reasonably required

in connection with any litigation or proceeding (including, but not limited to,

any bankruptcy proceeding) to which the Administrative Agent, any Lender or

their respective Affiliates may be party; (5) to the extent reasonably

required in connection with the exercise of any remedy hereunder or under any

other Loan Document; (6) to the Administrative Agent’s or such Lender’s

independent auditors, accountants, attorneys and other

 

94

 

professional advisors; (7) to any prospective Participant or

Assignee under any Assignment and Acceptance, actual or potential, provided

that such prospective Participant or Assignee agrees to keep such information

confidential to the same extent required of the Administrative Agent and the

Lenders hereunder; (8) as expressly permitted under the terms of any other

document or agreement regarding confidentiality to which a Borrower is party or

is deemed party with the Administrative Agent or such Lender, and (9) to

its Affiliates.

 

14.18       Conflicts

with Other Loan Documents. 

Unless otherwise expressly provided in this Agreement (or in another

Loan Document by specific reference to the applicable provision contained in

this Agreement), if any provision contained in this Agreement conflicts with

any provision of any other Loan Document, the provision contained in this

Agreement shall govern and control.

 

95

 

IN WITNESS WHEREOF, the

parties have entered into this Agreement on the date first above written.

 

	

   

  	

  “BORROWERS”

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MANUFACTURERS’ SERVICES

  LIMITED

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MANUFACTURERS’ SERVICES

  SALT LAKE CITY

  OPERATIONS, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MANUFACTURERS’ SERVICES

  WESTERN U.S.

  OPERATIONS, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MANUFACTURERS’ SERVICES CENTRAL

  U.S.

  OPERATIONS, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MSL LOWELL OPERATIONS,

  INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MSL MIDWEST OPERATIONS,

  INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  

 

96

 

	

   

  	

  “GUARANTORS”

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MANUFACTURERS’ SERVICES

  LIMITED

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MANUFACTURERS’ SERVICES

  SALT LAKE CITY

  OPERATIONS, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MANUFACTURERS’ SERVICES

  WESTERN U.S.

  OPERATIONS, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MANUFACTURERS’ SERVICES

  CENTRAL U.S.

  OPERATIONS, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MSL LOWELL OPERATIONS,

  INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  MSL MIDWEST OPERATIONS,

  INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  Sean Lannan

  	

   

  
	

   

  	

  Title:

  	

  Treasurer

  	

   

  

 

97

 

	

   

  	

  MSL SPV SPAIN, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Alan R. Cormier

  	

   

  
	

   

  	

  Title:

  	

  Secretary

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  “ADMINISTRATIVE

  AGENT”

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  BANK OF AMERICA, N.A., as

  the

  Administrative Agent

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Richard Levenson

  	

   

  
	

   

  	

  Title:

  	

  Senior Vice President

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  “SYNDICATION

  AGENT”

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CREDIT SUISSE FIRST

  BOSTON, CAYMAN

  ISLANDS BRANCH, as the Syndication Agent

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Paul J. Corona   /s/ Bill O'Daly

  	

   

  
	

   

  	

  Title:

  	

  Director                    Director

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  “DOCUMENTATION

  AGENT”

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  GENERAL ELECTRIC CAPITAL

  CORPORATION,

  as Documentation Agent

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Raymond Shu

  	

   

  
	

   

  	

  Title:

  	

  Vice President

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  “ARRANGERS”

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  BANC OF AMERICA SECURITIES

  LLC, as Co-

  Lead Arranger and Co-Book Manager

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Mark Huffstetler

  	

   

  
	

   

  	

  Title:

  	

  Principal

  	

   

  

 

98

 

	

   

  	

  CREDIT SUISSE FIRST

  BOSTON, CAYMAN

  ISLANDS BRANCH, as Co-Lead Arranger and Co-

  Book Manager

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Paul J. Corona   /s/ Bill O'Daly

  	

   

  
	

   

  	

  Title:

  	

  Director                    Director

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  “REVOLVING

  LENDERS”

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  BANK OF AMERICA, N.A.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Richard Levenson

  	

   

  
	

   

  	

  Title:

  	

  Senior Vice President

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CREDIT SUISSE FIRST

  BOSTON, CAYMAN

  ISLANDS BRANCH

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Paul J. Corona   /s/ Bill O'Daly

  	

   

  
	

   

  	

  Title:

  	

  Director                    Director

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  GENERAL ELECTRIC CAPITAL

  CORPORATION

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Raymond Shu

  	

   

  
	

   

  	

  Title:

  	

  Vice President

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  UPS CAPITAL CORPORATION

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Scott Mower

  	

   

  
	

   

  	

  Title:

  	

  Managing Director

  	

   

  

 

99

 

	

   

  	

  “TERM

  LENDERS”

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  WINGATE CAPITAL LTD.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  Citadel Partnership,

  Portfolio Manager

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  GLB Partners, L.P., its

  General Partner

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  Citadel Investment Group,

  L.L.C., its General

  Partner

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Levoyd E. Robinson, CFA

  	

   

  
	

   

  	

  Title:

  	

  Managing

  Director

  	

   

  

 

100

 

ANNEX A

to

Credit Agreement

 

Definitions

 

Capitalized terms used in

the Loan Documents shall have the following respective meanings (unless

otherwise defined therein), and all section references in the following

definitions shall refer to sections of the Agreement:

 

“Account Debtor”

means each Person obligated in any way on or in connection with an Account,

Chattel Paper or General Intangibles (including a payment intangible).

 

“Accounts” means,

with respect to a Borrower, all of such Borrower’s now owned or hereafter

acquired or arising accounts, as defined in the UCC, including any rights to

payment for the sale or lease of goods or rendition of services, whether or not

they have been earned by performance.

 

“ACH Transactions”

means any cash management or related services including the automatic clearing

house transfer of funds by the Bank for the account of any Borrower pursuant to

agreement or overdrafts.

 

“Adjusted EBITDA”

means, with respect to any fiscal period of the Parent, EBITDA for such fiscal

period less, to the extent included in the determination of Adjusted Net

Earnings from Operations for such fiscal period, gain arising from a decrease

in, or the reduction or reversal of, reserves previously established by the

Parent or any of its Subsidiaries which were at any time deducted in the

determination of Adjusted Net Earnings from Operations.

 

“Adjusted Net Earnings

from Operations” means, with respect to any fiscal period of the Parent,

the net income of the Parent and its Subsidiaries after provision for income

taxes for such fiscal period, as determined in accordance with GAAP on a

consolidated basis and reported on the Financial Statements for such period,

excluding any and all of the following included in such net income:  (a) gain or loss arising from the sale

of any capital assets; (b) gain arising from any write–up in the

book value of any asset; (c) earnings of any Person, substantially all the

assets of which have been acquired by the Parent or any of its Subsidiaries in

any manner, to the extent realized by such other Person prior to the date of

acquisition; (d) earnings of any Person in which the Parent or any of its

Subsidiaries has an ownership interest unless (and only to the extent) such

earnings shall actually have been received by the Parent or any of its

Subsidiaries in the form of cash distributions; (e) earnings of any Person

to which assets of the Parent or any of its Subsidiaries shall have been sold,

transferred or disposed of, or into which the Parent or any of its Subsidiaries

shall have been merged, or which has been a party with the Parent or any of its

Subsidiaries to any consolidation or other form of reorganization, prior to the

date of such transaction; (f) gain arising from the acquisition of debt or

equity securities of the Parent or any of its Subsidiaries or from cancellation

or forgiveness of Debt; and (g) gain arising from extraordinary items, as

determined in accordance with GAAP, or from any other non–recurring

transaction.  For purposes of

determining

 

A-1

 

compliance with Section 7.26,

“Subsidiaries” as used in this definition shall refer only to the Domestic

Subsidiaries of the Parent.

 

“Adjusted Tangible Assets”

means all of the Parent’s and each of its Subsidiaries’ assets determined on a

consolidated basis except: 

(a) deferred long-term assets, other than deferred taxes;

(b) patents, copyrights, trademarks, trade names, franchises, goodwill and

other similar intangibles; (c) Restricted Investments; (d) unamortized

debt discount and expense; and (e) fixed assets to the extent of any

write-up in the book value thereof resulting from a revaluation effective after

the Closing Date.

 

“Adjusted Tangible Net

Worth” means, at any date: 

(a) the book value (after deducting related depreciation,

obsolescence, amortization, valuation and other proper reserves as determined

in accordance with GAAP) at which the Adjusted Tangible Assets would be shown

on a balance sheet of the Parent and its Subsidiaries at such date prepared in

accordance with GAAP on a consolidated basis, less (b) the amount

at which the Parent’s and its Subsidiaries’ liabilities would be shown on such

balance sheet, including as liabilities all reserves for contingencies and

other potential liabilities which would be required to be shown on such balance

sheet or disclosed in the notes thereto.

 

“Administrative Agent”

means the Bank, solely in its capacity as administrative agent for the Lenders,

and any successor administrative agent.

 

“Affiliate” means, as

to any Person, any other Person which, directly or indirectly, is in control

of, is controlled by, or is under common control with, such Person or which

owns, directly or indirectly, five percent (5%) or more of the outstanding

equity interest of such Person. A Person shall be deemed to control another

Person if the controlling Person possesses, directly or indirectly, the power

to direct or cause the direction of the management and policies of the other

Person, whether through the ownership of voting securities, by contract, or

otherwise.

 

“Agency Fee” has the

meaning specified in Section 2.7.

 

“Agent Advances” has

the meaning specified in Section 1.2(i).

 

“Agent’s Liens” means

the Liens in the Collateral granted to the Administrative Agent, for the

benefit of the Lenders, the Bank and the Administrative Agent, pursuant to this

Agreement and the other Loan Documents.

 

“Agent-Related Persons”

means the Agents, together with their respective Affiliates and the respective

officers, directors, employees, counsel, representatives, agents and attorneys–in–fact

of the Agents and such Affiliates.

 

“Agents” means the

collective reference to the Syndication Agent, the Documentation Agent and the

Administrative Agent.

 

A-2

 

“Aggregate Revolver

Outstandings” means, at any date of determination:  the sum of (a) the aggregate unpaid

principal balance of all Revolving Loans, (b) the aggregate amount of all

Pending Revolving Loans, (c) one hundred percent (100%) of the aggregate

undrawn face amount of all outstanding Letters of Credit, and (d) the

aggregate amount of any unpaid reimbursement obligations in respect of all

Letters of Credit.

 

“Agreement” means the

Credit Agreement to which this Annex A is attached, as from time to time

amended, modified or restated.

 

“Anniversary Date”

means each anniversary of the Closing Date.

 

“Applicable Margin”

means

 

(a)                                  with respect to Base Rate Revolving Loans and

all other Obligations (other than Term Loans and LIBOR Rate Revolving Loans),

1.75%; and

 

(b)           with respect to LIBOR Rate Revolving Loans, 3.25%.

 

The Applicable Margins shall

be adjusted (up or down) prospectively on a quarterly basis commencing on the

first day of the first calendar quarter beginning after the first Anniversary

Date, as determined by the Borrowers’ average aggregate Availability for the

then most recently ended calendar quarter (calculated without giving effect to

clause (e) of the definition of Availability). 

Adjustments in Applicable Margins shall be determined by reference to

the following pricing grid:

 

	

  Average

  Aggregate Availability for Preceding Quarter

  	

   

  	

  Applicable

  Margin

  	

   

  
	

   

  	

   

  	

  Base Rate

  Revolving

  Loans

  	

   

  	

  LIBOR Rate

  Revolving Loans

  	

   

  
	

  Less than $10,000,000

  	

   

  	

  2.25

  	

  %

  	

  3.50

  	

  %

  
	

  Less than $18,000,000 but greater than or equal to $10,000,000

  	

   

  	

  2.00

  	

  %

  	

  3.25

  	

  %

  
	

  Less than $24,000,000 but greater than or equal to $18,000,000

  	

   

  	

  1.75

  	

  %

  	

  3.00

  	

  %

  
	

  Less than $42,000,000 but greater than or equal to $24,000,000

  	

   

  	

  1.50

  	

  %

  	

  2.75

  	

  %

  
	

  Greater than or equal to $42,000,000

  	

   

  	

  1.25

  	

  %

  	

  2.50

  	

  %

  

 

“Appraisal” means

(a) on the Closing Date, the appraisal prepared by

 

A-3

 

DoveBid Valuation Services, Inc. dated

May 9, 2002 and (b) thereafter, each inventory Appraisal delivered

pursuant to Section 5.2(o), as updated pursuant to such Section.

 

“Assignee” has the

meaning specified in Section 11.2(a).

 

“Assignment and

Acceptance” has the meaning specified in Section 11.2(a).

 

“Assumption Agreement”

has the meaning specified in Section 1.6(b).

 

“Attorney Costs”

means and includes all reasonable fees, expenses and disbursements of any law

firm or other counsel engaged by the Administrative Agent and the reasonably

allocated costs and expenses of internal legal services of the Administrative

Agent.

 

“Availability” means,

with respect to a Borrower, at any time (a) the lesser of (i) the

Maximum Revolver Amount minus the portion of the Aggregate Revolver

Outstandings at such time relating to extensions of credit made to the other

Borrowers or (ii) the Borrowing Base of such Borrower, minus

(b) Reserves with respect to such Borrower other than Reserves deducted in

the calculation of the Borrowing Base of such Borrower, minus (c) the

portion of the Aggregate Revolver Outstandings at such time relating to extensions

of credit made to such Borrower, minus 

(d) the aggregate amount of (i) any proceeds that are received by such

Borrower (and, additionally with respect to the Parent, any proceeds received

by MSL SPV Spain, Inc.) after the Closing Date from asset dispositions

permitted under clauses (iii), (viii) or (ix) of Section 7.11 that are

not reinvested in Fixed Assets as permitted under such Section and (ii) any

insurance or condemnation proceeds received by such Borrower (and, additionally

with respect to the Parent, any insurance or condemnation proceeds received by

MSL SPV Spain, Inc.) or the Administrative Agent under Section 7.6  after the Closing Date that are not used to

replace, repair, restore or rebuild the relevant Fixed Assets, to the extent

such Borrower (or, with respect to the Parent, MSP SPV Spain, Inc.) was

permitted to do so under such Section; and minus (e) the Availability

Requirement of such Borrower.  For

purposes hereof, “Availability Requirement” shall mean, with respect to a

Borrower at any time, an amount equal to the product of (i) (x) the

Availability of such Borrower at such time calculated without giving effect to

clause (e) thereof, divided by (y) the aggregate Availability of all Borrowers

at such time calculated without giving effect to clause (e) thereof, multiplied

by (ii) $10,000,000.

 

“Bank” means Bank of

America, N.A., a national banking association, or any successor entity thereto.

 

“Bank Fee Letter” has

the meaning specified in Section 2.4.

 

“Bank Product Reserves”

means all reserves which the Administrative Agent from time to time establishes

in its reasonable discretion for the Bank Products then provided or

outstanding.

 

“Bank Products” means

any one or more of the following types of services or facilities extended to

any Borrower by the Bank or any affiliate of the Bank in reliance on the Bank’s

agreement

 

A-4

 

to indemnify such affiliate or any other

Lender:  (i) credit cards;

(ii) ACH Transactions; (iii) cash management, including controlled

disbursement services; and (iv) Hedge Agreements.

 

“Bankruptcy Code”

means Title 11 of the United States Code (11 U.S.C. § 101 et seq.).

 

“Base Rate” means,

for any day, the rate of interest in effect for such day as publicly announced

from time to time by the Bank in Charlotte, North Carolina as its “prime rate”

(the “prime rate” being a rate set by the Bank based upon various factors

including the Bank’s costs and desired return, general economic conditions and

other factors, and is used as a reference point for pricing some loans, which

may be priced at, above, or below such announced rate).  Any change in the prime rate announced by

the Bank shall take effect at the opening of business on the day specified in

the public announcement of such change. 

Each Interest Rate based upon the Base Rate shall be adjusted

simultaneously with any change in the Base Rate.

 

“Base Rate Revolving Loan”

means a Revolving Loan during any period in which it bears interest based on

the Base Rate.

 

“Blocked Account

Agreement” means an agreement among a Borrower, the Administrative Agent

and a Clearing Bank, in form and substance reasonably satisfactory to the

Administrative Agent, concerning the collection of payments which represent the

proceeds of Accounts or of any other Collateral.

 

“Borrower Representative”

has the meaning specified in Section 1.2(c).

 

“Borrowing” means a

borrowing hereunder consisting of Revolving Loans or Term Loans made on the

same day by the applicable Lenders to a Borrower or by the Bank in the case of

a Borrowing to a Borrower funded by Non–Ratable Loans or by the

Administrative Agent in the case of a Borrowing to a Borrower consisting of an

Administrative Agent Advance, or the issuance of a Letter of Credit hereunder.

 

“Borrowing Base”

means, with respect a Borrower, at any time, an amount equal to (a) the

sum of (A) up to eighty-five percent (85%) of the Net Amount of Eligible

Accounts of such Borrower; plus (B) up to the lesser of

(i) forty percent (40%) of the value of Eligible Inventory of such

Borrower valued at the lower of cost (on a first–in, first–out

basis) or market and (ii) eighty–five percent (85%) of the Orderly

Liquidation Value of Eligible Inventory of such Borrower; minus

(b) Reserves from time to time established by the Administrative Agent in

its reasonable credit judgment with respect to such Borrower; provided,

that the aggregate Revolving Loans and Letters of Credit advanced or issued

against Eligible Inventory of such Borrower and the other Borrowers shall not

exceed the Maximum Inventory Loan Amount. 

Notwithstanding the foregoing, for purposes of this definition and the proviso in clause (iv)(C) of the

definition of “Permitted Acquisition”, no Accounts or Inventory being acquired

in a Permitted Acquisition or otherwise created, purchased, completed or owned

by a business unit acquired pursuant to a Permitted Acquisition will be

included in the Borrowing Base of the

 

A-5

 

applicable Borrower unless (i) the

Administrative Agent, in its sole discretion, agrees in writing to include such

Accounts or Inventory in such Borrowing Base and (ii) to the extent deemed

necessary by the Administrative Agent, an audit of such Accounts and an

appraisal of such Inventory is conducted (which appraisal shall be by an

appraiser acceptable to the Administrative Agent and in form, scope and

substance acceptable to the Administrative Agent in its sole discretion) and

then only so long as such Accounts or Inventory, as the case may be, would

otherwise satisfy the applicable eligibility criteria.

 

“Borrowing Base

Certificate” means a certificate by a Responsible Officer of the applicable

Borrower, substantially in the form of Exhibit B (or another form

acceptable to the Administrative Agent) setting forth the calculation of the

Borrowing Base of such Borrower, including a calculation of each component

thereof, all in such detail as shall be reasonably satisfactory to the

Administrative Agent.  All calculations

of the Borrowing Base of a Borrower in connection with the preparation of any

Borrowing Base Certificate shall originally be made by such Borrower and

certified to the Administrative Agent; provided, that the Administrative Agent

shall have the right to review and adjust, in the exercise of its reasonable

credit judgment, any such calculation (1) to reflect its reasonable

estimate of declines in value of any of the Collateral described therein, and

(2) to the extent that such calculation is not in accordance with this

Agreement.

 

“Business Day” means

(a) any day that is not a Saturday, Sunday, or a day on which banks in New

York, New York or Charlotte, North Carolina are required or permitted to be

closed, and (b) with respect to all notices, determinations, fundings and

payments in connection with the LIBOR Rate or LIBOR Rate Revolving Loans, any

day that is a Business Day pursuant to clause (a) above and that is

also a day on which trading in Dollars is carried on by and between banks in

the London interbank market.

 

“Capital Adequacy Regulation”

means any guideline, request or directive of any central bank or other

Governmental Authority, or any other law, rule or regulation, whether or not

having the force of law, in each case, regarding capital adequacy of any bank

or of any corporation controlling a bank.

 

“Capital Expenditures”

means all payments due (whether or not paid during any fiscal period) in

respect of the cost of any fixed asset or improvement, or replacement,

substitution, or addition thereto, which has a useful life of more than one

year, including, without limitation, those costs arising in connection with the

direct or indirect acquisition of such asset by way of increased product or

service charges or in connection with a Capital Lease.

 

“Capital Lease” means

any lease of property by the Parent or any of its Subsidiaries which, in

accordance with GAAP, should be reflected as a capital lease on the balance

sheet of the Parent or such Subsidiary.

 

“Cash Interest Rate”

means, for any day, a per annum interest rate equal to the greater of

(i) the Base Rate in effect on such day plus six percent (6%) and

(ii) eleven percent (11%).

 

A-6

 

“Change of Control”

means any of the following: 

(i) any Person (other than DLJ Merchant Banking Partners, L.P. and

its Affiliates (each, a “Permitted Holder”)), acting alone or in concert with

one or more other Persons (other than any Permitted Holder) shall have acquired

beneficial ownership, directly or indirectly, of securities of the Parent (or other

securities convertible into such securities) representing 30% or more of the

combined voting power of all securities of the Parent entitled to vote in the

election of members of the governing body of the Parent, other than securities

having such power only by reason of the happening of a contingency,

(ii) the occurrence of a change in the composition of the governing body

of the Parent such that a majority of the members of any such governing body

(x) were not members of such governing body on the Closing Date or

(y) were not nominated for election or elected to such governing body with

the affirmative vote of a majority of the members who were either members of

such governing body on the Closing Date or whose nomination or election was

previously so approved, (iii) except in connection with a Permitted

Acquisition or a merger permitted under Section 7.11(xi), the

Parent shall cease to own, directly or indirectly, 100% of the capital stock or

other equity interests of each of its Subsidiaries (other than, to the extent

required by law, capital stock or other equity interests of a Subsidiary held

by members of the governing body of such Subsidiary in order to qualify such

members for such position), free and clear of all Liens (other than Liens

created under the Loan Documents in favor of the Administrative Agent), or

(iv) the occurrence of any “Change of Control” as defined in any

indenture, other agreement or certificate of designation of preferences

relating to any subordinated Debt or preferred stock of the Parent.  As used herein, the term “beneficially own”

or “beneficial ownership” shall have the meaning set forth in the Exchange Act

and the rules and regulations promulgated thereunder.

 

“Chattel Paper”

means, with respect to a Borrower, all of such Borrower’s now owned or

hereafter acquired chattel paper, as defined in the UCC, including electronic

chattel paper.

 

“Citadel Fee Letter”

has the meaning specified in Section 2.8.

 

“Clearing Bank” means

the Bank or any other banking institution with whom a Payment Account has been

established pursuant to a Blocked Account Agreement.

 

“Closing Date” means

the date of this Agreement.

 

“Closing Fee” has the

meaning specified in Section 2.4.

 

“Code” means the

Internal Revenue Code of 1986.

 

“Collateral” means all

of each Borrower’s real and personal property and all other assets of any

Person from time to time subject to the Agent’s Liens securing payment or

performance of the Obligations.

 

“Commitment” means,

at any time with respect to a Lender, the sum of the Term Loan Commitment and

the Revolving Credit Commitment of such Lender.

 

A-7

 

“Contaminant” means

any waste, pollutant, hazardous substance, toxic substance, hazardous waste,

special waste, petroleum or petroleum–derived substance or waste,

asbestos in any form or condition, polychlorinated biphenyls (“PCBs”), or any

constituent of any such substance or waste.

 

“Continuation/Conversion

Date” means the date on which a Revolving Loan is converted into or continued

as a LIBOR Rate Revolving Loan.

 

“Copyright Licenses”

means, with respect to a Borrower or Subsidiary, all of such Borrower’s or

Subsidiary’s right, title and interest in and to any and all agreements

providing for the granting of any right in or to Copyrights (whether such

Borrower or Subsidiary is licensee or licensor thereunder), including, without

limitation, each such agreement listed on Schedule 6.12.

 

“Copyrights” means,

with respect to a Borrower or Subsidiary, all of such Borrower’s or Subsidiary’s

right, title, and interest in and to all United States and foreign copyrights,

all mask works fixed in semi-conductor chip products (as defined under 17

U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, now

or hereafter in force throughout the world, all registrations and applications

therefor including, without limitation, the registrations and applications

referred to in Schedule 6.12, all rights, corresponding thereto

throughout the world, all extensions and renewals of any thereof, the right to

sue for past infringements of any of the foregoing, and all proceeds of the

foregoing, including without limitation, licenses, royalties, income, payments,

claims, damages and proceeds of suit.

 

“Copyright Security

Agreement” means a Copyright Security Agreement to be executed and

delivered by the Borrowers to the Administrative Agent, for the benefit of the

Administrative Agent and the Lenders, to evidence and perfect the

Administrative Agent’s security interest in each Borrower’s present and future

Copyrights and related licenses and rights, which agreement shall be in form

and substance satisfactory to the Administrative Agent.

 

“Credit Support” has

the meaning specified in Section 1.4(a).

 

“Debt” means, without

duplication, all liabilities, obligations and indebtedness of the Parent or any

of its Subsidiaries to any Person, of any kind or nature, now or hereafter

owing, arising, due or payable, howsoever evidenced, created, incurred,

acquired or owing, whether primary, secondary, direct, contingent, fixed or

otherwise, consisting of indebtedness for borrowed money or the deferred

purchase price of property, excluding trade payables, but including

(a) all Obligations; (b) all obligations and liabilities of any

Person secured by any Lien on the property of the Parent or any of its

Subsidiaries, even though the Parent or such Subsidiary shall not have assumed

or become liable for the payment thereof; provided, however, that

all such obligations and liabilities which are limited in recourse to such

property shall be included in Debt only to the extent of the book value of such

property as would be shown on a balance sheet of the Parent or such Subsidiary,

as the case may be, prepared in accordance with GAAP; (c) all obligations

or liabilities created or arising under any Capital Lease or conditional sale

or other title retention agreement with respect to property used or acquired by

the

 

A-8

 

Parent or any of its Subsidiaries, even if

the rights and remedies of the lessor, seller or lender thereunder are limited

to repossession of such property; provided, however, that all

such obligations and liabilities which are limited in recourse to such property

shall be included in Debt only to the extent of the book value of such property

as would be shown on a balance sheet of the Parent or such Subsidiary, as the

case may be, prepared in accordance with GAAP; (d) all obligations and

liabilities under Guaranties and (e) the present value (discounted at the

Base Rate) of lease payments due under synthetic leases.

 

“Default” means any

event or circumstance which, with the giving of notice, the lapse of time, or

both, would (if not cured, waived or otherwise remedied during such time)

constitute an Event of Default.

 

“Default Rate” means

a fluctuating per annum interest rate at all times equal to (i) with

respect to the Revolving Loans and other Obligations (other than the Term Loans

and interest thereon), the sum of (a) the otherwise applicable Interest Rate

plus (b) two percent (2%) per annum and (ii) with respect only

to the Cash Interest Rate on the Term Loans, the sum of (a) the Cash

Interest Rate plus four percent (4%) per annum.  Each Default Rate shall be adjusted simultaneously with any

change in the applicable Interest Rate. 

In addition, the Default Rate shall result in an increase in the Letter

of Credit Fee by 2 percentage points per annum.

 

“Defaulting Lender”

has the meaning specified in Section 12.15(c).

 

“Deferred Interest Amount”

means, for any day, the amount of interest accrued in respect of the Term Loans

at the Deferred Interest Rate.

 

“Deferred Interest Rate”

means, for any day, a per annum interest rate equal to three percent (3%).

 

“Deposit Accounts”

means all deposit accounts as such term is defined in the UCC, now or hereafter

held in the name of a Borrower.

 

“Designated Account”

has the meaning specified in Section 1.2(c).

 

“Distribution” means,

in respect of any corporation: (a) the payment or making of any dividend

or other distribution of property in respect of capital stock (or any options

or warrants for, or other rights with respect to, such stock) of such

corporation, other than distributions in capital stock (or any options or

warrants for such stock) of the same class or common stock; or (b) the

redemption or other acquisition by such corporation or any of its Subsidiaries

of any capital stock (or any options or warrants for such stock) of such

corporation.

 

“Documents” means,

with respect to a Borrower, all documents as such term is defined in the UCC,

including bills of lading, warehouse receipts or other documents of title, now

owned or hereafter acquired by such Borrower.

 

A-9

 

“DOL” means the

United States Department of Labor or any successor department or agency.

 

“Dollar” and “$”

means dollars in the lawful currency of the United States.  Unless otherwise specified, all payments

under this Agreement shall be made in Dollars.

 

“Domestic Subsidiary”

means any direct or indirect Subsidiary of the Parent which is incorporated or

organized under the laws of any state of the United States of America or the

District of Columbia.

 

“EBITDA” means, with

respect to any fiscal period of the Parent, Adjusted Net Earnings from

Operations, plus, to the extent deducted in the determination of Adjusted Net

Earnings from Operations for that fiscal period, interest expenses, non-cash

restructuring and other charges (provided, that in the event the Parent

or any Subsidiary at any time makes any cash payment in respect of any such

non-cash charge, such cash payment shall be deducted from EBITDA in the fiscal

period in which such payment is made), Federal, state, local and foreign income

taxes, depreciation and amortization.

 

“Eligible Accounts” means,

with respect to a Borrower, the Accounts of such Borrower which the

Administrative Agent in the exercise of its reasonable commercial discretion

determines to be Eligible Accounts. 

Without limiting the discretion of the Administrative Agent to establish

other criteria of ineligibility, Eligible Accounts of a Borrower shall not,

unless the Administrative Agent in its sole discretion exercised in good faith

elects, include any Account of such Borrower:

 

(a)           with respect to which more than 90

days have elapsed since the date of the original invoice therefor or which is

more than 60 days past due;

 

(b)           with respect to which any of the

representations, warranties, covenants and agreements contained in the Security

Agreement are incorrect or have been breached;

 

(c)           with respect to which Account (or any

other Account due from such Account Debtor, whether owing to such Borrower or

any other Borrower), in whole or in part, a check, promissory note, draft,

trade acceptance or other instrument for the payment of money has been

received, presented for payment and returned uncollected for any reason;

 

(d)           which represents a progress billing

(as hereinafter defined) or as to which such Borrower has extended the time for

payment without the consent of the Administrative Agent; for the purposes

hereof, “progress billing” means any invoice for goods sold or leased or

services rendered under a contract or agreement pursuant to which the Account

Debtor’s obligation to pay such invoice is conditioned upon such Borrower’s completion

of any further performance under the contract or agreement;

 

A-10

 

(e)           with respect to which any one or more

of the following events has occurred to the Account Debtor on such

Account:  death or judicial declaration

of incompetency of an Account Debtor who is an individual; the filing by or

against the Account Debtor of a request or petition for liquidation,

reorganization, arrangement, adjustment of debts, adjudication as a bankrupt,

winding–up or other relief under the bankruptcy, insolvency or similar

laws of the United States, any state or territory thereof or any foreign

jurisdiction, now or hereafter in effect; the making of any general assignment

by the Account Debtor for the benefit of creditors; the appointment of a

receiver or trustee for the Account Debtor or for any of the assets of the

Account Debtor, including, without limitation, the appointment of or taking

possession by a “custodian,” as defined in the Bankruptcy Code; the institution

by or against the Account Debtor of any other type of insolvency proceeding

(under the bankruptcy laws of the United States or otherwise) or of any formal

or informal proceeding for the dissolution or liquidation of, settlement of

claims against, or winding up of affairs of, the Account Debtor; the sale,

assignment or transfer of all or any material part of the assets of the Account

Debtor; the nonpayment generally by the Account Debtor of its debts as they

become due; or the cessation of the business of the Account Debtor as a going

concern;

 

(f)            if fifty percent (50%) or more of

the aggregate Dollar amount of outstanding Accounts owed at such time to the

Borrowers by the Account Debtor thereon is classified as ineligible under one

or more of the other criteria set forth in the definition of “Eligible

Accounts”;

 

(g)           owed by an Account Debtor which:  (i) does not maintain its chief

executive office in the United States of America or Canada (other than the

Province of Newfoundland); or (ii) is not organized under the laws of the

United States of America or Canada or any state or province thereof; or

(iii) is the government of any foreign country or sovereign state, or of

any state, province, municipality or other political subdivision thereof, or of

any department, agency, public corporation or other instrumentality thereof;

except to the extent that such Account is secured or payable by a letter of

credit satisfactory to the Administrative Agent in its discretion;

 

(h)           owed by an Account Debtor which is an

Affiliate or employee of any Borrower (other than a stockholder of not more

than 10% of the capital stock of the Parent);

 

(i)            except as provided in clause (k)

below, with respect to which either the perfection, enforceability, or validity

of the Agent’s Liens in such Account, or the Administrative Agent’s right or

ability to obtain direct payment to the Administrative Agent of the proceeds of

such Account, is governed by any federal, state, or local statutory

requirements other than those of the UCC;

 

(j)            owed by an Account Debtor to which

any Borrower or any of its Subsidiaries is indebted in any way, or which is

subject to any right of setoff or recoupment by the Account Debtor, unless the

Account Debtor has entered into an agreement acceptable to the Administrative

Agent to waive setoff rights; or if the Account Debtor thereon has disputed

 

A-11

 

liability or made any claim

with respect to any other Account due from such Account Debtor (whether such

Account is owing to such Borrower or any other Borrower); but in each such case

only to the extent of such indebtedness, setoff, recoupment, dispute, or claim;

 

(k)           owed by the government of the United

States of America, or any department, agency, public corporation, or other

instrumentality thereof, unless the Federal Assignment of Claims Act of 1940,

as amended (31 U.S.C. § 3727 et  seq.), and any other steps

necessary to perfect the Agent’s Liens therein, have been complied with to the

Administrative Agent’s satisfaction with respect to such Account;

 

(l)            owed by any state, municipality, or

other political subdivision of the United States of America, or any department,

agency, public corporation, or other instrumentality thereof and as to which

the Administrative Agent determines that its Lien therein is not or cannot be

perfected;

 

(m)          which represents a sale on a bill–and–hold,

guaranteed sale, sale and return, sale on approval, consignment, or other

repurchase or return basis;

 

(n)           which is evidenced by a promissory

note or other instrument or by chattel paper;

 

(o)           if the Administrative Agent believes,

in the exercise of its reasonable judgment, that the prospect of collection of

such Account is impaired or that the Account may not be paid by reason of the

Account Debtor’s financial inability to pay;

 

(p)           with respect to which the Account

Debtor is located in any state requiring the filing of a Notice of Business

Activities Report or similar report in order to permit such Borrower to seek

judicial enforcement in such State of payment of such Account, unless such

Borrower has qualified to do business in such state or has filed a Notice of

Business Activities Report or equivalent report for the then current year;

 

(q)           which arises out of a sale not made

in the ordinary course of such Borrower’s business;

 

(r)            with respect to which the goods

giving rise to such Account have not been shipped and delivered to and accepted

by the Account Debtor or the services giving rise to such Account have not been

performed by such Borrower, and, if applicable, accepted by the Account Debtor,

or the Account Debtor revokes its acceptance of such goods or services;

 

(s)           owed by an Account Debtor which,

together with any Affiliates of such Account Debtor, is obligated to the

Borrowers respecting Accounts the aggregate unpaid balance of which exceeds

(i) in the case of any Account Debtor other than IBM Corporation,

twenty-five percent (25%) of the aggregate unpaid balance of all Eligible

Accounts owed to the

 

A-12

 

Borrowers at such time by

all of the Borrowers’ Account Debtors, or (ii) in the case of IBM

Corporation, forty percent (40%) of the aggregate unpaid balance of all

Eligible Accounts owed to the Borrowers at such time by all of the Borrowers’

Account Debtors, but in each case only to the extent of such excess;

 

(t)            with respect to which an invoice

constituting a request for payment, in form and substance reasonably acceptable

to the Administrative Agent, has not been sent on a timely basis to the

applicable Account Debtor according to the applicable Borrower’s normal invoice

and timing procedures; or

 

(u)           which is not subject to a first

priority and perfected security interest in favor of the Administrative Agent

for the benefit of the Lenders.

 

If any Account at any time

ceases to be an Eligible Account, then such Account shall promptly be excluded

from the calculation of Eligible Accounts.

 

“Eligible Assignee”

means (i) with respect to an assignment of all or a portion of a Revolving Lender’s

Revolving Loans and/or Revolving Credit Commitment and with respect to any New

Revolving Lender that becomes party to this Agreement pursuant to Section

1.6, (a) a commercial bank, commercial finance company or other asset

based lender, having total assets in excess of $1,000,000,000; (b) any

Revolving Lender listed on the signature page of this Agreement; (c) any

Affiliate of any Revolving Lender and (d) if an Event of Default has

occurred and is continuing, any Person reasonably acceptable to the

Administrative Agent and (ii) with respect only to an assignment of all or a

portion of a Term Lender’s Term Loans, (a) any Term Lender, any Affiliate of

any Term Lender and, with respect to any Term Lender that is an investment fund

that invests in commercial loans, any other investment fund that invests in

commercial loans and that is managed or advised by the same investment advisor

as such Term Lender or by an Affiliate of such investment advisor, and (b) any

commercial bank, savings and loan association or savings bank or any other

entity which is an “accredited investor” (as defined in Regulation D under the

Securities Act of 1933) which extends credit or buys loans as one of its

businesses, including insurance companies, mutual funds, investment funds,

lease financing companies and commercial finance companies, in each case,

which, through its applicable lending office, is capable of lending to the

Borrowers without the imposition of any withholding or similar taxes.

 

“Eligible Inventory”

means, with respect to a Borrower, Inventory of such Borrower which the

Administrative Agent, in its reasonable discretion, determines to be Eligible

Inventory.  Without limiting the

discretion of the Administrative Agent to establish other criteria of

ineligibility, Eligible Inventory of a Borrower shall not, unless the

Administrative Agent in its sole discretion exercised in good faith elects,

include any Inventory of such Borrower:

 

(a)           that is not owned by such Borrower;

 

A-13

 

(b)           that is not subject to the Agent’s

Liens, which are perfected as to such Inventory, or that are subject to any

other Lien whatsoever (other than the Liens described in clause (d)

of the definition of Permitted Liens provided that such Permitted Liens

(i) are junior in priority to the Agent’s Liens or subject to Reserves and

(ii) do not impair directly or indirectly the ability of the

Administrative Agent to realize on or obtain the full benefit of the

Collateral);

 

(c)           that does not consist of finished

goods or raw materials;

 

(d)           that consists of work–in–process,

chemicals, samples, prototypes, supplies, or packing and shipping materials;

 

(e)           that is not in good condition, is

unmerchantable, or does not meet all standards imposed by any Governmental

Authority, having regulatory authority over such goods, their use or sale;

 

(f)            that is not currently either usable

or salable, at prices approximating at least cost, in the normal course of such

Borrower’s business, or that is slow moving or stale;

 

(g)           that is obsolete or returned or

repossessed or used goods taken in trade;

 

(h)           that is located outside the United

States of America or Canada (or that is in–transit from vendors or

suppliers);

 

(i)            that is located in a public

warehouse or in possession of a bailee or in a facility leased by a Borrower,

if the warehouseman, or the bailee or the lessor has not delivered to the

Administrative Agent, if requested by the Administrative Agent, a subordination

agreement in form and substance satisfactory to the Administrative Agent or if

a Reserve for rents or storage charges has not been established for Inventory

at that location;

 

(j)            that contains or bears any

Proprietary Rights licensed to a Borrower by any Person, if the Administrative

Agent is not satisfied that it may sell or otherwise dispose of such Inventory

in accordance with the terms of the Security Agreement and Section 9.2

without infringing the rights of the licensor of such Proprietary Rights or

violating any contract with such licensor (and without payment of any royalties

other than any royalties due with respect to the sale or disposition of such

Inventory pursuant to the existing license agreement), and, as to which such

Borrower has not delivered to the Administrative Agent a consent or sublicense

agreement from such licensor in form and substance acceptable to the

Administrative Agent if requested;

 

(k)           that is not reflected in the details

of a current perpetual inventory report; or

 

(l)            that is Inventory placed on

consignment.

 

A-14

 

If any Inventory at any time ceases to be Eligible Inventory, such

Inventory shall promptly be excluded from the calculation of Eligible

Inventory.

 

“Emulex Agreement” means the Manufacturing Agreement, effective

as of November 2, 2000, between the Parent and Emulex Corporation.

 

“Enforcement Action” means the exercise by the Administrative

Agent in good faith of any of its material enforcement rights and remedies as a

secured creditor under this Agreement, the other Loan Documents, applicable law

or otherwise at any time after the occurrence and during the continuance of an

Event of Default (including, without limitation, the demand for the immediate

payment of all of the Obligations, the solicitation of bids from third parties

to conduct the liquidation of the Collateral, the engagement or retention of

sales brokers, marketing agents, investment bankers, accountants, appraisers,

auctioneers or other third parties for the purpose of valuing, marketing, promoting

and selling the Collateral, the commencement of any action to foreclose on the

security interests or Liens of the Administrative Agent in all or any material

portion of the Collateral, notification of account debtors to make payments to

the Administrative Agent, any action to take possession of all or any material

portion of the Collateral or commencement of any legal proceedings or actions

against or with respect to all or any portion of the Collateral).

 

“Environmental Claims” means all claims, however asserted, by

any Governmental Authority or other Person alleging potential liability or

responsibility for violation of any Environmental Law or for a Release or

injury to the environment.

 

“Environmental Compliance Reserve” means any reserve which the

Administrative Agent establishes in its reasonable discretion after prior

written notice to the Borrowers (or the Parent on behalf of the Borrowers) from

time to time for amounts that are reasonably likely to be expended by any

Borrower in order for such Borrower and its operations and property (a) to

comply with any notice from a Governmental Authority asserting material non–compliance

with Environmental Laws, or (b) to correct any such material non–compliance

identified in a report delivered to the Administrative Agent and the Lenders

pursuant to Section 7.7.

 

“Environmental Laws” means all federal, state or local laws,

statutes, common law duties, rules, regulations, ordinances and codes, together

with all administrative orders, directed duties, licenses, authorizations and

permits of, and agreements with, any Governmental Authority, in each case

relating to environmental, health, safety and land use matters.

 

“Environmental Lien” means a Lien in favor of any Governmental

Authority for (a) any liability under Environmental Laws, or

(b) damages arising from, or costs incurred by such Governmental Authority

in response to, a Release or threatened Release of a Contaminant into the

environment.

 

“Equipment” means, with respect to a Borrower, all of such

Borrower’s now owned and hereafter acquired machinery, equipment, furniture,

furnishings, fixtures and other tangible personal

 

A-15

 

property (except Inventory), including embedded software, motor

vehicles with respect to which a certificate of title has been issued,

aircraft, dies, tools, jigs, molds and office equipment, as well as all of such

types of property leased by such Borrower and all of such Borrower’s rights and

interests with respect thereto under such leases (including, without

limitation, options to purchase); together with all present and future

additions and accessions thereto, replacements therefor, component and

auxiliary parts and supplies used or to be used in connection therewith, and

all substitutes for any of the foregoing, and all manuals, drawings,

instructions, warranties and rights with respect thereto; wherever any of the

foregoing is located.

 

“Equity Agreements” means, collectively, (i) the

Registration Rights Agreement, dated as of March 12, 2002, among the

Parent, Robertson Stephens, Inc. and the buyers referred to therein,

(ii) the Securities Purchase Agreement, dated as of March 12, 2002,

between the Parent and the buyers referred to therein, (iii) the Warrant executed

by the Parent, dated March 14, 2002, (iv) the Manufacturers’ Services

Limited Private Placement Memorandum, dated March 12, 2002 and

(v) the Certificate of Designations executed by the Parent on May 14,

2002.

 

“ERISA” means the Employee Retirement Income Security Act of

1974, and regulations promulgated thereunder.

 

“ERISA Affiliate” means any trade or business (whether or not

incorporated) under common control with any Borrower within the meaning of

Section 414(b) or (c) of the Code (and Sections 414(m) and

(o) of the Code for purposes of provisions relating to Section 412 of

the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to

a Pension Plan, (b) a withdrawal by any Borrower or any ERISA Affiliate

from a Pension Plan subject to Section 4063 of ERISA during a plan year in

which it was a substantial employer (as defined in Section 4001(a)(2) of

ERISA) or a cessation of operations which is treated as such a withdrawal under

Section 4062(e) of ERISA, (c) a complete or partial withdrawal by any

Borrower or any ERISA Affiliate from a Multi–employer Plan or

notification that a Multi–employer Plan is in reorganization,

(d) the filing of a notice of intent to terminate, the treatment of a Plan

amendment as a termination under Section 4041 or 4041A of ERISA, or the

commencement of proceedings by the PBGC to terminate a Pension Plan or Multi–employer

Plan, (e) the occurrence of an event or condition which might reasonably

be expected to constitute grounds under Section 4042 of ERISA for the

termination of, or the appointment of a trustee to administer, any Pension Plan

or Multi–employer Plan, or (f) the imposition of any liability under

Title IV of ERISA, other than for PBGC premiums due but not delinquent under

Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate.

 

“Eurodollar Reserve Percentage” means, for any day during any

Interest Period, the reserve percentage (expressed as a decimal, rounded upward

to the next 1/100th of 1%) in effect on such day applicable to

member banks under regulations issued from time to time by the Federal Reserve

Board for determining the maximum reserve requirement (including any emergency,

supplemental or other marginal reserve requirement) with respect to

Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).  The Offshore Rate for each outstanding LIBOR

Rate

 

A-16

 

Revolving Loan shall be adjusted automatically as of the effective date

of any change in the Eurodollar Reserve Percentage.

 

“Event of Default” has the meaning specified in Section 9.1.

 

“Excess Cash Flow” means, without duplication, with respect to

any Fiscal Year, Adjusted Net Earnings from Operations, plus

(a) depreciation, amortization and interest expenses deducted in the

calculation of Adjusted Net Earnings from Operations not paid in cash

(including original issue discount, interest paid in kind and amortized debt

discount), minus (b) Capital Expenditures of the Parent and its

Subsidiaries made in cash during such Fiscal Year (except to the extent funded

by insurance proceeds or proceeds of Debt, other than Borrowings of Revolving

Loans), minus (c) scheduled cash principal payments paid or payable

in respect of Debt during such Fiscal Year, plus (d) extraordinary

gains of the Parent and its Subsidiaries received in cash and not otherwise

included in the calculation of Adjusted Net Earnings from Operations, minus

(e) extraordinary losses of the Parent and its Subsidiaries representing

payments of cash and not otherwise deducted in the calculation of Adjusted Net

Earnings from Operations, plus (f) income taxes deducted in

determining Adjusted Net Income from Operations for that Fiscal Year to the

extent not paid in cash.

 

“European Operations Reorganization” means the reorganization of

the Parent’s foreign operations to ultimately establish Global Manufacturers’

Services Valencia S.A. (“MSL Spain”) as the holding company for all of its

Subsidiaries organized under European jurisdictions.  This reorganization includes the transfer by MSL Spain of its

ownership of certain Subsidiaries organized under Asian jurisdictions to other

companies in the MSL group and the functioning of MSL Spain as a central focus

for European treasury matters.

 

“Exchange Act” means the Securities Exchange Act of 1934, and

regulations promulgated thereunder.

 

“FDIC” means the Federal Deposit Insurance Corporation, and any

Governmental Authority succeeding to any of its principal functions.

 

“Federal Funds Rate” means, for any day, the rate per annum

(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the

weighted average of the rates on overnight Federal funds transactions with

members of the Federal Reserve System arranged by Federal funds brokers on such

day, as published by the Federal Reserve Bank of New York on the Business Day

next succeeding such day; provided that (a) if such day is not a

Business Day, the Federal Funds Rate for such day shall be such rate on such

transactions on the next preceding Business Day as so published on the next

succeeding Business Day, and (b) if no such rate is so published on such

next succeeding Business Day, the Federal Funds Rate for such day shall be the

average rate charged to the Bank on such day on such transactions as determined

by the Administrative Agent.

 

“Federal Reserve Board” means the Board of Governors of the

Federal Reserve System or any successor thereto.

 

A-17

 

“Financial Statements” means, according to the context in which

it is used, the financial statements referred to in Sections 5.2 and 6.6

or any other financial statements required to be given to the Lenders pursuant

to this Agreement.

 

“Fiscal Year” means the Parent’s fiscal year for financial

accounting purposes.  The current Fiscal

Year of the Parent will end on December 31, 2002.

 

“Fixed Assets” means the Equipment and Real Estate of the

Borrowers.

 

“Fixed Charge Coverage Ratio” means, with respect to any fiscal

period of the Parent, the ratio of EBITDA to Fixed Charges.

 

“Fixed Charges” means, with respect to any fiscal period of the

Parent on a consolidated basis, without duplication, cash interest expense of

the Parent and its Subsidiaries, Capital Expenditures of the Parent and its

Subsidiaries (excluding Capital Expenditures funded with Debt other than

Revolving Loans, but including, without duplication, principal payments with

respect to such Debt), scheduled principal payments of Debt of the Parent and

its Subsidiaries, cash dividends or other Distributions paid or made by the

Parent in respect of its capital stock, repurchases by the Parent or any of its

Subsidiaries of capital stock of the Parent (or options or warrants to acquire

same), and Federal, state, local and foreign income taxes of the Parent and its

Subsidiaries paid in cash, excluding deferred taxes.

 

“Foreign Subsidiary” means any direct or indirect Subsidiary of

the Parent which is not a Domestic Subsidiary.

 

“Funding Date” means the date on which a Borrowing occurs.

 

“GAAP” means generally accepted accounting principles and practices

set forth from time to time in the opinions and pronouncements of the

Accounting Principles Board and the American Institute of Certified Public

Accountants and statements and pronouncements of the Financial Accounting

Standards Board (or agencies with similar functions of comparable stature and

authority within the U.S. accounting profession), which are applicable to the

circumstances as of the Closing Date.

 

“General Intangibles” means, with respect to a Borrower, all of

such Borrower’s now owned or hereafter acquired general intangibles, choses in

action and causes of action and all other intangible personal property of such

Borrower of every kind and nature (other than Accounts), including, without

limitation, all contract rights, payment intangibles, Proprietary Rights,

corporate or other business records, inventions, designs, blueprints, plans,

specifications, trade secrets, goodwill, computer software, customer lists,

registrations, licenses, franchises, tax refund claims, any funds which may become

due to such Borrower in connection with the termination of any Plan or other

employee benefit plan or any rights thereto and any other amounts payable to

such Borrower from any Plan or other employee benefit plan, rights and claims

against carriers and shippers, rights to indemnification,

 

A-18

 

business interruption insurance and proceeds thereof, property,

casualty or any similar type of insurance and any proceeds thereof, proceeds of

insurance covering the lives of key employees on which such Borrower is

beneficiary, rights to receive dividends, distributions, cash, Instruments and

other property in respect of or in exchange for pledged equity interests or

Investment Property and any letter of credit, guarantee, claim, security

interest or other security held by or granted to such Borrower.

 

“Goods” means, with respect to a Borrower, all goods as defined

in the UCC, now owned or hereafter acquired by such Borrower, wherever located,

including embedded software to the extent included in “goods” as defined in the

UCC, manufactured homes, standing timber that is cut and removed for sale and

unborn young of animals.

 

“Governmental Authority” means any nation or government, any

state or other political subdivision thereof, any central bank (or similar

monetary or regulatory authority) thereof, any entity exercising executive,

legislative, judicial, regulatory or administrative functions of or pertaining

to government, and any corporation or other entity owned or controlled, through

stock or capital ownership or otherwise, by any of the foregoing.

 

“Guarantor” means the Parent and each of its Domestic

Subsidiaries.

 

“Guaranty” means, with respect to any Person, all obligations of

such Person which in any manner directly or indirectly guarantee or assure, or

in effect guarantee or assure, the payment or performance of any indebtedness,

dividend or other obligations of any other Person (the “guaranteed

obligations”), or assure or in effect assure the holder of the guaranteed

obligations against loss in respect thereof, including any such obligations

incurred through an agreement, contingent or otherwise:  (a) to purchase the guaranteed

obligations or any property constituting security therefor; (b) to advance

or supply funds for the purchase or payment of the guaranteed obligations or to

maintain a working capital or other balance sheet condition; or (c) to

lease property or to purchase any debt or equity securities or other property

or services.

 

“Hedge Agreement” means any and all transactions, agreements or

documents now existing or hereafter entered into, which provides for an

interest rate, credit, commodity or equity swap, cap, floor, collar, forward

foreign exchange transaction, currency swap, cross currency rate swap, currency

option, or any combination of, or option with respect to, these or similar

transactions, for the purpose of hedging a Borrower’s exposure to fluctuations

in interest or exchange rates, loan, credit exchange, security or currency

valuations or commodity prices.

 

“HP Agreement” means the Master Manufacturing Agreement, dated

April 19, 2001, between Hewlett Packard Company and the Parent, as same may be

amended, restated, modified or otherwise supplemented from time to time in

accordance with its terms.

 

“IBM Agreement” means the Outsourcing Agreement, dated June 1,

1998, as amended, between International Business Machines Corporation and

Manufacturers’ Services Western U.S. Operations, Inc.

 

A-19

 

“Increase Date” has the meaning specified in Section 1.6(a).

 

“Instruments” means, with respect to a Borrower, all instruments

as such term is defined in the UCC, now owned or hereafter acquired by such

Borrower.

 

“Interest Period” means, as to any LIBOR Rate Revolving Loan,

the period commencing on the Funding Date of such Loan or on the

Continuation/Conversion Date on which the Loan is converted into or continued

as a LIBOR Rate Revolving Loan, and ending on the date one, two or three months

thereafter as selected by the applicable Borrower in its Notice of Borrowing,

in the form attached hereto as Exhibit D, or Notice of

Continuation/Conversion, in the form attached hereto as Exhibit E,

provided that:

 

(a)           if

any Interest Period would otherwise end on a day that is not a Business Day,

that Interest Period shall be extended to the following Business Day unless the

result of such extension would be to carry such Interest Period into another

calendar month, in which event such Interest Period shall end on the preceding

Business Day;

 

(b)           any

Interest Period pertaining to a LIBOR Rate Revolving Loan that begins on the

last Business Day of a calendar month (or on a day for which there is no

numerically corresponding day in the calendar month at the end of such Interest

Period) shall end on the last Business Day of the calendar month at the end of

such Interest Period; and

 

(c)           no

Interest Period shall extend beyond the Stated Termination Date.

 

“Interest Rate” means each or any of the interest rates,

including the Default Rate, set forth in Section 2.1.

 

“Inventory” means, with respect to a Borrower, all of such

Borrower’s now owned and hereafter acquired inventory, goods and merchandise,

wherever located, to be furnished under any contract of service or held for

sale or lease, all returned goods, raw materials, work–in–process,

finished goods (including embedded software), other materials and supplies of

any kind, nature or description which are used or consumed in such Borrower’s

business or used in connection with the packing, shipping, advertising, selling

or finishing of such goods, merchandise, and all documents of title or other

Documents representing them.

 

“Investment Property” means, with respect to a Borrower, all of

such Borrower’s right title and interest in and to any and all:  (a) securities whether certificated or

uncertificated; (b) securities entitlements; (c) securities accounts;

(d) commodity contracts; or (e) commodity accounts.

 

“IRS” means the Internal Revenue Service and any Governmental

Authority succeeding to any of its principal functions under the Code.

 

A-20

 

“Latest Projections” means: 

(a) on the Closing Date and thereafter until the Administrative

Agent receives new projections pursuant to Section 5.2(f), the

projections of the Parent and its Subsidiaries’ financial condition, results of

operations, and cash flows on a consolidated and consolidating basis, for the

period commencing on January 1, 2002 and ending on December 31, 2003

and delivered to the Administrative Agent prior to the Closing Date; and

(b) thereafter, the projections most recently received by the

Administrative Agent pursuant to Section 5.2(f).

 

“Lender” and “Lenders” have the meanings specified in the

introductory paragraph hereof and shall include the Administrative Agent to the

extent of any Agent Advance outstanding and the Bank to the extent of any Non–Ratable

Loan outstanding; provided that no such Agent Advance or Non–Ratable

Loan shall be taken into account in determining any Lender’s Pro Rata Share.

 

“Letter of Credit” has the meaning specified in Section 1.4(a).

 

“Letter of Credit Fee” has the meaning specified in Section 2.6.

 

“Letter of Credit Issuer” means the Bank, any affiliate of the

Bank or any other financial institution that issues any Letter of Credit

pursuant to this Agreement.

 

“Letter-of-Credit Rights” means, with respect to a Borrower,

letter-of-credit rights as such term is defined in the UCC, now owned or

hereafter acquired by such Borrower, including rights to payments or

performance under a letter of credit, whether or not such Borrower, as

beneficiary, has demanded or is entitled to demand payment or performance.

 

“Letter of Credit Subfacility” means $10,000,000.

 

“LIBOR Interest Payment Date” means, with respect to a LIBOR

Rate Revolving Loan, the Termination Date and the last day of each Interest

Period applicable to such Loan or, with respect to each Interest Period of

greater than three months in duration, the last day of the third month of such

Interest Period and the last day of such Interest Period.

 

“LIBOR Rate” means, for any Interest Period, with respect to

LIBOR Rate Revolving Loans, the rate of interest per annum determined pursuant

to the following formula:

 

	

  LIBOR

  Rate

  	

  =

  	

  Offshore Base Rate

  
	

   

  	

   

  	

  1.00 - Eurodollar Reserve Percentage

  

 

Where,

 

“Offshore Base Rate” means the rate per annum appearing on

Telerate Page 3750 (or any successor page) as the London interbank offered

rate for deposits in Dollars at approximately 11:00 a.m. (London time) two

Business Days prior to the first day of such Interest Period for a term

comparable to such Interest Period.  If

for any reason such rate is not available, the Offshore Base Rate shall be, for

any Interest Period, the rate per annum

 

A-21

 

appearing

on Reuters Screen LIBO Page as the London interbank offered rate for deposits

in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to

the first day of such Interest Period for a term comparable to such Interest

Period; provided, however, if more than one rate is specified on

Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of

all such rates.  If for any reason none

of the foregoing rates is available, the Offshore Base Rate shall be, for any

Interest Period, the rate per annum determined by the Administrative Agent as

the rate of interest at which dollar deposits in the approximate amount of the

LIBOR Rate Revolving Loan comprising part of such Borrowing would be offered by

the Bank’s London Branch to major banks in the offshore dollar market at their

request at or about 11:00 a.m. (London time) two Business Days prior to the

first day of such Interest Period for a term comparable to such Interest

Period.

 

“LIBOR Rate Revolving Loan” means a Revolving Loan during any

period in which it bears interest based on the LIBOR Rate.

 

“Lien” means: 

(a) any interest in property securing an obligation owed to, or a

claim by, a Person other than the owner of the property, whether such interest

is based on the common law, statute, or contract, and including a security

interest, charge, claim, or lien arising from a mortgage, deed of trust,

encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement,

security agreement, conditional sale or trust receipt or a lease, consignment

or bailment for security purposes; (b) to the extent not included under clause

(a), any reservation, exception, encroachment, easement, right–of–way,

covenant, condition, restriction, lease or other title exception or encumbrance

affecting property; and (c) any contingent or other agreement to provide

any of the foregoing.

 

“Loan Account” means, with respect to each Borrower, the loan

account of such Borrower, which account shall be maintained by the

Administrative Agent.

 

“Loan Documents” means this Agreement, the Term Loan Notes, the

Bank Fee Letter, the Citadel Fee Letter, the Syndication Agency Fee Letter, the

Patent and Trademark Security Agreement, the Copyright Security Agreement, the

Security Agreement, the Pledge Agreement, the Mortgages and any other

agreements, instruments and documents heretofore, now or hereafter evidencing,

securing, guaranteeing or otherwise relating to the Obligations, the

Collateral, or any other aspect of the transactions contemplated by this

Agreement.

 

“Loans” means, collectively, all loans and advances provided for

in Article 1.

 

“Majority Lenders” means at any date of determination Lenders

whose Pro Rata Shares aggregate more than 50%.

 

“Majority Revolving Lenders” means at any time Revolving Lenders

whose Pro Rata Shares (as determined in such definition solely in the context

of the revolving credit facility provided under this Agreement) aggregate more

than 50%.

 

A-22

 

“Majority Term Lenders” means at any time Term Lenders whose Pro

Rata Shares (as determined in such definition solely in the context of the Term

Loans) aggregate more than 50%.

 

“Margin Stock” means “margin stock” as such term is defined in

Regulation T, U or X of the Federal Reserve Board.

 

“Material Adverse Effect” means (a) a material adverse

change in, or a material adverse effect upon, the assets, liabilities,

business, financial condition, results of operations or prospects of the Borrowers

taken as a whole, the Borrowers and their Domestic Subsidiaries taken as a

whole or the Collateral; (b) a material impairment of the ability of any

Borrower or any Affiliate of any Borrower to perform under any Loan Document to

which it is a party; or (c) a material adverse effect upon the legality,

validity, binding effect or enforceability against any Borrower of any Loan

Document to which it is a party.

 

“Maximum Inventory Loan Amount” means, on any day,  $40,000,000; provided, that (i) on

each day from and after the Closing Date through and including the date of

delivery to the Administrative Agent of the quarterly financial statements for

the fiscal quarter ending June 30, 2002, Maximum Inventory Loan Amount shall

mean $10,000,000,  (ii) on each day

after the date of delivery to the Administrative Agent of the financial

statements for the fiscal quarter ending June 30, 2002 through and including

the date of delivery to the Administrative Agent of the financial statements

for the fiscal quarter ending September 30, 2002 , if Adjusted  EBITDA of the Parent and its consolidated

Subsidiaries for the fiscal quarter ending June 30, 2002  is less than $12,000,000, Maximum Inventory

Loan Amount shall mean $10,000,000 and (iii) if (x) Adjusted  EBITDA of the Parent and its consolidated

Subsidiaries for the fiscal quarter ending June 30, 2002  is less than $12,000,000 and (y)

Adjusted  EBITDA of the Parent and its

consolidated Subsidiaries for the fiscal quarter ending September 30, 2002  is less than $8,000,000, on each day after

the date of delivery to the Administrative Agent of the financial statements

for the fiscal quarter ending September 30, 2002 Maximum Inventory Loan Amount

shall mean $10,000,000.

 

“Maximum Revolver Amount” means $100,000,000, as such amount may

be increased from time to time in accordance with Section 1.6; provided,

however, the Maximum Revolver Amount shall at no time exceed

$125,000,000.

 

“Mortgages” means and includes any and all of the mortgages,

deeds of trust, deeds to secure debt, assignments and other instruments

executed and delivered by any Borrower to or for the benefit of the

Administrative Agent by which the Administrative Agent, on behalf of the

Lenders, acquires a Lien on the Real Estate or a collateral assignment of any

Borrower’s interest under leases of Real Estate, and all amendments,

modifications and supplements thereto.

 

“Multi–employer Plan” means a “multi–employer plan”

as defined in Section 4001(a)(3) of ERISA which is or was at any time

during the current year or the immediately preceding six (6) years contributed

to by any Borrower or any ERISA Affiliate.

 

A-23

 

“Net Amount of Eligible Accounts” means, at any time, the gross

amount of Eligible Accounts less sales, excise or similar taxes, and less

returns, discounts, claims, credits and allowances accrued rebates, offsets,

deductions, counterclaims, disputes and other defenses of any nature at any

time issued, owing, granted, outstanding, available or claimed.

 

“Net Proceeds” has the meaning specified in Section 3.4(a).

 

“New Revolving Lender” has the meaning specified in Section

1.6(a).

 

“Non–Ratable Loan” and “Non–Ratable Loans”

have the meanings specified in Section 1.2(h).

 

“Notice of Borrowing” has the meaning specified in Section 1.2(b).

 

“Notice of Continuation/Conversion” has the meaning specified in

Section 2.2(b).

 

“Obligations” means all present and future loans, advances,

liabilities, obligations, covenants, duties, and debts owing by the Borrowers

to the Administrative Agent and/or any Lender, arising under or pursuant to

this Agreement or any of the other Loan Documents, whether or not evidenced by

any note, or other instrument or document, whether arising from an extension of

credit, opening of a letter of credit, acceptance, loan, guaranty,

indemnification or otherwise, whether direct or indirect, absolute or

contingent, due or to become due, primary or secondary, as principal or

guarantor, and including all principal, interest, charges, expenses, fees,

attorneys’ fees, filing fees and any other sums chargeable to any of the

Borrowers hereunder or under any of the other Loan Documents.  “Obligations” includes, without limitation,

(a) all debts, liabilities, and obligations now or hereafter arising from

or in connection with the Letters of Credit and (b) all debts, liabilities

and obligations now or hereafter arising from or in connection with Bank

Products.

 

“Orderly Liquidation Percentage” means, with respect to

Inventory of a Borrower at any time, the ratio (expressed as a  percentage) computed by dividing (i) (x) if

such percentage is being determined on the Closing Date or on any date prior to

the first delivery of an Appraisal required pursuant to Section 5.2(o),

the estimated orderly liquidation value of the Inventory of such Borrower as

set forth in the Appraisal delivered to the Administrative Agent prior to the

Closing Date and  (y) if such

percentage is being determined on or after the date of the first delivery of an

Appraisal required pursuant to Section 5.2(o), the estimated orderly

liquidation value of the Inventory of such Borrower as set forth in the

Appraisal most recently delivered pursuant to Section 5.2(o), as

updated pursuant to such Section by (ii) the value of the Inventory of such Borrower

valued at cost as set forth in the corresponding Appraisal (or update thereof).

 

“Orderly Liquidation Value” means, with respect to the Eligible

Inventory of a Borrower at any time, an amount equal to the product of (i) the

value of the Eligible Inventory of such Borrower at such time valued at the

lower of cost (on a first-in, first-out basis) or market, multiplied by

(ii) the Orderly Liquidation Percentage in effect at such time.

 

A-24

 

“Other Taxes” means any present or future stamp or documentary

taxes or any other excise or property taxes, charges or similar levies which

arise from any payment made hereunder or from the execution, delivery or

registration of, or otherwise with respect to, this Agreement or any other Loan

Documents.

 

“Participant” means any Person who shall have been granted the

right by any Lender to participate in the financing provided by such Lender

under this Agreement and who shall have entered into a participation agreement in

form and substance satisfactory to such Lender.

 

“Patent and Trademark Agreement” means the Security Agreement

and Mortgage-Trademarks and Patents, dated as of the date hereof, executed and

delivered by each Borrower and Guarantor to the Administrative Agent to

evidence and perfect the Administrative Agent’s security interest in each

Borrower’s and Guarantor’s present and future patents, trademarks, and related

licenses and rights, for the benefit of the Administrative Agent and the

Lenders, together with all related assignments for security and special powers

of attorney.

 

“Patent Licenses” means, with respect to a Borrower or

Subsidiary, all of such Borrower’s or Subsidiary’s right, title and interest in

and to any and all agreements providing for the granting of any right in or to

Patents (whether such Borrower or Subsidiary is licensee or licensor

thereunder), including, without limitation, each such agreement listed in Schedule

6.12.

 

“Patents” means, with respect to a Borrower or Subsidiary, all

of such Borrower’s or Subsidiary’s right, title and interest in and to all

United States and foreign patents and applications for letters patent

throughout the world, including, but not limited to each patent and patent

application referred to in Schedule 6.12, all reissues, divisions,

continuations, continuations-in-part, extensions, renewals, and reexaminations

of any of the foregoing, all rights corresponding thereto throughout the world,

the right to sue for past infringements of any of the foregoing, and all

proceeds of the foregoing including, without limitation, licenses, royalties,

income, payments, claims, damages, and proceeds of suit.

 

“Payment Account” means each bank account established pursuant

to the Security Agreement to which the proceeds of Accounts and other

Collateral are deposited or credited and which is maintained in the name of the

Administrative Agent or the applicable Borrower, as the Administrative Agent

may determine, on terms acceptable to the Administrative Agent.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any

Governmental Authority succeeding to the functions thereof.

 

“Pending Revolving Loans” means, at any time, the aggregate

principal amount of all Revolving Loans requested in any Notice of Borrowing

received by the Administrative Agent which have not yet been advanced.

 

A-25

 

“Pension Plan” means a pension plan (as defined in

Section 3(2) of ERISA) subject to Title IV of ERISA which any

Borrower sponsors, maintains, or to which it makes, is making, or is obligated

to make contributions, or in the case of a Multi–employer Plan has made

contributions at any time during the immediately preceding five (5) plan years.

 

“Permitted Acquisition” means an acquisition by a Borrower of

all or a substantial part of the capital stock or assets of any Person, which

(unless otherwise agreed to in writing by the Majority Lenders) satisfies each

of the following conditions: 

(i) no Default or Event of Default shall have occurred and be continuing

on the date of any such acquisition or would be caused upon the consummation

thereof, (ii) the assets acquired (or the assets of the Person in which an

equity interest is acquired) are to be used in the same or a related line of

business as that conducted by such Borrower, (iii) if capital stock or other

equity interests of a Person are acquired, the governing body of such Person

shall have approved such acquisition, and (iv) the consideration paid by

such Borrower in respect of any such acquisition shall consist of any of or a

combination of (A) unsecured subordinated Debt of such Borrower issued to

the seller in accordance with Section 7.15(k), (B) proceeds

from the issuance of capital stock (other than preferred stock) of the Parent

to, or any common stock capital contribution to the Parent by, any Person

(other than a Borrower or a Subsidiary of a Borrower) that has been paid or

contributed to the Parent in the form of cash or (C) proceeds of Revolving

Loans; provided, however, if the consideration paid by such

Borrower making the acquisition includes proceeds of Revolving Loans,

(A) the aggregate Availability for all Borrowers in effect on the date of

any such acquisition and after giving effect to such acquisition shall be equal

to or greater than $10,000,000, (B) the aggregate consideration paid by

all the Borrowers with the proceeds of Revolving Loans in respect of all

Permitted Acquisitions consummated during any applicable period shall not

exceed (1) $15,000,000, for the period from the Closing Date until the

first Anniversary Date and (2) $15,000,000 for each subsequent 12-month

period thereafter beginning on an Anniversary Date and ending on the day

immediately preceding the next Anniversary Date, and (C) the Fixed Charge

Coverage Ratio for the period of four consecutive fiscal quarters of the Parent

ended on the most recently ended fiscal quarter of the Parent on a pro forma

basis after giving effect to such acquisition (as if such acquisition occurred

on the last day of the most recently ended fiscal quarter of the Parent and

utilizing the actual results of operations and financial position of the Parent

and its consolidated Subsidiaries and of the acquired business or Person for

such period of four consecutive fiscal quarters and at the end of such period)

must be equal to or greater than 1.25:1.00 and the Parent shall have provided

to the Administrative Agent evidence satisfactory to the Administrative Agent

of satisfaction of such requirement.

 

“Permitted Liens” means:

 

(a)           Liens

for taxes not delinquent or statutory Liens for taxes in an aggregate amount

not to exceed $250,000 provided that the payment of such taxes which are due

and payable is being contested in good faith and by appropriate proceedings

diligently pursued and as to which adequate financial reserves have been

established on the applicable Borrower’s books and records and a stay of

enforcement of any such Lien is in effect;

 

A-26

 

(b)           The

Agent’s Liens;

 

(c)           Liens

consisting of deposits made in the ordinary course of business in connection

with, or to secure payment of, obligations under worker’s compensation,

unemployment insurance, social security and other similar laws, or to secure

the performance of bids, tenders or contracts (other than for the repayment of

Debt) or to secure indemnity, performance or other similar bonds for the

performance of bids, tenders or contracts (other than for the repayment of

Debt) or to secure statutory obligations (other than liens arising under ERISA

or Environmental Liens) or surety or appeal bonds, or to secure indemnity,

performance or other similar bonds;

 

(d)           Liens

securing the claims or demands of materialmen, mechanics, carriers,

warehousemen, landlords and other like Persons, provided that if any

such Lien arises from the nonpayment of such claims or demand when due, such

claims or demands (i) do not exceed $250,000 in the aggregate and

(ii) are being contested in good faith and adequate reserves with respect

thereto are maintained on the books of the applicable Borrower or Subsidiary,

as the case may be, in accordance with GAAP;

 

(e)           Liens

constituting encumbrances in the nature of reservations, exceptions,

encroachments, easements, rights of way, covenants running with the land and other

similar title exceptions or encumbrances affecting any Real Estate; provided

that they do not in the aggregate materially detract from the value of the Real

Estate or materially interfere with its use in the ordinary conduct of any

Borrower’s business;

 

(f)            Liens

arising from judgments and attachments in connection with court proceedings

provided that the attachment or enforcement of such Liens would not result in

an Event of Default hereunder and such Liens are being contested in good faith

by appropriate proceedings, adequate reserves have been set aside and no

material Property is subject to a material risk of loss or forfeiture and the

claims in respect of such Liens are fully covered by insurance (subject to

ordinary and customary deductibles) and a stay of execution pending appeal or

proceeding for review is in effect;

 

(g)           Leases

or subleases granted to third parties in accordance with any applicable terms

of the Security Agreement or other Loan Documents and not interfering in any

material respect with the ordinary conduct of the business of any Borrower or

any of its Subsidiaries or resulting in a material diminution in the value of

any Collateral as security for the Obligations;

 

(h)           Any

(a) interest or title of a lessor or sublessor under any operating lease

not prohibited by this Agreement, (b) restriction or encumbrance that the

interest or title of such lessor or sublessor may be subject to or

(c) subordination of the interest of the lessee or sublessee under such

lease to any restriction or encumbrance referred to in the preceding

clause (b), so long as the holder of such restriction or encumbrance

agrees to recognize the rights of such lessee or sublessee under such lease;

 

A-27

 

(i)            Liens

arising from filing UCC financing statements relating solely to operating

leases in the ordinary course of business not prohibited by this Agreement;

 

(j)            Liens

in favor of customs and revenue authorities arising as a matter of law to

secure payment of custom duties in connection with the importation of goods;

 

(k)           Any

zoning or similar law or right with respect to real property reserved to or

vested in any governmental office or agency to control or regulate the use of

any real property;

 

(l)            Licenses

of intellectual property granted by a Borrower or any of its Subsidiaries in

the ordinary course of business and not interfering in any material respect

with the ordinary conduct of the business of any such Borrower or any of its

Subsidiaries;

 

(m)          Liens

on assets of Persons that become Subsidiaries after the date hereof in

accordance with the terms hereof; provided, however, that such

Liens existed at the same time such Persons became Subsidiaries and were not

created in anticipation thereof and cover only the respective assets of the

Persons acquired and, in any event, do not secure Debt other than Debt

permitted hereunder;

 

(n)           Liens

solely on any cash money deposits made by a Borrower or any of its Subsidiaries

in connection with any letter of intent or purchase agreement entered into by

it in connection with an acquisition permitted hereunder;

 

(o)           Liens

incurred in connection with the purchase or shipping of goods or assets on the

related assets and proceeds thereof in favor of the seller or shipper of such

goods or assets;

 

(p)           Liens

incurred by Global Manufacturers’ Services Valencia S.A. in connection with the

Spanish Financing;

 

(q)           Liens

in effect as of the Closing Date described on Schedule 6.9 securing Debt

described in Schedule 6.9;

 

(r)            Liens

securing Capital Leases and purchase money Debt permitted in Section 7.15;

and

 

(s)           Liens arising from filing UCC

financing statements relating solely to inventory consigned to a Borrower or

any of its Subsidiaries in the ordinary course of business (it being understood

that any such inventory shall not be included in the Inventory of such Borrower

or Subsidiary, as the case may be, nor be reflected in the books and records of

such Borrower or Subsidiary, as the case may be, as Inventory of such Borrower

or Subsidiary, such consigned inventory shall be segregated from the Inventory

of such Borrower or Subsidiary and any accounts receivable generated from sales

of such consigned inventory shall not be included in the Accounts of such

Borrower or Subsidiary).

 

A-28

 

“Person” means any individual, sole proprietorship, partnership,

limited liability company, joint venture, trust, unincorporated organization,

association, corporation, Governmental Authority or any other entity.

 

“Plan” means an employee benefit plan (as defined in

Section 3(3) of ERISA) which any Borrower sponsors or maintains or to

which any Borrower makes, is making, or is obligated to make contributions and

includes any Pension Plan.

 

“Pledge Agreement” means the Pledge Agreement of even date

herewith among the Borrowers and the Administrative Agent for the benefit of

the Administrative Agent and the other Lenders.

 

“Proprietary Rights” means, with respect to a Borrower, all of

such Borrower’s now owned and hereafter arising or acquired:  Trademarks, Copyrights, Patents, Patent

Licenses, Copyright Licenses and Trademark Licenses.

 

“Pro Rata Share” means, with respect to a Lender at any time, a

fraction (expressed as a percentage), the numerator of which is the sum of

(x) the amount of such Lender’s Commitment at such time plus (y) the

aggregate unpaid principal balance of the Term Loans owing to such Lender at

such time and the denominator of which is the sum of (x) the amounts of

all of the Lenders’ Commitments at such time plus (y) the aggregate unpaid

principal balance of the Term Loans owing to all of the Lenders at such time

(or if no Commitments are outstanding at such time, a fraction (expressed as a

percentage), the numerator of which is the amount of Obligations owed to such

Lender at such time and the denominator of which is the aggregate amount of the

Obligations owed to all Lenders at such time); provided, that references

to Pro Rata Share in the context solely of the revolving line of credit provided

hereunder (including, without limitation, with respect to Revolving Loans and

participations in Revolving Loans, Letters of Credit and Credit Support) means,

with respect to a Lender at any time, a fraction (expressed as a percentage),

the numerator of which is the amount of such Lender’s Revolving Credit

Commitment at such time and the denominator of which is the sum of the amounts

of all of the Lenders’ Revolving Credit Commitments at such time, or if no

Revolving Credit Commitments are outstanding at such time, a fraction

(expressed as a percentage), the numerator of which is the amount of

Obligations owed to such Lender at such time with respect to the revolving line

of credit provided hereunder and the denominator of which is the aggregate

amount of the Obligations owed to all Lenders at such time with respect to the

revolving line of credit provided hereunder; and provided, further,

that references to Pro Rata Share in the context solely of the Term

 

A-29

 

Loans means, with respect to a Lender at any time, a fraction

(expressed as a percentage), the numerator of which is the aggregate unpaid

principal balance of the Term Loans owing to such Lender at such time and the

denominator of which is the aggregate unpaid principal balance of the Term

Loans owing to all of the Lenders at such time.

 

“Real Estate” means all of each Borrower’s now or hereafter

owned or leased estates in real property, including, without limitation, all

fees, leaseholds and future interests, together with all of each Borrower’s now

or hereafter owned or leased interests in the improvements thereon, the

fixtures attached thereto and the easements appurtenant thereto.

 

“Release” means a release, spill, emission, leaking, pumping,

injection, deposit, disposal, discharge, dispersal, leaching or migration of a

Contaminant into the indoor or outdoor environment or into or out of any Real

Estate or other property, including the movement of Contaminants through or in

the air, soil, surface water, groundwater or Real Estate or other property.

 

“Reportable Event” means, any of the events set forth in

Section 4043(b) of ERISA or the regulations thereunder, other than any

such event for which the 30–day notice requirement under ERISA has been

waived in regulations issued by the PBGC.

 

“Required Lenders” means at any time Lenders whose Pro Rata

Shares aggregate more than 66–2/3%.

 

“Requirement of Law” means, as to any Person, any law (statutory

or common), treaty, rule or regulation or determination of an arbitrator or of

a Governmental Authority, in each case applicable to or binding upon the Person

or any of its property or to which the Person or any of its property is

subject.

 

“Reserves” means reserves that limit the availability of credit

hereunder, consisting of reserves against Availability, Eligible Accounts or

Eligible Inventory, established by the Administrative Agent from time to time

in the Administrative Agent’s reasonable credit judgment.  Without limiting the generality of the

foregoing, the following reserves shall be deemed to be a reasonable exercise

of the Administrative Agent’s credit judgment: 

(a) Bank Product Reserves, (b) a reserve for accrued, unpaid

interest on the Obligations, (c) reserves for rent at leased locations

subject to statutory or contractual landlord liens, (d) Inventory

shrinkage, (e) Environmental Compliance Reserves, (f) customs

charges, (g) dilution, and (h) warehousemen’s or bailees’

charges.  The Administrative Agent shall

at all times, unless the Majority Term Lenders consent in writing, maintain the

Bank Products Reserve with respect to a Borrower in the amount of such

Borrower’s estimated liability with respect to Bank Products.

 

“Responsible Officer” means the chief executive officer or the

president of a Borrower, or any other officer having substantially the same

authority and responsibility; or, with respect to compliance with financial

covenants and the preparation of the Borrowing Base Certificate of a Borrower,

the chief financial officer or the treasurer of such Borrower, or any other

officer having substantially the same authority and responsibility.

 

A-30

 

“Restricted Investment” means, as to any Borrower or any of its

Subsidiaries, any acquisition of property by such Borrower or such Subsidiary

in exchange for cash or other property, whether in the form of an acquisition

of stock, debt or other indebtedness or obligation, or the purchase or

acquisition of any other property, or a loan, advance, capital contribution or

subscription, except the following: 

(a) acquisitions of Equipment to be used in the business of such

Borrower or such Subsidiary so long as the acquisition costs thereof constitute

Capital Expenditures permitted hereunder; (b) acquisitions of Inventory in

the ordinary course of business of such Borrower or such Subsidiary;

(c) acquisitions of current assets acquired in the ordinary course of

business of such Borrower or such Subsidiary; (d) direct obligations of

the United States of America, or any agency thereof, or obligations guaranteed

by the United States of America, provided that such obligations mature

within one year from the date of acquisition thereof; (e) acquisitions of

certificates of deposit maturing within one year from the date of acquisition,

bankers’ acceptances, Eurodollar bank deposits, or overnight bank deposits, in

each case issued by, created by, or with a bank or trust company organized

under the laws of the United States of America or any state thereof having

capital and surplus aggregating at least $100,000,000; (f) acquisitions of

commercial paper given a rating of “A2” or better by Standard & Poor’s

Corporation or “P2” or better by Moody’s Investors Service, Inc. and maturing

not more than 90 days from the date of creation thereof; (g) Hedge

Agreements; (h) Permitted Acquisitions and (i) investments made by

such Borrower or such Subsidiary in another Borrower or Subsidiary otherwise

expressly permitted under this Agreement.

 

“Revolver Increase” has the meaning specified in Section 1.6(a).

 

“Revolving Credit Commitment” means, as to any Lender, the

obligation of such Lender, if any, to make Revolving Loans and participate in

Letters of Credit in an aggregate principal and/or face amount not to exceed

the amount set forth under the heading “Revolving Credit Commitment” opposite

such Lender’s name on Schedule 1.2 or in the Assignment and

Acceptance or Assumption Agreement pursuant to which such Lender became a party

hereto, as the same may be changed from time to time pursuant to the terms

hereof.

 

“Revolving Lender” means each Lender that has a Revolving Credit

Commitment or that holds Revolving Loans.

 

“Revolving Loans” has the meaning specified in Section 1.2

and includes each Agent Advance and Non–Ratable Loan.

 

“Security Agreement” means the Security Agreement of even date

herewith among the Borrowers and the Administrative Agent for the benefit of

the Administrative Agent and the other Lenders.

 

“Settlement” and “Settlement Date” have the meanings

specified in Section 12.15(a)(ii).

 

“Significant Customer Contract” means any of the HP Agreement,

the IBM Agreement or the Emulex Agreement.

 

A-31

 

“Software” means, with respect to a Borrower, all software as

such term is defined in the UCC, now owned or hereafter acquired by such

Borrower, other than software embedded in any category of Goods, including all

computer programs and all supporting information provided in connection with a

transaction related to any program.

 

“Solvent” means, when used with respect to any Person, that at

the time of determination:

 

(a)           the assets of such

Person, at a fair valuation, are in excess of the total amount of its debts

(including contingent liabilities); and

 

(b)           the present fair

saleable value of its assets is greater than its probable liability on its

existing debts as such debts become absolute and matured; and

 

(c)           it is then able and

expects to be able to pay its debts (including contingent debts and other

commitments) as they mature; and

 

(d)           it has capital

sufficient to carry on its business as conducted and as proposed to be

conducted.

 

For purposes of determining whether a Person is Solvent, the amount of

any contingent liability shall be computed as the amount that, in light of all

the facts and circumstances existing at such time, represents the amount that

can reasonably be expected to become an actual or matured liability.

 

“Spanish Financing” means any factoring, receivables financing,

real estate financing or other similar types of financing provided by one or

more financial institutions.

 

“Stated Termination Date” means June 20, 2005.

 

“Subsidiary” of a Person means any corporation, association,

partnership, limited liability company, joint venture or other business entity

of which more than fifty percent (50%) of the voting stock or other equity

interests (in the case of Persons other than corporations), is owned or

controlled directly or indirectly by the Person, or one or more of the

Subsidiaries of the Person, or a combination thereof.  Unless the context otherwise clearly requires, references herein

to a “Subsidiary” refer to a Subsidiary of the Parent.

 

“Supporting Obligations” means all supporting obligations as

such term is defined in the UCC, including letters of credit and guaranties

issued in support of Accounts, Chattel Paper, Documents, General Intangibles,

Instruments or Investment Property.

 

“Syndication Agency Fee Letter” has the meaning specified in Section 2.9.

 

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“Taxes” means any and all present or future taxes, levies,

imposts, deductions, charges or withholdings, and all liabilities with respect

thereto, excluding, in the case of each Lender and the Administrative Agent,

such taxes (including income taxes or franchise taxes) as are imposed on or

measured by the Administrative Agent’s or each Lender’s net income in any

jurisdiction (whether federal, state or local and including any political

subdivision thereof) under the laws of which such Lender or the Administrative

Agent, as the case may be, is organized or maintains a lending office.

 

“Term Closing Fee” has the meaning specified in Section 2.8.

 

“Term Facility Fee” has the meaning specified in Section 2.8.

 

“Term Interest Rate” means, for any day, the per annum interest

rate equal to the sum of (a) the Cash Interest Rate in effect on such day,

plus (b) the Deferred Interest Rate.

 

“Term Lender” means each Lender that has a Term Loan Commitment

or is the holder of a Term Loan.

 

“Term Loan Commitment” means, as to any Lender, the obligation

of such Lender, if any, to make a Term Loan to the Borrowers hereunder on the

Closing Date in an aggregate principal amount not to exceed the amount set

forth under the heading “Term Loan Commitment” opposite such Lender’s name on Schedule 1.2,

or, as the case may be, in the Assignment and Acceptance pursuant to which such

Lender became a party hereto, as the same may be changed from time to time

pursuant to the terms hereof. Effective immediately after the making of the Term

Loans on the Closing Date, the Term Loan Commitment of each Lender shall be

permanently reduced to zero.

 

“Term Loan” and “Term Loans” have the meanings specified

in Section 1.3(a).

 

“Term Loan Note” and “Term Loan Notes” have the meanings

specified in Section 1.3(c).

 

“Termination Date” means the earliest to occur of (i) the

Stated Termination Date, (ii) the date the Total Facility is terminated

either by the Borrowers pursuant to Section 3.2 or by the Majority

Revolving Lenders pursuant to Section 9.2, and (iii) the date

this Agreement is otherwise terminated for any reason whatsoever pursuant to

the terms of this Agreement.

 

“Total Facility” has the meaning specified in Section 1.1.

 

“Trademark Licenses” means, with respect to a Borrower or

Subsidiary, all of such Borrower’s or Subsidiary’s right, title and interest in

and to any and all agreements providing for the granting of any right in or to

Trademarks (whether the such Borrower or Subsidiary is licensee or licensor

thereunder), including, without limitation, each agreement listed on Schedule

6.12.

 

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“Trademarks” means, with respect to a Borrower or Subsidiary,

all of such Borrower’s or Subsidiary’s right, title and interest in and to all

United States and foreign trademarks, trade names, corporate names, company

names, business names, fictitious business names, trade styles, service marks,

certification marks, collective marks, logos, other source of business

identifiers, designs and general intangibles of a like nature, all

registrations and applications for any of the foregoing, including, but not

limited to the registrations and applications listed on Schedule 6.12,

all extensions or renewals of any of the foregoing, all of the goodwill of the business

connected with the use of and symbolized by the foregoing, the right to sue for

past infringement or dilution of any of the foregoing or for any injury to

goodwill, and all proceeds of the foregoing, including, without limitation,

license royalties, income, payments, claims, damages, and proceeds of suit.

 

“UCC” means the Uniform Commercial Code, as in effect from time

to time, of the State of New York or of any other state the laws of which are

required as a result thereof to be applied in connection with the issue of

perfection of security interests, provided, that to the extent that the UCC is

used to define any term herein or in any other documents and such term is

defined differently in different Articles or Divisions of the UCC, the definition

of such term contained in Article or Division 9 shall govern.

 

“Unfunded Pension Liability” means the excess of a Plan’s

benefit liabilities under Section 4001(a)(16) of ERISA over the current

value of that Plan’s assets, determined in accordance with the assumptions used

for funding the Pension Plan pursuant to Section 412 of the Code for the

applicable plan year.

 

“Unused Letter of Credit Subfacility” means an amount equal to

$10,000,000 minus the sum of (a) the aggregate undrawn amount of

all outstanding Letters of Credit plus, without duplication,

(b) the aggregate unpaid reimbursement obligations with respect to all

Letters of Credit.

 

“Unused Line Fee” has the meaning specified in Section 2.5.

 

Accounting Terms.  Any accounting term used in this Agreement

shall have, unless otherwise specifically provided herein, the meaning

customarily given in accordance with GAAP, and all financial computations in

this Agreement shall be computed, unless otherwise specifically provided

therein, in accordance with GAAP as consistently applied and using the same

method for inventory valuation as used in the preparation of the Financial

Statements.

 

Interpretive Provisions.  (a)  The meanings of

defined terms are equally applicable to the singular and plural forms of the

defined terms.

 

(b)           The words “hereof,”

“herein,” “hereunder” and similar words refer to this Agreement as a whole and

not to any particular provision of this Agreement; and Subsection, Section,

Schedule and Exhibit references are to this Agreement unless otherwise

specified.

 

A-34

 

(c)           (i)            The term “documents” includes any

and all instruments, documents, agreements, certificates, indentures, notices

and other writings, however evidenced.

 

(ii)           The

term “including” is not limiting and means “including without limitation.”

 

(iii)          In

the computation of periods of time from a specified date to a later specified

date, the word “from” means “from and including,” the words “to” and “until”

each mean “to but excluding” and the word “through” means “to and including.”

 

(iv)          The

word “or” is not exclusive.

 

(d)           Unless otherwise

expressly provided herein, (i) references to agreements (including this

Agreement) and other contractual instruments shall be deemed to include all

subsequent amendments and other modifications thereto, but only to the extent

such amendments and other modifications are not prohibited by the terms of any

Loan Document, and (ii) references to any statute or regulation are to be

construed as including all statutory and regulatory provisions consolidating,

amending, replacing, supplementing or interpreting the statute or regulation.

 

(e)           The captions and

headings of this Agreement and the other Loan Documents are for convenience of

reference only and shall not affect the interpretation of this Agreement.

 

(f)            This Agreement and

the other Loan Documents may use several different limitations, tests or

measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and

shall each be performed in accordance with their terms.

 

(g)           For purposes of

Section 9.1, a breach of a financial covenant contained in any of Sections 7.25,

7.26, 7.27 or 7.30 shall be deemed to have occurred as of

any specified measuring date or as of the last day of any specified measuring

period, as applicable, regardless of when the Financial Statements reflecting

such breach are delivered to the Administrative Agent.

 

(h)           This Agreement and

the other Loan Documents are the result of negotiations among and have been

reviewed by counsel to the Administrative Agent, the Borrowers and the other

parties hereto, and are the products of all parties hereto.  Accordingly, they shall not be construed

against the Lenders or the Administrative Agent merely because of the

Administrative Agent’s or Lenders’ involvement in their preparation.

 

A-35

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