Credit Agreement, dated September 15, 2011, by and among Insperity, Inc., Amegy Bank, as Administrative Agent, and certain lenders party thereto

 

THIS CREDIT AGREEMENT, dated as of September 15, 2011 (this “Agreement”), is between INSPERITY, INC., a Delaware corporation (“Borrower”), and each of the financial institutions which is or may from time to time become a party hereto (collectively, “Lenders”, and each a “Lender”), and AMEGY BANK NATIONAL ASSOCIATION, a national banking association, as agent for the Lenders.

 

R E C I T A L S:

 

Borrower has requested that Lenders extend credit to Borrower in the form of a revolving line of credit in the amount of $100,000,000.00 (which may be increased upon the terms and conditions hereinafter set forth to $150,000,000.00 and which includes a swing line in the amount of $10,000,000.00).  Lenders are willing to make such extensions of credit to Borrower upon the terms and conditions hereinafter set forth.

 

Bank of America, N.A. has been appointed Syndication Agent for the credit facilities described in this Agreement.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

 

 

Section 1.1        Definitions.  As used in this Agreement, the following terms have the following meanings:

 

“Acquisition” means the acquisition of substantially all the assets of another Person or a line of business or division of another Person or substantially all the ownership interests of another Person by Borrower or any Subsidiary.

 

“Affiliate” means, with respect to any Person, any other Person which, directly or indirectly, Controls or is Controlled by or is under common Control with such Person.

 

“Agent” means Amegy Bank National Association, a national banking association, in its capacity as agent for the Lenders, and any successor in such capacity pursuant to Article XI.

 

“Alternate Base Rate” means, for any day, a rate of interest which is the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus one-half percent (0.50%), and (c) the sum of (i) the Floating Thirty Day LIBOR Rate as of such day plus (ii) two percent (2.0%).

 

“Alternate Base Rate Loans” means Loans that bear interest at rates based upon the Alternate Base Rate.

 

 

“Alternate Base Rate Margin” means, for any day, the rate per annum identified as the Alternate Base Rate Margin in the table contained in the definition of the term “Applicable Margin” corresponding to the applicable Level on such day.

 

“Amegy” means Amegy Bank National Association, a national banking association, and its successors and assigns.

 

“Applicable Margin” means, for the Levels described below, the applicable rate per annum set forth below.

 

	Level I	Level II	Level III	Level IV
LIBOR Margin	2.00%	2.25%	2.50%	2.75%
Alternate Base Rate Margin	0.00%	0.25%	0.50%	0.75%

 

Level I applies when the Leverage Ratio is less than or equal to 1.00 to 1.00.

 

Level II applies when the Leverage Ratio is greater than 1.00 to 1.00 but less than or equal to 1.50 to 1.00.

 

Level III applies when the Leverage Ratio is greater than 1.50 to 1.00 but less than or equal to 2.00 to 1.00.

 

Level IV applies when the Leverage Ratio is greater than 2.00 to 1.00.

 

The applicable Level shall be adjusted, to the extent applicable, forty-five (45) days after the end of each fiscal quarter of Borrower (or, in the case of any change reflected by the audited financial statements delivered pursuant to Section 7.1(a), one hundred twenty (120) days after the end of any fiscal year) based on the Leverage Ratio tested for the period of four (4) consecutive fiscal quarters ending on the last day of such fiscal quarter or such fiscal year, as applicable; provided that if Borrower fails to deliver the financial statements required by Section 7.1(a) or (b), as applicable, or the related No Default Certificate required by Section 7.1(c) by the forty-fifth (45th) day (or, if applicable, the one hundred twentieth (120th) day) after the end of any fiscal quarter or any fiscal year, as applicable, Level IV or the Default Rate, if applicable, shall apply until such financial statements are delivered; provided, however, that notwithstanding any provision hereof to the contrary, the applicable Level shall be deemed to be Level I from the Closing Date through the delivery of the financial statements dated September 30, 2011.

 

“Applicable Rate” means (a) during the period that a Loan is an Alternate Base Rate Loan, the sum of (i) the Alternate Base Rate from time to time in effect, plus (ii) the applicable Alternate Base Rate Margin, and (b) during the period that a Loan is a LIBOR Loan, the sum of (i) the LIBOR Rate from time to time in effect, plus (ii) the applicable LIBOR Margin; provided, however, that if an Event of Default has occurred and is continuing, the Applicable Rate shall be determined pursuant to clause (a) only and clause (b) shall not be applicable.

 

 

“Assignment and Acceptance” means a document in substantially the form of Exhibit “E”.

 

“Authorized Representative” means the chief executive officer, the chief financial officer, the president or any other officer or employee of Borrower who has been designated in writing by Borrower to Agent to be an Authorized Representative.

 

“Bermuda Subsidiary” means Insperity Captive Insurance Companies Limited, a Bermuda corporation.

 

“Borrower” has the meaning given to such term in the introductory paragraph hereof.

 

“Business Day” means (a) any day on which commercial banks are not authorized or required by law to close in Houston, Texas, and (b) with respect to all borrowings, payments, Conversions, Continuations, Interest Periods, and notices in connection with LIBOR Loans, any day which is a Business Day described in clause (a) above and which is also a day on which dealings in Dollar deposits are carried out in the London interbank market.

 

“Capital Expenditures” means for Borrower and its Subsidiaries, all expenditures for assets which, in accordance with GAAP, are required to be capitalized and so shown on the consolidated balance sheet of Borrower and its Subsidiaries and which are incurred for property, plant and equipment in the ordinary course of business.

 

“Capitalized Lease Obligations” means, for Borrower and its Subsidiaries, on a consolidated basis, the obligations of Borrower and its Subsidiaries to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal property, which obligations, in accordance with GAAP, are required to be classified and accounted for as a capital lease on a balance sheet of any such Person.

 

“Cash Distribution” means any distribution, dividend or any other payment paid in cash or cash equivalents by a Person on account of its capital stock.  For the avoidance of doubt, repurchases of any capital stock of a Person by such Person shall not constitute a “Cash Distribution”.

 

“Cash Interest Expense” means for Borrower and its Subsidiaries, on a consolidated basis, for any period, the sum of all cash interest expense paid or required by its terms to be paid during such period, as determined in accordance with GAAP.

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority charged with the interpretation, administration or application thereof, after the date of this Agreement or (c) compliance by a Lender (or its parent company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided, however, that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, guidelines, directives, rules or regulations thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives concerning capital adequacy (A) promulgated by the Bank for International Settlements or the Basel Committee on Banking Supervision (or any successor or similar authority) and made or issued by any Governmental Authority or (B) made or issued by the United States financial regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued, and shall be deemed to have gone into effect and adopted after the date of this Agreement.

 

 

“Change of Control” means with respect to Borrower the acquisition of ownership, directly or indirectly, beneficially or of record by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect of the date hereof) other than Related Persons, of shares representing more than fifty percent (50%) of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Borrower.

 

“Claims” has the meaning set forth in Section 12.2.

 

“Closing Date” means the date on which this Agreement has been executed and delivered by the parties hereto and the conditions set forth in Section 5.1 have been satisfied (or waived by Agent).

 

“Combined Commitments” means, at any time, the sum of the Commitments of all Lenders at such time.  The Combined Commitments shall be $100,000,000.00 as of the Closing Date.

 

“Combined Commitments Increase” shall have the meaning given to such term in Section 2.8.

 

“Commitment Percentage” means, at any time, for each Lender, the percentage derived by dividing such Lender’s Commitment at such time by the Combined Commitments at such time.

 

“Commitment” means, as to any Lender, its obligation to make Revolving Advances and to acquire participations in Letters of Credit and Swing Loans hereunder in an aggregate amount set forth opposite the name of such Lender on Annex “I” hereto under the heading “Commitments”, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable, as the same may be (a) reduced as provided herein, (b) modified as provided in an amendment to this Agreement, (c) modified as the result of an assignment of all or part of such Lender’s Revolving Note pursuant to Section 12.16 or (d) increased pursuant to Section 2.8.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract to otherwise.  “Controlled” has the meaning correlative thereto.

 

“Continue”, “Continuation” and “Continued” shall refer to the continuation pursuant to Section 3.7 of a LIBOR Loan from one Interest Period to the next Interest Period.

 

“Convert”, “Conversion”, and “Converted” shall refer to a conversion pursuant to Section 3.7 or 3.8 of one Type of Loan into another Type of Loan.

 

 

“Current Assets” means, at any particular time, all amounts which, in conformity with GAAP, would be included as current assets on a consolidated balance sheet of Borrower and its Subsidiaries.

 

“Current Liabilities” means, at any particular time, all amounts which, in conformity with GAAP, would be included as current liabilities on a consolidated balance sheet of Borrower and its Subsidiaries.

 

“Debt” means, for any Person, (a) all indebtedness of such Person, whether or not represented by bonds, debentures, notes, securities or other evidences of indebtedness, for the repayment of money borrowed, including, with respect to Borrower, the indebtedness evidenced by the Notes and all other indebtedness for the repayment of money borrowed by Borrower and owed to any Lender, (b) indebtedness and obligations of such Person arising in connection with Rate Management Transactions, (c) all indebtedness of such Person representing deferred payment of the purchase price of property or assets (other than accounts payable incurred in the ordinary course of business which are either (i) current or (ii) being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP), (d) Capitalized Lease Obligations, (e) all indebtedness of such Person under guaranties, endorsements, assumptions or other contingent obligations in respect of, or to purchase or otherwise acquire, Debt (as defined in the other clauses of this definition) of others, (f) all Debt (as defined in the other clauses of this definition) of others secured by a Lien existing on property owned by such Person, whether or not the indebtedness secured thereby shall have been assumed by the owner thereof, and (g) any obligation of such Person to redeem or repurchase any of such Person’s capital stock, partnership or membership interests or other ownership interests, as applicable, on or prior to the date that is ninety-one (91) days after the Termination Date.

 

“Default Rate” means the lesser of (a) with respect to any Note, the sum of the stated rate to be borne by such Note plus two percent (2.0%) or (b) the Maximum Rate.

 

“Defaulting Lender” means any Lender that has (a) failed to fund any portion of its Loans or participations in Letters of Credit or Swing Loans within three (3) Business Days of the date required to be funded by it hereunder, (b) notified Borrower, Agent, the Issuing Bank, the Swing Lender or any Lender in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed, within three (3) Business Days after request by Agent or Borrower, to confirm in writing that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans, (d) otherwise failed to pay over to Agent, the Issuing Bank or any Lender any other amount required to be paid by it hereunder within three (3) Business Days of the date when due, unless (i) the amount due is the subject of a good faith dispute, or (ii) Agent consents (which consent may be withheld at the sole discretion of Agent) to such Lender’s cure of such failure, or (e) as determined by Agent, (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

 

 

“Distribution” means any distribution, dividend or any other payment or distribution (in cash, property or obligations) made by a Person on account of its capital stock.

 

“Dollar,” “Dollars” and “$” means currency of the United States of America which is at the time of payment legal tender for the payment of public and private debts in the United States of America.

 

“Domestic Subsidiary” means any Subsidiary of Borrower, whether presently or hereafter created or existing, that is organized and existing under the laws of the United States or any state or commonwealth thereof or under the laws of the District of Columbia; provided that if such Subsidiary does not exist on the date of this Agreement, Borrower or such Subsidiary shall satisfy the provisions of Section 8.4(a)(i) with respect to such Subsidiary.  The Domestic Subsidiaries are listed on Schedule 6.14.  Schedule 6.14 may be amended or supplemented from time to time with the written consent of Agent and Borrower.

 

“EBITDA” means for Borrower and its Subsidiaries, on a consolidated basis for any period, the sum of (a) Operating Income for such period, plus (b) depreciation and amortization for such period, plus (c) non-cash stock based compensation expense for such period, plus (d) Interest Income for such period, plus (e) non-recurring charges consisting of fees and expenses incurred in connection with the change of Borrower’s name, if applicable, during such period; provided, however, that the amounts of each of the items set forth in clauses (a), (b), (c) and (d) above shall include, for the first twelve (12) months after any Acquisition, the actual historical amounts of such items for any Person which is acquired by Borrower or any Subsidiary in such Acquisition.

 

“Eligible Assignee” means any of (a) a Lender or any Affiliate of a Lender (except, in each case, a Defaulting Lender) (b) a commercial bank organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $100,000,000.00, (c) a commercial bank organized under the laws of a country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and having a combined capital and surplus of at least $100,000,000.00, provided that such bank is acting through a branch or agency located in the United States, and (d) subject to the provisions of Section 12.16, any other Person approved by Agent and, if no Event of Default or Unmatured Event of Default exists, by Borrower.

 

 

“Environmental Laws” means any and all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of Hazardous Substance or to health and safety matters.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and published interpretations thereof.

 

“Event of Default” has the meaning specified in Section 10.1.

 

“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the next 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 immediately succeeding such day, provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Business Day as so published on the immediately succeeding Business Day and (b) if no such rate is so published on such immediately succeeding Business Day, the Federal Funds Rate for any day shall be the average rate (rounded upwards, if necessary, to the next 1/100 of 1%) charged to Agent on such day on such transactions as determined by Agent.

 

“Financial Officer” means the chief executive officer, the chief financial officer, the principal accounting officer or the treasurer of Borrower or any other officer of Borrower acceptable to Agent.

 

“Floating Thirty Day LIBOR Rate” means, as of any day, the rate per annum offered for Dollar deposits in an amount comparable to the principal amount of the outstanding Alternate Base Rate Loans for a period of thirty (30) days as of 11:00 a.m. City of London, England time two (2) Business Days prior to such day as shown on the display designated as “British Bankers Association Interest Settlement Rates” on the Bloomberg System (“Bloomberg”); provided, however, that if such rate is not available on Bloomberg then such offered rate shall be otherwise independently determined by Agent from an alternate, substantially similar independent source available to Agent and recognized in the banking industry.

 

“Foreign Subsidiary” means any Subsidiary of Borrower that is not a Domestic Subsidiary, whether presently or hereafter created or existing; provided that if such Subsidiary does not exist on the date of this Agreement, Borrower and such Subsidiary shall satisfy the provisions of Section 8.4(a)(ii) with respect to such Subsidiary.  The Foreign Subsidiaries are listed on Schedule 6.14.  Schedule 6.14 may be amended or supplemented from time to time with the written consent of Agent and Borrower.

 

“Funded Debt” means, at any time, for Borrower and its Subsidiaries, on a consolidated basis, the sum of (a) all indebtedness for borrowed money, whether or not evidenced by notes, bonds, debentures or similar instruments, of Borrower and its Subsidiaries, including the Notes, (b) all Capitalized Lease Obligations, (c) all obligations of Borrower and its Subsidiaries to pay the deferred purchase price of property or services (but excluding trade accounts payable or trade notes in the ordinary course of business that are not past due by more than ninety (90) days) arising, and accrued expenses incurred, in the ordinary course of business, (d) all indebtedness of others secured by a Lien on the property of such Persons, and (e) the Letter of Credit Liabilities and liabilities related to other unfunded letters of credit, bankers acceptances and similar instruments.

 

 

“GAAP” means generally accepted accounting principles in the United States of America.

 

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Guarantors” means those Domestic Subsidiaries existing on the Closing Date and all future Domestic Subsidiaries (other than those expressly released from their obligations by Agent pursuant to Section 8.4(b)).

 

"Guarantor Release Date" shall have the meaning given to such term in Section 8.4(b)(i).

 

“Guaranty Agreement” means a Guaranty Agreement executed by a Domestic Subsidiary in favor of Agent in substantially the form of Exhibit “F”, as the same may be amended, supplemented or modified from time to time.

 

“Hazardous Substance” means any substance, product, waste, pollutant, material, chemical, contaminant, constituent, or other material which is or becomes listed, regulated or addressed under any Environmental Law.

 

“Indemnitee” has the meaning set forth in Section 12.2.

 

“Interest Coverage Ratio” means for Borrower and its Subsidiaries, on a consolidated basis, as of any date (a) EBITDA for the period of four consecutive fiscal quarters ended on such date, divided by (b) the sum of (i) Cash Interest Expense for the period of four consecutive fiscal quarters ended on such date, plus (ii) Cash Distributions paid, or to be paid, for the period of four consecutive fiscal quarters ended on such date.

 

“Interest Income” means for Borrower and its Subsidiaries, on a consolidated basis, for any period, the sum of all interest income for such period, as determined in accordance with GAAP.

 

“Interest Period” means, with respect to any LIBOR Loan, the period commencing on the date such Loan is made or Converted from Loans of another Type or, in the case of each subsequent, successive Interest Period applicable to a LIBOR Loan, each period commencing on the last day of the immediately preceding Interest Period with respect to such LIBOR Loan, and in each case ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as Borrower may select as provided in Sections 2.5 or 3.7;  provided, however, that (a) each Interest Period that would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day, unless such extension would cause the last day of such Interest Period to occur in the next following calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period which 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 in which it would have ended if there were a numerically corresponding day in such calendar month, (c) no Interest Period for any LIBOR Loan may extend beyond the Termination Date (and any proposed LIBOR Loan with an Interest Period which would extend beyond the Termination Date shall be an Alternate Base Rate Loan), (d) for all LIBOR Loans no more than eight (8) Interest Periods shall be in effect at the same time and (e) no Interest Period shall have a duration of less than thirty (30) days and, if the Interest Period for any LIBOR Loan would otherwise be a shorter period, such Loan shall be an Alternate Base Rate Loan.

 

 

"IRC" means the Internal Revenue Code of 1986, as amended from time to time.

 

“Issuing Bank” means Amegy Bank National Association in its capacity as the issuer of Letters of Credit.

 

“LC Exposure” means, with respect to any Lender at any time, such Lender’s Pro Rata Share of the Letter of Credit Liabilities at such time.

 

“Lender” and “Lenders” have the meanings given to such terms in the introductory paragraph hereof.

 

“Letter of Credit” means any letter of credit issued by Issuing Bank for the account of Borrower pursuant to Article II.

 

“Letter of Credit Application” means Issuing Bank’s standard form of letter of credit application and agreement, as the same may be amended or supplemented.

 

“Letter of Credit Liabilities” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all drawings made under Letters of Credit that have not been reimbursed by one or more Revolving Advances at such time.

 

“Leverage Ratio” means, as of any date, (a) Funded Debt as of such date divided by (b) EBITDA for the period of four consecutive fiscal quarters ended on such date.

 

“LIBOR Loans” means Loans the interest rates on which are determined on the basis of the rates referred to in the definition of “LIBOR Rate”.

 

“LIBOR Margin” means, for any day, the rate per annum identified as the LIBOR Margin in the table contained in the definition of the term “Applicable Margin” corresponding to the applicable Level on such day.

 

 

“LIBOR Rate” means, for any LIBOR Loan, for any Interest Period therefor, (a) the rate per annum offered for Dollar deposits in an amount comparable to the outstanding principal amount of such LIBOR Loan for a period of time equal to such Interest Period as of 11:00 a.m. City of London, England time two (2) London Business Days prior to the first date of such Interest Period as shown on the display designated as “British Bankers Association Interest Settlement Rates” on the Bloomberg System (“Bloomberg”), provided, however, that if such rate is not available on Bloomberg, then such rate shall be otherwise independently determined by Agent from an alternate, substantially similar independent source available to Agent and recognized in the banking industry; divided by (b) one (1) minus the Reserve Requirement.

 

“Lien” means any lien, mortgage, security interest, pledge, charge, hypothecation or other encumbrance of any kind or nature whatsoever (including, without limitation, the interest of a vendor under any conditional sale or title retention agreement), whether arising by contract, operation of law, or otherwise.

 

“Loan Documents” means this Agreement and all promissory notes, security agreements, deeds of trust, assignments, letters of credit, guaranties, and other instruments, documents, and agreements executed and delivered pursuant to or in connection with this Agreement, as such instruments, documents, and agreements may be amended, modified, renewed, extended or supplemented.

 

“Loans” means Revolving Advances and Swing Loans.

 

“London Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions are generally authorized or obligated by laws or executive order to close in the City of London, England.

 

“Majority Lenders” means, at any time, Lenders holding more than 50% or more of the Combined Commitments; provided, however, that if there are only two (2) Lenders, “Majority Lenders” means both Lenders; provided, further, that the Commitment of any Defaulting Lender shall be excluded for purposes of making a determination of Majority Lenders.

 

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, property or condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, (b) the ability of Borrower to pay the Obligations or the ability of Borrower and the Guarantors, considered as a whole, to perform their respective obligations under this Agreement and the other Loan Documents, or (c) the validity or enforceability of this Agreement, any Guaranty Agreement or any of the other Loan Documents, or the rights or remedies of Agent or any Lender under this Agreement, any Guaranty Agreement or any of the Notes.

 

“Maximum Rate” means the maximum rate of nonusurious interest permitted from day to day by applicable law, including Chapter 303 of the Texas Finance Code (the “Code”) (and as the same may be incorporated by reference in other Texas statutes).  To the extent that Chapter 303 of the Code is relevant to Lenders for the purposes of determining the Maximum Rate, Lenders may elect to determine such applicable legal rate pursuant to the “weekly ceiling,” from time to time in effect, as referred to and defined in Chapter 303 of the Code; subject, however, to the limitations on such applicable ceiling referred to and defined in the Code, and further subject to any right any Lender may have subsequently, under applicable law, to change the method of determining the Maximum Rate.

 

 

“Merger” shall have the meaning given to such term in Section 8.3.

 

“Net Working Capital” means for Borrower and its Subsidiaries, on a consolidated basis, as of any date, (a) Current Assets as of such date minus (b) Current Liabilities as of such date; provided that, for purposes of calculating Current Assets, Borrower may include an amount equal to the maximum amount of the Revolving Line of Credit Availability as of such date which, assuming such amount had been fully borrowed as of such date, would not cause the Leverage Ratio as of such date to exceed 3.00 to 1.00.

 

“No Default Certificate” means a certificate in the form of Exhibit “D” hereto, fully completed and executed by Borrower.

 

“Notes” means the Revolving Notes and the Swing Note.

 

“Obligations” means (a) all obligations, indebtedness and liabilities of Borrower to Agent, Issuing Bank and Lenders, or any of them, arising pursuant to this Agreement or any of the other Loan Documents, now existing or hereafter arising, including, without limitation, all of Borrower’s contingent reimbursement obligations in respect of Letters of Credit, (b) all interest accruing thereon and all attorneys’ fees and other expenses incurred in the enforcement or collection thereof and (c) all Rate Management Transaction Obligations.

 

“Operating Income” means, for Borrower and its Subsidiaries for any period, the consolidated operating income (or loss) of Borrower and its Subsidiaries for such period, as determined in accordance with GAAP.

 

“Organizational Documents” means, for any Person, (a) if such Person is a corporation, the articles of incorporation or certificate of incorporation and bylaws of such Person, (b) if such Person is a limited liability company, the articles of organization or certificate of formation and regulations or limited liability company agreement of such Person, (c) if such Person is a limited partnership, the certificate of limited partnership or certificate of formation and the limited partnership agreement of such Person and (d) if such person is not a corporation, limited liability company or limited partnership, the documents under which such Person was created and is governed.

 

“Permitted Dividend” means the regular quarterly dividend established by the board of directors of Borrower.

 

“Person” means any individual, corporation, limited liability company, partnership, joint venture, company, trust, business trust, association, Governmental Authority or other entity.

 

“Pledged Foreign Subsidiary” means each Foreign Subsidiary (other than the Bermuda Subsidiary) with respect to which sixty-five percent (65%) of the ownership interests thereof have been pledged to Agent pursuant to Section 8.4(a)(ii)(C).

 

 

“Prime Rate” means, at any time, the rate of interest per annum then most recently published in The Wall Street Journal (or any successor publication if The Wall Street Journal is no longer published) in the “Money Rates” section (or such successor section) as the “Prime Rate.”  If a range of prime interest rates per annum is so published, “Prime Rate” shall mean the highest rate per annum in such published range.  If the definition of “Prime Rate” is no longer published in The Wall Street Journal (or any successor publication), “Prime Rate” shall mean, at any time, the rate of interest per annum then most recently established by Agent as its prime rate.

 

“Pro Rata” or “Pro Rata Share” means for each Lender, with respect to Revolving Advances and Letters of Credit and fees, as applicable, attributable thereto, such Lender’s Commitment Percentage.

 

“Proprietary Accounts” shall mean all the depository accounts of Borrower and its Subsidiaries which are not used to hold client-related payroll and payroll tax funds.  The Proprietary Accounts are listed on Schedule 1.1.  Schedule 1.1 may be amended or supplemented from time to time with the written consent of Agent and Borrower.

 

“Rate Management Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into by Borrower or any Subsidiary which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

 

“Rate Management Transaction Obligations” means any and all obligations and indebtedness, contingent or otherwise, whether now existing or hereafter arising, of Borrower or any Subsidiary to any Lender arising under or in connection with any Rate Management Transaction.

 

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented.

 

“Regulatory Change” means, with respect to any Lender, any change after the date of this Agreement in United States federal, state, or foreign laws or regulations (including Regulation D) or the adoption or making after such date any interpretations, directives, or requests applying to a class of banks (including any Lender) of or under any United States federal or state, or any foreign, laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof.

 

“Related Persons” means (a) Borrower and any of its Subsidiaries, (b) any trust for any employee benefit plan of Borrower or any of its Subsidiaries, (c) any other individual who is as of the date of this Agreement an employee or retiree of Borrower or any of its Subsidiaries or any member of such employee’s or retiree’s family, and (d) any trust, corporation, partnership or family foundation created by or for the benefit of any individual who is as of the date of this Agreement an employee or retiree of Borrower or any of its Subsidiaries or any member of such employee’s or retiree’s family.

 

 

“Reserve Requirement” means the aggregate maximum reserve percentages (including any marginal, special, supplemental or emergency reserves, and expressed as a decimal) established by the Board of Governors of the Federal Reserve System or any other United States banking authority to which Lenders are subject for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D).  Such reserve percentages shall include, without limitation, those imposed under Regulation D.  LIBOR Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time under Regulation D or any comparable regulation.  The Reserve Requirement shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

"Requesting Guarantor " shall have the meaning given to such term in Section 8.4(b).

 

“Revolving Advance” means an advance of funds pursuant to Article II (other than Swing Loans).

 

“Revolving Advance Request Form” means a certificate, in substantially the form of Exhibit “C”, properly completed and signed by Borrower requesting a Revolving Advance.

 

“Revolving Line of Credit” means the credit facility extended by those Lenders who have a Commitment to Borrower pursuant to Article II.

 

“Revolving Line of Credit Availability” means, as of any date, an amount equal to the Combined Commitments minus the sum of (a) the aggregate principal amount of the outstanding Revolving Advances, plus (b) the Letter of Credit Liabilities, plus (c) the aggregate principal amount of the outstanding Swing Loans.

 

“Revolving Notes” means the promissory notes executed by Borrower payable to the order of each Lender, in substantially the form of Exhibit “A”, properly completed, as the same may be renewed, extended or modified, and all promissory notes executed by Borrower in renewal, extension, modification or substitution thereof.

 

“SEC” means the Securities and Exchange Commission or any successor Governmental Authority.

 

“Stock Repurchase” has the meaning assigned to such term in Section 8.5(b).

 

“Subsidiary” means any Person with respect to which Borrower or one or more of its other Subsidiaries, or Borrower and one or more of its other Subsidiaries, own or control, directly or indirectly, fifty percent (50%) or more of (a) the combined voting power of all classes of capital stock having general voting power under ordinary circumstances to elect a majority of the directors (if it is a corporation), managers or equivalent body of such Person, (b) the capital interest or profits interest of such Person, if it is a partnership, limited liability company, joint venture or similar entity, or (c) the beneficial interest of such Person, if it is a trust, association or other unincorporated association or organization.

 

 

“Swing Exposure” means, with respect to any Lender at any time, such Lender’s Pro Rata Share of the aggregate principal amount of all Swing Loans outstanding at such time.

 

“Swing Lender” means the Lender designated as Swing Lender, initially Amegy Bank National Association.

 

“Swing Loan” has the meaning assigned to such term in Section 2.9.

 

“Swing Loan-Applicable Rate” means the sum of (a) the Alternate Base Rate from time to time in effect, plus (b) the applicable Alternate Base Rate Margin.

 

“Swing Note” means the promissory note executed by Borrower payable to the order of Swing Lender, in substantially the form of Exhibit “B”, as the same may be renewed, extended or modified, and all promissory notes executed by Borrower in renewal, extension, modification or substitution thereof.

 

"Tangible Net Worth" means, for a Person, as of any date, all amounts which, in conformity with GAAP, would be included as partners' capital, stockholders' equity or members' capital, as applicable, on a balance sheet of such Person; provided, however, there shall be excluded therefrom (a) any amount at which partnership interests, shares of capital stock or membership interests, as applicable, of such Person appear as an asset on such Person's balance sheet, (b) goodwill, including any amounts, however designated, that represent the excess of the purchase price paid for assets, stock or other ownership interests over the value assigned thereto, (c) patents, trademarks, trade names and copyrights, (d) deferred expenses, (e) loans and advances to any stockholder, partner, member, owner, director, officer, manager or employee of such Person or any Affiliate of such Person, including any such loans and advances evidenced by promissory notes, and (f) all other assets which are properly classified as intangible assets.

"Tangible Net Worth Test" means, for any Subsidiary, as of any date, the Tangible Net Worth of such Subsidiary as of such date is not greater than one percent (1.0%) of the consolidated Tangible Net Worth of Borrower and its Subsidiaries as of such date (excluding such Subsidiary).

“Termination Date” means 11:00 a.m. on September 15, 2015, or such earlier date on which the Commitments terminate as provided in this Agreement.

 

“Type” refers to whether a Loan is an Alternate Base Rate Loan or a LIBOR Loan.

 

“Unmatured Event of Default” means the occurrence of an event or the existence of a condition which, with the giving of notice or the passage of time, would constitute an Event of Default.

 

Section 1.3       Accounting Terms and Determinations; GAAP.  Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to Agent or the Lenders hereunder shall be prepared, in accordance with GAAP as in effect from time to time; provided that, if Borrower notifies Agent that it requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof or the operation of such provision (or if Agent notifies Borrower that the Majority Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.  Notwithstanding anything to the contrary in this Agreement or any other Loan Document, for purposes of the definitions of Capitalized Lease Obligations and Funded Debt, GAAP will be deemed to treat leases that would have been classified as operating leases in accordance with generally accepted accounting principles in the United States as in effect on December 31, 2010 in a manner consistent with the treatment of such leases under generally accepted accounting principles in the United States as in effect on December 31, 2010, notwithstanding any modifications or interpretive changes thereto that may occur thereafter.

 

 

Section 2.1       Revolving Line of Credit.  Subject to the terms and conditions of this Agreement, each Lender agrees severally to make Revolving Advances to Borrower from time to time from the date hereof to and including the Termination Date in an aggregate principal amount at any time outstanding up to but not exceeding such Lender’s Commitment; provided that the aggregate principal amount of all Revolving Advances of such Lender at any time shall not exceed such Lender’s Commitment at such time minus such Lender’s Pro Rata Share of the Letter of Credit Liabilities at such time; and provided, further, that the aggregate principal amount of all Revolving Advances at any time outstanding shall not exceed the Combined Commitments at such time minus the sum of (a) the Letter of Credit Liabilities at such time plus (b) the aggregate principal amount of the outstanding Swing Loans at such time.  Lenders shall have no obligation to make any Revolving Advance (other than a Revolving Advance to reimburse Issuing Bank for any draw on a Letter of Credit issued pursuant to the terms hereof) if an Event of Default or an Unmatured Event of Default has occurred and is continuing unless agreed to by Majority Lenders.  The obligations of the Lenders under the Commitments are several and not joint.  The failure of any Lender to make a Revolving Advance required to be made by it shall not relieve any other Lender of its obligation to make its Revolving Advance, and no Lender shall be responsible for the failure of any other Lender to make the Revolving Advance to be made by such other Lender.  Subject to the foregoing limitations, and the other terms and provisions of this Agreement, Borrower may borrow, repay and reborrow Revolving Advances hereunder.

 

 

Section 2.2       Revolving Notes.  The obligation of Borrower to repay the Revolving Advances made by each Lender shall be evidenced by a Revolving Note executed by Borrower, payable to the order of such Lender, in the principal amount of such Lender’s Commitment.  From time to time a new Revolving Note may be issued to another Lender hereunder as such Person becomes a party to this Agreement. From time to time Agent may require a Revolving Note to be exchanged for a newly issued Revolving Note to accurately reflect the amount of each Lender’s Commitment hereunder.  Upon the request of Agent, Borrower shall execute and deliver to Agent such new Revolving Notes as requested by Agent; provided, however, that in no event will Borrower be required to (i) issue Revolving Notes in an aggregate amount which exceeds the amount of the Combined Commitments or (ii) issue Revolving Notes to any Lender in an aggregate amount which exceeds the Commitment of such Lender.

 

Section 2.3        Interest.  The unpaid principal amount of the Revolving Advances shall bear interest prior to maturity at a varying rate per annum equal from day to day to the lesser of (a) the Maximum Rate or (b) the Applicable Rate in effect from day to day, and each change in the rate of interest charged on the Revolving Advances shall become effective, without notice to Borrower, on the effective date of each change in the Applicable Rate or the Maximum Rate, as the case may be; provided, however, if at any time the rate of interest specified in clause (b) preceding shall exceed the Maximum Rate, thereby causing the interest on the Revolving Advances to be limited to the Maximum Rate, then any subsequent reduction in the Applicable Rate shall not reduce the rate of interest on the Revolving Advances below the Maximum Rate until the aggregate amount of interest actually accrued on the Revolving Advances equals the amount of interest which would have accrued on the Revolving Advances if the interest rate specified in clause (b) preceding had at all times been in effect.  Notwithstanding the foregoing, if any Event of Default has occurred and is continuing, the outstanding principal of the Revolving Advances shall, upon the determination of the Majority Lenders, bear interest at the Default Rate.

 

Section 2.4        Repayment of Principal and Interest.  (a)  Accrued and unpaid interest on the Revolving Advances shall be payable as follows:

 

 

 

 

 

(b)           The aggregate unpaid principal amount of the Revolving Advances shall be due and payable on the Termination Date.

 

(c)           Notwithstanding the foregoing, interest payable at the Default Rate shall be payable from time to time on demand.

 

Section 2.5        Requests for Revolving Advances.  (a)  Borrower shall request each Revolving Advance by delivering to Agent a Revolving Advance Request Form (i) stating the amount of the Revolving Advance, (ii) stating the date on which Borrower desires that the Revolving Advance be funded (which shall be a Business Day), (iii) stating the Type of the Revolving Advance, and (iv) if such Revolving Advance is a LIBOR Loan, designating the Interest Period thereof.  Each Revolving Advance Request Form shall be delivered to Agent (i) in the case of each Revolving Advance which is to be an Alternate Base Rate Loan, not later than 11:00 a.m. on the date on which Borrower desires that the Revolving Advance be funded, and (ii) in the case of each Revolving Advance which is to be a LIBOR Loan, at least three (3) Business Days before the date on which Borrower desires that the Revolving Advance be funded; provided that (y) no Revolving Advance which is a LIBOR Loan may be in an amount which is less than $250,000.00, and (z) at any time there can be no more than eight (8) Interest Periods in effect for all LIBOR Loans.  Borrower at any time may redesignate the amounts of, and Convert and Continue, the Revolving Advances, subject to the terms and provisions of this Agreement, including Sections 3.7, 3.8 and 3.9 hereof.

 

(b)           Agent shall promptly notify each Lender of each request for a Revolving Advance.  No later than 12:00 p.m. on the proposed date of any Revolving Advance hereunder, each Lender shall make available to Agent at its office specified herein in immediately available funds, its Pro Rata Share of such requested Revolving Advance.  After Agent’s receipt of such funds and subject to the other terms and conditions of this Agreement, Agent shall make each Revolving Advance available to Borrower.

 

Section 2.6        Use of Proceeds.  The proceeds of the Revolving Advances shall be used for working capital and general corporate purposes.

 

Section 2.7        Unused Commitment Fee; Reduction or Termination of Commitment.

 

(a)           Borrower agrees to pay to Agent for the Pro Rata benefit of Lenders who have a Commitment a commitment fee on the average daily unused portion of the Combined Commitments, for the period from and including the Closing Date to and excluding the Termination Date, at the rate of one-quarter percent (0.25%) per annum based on a three hundred sixty (360) day year and the actual number of days elapsed, payable quarterly in arrears and on the Termination Date.  For the purpose of calculating the commitment fee hereunder, the Combined Commitments shall be deemed utilized by the amount of all outstanding Revolving Advances, Swing Loans and Letter of Credit Liabilities.

 

 

(b)           Borrower shall have the right at any time to terminate in whole, or from time to time to irrevocably reduce in part, the Combined Commitments upon at least three (3) Business Days prior notice to Agent specifying the effective date thereof, whether a termination or reduction is being made, and the amount of any partial reduction; provided, however, that (a) no such reduction shall be in an amount less than the lesser of (i) $250,000.00 and (ii) the Combined Commitments, and (b) the Combined Commitments shall never be reduced below an amount equal to the Letter of Credit Liabilities.  At the time of such reduction, Borrower shall prepay the amount by which the unpaid principal amount of the Revolving Advances plus the Swing Loans plus the Letter of Credit Liabilities exceeds the Combined Commitments (after giving effect to such reduction) plus accrued and unpaid interest on the principal amount so prepaid.  The Combined Commitments may not be reinstated after they have been terminated or reduced.

 

Section 2.8        Increase of the Combined Commitments.  (a)  At any time prior to the Termination Date, Borrower may effectuate increases in the aggregate Combined Commitments (each such increase being a “Combined Commitments Increase”), by designating either one or more of the existing Lenders (each of which, in its sole discretion, may determine whether and to what degree to participate in such Combined Commitments Increase) or one or more other banks or other financial institutions (acceptable to Agent) that at the time agree (y) in the case any existing Lender, to increase its Commitment (an “Increasing Lender”), and (z) in the case of any other bank or financial institution that is not an existing Lender, to provide a Commitment and become a party to this Agreement as a Lender (an “Additional Lender”); provided, however, that (i) each Combined Commitments Increase shall be in an amount at least equal to $5,000,000.00, (ii) the aggregate amount of all Combined Commitments Increases shall not exceed $50,000,000.00, and (iii) all Commitments and Revolving Advances provided pursuant to a Combined Commitments Increase shall be available on the same terms as those applicable to the existing Commitments and Revolving Advances.  Borrower shall provide prompt notice of any proposed Combined Commitments Increase pursuant to clause (a) above to Agent.  This Section 2.8 shall not be construed to create any obligation on Agent or any Lender to advance or to commit to advance any credit to Borrower or to arrange for any other Person to advance or to commit to advance any credit to Borrower.

 

(b)           A Combined Commitments Increase shall become effective upon (i) the receipt by Agent of (A) an agreement in form and substance satisfactory to Agent signed by Borrower, each Increasing Lender and each Additional Lender, as applicable, setting forth the Commitments of each such Lender, and in the case of an Additional Lender, setting forth the agreement of such Additional Lender to become a party to this Agreement and to be bound by all the terms and provisions hereof binding upon each Lender, and (B) such evidence of appropriate authorization on the part of Borrower with respect to such Combined Commitments Increase as Agent may reasonably request, and (ii) receipt by Agent of a certificate of an Authorized Representative of Borrower stating that, both before and after giving effect to such Combined Commitments Increase, no Event of Default or Unmatured Event of Default has occurred and is continuing, and that all representations and warranties made by Borrower in this Agreement are, to Borrower’s knowledge, true and correct as of such date, unless such representation or warranty relates to an earlier date, in which case such representation and warranty shall continue to be, to Borrower’s knowledge, true and correct as of such earlier date.

 

 

(c)           Upon the occurrence of a Combined Commitments Increase, the outstanding Revolving Advances and participation interests shall be reallocated by Agent and Lenders by causing such assignments (among the Lenders with Commitments) of Revolving Advances, Commitments and participation interests as necessary such that, after giving effect to such Combined Commitments Increase, each Lender with a Commitment will hold Revolving Advances, Commitments and participation interests based upon its Pro Rata Share of the Combined Commitments (after giving effect to such Combined Commitments Increase and such assignments).  Borrower shall be responsible for payment of any costs arising under Section 3.9 as a result of the assignments described in this paragraph (c) as though such assignments were prepayments.  The fees described in paragraph (b) of Section 12.16 shall not be applicable in connection with assignments described in this paragraph (c).

 

Section 2.9       Swing Loans.  (a)  On the terms and conditions set forth in this Agreement, upon Borrower’s request on any Business Day prior to the Termination Date, Swing Lender shall make Alternate Base Rate Loans under the Swing Note (“Swing Loans”) to Borrower in an aggregate principal amount not to exceed $10,000,000.00 outstanding at any time; provided that the aggregate principal amount of the outstanding Revolving Advances, plus the Letter of Credit Liabilities, plus the aggregate principal amount of the outstanding Swing Loans shall never exceed the Combined Commitments; and provided, further, that Swing Lender shall not make Swing Loans if an Event of Default or an Unmatured Event of Default has occurred and is continuing.  Subject to the other provisions of this Agreement, Borrower may from time to time borrow, prepay (in whole or in part and without premium or penalty) and reborrow Swing Loans.  Borrower shall request a Swing Loan by written notice to Swing Lender.

 

(b)           The unpaid principal amount of the Swing Loans shall bear interest prior to maturity at a varying rate per annum equal from day to day to the lesser of (i) the Maximum Rate or (ii) the Swing Loan-Applicable Rate in effect from day to day, and each change in the rate of interest charged on the Swing Loans shall become effective, without notice to Borrower, on the effective date of each change in the Swing Loan-Applicable Rate or the Maximum Rate, as the case may be; provided, however, if at any time the rate of interest specified in clause (b)(ii) preceding shall exceed the Maximum Rate, thereby causing the interest on the Swing Loans to be limited to the Maximum Rate, then any subsequent reduction in the Swing Loan-Applicable Applicable Rate shall not reduce the rate of interest on the Swing Loans below the Maximum Rate until the aggregate amount of interest actually accrued on the Swing Loans equals the amount of interest which would have accrued on the Swing Loans if the interest rate specified in clause (b)(ii) preceding had at all times been in effect.  Notwithstanding the foregoing, if any Event of Default has occurred and is continuing, the outstanding principal of the Swing Loans shall, upon the determination of the Swing Lender, bear interest at the Default Rate.

 

(c)           Borrower shall repay the outstanding principal amount of the Swing Loans on the Termination Date.  Borrower shall pay the accrued interest on the Swing Loans on the last day of each March, June, September and December, commencing December 31, 2011.  Borrower may prepay the Swing Loans, together with accrued interest thereon, at any time.

 

 

(d)           If (i) any Swing Loan advanced hereunder is not repaid within five (5) Business Days following the date such Swing Loan is advanced or (ii) Swing Lender at any time in its sole and absolute discretion requests on behalf of Borrower (which Borrower hereby authorizes Swing Lender to so request on its behalf), that each Lender make a Revolving Advance that is an Alternate Base Rate Loan in an amount equal to such Lender’s Pro Rata Share of such Swing Loan then outstanding, then, upon the giving of notice to the Lenders in accordance with the following sentence, each Lender shall pay to Swing Lender such Lender’s Pro Rata Share of such Swing Loan.  In connection with any Revolving Advance to be made to refinance any Swing Loan as contemplated by the foregoing sentence, Swing Lender shall give a notice to Agent prior to 12:00 noon on (i) the sixth (6th) Business Day following the date such Swing Loan is advanced or (ii) such other day that Swing Lender makes a request on behalf of Borrower as set forth above, and Agent shall give each Lender a notice by 1:00 p.m. on such date, to make an Alternate Base Rate Loan in the amount of its Pro Rata Share of such Swing Loan.  Each Revolving Advance made pursuant to each request made by Swing Lender pursuant to the foregoing sentence shall be considered to be a Revolving Advance, and Borrower hereby irrevocably instructs Swing Lender to apply the proceeds of such Revolving Advances to the prepayment of such Swing Loan.  Each Lender (including Swing Lender in its capacity as a Lender) shall make its Pro Rata Share of such Revolving Advance available to Agent in immediately available funds by 3:00 p.m. on the date requested, and the obligation to fund such Revolving Advance shall be unconditional, irrespective of the occurrence, existence or continuance of an Event of Default or Unmatured Event of Default.

 

(e)           If, prior to refinancing a Swing Loan with a Revolving Advance as provided above, an Event of Default under Section 10.1(d) or 10.1(e) shall have occurred or if for any other reason a Revolving Advance cannot be made, then each Lender will, on the date on which the Revolving Advance was to have been made or such other date as is designated by Swing Lender, purchase from the Swing Lender an undivided participation interest in all the outstanding Swing Loans in an amount equal to its Pro Rata Share of such Swing Loans.  Upon request from Agent (which shall be given by Agent to Lenders immediately following receipt by Agent of notice from Swing Lender), each Lender will immediately transfer such amount to Swing Lender.

 

Section 2.10     Letters of Credit.  Subject to the terms and conditions of this Agreement, Issuing Bank agrees to issue one or more Letters of Credit for the account of Borrower from time to time from the date hereof to and including the Business Day prior to the Termination Date; provided, however, that the Letter of Credit Liabilities shall not at any time exceed the lesser of (a) $10,000,000.00 and (b) the Combined Commitments at such time minus the sum of (i) the aggregate principal amount of the outstanding Revolving Advances at such time, plus (ii) the aggregate principal amount of the outstanding Swing Loans at such time.  Each Letter of Credit shall (a) have an expiration date (i) which is not later than one year following the date of issuance of such Letter of Credit (or, in the case of any renewal or extension of a Letter of Credit, not later than one year after such renewal or extension) and (ii) which may, at the sole discretion of Issuing Bank, extend beyond the Termination Date, subject to Section 2.18, (b) be payable in Dollars, (c) be issued for general corporate purposes of Borrower or any Subsidiary and (d) otherwise be satisfactory in form and substance to Issuing Bank; provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods.  No Letter of Credit shall require any payment by Issuing Bank to the beneficiary thereunder pursuant to a drawing prior to the third (3rd) Business Day following presentment of a draft and any related documents to Issuing Bank.  Issuing Bank shall have no obligation to issue any Letter of Credit if an Event of Default or an Unmatured Event of Default has occurred and is continuing.

 

 

Section 2.11     Procedure for Issuing Letters of Credit.  Each Letter of Credit shall be issued upon receipt by Issuing Bank of written notice from an Authorized Representative requesting the issuance of such Letter of Credit, which notice shall be received by Issuing Bank at least three (3) Business Days prior to the requested date of issuance of such Letter of Credit (or such shorter period as Issuing Bank may agree).  Such notice shall be accompanied by a Letter of Credit Application and such other documents as Issuing Bank may require in order to prepare such Letter of Credit.  Such notice and application (both front and back sides) may be sent by fax or other electronic method.  Each request for a Letter of Credit shall constitute a representation by Borrower to Issuing Bank, Agent and the other Lenders as to each of the matters set forth in the Revolving Advance Request Form, including representations that (a) immediately after giving effect to the issuance of such Letter of Credit, the sum of (i) the aggregate principal amount of the outstanding Revolving Advances plus (ii) the Letter of Credit Liabilities plus (iii) the aggregate principal amount of the outstanding Swing Loans does not exceed the Combined Commitments, and (b) at the time of and immediately after giving effect to the issuance of such Letter of Credit, no Event of Default or Unmatured Event of Default exists.  To the extent that the terms and provisions of a Letter of Credit Application may conflict with or be inconsistent with the terms and provisions of this Agreement, the terms and provisions of this Agreement shall govern and control.

 

Section 2.12     Participation by Lenders.  By the issuance of any Letter of Credit and without any further action on the part of Issuing Bank or any Lender in respect thereof, Issuing Bank hereby grants to each Lender, and each Lender hereby agrees to acquire from Issuing Bank, a participation in each such Letter of Credit and the related Letter of Credit Liabilities, effective upon the issuance thereof without recourse or warranty, equal to such Lender’s Pro Rata Share of such Letter of Credit and the Letter of Credit Liabilities related to such Letter of Credit.  Issuing Bank shall provide a copy of each Letter of Credit to each other Lender promptly after issuance thereof.  This agreement to grant and acquire participations is an agreement between Issuing Bank and Lenders, and neither Borrower nor any beneficiary of a Letter of Credit shall be entitled to rely thereon.  Borrower agrees that each Lender purchasing a participation from the Issuing Bank pursuant to this Section 2.12 may exercise all of its rights to payment against Borrower including the right of setoff, with respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participations.

 

Section 2.13     Payments Constitute Revolving Advances.  Each payment by Issuing Bank pursuant to a drawing under a Letter of Credit shall constitute and be deemed a Revolving Advance by Issuing Bank to Borrower under the Revolving Notes and this Agreement as of the day and time such payment is made by Issuing Bank and in the amount of such payment.  Each Lender shall make available to Issuing Bank in immediately available funds its Pro Rata Share of such Revolving Advance in the manner provided in Section 2.5 hereof upon notice given by Issuing Bank in the manner provided in Section 2.5 for notices given by Agent.  Notwithstanding the foregoing, if, prior to paying a drawing on a Letter of Credit with a Revolving Advance as provided above, an Event of Default under Section 10.1(d) or Section 10.1(e) shall have occurred or if for any other reason a Revolving Advance cannot be made, then each Lender will, on the date on which the Revolving Advance was to have been made to pay such drawing or such other date as is designated by Issuing Bank, purchase from Issuing Bank an undivided participation interest in such Letter of Credit in an amount equal to its Commitment Percentage times the amount of such drawing.  Upon request from Agent (which shall be given by Agent to Lenders immediately following receipt of notice by Agent from Issuing Bank), each Lender will immediately transfer such amount to Issuing Bank.

 

 

Section 2.14     Letter of Credit Fees.  Borrower shall pay to Agent for the ratable benefit of the Lenders a letter of credit participation fee, payable quarterly in arrears, in an amount equal to (a) for a commercial Letter of Credit, the greater of (i) one percent (1.0%) per annum of the stated amount of such commercial Letter of Credit for the period during which such commercial Letter of Credit will remain outstanding (based on a three hundred sixty (360) day year and the actual number of days to elapse), and (ii) $250.00, and (b) for a standby Letter of Credit, the greater of (i) two percent (2.0%) per annum of the stated amount of such standby Letter of Credit for the period during which such standby Letter of Credit will remain outstanding (based on a three hundred sixty (360) day year and the actual number of days to elapse), and (ii) $250.00.  At the time of issuance of each Letter of Credit, Borrower shall also pay to the Issuing Bank a letter of credit fee in an amount equal to one-eighth of one percent (⅛%) of the stated amount of such Letter of Credit.  In addition, Borrower shall pay to Issuing Bank (a) at the time of issuance of any Letter of Credit, all reasonable out-of-pocket costs incurred by Issuing Bank in connection with the issuance of such Letter of Credit, (b) upon the payment of any Letter of Credit, Issuing Bank’s standard letter of credit payment fees (if any) with respect to such payment, and (c) upon the amendment (including the extension) of any Letter of Credit, Issuing Bank’s standard letter of credit amendment fees (if any) with respect to such amendment.

 

Section 2.15     Obligations Absolute.  The obligations of Borrower to reimburse Issuing Bank and Lenders, as applicable, for payment of drawings under any Letter of Credit shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement and the other Loan Documents under all circumstances, including (a) any lack of validity or enforceability of any Letter of Credit or any other Loan Document, (b) the existence of any claim, set-off, counterclaim, defense or other rights which any Subsidiary or any other Person may have at any time against any beneficiary of any Letter of Credit, Issuing Bank, Agent, any Lender, or any other Person, whether in connection with this Agreement or any other Loan Document or any unrelated transaction, (c) if any statement, draft or other document presented under any Letter of Credit proves to be forged, fraudulent, invalid or insufficient in any respect or any statement therein is untrue or inaccurate in any respect whatsoever, (d) payment by Issuing Bank under any Letter of Credit against presentation of a draft or other document which does not comply with the terms of such Letter of Credit in a manner which is not material, (e) any amendment or waiver of, or any consent to departure from, any Loan Document or (f) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, Borrower’s obligations hereunder.

 

 

Section 2.16      Limitation of Liability.  Borrower assumes all risks of the acts or omissions of any beneficiary of any Letter of Credit with respect to its use of such Letter of Credit.  None of Issuing Bank, Agent, any Lender or any of their officers, employees or directors shall have any responsibility or liability to Borrower or any other Person for (a) the failure of any draft to bear any reference or adequate reference to any Letter of Credit, or the failure of any documents to accompany any draft at negotiation, or the failure of any Person to surrender any Letter of Credit or to send documents apart from drafts as required by the terms of any Letter of Credit, or the failure of any Person to note the amount of any instrument on any Letter of Credit, (b) errors, omissions, interruptions or delays in transmission or delivery of any messages relating to any Letter of Credit, (c) the validity, sufficiency or genuineness of any draft or other document, or any endorsement thereon, even if any such draft, document or endorsement should in fact prove to be in any and all respects invalid, insufficient, fraudulent or forged or any statement therein is untrue or inaccurate in any respect, (d) payment by Issuing Bank to the beneficiary of any Letter of Credit against presentation of any draft or other document that does not comply with the terms of the Letter of Credit in a respect which is not material or (e) any other circumstance whatsoever in making or failing to make any payment under a Letter of Credit.  Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.  Notwithstanding the foregoing, Issuing Bank shall be liable to Borrower to the extent of any direct, but not consequential, damages suffered by Borrower which Borrower proves in a final nonappealable judgment were caused by (i) Issuing Bank’s willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit comply with the terms thereof or (ii) Issuing Bank’s willful failure to pay under any Letter of Credit after presentation to it of documents strictly complying with the terms and conditions of such Letter of Credit.

 

Section 2.17      Provisions Regarding Electronic Issuance of Letters of Credit.  Issuing Bank may adopt procedures pursuant to which Borrower may request the issuance of Letters of Credit by electronic means and Issuing Bank may issue Letters of Credit based on such electronic requests.  Such procedures may include the submission by Borrower of Letter of Credit Applications electronically.

 

Section 2.18      Cash Deposit Prior to Termination Date.  If Letters of Credit are to be outstanding after the Termination Date, not later than five (5) Business Days prior to the Termination Date, Borrower will deposit with Issuing Bank cash, or pledge to Issuing Bank (in a manner satisfactory to Issuing Bank) cash equivalent investments or other collateral acceptable to Issuing Bank, or a combination thereof, in an amount equal to the sum of the amounts available to be drawn under the Letters of Credit which will remain outstanding after the Termination Date.

 

Section 2.19      Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a)           any and all fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.7;

 

(b)           the Commitment of such Defaulting Lender shall not be included in determining whether all Lenders or Majority Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 2.1 or Section 12.7), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender;

 

 

(c)           if any Swing Loans or Letter of Credit Liabilities exist at the time such Lender becomes a Defaulting Lender, then:

 

 

 

 

 

 

 

(d)           so long as any Lender is a Defaulting Lender, the Swing Lender shall not be required to fund any Swing Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless the Swing Lender or the Issuing Bank, as applicable, is satisfied that the related exposure will be covered one hundred percent (100%) by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by Borrower in accordance with Section 2.19(c)(iii), and participating interests in any such newly made Swing Loan or newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.19(c)(iv) (and Defaulting Lenders shall not participate therein).

 

In the event that Agent, Borrower, the Swing Lender and the Issuing Bank each agree that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swing Exposures and LC Exposures of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment, and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Loans) as Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Commitment Percentage.  The rights and remedies against, and with respect to, a Defaulting Lender under this Section 2.19 are in addition to, and cumulative and not in limitation of, all other rights and remedies that Agent, the Issuing Bank, the Swing Lender, the Lenders, Borrower and Guarantors may at any time have against, or with respect to, such Defaulting Lender.

 

Section 2.20      Failure of Lender to Make Loans or Payments.  If any Lender shall fail to make any Loan or payment required to be made by it, then Agent may, in its discretion and notwithstanding any contrary provision hereof, (a) apply any amounts thereafter received by Agent for the account of such Lender to satisfy such Lender’s obligations to make such Loan and/or payment until all such unsatisfied obligations are fully paid, and/or (b) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender to make such Loan and/or payment; in the case of each of (a) and (b) above, in any order as determined by Agent in its discretion.

 

Section 2.21      Replacement of Lenders.  If (i) any Lender requests compensation under Section 3.5 or (ii) any Lender becomes a Defaulting Lender, then Borrower may, at its sole expense and effort, upon notice to such Lender and Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 12.16), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (1) Borrower shall have received the prior written consent of the Issuing Bank and, if such assignee is not already a Lender hereunder, Agent, which consent of the Issuing Bank and Agent (if applicable) shall not be unreasonably withheld, conditioned or delayed and (2) such Lender shall have received payment of an amount equal to the outstanding principal of its Revolving Advances, participations in Letters of Credit and Swing Exposure, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other amounts).

 

 

Section 3.1        Method of Payment.  All payments of principal, interest and other amounts to be made by Borrower under this Agreement, the Notes or any other Loan Document shall be made to Agent at its designated office specified herein in immediately available funds, without setoff, deduction, or counterclaim, not later than 11:00 a.m. on the date that such payment shall become due (and each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).  Each payment received by Agent under this Agreement or any other Loan Document for the account of a Lender shall be paid promptly to such Lender, in immediately available funds, at such Lender’s office designated herein; provided, however, in the event any Lender fails to fund any Revolving Advance required to be funded by it and Agent or another Lender or Lenders shall have funded such Revolving Advance on behalf of such Lender, any payment received by Agent for the account of such non-funding Lender shall not be distributed to such Lender until such Revolving Advance shall have been repaid in full to Agent or the Lender or Lenders who funded such Revolving Advance on behalf of such Lender.  Whenever any payment under this Agreement, any Note or any other Loan Document shall be stated to be due on a day that is not a Business Day, such payment may be made on the next Business Day, and interest shall continue to accrue during such extension.

 

Section 3.2        Sharing of Payments, etc./Non-Receipt of Funds by Agent.

 

(a)           If any Lender shall obtain any payment (whether voluntary, involuntary or otherwise) on account of Revolving Advances (including, without limitation, any set-off), which is in excess of its Pro Rata Share of payments on the Revolving Advances obtained by all Lenders, such Lender shall purchase from the other Lenders such participations in the Revolving Advances of the other Lenders as shall be necessary to cause such purchasing Lender to share the excess payment Pro Rata with each of the other Lenders; provided that (i) if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of recovery and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Revolving Advances to any assignee or participant.  Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this paragraph may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participation.

 

(b)           Unless Agent shall have been notified by a Lender or Borrower (the “Payor”) prior to the date on which such Lender is to make payment to Agent of the proceeds of a Revolving Advance to be made by it hereunder or Borrower is to make a payment to Agent for the account of one or more of the Lenders, as the case may be (a “Required Payment”), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to Agent, Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient on such date and, if the Payor has not in fact made the Required Payment to Agent, the recipient of such payment shall, on demand, pay to Agent the amount made available to it together with interest thereon in respect of the period commencing on the date such amount was made available by Agent until the date Agent recovers such amount at the rate applicable to such portion of the applicable Revolving Advance.

 

 

Section 3.3        Voluntary Prepayment.  Borrower may prepay the Notes in whole at any time or from time to time in part without premium or penalty.  Each prepayment of the Notes shall be accompanied by all accrued and unpaid interest to the date of prepayment on the amount so prepaid, together with any additional amounts required pursuant to Section 3.9.

 

Section 3.4        Computation of Interest.  Interest on the indebtedness evidenced by the Notes shall be computed on the basis of a year of (a) three hundred sixty (360) days and the actual number of days elapsed (including the first day but excluding the last day) for all LIBOR Loans unless such calculation would result in a usurious rate, in which case interest shall be calculated on the basis of a year of three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be, and (b) three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be, for all Alternate Base Rate Loans.

 

Section 3.5        Capital Adequacy.

 

(a)           If, after the date hereof, any Lender shall have determined in good faith that a Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital (or the capital of such Lender’s parent company, if any) as a consequence of its obligations hereunder or the transactions contemplated hereby to a level below that which such Lender (or its parent company) could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s parent company with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, subject to paragraphs (b) and (c) of this Section, Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender (or its parent company) for any such reduction actually suffered.

 

(b)           A certificate of such Lender claiming compensation under this Section and setting forth the additional amount or amounts necessary to compensate such Lender or such Lender’s parent company, as the case may be, including in reasonable detail a description of the basis for such claim for compensation and a calculation of such amount or amounts, shall be delivered to Borrower and shall be conclusive absent manifest error, provided that the determination of such amount or amounts is made on a reasonable basis.  In determining such amount or amounts, such Lender may use any reasonable averaging and attribution methods.  Borrower shall pay such Lender the amount shown as due on any such certificate within thirty (30) days after receipt thereof.

 

(c)           Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than one hundred eighty (180) days prior to the date that such Lender notifies Borrower in writing of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the one hundred eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof.

 

 

Section 3.6        Additional Costs in Respect of Letters of Credit.

 

(a)           If as a result of any Regulatory Change there shall be imposed, modified or deemed applicable any tax, reserve, special deposit, or similar requirement against or with respect to or measured by reference to Letters of Credit issued or to be issued hereunder or Issuing Bank’s commitment to issue Letters of Credit hereunder, and the result shall be to increase the cost to Issuing Bank of issuing or maintaining any Letter of Credit or its commitment to issue Letters of Credit hereunder or reduce any amount receivable by Issuing Bank hereunder in respect of any Letter of Credit (which increase in cost or reduction in amount receivable, shall be the result of Issuing Bank’s reasonable allocation of the aggregate of such increases or reductions resulting from such event), then from time to time, subject to paragraphs (b) and (c) of this Section, Borrower shall pay to Issuing Bank such additional amount or amounts as will compensate Issuing Bank for such increased costs or reductions in amount.

 

(b)           A certificate of Issuing Bank claiming compensation under this Section and setting forth the additional amount or amounts necessary to compensate Issuing Bank, including in reasonable detail a description of the basis for such claim for compensation and a calculation of such amount or amounts, shall be delivered to Borrower and shall be conclusive absent manifest error, provided that the determination of such amount or amounts is made on a reasonable basis.  Borrower shall pay Issuing Bank the amount shown as due on any such certificate within thirty (30) days after receipt thereof.

 

(c)           Failure or delay on the part of Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of Issuing Bank’s right to demand such compensation; provided that Borrower shall not be required to compensate Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than one hundred eighty (180) days prior to the date that Issuing Bank notifies Borrower in writing of the Regulatory Change giving rise to such increased costs or reductions and of Issuing Bank’s intention to claim compensation therefor; provided further that, if the Regulatory Change giving rise to such increased costs or reductions is retroactive, then the one hundred eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof.

 

Section 3.7        Conversions and Continuations.  Borrower shall have the right from time to time to Convert any Loan from one Type of Loan into another Type of Loan or to Continue any LIBOR Loan as a LIBOR Loan by giving Agent written notice (a) for Conversion into an Alternate Base Rate Loan, not later than 11:00 a.m. on the date on which Borrower desires that the Conversion occur (which shall be a Business Day), in which case such Loan shall be Converted into an Alternate Base Rate Loan on such date, and (b) for Continuation of or Conversion into a LIBOR Loan, not later than 11:00 a.m. three (3) Business Days before the effective date of such Conversion or Continuation, specifying (i) the Conversion or Continuation date (which shall be a Business Day), (ii) in the case of Conversions, the Type of Loan to be Converted into, and (iii) in the case of a Continuation of or Conversion into a LIBOR Loan, the duration of the Interest Period to be applicable thereto after giving effect to such election; provided that (x) no Loan which is a LIBOR Loan may be in an amount which is less than $250,000.00, (y) at any time there can be no more than eight (8) Interest Periods in effect for all LIBOR Loans, and (z) except for Conversions to Alternate Base Rate Loans, no Lender shall have an obligation to make any Conversions while an Event of Default or an Unmatured Event of Default has occurred and is continuing.  All notices under this Section shall be irrevocable once given.  If Borrower shall fail to give Agent the notice specified above for Continuation or Conversion of any LIBOR Loan prior to the end of the Interest Period with respect thereto, such LIBOR Loan shall automatically be Converted into an Alternate Base Rate Loan on the last day of such Interest Period.

 

Section 3.8        Illegality, Impossibility, Regulatory Change; Change in Law and Compensation.  In the event that (a) it becomes unlawful for any Lender to honor its obligation to make LIBOR Loans hereunder or to maintain LIBOR Loans hereunder, (b) Agent determines that (i) quotations of interest rates for the relevant deposits referred to in the definition of “LIBOR Rate” are not being provided in the relative amounts or for the relative maturities for determining the interest rates borne by the LIBOR Loans as provided in this Agreement or (ii) such quotations do not accurately reflect any Lender’s costs of making or maintaining its LIBOR Loans, or (c) a Regulatory Change (including the imposition of a Reserve Requirement) or any change in law occurs which changes any Lender’s basis of taxation with respect to LIBOR Loans or imposes reserve, capital or other requirements with respect thereto, then (x) such Lender shall notify Borrower of any such event, (y) Borrower shall promptly pay to such Lender such amounts as such Lender may determine (which determination shall be conclusive provided such determination is made on a reasonable basis) to be necessary to compensate such Lender for any increased costs incurred by such Lender or decreases in amounts receivable by such Lender which such Lender determines are attributable to any event described in clauses (a), (b) or (c) above, and (z) the obligation of such Lender to make or Continue LIBOR Loans or to Convert Alternate Base Rate Loans to LIBOR Loans shall terminate, and (i) all future Loans shall be Alternate Base Rate Loans and (ii) all outstanding Loans which are LIBOR Loans shall be Converted to Alternate Base Rate Loans on the last day of the current Interest Period therefor.

 

Section 3.9        Compensation for Prepayment or Failure to Borrow.  Borrower shall pay to Agent in accordance with this Section, promptly upon the request of Agent, such amount or amounts as shall be sufficient to compensate any Lender for any reasonable loss, cost or expense (including any reasonable losses and expenses arising from the liquidation or reemployment of deposits acquired to fund or maintain any principal amount prepaid) incurred by such Lender as a result of (a) any payment, prepayment or Conversion of any LIBOR Loan on a day other than the last day of an Interest Period therefor (a “LIBOR Prepayment”) or (b) the failure by Borrower to borrow, Convert or prepay a LIBOR Loan on any date required hereby.  Such reimbursement shall be calculated as though such Lender funded the principal amount paid, prepaid, Converted or not borrowed through the purchase of Dollar deposits in the London, England interbank market having a maturity corresponding to last day of the Interest Period for the amount paid, prepaid, Converted or to be borrowed and bearing an interest rate equal to the LIBOR Rate for such principal amount for such Interest Period, whether in fact that is the case or not.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section, including in reasonable detail a description of the basis for such compensation and a calculation of such amount or amounts, shall be delivered to Borrower and Agent and shall be conclusive absent manifest error, provided that the determination thereof is made on a reasonable basis.  Borrower shall pay such Lender the amount shown as due on any such certificate within thirty (30) days after receipt thereof.  On the date of any LIBOR Prepayment, interest shall be due and payable on the principal amount so paid, prepaid or Converted.

 

 

 

Section 4.1       Setoff.  If an Event of Default has occurred and is continuing, Agent, Issuing Bank and each Lender, or any of the foregoing, shall have the right and are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply against the Obligations in such a manner as such Person may determine, at any time and without notice to Borrower, any and all deposits (general or special, time or demand, provisional or final) held in any Proprietary Account maintained by Agent, Issuing Bank or such Lender, whether or not the Obligations are then due.  The rights and remedies of Agent, Issuing Bank and each Lender hereunder are in addition to other rights and remedies (including, without limitation, to the rights of setoff) which such Person may have.

 

Section 4.2        Guaranty Agreements.  Each Domestic Subsidiary shall unconditionally and irrevocably guarantee payment and performance of the Obligations by execution and delivery of a Guaranty Agreement.

 

 

 

Section 5.1        Initial Extension of Credit.  The obligation of Lenders to fund any amounts hereunder is subject to satisfaction (or waiver) of the condition precedent that prior thereto Agent shall have received all of the documents set forth below in this Section 5.1 in form and substance satisfactory to Agent.

 

(a)           Certificates.

 

(i)        A certificate of the Secretary or Assistant Secretary of Borrower (or another officer of Borrower acceptable to Agent) certifying (A) resolutions of the board of directors of Borrower which authorize the execution, delivery and performance by Borrower of this Agreement and the other Loan Documents to which Borrower is or is to be a party, and (B) the names of the officers of Borrower authorized to sign this Agreement and each of the other Loan Documents to which Borrower is or is to be a party as of the Closing Date, together with specimen signatures of such officers.

 

(ii)       A certificate of the Chief Financial Officer of Borrower certifying (A) that all representations and warranties in this Agreement and the other Loan Documents are true and correct, (B) that no Event of Default or Unmatured Event of Default has occurred and is continuing, (C) that no Material Adverse Effect has occurred since December 31, 2010, and (D) that no event has occurred and no condition exists which could reasonably be expected to have a Material Adverse Effect.

 

 

(b)           Organizational Documents.  The certificate of incorporation and the bylaws of Borrower, certified by the Secretary or Assistant Secretary of Borrower (or another officer of Borrower acceptable to Agent).

 

(c)           Governmental Certificates.  Certificates issued by the appropriate government officials of the state of incorporation of Borrower as to the existence and good standing of Borrower in such state.

 

(d)           Certificate - Domestic Subsidiaries.  A certificate of the Secretary or Assistant Secretary of each Domestic Subsidiary (or another officer of such Domestic Subsidiary acceptable to Agent) certifying (i) resolutions of the governing body of such Domestic Subsidiary which authorize the execution, delivery and performance by such Domestic Subsidiary of each of the Loan Documents to which such Domestic Subsidiary is or is to be a party as of the Closing Date and (ii) the names of the officers of such Domestic Subsidiary authorized to sign each of the Loan Documents to which such Domestic Subsidiary is or is to be a party, together with specimen signatures of such officers.

 

(e)           Organizational Documents - Domestic Subsidiaries.  The Organizational Documents of each Domestic Subsidiary, certified by the Secretary or Assistant Secretary of such Domestic Subsidiary (or another officer of such Domestic Subsidiary acceptable to Agent).

 

(f)           Governmental Certificates - Domestic Subsidiaries.  Certificates issued by the appropriate government officials of the state of organization of each Domestic Subsidiary as to the existence and good standing of such Domestic Subsidiary in such state.

 

(g)           Notes.  (i) Revolving Notes executed by Borrower payable to the order of the Lenders and (ii) a Swing Note executed by Borrower payable to the order of the Swing Lender.

 

(h)           Pledge of Bermuda Subsidiary.  (i) A pledge agreement executed by the owner of the ownership interests of the Bermuda Subsidiary pledging sixty-five percent (65%) of its ownership interests in the Bermuda Subsidiary to Agent.

 

(ii)           A Uniform Commercial Code search showing all financing statements and other documents or instruments on file against the owner of the ownership interests of the Bermuda Subsidiary in the office of the Secretary of State of Delaware.

(iii)           Uniform Commercial Code financing statements showing the owner of the ownership interests of the Bermuda Subsidiary as debtor.

 

(iv)           An original stock certificate evidencing sixty-five percent (65%) of Bermuda Subsidiary’s ownership interests and an executed stock power related thereto.

 

(i)            Guaranty Agreements.  A Guaranty Agreement executed by each Domestic Subsidiary in existence on the date hereof.

 

 

(j)           Insurance Policies.  A summary of insurance coverage of Borrower and its Subsidiaries evidencing that they are carrying insurance in compliance with the requirements of Section 7.6.

 

(k)           Opinion of Counsel.  An opinion of Baker Botts L.L.P., legal counsel to Borrower and Guarantors, in substantially the form attached hereto as Exhibit G.

 

(l)           Fees and Expenses.  (i)  Evidence that the costs and expenses (including reasonable attorneys’ fees) referred to in Section 12.1, to the extent invoiced prior to the Closing Date, have been paid in full by Borrower.

 

(ii)           Evidence that all fees referenced in the term sheet have been paid in full by Borrower.

 

(m)           Additional Documentation.  Such additional approvals, opinions or documents as Agent may reasonably request.

 

Section 5.2        Post Closing Obligations.  Borrower shall deliver to Agent within ninety (90) days of the Closing Date (a) evidence that Borrower has taken all actions necessary to perfect the pledge to Agent of sixty-five percent (65%) of the ownership interests in the Bermuda Subsidiary, and (b) an opinion of legal counsel to the Bermuda Subsidiary, in substantially the form attached hereto as Exhibit H.

 

Section 5.3        All Extensions of Credit.  The obligation of Lenders to make any Revolving Advance and Issuing Bank to issue any Letter of Credit (including the initial Revolving Advance and the initial Letter of Credit) is subject to satisfaction (or waiver) of the following conditions:

 

(a)           Agent or Issuing Bank, as applicable, shall have received the items required by Section 2.5 or 2.11, as applicable;

 

(b)           the representations and warranties contained in Article VI hereof and the other Loan Documents shall, to Borrower’s knowledge, be true and correct on and as of the date of such Revolving Advance and/or Letter of Credit issuance, as applicable, with the same force and effect as if such representations and warranties had been made on and as of such date, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case such representations and warranties shall continue to be true and correct as of such earlier date; and

 

(c)           at the time of and immediately after giving effect to such Revolving Advance or such Letter of Credit issuance, no Event of Default or Unmatured Event of Default shall have occurred and be continuing.

 

 

 

To induce Agent, Issuing Bank and Lenders to enter into this Agreement, Borrower represents and warrants to each such Person that:

 

Section 6.1        Existence.  Each of Borrower and each Subsidiary (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (b) has all requisite power and authority to own its assets and carry on its business as now being or as proposed to be conducted and (c) is qualified to do business in all jurisdictions where such qualification is necessary.  Borrower has the power and authority to execute, deliver and perform its obligations under this Agreement and the other Loan Documents to which it is or may become a party.

 

Section 6.2        Financial Statements.  Borrower has delivered to Agent audited consolidated financial statements of Borrower and its Subsidiaries as at and for the fiscal year ended December 31, 2010, and unaudited consolidated financial statements of Borrower and its Subsidiaries for the fiscal quarter ending June 30, 2011.  Such financial statements have been prepared in accordance with GAAP, and fairly present in all material respects, on a consolidated basis, the financial condition of Borrower and its Subsidiaries as of the respective dates indicated therein and the results of operations for the respective periods indicated therein.  Neither Borrower nor any of its Subsidiaries has any material contingent liabilities, liabilities for taxes, material forward or long-term commitments, or unrealized or anticipated losses from any unfavorable commitments that are not either (x) reflected in such financial statements or (y) otherwise disclosed to Agent prior to the Closing Date.

 

Section 6.3       Requisite Action; No Breach.  The execution, delivery and performance by Borrower of this Agreement and the other Loan Documents to which Borrower is or may become a party (a) have been duly authorized by all requisite action on the part of Borrower, (b) do not and will not violate the Organizational Documents of Borrower, (c) do not and will not violate in any material respect any law, rule or regulation of any Governmental Authority applicable to Borrower or any of its properties, or any order, writ, injunction or decree of any court, Governmental Authority or arbitrator applicable to Borrower or any of its properties and (d) do not and will not result in a breach of, or constitute a default under, or result in the imposition of any Lien (except as permitted by this Agreement) upon any of the revenues or assets of Borrower or any Subsidiary pursuant to the provisions of, any indenture, mortgage, deed of trust, security agreement, franchise, permit, license or other instrument or agreement (x) that is material to Borrower and its Subsidiaries and (y) by which Borrower or any Subsidiary or any of their respective properties is bound.

 

Section 6.4       Operation of Business.  Each of Borrower and its Subsidiaries possess all material licenses, permits, approvals and other governmental authorizations necessary for the ownership of its property and the conduct of its business.

 

 

Section 6.6       Rights in Properties; Liens.  Borrower and each Subsidiary have good title to, or valid leasehold interests in, their respective properties and assets (real and personal) necessary for the conduct of its business, subject, with respect to all real property owned by Borrower or a Subsidiary, to encumbrances consisting of easements, zoning restrictions or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of Borrower or any Subsidiary to use such assets in its business, and none of which is violated in any material respect by existing or proposed structures or land use, and none of such properties, assets or leasehold interests is subject to any Lien, except as permitted by this Agreement.

 

Section 6.7        Enforceability.  This Agreement constitutes, and the other Loan Documents to which Borrower is a party, when delivered, shall constitute, the legal, valid, and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditor’s rights and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

Section 6.8       Approvals.  No authorization, approval, or consent of, and no filing or registration with, any Governmental Authority or third party is or will be necessary for the execution, delivery or performance by Borrower of this Agreement and the other Loan Documents to which Borrower is or may become a party or the validity or enforceability thereof, except (i) such as have been obtained or made and are in full force and effect and (ii) the filing of any required documents with the SEC after the Closing Date.

 

Section 6.9        Debt.  Borrower and its Subsidiaries have no Debt except Debt permitted pursuant to Section 8.1.

 

Section 6.10     Use of Proceeds; Margin Securities.  Neither Borrower nor any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any extension of credit under this Agreement will be used for any purpose that violates Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

Section 6.11     ERISA.  Borrower and each Subsidiary have complied with all applicable minimum funding requirements and all other material requirements of ERISA applicable to them, and there are no existing conditions that would give rise to liability thereunder.  No Reportable Event (as defined in Section 4043 of ERISA) has occurred in connection with any employee benefit plan that might constitute grounds for the termination thereof by the Pension Benefit Guaranty Corporation or for the appointment by the appropriate United States District Court of a trustee to administer such plan.

 

 

Section 6.12      Taxes.  To Borrower's knowledge, Borrower and each Subsidiary have filed all tax returns (federal, state, and local) required to be filed by them, including all income, franchise, employment, property, and sales taxes, and have paid all of their liabilities for taxes that are due and payable pursuant to such returns, except such taxes as are being contested in good faith by appropriate proceedings and for which Borrower or such Subsidiary has set aside on its books adequate reserves in accordance with GAAP.  No Tax lien has been filed and, to the knowledge of Borrower, no claim for the collection or assessment of taxes is being asserted against Borrower or any Subsidiary which is not being contested as permitted in this Agreement.

 

Section 6.13      Disclosure.  Since December 31, 2010, no event has occurred, and no fact or condition exists, which has had a Material Adverse Effect or which is likely to have a Material Adverse Effect.

 

Section 6.14     Subsidiaries.  Borrower has no Subsidiaries other than as set forth on Schedule 6.14.  As of the date hereof, Borrower owns, directly or indirectly, one hundred percent (100%) of the equity interests of each such Subsidiary set forth in Schedule 6.14.

 

Section 6.15     Compliance with Laws.  Neither Borrower nor any Subsidiary is in violation in any material respect of any law, rule, regulation, order or decree of any Governmental Authority or arbitrator applicable to it or its properties.

 

Section 6.16     Compliance with Agreements.  Neither Borrower nor any Subsidiary is in violation in any material respect of any material document, agreement, contract or instrument to which it is a party or by which it or its properties are bound.

 

Section 6.17     Environmental Matters.  To Borrower's knowledge, Borrower and each Subsidiary, and their respective properties, are in compliance with all applicable Environmental Laws and neither Borrower nor any Subsidiary is subject to any liability or obligation for remedial action thereunder.  There is no pending or, to Borrower’s knowledge, threatened investigation or inquiry by any Governmental Authority of Borrower or any Subsidiary, or any of their respective properties pertaining to any Hazardous Substance.  To Borrower's knowledge, Borrower and each Subsidiary have obtained all permits, licenses, and authorizations which are required under and by all Environmental Laws.  Furthermore, except in the ordinary course of business and in compliance with all applicable Environmental Laws or otherwise with respect to any matters that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, (x) to Borrower's knowledge, there are no Hazardous Substances located on or under any of the properties of Borrower or any Subsidiary and (y) to Borrower's knowledge, neither Borrower nor any Subsidiary has caused or permitted any Hazardous Substance to be disposed of on or under or released from any of its properties.

 

Section 6.18      Solvency.  Borrower and its Subsidiaries, on a consolidated basis, are not insolvent, Borrower’s and its Subsidiaries’ assets, on a consolidated basis, exceed their liabilities, and Borrower will not be rendered insolvent by the execution and performance of this Agreement and the other Loan Documents to which it is a party.

 

 

Section 6.19     Investment Company Act.  Neither Borrower nor any Subsidiary is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 6.20     Proprietary Accounts.  All the Proprietary Accounts of Borrower and its Subsidiaries are listed on Schedule 1.1, and neither Borrower nor any Subsidiary maintains any Proprietary Account which is not listed on Schedule 1.1; provided that no Proprietary Account opened after the date hereof shall be deemed to be included in the representation and warranty set forth in this Section 6.20 until ten (10) Business Days (or such later date as Agent may agree) after the opening of such Proprietary Account.

 

ARTICLE VII.

 

 

Borrower covenants and agrees that, as long as the Obligations or any part thereof are outstanding (other than indemnities and other contingent obligations not then due and payable and as to which no claim has been made at the time of determination) or any Lender has any commitment to advance funds hereunder or Issuing Bank has any obligation to issue any Letter of Credit hereunder or any Letter of Credit Liabilities exist (unless collateralized in accordance with Section 2.18), Borrower will perform and observe the covenants set forth below.

 

Section 7.1        Reporting Requirements.  Borrower will deliver to Agent:

 

(a)           Annual Financial Statements.  As soon as available, and in any event within one hundred twenty (120) days after the end of each fiscal year of Borrower, beginning with the fiscal year ending December 31, 2011, a copy of the annual audited financial statements of Borrower and its Subsidiaries for such fiscal year containing, on a consolidated basis, Borrower’s balance sheet and related statements of income, stockholders’ equity and cash flows as at the end of such fiscal year and for the 12-month period then ended, in each case setting forth in comparative form the figures for the preceding fiscal year, all in reasonable detail, prepared in accordance with GAAP, and audited and certified by independent certified public accountants of recognized national standing or otherwise reasonably acceptable to Agent (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) (provided that the requirements of this Section 7.1(a) with respect to the delivery of financial statements for any fiscal year shall be deemed satisfied by publicly filing Borrower’s Form 10-K for such fiscal year with the SEC, and such financial statements shall be deemed to have been delivered to Agent under this Section 7.1(a) on the date such Form 10-K has been posted on the SEC website accessible through http://www.sec.gov/edgar/searchedgar/webusers.htm or such successor webpage of the SEC thereto).

 

 

(c)           No Default Certificate.  (i) Together with the financial statements delivered pursuant to Section 7.1(a), a No Default Certificate as of the last day of the fiscal year covered by such financial statements, and (ii) together with the financial statements delivered pursuant to Section 7.1(b), a No Default Certificate as of the last day of the fiscal quarter covered by such financial statements, in each case executed by a Financial Officer and containing detailed calculations of the covenants contained in Section 8.1 and Article IX.

 

(d)           Notice of Litigation.  Promptly after the commencement thereof, notice of all actions, suits and proceedings before any Governmental Authority against Borrower or any Subsidiary as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, is likely to have a Material Adverse Effect.

 

(e)           Judgments.  Within five (5) Business Days of the rendering thereof, notice of any judgment against Borrower or any Subsidiary in an amount which is more than $5,000,000.00.

 

(f)           Notice of Default.  As soon as possible and in any event within five (5) Business Days after Borrower becomes aware thereof, a written notice setting forth the details of any Event of Default or Unmatured Event of Default and the action which Borrower has taken and proposes to take with respect thereto.

 

(g)           Notice of Material Adverse Effect.  As soon as possible, and in any event within five (5) Business Days after Borrower becomes aware thereof, notice of the occurrence of any event or the existence of any fact or condition which is likely to have a Material Adverse Effect.

 

(h)           General Information.  Promptly, such other information concerning Borrower or any Subsidiary as Agent or any Lender may from time to time reasonably request.

 

Section 7.2       Maintenance of Existence; Conduct of Business.  Borrower will preserve and maintain, and will cause each Subsidiary to preserve and maintain, (a) its legal existence and (b) all of its leases, privileges, licenses, permits, franchises, qualifications and rights that are necessary in the ordinary conduct of its business provided that the foregoing shall not prohibit any merger, consolidation or other transaction permitted under Section 8.3.

 

 

Section 7.4        Maintenance of Properties.  Borrower will maintain, and will cause each Subsidiary to maintain, all assets and properties material to the conduct of the business of Borrower and its Subsidiaries, in good condition and repair, ordinary wear and tear excepted.

 

Section 7.5        Taxes and Claims.  Borrower will pay or discharge, and will cause each Subsidiary to pay or discharge, at or before maturity or before becoming delinquent (a) all taxes, levies, assessments and charges imposed on it or its income or profits or any of its property by any Governmental Authority, and (b) all lawful claims for labor, material and supplies, which, if unpaid, might become a Lien upon any of its property; provided, however, that neither Borrower nor any Subsidiary shall be required to pay or discharge any such tax, levy, assessment, charge or claim (a “Tax and Claim Charge”) if (i) the validity or amount thereof is being contested in good faith by appropriate proceedings diligently pursued, and (ii) either (A) (I) no Lien has been filed of record with respect to such Tax and Claim Charge, (II) no material assets of Borrower or such Subsidiary would be in any danger of sale, forfeiture or loss by reason of the contest of such Tax and Claim Charge, and (III) Borrower or such Subsidiary has set aside on its books adequate reserves against such Tax and Claim Charge in accordance with GAAP, or (B) the aggregate amount of all Tax and Claim Charges not otherwise permitted under clause (ii)(A) is less than $250,000.00.

 

Section 7.6        Insurance.  Borrower will maintain, and will cause each Subsidiary to maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are usually insured against by Persons engaged in similar businesses.

 

 

Section 7.8        Keeping Books and Records.  Borrower will maintain, and will cause each Subsidiary to maintain, proper books of record and account in which full, true and correct entries, in all material respects, are made of its financial and business transactions to the extent required by GAAP.  For purposes of determining compliance with the financial covenants contained in this Agreement, any election by Borrower to measure an item of Debt using fair value (as permitted by Statement of Financial Accounting Standards No. 159 or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.

 

 

Section 7.9       Compliance with Laws.  Borrower will comply, and will cause each Subsidiary to comply, in all material respects with all applicable laws, rules, regulations and orders of any court, Governmental Authority or arbitrator applicable to it or its properties.

 

Section 7.10      Compliance with Agreements.  Borrower will comply, and will cause each Subsidiary to comply, in all material respects with all material agreements, contracts, and instruments binding on it or affecting its properties or business.

 

Section 7.11     Further Assurances.  Borrower will execute and deliver, and will cause each Subsidiary to execute and deliver, such further instruments as may be reasonably requested by Agent to carry out the provisions and purposes of this Agreement and the other Loan Documents.

 

Section 7.12      ERISA.  Borrower will comply, and will cause each Subsidiary to comply, with all material requirements of ERISA so as not to give rise to any material liability thereunder.

 

 

 

Borrower covenants and agrees that, as long as the Obligations or any part thereof are outstanding (other than indemnities and other contingent obligations not then due and payable and as to which no claim has been made at the time of determination) or any Lender has any commitment to advance funds hereunder or Issuing Bank has any obligation to issue any Letter of Credit hereunder or any Letter of Credit Liabilities exist (unless collateralized in accordance with Section 2.18), Borrower will perform and observe the covenants set forth below.

 

Section 8.1        Debt.  Borrower will not incur, create, assume or permit to exist, and will not permit any Subsidiary to incur, create, assume, or permit to exist, any Debt, except (a) Debt to Lenders pursuant to this Agreement and the other Loan Documents, (b) purchase money Debt and Capitalized Lease Obligations in an aggregate amount which does not exceed $10,000,000.00 outstanding at any time, (c) accounts payable in the ordinary course of business so long as no account payable has been outstanding more than ninety (90) days, (d) Rate Management Transaction Obligations incurred solely in connection with hedging transactions, (e) Debt arising from the endorsement of instruments for collection in the ordinary course of business and (f) other unsecured Debt in an aggregate principal amount not to exceed $5,000,000.00 at any time outstanding.

 

Section 8.2        Limitation on Liens.  Borrower will not incur, create, assume or permit to exist, and will not permit any Subsidiary to incur, create, assume or permit to exist, any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except (a) Liens in favor of Agent as agent for Lenders, (b) Liens described on Schedule 8.2, (c) purchase money Liens and Liens related to Capitalized Lease Obligations securing Debt permitted by Section 8.1(b), which Liens cover only the assets financed or leased, as applicable, with the Debt permitted by Section 8.1(b), (d) encumbrances consisting of easements, zoning restrictions or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of Borrower or any Subsidiary to use such assets in its business, and none of which is violated in any material respect by existing or proposed structures or land use, (e) Liens for taxes, assessments or other governmental charges (a “Tax and Government Charge”) which (i) are not delinquent, or (ii) for which (A) no Lien has been filed of record with respect to such Tax and Government Charge, (B) no material assets of Borrower or such Subsidiary would be in any danger of sale, forfeiture or loss by reason of the contest for such Tax and Government Charge, and (C) Borrower or such Subsidiary has set aside on its books adequate reserves against such Tax and Government Charge, (f) Liens of mechanics, materialmen, warehousemen, carriers or other similar statutory Liens securing obligations that are not yet due (or are being contested in good faith, for which adequate reserves have been established) and are incurred in the ordinary course of business, and (g) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other social security, old age pension or public liability obligations.

 

 

Section 8.3        Mergers, Acquisitions, Dissolutions and Disposition of Assets.  Borrower will not, and will not permit any Subsidiary to:

 

(a)           become a party to a merger, consolidation or other business combination (a “Merger”) or an Acquisition, except that:

 

(i)       any Subsidiary may merge into Borrower if Borrower is the surviving entity,

 

(ii)      any Subsidiary may merge into any Guarantor or any Foreign Subsidiary for which Agent has a pledge of ownership interests as required by Section 8.4(a)(ii),

 

(iii)     any Subsidiary may merge with any other Person with such other Person being the surviving entity, so long as such Person becomes a Subsidiary as a result of such merger, and

 

(iv)     Borrower or any Subsidiary may enter into an Acquisition if, at the time of such Acquisition,

 

(A)           Borrower has an Interest Coverage Ratio of not less than 3.00 to 1.00 as of the last day of the fiscal quarter most recently ended for which financial statements are available, calculated on a pro forma basis assuming that such Acquisition and all other Acquisitions made since the last day of the fiscal quarter most recently ended for which financial statements are available had been made on the first day of the four consecutive fiscal quarter period then ended (but without any adjustment for projected cost savings or other synergies (except with the consent of Agent)),

 

(B)           Borrower has a Leverage Ratio of not greater than 2.75 to 1.00 as of the last day of the fiscal quarter most recently ended for which financial statements are available, calculated on a pro forma basis assuming that such Acquisition and all other Acquisitions made since the last day of the fiscal quarter most recently ended for which financial statements are available had been made on the first day of the four consecutive fiscal quarter period then ended (but without any adjustment for projected cost savings or other synergies (except with the consent of Agent)),

 

 

(C)           Borrower’s Net Working Capital as of the last day of the fiscal quarter most recently ended for which financial statements are available is equal to an amount not less than $25,000,000.00, calculated on a pro forma basis assuming that such Acquisition and all other Acquisitions made since the last day of the fiscal quarter most recently ended for which financial statements are available had been made on the first day of the four consecutive fiscal quarter period then ended, and

 

(D)           no Event of Default exists at the time of such Acquisition or would occur as a result thereof;

 

provided that, if the total consideration paid (including cash, Debt (incurred or assumed) and equity issued) for such Acquisition equals or exceeds $25,000,000.00, Borrower shall deliver to Agent a written notice regarding such Acquisition, which written notice shall certify as to the foregoing conditions; provided, further, however, that Borrower and its Subsidiaries may enter into Acquisitions without having to satisfy the requirements of clauses (A) through (D) above if (I) the total consideration paid (including cash, Debt (incurred or assumed) and equity issued) for all such Acquisitions consummated during the then-current fiscal year of Borrower does not exceed $3,500,000.00 and (II) no Event of Default exists at the time of such Acquisition or would occur as a result thereof;

 

(b)           dissolve, liquidate or dispose of substantially all of its assets, except that (i) any Subsidiary may liquidate or dissolve if as of the date of such liquidation or dissolution (A) no Event of Default or Unmatured Event of Default exists, and (B) such Subsidiary satisfies the Tangible Net Worth Test, and (ii) any Subsidiary may dispose of all or substantially all of its assets to Borrower or to another Subsidiary;

 

(c)           amend its Organizational Documents in a manner that is materially adverse to the Lenders;

 

(d)           sell or otherwise dispose of the ownership interests (corporate, partnership, membership or otherwise) in any Subsidiary to any Person other than to Borrower or any Subsidiary, except Borrower or a Subsidiary may dispose of all its ownership interests in a Subsidiary if as of the date of such disposition (A) no Event of Default or Unmatured Event of Default exists, and (B) such Subsidiary satisfies the Tangible Net Worth Test; or

 

(e)           enter into any agreement to enter into a transaction that would (upon the effectiveness of such transaction) be prohibited by any of clauses (a) through (d) of this Section without giving Agent prior notice thereof.

 

Section 8.4        Subsidiaries.  (a) Borrower will not, and will not permit any Subsidiary to, create or acquire any Subsidiary (including in connection with any Acquisition pursuant to Section 8.3(a)), unless:

 

 

(i)            if such Subsidiary is a Domestic Subsidiary, within ten (10) Business Days after the creation or Acquisition of such Subsidiary (unless such ten (10) Business Day time period is extended by Agent in its sole discretion):

 

 

(B)           such Subsidiary has (I) executed and delivered to Agent a Guaranty Agreement, and (II) delivered to Agent its Organizational Documents and evidence of its authority to enter into such Guaranty Agreement (each Guaranty Agreement executed by a Domestic Subsidiary pursuant to the preceding clause shall constitute a Loan Document); or

(ii)           if such Subsidiary is a Foreign Subsidiary, within ten (10) Business Days after the creation or Acquisition of such Subsidiary (unless such ten (10) Business Day time period is extended by Agent in its sole discretion):

 

(A)           Borrower or such Subsidiary has notified Agent of the creation or the Acquisition of such Subsidiary (and, in the case of an Acquisition, has complied with Section 8.3(a));

(B)           such Subsidiary shall be owned directly by Borrower or a Domestic Subsidiary; and

 

(C)           Borrower or the direct Domestic Subsidiary-owner of such Subsidiary has (I) executed and delivered to Agent a pledge agreement granting Agent a Lien on sixty-five percent (65%) of the ownership interests of such Foreign Subsidiary, (II) delivered to Agent (aa) such Foreign  Subsidiary's Organizational Documents and (bb) evidence of such pledging party's authority to enter into such pledge agreement, and (III) delivered to Agent an opinion of legal counsel to such Foreign Subsidiary opinions covering such matters as may be reasonably requested by Agent.

(iii)           such Subsidiary shall not be deemed to be included in the representations, warranties and covenants contained in this Agreement until the date of compliance with the terms and provisions of Section 8.4(a)(i) or (ii), as applicable.

 

(b)           Upon Borrower's written request, Agent shall release a Guarantor hereunder (a "Requesting Guarantor") from its obligations and liabilities arising in connection with such Guarantor's Guaranty Agreement if:

 

(i)             no Event of Default or Unmatured Event of Default exists on the date of the release of such Requesting Guarantor from its Guaranty Agreement (the "Guarantor Release Date"); and

 

 

(ii)           on the Guarantor Release Date, such Requesting Guarantor is either (A) dissolved in a transaction permitted pursuant to Section 8.3(b), or (B) all of its assets or all of its equity interests are acquired by a Person who is an unrelated third party to Borrower and its Subsidiaries in a transaction permitted pursuant to Section 8.3(d).

 

Section 8.5        Restricted Payments.

 

(a)           Borrower will not declare or pay any Distribution (other than a Permitted Dividend) if (i) an Event of Default exists at the time of declaring or paying such Distribution or (ii) an Event of Default would occur immediately after giving effect to the declaration or payment of such Distribution.

 

(b)           Borrower will not redeem, purchase, retire or otherwise acquire any of its capital stock (each, a “Stock Repurchase”) if (i) an Event of Default exists at the time of declaring or making such Stock Repurchase or (ii) an Event of Default would occur immediately after giving effect to the declaration or making of such Stock Repurchase; provided that the aggregate amount of all Restricted Stock Repurchases effected by Borrower during each calendar year shall not exceed $25,000,000.00.  A Stock Repurchase shall be deemed to be a “Restricted Stock Repurchase” for purposes of this Section 8.5(b) if the Leverage Ratio is greater than or equal to 2.25 to 1.00 as of the last day of the fiscal quarter most recently ended for which financial statements are available, calculated on a pro forma basis assuming that such Stock Repurchase and all other Stock Repurchases made since the last day of the fiscal quarter most recently ended for which financial statements are available had been made on such day.

 

Section 8.6        Loans and Advances.  Borrower will not make, and will not permit any Subsidiary to make, any advance, loan or extension of credit to any Person, except (a) advances, loans and extensions of credit in an aggregate outstanding principal amount which does not exceed $10,000,000.00 at any time, (b) advances, loans and extensions of credit among Borrower, Guarantors and the Bermuda Subsidiary, and (c) advances, loans and extensions of credit from Borrower or any Guarantor to any Pledged Foreign Subsidiary, provided that the aggregate outstanding amount of all advances, loans and extensions of credit made pursuant to this clause (c), together with the aggregate amount of all investments made by Borrower and the Guarantors pursuant to Section 8.7(j) since the date of this Agreement, shall not exceed $20,000,000.00 at any time.

 

Section 8.7        Investments.  Except for investments permitted pursuant to Section 8.3, Borrower will not make, and will not permit any Subsidiary to make, any capital contribution to or investment in, or purchase, or permit any Subsidiary to purchase, any stock, bonds, notes, debentures, or other securities of any Person, except:

 

(a)           direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America or Canada (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America or Canada), in each case maturing within one year from the date of acquisition. thereof;

 

 

(b)           investments in commercial paper maturing within two hundred seventy (270) days from the date of acquisition thereof and having, at such date of acquisition, a rating of A2 or better by Standard and Poor's Corporation ("S&P"), P2 or better by Moody's Investors Service ("Moody's"), or R1 "mid" or better by The Dominion Bond Rating Service;

 

(c)           investments in certificates of deposit, banker's acceptances and time deposits (including eurodollar deposits) maturing within one hundred eighty (180) days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any Lender or any domestic office of any commercial bank organized under the laws of the United States of America or Canada or any State or Province thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000.00;

 

(d)           fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above;

 

(e)           money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P or Aaa by Moody's and (iii) have portfolio assets of at least $1,000,000,000.00;

 

(f)           investments in corporate debt securities (including loan participations) that (a) mature within sixty (60) days from the date of acquisition, and (b) are rated BBB or better by S&P or Baa2 or better by Moody's at the date of acquisition;

 

(g)           investments in municipal securities or auction rate securities that are rated AA or better by S&P or Aa or better by Moody's, provided that Borrower has the right to put such securities back to the issuer or seller thereof at least once every sixty (60) days;

 

(h)           other investments in an amount not to exceed $10,000,000.00 in the aggregate at any one time by Foreign Subsidiaries in certificates of deposit, banker's acceptances and time deposits (or other substantially similar investments) maturing within one hundred eighty (180) days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts (or other substantially similar deposit accounts) issued or offered by, any foreign commercial bank not organized under the laws of the United States of America or Canada or any state or province thereof;

 

(i)            investments in Guarantors and the Bermuda Subsidiary;

 

(j)            investments made by Borrower or any Guarantor in any Pledged Foreign Subsidiary, provided that the aggregate amount of all investments made by Borrower and the Guarantors pursuant to this Section 8.7(j) since the date of this Agreement, together with the aggregate outstanding amount of all advances, loans and extensions of credit made by Borrower and the Guarantors pursuant to Section 8.6(c), shall not exceed $20,000,000.00 at any time;

 

(k)           investments in any Person (other than a Guarantor, the Bermuda Subsidiary or a Pledged Foreign Subsidiary), provided such investments are only permitted under this subsection (k) if:

 

 

(i)        Borrower and its Subsidiaries do not hold, collectively, a controlling interest in such Person,

 

(ii)       the aggregate amount of all investments made under this subsection (k) does not exceed $10,000,000.00 during any fiscal year of Borrower,

 

(iii)      Borrower has an Interest Coverage Ratio of not less than 3.00 to 1.00 as of the last day of the fiscal quarter most recently ended for which financial statements are available,

 

(iv)      Borrower has a Leverage Ratio of not greater than 2.75 to 1.00 as of the last day of the fiscal quarter most recently ended for which financial statements are available,

 

(v)       Borrower’s Net Working Capital as of the last day of the fiscal quarter most recently ended for which financial statements are available is equal to an amount not less than $25,000,000.00, and

 

(vi)      no Event of Default exists at the time of such investment or would occur as a result thereof; and

 

(l)            other investments in an aggregate amount which does not exceed $1,000,000.00.

 

Section 8.8       Compliance with Environmental Laws.  Borrower will not, and will not permit any Subsidiary to, (a) use (or permit any tenant to use) any of their respective properties or assets for the handling, processing, storage, transportation, or disposal of any Hazardous Substance, except in the ordinary course of business and in compliance with all Environmental Laws, (b) generate any Hazardous Substance in violation of any Environmental Law, (c) conduct any activity which is likely to cause a release or threatened release of any Hazardous Substance in violation of any Environmental Law, or (d) otherwise conduct any activity or use any of their respective properties or assets in any manner which is likely to violate any Environmental Law.

 

Section 8.9        Accounting.  Borrower will not make, and will not permit any Subsidiary to make, any change in accounting treatment or reporting practices, except as required by GAAP.  For purposes of determining compliance with the financial covenants contained in this Agreement, any election by Borrower to measure an item of Debt using fair value (as permitted by Statement of Financial Accounting Standards No. 159 or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.  Further, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Debt of Borrower and its Subsidiaries shall be deemed to be carried at one hundred percent (100%) of the outstanding principal amount thereof, and the effects of Statement of Financial Accounting Standards ASC 825 and Statement of Financial Accounting Standards ASC 470-20 on financial liabilities shall be disregarded.

 

Section 8.10      Change of Business.  Borrower will not enter into, or permit any Subsidiary to enter into, any type of business which is materially different from the business of providing services or products in the area of human resources and business solutions which are designed to improve business performance, and activities reasonably ancillary thereto.

 

 

Section 8.11      Transactions With Affiliates.  Borrower will not enter into, or permit to exist, and will not permit any Subsidiary to enter into or permit to exist, any transaction, arrangement or contract (including any lease or other rental agreement) with any of its Affiliates, unless such transaction, arrangement or contract is upon terms substantially as favorable to it as are obtainable from any Person who is not an Affiliate of Borrower or such Subsidiary (or, if in the good faith judgment of Borrower’s Board of Directors, no comparable transaction, arrangement or contract is available with which to compare any such transaction, arrangement or contract, such transaction arrangement or contract is otherwise fair to Borrower or the relevant Subsidiary from a financial point of view); provided that the foregoing shall not apply to:

 

(a)           transactions between or among Borrower and Subsidiaries;

 

(b)           transactions described on Schedule 8.11;

 

(c)           the payment of reasonable and customary directors’ fees and other benefits to Persons who are not otherwise Affiliates of Borrower or any Subsidiary;

 

(d)           any employment or severance or other employee compensation, arrangement or plan or any amendment thereto, entered into by Borrower or any of the Subsidiaries in the ordinary course of business, and payments, awards, grants or issuances of equity interests pursuant thereto; and

 

(e)           provision of officers’ and directors’ indemnification and insurance in the ordinary course of business to the extent permitted by law.

 

Section 8.12      Rate Management Transactions.  Borrower will not, and will not permit any Subsidiary to, enter into any Rate Management Transactions, except for Rate Management Transactions which are entered into solely for hedging purposes.

 

Section 8.13      Compliance with Government Regulations.  Borrower will not, and will not permit any Subsidiary to, (a) be or become subject at any time to any law, regulation or list of any governmental agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits any Lender from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower, or (b) fail to provide documentary and other evidence of Borrower’s identity as may be requested by Agent or any Lender at any time to enable Agent or such Lender to verify Borrower’s identity or to comply with any applicable law or regulation, including, without limitation Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

Section 8.14      Capital Expenditures.  Borrower will not, and will not permit any Subsidiary to, incur any Capital Expenditure, other than Capital Expenditures needed to maintain the normal business operations of Borrower and its Subsidiaries, if (a) an Event of Default exists at the time of incurring such Capital Expenditure or (b) an Event of Default would occur immediately after giving effect to such Capital Expenditure.

 

Section 8.15      ERISA.  Borrower will not maintain, and will not permit its Subsidiaries to maintain, any ERISA benefit plan which is subject to the  minimum funding standards as set forth under IRC Section 412 or ERISA Section 302.

 

 

 

Borrower covenants and agrees that, as long as the Obligations or any part thereof are outstanding (other than indemnities and other contingent obligations not then due and payable and as to which no claim has been made at the time of determination) or any Lender has any commitment to advance funds hereunder or Issuing Bank has any obligation to issue any Letter of Credit hereunder or any Letter of Credit Liabilities exist (unless collateralized in accordance with Section 2.18), Borrower will observe and perform the financial covenants set forth below.

 

Section 9.1        Interest Coverage Ratio.  Borrower will at all times maintain an Interest Coverage Ratio of not less than 3.00 to 1.00.  The Interest Coverage Ratio will be calculated and tested quarterly as of the last day of each fiscal quarter of Borrower, commencing with the fiscal quarter ending September 30, 2011, for the period of four consecutive fiscal quarters ended as of such date (a “rolling or trailing four quarter” basis).

 

Section 9.2        Leverage Ratio.  Borrower will at all times maintain a Leverage Ratio of not greater than 3.00 to 1.00.  The Leverage Ratio shall be calculated and tested quarterly as of the last day of each quarter of each fiscal year of Borrower, commencing with the quarter ending September 30, 2011, and, for purposes of calculating the Leverage Ratio, EBITDA shall be calculated for the period of four consecutive fiscal quarters ended as of such date (a “rolling or trailing four quarter” basis).

 

 

 

Section 10.1      Events of Default.  Each of the following shall be deemed an “Event of Default”:

 

(a)           Borrower shall fail to pay when due (i) any principal of the Obligations, or (ii) any interest on the Obligations or any other amount due under this Agreement or any Loan Document and, with respect to this clause (ii), such failure shall continue for a period of five (5) Business Days.

 

(b)           Any representation or warranty made or deemed made by Borrower or any Subsidiary (or any of their respective officers) in any Loan Document or in any certificate, report, notice or financial statement furnished at any time in connection with this Agreement shall be false, misleading or erroneous in any material respect when made or deemed to have been made.

 

(c)           Borrower or any Subsidiary shall fail to perform, observe or comply with (i) any covenant, agreement or term contained in Section 7.6 or Section 8.3 of this Agreement; (ii) any covenant, agreement or term contained in Section 7.1 or Article IX of this Agreement and, with respect to this clause (ii), such failure shall continue for a period of fifteen (15) days; or (iii) any covenant, agreement or term contained in any other Section of this Agreement or any other Loan Document and, with respect to this clause (iii), such failure shall have continued for a period of thirty (30) days following the earlier to occur of (A) the date on which Agent gave Borrower notice of such failure or (B) the date on which Borrower first obtained knowledge of such failure.

 

 

(d)           Borrower or any Subsidiary shall commence a voluntary proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or a substantial part of its property or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it or shall make a general assignment for the benefit of creditors or shall generally fail to pay its debts as they become due or shall take any corporate action to authorize any of the foregoing.

 

(e)           An involuntary proceeding shall be commenced against Borrower or any Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for it or a substantial part of its property, and such involuntary proceeding shall remain undismissed and unstayed for a period of sixty (60) days.

 

(f)           Borrower or any Subsidiary shall fail to discharge, within a period of thirty (30) days after the commencement thereof, any attachment, sequestration, or similar proceeding or proceedings involving an aggregate amount in excess of $5,000,000.00 against any of its assets or properties.

 

(g)           One or more judgments for the payment of money in an aggregate amount in excess of $5,000,000.00 (to the extent not covered by independent third party insurance as to which the insurer does not dispute coverage) shall be rendered against any Borrower or any Subsidiary and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of Borrower or any Guarantor to enforce any such judgment.

 

(h)           Borrower or any Subsidiary shall fail to pay when due (after giving effect to any applicable grace periods) any principal of or interest on any Debt (other than the Obligations) with a principal amount in excess of $5,000,000.00, or the maturity of any such Debt shall have been accelerated, or any such Debt shall have been required to be prepaid prior to the stated maturity thereof, or any event shall have occurred that permits (or, with the giving of notice or lapse of time or both, would permit) any holder or holders of such Debt or any Person acting on behalf of such holder or holders to accelerate the maturity thereof or require any such prepayment.

 

(i)           Borrower or any Subsidiary shall fail to pay when due (after giving effect to any applicable grace periods) any Debt (excluding the Obligations) with a principal amount in excess of $500,000.00 owed to any Lender or any Affiliate of any Lender.

 

 

(j)           This Agreement, any Guaranty Agreement or any Note shall cease to be in full force and effect or shall be declared null and void or the validity or enforceability thereof shall be contested or challenged by Borrower or any Subsidiary, or Borrower or any Subsidiary shall deny that it has any further liability or obligation under any of the Loan Documents.

 

(k)           Any Change of Control of Borrower shall occur.

 

(l)            Borrower shall fail to comply with the provisions of Section 2.18 of this Agreement.

 

Section 10.2      Remedies Upon Default.  If any Event of Default shall occur and be continuing, Agent may, and, upon the direction of the Majority Lenders, shall, do any one or more of the following: (a) declare the outstanding principal of and accrued and unpaid interest on the Notes and the Obligations or any part thereof to be immediately due and payable, and the same shall thereupon become immediately due and payable, without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to demand, protest, or other formalities of any kind, all of which are hereby expressly waived by Borrower, (b) terminate the Combined Commitments without notice to Borrower, (c) foreclose or otherwise enforce any Lien granted to Agent to secure payment and performance of the Obligations, and (d) exercise any and all rights and remedies afforded by the laws of the State of Texas or any other jurisdiction by any of the Loan Documents, by equity or otherwise; provided, however, that upon the occurrence of an Event of Default under Section 10.1(d) or Section 10.1(e), the Combined Commitments shall automatically terminate, and the outstanding principal of and accrued and unpaid interest on the Notes and the other Obligations shall become immediately due and payable without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to demand, protest, or other formalities of any kind, all of which are hereby expressly waived by Borrower.

 

Section 10.3      Cash Collateral.  If any Event of Default shall occur, Borrower shall, if requested by Agent, immediately deposit with and pledge to Agent, cash or cash equivalent investments in an amount equal to the Letter of Credit Liabilities as security for the Obligations.

 

Section 10.4      Performance by Agent.  If Borrower shall fail to perform any covenant, duty, or agreement contained in any of the Loan Documents, Agent may perform or attempt to perform such covenant, duty, or agreement on behalf of Borrower.  In such event, Borrower shall, at the request of Agent, promptly pay any amount expended by Agent in such performance or attempted performance to Agent, together with interest thereon at the Default Rate from the date of such expenditure until paid.  Notwithstanding the foregoing, it is expressly agreed that neither Agent nor any Lender shall have any liability or responsibility for the performance of any obligation of Borrower under this Agreement or any other Loan Document.

 

Section 10.5      Application of Liquidation Proceeds.  All monies received by Agent from the exercise of remedies under this Agreement or the Loan Documents securing or relating to the Notes or the Rate Management Transaction Obligations shall, unless otherwise required by applicable law, be applied as follows:

 

 

(a)           First, to the payment of all expenses incurred by Agent in connection with the exercise of such rights and remedies, including, without limitation, all reasonable costs and expenses of collection, attorneys’ fees, court costs and foreclosure expenses.

 

(b)           Second, to the payment of interest then accrued on the Notes.

 

(c)           Third, to the payment pro rata of the principal balance then owing on the Notes, the cash collateralization of outstanding Letters of Credit and all payments under Rate Management Transaction Obligations.

 

(d)           Fourth, to the payment of any other Obligations.

 

(e)           Finally, any remaining surplus, to Borrower or to whomsoever shall be lawfully entitled thereto.

 

The provisions of this Section 10.5 shall govern and control over any conflicting provisions in this Agreement or any Loan Document.

 

 

 

Section 11.1      Appointment and Authorization.  v)  Each Lender and the Issuing Bank hereby irrevocably (subject to Section 11.9) appoints Amegy Bank National Association to act as Agent hereunder, and under the Loan Documents and authorizes 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 person serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender” or “Lenders” shall include the Person serving as Agent hereunder in its individual capacity.

 

(b)           Issuing Bank shall act on behalf of Lenders with respect to any Letters of Credit issued by it and the documents associated therewith.  The Issuing Bank shall have all of the benefits and immunities (i) provided to Agent in this Article XI with respect to any acts taken or omissions suffered by Issuing Bank in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term “Agent”, as used in this Article XI, included Issuing Bank with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to Issuing Bank.

 

Section 11.2      Delegation of Duties.  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 Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care.

 

 

Section 11.3      Liability of Agent.  vi)  Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, Agent shall not have any duty or responsibility except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender (regardless of whether an Event of Default or an Unmatured Event of Default exists), and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Documents or otherwise exist against Agent.  Without limiting the foregoing, the Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretional rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Majority Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law.

 

(b)           None of Agent nor any of its directors, officers, employees or agents 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 Documents or the transactions contemplated hereby (except for their own gross negligence or willful misconduct), or (ii) have any duty to inquire into or be responsible in any manner to any Lender for any recital, statement, representation or warranty made by Borrower or any Subsidiary or Affiliate of 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 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 Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder.  Agent shall not 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 the properties, books or records of Borrower or any of Borrower’s Subsidiaries or Affiliates.

 

Section 11.4      Reliance by Agent.  Agent shall be entitled to rely, and shall not incur any liability for relying, upon (a) any writing, resolution, notice, consent, certificate, affidavit, letter, facsimile, email 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, (b) any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and (c) advice and statements of legal counsel (including counsel to Borrower), independent accountants and other experts selected by Agent.  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 as it deems appropriate and, if it so requests, confirmation from Lenders of their obligation to indemnify Agent against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Documents in accordance with a request or consent of the Majority Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all Lenders.  In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit.

 

 

Section 11.5      Notice of Default.  Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default or Unmatured Event of Default except with respect to defaults in the payment of principal, interest and fees required to be paid to Agent for the account of Lenders, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Event of Default or Unmatured Event of Default and stating that such notice is a “notice of default”.  The Agent will notify Lenders of its receipt of any such notice.  Agent shall take such action with respect to such Event of Default or Unmatured Event of Default as may be requested by the Majority Lenders in accordance with Article X; provided that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default or Unmatured Event of Default as it shall deem advisable or in the best interest of Lenders.

 

Section 11.6      Credit Decision.  Each Lender acknowledges that Agent has not made any representation or warranty to it, and that no act by Agent hereafter taken, including any review of the affairs of Borrower and its Subsidiaries, shall be deemed to constitute any representation or warranty by Agent to any Lender.  Each Lender represents to Agent that it has, independently and without reliance upon Agent 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 Borrower and its Subsidiaries, and made its own decision to enter into this Agreement and to extend credit to Borrower hereunder.  Each Lender also represents that it will, independently and without reliance upon Agent 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 Borrower and its Subsidiaries.  Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by Agent, 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 or other condition or creditworthiness of Borrower or its Subsidiaries which may come into the possession of the Agent.

 

Section 11.7      Indemnification.  Whether or not the transactions contemplated hereby are consummated, each Lender shall indemnify upon demand Agent and its directors, officers, employees and agents (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so) from and against any and all Claims in an amount based on such Lender’s Pro Rata Share of such Claims; provided that no Lender shall be liable for any payment to any such Person of any portion of the Claims to the extent such Claims arise from such Person’s gross negligence or willful misconduct.  Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for its Pro Rata Share of any costs or out-of-pocket expenses (including reasonable attorneys’ fees) incurred by 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 Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrower or any Guarantor.  The undertaking in this Section shall survive repayment of the Revolving Advances, cancellation of each Note, expiration or termination of the Letters of Credit, any foreclosure under, or modification, release or discharge of, any or all of the Loan Documents, termination of this Agreement and the resignation or replacement of Agent.

 

 

Section 11.8      Agent in Individual Capacity.  Amegy Bank National Association 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 Borrower and its Subsidiaries and Affiliates as though Amegy Bank National Association were not Agent or Issuing Bank hereunder and without notice to or consent of Lenders.  Lenders acknowledge that, pursuant to such activities, Amegy Bank National Association or its Affiliates may receive information regarding Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of Borrower or such Affiliate) and acknowledge that Agent shall be under no obligation to provide such information to them.

 

Section 11.9      Successor Agent.  Agent may resign as Agent upon thirty (30) days’ notice to Lenders and Borrower.  If Agent resigns under this Agreement, Majority Lenders shall, with (so long as no Event of Default exists) the consent of Borrower (which shall not be unreasonably withheld or delayed), appoint from among Lenders a successor agent for Lenders.  If no successor agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with Lenders and Borrower, a successor agent from among Lenders.  Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term “Agent” shall mean such successor agent, and the retiring Agent’s appointment, powers and duties as Agent shall be terminated.  After any retiring Agent’s resignation hereunder as Agent, the provisions of this Article XI and Sections 12.1, 12.2 and 12.3 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.  If no successor agent has accepted appointment as Agent by the date which is thirty (30) days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Majority Lenders appoint a successor agent as provided for above.

 

 

 

Section 12.1      Expenses.  Borrower hereby agrees to pay Agent and Lenders, as applicable, on demand (a) all reasonable out-of-pocket costs and expenses incurred by Agent in connection with the preparation, negotiation, and execution of this Agreement and the other Loan Documents and any and all amendments, modifications, renewals, extensions, and supplements thereof and thereto, including, without limitation, the reasonable fees and expenses of Agent’s legal counsel, (b) all reasonable out-of-pocket costs and expenses incurred by Agent and each Lender in connection with the enforcement of this Agreement or any other Loan Document, including, without limitation, the fees and expenses of each such Person’s legal counsel, and (c) all other reasonable out-of-pocket costs and expenses incurred by Agent in connection with this Agreement or any other Loan Document, including, without limitation, all costs, expenses, taxes, assessments, filing fees, and other charges levied by any Governmental Authority or otherwise payable in respect of this Agreement or any other Loan Document.

 

 

Section 12.2      INDEMNIFICATION.  BORROWER HEREBY INDEMNIFIES AGENT, ISSUING BANK AND EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) FROM, AND HOLDS EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES) (COLLECTIVELY, “CLAIMS”) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (a) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (b) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (c) ANY BREACH BY BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (d) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS SUBSTANCE LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF BORROWER OR ANY SUBSIDIARY, (e) ANY ACT OR OMISSION OF AGENT OR ANY LENDER BASED UPON ANY FAX OR ELECTRONIC TRANSMISSION, OR (f) ANY MATTER RELATED TO ANY LETTER OF CREDIT, INCLUDING, WITH RESPECT TO ALL OF THE ABOVE, ANY CLAIM WHICH ARISES AS A RESULT OF THE NEGLIGENCE OF AGENT OR ANY LENDER; PROVIDED, HOWEVER, THAT BORROWER’S INDEMNIFICATION OBLIGATIONS UNDER THIS SECTION 12.2 SHALL NOT APPLY TO THE EXTENT THAT ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES OR EXPENSES WERE INCURRED BY REASON OF THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR UNLAWFUL CONDUCT OF SUCH INDEMNITEE.

 

Section 12.3     Limitation of Liability.  Neither Agent, Issuing Bank, any Lender nor any affiliate, officer, director, employee, attorney, or agent of such Person shall have any liability with respect to, and Borrower hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by Borrower in connection with, arising out of, or in any way related to, this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other Loan Documents.  Borrower hereby waives, releases, and agrees not to sue Agent, Issuing Bank, any Lender or any of such Person’s Affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Agreement or any of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the other Loan Documents.

 

 

Section 12.4     No Waiver; Cumulative Remedies.  No failure on the part of Agent, Issuing Bank, or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.  The rights and remedies provided for in this Agreement and the other Loan Documents are cumulative and not exclusive of any rights and remedies provided by law.

 

Section 12.5      Successors and Assigns.  This Agreement is binding upon and shall inure to the benefit of Agent, Issuing Bank, each Lender and Borrower and their respective successors and assigns, except that (a) Borrower may not assign or transfer any of its rights or obligations under this Agreement without prior written consent of Agent and Lenders and (b) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with Section 12.16 or as required under Section 2.21.

 

Section 12.6     Survival.  All representations and warranties made in this Agreement or any other Loan Document or in any document, statement, or certificate furnished in connection with this Agreement shall survive the execution and delivery of this Agreement and the other Loan Documents, and no investigation by Agent, Issuing Bank or any Lender or any closing shall affect the representations and warranties or the right of Agent, Issuing Bank or any Lender to rely upon them.  Without prejudice to the survival of any other obligation of Borrower hereunder, the obligations of Borrower under Sections 12.1 and 12.2 shall survive repayment of the Notes and termination of the Combined Commitments and the Letters of Credit.

 

Section 12.7     Amendments.  No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or any Note shall in any event be effective unless the same shall be in writing and signed and delivered by the Majority Lenders and Borrower, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  No amendment, modification, waiver or consent shall change the Commitment of any Lender without the consent of such Lender.  No amendment, modification, waiver or consent shall (i) increase the Combined Commitments (other than pursuant to Section 2.8), (ii) extend the date for payment of any principal of or interest on the Revolving Advances or any fees payable hereunder, (iii) extend any Lender’s Commitment, (iv) reduce the principal amount of any Revolving Advance, (v) release any guaranty (except as permitted in Section 8.4(b)), or (vi) reduce the aggregate percentage of holders of the Combined Commitments required to effect an amendment, modification, waiver or consent without, in each case, the consent of all Lenders.  If any amendment, modification, waiver or consent relates only to the Revolving Advances, the applicable percentage for consent shall be calculated only from the holders of the Combined Commitments, provided that if either the Combined Commitments are fully funded or the Termination Date has occurred, then such applicable percentage for consent shall be calculated from the holders of the outstanding Revolving Advances and the Letter of Credit Liabilities.  No amendment, modification, waiver or consent shall reduce any principal of or interest on the Revolving Advances or any fees payable hereunder without the consent of each Lender affected thereby.  No provision of Article XI or any other provision of this Agreement affecting Agent in its capacity as such shall be amended, modified or waived without the consent of Agent.  No provision of this Agreement relating to the rights or duties of the Issuing Bank in its capacity as such shall be amended, modified or waived without the consent of the Issuing Bank.  No provision of this Agreement relating to the rights or duties of the Swing Lender in its capacity as such shall be amended, modified or waived without the consent of the Swing Lender.

 

 

Section 12.8      Maximum Interest Rate.  No provision of this Agreement or of any other Loan Documents shall require the payment or the collection of interest (including all fees, charges and other amounts which are treated as interest) in excess of the Maximum Rate.  If any excess of interest in such respect is hereby provided for, or shall be adjudicated to be so provided, in any other Loan Documents or otherwise in connection with this loan transaction, the provisions of this Section shall govern and prevail and neither Borrower nor the sureties, guarantors, successors, or assigns of Borrower shall be obligated to pay the excess amount of such interest or any other excess sum paid for the use, forbearance, or detention of sums loaned pursuant hereto.  In the event Agent, Issuing Bank or any Lender ever receives, collects, or applies as interest any such sum, such amount which would be in excess of the maximum amount permitted by applicable law shall be applied as a payment and reduction of the principal of the indebtedness evidenced by the Notes; and, if the principal of the Notes have been paid in full, any remaining excess shall forthwith be paid to Borrower.  In determining whether or not the interest paid or payable exceeds the Maximum Rate, Borrower and Agent, Issuing Bank and Lenders shall, to the extent permitted by applicable law, (a) characterize any non-principal payment as an expense, fee, or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of the indebtedness evidenced by the Notes so that interest for the entire term does not exceed the Maximum Rate.

 

Section 12.9      Notices.  All notices and other communications provided for in this Agreement and the other Loan Documents shall be in writing and may be emailed, telecopied (faxed), mailed by certified mail return receipt requested, or delivered by hand or overnight courier service to the intended recipient at the addresses specified on the signature pages hereof or at such other address as shall be designated by any such party in a notice to the other parties given in accordance with this Section; provided, however, that (a) all electronic mail transmissions may be only in the form of electronically scanned documents, showing all signatures, and (b) electronic mail may be used only to distribute Advance Request Forms, interest election requests, notices of prepayment and other routine communications, such as financial statements, and not for any other purpose.  Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given (a) when received if transmitted by electronic mail, (b) when transmitted by telecopy (fax), subject to confirmation of receipt, (c) when personally delivered if by hand or overnight courier service or, (d) in the case of a mailed notice, when duly deposited in the mails, in each case given or addressed as aforesaid; provided, however, that notices to Agent pursuant to Article II shall not be effective until received by Agent.

 

 

Section 12.11    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Delivery of an executed signature page of this Agreement by facsimile transmission or other electronic means shall be effective as delivery of a manually executed counterpart hereof.

 

Section 12.12   Severability.  Any provision of this Agreement or any other Loan Document held by a court of competent jurisdiction to be invalid, illegal or unenforceable shall not impair or invalidate the remaining provisions hereof or thereof and the effect of such invalidity, illegality or unenforceability shall be confined to the provision held to be invalid, illegal or unenforceable.

 

Section 12.13    Headings.  The headings, captions, and arrangements used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

 

Section 12.14    Non-Application of Chapter 346 of Texas Finance Code.  The provisions of Chapter 346 of the Texas Finance Code are specifically declared by the parties hereto not to be applicable to this Agreement or any of the other Loan Documents or to the transactions contemplated hereby.

 

Section 12.15    Consent to Participations.  Any Lender shall have the right at any time and from time to time to sell or transfer one or more participation interests in the Notes and the indebtedness evidenced thereby to one or more purchasers (“Purchasers”), whether related or unrelated to such Lender, but such Person shall not be a “Lender” hereunder.  Subject to Section 12.20, any Lender may provide to any one or more Purchasers or potential Purchasers any information, financial statements, data or knowledge such Lender may have about Borrower or about any other matter relating to the Obligations.  Borrower further waives any and all notices of sale of participation interests and notices of repurchases of participation interests.  Borrower agrees that the owners of any participation interests will be considered as the absolute owners of their interests in the Obligations and will have all the rights granted under the participation agreements or other agreements governing the sale of their participation interests, but such Purchasers shall not have any direct rights under this Agreement or the Loan Documents.  Borrower waives all rights of offset or counterclaim that it may now or later have against Agent or against any Purchaser.

 

 

Section 12.16    Assignments.  Any Lender may, with the prior written consent of Agent and (so long as no Event of Default or Unmatured Event of Default exists) Borrower, which consents shall not be unreasonably delayed or withheld (it being understood that Borrower may withhold its consent to any such assignment if such assignment would result in a "Termination Event" or an "Event of Default" or a similar event under any agreement relating to any Rate Management Transaction to which the assignor or any Affiliate of the assignor is a party and such "Termination Event," "Event of Default" or similar event would result in an Event of Default under Section 10.1(h) or 10.1(i) of this Agreement) and, in any event, shall not be required for an assignment by any Lender to one of its Affiliates, at any time assign and delegate to an Eligible Assignee all or any fraction of such Lender’s Revolving Advances and Commitment, in a minimum aggregate amount not less than the lesser of (a) the amount of the assigning Lender’s Commitments, and (b) $2,000,000.00; provided that Borrower and Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned and delegated to an Eligible Assignee until the date when all of the following conditions shall have been met:

 

(a)           the assigning Lender and the Eligible Assignee shall have executed and delivered to Borrower and Agent an Assignment and Acceptance, together with any documents required to be delivered thereunder, which Assignment and Acceptance shall have been accepted by Agent, and

 

(b)           except in the case of an assignment by a Lender to one of its Affiliates, the assigning Lender or the Eligible Assignee shall have paid Agent a processing fee of $3,500.00.

 

From and after the date on which the conditions described above have been met, (x) such Eligible Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights and obligations hereunder have been assigned and delegated to such Eligible Assignee pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender hereunder and (y) the assigning Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it pursuant to such Assignment and Acceptance, shall be released from its obligations hereunder.  Within five (5) Business Days after effectiveness of any assignment and delegation and upon request by Agent, Borrower shall execute and deliver to Agent (for delivery to the Eligible Assignee and the assigning Lender, as applicable) a new Note, as applicable, in the principal amount of the Eligible Assignee’s Pro Rata Share of the Combined Commitments, and, if the assigning Lender has retained a Commitment, a replacement Note in the principal amount of the Pro Rata Share of the Combined Commitments, retained by the assigning Lender (each such Note to be in exchange for, but not in payment of, the portion of the predecessor Note not being assigned).  At such time the assigning Lender shall deliver to Borrower the Note assigned by such Lender.  Accrued interest and accrued fees shall be paid at the same time or times provided in the predecessor Note and in this Agreement.  Subject to Section 2.21, any attempted assignment and delegation not made in accordance with this Section 12.16 shall be null and void.

 

Notwithstanding the foregoing provisions of this Section 12.16 or any other provision of this Agreement, any Lender may at any time assign all or any portion of its Commitment and its Notes to a Federal Reserve Bank (but no such assignment shall release any Lender from any of its obligations hereunder).

 

 

Section 12.17    USA Patriot Act.  Each Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender to identify Borrower in accordance with the Act.

 

Section 12.18   Foreign Lender Reporting Requirements.  If any Lender which is not a Person organized and existing under the laws of the United States of America or a state thereof (a “Non-US Person”) becomes a party to this Agreement, such Lender will deliver to Borrower and Agent such documents and forms related to such status as a Non-US Person as Borrower or Agent may require.

 

Section 12.19    Document Imaging.  Borrower understands and agrees that (a) Agent’s document retention policy involves the imaging of executed loan documents and the destruction of the paper originals, and (b) Borrower waives any right that it may have to claim that the imaged copies of the Loan Documents are not originals.

 

Section 12.20.   Confidentiality.  Agent, Issuing Bank and each Lender agree (on behalf of itself and each of its Affiliates, directors, officers and employees) to maintain the confidentiality of all non-public information supplied to it by or on behalf of Borrower or any Subsidiaries pursuant to this Agreement or any other Loan Document (“Confidential Information”), provided that nothing herein shall limit the disclosure of any Confidential Information (a) to the extent required by statute, rule, regulation or judicial process, (b) to counsel or any other third party professional consultants or advisors for any Lender, Issuing Bank or Agent, provided that such consultant or advisor has agreed to hold such Confidential Information confidential, (c) to regulatory bodies (including the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about Agent's, Issuing Bank's or any Lender's investment portfolio), auditors or accountants of Agent, Issuing Bank or any Lender, (d) to Agent, Issuing Bank or any other Lender or any Affiliate thereof, (e) in connection with any litigation relating to the transactions contemplated by this Agreement or any other Loan Document to which any one or more of Agent, Issuing Bank or any Lender is a party, or (f) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) agrees in writing to be bound by the provisions of this Section 12.20.  Confidential Information does not include information that (i) was publicly known prior to the time of disclosure by Borrower or any Subsidiary, (ii) after disclosure by Borrower or any Subsidiary to any Lender, Issuing Bank or Agent, becomes publicly known through no act or omission by any Lender, Issuing Bank or Agent or by any Person acting on behalf of any Lender, Issuing Bank or Agent or (iii) otherwise becomes known to any Lender, Issuing Bank or Agent other than through disclosure by Borrower, any Subsidiary or any other party known by such Lender, Issuing Bank or Agent to be subject to a confidentiality agreement.

 

Section 12.21.   Dispute Resolution.  This Section contains a jury waiver, arbitration clause and a class action waiver.  This Section should be carefully read.

 

 

(b)           ARBITRATION.  If a claim, dispute, or controversy arises between any of the parties hereto with respect to this Agreement (a "Dispute"), and only if a jury trial waiver with respect to such Dispute is not permitted by applicable law or ruling by a court, any party may require that the Dispute be resolved by binding arbitration before a single arbitrator at the request of any party.  By agreeing to arbitrate a Dispute, each party gives up any right such party may have to a jury trial, as well as other rights such party would have in court that are not available or are more limited in arbitration, such as the rights to discovery and to appeal.

 

Arbitration shall be commenced by filing a petition with, and in accordance with the applicable arbitration rules of, JAMS or National Arbitration Forum (“Administrator”) as selected by the initiating party.  If the parties agree, arbitration may be commenced by appointment of a licensed attorney who is selected by the parties and who agrees to conduct the arbitration without an Administrator.  Disputes include matters (i) relating to a deposit account, application for or denial of credit, enforcement of any of the obligations any party has to any other party, compliance with applicable laws and/or regulations, performance or services provided under any agreement by any party, (ii) based on or arising from an alleged tort, or (iii) involving any party's employees, agents, affiliates, or assigns.  However, Disputes do not include the validity, enforceability, meaning, or scope of this arbitration provision and such matters may be determined only by a court.  If a third party is a party to a Dispute, each party will consent to including the third party in the arbitration proceeding for resolving the Dispute with the third party.  Venue for the arbitration proceeding shall be at a location determined by mutual agreement of the parties or, if no agreement, in the city and state where lender or bank is headquartered.

After entry of an Arbitration Order, the non-moving party shall commence arbitration.  The moving party shall, at its discretion, also be entitled to commence arbitration but is under no obligation to do so, and the moving party shall not in any way be adversely prejudiced by electing not to commence arbitration.  The arbitrator: (i) will hear and rule on appropriate dispositive motions for judgment on the pleadings, for failure to state a claim, or for full or partial summary judgment; (ii) will render a decision and any award applying applicable law; (iii) will give effect to any limitations period in determining any Dispute or defense; (iv) shall enforce the doctrines of compulsory counterclaim, res judicata, and collateral estoppel, if applicable; (v) with regard to motions and the arbitration hearing, shall apply rules of evidence governing civil cases; and (vi) will apply the law of the state specified in the agreement giving rise to the Dispute.  Filing of a petition for arbitration shall not prevent any party from (i) seeking and obtaining from a court of competent jurisdiction (notwithstanding ongoing arbitration) provisional or ancillary remedies including but not limited to injunctive relief, property preservation orders, foreclosure, eviction, attachment, replevin, garnishment, and/or the appointment of a receiver, (ii) pursuing non-judicial foreclosure, or (iii) availing itself of any self-help remedies such as setoff and repossession.  The exercise of such rights shall not constitute a waiver of the right to submit any Dispute to arbitration.

 

Judgment upon an arbitration award may be entered in any court having jurisdiction except that, if the arbitration award exceeds $5,000,000.00, any party shall be entitled to a de novo appeal of the award before a panel of three arbitrators.  To allow for such appeal, if the award (including Administrator, arbitrator, and attorney’s fees and costs) exceeds $5,000,000.00, the arbitrator will issue a written, reasoned decision supporting the award, including a statement of authority and its application to the Dispute.  A request for de novo appeal must be filed with the arbitrator within thirty (30) days following the date of the arbitration award; if such a request is not made within that time period, the arbitration decision shall become final and binding.  On appeal, the arbitrators shall review the award de novo, meaning that they shall reach their own findings of fact and conclusions of law rather than deferring in any manner to the original arbitrator.  Appeal of an arbitration award shall be pursuant to the rules of the Administrator or, if the Administrator has no such rules, then the JAMS arbitration appellate rules shall apply.

Arbitration under this provision concerns a transaction involving interstate commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq.  This arbitration provision shall survive any termination, amendment, or expiration of this Agreement.  If the terms of this provision vary from the Administrator’s rules, this arbitration provision shall control.

(c)           CLASS ACTION WAIVER.  EACH PARTY WAIVES THE RIGHT TO LITIGATE IN COURT OR ARBITRATE ANY CLAIM OR DISPUTE AS A CLASS ACTION, EITHER AS A MEMBER OF A CLASS OR AS A REPRESENTATIVE, OR TO ACT AS A PRIVATE ATTORNEY GENERAL.

 

(d)           RELIANCE.  Each party (i) certifies that no one has represented to such party that the other parties would not seek to enforce jury and class action waivers in the event of suit, and (ii) acknowledges that it and the other parties have been induced to enter into this Agreement by, among other things, the mutual waivers, agreements, and certifications in this Section.

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

 

 

COMMITMENTS

 

September 15, 2011

 

 

	Name of Lender	Percentage Share as of August September 15, 2011	Commitment Amounts as of September 15, 2011
1.	Amegy Bank National Association	40%	$40,000,000.00
2.	Bank of America, N.A.	40%	$40,000,000.00
3.	Woodforest National Bank	20%	$20,000,000.00
	Total	100%	$100,000,000.00

 

 

 

 

 

 

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