SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13
or 15(d)
of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 2004
Encore Capital Group,
Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 000-26489 | 48-1090909 | ||
|---|---|---|---|---|
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S Employer (Identification No.) | ||
5775 Roscoe Court
San Diego, California
92123
(Address of Principal
Executive Offices) (Zip Code)
(877) 445-4581
(Registrant’s
Telephone Number, Including Area Code)
Item 5. Other Events and Regulation FD Disclosure
On June 30, 2004 the Company closed on a new $75 million syndicated, three-year revolving credit facility to be utilized for the purpose of purchasing portfolios of receivables and for working capital needs. Interest rates on borrowings under the new credit facility will be, at the Company’s option, at the lender’s prime rate or at LIBOR plus a current margin of 250 basis points. The applicable margin will be adjusted quarterly based on a pricing grid which takes into account certain financial covenants related to the Company’s balance sheet and results of operations. The new credit facility is secured by all assets of the Company, except for the assets of the Company’s wholly-owned subsidiary, MRC Receivables Corporation, in which the Company’s existing secured lender has a first priority security interest. The new facility also requires the Company to pay certain fees and expenses to the lender in connection with the previously disclosed related commitment letter and the credit facility. Copies of the Credit Agreement, Pledge and Security Agreement and Guaranty are being filed as exhibits hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits:
| 10.1 | Credit Agreement dated as of June 30, 2004 among Encore Capital Group, Inc., the Lenders from time to time parties thereto and Bank One, NA as Administrative Agent (the "Credit Agreement") |
| 10.2 | Pledge and Security Agreement dated as of June 30, 2004, with respect to the Credit Agreement |
| 10.3 | Guaranty dated as of June 30, 2004, with respect to the Credit Agreement |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: July 2, 2004 | ENCORE CAPITAL GROUP, INC. By /s/ Barry R. Barkley —————————————— Barry R. Barkley Executive Vice President, Chief Financial Officer and Treasurer |
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EXHIBIT INDEX
| Exhibit | Description |
| 10.1 | Credit Agreement dated as of June 30, 2004 among Encore Capital Group, Inc., the Lenders from time to time parties thereto and Bank One, NA as Administrative Agent (the "Credit Agreement") |
| 10.2 | Pledge and Security Agreement dated as of June 30, 2004, with respect to the Credit Agreement |
| 10.3 | Guaranty dated as of June 30, 2004, with respect to the Credit Agreement |
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Exhibit 10.1
EXECUTION COPY
CREDIT AGREEMENT
DATED AS OF JUNE 30, 2004
AMONG
ENCORE CAPITAL GROUP, INC.
THE LENDERS FROM TIME TO TIME PARTIES HERETO
BANK ONE, NA (MAIN OFFICE CHICAGO),
AS ADMINISTRATIVE AGENT
___________________________________________________________________________
BANC ONE CAPITAL MARKETS, INC.,
as Lead Arranger and Sole Book Runner
_____________________________________________________________________________
SIDLEY AUSTIN BROWN & WOOD LLP
Bank One Plaza
10 South Dearborn Street
Chicago, Illinois 60603
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................................1
1.1. Certain Defined Terms...........................................................................1
1.2. Plural Forms...................................................................................21
ARTICLE II THE CREDITS..........................................................................................22
2.1. Revolving Loan Commitments.....................................................................22
2.2. Required Payments; Termination.................................................................22
2.3. Ratable Loans; Types of Advances...............................................................23
2.4. Swing Line Loans...............................................................................23
2.5. Commitment Fee; Aggregate Revolving Loan Commitment............................................25
2.6. Minimum Amount of Each Advance.................................................................28
2.7. Optional Principal Payments....................................................................28
2.8. Method of Selecting Types and Interest Periods for New Advances................................29
2.9. Conversion and Continuation of Outstanding Advances; No Conversion or Continuation of Eurodollar Advances
After Default..................................................................................29
2.10. Changes in Interest Rate, etc..................................................................30
2.11. Rates Applicable After Default.................................................................30
2.12. Method of Payment..............................................................................31
2.13. Noteless Agreement; Evidence of Indebtedness...................................................31
2.14. Telephonic Notices.............................................................................32
2.15. Interest Payment Dates; Interest and Fee Basis.................................................32
2.16. Notification of Advances, Interest Rates, Prepayments and Revolving Loan Commitment Reductions;
Availability of Loans..........................................................................32
2.17. Lending Installations..........................................................................33
2.18. Non-Receipt of Funds by the Administrative Agent...............................................33
2.19. Replacement of Lender..........................................................................33
2.20. Facility LCs...................................................................................34
ARTICLE III YIELD PROTECTION; TAXES.............................................................................39
3.1. Yield Protection...............................................................................39
3.2. Changes in Capital Adequacy Regulations........................................................40
3.3. Availability of Types of Advances..............................................................40
3.4. Funding Indemnification........................................................................41
3.5. Taxes..........................................................................................41
3.6. Lender Statements; Survival of Indemnity.......................................................43
3.7. Alternative Lending Installation...............................................................44
ARTICLE IV CONDITIONS PRECEDENT.................................................................................44
4.1. Initial Credit Extension.......................................................................44
4.2. Each Credit Extension..........................................................................46
ARTICLE V REPRESENTATIONS AND WARRANTIES........................................................................46
5.1. Existence and Standing.........................................................................47
5.2. Authorization and Validity.....................................................................47
5.3. No Conflict; Government Consent................................................................47
5.4. Financial Statements...........................................................................47
5.5. Material Adverse Change........................................................................48
5.6. Taxes..........................................................................................48
5.7. Litigation and Contingent Obligations..........................................................48
5.8. Subsidiaries...................................................................................48
5.9. ERISA..........................................................................................48
5.10. Accuracy of Information........................................................................49
5.11. Regulation U...................................................................................49
5.12. Material Agreements............................................................................49
5.13. Compliance With Laws...........................................................................49
5.14. Ownership of Properties........................................................................49
5.15. Plan Assets; Prohibited Transactions...........................................................50
5.16. Environmental Matters..........................................................................50
5.17. Investment Company Act.........................................................................50
5.18. Public Utility Holding Company Act.............................................................50
5.19. Insurance......................................................................................50
5.20. No Default or Unmatured Default................................................................50
5.21. SDN List Designation...........................................................................50
ARTICLE VI COVENANTS............................................................................................50
6.1. Financial Reporting............................................................................51
6.2. Use of Proceeds................................................................................53
6.3. Notice of Default..............................................................................53
6.4. Conduct of Business............................................................................53
6.5. Taxes..........................................................................................53
6.6. Insurance......................................................................................54
6.7. Compliance with Laws...........................................................................54
6.8. Maintenance of Properties......................................................................54
6.9. Inspection; Keeping of Books and Records.......................................................54
6.10. Restricted Payments............................................................................55
6.11. Merger or Dissolution..........................................................................55
6.12. Sale of Assets.................................................................................55
6.13. Investments and Acquisitions...................................................................56
6.14. Indebtedness...................................................................................57
6.15. Liens..........................................................................................58
6.16. Affiliates.....................................................................................60
6.17. Financial Contracts............................................................................60
6.18. Subsidiary Covenants...........................................................................60
6.19. Contingent Obligations.........................................................................60
6.20. Subordinated Indebtedness, Indebtedness under Permitted Receivables Transactions and Amendments to
Subordinated Note Documents and Permitted Receivables Transactions Documents ..................61
6.21. Cash Flow Leverage Ratio.......................................................................62
6.22. Balance Sheet Leverage Ratio...................................................................62
6.23. Capital Expenditures...........................................................................62
6.24. Rentals........................................................................................62
6.25. Guarantors.....................................................................................62
6.26. Collateral.....................................................................................63
6.27. Sale and Leaseback Transactions................................................................63
6.28. Acquisitions of Receivables Portfolios.........................................................63
6.29. Government Regulation..........................................................................63
6.30. Inactive Subsidiaries..........................................................................64
6.31. Receivables Portfolios.........................................................................64
6.32. Collection Accounts............................................................................64
ARTICLE VII DEFAULTS............................................................................................64
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.....................................................67
8.1. Acceleration...................................................................................67
8.2. Amendments.....................................................................................68
8.3. Preservation of Rights.........................................................................69
ARTICLE IX GENERAL PROVISIONS...................................................................................69
9.1. Survival of Representations....................................................................69
9.2. Governmental Regulation........................................................................69
9.3. Headings.......................................................................................69
9.4. Entire Agreement...............................................................................70
9.5. Several Obligations; Benefits of this Agreement................................................70
9.6. Expenses; Indemnification......................................................................70
9.7. Numbers of Documents...........................................................................71
9.8. Accounting.....................................................................................71
9.9. Severability of Provisions.....................................................................71
9.10. Nonliability of Lenders........................................................................71
9.11. Confidentiality................................................................................72
9.12. Lenders Not Utilizing Plan Assets..............................................................73
9.13. Nonreliance....................................................................................73
9.14. Disclosure.....................................................................................73
9.15. Performance of Obligations.....................................................................73
9.16. USA Patriot Act Notification...................................................................74
ARTICLE X THE ADMINISTRATIVE AGENT..............................................................................74
10.1. Appointment; Nature of Relationship............................................................74
10.2. Powers.........................................................................................75
10.3. General Immunity...............................................................................75
10.4. No Responsibility for Loans, Recitals, etc.....................................................75
10.5. Action on Instructions of Lenders..............................................................75
10.6. Employment of Agents and Counsel...............................................................76
10.7. Reliance on Documents; Counsel.................................................................76
10.8. Administrative Agent's Reimbursement and Indemnification.......................................76
10.9. Notice of Default..............................................................................77
10.10. Rights as a Lender.............................................................................77
10.11. Lender Credit Decision.........................................................................77
10.12. Successor Administrative Agent.................................................................77
10.13. Administrative Agent and Arranger Fees.........................................................78
10.14. Delegation to Affiliates.......................................................................78
10.15. Co-Agents, Documentation Agent, Syndication Agent, etc.........................................78
10.17. Co-Agents, Documentation Agent, Syndication Agent, etc.........................................78
10.16. Collateral Documents...........................................................................78
ARTICLE XI SETOFF; RATABLE PAYMENTS.............................................................................79
11.1. Setoff.........................................................................................79
11.2. Ratable Payments...............................................................................80
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS...................................................80
12.1. Successors and Assigns.........................................................................80
12.2. Participations.................................................................................81
12.3. Assignments....................................................................................82
12.4. Dissemination of Information...................................................................83
12.5. Tax Treatment..................................................................................83
ARTICLE XIII NOTICES............................................................................................84
13.1. Notices; Effectiveness; Electronic Communication...............................................84
13.2. Change of Address, Etc.........................................................................85
ARTICLE XIV COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION......................................85
14.1. Counterparts; Effectiveness....................................................................85
14.2. Electronic Execution of Assignments............................................................85
ARTICLE XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.........................................85
15.1 CHOICE OF LAW..................................................................................85
15.2 CONSENT TO JURISDICTION........................................................................85
15.3 WAIVER OF JURY TRIAL...........................................................................86
SCHEDULES
Commitment Schedule
Pricing Schedule
Schedule 5.6- Taxes
Schedule 5.8- Subsidiaries
Schedule 5.12- Material Agreements
Schedule 6.13- Existing Investments
Schedule 6.14- Existing Indebtedness
Schedule 6.15- Existing Liens
Schedule 6.31 - Maximum Non-Credit Card Receivables Amount
Schedule 6.32 - Initial and Intermediate Collection Accounts
EXHIBITS
Exhibit A- Form of Borrower’s Counsel’s Opinion
Exhibit B- Form of Compliance Certificate
Exhibit C- Form of Assignment and Assumption Agreement
Exhibit D- Form of Loan/Credit Related Money Transfer Instruction
Exhibit E- Form of Promissory Note for Revolving Loan (if requested)
Exhibit F- Officer’s Certificate
Exhibit G- List of Closing Documents
Exhibit H- Form of Borrowing Base Certificate
Exhibit I- Form of Commitment and Acceptance
CREDIT AGREEMENT
This Credit Agreement, dated as of June 30, 2004, is entered into by and among Encore Capital Group, Inc., a Delaware
corporation, the Lenders, the LC Issuer and Bank One, NA, a national banking association having its principal office in Chicago,
Illinois, as Administrative Agent. The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Certain Defined Terms. As used in this Agreement:
“Accounting Changes” is defined in Section 9.8 hereof.
“Accounts” means and includes all of the Borrower’s and each Subsidiary’s presently existing and hereafter arising or
acquired accounts, accounts receivable, and all present and future rights of the Borrower or such Subsidiary to payment for goods
sold or leased or for services rendered (except those evidenced by instruments or chattel paper), whether or not they have been
earned by performance, and all rights in any merchandise or goods which any of the same may represent, and all rights, title,
security and guarantees with respect to each of the foregoing, including, without limitation, any right of stoppage in transit.
“Acquisition” means any transaction or any series of related transactions, other than the Permitted Restructuring or
purchases or acquisitions of Receivables Portfolios in the ordinary course of business, consummated on or after the Closing Date, by
which the Borrower or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm,
corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a
majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage of voting
power) of the outstanding ownership interests of a partnership or limited liability company of any Person; provided, however, that
the following shall not be considered “Acquisitions”: (a) any asset purchase consisting solely of Receivables Portfolios and (b) the
purchase of stock of an entity (1) the assets of which consist solely of Receivables, (2) which has not engaged in the conduct of
business and (3) which has no Indebtedness.
“Adjusted Available Aggregate Revolving Loan Commitment” means, at any time, the lesser of (i) Aggregate Revolving Loan
Commitment and (ii) the Borrowing Base, in each case as then in effect.
“Administrative Agent” means Bank One in its capacity as contractual representative of the Lenders pursuant to Article X,
and not in its individual capacity as a Lender, as Administrative Agent, and any successor Administrative Agent appointed pursuant to
Article X.
“Advance” means a borrowing hereunder consisting of the aggregate amount of several Revolving Loans (i) made by some or all
of the Lenders on the same Borrowing Date, or (ii) converted or continued by the Lenders on the same date of conversion or
continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of
Eurodollar Loans, for the same Interest Period. The term “Advance” shall include Swing Line Loans unless otherwise expressly
provided.
“Affiliate” of any Person means any other Person directly or indirectly controlling, controlled by or under common control
with such Person. A Person shall be deemed to control another Person if the controlling Person is the “beneficial owner” (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934) of 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of voting securities, by contract or otherwise.
“Age Adjusted Advance Rate” means with respect to any Receivables Portfolio of any Credit Party, (a) for the period from and
including the date such Credit Party acquires such Receivables Portfolio to and including the end of the third full calendar month
ending after such date, eighty-five percent (85%), and (b) for any subsequent calendar month beginning after such third full calendar
month, the percentage equal to eighty-five percent (85%) minus three percentage points (3%) for each successive calendar month that
has begun since the end of such third full calendar month (it being understood and agreed that, for the sake of illustration, if a
Receivables Portfolio is acquired on January 1, 2005, the Age Adjusted Advance Rate with respect thereto shall be 85% through April
30, 2005, 82% from May 1, 2005 through May 31, 2005, 79% from June 1, 2005 through June 30, 2005 and continuing to reduce in the same
manner by three percentage points (3%) for each successive calendar month).
“Aggregate Outstanding Revolving Credit Exposure” means, at any time, the aggregate of the Outstanding Revolving Credit
Exposure of all the Lenders.
“Aggregate Revolving Loan Commitment” means the aggregate of the Revolving Loan Commitments of all the Lenders, as may be
increased or reduced from time to time pursuant to the terms hereof. The initial Aggregate Revolving Loan Commitment is Seventy-Five
Million and 00/100 Dollars ($75,000,000).
“Agreement” means this Credit Agreement, as it may be amended, restated, supplemented or otherwise modified and as in effect
from time to time.
“Agreement Accounting Principles” means generally accepted accounting principles as in effect in the United States from time
to time, applied in a manner consistent with that used in preparing the financial statements of the Borrower referred to in Section
5.4.
“Alternate Base Rate” means, for any day, a rate of interest per annum equal to the higher of (i) the Prime Rate for such
day and (ii) the sum of the Federal Funds Effective Rate for such day plus ½% per annum.
“Applicable Fee Rate” means, with respect to the Commitment Fee at any time, the percentage rate per annum which is
applicable at such time with respect to such fee as set forth in the Pricing Schedule.
“Applicable Margin” means, with respect to Advances of any Type at any time, the percentage rate per annum which is
applicable at such time with respect to Advances of such Type as set forth in the Pricing Schedule.
“Applicable Pledge Percentage” means 100%, but 65% in the case of a pledge of Capital Stock of a Foreign Subsidiary to the
extent a 100% pledge would cause a Deemed Dividend Problem or a Financial Assistance Problem.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.
“Arranger” means Banc One Capital Markets, Inc., a Delaware corporation, and its successors, in its capacity as Lead
Arranger and Sole Book Runner.
“Article” means an article of this Agreement unless another document is specifically referenced.
“Asset Sale” means, with respect to the Borrower or any Subsidiary, the sale, lease, conveyance, disposition or other
transfer by such Person of any of its assets (including by way of a Sale and Leaseback Transaction, and including the sale or other
transfer of any of the capital stock or other equity interests of such Person or any Subsidiary of such Person) to any Person other
than the Borrower or any of its wholly-owned Subsidiaries other than (i) the sale of Receivables in the ordinary course of business
(so long as, after giving effect to each such sale, the Borrower makes the required prepayments and/or reinvestment of proceeds
required under Section 2.2(a)), (ii) the sale or other disposition of any obsolete, excess, damaged or worn-out Equipment disposed of
in the ordinary course of business, (iii) leases of assets in the ordinary course of business consistent with past practice and (iv)
sales or dispositions of assets outside the ordinary course of business with an aggregate fair market value not to exceed, during the
term of this Agreement, $5,000,000.
“Assignment Agreement” is defined in Section 12.3.1.
“Authorized Officer” means any of the President and Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer, Treasurer or Controller of the Borrower, or such other officer of the Borrower as may be designated by the Borrower in
writing to the Administrative Agent from time to time, acting singly.
“Available Aggregate Revolving Loan Commitment” means, at any time, the Aggregate Revolving Loan Commitment then in effect
minus the Aggregate Outstanding Revolving Credit Exposure at such time.
“Bank One” means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its
individual capacity, and its successors.
“Borrower” means Encore Capital Group, Inc., a Delaware corporation, and its permitted successors and assigns (including,
without limitation, a debtor in possession on its behalf).
“Borrowing Base” means, as of any date of calculation, an amount, as set forth on the most current Borrowing Base
Certificate delivered to the Administrative Agent, equal to the aggregate Borrowing Base Value of all Receivables Portfolios of the
Credit Parties as of such date.
“Borrowing Base Certificate” means a certificate, in substantially the form of Exhibit H hereto, setting forth the Borrowing
Base and the component calculations thereof.
“Borrowing Base Value” means, for any period, with respect to any Receivables Portfolio owned by any Credit Party or which
will be acquired by one or more Credit Parties by applying the proceeds from a requested Credit Extension, the product of (a) the
purchase price paid (or to be paid by applying proceeds from a requested Credit Extension) by such Credit Party for such Receivables
Portfolio, multiplied by (b) the Age Adjusted Advance Rate (expressed as a decimal) applicable to such Receivables Portfolio for such
period; provided that, if at any time after any Receivables Portfolio of any Credit Party is included in Borrowing Base, such Credit
Party shall, on a cumulative basis, sell or otherwise dispose of more than 40% of such Receivables Portfolio, whether in one
transaction or a series of transactions, then (i) the Borrower shall apply an amount equal to one hundred percent (100%) of the cash
proceeds of such sale or sales to any required payments pursuant to the second sentence of Section 2.2(a) and (ii) the “Borrowing
Base Value” for such Receivables Portfolio shall be determined by the product of (a) a pro rata portion of the purchase price paid by
such Credit Party for such Receivables Portfolio (determined by the ratio that the aggregate face amount of the remaining Receivables
in such Receivables Portfolio bears to the aggregate face amount of all the Receivables included in such Receivables Portfolio at the
time of its acquisition), multiplied by (b) the applicable Age Adjusted Advance Rate. Notwithstanding anything contained herein to
the contrary, the Borrowing Base Value with respect to any Receivables Portfolio shall be determined exclusive of any Receivables in
such Receivables Portfolio that are not Eligible Receivables.
“Borrowing Date” means a date on which an Advance is made hereunder.
“Borrowing Notice” is defined in Section 2.8.
“Business Day” means (i) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than
a Saturday or Sunday) on which banks generally are open in Phoenix, Arizona for the conduct of substantially all of their commercial
lending activities, interbank wire transfers can be made on the Fedwire system and dealings in Dollars are carried on in the London
interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in
Phoenix, Arizona for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made
on the Fedwire system.
“Buying Lender” is defined in Section 2.5.3(ii).
“Capital Expenditures” means, without duplication, any expenditures for any purchase or other acquisition of any asset which
would be classified as a fixed or capital asset on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in
accordance with Agreement Accounting Principles, but excluding, solely for the fiscal year in which each Acquisition is consummated,
any such expenditures of any Person or business acquired pursuant to such Acquisition.
“Capitalized Lease” of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with Agreement Accounting Principles.
“Capitalized Lease Obligations” of a Person means the amount of the obligations of such Person under Capitalized Leases
which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.
“Cash Equivalent Investments” means (i) short-term obligations of, or fully guaranteed by, the United States of America,
(ii) commercial paper rated A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts maintained in the
ordinary course of business, and (iv) certificates of deposit issued by and time deposits with commercial banks (whether domestic or
foreign) having capital and surplus in excess of $100,000,000; provided in each case that the same provides for payment of both
principal and interest (and not principal alone or interest alone) and is not subject to any contingency regarding the payment of
principal or interest.
“Cash Flow Leverage Ratio” is defined in Section 6.21.
“CFSC Transaction” means the transaction, or series of transactions, pursuant to that certain Credit Agreement dated
December 20, 2000 between MRC Receivables Corporation and CFSC Capital Corp. VIII (as amended or otherwise modified) provided that
(i) all such transactions are entered into on or before December 31, 2004 and (ii) the aggregate principal amount of Indebtedness
outstanding pursuant to such transaction or series of transactions does not exceed $75,000,000.
“Change of Control” means (i) the acquisition by any Person, or two or more Persons acting in concert, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of
30% or more of the outstanding shares of voting stock of the Borrower, excluding acquisitions by any Person with beneficial ownership
of 5% or more of the outstanding shares of voting stock of the Borrower as of the Closing Date so long as the aggregate shares so
acquired by all such Persons do not exceed 49% of the outstanding shares of voting stock of the Borrower; (ii) other than pursuant to
a transaction permitted hereunder, the Borrower shall cease to own, directly or indirectly and free and clear of all Liens or other
encumbrances, all of the outstanding shares of voting stock of the Guarantors on a fully diluted basis; or (iii) the majority of the
Board of Directors of the Borrower fails to consist of Continuing Directors. The Permitted Restructuring shall not constitute a
Change of Control.
“Closing Date” means June 30, 2004.
“Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time, and any rule
or regulation issued thereunder.
“Collateral” means all Property and interests in Property now owned or hereafter acquired by the Borrower or any of its
Subsidiaries in or upon which a security interest, lien or mortgage is granted to the Administrative Agent, for the benefit of the
Holders of Secured Obligations, whether under the Pledge and Security Agreement, under any of the other Collateral Documents or under
any of the other Loan Documents.
“Collateral Documents” means all agreements, instruments and documents executed in connection with this Agreement that are
intended to create or evidence Liens to secure the Secured Obligations, including, without limitation, the Pledge and Security
Agreement, the Intellectual Property Security Agreements, the Mortgages and all other security agreements, mortgages, deeds of trust,
loan agreements, notes, guarantees, subordination agreements, pledges, powers of attorney, consents, assignments, contracts, fee
letters, notices, leases, financing statements and all other written matter whether heretofore, now, or hereafter executed by the
Borrower or any of its Subsidiaries and delivered to the Administrative Agent.
“Collateral Shortfall Amount” is defined in Section 8.1.
“Commitment and Acceptance” is defined in Section 2.5.3(i).
“Commitment Increase Notice” is defined in Section 2.5.3(i).
“Commitment Fee” is defined in Section 2.5.1.
“Commitment Schedule” means the Schedule identifying each Lender’s Revolving Loan Commitment as of the Closing Date attached
hereto and identified as such.
“Consolidated Capital Expenditures” means, with reference to any period, the Capital Expenditures of the Borrower and its
Subsidiaries calculated on a consolidated basis for such period.
“Consolidated EBITDA” means Consolidated Net Income plus, to the extent deducted from revenues in determining Consolidated
Net Income, (i) Consolidated Interest Expense (whether actual or contingent), (ii) expense for taxes paid or accrued, (iii)
depreciation expense and (iv) amortization expense minus, to the extent included in Consolidated Net Income, (a) interest income and
(b) any extraordinary, unusual or non-recurring gains or other income (provided that gains from sales of Receivables Portfolios shall
not be treated as non-recurring gains for this purpose), all calculated for the Borrower and its Subsidiaries on a consolidated basis.
“Consolidated Interest Expense” means, with reference to any period, the interest expense of the Borrower and its
Subsidiaries (including that portion attributable to Capital Leases) calculated on a consolidated basis for such period, in
accordance with Agreement Accounting Principles, including without limitation, any Off-Balance Sheet Liability that would constitute
interest if the transaction giving rise to such Off-Balance Sheet Liability were re-characterized as a loan transaction and financing
costs (including contingent interest expense) in connection with a Permitted Receivables Transaction.
“Consolidated Net Income” means, with reference to any period, the net income (or loss) of the Borrower and its Subsidiaries
calculated on a consolidated basis for such period in accordance with Agreement Accounting Principles.
“Consolidated Rentals” means, with reference to any period, the Rentals of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period in accordance with Agreement Accounting Principles.
“Consolidated Tangible Assets” means Consolidated Total Assets minus any Intangible Assets.
“Consolidated Tangible Net Worth” means at any time, with respect to any Person, the consolidated stockholders’ equity of
such Person and its Subsidiaries calculated on a consolidated basis in accordance with Agreement Accounting Principles minus any
Intangible Assets.
“Consolidated Total Assets” means the total assets of the Borrower and its Subsidiaries calculated on a consolidated basis
in accordance with Agreement Accounting Principles.
“Consolidated Total Liabilities” means the total liabilities of the Borrower and its Subsidiaries calculated on a
consolidated basis in accordance with Agreement Accounting Principles.
“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement, take-or-pay contract or the obligations of any such Person as general partner of
a partnership with respect to the liabilities of the partnership.
“Continuing Director” means, with respect to any Person as of any date of determination, any member of the board of
directors of such Person who (i) was a member of such board of directors on the Closing Date, or (ii) was nominated for election or
elected to such board of directors with the approval of the required majority of the Continuing Directors who were members of such
board at the time of such nomination or election.
“Controlled Group” means all members of a controlled group of corporations or other business entities and all trades or
businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
“Conversion/Continuation Notice” is defined in Section 2.9.
“Credit Extension” means the making of an Advance or the issuance of a Facility LC hereunder.
“Credit Extension Date” means the Borrowing Date for an Advance or the issuance date for a Facility LC.
“Credit Party” means, at any time, any of the Borrower and any Person which is a Guarantor at such time.
“Deemed Dividend Problem” means, with respect to any Foreign Subsidiary, such Foreign Subsidiary’s accumulated and
undistributed earnings and profits being deemed to be repatriated to the Borrower or the applicable parent Domestic Subsidiary for
U.S. federal income tax purposes and the effect of such repatriation causing adverse tax consequences to the Borrower or such parent
Domestic Subsidiary, in each case as determined by the Borrower in its commercially reasonable judgment acting in good faith and in
consultation with its legal and tax advisors.
“Default” means an event described in Article VII.
“Disqualified Stock” means any capital stock or other equity interest that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in
part, on or prior to the date that is 91 days after the Revolving Loan Termination Date.
“Dollar”, “dollar” and “$” means the lawful currency of the United States of America.
“Domestic Subsidiary” means any Subsidiary of any Person organized under the laws of a jurisdiction located in the United
States of America.
“Effective Commitment Amount” is defined in Section 2.5.3(i).
“Eligible Receivables” of any Credit Party shall mean, as of any date of determination, (i) Receivables with a Borrowing
Base Value of up to $10,000,000 owned by a Credit Party as of the Closing Date, which Receivables arose by a means other than through
the use of credit cards and which were purchased by a Credit Party with cash (and not with borrowed money) during the period
commencing on January 1, 2004 and ending on the Closing Date and (ii) Receivables purchased by a Credit Party on or after the Closing
Date to the extent such Receivable is owned, or to be purchased by such Credit Party by applying the proceeds of a Credit Extension
within five (5) Business Days of the making of such Credit Extension, and in the case of both (i) and (ii) that is payable in Dollars
and in which the Administrative Agent has, for the benefit of the Holders of Secured Obligations, a first-priority perfected security
interest pursuant to the Collateral Documents, other than any such Receivable:
(a) that is not an existing obligation for which sufficient consideration has been given;
(b) with respect to which such Credit Party does not (or will not, upon the closing of the relevant purchase
thereof) have good and marketable title pursuant to a legal, valid and binding bill of sale or purchase agreement entered into by
such Credit Party or assignment to such Credit Party;
(c) that has been repurchased by, or returned or put-back to, the person from whom such Borrower acquired such
Receivable and such Receivable has not subsequently been replaced with a new Receivable of at least comparable value acquired from
such Person;
(d) all or any portion of which is subject to any Lien (except the Lien in favor of the Administrative Agent
under the Collateral Documents);
(e) that is due from or has been originated by any Subsidiary or Encore Affiliate; or
(f) that is not a type of collateral for which a security interest can be perfected by filing pursuant to
Article 9 of the Uniform Commercial Code as then in effect in the State of New York.
“Encore Affiliate” means any Person directly or indirectly controlling, controlled by or under common control with the
Borrower. A Person shall be deemed to control another Person if the controlling Person is the “beneficial owner” (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of 10% or more of any class of voting securities (or other ownership interests) of
the controlled Person and possesses, directly or indirectly, the power to direct or cause the direction of the management or policies
of the controlled Person, whether through ownership of voting securities, by contract or otherwise.
“Environmental Laws” means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and
other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water,
ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.
“Equipment” means all of the Borrower’s and each Subsidiary’s present and future (i)equipment, including, without
limitation, machinery, manufacturing, distribution, data processing and office equipment, assembly systems, tools, molds, dies,
fixtures, appliances, furniture, furnishings, vehicles, vessels, aircraft, aircraft engines, and trade fixtures, (ii)other tangible
personal property (other than inventory), and (iii)any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and replacements, products and proceeds thereof.
“Equipment Financing Transactions” means the secured equipment financing arrangements of the Credit Parties set forth on
Schedule 6.14.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rules or
regulations promulgated thereunder.
“Eurodollar Advance” means an Advance which, except as otherwise provided in Section 2.11, bears interest at the applicable
Eurodollar Rate.
“Eurodollar Base Rate” means, with respect to a Eurodollar Advance for the relevant Interest Period, the applicable British
Bankers' Association LIBOR rate for deposits in Dollars as reported by any generally recognized financial information service as of
11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, if no such British Bankers' Association LIBOR rate is available to the Administrative Agent, the
applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Administrative Agent to
be the rate at which Bank One or one of its affiliate banks offers to place deposits in Dollars with first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period, in
the approximate amount of Bank One's relevant Eurodollar Loan and having a maturity equal to such Interest Period.
“Eurodollar Loan” means a Revolving Loan which, except as otherwise provided in Section 2.11, bears interest at the
applicable Eurodollar Rate.
“Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (i) the quotient
of (a) the Eurodollar Base Rate applicable to such Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a
decimal) applicable to such Interest Period, plus (ii) the Applicable Margin then in effect, changing as and when the Applicable
Margin changes.
“Excluded Subsidiaries” means, (i) to the extent the applicable Permitted Receivables Transaction in respect of which such
entity was created is in full force and effect and the Indebtedness thereunder had not been repaid in full, MRC Receivables
Corporation and Midland Funding NCC-1 Corporation and any other successor or transferee Subsidiaries created in connection with the
Permitted Restructuring and (ii) the Inactive Subsidiaries and any other successor or transferee Subsidiaries created in connection
with the Permitted Restructuring.
“Excluded Taxes” means, in the case of each Lender or applicable Lending Installation and the Administrative Agent, taxes
imposed on its overall net income, and franchise taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender or
the Administrative Agent is incorporated or organized or any political combination or subdivision or taxing authority thereof or (ii)
the jurisdiction in which the Administrative Agent's or such Lender's principal executive office or such Lender's applicable Lending
Installation is located.
“Exhibit” refers to an exhibit to this Agreement, unless another document is specifically referenced.
“Existing Financing Arrangements” means financing arrangements of the Borrower or any Subsidiary (other than the
transactions under the Loan Documents and the Permitted Receivables Transactions and the Equipment Financing Transactions) in effect
on the Closing Date.
“Facility LC” is defined in Section 2.20.1.
“Facility LC Application” is defined in Section 2.20.3.
“Facility LC Collateral Account” is defined in Section 2.20.11.
“Federal Funds Effective Rate” means, for any day, an interest rate per annum 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 for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at
approximately 10:00 a.m. (Phoenix, Arizona time) on such day on such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion.
“Financial Contract” of a Person means (i) any exchange-traded or over-the-counter futures, forward, swap or option contract
or other financial instrument with similar characteristics or (ii) any Rate Management Transaction.
“Financial Assistance Problem” means, with respect to any Foreign Subsidiary, the inability of such Foreign Subsidiary to
become a Subsidiary Guarantor or to permit its Capital Stock from being pledged pursuant to a pledge agreement on account of legal or
financial limitations imposed by the jurisdiction of organization of such Foreign Subsidiary or other relevant jurisdictions having
authority over such Foreign Subsidiary, in each case as determined by the Borrower in its commercially reasonable judgment acting in
good faith and in consultation with its legal and tax advisors.
“First Tier Foreign Subsidiary” means each Foreign Subsidiary with respect to which any one or more of the Borrower and its
Domestic Subsidiaries directly owns or controls more than 50% of such Foreign Subsidiary’s issued and outstanding equity interests.
“Floating Rate” means, for any day, a rate per annum equal to the sum of (i) the Alternate Base Rate for such day, changing
when and as the Alternate Base Rate changes plus (ii) the Applicable Margin then in effect, changing as and when the Applicable
Margin changes.
“Floating Rate Advance” means an Advance which, except as otherwise provided in Section 2.11, bears interest at the Floating
Rate.
“Floating Rate Loan” means a Loan which, except as otherwise provided in Section 2.11, bears interest at the Floating Rate.
“Foreign Subsidiary” means any Subsidiary of any Person which is not a Domestic Subsidiary of such Person.
“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.
“Governmental Authority” means any nation or government, any foreign, federal, state, local or other political subdivision
thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to
government.
“Guarantor” means each Subsidiary of the Borrower which is a party to the Guaranty Agreement, including each Subsidiary of
the Borrower which becomes a party to the Guaranty Agreement pursuant to a joinder or other supplement thereto.
“Guaranty Agreement” means the Guaranty Agreement, dated as of the Closing Date, made by the Guarantors in favor of the
Administrative Agent for the benefit of the Holders of Secured Obligations, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
“Holders of Secured Obligations” means the holders of the Secured Obligations from time to time and shall refer to (i) each
Lender in respect of its Loans, (ii) the LC Issuer in respect of Reimbursement Obligations, (iii) the Administrative Agent, the
Lenders and the LC Issuer in respect of all other present and future obligations and liabilities of the Borrower or any of its
Domestic Subsidiaries of every type and description arising under or in connection with this Agreement or any other Loan Document,
(iii) each Lender (or affiliate thereof), in respect of all Rate Management Obligations of the Borrower to such Lender (or such
affiliate) as exchange party or counterparty under any Rate Management Transaction, and (iv) their respective successors, transferees
and assigns.
“Inactive Subsidiaries” means the following Subsidiaries in existence on the Closing Date: Midland Funding 98-A Corporation,
Midland Receivables 98-1 Corporation and Midland Receivables 99-1 Corporation.
“Indebtedness” of a Person means, at any time, without duplication, such Person’s (i) obligations for borrowed money, (ii)
obligations representing the deferred purchase price of Property or services (other than current accounts payable arising in the
ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed,
secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, bonds, debentures, acceptances, or other instruments, (v) obligations to purchase
securities or other Property arising out of or in connection with the sale of the same or substantially similar securities or
Property, (vi) Capitalized Lease Obligations, (vii) Contingent Obligations of such Person, (viii) reimbursement obligations under
Letters of Credit, bankers’ acceptances, surety bonds and similar instruments, (ix) Off-Balance Sheet Liabilities, (x) obligations
under Sale and Leaseback Transactions, (xi) Net Mark-to-Market Exposure under Rate Management Transactions and other Financial
Contracts, (xii) Rate Management Obligations and (xiii) any other obligation for borrowed money which in accordance with Agreement
Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person.
“Intangible Assets” means the aggregate amount, for the Borrower and its Subsidiaries on a consolidated basis, of: (1) all
assets classified as intangible assets under Agreement Accounting Principles, including, without limitation, goodwill, trademarks,
patents, copyrights, organization expenses, franchises, licenses, trade names, brand names, mailing lists, catalogs, excess of cost
over book value of assets acquired, and bond discount and underwriting expenses; (2) loans or advances to, investments in, or
receivables from (i) Encore Affiliates, officers, directors, employees or shareholders of the Borrower or any Subsidiary or (ii) any
Person if such loan, advance, investment or receivable is outside the Borrower’s or any Subsidiary’s normal course of business; and
(3) prepaid expenses; provided that Intangible Assets shall not include deferred court costs, deferred tax assets, deposits under
state workers compensation programs and assets of the Borrower’s excess deferred compensation plan.
“Intellectual Property Security Agreements” means the intellectual property security agreements as any Credit Party may from
time to time make in favor of the Administrative Agent for the benefit of the Holders of Secured Obligations, in each case as the
same may be amended, restated, supplemented or otherwise modified from time to time.
“Interest Period” means, with respect to a Eurodollar Advance, a period of one, two, three, six, nine or twelve months,
commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Interest Period shall end on but exclude the
day which corresponds numerically to such date one, two, three, six, nine or twelve months thereafter, provided, however, that if
there is no such numerically corresponding day in such next, second, third, sixth, ninth or twelfth succeeding month, such Interest
Period shall end on the last Business Day of such next, second, third, sixth, ninth or twelfth succeeding month. If an Interest
Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day,
provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the
immediately preceding Business Day.
“Investment” of a Person means any loan, advance (other than commission, travel and similar advances to officers, employees
made in the ordinary course of business), extension of credit (other than Accounts arising in the ordinary course of business) or
contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities
owned by such Person; any deposit accounts and certificate of deposit owned by such Person; and structured notes, derivative
financial instruments and other similar instruments or contracts owned by such Person. The Permitted Restructuring shall not
constitute Investments.
“LC Fee” is defined in Section 2.20.4.
“LC Issuer” means Bank One (or any subsidiary or affiliate of Bank One designated by Bank One) in its capacity as issuer of
Facility LCs hereunder.
“LC Obligations” means, at any time, the sum, without duplication, of (i) the aggregate undrawn stated amount under all
Facility LCs outstanding at such time plus (ii) the aggregate unpaid amount at such time of all Reimbursement Obligations.
“LC Payment Date” is defined in Section 2.20.5.
“Lenders” means the lending institutions listed on the signature pages of this Agreement and their respective successors and
assigns. Unless otherwise specified, the term “Lenders” includes the Swing Line Lender and the LC Issuer.
“Lender Increase Notice” is defined in Section 2.5.3(i).
“Lending Installation” means, with respect to a Lender or the Administrative Agent, the office, branch, subsidiary or
affiliate of such Lender or the Administrative Agent listed on the signature pages hereof or on the administrative information sheets
provided to the Administrative Agent in connection herewith or on a Schedule or otherwise selected by such Lender or the
Administrative Agent pursuant to Section 2.17.
“Letter of Credit” of a Person means a letter of credit or similar instrument which is issued upon the application of such
Person or upon which such Person is an account party or for which such Person is in any way liable.
“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement, and,
in the case of stock, stockholders agreements, voting trust agreements and all similar arrangements).
“Loan” means, with respect to a Lender, such Lender’s loan made pursuant to Article II (or any conversion or continuation
thereof), whether constituting a Revolving Loan or a Swing Line Loan.
“Loan Documents” means this Agreement, the Facility LC Applications, the Collateral Documents, the Guaranty Agreement and
all other documents, instruments, notes (including any Notes issued pursuant to Section 2.13 (if requested)) and agreements executed
in connection herewith or therewith or contemplated hereby or thereby, as the same may be amended, restated or otherwise modified and
in effect from time to time.
“Material Adverse Effect” means a material adverse effect on (i) the business, Property, condition (financial or otherwise),
operations or results of operations or prospects of the Borrower, or the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower or any Subsidiary to perform its obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent, the LC Issuer or the Lenders
thereunder or their rights with respect to the Collateral.
“Material Indebtedness” means any Indebtedness in an outstanding principal amount of $1,000,000 or more in the aggregate (or
the equivalent thereof in any currency other than Dollars).
“Material Indebtedness Agreement” means any agreement under which any Material Indebtedness was created or is governed or
which provides for the incurrence of Indebtedness in an amount which would constitute Material Indebtedness (whether or not an amount
of Indebtedness constituting Material Indebtedness is outstanding thereunder).
“Modify” and “Modification” are defined in Section 2.20.1.
“Moody's” means Moody's Investors Services, Inc. and any successor thereto.
“Mortgage” means each of those certain mortgages and deeds of trust as are entered into by the Credit Parties pursuant
hereto or in connection herewith, in each case as amended, restated, supplemented or otherwise modified from time to time.
“Mortgage Instruments” means such title reports, title insurance, opinions of counsel, surveys, appraisals and environmental
reports as are requested by, and in form and substance reasonably acceptable to, the Administrative Agent from time to time.
“Mortgaged Properties” means each Credit Party’s real Property with a book value equal to or in excess of $1,000,000.
“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, which is covered by Title IV of
ERISA and to which the Borrower or any member of the Controlled Group is obligated to make contributions.
“Net Cash Proceeds” means, with respect to any Asset Sale by any Person, cash (freely convertible into Dollars) received by
such Person or any Subsidiary of such Person from such Asset Sale (including cash received as consideration for the assumption or
incurrence of liabilities incurred in connection with or in anticipation of such Asset Sale), after (i) provision for all income or
other taxes measured by or resulting from such sale of Property, (ii) cash payment of all reasonable brokerage commissions and other
fees and expenses related to such sale of Property, and (iii) taking into account all amounts in cash used to repay Indebtedness
secured by a Lien on any Property disposed of in such Asset Sale which is or may be required (by the express terms of the instrument
governing such Indebtedness) to be repaid in connection with such Asset Sale (including payments made to obtain or avoid the need for
the consent of any holder of such Indebtedness).
“Net Mark-to-Market Exposure” of a Person means, as of any date of determination, the excess (if any) of all unrealized
losses over all unrealized profits of such Person arising from Rate Management Transactions. “Unrealized losses” means the fair
market value of the cost to such Person of replacing such Rate Management Transaction as of the date of determination (assuming the
Rate Management Transaction were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain
to such Person of replacing such Rate Management Transaction as of the date of determination (assuming such Rate Management
Transaction were to be terminated as of that date).
“Non-U.S. Lender” is defined in Section 3.5(iv).
“Note” is defined in Section 2.13.
“Obligations” means all Loans, all Reimbursement Obligations, advances, debts, liabilities, obligations, covenants and
duties owing by the Borrower or any other Credit Party to the Administrative Agent, any Lender, the Swing Line Lender, the LC Issuer,
the Arranger, any affiliate of the Administrative Agent, any Lender, the Swing Line Lender, the LC Issuer or the Arranger, or any
indemnitee under the provisions of Section9.6 or any other provisions of the Loan Documents, in each case of any kind or nature,
present or future, arising under this Agreement or any other Loan Document, whether or not evidenced by any note, guaranty or other
instrument, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, foreign exchange
risk, guaranty, indemnification, or in any other manner, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. The term includes, without
limitation, all interest, charges, expenses, fees, attorneys' fees and disbursements, paralegals' fees (in each case whether or not
allowed), and any other sum chargeable to the Borrower or any of its Subsidiaries under this Agreement or any other Loan Document.
“Off-Balance Sheet Liability” of a Person means the principal component of (i) any repurchase obligation or liability of
such Person (excluding any such obligation or liability for disposition of Receivables), with respect to Accounts or notes
receivable sold by such Person, (ii) any liability under any so-called “synthetic lease” or “tax ownership operating lease”
transaction entered into by such Person, or (iii) any obligation arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheets
of such Person, but excluding from this clause (iii) all Operating Leases.
“Operating Lease” of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee which
has an original term (including any required renewals and any renewals effective at the option of the lessor) of one year or more.
“Other Taxes” is defined in Section 3.5(ii).
“Outstanding Revolving Credit Exposure” means, as to any Lender at any time, the sum of (i) the aggregate principal amount
of its Revolving Loans outstanding at such time, plus (ii) an amount equal to its ratable obligation to purchase participations in
the aggregate principal amount of Swing Line Loans outstanding at such time, plus (iii) an amount equal to its ratable obligation to
purchase participations in the LC Obligations at such time.
“Participants” is defined in Section 12.2.1.
“Patriot Transaction” means the transaction pursuant to that certain Loan and Security Agreement dated July 25, 2003 between
Patriot Capital Markets, LLC and Midland Funding NCC-1 Corporation, so long as the aggregate amount of Indebtedness incurred in such
transaction or series of transactions does not exceed $400,000.
“Payment Date” means the first day of each April, July, October and January and the Revolving Loan Termination Date. The
first Payment Date under this Agreement is October 1, 2004.
“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.
“Permitted Acquisition” is defined in Section 6.13.3
“Permitted Receivables Transactions” means the CFSC Transaction and the Patriot Transaction.
“Permitted Receivables Transactions Documents” means any document, agreement or instrument evidencing any Permitted
Receivables Transaction or entered into in connection with any Permitted Receivables Transaction.
“Permitted Restructuring” means a transaction or series of transactions pursuant to which the Borrower or any Subsidiary
sells, assigns or otherwise transfers Receivables and/or other assets between or among themselves, including transfers to or mergers
or consolidations with, or voluntary dissolutions or liquidations into, newly created Wholly-Owned Subsidiaries of the Borrower or
the Subsidiaries, subject to compliance with Sections 6.25 and 6.26; provided that (i) no Receivables or other assets of Excluded
Subsidiaries shall be commingled with the assets of a Credit Party as a result of such Permitted Restructuring, (ii) no such
transfers shall take place from a Credit Party to an Excluded Subsidiary or to a Subsidiary that is not a Credit Party and (iii) such
transactions are effected for tax planning and related general corporate purposes.
“Person” means any natural person, corporation, firm, joint venture, partnership, limited liability company, association,
enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or
instrumentality thereof.
“Plan” means an employee pension benefit plan, excluding any Multiemployer Plan, which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group
may have any liability.
“Pledge and Security Agreement” means that certain Pledge and Security Agreement, dated as of the Closing Date, by and
between the Credit Parties and the Administrative Agent for the benefit of the Holders of Secured Obligations, as the same may be
amended, restated, supplemented, or otherwise modified from time to time.
“Pledge Subsidiary” means each Domestic Subsidiary and First Tier Foreign Subsidiary.
“Pricing Schedule” means the Schedule identifying the Applicable Margin and Applicable Fee Rate attached hereto and
identified as such.
“Prime Rate” means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its
parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.
“Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person,
or other assets owned, leased or operated by such Person.
“Proposed New Lender” is defined in Section 2.5.3(i).
“Purchase Price” means the total consideration and other amounts payable in connection with any Acquisition, including,
without limitation, any portion of the consideration payable in cash, all Indebtedness, liabilities and contingent obligations
incurred or assumed in connection with such Acquisition and all transaction costs and expenses incurred in connection with such
Acquisition.
“Purchasers” is defined in Section 12.3.1.
“Rate Management Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all Rate Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.
“Rate Management Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter
entered by the Borrower or a 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.
“Receivable” of a Credit Party shall mean any right of such Credit Party to the payment of money arising out of a consumer
financing transaction, and which right was acquired by such Credit Party with a group of similar rights.
“Receivables Portfolio” of a Credit Party means any group of Receivables of such Credit Party acquired by such Credit Party
as part of a single transaction.
“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and
any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements
applicable to member banks of the Federal Reserve System.
“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and
any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks,
non-banks and non-broker lenders for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal
Reserve System.
“Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and
any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by
foreign lenders for the purpose of purchasing or carrying margin stock (as defined therein).
“Reimbursement Obligations” means, at any time, the aggregate of all obligations of the Borrower then outstanding under
Section 2.20 to reimburse the LC Issuer for amounts paid by the LC Issuer in respect of any one or more drawings under Facility LCs.
“Rentals” of a Person means the aggregate rent expense incurred by such Person under any Operating Lease.
“Reportable Event” means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such
section, with respect to a Plan subject to Title IV of ERISA, excluding, however, such events as to which the PBGC has by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided,
however, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the Code.
“Reports” is defined in Section 9.6.
“Required Lenders” means Lenders in the aggregate having at least 66 2/3% of the sum of the Aggregate Revolving Loan
Commitment (or, if all of the Revolving Loan Commitments are terminated pursuant to the terms of this Agreement, the Aggregate
Outstanding Revolving Credit Exposure at such time).
“Reserve Requirement” means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed under Regulation D on “Eurocurrency liabilities” (as defined in
Regulation D) (it being understood that no Reserve Requirement is in effect on the Closing Date).
“Restricted Payment” means (i) any dividend or other distribution, direct or indirect, on account of any equity interests of
the Borrower now or hereafter outstanding, except a dividend payable solely in the Borrower’s capital stock (other than Disqualified
Stock) or in options, warrants or other rights to purchase such capital stock, (ii) any redemption, retirement, purchase or other
acquisition for value, direct or indirect, of any equity interests of the Borrower or any of its Subsidiaries now or hereafter
outstanding, other than in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of
the Borrower) of other equity interests of the Borrower (other than Disqualified Stock) and (iii) any redemption, purchase,
retirement, defeasance, prepayment or other acquisition for value, direct or indirect, of any Indebtedness prior to the stated
maturity thereof, other than the Obligations, the Patriot Transaction and the Equipment Financing Transactions.
“Revolving Loan” means, with respect to a Lender, such Lender’s loan made pursuant to its commitment to lend set forth in
Section 2.1.1 (and any conversion or continuation thereof).
“Revolving Loan Commitment” means, for each Lender, including without limitation, each LC Issuer, such Lender’s obligation
to make Revolving Loans to, and participate in Facility LCs issued upon the application of, the Borrower in an aggregate amount not
exceeding the amount set forth for such Lender on the Commitment Schedule or in any Assignment Agreement delivered pursuant to
Section 12.3, as such amount may be modified from time to time pursuant to the terms hereof.
“Revolving Loan Pro Rata Share” means, with respect to any Lender, the percentage obtained by dividing (i) such Lender’s
Revolving Loan Commitment at such time by (ii) the Aggregate Revolving Loan Commitment at such time; provided, however, if all of the
Revolving Loan Commitments are terminated pursuant to the terms of this Agreement, then “Revolving Loan Pro Rata Share” means the
percentage obtained by dividing (a) such Lender’s Outstanding Revolving Credit Exposure at such time by (b) the Aggregate Outstanding
Revolving Credit Exposure at such time.
“Revolving Loan Termination Date” means the earlier of (a) June 30, 2007, and (b) the date of termination in whole of the
Aggregate Revolving Loan Commitment pursuant to Section 2.2 hereof or the Revolving Loan Commitments pursuant to Section 8.1 hereof.
“S&P” means Standard and Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.
“Sale and Leaseback Transaction” means any sale or other transfer of Property by any Person with the intent to lease such
Property as lessee.
“Schedule” refers to a specific schedule to this Agreement, unless another document is specifically referenced.
“Section” means a numbered section of this Agreement, unless another document is specifically referenced.
“Secured Obligations” means, collectively, (i) the Obligations and (ii) all Rate Management Obligations owing in connection
with Rate Management Transactions to any Lender or any affiliate of any Lender.
“Selling Lender” is defined in Section 2.5.3(ii).
“Single Employer Plan” means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the
Borrower or any member of the Controlled Group.
“Subordinated Indebtedness” of a Person means any Indebtedness (other than Indebtedness arising from intercompany loans and
advances) of such Person the payment of which is subordinated to payment of the Secured Obligations to the written satisfaction of
the Required Lenders.
“Subordinated Indebtedness Documents” means any document, agreement or instrument evidencing any Subordinated Indebtedness
or entered into in connection with any Subordinated Indebtedness.
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power
of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by
such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so
owned or controlled. Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the
Borrower.
“Substantial Portion” means, with respect to the Property of the Borrower and its Subsidiaries, Property which represents
more than 5% of Consolidated Tangible Assets or Property which is responsible for more than 5% of the consolidated net revenues of
the Borrower and its Subsidiaries, in each case, as would be shown in the consolidated financial statements of the Borrower and its
Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made (or if
financial statements have not been delivered hereunder for that month which begins the twelve-month period, then the financial
statements delivered hereunder for the quarter ending immediately prior to that month).
“Swing Line Borrowing Notice” is defined in Section 2.4.2.
“Swing Line Commitment” means the obligation of the Swing Line Lender to make Swing Line Loans up to a maximum principal
amount of $5,000,000 at any one time outstanding.
“Swing Line Lender” means Bank One.
“Swing Line Loan” means a Loan made available to the Borrower by the Swing Line Lender pursuant to Section 2.4.
“Taxes” means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and
all liabilities with respect to the foregoing, but excluding Excluded Taxes and Other Taxes.
“Transferee” is defined in Section 12.4.
“Type” means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar Advance and with respect to
any Loan, its nature as a Floating Rate Loan or a Eurodollar Loan.
“Unfunded Liabilities” means the amount (if any) by which the present value of all vested and unvested accrued benefits
under each Single Employer Plan subject to Title IV of ERISA exceeds the fair market value of all such Plan’s assets allocable to
such benefits, all determined as of the then most recent valuation date for such Plan for which a valuation report is available,
using actuarial assumptions for funding purposes as set forth in such report.
“Unmatured Default” means an event which but for the lapse of time or the giving of notice, or both, would constitute a
Default.
“Wholly-Owned Subsidiary” of a Person means (i) any Subsidiary all of the outstanding voting securities of which shall at
the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or
by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which
shall at the time be so owned or controlled.
1.2. Plural Forms. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined
terms.
ARTICLE II
THE CREDITS
2.1. Revolving Loan Commitments. From and including the Closing Date and prior to the Revolving Loan Termination Date, upon the
satisfaction of the conditions precedent set forth in Section 4.1 and 4.2, as applicable, each Lender severally and not jointly
agrees, on the terms and conditions set forth in this Agreement, to (i) make Revolving Loans to the Borrower from time to time and
(ii) participate in Facility LCs issued upon the request of the Borrower, in each case in an amount not to exceed in the aggregate at
any one time outstanding of its Revolving Loan Pro Rata Share of the Available Aggregate Revolving Loan Commitment; provided that at
no time shall the Aggregate Outstanding Revolving Credit Exposure hereunder exceed the Adjusted Available Aggregate Revolving Loan
Commitment. Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow Revolving Loans at any time prior to
the Revolving Loan Termination Date. The commitment of each Lender to lend hereunder shall automatically expire on the Revolving
Loan Termination Date. The LC Issuer will issue Facility LCs hereunder on the terms and conditions set forth in Section 2.20.
2.2. Required Payments; Termination. (a) Any outstanding Revolving Loans shall be paid in full by the Borrower on the Revolving
Loan Termination Date and all other unpaid Secured Obligations shall be paid in full by the Borrower on the later of the date when
due or the Revolving Loan Termination Date. In addition, if at any time the Aggregate Outstanding Revolving Credit Exposure
hereunder exceeds the Adjusted Available Aggregate Revolving Loan Commitment, the Borrower shall promptly (i) repay outstanding
Revolving Loans up to the aggregate amount of such excess, and (ii) if such excess is greater than the outstanding principal amount
of the Revolving Loans, cash collateralize the outstanding LC Obligations by depositing funds in the Facility LC Collateral Account,
in an aggregate amount equal to the remaining excess. Notwithstanding the termination of the Revolving Loan Commitments under this
Agreement on the Revolving Loan Termination Date, until all of the Obligations (other than contingent indemnity obligations) shall
have been fully paid and satisfied and all financing arrangements among the Borrower and the Lenders hereunder and under the other
Loan Documents shall have been terminated, all of the rights and remedies under this Agreement and the other Loan Documents shall
survive.
(b) Asset Sales. Upon the consummation of any Asset Sale (other than sales permitted under Sections 6.12.1,
6.12.2, 6.12.3 or 6.12.4) by the Borrower or any Subsidiary, within three (3) Business Days after the Borrower’s or any of its
Subsidiaries’ receipt of any Net Cash Proceeds (orconversion to cash of non-cash proceeds (whether principal or interest and
including securities, release of escrow arrangements)) received from any such Asset Sale, the Borrower shall make a mandatory
prepayment of the Loans, subject to the provisions governing the application of payments set forth in Section 2.2(c), in an amount
equal to one hundred percent (100%) of such Net Cash Proceeds. Notwithstanding the foregoing, Net Cash Proceeds of Asset Sales with
respect to which the Borrower shall have given the Administrative Agent written notice of its intention to repair or replace the
Property subject to any such Asset Sale or invest such Net Cash Proceeds in the purchase of assets (other than securities, unless
those securities represent equity interests in an entity that becomes a Guarantor) to be used by one or more of the Borrower or the
Guarantors in their businesses within one year following such Asset Sale, shall not be subject to the provisions of the first
sentence of this Section 2.2(b) unless and to the extent that such applicable period shall have expired without such repair or
replacement having been made.
(c) Application of Designated Prepayments. Each mandatory prepayment required by clause (b) of this Section
2.2 shall be referred to herein as a “Designated Prepayment.” Designated Prepayments of Loans shall first be applied to Floating
Rate Loans and to any Eurodollar Rate Loans maturing on such date and then to subsequently maturing Eurodollar Rate Loans in order of
maturity. Notwithstanding the foregoing, so long as no Default has occurred and is then continuing and at the Borrower’s option, the
Administrative Agent shall hold all Designated Prepayments to be applied to Eurodollar Rate Loans in escrow for the benefit of the
Lenders and shall release such amounts upon the expiration of the Interest Periods applicable to any such Eurodollar Rate Loans being
prepaid (it being understood and agreed that interest shall continue to accrue on the Obligations until such time as such prepayments
are released from escrow and applied to reduce the Obligations); provided, however, that upon the occurrence and during the
continuance of an Event of Default, such escrowed amounts may be applied to Eurodollar Rate Loans without regard to the expiration of
any Interest Period and the Borrower shall make all payments under Section 3.4 resulting therefrom.
(d) Mandatory Reductions in Aggregate Revolving Loan Commitment. Each Designated Prepayment (as defined in
clause (c) above) shall permanently reduce, by an amount equal to the amount of such Designated Prepayment, the Aggregate Revolving
Loan Commitment and the Borrower shall make the payments required under Section 2.2(a).
2.3. Ratable Loans; Types of Advances. (a) Each Advance hereunder (other than a Swing Line Loan) shall consist of Loans made
from the several Lenders ratably in proportion to their respective Revolving Loan Pro Rata Share.
(b) The Advances may be Floating Rate Advances or Eurodollar Advances, or a combination thereof, selected by
the Borrower in accordance with Sections 2.8 and 2.9, or Swing Line Loans selected by the Borrower in accordance with Section 2.4.
2.4. Swing Line Loans.
2.4.1 Amount of Swing Line Loans. Upon the satisfaction of the conditions precedent set forth in Section 4.2 and, if such Swing
Line Loan is to be made on the date of the initial Credit Extension hereunder, the satisfaction of the conditions precedent
set forth in Section 4.1 as well, from and including the date of this Agreement and prior to the Revolving Loan Termination
Date, the Swing Line Lender agrees, on the terms and conditions set forth in this Agreement, to make Swing Line Loans to the
Borrower from time to time in an aggregate principal amount not to exceed the Swing Line Commitment, provided that the
Aggregate Outstanding Revolving Credit Exposure shall not at any time exceed the Aggregate Revolving Loan Commitment, and
provided further that at no time shall the sum of (i) the Swing Line Lender’s Revolving Loan Pro Rata Share of the Swing
Line Loans then outstanding, plus (ii) the outstanding Revolving Loans made by the Swing Line Lender pursuant to Section 2.1
(including its participation in any Facility LCs), exceed the Swing Line Lender’s Revolving Loan Commitment at such time.
Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow Swing Line Loans at any time prior to
the Revolving Loan Termination Date.
2.4.2 Borrowing Notice. The Borrower shall deliver to the Administrative Agent and the Swing Line Lender irrevocable notice (a
“Swing Line Borrowing Notice”) not later than 12:00 noon (Phoenix, Arizona time) on the Borrowing Date of each Swing Line
Loan, specifying (i) the applicable Borrowing Date (which date shall be a Business Day), and (ii) the aggregate amount of
the requested Swing Line Loan which shall be an amount not less than $100,000. The Swing Line Loans shall bear interest at
the Floating Rate or at such other rate as is agreed upon by the Borrower and the Swing Line Lender.
2.4.3 Making of Swing Line Loans. Promptly after receipt of a Swing Line Borrowing Notice, the Administrative Agent shall notify
each Lender by fax or other similar form of transmission, of the requested Swing Line Loan. Not later than 2:00 p.m.
(Phoenix, Arizona time) on the applicable Borrowing Date, the Swing Line Lender shall make available the Swing Line Loan, in
funds immediately available in Phoenix, to the Administrative Agent at its address specified pursuant to Article XIII. The
Administrative Agent will promptly make the funds so received from the Swing Line Lender available to the Borrower on the
Borrowing Date at the Administrative Agent’s aforesaid address.
2.4.4 Repayment of Swing Line Loans. Each Swing Line Loan shall be paid in full by the Borrower on or before the fifth (5th)
Business Day after the Borrowing Date for such Swing Line Loan. In addition, the Swing Line Lender (i) may at any time in
its sole discretion with respect to any outstanding Swing Line Loan, or (ii) shall, on the fifth (5th) Business Day after
the Borrowing Date of any Swing Line Loan, require each Lender (including the Swing Line Lender) to make a Revolving Loan in
the amount of such Lender’s Revolving Loan Pro Rata Share of such Swing Line Loan (including, without limitation, any
interest accrued and unpaid thereon), for the purpose of repaying such Swing Line Loan. Not later than 1:00 p.m. (Phoenix,
Arizona time) on the date of any notice received pursuant to this Section 2.4.4, each Lender shall make available its
required Revolving Loan, in funds immediately available in Phoenix to the Administrative Agent at its address specified
pursuant to Article XIII. Revolving Loans made pursuant to this Section 2.4.4 shall initially be Floating Rate Loans and
thereafter may be continued as Floating Rate Loans or converted into Eurodollar Loans in the manner provided in Section 2.9
and subject to the other conditions and limitations set forth in Article II. Unless a Lender shall have notified the Swing
Line Lender, prior to its making any Swing Line Loan, that any applicable condition precedent set forth in Sections 4.1 or
4.2 had not been satisfied, such Lender’s obligation to make Revolving Loans pursuant to this Section 2.4.4 to repay Swing
Line Loans shall be unconditional, continuing, irrevocable and absolute and shall not be affected by any circumstances,
including, without limitation, (a) any set-off, counterclaim, recoupment, defense or other right which such Lender may have
against the Swing Line Lender or any other Person, (b) the occurrence or continuance of a Default or Unmatured Default, (c)
any adverse change in the condition (financial or otherwise) of the Borrower, or (d) any other circumstances, happening or
event whatsoever. In the event that any Lender fails to make payment to the Administrative Agent of any amount due under
this Section 2.4.4, the Administrative Agent shall be entitled to receive, retain and apply against such obligation the
principal and interest otherwise payable to such Lender hereunder until the Administrative Agent receives such payment from
such Lender or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Lender
fails to make payment to the Administrative Agent of any amount due under this Section 2.4.4, such Lender shall be deemed,
at the option of the Administrative Agent, to have unconditionally and irrevocably purchased from the Swing Line Lender,
without recourse or warranty, an undivided interest and participation in the applicable Swing Line Loan in the amount of
such Revolving Loan, and such interest and participation may be recovered from such Lender together with interest thereon at
the Federal Funds Effective Rate for each day during the period commencing on the date of demand and ending on the date such
amount is received. On the Revolving Loan Termination Date, the Borrower shall repay in full the outstanding principal
balance of the Swing Line Loans.
2.5. Commitment Fee; Aggregate Revolving Loan Commitment.
2.5.1 Commitment Fee. The Borrower shall pay to the Administrative Agent, for the account of the Lenders in accordance with their
Revolving Loan Pro Rata Shares, from and after the Closing Date until the date on which the Aggregate Revolving Loan
Commitment shall be terminated in whole, a commitment fee (the “Commitment Fee”) accruing at the rate of the then
Applicable Fee Rate on the Available Aggregate Revolving Loan Commitment in effect from time to time; provided that, to the
extent any Swing Line Loan is outstanding, the amount of the Commitment Fee payable to the Swing Line Lender shall be
computed by adding to its Outstanding Revolving Credit Exposure the outstanding principal amount of such Swing Line Loan.
In the case of each Lender other than the Swing Line Lender, Swing Line Loans shall not count as usage of the Aggregate
Commitment for purposes of calculating the Commitment Fee. All such Commitment Fees payable hereunder shall be payable
quarterly in arrears on each Payment Date; provided, that if any Lender continues to have Outstanding Revolving Credit
Exposure after the termination of its Revolving Loan Commitment, then the Commitment Fee shall continue to accrue and be due
and payable pursuant to the terms hereof until such Outstanding Revolving Credit Exposure is reduced to zero.
2.5.2 Voluntary Reductions in Aggregate Revolving Loan Commitment. The Borrower may permanently reduce the Aggregate Revolving
Loan Commitment in whole, or in part, ratably among the Lenders in the minimum amount of $3,000,000 (and in multiples of
$1,000,000 in excess thereof), upon at least three (3) Business Days' written notice to the Administrative Agent, which
notice shall specify the amount of any such reduction, provided, however, that the amount of the Aggregate Revolving Loan
Commitment may not be reduced below the Aggregate Outstanding Revolving Credit Exposure. All accrued Commitment Fees shall
be payable on the effective date of any termination of the obligations of the Lenders to make Credit Extensions hereunder
and on the final date upon which all Loans are repaid.
2.5.3 Increase in Aggregate Revolving Loan Commitment. (i) At any time, but not more than once during the period commencing on
the Closing Date and ending on the one-year anniversary thereof and not more than once during each successive one-year
anniversary of the Closing Date, the Borrower may request that the Aggregate Revolving Loan Commitment be increased;
provided that, without the prior written consent of all of the Lenders, (A) the Aggregate Revolving Loan Commitment shall at
no time exceed $100,000,000 minus the aggregate amount of all reductions in the Aggregate Revolving Loan Commitment
previously made pursuant to Section 2.5.2; (B) such request shall be in an amount not less than $5,000,000; and (C) the
aggregate amount of such increase shall not exceed $25,000,000. Such request shall be made in a written notice given to the
Administrative Agent and the Lenders by the Borrower not less than twenty (20) Business Days prior to the proposed effective
date of such increase, which notice (a “Commitment Increase Notice”) shall specify the amount of the proposed increase in
the Aggregate Revolving Loan Commitment and the proposed effective date of such increase. In the event of such a Commitment
Increase Notice, each of the Lenders shall be given the opportunity to participate in the requested increase ratably in the
proportions that their respective Revolving Loan Commitments bear to the Aggregate Revolving Loan Commitment under this
Agreement. On or prior to the date that is fifteen (15) Business Days after receipt of the Commitment Increase Notice, each
Lender shall submit to the Administrative Agent a notice indicating the maximum amount by which it is willing to increase
its Revolving Loan Commitment in connection with such Commitment Increase Notice (any such notice to the Administrative
Agent being herein a “Lender Increase Notice”). Any Lender which does not submit a Lender Increase Notice to the
Administrative Agent prior to the expiration of such fifteen (15) Business Day period shall be deemed to have denied any
increase in its Revolving Loan Commitment. In the event that the increases of Revolving Loan Commitments set forth in the
Lender Increase Notices exceed the amount requested by the Borrower in the Commitment Increase Notice, the Administrative
Agent and the Arranger shall have the right, with the consent of the Borrower, to allocate the amount of increases necessary
to meet the Borrower’s Commitment Increase Notice. In the event that the Lender Increase Notices are less than the amount
requested by the Borrower, not later than three (3) Business Days prior to the proposed effective date, the Borrower may
notify the Administrative Agent of any financial institution that shall have agreed to become a “Lender” party hereto (a
“Proposed New Lender”) in connection with the Commitment Increase Notice. Any Proposed New Lender shall be subject to the
consent of the Administrative Agent (which consent shall not be unreasonably withheld). If the Borrower shall not have
arranged any Proposed New Lender(s) to commit to the shortfall from the Lender Increase Notices, then the Borrower shall be
deemed to have reduced the amount of its Commitment Increase Notice to the aggregate amount set forth in the Lender Increase
Notices. Based upon the Lender Increase Notices, any allocations made in connection therewith and any notice regarding any
Proposed New Lender, if applicable, the Administrative Agent shall notify the Borrower and the Lenders on or before the
Business Day immediately prior to the proposed effective date of the amount of each Lender’s and Proposed New Lenders’
Revolving Loan Commitment (the “Effective Commitment Amount”) and the amount of the Aggregate Revolving Loan Commitment,
which amounts shall be effective on the following Business Day. Any increase in the Aggregate Revolving Loan Commitment
shall be subject to the following conditions precedent: (I) as of the date of the Commitment Increase Notice and as of the
proposed effective date of the increase in the Aggregate Revolving Loan Commitment, all representations and warranties shall
be true and correct in all material respects as though made on such date and no event shall have occurred and then be
continuing which constitutes a Default or Unmatured Default, (II) the Borrower, the Administrative Agent and each Proposed
New Lender or Lender that shall have agreed to provide a “Revolving Loan Commitment” in support of such increase in the
Aggregate Revolving Loan Commitment shall have executed and delivered a “Commitment and Acceptance” substantially in the
form of Exhibit I hereto, (III) counsel for the Borrower and for the Guarantors shall have provided to the Administrative
Agent supplemental opinions in form and substance reasonably satisfactory to the Administrative Agent and (IV) the Borrower
and the Proposed New Lender shall otherwise have executed and delivered such other instruments and documents as may be
required under Article IV or that the Administrative Agent shall have reasonably requested in connection with such
increase. If any fee shall be charged by the Lenders in connection with any such increase, such fee shall be in accordance
with then prevailing market conditions, which market conditions shall have been reasonably documented by the Administrative
Agent to the Borrower. No less than two (2) Business Days prior to the effective date of the increase of the Aggregate
Revolving Loan Commitment, the Administrative Agent shall notify the Borrower of the amount of the fee to be charged by the
Lenders, and the Borrower may, at least one (1) Business Day prior to such effective date, cancel its request for the
commitment increase. If the commitment increase is cancelled pursuant to the immediately preceding sentence, the Borrower’s
cancelled increase request shall not be counted towards the Borrower’s maximum number of increase requests permitted by the
first sentence of this Section 2.5.3(i). Upon satisfaction of the conditions precedent to any increase in the Aggregate
Revolving Loan Commitment, the Administrative Agent shall promptly advise the Borrower and each Lender of the effective date
of such increase. Upon the effective date of any increase in the Aggregate Revolving Loan Commitment that is supported by a
Proposed New Lender, such Proposed New Lender shall be a party to this Agreement as a Lender and shall have the rights and
obligations of a Lender hereunder. Nothing contained herein shall constitute, or otherwise be deemed to be, a commitment on
the part of any Lender to increase its Revolving Loan Commitment hereunder at any time.
(ii) For purposes of this clause (ii), (A) the term “Buying Lender(s)” shall mean (1) each Lender the Effective Commitment Amount
of which is greater than its Revolving Loan Commitment prior to the effective date of any increase in the Aggregate
Revolving Loan Commitment and (2) each Proposed New Lender that is allocated an Effective Commitment Amount in connection
with any Commitment Increase Notice and (B) the term “Selling Lender(s)” shall mean each Lender whose Revolving Loan
Commitment is not being increased from that in effect prior to such increase in the Aggregate Revolving Loan Commitment.
Effective on the effective date of any increase in the Aggregate Revolving Loan Commitment pursuant to clause (i) above,
each Selling Lender hereby sells, grants, assigns and conveys to each Buying Lender, without recourse, warranty, or
representation of any kind, except as specifically provided herein, an undivided percentage in such Selling Lender’s right,
title and interest in and to its outstanding Credit Extensions in the respective dollar amounts and percentages necessary so
that, from and after such sale, each such Selling Lender’s outstanding Credit Extensions shall equal such Selling Lender’s
Revolving Loan Pro Rata Share (calculated based upon the Effective Commitment Amounts) of the outstanding Credit
Extensions. Effective on the effective date of the increase in the Aggregate Revolving Loan Commitment pursuant to clause
(i) above, each Buying Lender hereby purchases and accepts such grant, assignment and conveyance from the Selling Lenders.
Each Buying Lender hereby agrees that its respective purchase price for the portion of the outstanding Credit Extensions
purchased hereby shall equal the respective dollar amount necessary so that, from and after such payments, each Buying
Lender’s outstanding Credit Extensions shall equal such Buying Lender’s Revolving Loan Pro Rata Share (calculated based upon
the Effective Commitment Amounts) of the outstanding Credit Extensions. Such amount shall be payable on the effective date
of the increase in the Aggregate Revolving Loan Commitment by wire transfer of immediately available funds to the
Administrative Agent. the Administrative Agent, in turn, shall wire transfer any such funds received to the Selling
Lenders, in same day funds, for the sole account of the Selling Lenders. Each Selling Lender hereby represents and warrants
to each Buying Lender that such Selling Lender owns the Credit Extensions being sold and assigned hereby for its own account
and has not sold, transferred or encumbered any or all of its interest in such Credit Extensions, except for participations
which will be extinguished upon payment to Selling Lender of an amount equal to the portion of the outstanding Credit
Extensions being sold by such Selling Lender. Each Buying Lender hereby acknowledges and agrees that, except for each
Selling Lender’s representations and warranties contained in the foregoing sentence, each such Buying Lender has entered
into its Commitment and Acceptance with respect to such increase on the basis of its own independent investigation and has
not relied upon, and will not rely upon, any explicit or implicit written or oral representation, warranty or other
statement of the Lenders or the Administrative Agent concerning the authorization, execution, legality, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or the other Loan Documents. The Borrower
hereby agrees to compensate each Selling Lender for all losses, expenses and liabilities incurred by each Lender in
connection with the sale and assignment of any Eurodollar Loan hereunder on the terms and in the manner as set forth in
Section 3.4.
2.6. Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the minimum amount of $250,000, and each Floating Rate
Advance (other than an Advance to repay Swing Line Loans) shall be in the minimum amount of $250,000, provided, however, that any
Floating Rate Advance may be in the amount of the Adjusted Available Aggregate Revolving Loan Commitment minus the Aggregate
Outstanding Revolving Credit Exposure at such time.
2.7. Optional Principal Payments. The Borrower may from time to time pay, without penalty or premium, all outstanding Floating
Rate Advances (other than Swing Line Loans), or any portion of the outstanding Floating Rate Advances (other than Swing Line Loans),
in a minimum aggregate amount of $250,000, in each case upon prior notice to the Administrative Agent by 10:00 a.m. (Phoenix, Arizona
time) at least one Business Day prior to the date of such payment. The Borrower may at any time pay, without penalty or premium, all
outstanding Swing Line Loans, or, in a minimum amount of $100,000, any portion of the outstanding Swing Line Loans, with notice to
the Administrative Agent and the Swing Line Lender by 11:00 a.m. (Phoenix, Arizona time) on the date of repayment. The Borrower may
from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or
premium, all outstanding Eurodollar Advances, or, in a minimum aggregate amount of $250,000, any portion of the outstanding
Eurodollar Advances upon three (3) Business Days' prior notice to the Administrative Agent.
2.8. Method of Selecting Types and Interest Periods for New Advances. The Borrower shall select the Type of Advance and, in the
case of each Eurodollar Advance, the Interest Period applicable thereto from time to time; provided that there shall be no more than
30 Interest Periods in effect with respect to all of the Loans at any time, unless such limit has been waived by the Administrative
Agent in its sole discretion. The Borrower shall give the Administrative Agent irrevocable notice (a “Borrowing Notice”) not later
than 10:00 a.m. (Phoenix, Arizona time) at least one Business Day before the Borrowing Date of each Floating Rate Advance (other than
a Swing Line Loan) and 12:00 noon (Phoenix, Arizona time) at least three Business Days before the Borrowing Date for each Eurodollar
Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest Period applicable thereto.
Not later than 1:00 p.m. (Phoenix, Arizona time) on each Borrowing Date, each Lender shall make available its Loan or Loans in
Federal or other funds immediately available in Phoenix to the Administrative Agent at its address specified pursuant to Article
XIII. The Administrative Agent will promptly make the funds so received from the Lenders available to the Borrower at the
Administrative Agent's aforesaid address.
2.9. Conversion and Continuation of Outstanding Advances; No Conversion or Continuation of Eurodollar Advances After Default.
Floating Rate Advances (other than Swing Line Advances) shall continue as Floating Rate Advances unless and until such Floating Rate
Advances are converted into Eurodollar Advances pursuant to this Section 2.9 or are repaid in accordance with Section 2.7. Each
Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which
time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or
was repaid in accordance with Section 2.7 or (y) the Borrower shall have given the Administrative Agent a Conversion/Continuation
Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar
Advance for the same or another Interest Period. Subject to the terms of Section 2.6, the Borrower may elect from time to time to
convert all or any part of an Advance of any Type (other than a Swing Line Advance) into any other Type or Types of Advances;
provided that any conversion of any Eurodollar Advance shall be made on, and only on, the last day of the Interest Period applicable
thereto. Notwithstanding anything to the contrary contained in this Section 2.9, during the continuance of a Default or an Unmatured
Default, the Administrative Agent may (or shall at the direction of the Required Lenders), by notice to the Borrower, declare that no
Advance may be made, converted or continued as a Eurodollar Advance. The Borrower shall give the Administrative Agent irrevocable
notice (a “Conversion/Continuation Notice”) of each conversion of an Advance or continuation of a Eurodollar Advance not later than
10:00 a.m. (Phoenix, Arizona time) at least one (1) Business Day, in the case of a conversion into a Floating Rate Advance, or three
(3) Business Days, in the case of a conversion into or continuation of a Eurodollar Advance, prior to the date of the requested
conversion or continuation, specifying:
(i) the requested date, which shall be a Business Day, of such conversion or continuation,
(ii) the aggregate amount and Type of the Advance which is to be converted or continued, and
(iii) the amount of such Advance which is to be converted into or continued as a Eurodollar Advance and the duration of the
Interest Period applicable thereto.
2.10. Changes in Interest Rate, etc. Each Floating Rate Advance (other than a Swing Line Advance) shall bear interest on the
outstanding principal amount thereof, for each day from and including the date such Advance is made or is automatically converted
from a Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.9, to but excluding the date it is paid or is converted
into a Eurodollar Advance pursuant to Section 2.9 hereof, at a rate per annum equal to the Floating Rate for such day. Each Swing
Line Loan shall bear interest on the outstanding principal amount thereof, for each day from and including the day such Swing Line
Loan is made to but excluding the date it is fully paid at a rate per annum equal to the Floating Rate for such day. Changes in the
rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each
change in the Alternate Base Rate. Each Eurodollar Advance shall bear interest on the outstanding principal amount thereof from and
including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the
interest rate determined by the Administrative Agent as applicable to such Eurodollar Advance based upon the Borrower's selections
under Sections 2.8 and 2.9 and otherwise in accordance with the terms hereof. No Interest Period in respect of any Revolving Loan
may end after the Revolving Loan Termination Date.
2.11. Rates Applicable After Default. During the continuance of a Default (including the Borrower’s failure to pay any Loan at
maturity) the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest
rates), declare that (i) each Eurodollar Advance shall bear interest for the remainder of the applicable Interest Period at the rate
otherwise applicable to such Interest Period plus 2% per annum, (ii) each Floating Rate Advance shall bear interest at a rate per
annum equal to the Floating Rate in effect from time to time plus 2% per annum, and (iii) the LC Fee shall be increased by 2% per
annum; provided that, during the continuance of a Default under Section 7.6 or 7.7, the interest rates set forth in clauses (i) and
(ii) above and the increase in the LC Fee set forth in clause (iii) above shall be applicable to all Credit Extensions, Advances,
fees and other Obligations hereunder without any election or action on the part of the Administrative Agent or any Lender.
2.12. Method of Payment. All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in
immediately available funds to the Administrative Agent at the Administrative Agent's address specified pursuant to Article XIII, or
at any other Lending Installation of the Administrative Agent specified in writing by the Administrative Agent to the Borrower, by
12:00 noon (Phoenix, Arizona time) on the date when due and shall (except with respect to repayments of Swing Line Loans, and except
in the case of Reimbursement Obligations for which the LC Issuer has not been fully indemnified by the Lenders, or as otherwise
specifically required hereunder) be applied ratably by the Administrative Agent among the Lenders. Each payment delivered to the
Administrative Agent for the account of any Lender shall be delivered promptly by the Administrative Agent to such Lender in the same
type of funds that the Administrative Agent received at its address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Administrative Agent from such Lender. The Administrative Agent is hereby authorized to charge
the account of the Borrower maintained with Bank One for each payment of the Obligations as it becomes due hereunder. Each reference
to the Administrative Agent in this Section 2.12 shall also be deemed to refer, and shall apply equally, to the LC Issuer in the case
of payments required to be made by the Borrower to the LC Issuer pursuant to Section 2.20.6.
2.13. Noteless Agreement; Evidence of Indebtedness.
(i) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the
Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time hereunder.
(ii) The Administrative Agent shall also maintain accounts in which it will record (a) the date and the amount of each Loan made
hereunder, the Type thereof and the Interest Period (in the case of a Eurodollar Advance) with respect thereto, (b)
the amount of any principal or interest due and payable or to become due and payable from the Borrower to each
Lender hereunder, (c) the original stated amount of each Facility LC and the amount of LC Obligations outstanding at
any time, (d) the effective date and amount of each Assignment Agreement delivered to and accepted by it and the
parties thereto pursuant to Section 12.3, (e) the amount of any sum received by the Administrative Agent hereunder
from the Borrower and each Lender's share thereof, and (f) all other appropriate debits and credits as provided in
this Agreement, including, without limitation, all fees, charges, expenses and interest.
(iii) The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be prima facie evidence of
the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the
Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Obligations in accordance with their terms.
(iv) Any Lender may request that its Revolving Loans or, in the case of the Swing Line Lender, the Swing Line Loans, be evidenced
by promissory notes (the “Notes”) in substantially the form of Exhibit E-1 or E-2, with appropriate changes for
notes evidencing Swing Line Loans. In such event, the Borrower shall prepare, execute and deliver to such Lender
such Note(s) payable to the order of such Lender. Thereafter, the Loans evidenced by such Note(s) and interest
thereon shall at all times (prior to any assignment pursuant to Section 12.3) be represented by one or more Notes
payable to the order of the payee named therein, except to the extent that any such Lender subsequently returns any
such Note(s) for cancellation and requests that such Loans once again be evidenced as described in paragraphs (i)
and (ii) above.
2.14. Telephonic Notices. The Borrower hereby authorizes the Lenders and the Administrative Agent to extend, convert or continue
Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the
Administrative Agent or any Lender in good faith believes to be acting on behalf of the Borrower, it being understood that the
foregoing authorization is specifically intended to allow Borrowing Notices and Conversion/Continuation Notices to be given
telephonically. The Borrower agrees to deliver promptly to the Administrative Agent a written confirmation, signed by an Authorized
Officer, if such confirmation is requested by the Administrative Agent or any Lender, of each telephonic notice. If the written
confirmation differs in any material respect from the action taken by the Administrative Agent and the Lenders, the records of the
Administrative Agent and the Lenders shall govern absent manifest error.
2.15. Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable in arrears
on the first day of each calendar month, commencing with the first such date to occur after the Closing Date, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest accrued on that portion of
the outstanding principal amount of any Floating Rate Advance converted into a Eurodollar Advance on a day other than a Payment Date
shall be payable on the date of conversion. Interest accrued on each Eurodollar Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Eurodollar Advance having an Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest Period. Interest on Eurodollar Advances, LC Fees and all other fees
hereunder shall be calculated for actual days elapsed on the basis of a 360-day year. Interest on Floating Rate Advances shall be
calculated for actual days elapsed on the basis of a 365/366-day year. Interest shall be payable for the day an Advance is made but
not for the day of any payment on the amount paid if payment is received prior to 12:00 noon (Phoenix, Arizona time) at the place of
payment. If any payment of principal of or interest on an Advance, any fees or any other amounts payable to the Administrative Agent
or any Lender hereunder shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest, fees and
commissions in connection with such payment.
2.16. Notification of Advances, Interest Rates, Prepayments and Revolving Loan Commitment Reductions; Availability of Loans.
Promptly after receipt thereof, the Administrative Agent will notify each Lender of the contents of each Aggregate Revolving Loan
Commitment reduction notice, Borrowing Notice, Swing Line Borrowing Notice, Conversion/Continuation Notice, and repayment notice
received by it hereunder. Promptly after notice from the LC Issuer, the Administrative Agent will notify each Lender of the contents
of each request for issuance of a Facility LC hereunder. The Administrative Agent will notify the Borrower and each Lender of the
interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give the Borrower and
each Lender prompt notice of each change in the Alternate Base Rate. Not later than 1:00 p.m. Phoenix, Arizona time) on each
Borrowing Date, each Lender shall make available its Revolving Loan or Revolving Loans in funds immediately available in Phoenix to
the Administrative Agent at its address specified pursuant to Article XIII. The Administrative Agent will promptly make the funds so
received from the Lenders available to the Borrower at the Administrative Agent’s aforesaid address.
2.17. Lending Installations. Each Lender may book its Loans and its participation in any LC Obligations and the LC Issuer may
book the Facility LCs at any Lending Installation selected by such Lender or the LC Issuer, as applicable, and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Loans, Facility
LCs, participations in LC Obligations and any Notes issued hereunder shall be deemed held by each Lender or the LC Issuer, as
applicable, for the benefit of any such Lending Installation. Each Lender and the LC Issuer may, by written notice to the
Administrative Agent and the Borrower in accordance with Article XIII, designate replacement or additional Lending Installations
through which Loans will be made by it or Facility LCs will be issued by it and for whose account Loan payments or payments with
respect to Facility LCs are to be made.
2.18. Non-Receipt of Funds by the Administrative Agent. Unless the Borrower or a Lender, as the case may be, notifies the
Administrative Agent prior to the date on which it is scheduled to make payment to the Administrative Agent of (i) in the case of a
Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal, interest or fees to the Administrative
Agent for the account of the Lenders, that it does not intend to make such payment, the Administrative Agent may assume that such
payment has been made. The Administrative Agent may, but shall not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Administrative Agent, the recipient of such payment shall, on demand by the Administrative Agent, repay to the
Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing
on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the Federal Funds Effective Rate for such day for the
first three days and, thereafter, the interest rate applicable to the relevant Loan or (y) in the case of payment by the Borrower,
the interest rate applicable to the relevant Loan.
2.19. Replacement of Lender. If the Borrower is required pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment to
any Lender or if any Lender's obligation to make or continue, or to convert Floating Rate Advances into, Eurodollar Advances shall be
suspended pursuant to Section 3.3 (any Lender so affected an “Affected Lender”), the Borrower may elect, if such amounts continue to
be charged or such suspension is still effective, to terminate or replace the Revolving Loan Commitment, and Loans of such Affected
Lender, provided that no Default or Unmatured Default shall have occurred and be continuing at the time of such termination or
replacement, and provided further that, concurrently with such termination or replacement, (i) if the Affected Lender is being
replaced, another bank or other entity which is reasonably satisfactory to the Borrower and the Administrative Agent shall agree, as
of such date, to purchase for cash the Outstanding Revolving Credit Exposure of the Affected Lender pursuant to an Assignment
Agreement substantially in the form of Exhibit C and to become a Lender for all purposes under this Agreement and to assume all
obligations of the Affected Lender to be terminated as of such date and to comply with the requirements of Section 12.3 applicable to
assignments, and (ii) the Borrower shall pay to such Affected Lender in immediately available funds on the day of such replacement
(A) all interest, fees and other amounts then accrued but unpaid to such Affected Lender by the Borrower hereunder to and including
the date of termination, including without limitation payments due to such Affected Lender under Sections 3.1, 3.2 and 3.5, and (B)
an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 3.4 had
the Loans of such Affected Lender been prepaid on such date rather than sold to the replacement Lender, in each case to the extent
not paid by the purchasing lender and (iii) if the Affected Lender is being terminated, the Borrower shall pay to such Affected
Lender all Obligations due to such Affected Lender (including the amounts described in the immediately preceding clauses (i) and (ii)
plus, to the extent not paid by the replacement Lender, the outstanding principal balance of such Affected Lender’s Credit
Extensions).
2.20. Facility LCs.
2.20.1 Issuance. The LC Issuer hereby agrees, on the terms and conditions set forth in this Agreement, to issue standby and
commercial Letters of Credit (each, a “Facility LC”) and to renew, extend, increase, decrease or otherwise modify each
Facility LC (“Modify,” and each such action, a “Modification”), from time to time from and including the date of this
Agreement and prior to the Revolving Loan Termination Date upon the request of the Borrower; provided that, immediately
after each such Facility LC is issued or Modified, (i) the aggregate amount of the outstanding LC Obligations shall not
exceed $5,000,000 and (ii) the Aggregate Outstanding Revolving Credit Exposure shall not exceed the Adjusted Available
Aggregate Revolving Loan Commitment. No Facility LC shall have an expiry date later than the earlier of (x) the fifteenth
Business Day prior to the Revolving Loan Termination Date and (y) one year after its issuance; provided that any Facility LC
with a one-year term may provide for the renewal thereof for additional one-year periods (which in no event shall extend
beyond the date referred to in the preceding clause (x)).
2.20.2 Participations. Upon the issuance or Modification by the LC Issuer of a Facility LC in accordance with this Section 2.20,
the LC Issuer shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably sold to
each Lender, and each Lender shall be deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the LC Issuer, a participation in such Facility LC (and each Modification thereof) and the
related LC Obligations in proportion to its Revolving Loan Pro Rata Share.
2.20.3 Notice. Subject to Section 2.20.1, the Borrower shall give the LC Issuer notice prior to 10:00 a.m. (Phoenix, Arizona time)
at least five Business Days prior to the proposed date of issuance or Modification of each Facility LC, specifying the
beneficiary, the proposed date of issuance (or Modification) and the expiry date of such Facility LC, and describing the
proposed terms of such Facility LC and the nature of the transactions proposed to be supported thereby. Upon receipt of
such notice, the LC Issuer shall promptly notify the Administrative Agent, and, upon issuance only, the Administrative Agent
shall promptly notify each Lender, of the contents thereof and of the amount of such Lender’s participation in such proposed
Facility LC. The issuance or Modification by the LC Issuer of any Facility LC shall, in addition to the conditions
precedent set forth in Article IV (the satisfaction of which the LC Issuer shall have no duty to ascertain), be subject to
the conditions precedent that such Facility LC shall be satisfactory to the LC Issuer and that the Borrower shall have
executed and delivered such application agreement and/or such other instruments and agreements relating to such Facility LC
as the LC Issuer shall have reasonably requested (each, a “Facility LC Application”). In the event of any conflict between
the terms of this Agreement and the terms of any Facility LC Application, the terms of this Agreement shall control.
2.20.4 LC Fees. The Borrower shall pay to the Administrative Agent, for the account of the Lenders ratably in accordance with
their respective Revolving Loan Pro Rata Shares, a letter of credit fee at a per annum rate equal to the Applicable Margin
for Eurodollar Loans in effect from time to time on the average daily undrawn stated amount under such Facility LC, such fee
to be payable in arrears on each Payment Date. The Borrower shall also pay to the LC Issuer for its own account (x) at the
time of issuance of each Facility LC which is a standby letter of credit, a fronting fee in an amount equal to 0.125% times
the face amount of such Facility LC, (y) in connection with each Facility LC which is a commercial letter of credit, a fee
in accordance with the LC Issuer’s customary commissions for such letters of credit and (z) documentary and processing
charges in connection with the issuance or Modification of and draws under Facility LCs in accordance with the LC Issuer’s
standard schedule for such charges as in effect from time to time. Each fee described in this Section 2.20.4 shall
constitute an “LC Fee”.
2.20.5 Administration; Reimbursement by Lenders. Upon receipt from the beneficiary of any Facility LC of any demand for payment
under such Facility LC, the LC Issuer shall notify the Administrative Agent and the Administrative Agent shall promptly
notify the Borrower and each other Lender as to the amount to be paid by the LC Issuer as a result of such demand and the
proposed payment date (the “LC Payment Date”). The responsibility of the LC Issuer to the Borrower and each Lender shall be
only to determine that the documents (including each demand for payment) delivered under each Facility LC in connection with
such presentment shall be in conformity in all material respects with such Facility LC. The LC Issuer shall endeavor to
exercise the same care in the issuance and administration of the Facility LCs as it does with respect to letters of credit
in which no participations are granted, it being understood that in the absence of any gross negligence or willful
misconduct by the LC Issuer, each Lender shall be unconditionally and irrevocably liable without regard to the occurrence of
any Default or any condition precedent whatsoever, to reimburse the LC Issuer on demand for (i) such Lender’s Revolving Loan
Pro Rata Share of the amount of each payment made by the LC Issuer under each Facility LC to the extent such amount is not
reimbursed by the Borrower pursuant to Section 2.20.6 below, plus (ii) interest on the foregoing amount to be reimbursed by
such Lender, for each day from the date of the LC Issuer’s demand for such reimbursement (or, if such demand is made after
11:00 a.m. (Phoenix, Arizona time) on such date, from the next succeeding Business Day) to the date on which such Lender
pays the amount to be reimbursed by it, at a rate of interest per annum equal to the Federal Funds Effective Rate for the
first three days and, thereafter, at a rate of interest equal to the rate applicable to Floating Rate Advances.
2.20.6 Reimbursement by Borrower. The Borrower shall be irrevocably and unconditionally obligated to reimburse the LC Issuer on or
before the applicable LC Payment Date for any amounts to be paid by the LC Issuer upon any drawing under any Facility LC,
without presentment, demand, protest or other formalities of any kind; provided that neither the Borrower nor any Lender
shall hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the Borrower or
such Lender to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of the LC Issuer
in determining whether a request presented under any Facility LC issued by it complied with the terms of such Facility LC or
(ii) the LC Issuer’s failure to pay under any Facility LC issued by it after the presentation to it of a request strictly
complying with the terms and conditions of such Facility LC. If the Borrower at any time fails to repay a Reimbursement
Obligation pursuant to this Section2.20, such unpaid Reimbursement Obligation shall at that time be automatically converted
into an obligation and the Borrower shall be deemed to have elected to borrow a Revolving Loan from the Lenders, as of the
date of the payment by the LC Issuer giving rise to the Reimbursement Obligation equal in amount to the amount of the unpaid
Reimbursement Obligation. Such Revolving Loan shall be made as of the date of the payment giving rise to such Reimbursement
Obligation, automatically, without notice and without any requirement to satisfy the conditions precedent otherwise
applicable to a Revolving Loan if the Borrower shall have failed to make such payment to the Administrative Agent for the
account of the LC Issuer prior to such time. Such Revolving Loan shall constitute a Floating Rate Advance and the proceeds
of such Advance shall be used to repay such Reimbursement Obligation. If, for any reason, the Borrower fails to repay a
Reimbursement Obligation on the day such Reimbursement Obligation arises and, for any reason, the Lenders are unable to make
or have no obligation to make a Revolving Loan, then such Reimbursement Obligation shall bear interest from and after such
day, until paid in full, at the interest rate applicable to a Floating Rate Advance. The Borrower agrees to indemnify the
LC Issuer against any loss or expense determined by the LC Issuer in good faith to have resulted from any conversion
pursuant to this Section 2.20 by reason of the inability of the LC Issuer to convert the amount received from the Borrower
or from the Lenders, as applicable, into an amount equal to the amount of such Reimbursement Obligation. The LC Issuer will
pay to each Lender ratably in accordance with its Revolving Loan Pro Rata Share all amounts received by it from the Borrower
for application in payment, in whole or in part, of the Reimbursement Obligation in respect of any Facility LC issued by the
LC Issuer, but only to the extent such Lender has made payment to the LC Issuer in respect of such Facility LC pursuant to
Section 2.20.5.
2.20.7 Obligations Absolute. The Borrower’s obligations under this Section 2.20 shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had
against the LC Issuer, any Lender or any beneficiary of a Facility LC. The Borrower further agrees with the LC Issuer and
the Lenders that the LC Issuer and the Lenders shall not be responsible for, and the Borrower’s Reimbursement Obligation in
respect of any Facility LC shall not be affected by, among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or
forged, or any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Facility LC or any
financing institution or other party to whom any Facility LC may be transferred or any claims or defenses whatsoever of the
Borrower or of any of its Affiliates against the beneficiary of any Facility LC or any such transferee. The LC Issuer shall
not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Facility LC. The Borrower agrees that any action taken or omitted by the LC
Issuer or any Lender under or in connection with each Facility LC and the related drafts and documents, if done without
gross negligence or willful misconduct, shall be binding upon the Borrower and shall not put the LC Issuer or any Lender
under any liability to the Borrower. Nothing in this Section 2.20.7 is intended to limit the right of the Borrower to make
a claim against the LC Issuer for damages as contemplated by the proviso to the first sentence of Section 2.20.6.
2.20.8 Actions of LC Issuer. The LC Issuer shall be entitled to rely, and shall be fully protected in relying, upon any Facility
LC, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other
experts selected by the LC Issuer. The LC Issuer shall be fully justified in failing or refusing to take any action under
this Agreement unless it shall first have received such advice or concurrence of the Required Lenders as it reasonably deems
appropriate or it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take any such action. Notwithstanding any other
provision of this Section 2.20, the LC Issuer shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement in accordance with a request of the Required Lenders, and such request and any action taken or failure
to act pursuant thereto shall be binding upon the Lenders and any future holders of a participation in any Facility LC.
2.20.9 Indemnification. The Borrower hereby agrees to indemnify and hold harmless each Lender, the LC Issuer and the
Administrative Agent, and their respective directors, officers, agents and employees (collectively, the “LC Indemnitees”)
from and against any and all claims and damages, losses, liabilities, costs or expenses which such Lender, the LC Issuer or
the Administrative Agent may incur (or which may be claimed against such Lender, the LC Issuer or the Administrative Agent
by any Person whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment
or failure to pay under any Facility LC or any actual or proposed use of any Facility LC, including, without limitation, any
claims, damages, losses, liabilities, costs or expenses which the LC Issuer may incur by reason of or in connection with (i)
the failure of any other Lender to fulfill or comply with its obligations to the LC Issuer hereunder (but nothing herein
contained shall affect any rights the Borrower may have against any defaulting Lender) or (ii) by reason of or on account of
the LC Issuer issuing any Facility LC which specifies that the term “Beneficiary” included therein includes any successor by
operation of law of the named Beneficiary, but which Facility LC does not require that any drawing by any such successor
Beneficiary be accompanied by a copy of a legal document, satisfactory to the LC Issuer, evidencing the appointment of such
successor Beneficiary; provided that the Borrower shall not be required to indemnify any LC Indemnitee for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct
or gross negligence of such LC Indemnitee or (y) the LC Issuer’s failure to pay under any Facility LC after the presentation
to it of a request strictly complying with the terms and conditions of such Facility LC. Nothing in this Section 2.20.9 is
intended to limit the obligations of the Borrower under any other provision of this Agreement.
2.20.10 Lenders’ Indemnification. Each Lender shall, ratably in accordance with its Revolving Loan Pro Rata Share,
indemnify the LC Issuer, its affiliates and their respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from such indemnitees’ gross negligence or willful misconduct or the LC
Issuer’s failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms
and conditions of the Facility LC) that such indemnitees may suffer or incur in connection with this Section 2.20 or any
action taken or omitted by such indemnitees hereunder.
2.20.11 Facility LC Collateral Account. The Borrower agrees that it will, upon the request of the Administrative Agent or
the Required Lenders and until the final expiration date of any Facility LC and thereafter as long as any amount is payable
to the LC Issuer or the Lenders in respect of any Facility LC, maintain a special collateral account pursuant to
arrangements satisfactory to the Administrative Agent (the “Facility LC Collateral Account”) at the Administrative Agent’s
office at the address specified pursuant to Article XIII, in the name of the Borrower but under the sole dominion and
control of the Administrative Agent, for the benefit of the Lenders and in which the Borrower shall have no interest other
than as set forth in Section 8.1. The Borrower hereby pledges, assigns and grants to the Administrative Agent, on behalf of
and for the ratable benefit of the Lenders and the LC Issuer, a security interest in all of the Borrower’s right, title and
interest in and to all funds which may from time to time be on deposit in the Facility LC Collateral Account to secure the
prompt and complete payment and performance of the Secured Obligations. The Administrative Agent will invest any funds on
deposit from time to time in the Facility LC Collateral Account in certificates of deposit of Bank One having a maturity not
exceeding 30 days. Nothing in this Section 2.20.11 shall either require the Borrower or any Guarantor to deposit any funds
in the Facility LC Collateral Account or limit the right of the Administrative Agent to release any funds held in the
Facility LC Collateral Account in each case other than as required by Section 2.2 or Section 8.1.
2.20.12 Rights as a Lender. In its capacity as a Lender, the LC Issuer shall have the same rights and obligations as any
other Lender.
ARTICLE III
YIELD PROTECTION; TAXES
3.1. Yield Protection. If, on or after the Closing Date, the adoption of any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of law), or any change in any such law, rule, regulation,
policy, guideline or directive or in the interpretation or administration thereof by any governmental or quasi-governmental
authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender
or applicable Lending Installation or the LC Issuer with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(i) subjects any Lender or any applicable Lending Installation or the LC Issuer to any additional Taxes, or changes the basis of
taxation of payments (other than with respect to Excluded Taxes) to any Lender or the LC Issuer in respect of its
Revolving Loan Commitments, Eurodollar Loans, Facility LCs or participations therein, or
(ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending
Installation or the LC Issuer (other than reserves and assessments taken into account in determining the interest
rate applicable to Eurodollar Advances), or
(iii) imposes any other condition (other than with respect to Taxes) the result of which is to increase the cost to any Lender or
any applicable Lending Installation of making, funding or maintaining its Revolving Loan Commitment or Eurodollar
Loans or of issuing or participating in Facility LCs, or reduces any amount receivable by any Lender or any
applicable Lending Installation or the LC Issuer in connection with its Revolving Loan Commitment or Eurodollar
Loans or Facility LCs (including participations therein), or requires any Lender or any applicable Lending
Installation or the LC Issuer to make any payment calculated by reference to the amount of Revolving Loan Commitment
or Eurodollar Loans or Facility LCs (including participations therein) held or interest or LC Fees received by it,
by an amount deemed material by such Lender or the LC Issuer, as applicable.
and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation or the LC Issuer of
making or maintaining its Eurodollar Loans or Revolving Loan Commitment or of issuing or participating in Facility LCs, as
applicable, or to reduce the return received by such Lender or applicable Lending Installation or LC Issuer in connection with such
Eurodollar Loans or Revolving Loan Commitment, or Facility LCs (including participations therein), then, within 15 days of demand,
accompanied by the written statement required by Section 3.6, by such Lender or LC Issuer, the Borrower shall pay such Lender or LC
Issuer such additional amount or amounts as will compensate such Lender or LC Issuer for such increased cost or reduction in amount
received; provided that the Borrower shall not be required to compensate any Lender or LC Issuer pursuant to this subsection for any
increased cost or reduction in respect of a period occurring more than six months prior to the date that such Lender or LC Issuer
notifies the Borrower of such intention to claim compensation therefor unless the circumstances giving rise to such increased cost or
reduction became applicable retroactively, in which case no such time limitation shall apply so long as such Lender or LC Issuer
requests compensation within six months from the date such circumstances become applicable.
3.2. Changes in Capital Adequacy Regulations. If a Lender or LC Issuer determines the amount of capital required or expected to
be maintained by such Lender or LC Issuer, any Lending Installation of such Lender or LC Issuer or any corporation controlling such
Lender or LC Issuer is increased as a result of a Change, then, within 15 days of demand, accompanied by the written statement
required by Section 3.6, by such Lender or LC Issuer, the Borrower shall pay such Lender or LC Issuer the amount necessary to
compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender or LC Issuer determines
is attributable to this Agreement, its Outstanding Revolving Credit Exposure, its Revolving Loan Commitment to make Revolving Loans
and issue or participate in Facility LCs, as applicable, hereunder (after taking into account such Lender's or LC Issuer’s policies
as to capital adequacy). “Change” means (i) any change after the Closing Date in the Risk-Based Capital Guidelines or (ii) any
adoption of, or change in, or change in the interpretation or administration of any other law, governmental or quasi-governmental
rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the Closing Date
which affects the amount of capital required or expected to be maintained by any Lender or LC Issuer or any Lending Installation or
any corporation controlling any Lender or LC Issuer. “Risk-Based Capital Guidelines” means (i) the risk-based capital guidelines in
effect in the United States on the Closing Date, including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking
Regulation and Supervisory Practices Entitled “International Convergence of Capital Measurements and Capital Standards,” including
transition rules, and any amendments to such regulations adopted prior to the Closing Date; provided that the Borrower shall not be
required to compensate any Lender or LC Issuer pursuant to this Section for any reduction in respect of a period occurring more than
six months prior to the date of such notification of the intent to claim compensation therefor unless the circumstances giving rise
to such reduction become applicable retroactively in which case no such time limitation shall apply so long as such Lender or LC
issuer requests compensation within six months from the date such circumstances become applicable.
3.3. Availability of Types of Advances. If (x) any Lender determines that maintenance of its Eurodollar Loans at a suitable
Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or (y)
the Required Lenders determine in good faith that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances
are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or
maintaining Eurodollar Advances, or (iii) no reasonable basis exists for determining the Eurodollar Base Rate, then the
Administrative Agent shall suspend the availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid
or converted to Floating Rate Advances on the respective last days of the then current Interest Periods with respect to such
Revolving Loans or within such earlier period as required by law, subject to the payment of any funding indemnification amounts
required by Section 3.4.
3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date which is not the last day of the
applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not made or
continued, or a Floating Rate Advance is not converted into a Eurodollar Advance, on the date specified by the Borrower for any
reason other than default by the Lenders, or a Eurodollar Advance is not prepaid on the date specified by the Borrower for any
reason, the Borrower, upon notice from, or on behalf of, any Lender will promptly compensate each Lender for any loss or cost
incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to
fund or maintain such Eurodollar Advance.
3.5. Taxes.
(i) All payments by the Borrower to or for the account of any Lender or the LC Issuer or the Administrative Agent hereunder or
under any Note shall be made free and clear of and without deduction for any and all Taxes. If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender, LC Issuer or
the Administrative Agent, (a) the sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under this Section 3.5) such Lender, LC
Issuer or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (b) the Borrower shall make such deductions, (c) the Borrower shall pay the full
amount deducted to the relevant authority in accordance with applicable law and (d) the Borrower shall furnish to
the Administrative Agent the original copy of a receipt evidencing payment thereof or, if a receipt cannot be
obtained with reasonable efforts, such other evidence of payment as is reasonably acceptable to the Administrative
Agent, in each case within 30 days after such payment is made; provided that no such additional amount shall be
required to be paid under this Section except to the extent that any change after the date such Lender, LC Issuer or
the Administrative Agent became a Lender, LC Issuer or Administrative Agent results in an increase in the rate of
such deduction, withholding or payment from that in effect at the date on which such Lender, LC Issuer or
Administrative Agent became a Lender, LC Issuer or Administrative Agent.
(ii) In addition, the Borrower shall pay any present or future stamp or documentary taxes and any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or under any Note or Facility LC Application
or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note or Facility LC
Application (“Other Taxes”).
(iii) The Borrower shall indemnify the Administrative Agent, the LC Issuer and each Lender for the full amount of Taxes or Other
Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5)
paid by the Administrative Agent, the LC Issuer or such Lender as a result of its Revolving Loan Commitment, any
Credit Extensions made by it hereunder, any Facility LC issued or participated in by it hereunder, or otherwise in
connection with its participation in this Agreement and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of
the date the Administrative Agent, the LC Issuer or such Lender makes demand therefor pursuant to Section 3.6.
(iv) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a “Non-U.S.
Lender”) agrees that it will, not more than ten Business Days after the date on which it becomes a party to this
Agreement (but in any event before a payment is due to it hereunder), (i) deliver to each of the Borrower and the
Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI,
certifying in either case that such Lender is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, or (ii) in the case of a Non-U.S. Lender that is fiscally
transparent, deliver to the Administrative Agent a United States Internal Revenue Form W-8IMY together with the
applicable accompanying forms, W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from
United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Borrower
and the Administrative Agent (x) renewals or additional copies of such form (or any successor form) on or before the
date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the
most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by
the Borrower or the Administrative Agent. All forms or amendments described in the preceding sentence shall certify
that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with
respect to it and such Lender advises the Borrower and the Administrative Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income tax.
(v) For any period during which a Non-U.S. Lender has failed to provide the Borrower with an appropriate form pursuant to clause
(iv) above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation
or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally
was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5
with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise
exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to
deliver a form required under clause (iv) above, the Borrower shall take such commercially reasonable steps as such
Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes at such Non U.S.
Lender’s cost and expense.
(vi) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this
Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate.
(vii) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any
political subdivision thereof asserts a claim that the Administrative Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form was not delivered or properly
completed, because such Lender failed to notify the Administrative Agent of a change in circumstances which rendered
its exemption from withholding ineffective, or for any other reason), such Lender shall indemnify the Administrative
Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as tax, withholding therefor,
or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable
to the Administrative Agent under this subsection, together with all costs and expenses related thereto (including
attorneys fees and time charges of attorneys for the Administrative Agent, which attorneys may be employees of the
Administrative Agent). The obligations of the Lenders under this Section 3.5(vii) shall survive the payment of the
Obligations and termination of this Agreement.
3.6. Lender Statements; Survival of Indemnity. Each Lender shall deliver a written statement of such Lender to the Borrower
(with a copy to the Administrative Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement
shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive
and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection
with a Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the
type, currency and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of
any Lender shall be payable on demand after receipt by the Borrower of such written statement. The obligations of the Borrower under
Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement.
3.7. Alternative Lending Installation. To the extent reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Loans to reduce any liability of the Borrower to such Lender under Sections 3.1, 3.2 and
3.5 or to avoid the unavailability of Eurodollar Advances under Section 3.3, so long as such designation is not, in the judgment of
such Lender, reasonably and materially disadvantageous to such Lender. A Lender’s designation of an alternative Lending Installation
shall not affect the Borrower’s rights under Section2.19 to replace a Lender.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Credit Extension. The Lenders shall not be required to make the initial Credit Extension hereunder, unless the
following conditions precedent have been satisfied and, if applicable, the Borrower has furnished to the Administrative Agent with
sufficient copies for the Lenders:
4.1.1 Copies of the articles or certificate of incorporation (or the equivalent thereof) of each initial Credit Party, in each
case, together with all amendments thereto, and a certificate of good standing, each certified by the appropriate
governmental officer in its jurisdiction of organization, as well as any other information required by Section 326 of the
USA Patriot Act, 31 U.S.C. Section 5318 or otherwise necessary for the Administrative Agent or any Lender to verify the
identity of such Credit Party as required by Section 326 of the USA Patriot Act, 31 U.S.C. Section 5318.
4.1.2 Copies, certified by the Secretary or Assistant Secretary (or the equivalent thereof) of each initial Credit Party, in each
case, of its by-laws and of its Board of Directors' resolutions and of resolutions or actions of any other body authorizing
the execution of the Loan Documents to which such Credit Party is a party.
4.1.3 An incumbency certificate, executed by the Secretary or Assistant Secretary (or the equivalent thereof) of each initial
Credit Party, in each case, which shall identify by name and title and bear the signatures of the Authorized Officers and
any other officers of such Credit Party authorized to sign the Loan Documents to which such Credit Party is party, upon
which certificate the Administrative Agent and the Lenders shall be entitled to rely until informed of any change in writing
by such Credit Party.
4.1.4 A certificate signed by the chief financial officer of the Borrower, stating that on the initial Credit Extension Date (a)
no Default or Unmatured Default has occurred and is continuing, (b) all of the representations and warranties in Article V
shall be true and correct in all material respects as of such date and (c) no material adverse change in the business,
Property, condition (financial or otherwise), operations or results of operations or prospects of the Borrower or any of its
Subsidiaries has occurred since December 31, 2003.
4.1.5 A written opinion of the initial Credit Parties’ counsel, in form and substance reasonably satisfactory to the
Administrative Agent and addressed to the Lenders, in substantially the form of Exhibit A.
4.1.6 Any Notes requested by a Lender pursuant to Section 2.13 payable to the order of each such requesting Lender.
4.1.7 Written money transfer instructions, in substantially the form of Exhibit D, addressed to the Administrative Agent and
signed by an Authorized Officer, together with such other related money transfer authorizations as the Administrative Agent
may have reasonably requested.
4.1.8 The Administrative Agent shall have determined that (i) there is an absence of any material adverse change or disruption in
primary or secondary loan syndication markets, financial markets or in capital markets generally that would likely impair
syndication of the Credit Extensions hereunder, and (ii) the Borrower has cooperated with the Administrative Agent’s
syndication efforts, including, without limitation, by providing the Administrative Agent with information regarding the
Borrower’s operations and prospects and such other information as the Administrative Agent deems necessary to successfully
syndicate the Credit Extensions hereunder.
4.1.9 An initial compliance certificate, dated as of the Closing Date, in substantially the form of Exhibit B hereto, with such
adjustments and amendments as are mutually acceptable to the Borrower and the Administrative Agent.
4.1.10 The Administrative Agent shall have received results satisfactory to the Administrative Agent of all aspects of its due
diligence investigation of the Borrower and its Subsidiaries.
4.1.11 The Administrative Agent and the Lenders shall have received pro forma financial statement projections through the
Borrower’s fiscal year ending on or about December 31, 2006 (“Projections”), together with such information as the
Administrative Agent and the Lenders may reasonably request to confirm the tax, legal, and business assumptions made in such
Projections, such Projections demonstrating, in the reasonable judgment of the Administrative Agent and the Lenders,
together with all other information then available to the Administrative Agent and the Lenders, that the Borrower and its
Subsidiaries have the ability to repay their debts and satisfy the respective other obligations as and when due and to
comply with Sections 6.21 through 6.24.
4.1.12 The Administrative Agent and the Lenders shall have received a certificate from the Chief Financial Officer of the Borrower
certifying that the Borrower is solvent and will be solvent subsequent to incurring the Indebtedness hereunder (including
the Credit Extensions), will be able to pay its debts and liabilities as they become due and will not be left with
unreasonably small capital with which to engage in its businesses.
4.1.13 The Administrative Agent shall have received evidence reasonably satisfactory to the Administrative Agent of the termination
of the Existing Financing Arrangements and the agreements relating thereto, all taking effect concurrently with the
effectiveness of this Agreement.
4.1.14 No order, judgment or decree of any arbitrator or Governmental Authority shall purport to enjoin or restrain any Lender from
making the initial Credit Extension.
4.1.15 Such other documents as the Administrative Agent or its counsel may have reasonably requested, including, without
limitation, those documents set forth in Exhibit G hereto.
4.2. Each Credit Extension. The Lenders shall not (except as otherwise set forth in Section 2.4.4 with respect to Revolving
Loans extended for the purpose of repaying Swing Line Loans) be required to make any Credit Extension unless on the applicable Credit
Extension Date:
4.2.1 There exists no Default or Unmatured Default.
4.2.2 The representations and warranties contained in Article V are true and correct as of such Credit Extension Date except to
the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such
representation or warranty shall have been true and correct on and as of such earlier date.
4.2.3 No order, judgment or decree of any arbitrator or Governmental Authority shall purport to enjoin or restrain any Lender from
making such Credit Extension.
4.2.4 If, after giving to effect to such Credit Extension and any repayment of Loans to be made on the date such Credit Extension
is made, the Aggregate Outstanding Revolving Credit Exposure will be increased above the amount of the Borrowing Base as
shown on the then most recently delivered Borrowing Base Certificate, the Lenders and the Administrative Agent shall have
received an updated Borrowing Base Certificate as of a later date demonstrating Borrowing Base availability to support such
increased Aggregate Outstanding Revolving Credit Exposure.
Each Borrowing Notice or Swing Line Borrowing Notice, as the case may be, or request for issuance of a Facility LC, with
respect to each such Credit Extension shall constitute a representation and warranty by the Borrower that the conditions contained in
Sections 4.2.1, 4.2.2, 4.2.3 and 4.2.4 have been satisfied. The Administrative Agent may require a duly completed compliance
certificate in substantially the form of Exhibit B as a condition to making a Credit Extension.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each Lender and the Administrative Agent as of each of (i) the Closing Date, (ii)
the date of the initial Credit Extension hereunder (if different from the Closing Date) and (iii) each date as required by Section
4.2:
5.1. Existence and Standing. Each of the Borrower and its Subsidiaries is a corporation, partnership (in the case of
Subsidiaries only) or limited liability company duly and properly incorporated or organized, as the case may be, validly existing and
(to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or
organization and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted.
5.2. Authorization and Validity. The Borrower has the power and authority and legal right to execute and deliver the Loan
Documents to which it is a party and to perform its obligations thereunder. The execution and delivery by the Borrower of the Loan
Documents to which it is a party and the performance of its obligations thereunder have been duly authorized by proper proceedings,
and the Loan Documents to which the Borrower is a party constitute legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their terms, except as enforceability may be limited by (i) bankruptcy, insolvency,
fraudulent conveyances, reorganization or similar laws relating to or affecting the enforcement of creditors' rights generally; (ii)
general equitable principles (whether considered in a proceeding in equity or at law); and (iii) requirements of reasonableness, good
faith and fair dealing.
5.3. No Conflict; Government Consent. Neither the execution and delivery by the Borrower or its Subsidiaries, as applicable, of
the Loan Documents to which such Person is a party, nor the consummation of the transactions therein contemplated, nor compliance
with the provisions thereof will violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on
the Borrower or any of its Subsidiaries or (ii) the Borrower's or any Subsidiary's articles or certificate of incorporation,
partnership agreement, certificate of partnership, articles or certificate of organization, by-laws, or operating agreement or other
management agreement, as the case may be, or (iii) the provisions of any indenture, instrument or agreement to which the Borrower or
any of its Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict with, or constitute a
default thereunder, or result in, or require, the creation or imposition of any Lien in, of or on the Property of the Borrower or a
Subsidiary pursuant to the terms of, any such indenture, instrument or agreement. No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, which has not been obtained by the Borrower or any of its
Subsidiaries, is required to be obtained by the Borrower or any of its Subsidiaries in connection with the execution and delivery of
the Loan Documents, the borrowings under this Agreement, the payment and performance by the Borrower of the Obligations or the
legality, validity, binding effect or enforceability of any of the Loan Documents.
5.4. Financial Statements. The December 31, 2003 audited consolidated financial statements of the Borrower and its Subsidiaries
heretofore delivered to the Administrative Agent and the Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations
of the Borrower and its Subsidiaries at such date and the consolidated results of their operations for the period then ended.
5.5. Material Adverse Change. Since December 31, 2003, there has been no change in the business, Property, prospects, condition
(financial or otherwise) or results of operations of the Borrower, any Guarantor, or the Borrower and its Subsidiaries taken
together, in each case which could reasonably be expected to have a Material Adverse Effect.
5.6. Taxes. Except as disclosed on Schedule 5.6, the Borrower and its Subsidiaries have filed all United States federal tax
returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by the Borrower or any of its Subsidiaries, except in respect of such taxes, if any, as are being contested
in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which
no Lien exists (except as permitted by Section 6.15.1). The United States income tax returns of the Borrower and its Subsidiaries
have not been audited by the Internal Revenue Service. No Liens have been filed and no claims are being asserted with respect to
such taxes. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are adequate.
5.7. Litigation and Contingent Obligations. There is no litigation, arbitration, governmental investigation, proceeding or
inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the
making of any Credit Extensions. Other than liabilities incident to any litigation, arbitration or proceeding which could not
reasonably be expected to be in an aggregate amount in excess of $2,000,000, the Borrower has no material contingent obligations not
provided for or disclosed in the financial statements referred to in Section 5.4.
5.8. Subsidiaries. Schedule 5.8 contains an accurate list of all Subsidiaries of the Borrower as of the date of this Agreement,
setting forth their respective jurisdictions of organization and the percentage of their respective capital stock or other ownership
interests owned by the Borrower or other Subsidiaries. All of the issued and outstanding shares of capital stock or other ownership
interests of such Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly
authorized and issued and are fully paid and non-assessable. No Inactive Subsidiary owns any assets (other than as disclosed to the
Administrative Agent on the Closing Date), conducts any business or is the obligor under any Indebtedness or other liabilities.
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the aggregate exceed $1,000,000. Neither the
Borrower nor any other member of the Controlled Group has incurred, or is reasonably expected to incur, pursuant to Section 4201 of
ERISA, any withdrawal liability to Multiemployer Plans in excess of an amount that would have a Material Adverse Effect. Each Plan
complies in all material respects with all applicable requirements of law and regulations. No Reportable Event has occurred with
respect to any Plan. Neither the Borrower nor any other member of the Controlled Group has withdrawn from any Multiemployer Plan
within the meaning of Title IV of ERISA or initiated steps to do so, and no steps have been taken to reorganize or terminate, within
the meaning of Title IV of ERISA, any Multiemployer Plan.
5.10. Accuracy of Information. No Loan Document or written statement furnished by the Borrower or any of its Subsidiaries to the
Administrative Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents contained, on the
date such Loan Document was entered into or such statements were made, any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein, in light of the circumstances under which they were
made, not misleading in their presentation of the Borrower, its Subsidiaries, their businesses and their Property. The Borrower
makes no representation or warranty concerning the forecasts, estimates, pro forma information, projections and statements as to
anticipated future performance or conditions, and the assumptions on which they were based, except that as of the date made (i) such
forecasts, estimates, pro forma information, projections and statements were based on good faith assumptions of the management of the
Borrower and (ii) such assumptions were believed by such management to be reasonable; it being understood and agreed that such
forecasts, estimates, pro forma information, projections and statements, and the assumptions on which they are based, may or may not
prove to be correct. In addition, the information provided by or on behalf of the Credit Parties with respect to the Receivables
owned or to be acquired by the Credit Parties (or the related purchase agreements) is, to the Borrower's knowledge and as of the date
provided, true and correct in all material respects and, to the Borrower's knowledge, does not contain any material omissions which
would cause such information to be materially misleading with respect to such Receivables, taken as a whole.
5.11. Regulation U. Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate of buying or carrying
margin stock (as defined in Regulation U), and after applying the proceeds of each Credit Extension, margin stock (as defined in
Regulation U) constitutes less than 25% of the value of those assets of the Borrower and its Subsidiaries which are subject to any
limitation on sale, pledge, or any other restriction hereunder.
5.12. Material Agreements. Except as described in Schedule 5.12, neither the Borrower nor any Subsidiary is a party to any
agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any Subsidiary is in default in any material respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions contained in any (i) agreement or instrument to which it
is a party, which default could reasonably be expected to have a Material Adverse Effect or (ii) any agreement or instrument
evidencing or governing Indebtedness for borrowed money.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have complied in all material respects with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof
having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property.
5.14. Ownership of Properties. The Borrower and its Subsidiaries have good title, free of all Liens other than those permitted by
Section 6.15, to all of the Property and assets reflected in the Borrower's most recent consolidated financial statements provided to
the Administrative Agent, as owned by the Borrower and its Subsidiaries, except for minor irregularities in title with respect to
Receivables that do not materially interfere with the business or operations of the Borrower or its Subsidiaries as presently
conducted.
5.15. Plan Assets; Prohibited Transactions. The Borrower is not an entity deemed to hold “plan assets” within the meaning of 29
C.F.R. § 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any
plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the making of Loans hereunder
gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. Given the nature of its business, the Borrower has concluded that Environmental Laws cannot
reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary has received any notice to the
effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the
subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic
or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.
5.17. Investment Company Act. Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940, as amended.
5.18. Public Utility Holding Company Act. The Borrower is not a “holding company” as such term is defined in the Public Utility
Holding Company Act of 1935, as amended.
5.19. Insurance. The Borrower maintains, and has caused each Subsidiary to maintain, with financially sound and reputable
insurance companies insurance on their Property as necessary to conduct their business in such amounts, subject to such deductibles
and self-insurance retentions and covering such properties and risks as is consistent with sound business practice.
5.20. No Default or Unmatured Default. No Default or Unmatured Default has occurred and is continuing.
5.21. SDN List Designation. Neither the Borrower nor any of its Subsidiaries or Encore Affiliates is a country, individual or
entity named on the Specifically Designated National and Blocked Persons (SDN) list issued by the Office of Foreign Asset Control of
the Department of the Treasury of the United States of America.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself and each Subsidiary, a system of accounting established and
administered in accordance with generally accepted accounting principles, and furnish to the Lenders:
6.1.1 Within 90 days after the close of each of its fiscal years, financial statements prepared in accordance with Agreement
Accounting Principles on a consolidated basis for itself and its Subsidiaries, including balance sheets as of the end of
such period, statements of income and statements of cash flows, accompanied by (a) an audit report, unqualified as to scope,
of BDO Seidman or another nationally recognized firm of independent public accountants or other independent public
accountants reasonably acceptable to the Required Lenders (provided that so long as the Borrower is a reporting company,
delivery of the Form 10-K filed by the Borrower with respect to a fiscal year as promptly as practicable but in no event
later than 5 Business Days after the filing thereof shall satisfy the requirement for the annual audit report and
consolidated financial statements for such fiscal year under this Section), (b) any management letter prepared by said
accountants and (c) a certificate of said accountants that, in the course of their examination necessary for their
certification of the foregoing, they have obtained no knowledge of any Default, or if, in the opinion of such accountants,
any Default shall exist, stating the nature and status thereof.
6.1.2 Within 45 days after the close of the first three quarterly periods of each of its fiscal years, for itself and its
Subsidiaries, consolidated unaudited balance sheets as at the close of each such period and consolidated statements of
income and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all
certified as to fairness of presentation, compliance with Agreement Accounting Principles and consistency by its chief
financial officer or treasurer (provided that so long as the Borrower is a reporting company, delivery of the Form 10-Q
filed by the Borrower with respect to a fiscal quarter as promptly as practicable but in no event later than 5 Business Days
after the filing thereof shall satisfy the requirement for certified quarterly consolidated financial statements for such
fiscal quarter under this Section).
6.1.3 Together with the financial statements required under Sections 6.1.1 and 6.1.2, a compliance certificate in substantially
the form of Exhibit B signed by its chief financial officer or treasurer showing the calculations necessary to determine
compliance with the relevant provisions of this Agreement, an officer’s certificate in substantially the form of Exhibit F
stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and
status thereof, and a certificate executed and delivered by the chief executive officer or chief financial officer stating
that the Borrower and each of its principal officers are in compliance with all requirements of Section 302 and Section 906
of the Sarbanes-Oxley Act of 2002 and all rules and regulations related thereto (provided that so long as the Borrower is a
reporting company, delivery of the certificates required pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002
as contained in the form 10-K or Form 10-Q filed by the Borrower and delivered pursuant to Section 6.1.1 or 6.1.2 shall
satisfy the requirement for such certification of compliance with the Sarbanes-Oxley Act under this Section).
6.1.4 Within 270 days after the close of each fiscal year of the Borrower during which the Borrower maintained a Single Employer
Plan, a copy of the actuarial report showing the Unfunded Liabilities of each Single Employer Plan as of the valuation date
occurring in such fiscal year, certified by an actuary enrolled under ERISA, if applicable.
6.1.5 As soon as possible and in any event within 10 days after the Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by the chief financial officer or treasurer of the Borrower, describing said
Reportable Event and the action which the Borrower proposes to take with respect thereto.
6.1.6 As soon as possible and in any event within 10 days after receipt by the Borrower, a copy of (a) any notice or claim to the
effect that the Borrower or any of its Subsidiaries is or may be liable to any Person as a result of the release by the
Borrower, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment,
and (b) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation
by the Borrower or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse
Effect.
6.1.7 Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular
reports which the Borrower or any of its Subsidiaries files with the Securities and Exchange Commission, including, without
limitation, all certifications and other filings required by Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002
and all rules and regulations related thereto.
6.1.8 As soon as practicable, and in any event within 90 days after the beginning of each fiscal year of the Borrower, a copy of
the plan and forecast (including a projected consolidated balance sheet, income statement and funds flow statement) of the
Borrower for such fiscal year.
6.1.9 As soon as possible, and in any event within 3 Business Days (in the case of the Borrower) and 15 days (in the case of any
Guarantor) after the occurrence thereof, a reasonably detailed notification to the Administrative Agent and its counsel of
any change in the jurisdiction of organization of the Borrower or any Guarantor.
6.1.10 As soon as practicable, and in any event within thirty (30) days after the close of each calendar month, the Borrower shall
provide the Administrative Agent and the Lenders with a Borrowing Base Certificate (containing a certification by an
Authorized Officer that the Receivables Portfolios included in the Borrowing Base referenced in such Borrowing Base
Certificate are performing, in the aggregate, at a sufficient level to support the amount of such Borrowing Base), together
with such supporting documents (including without limitation (i) copies of all bills of sale and purchase agreements
evidencing the acquisition of Receivables Portfolios included in the Borrowing Base and (ii) a copy of the most recent
static pool report with respect to such Receivables Portfolios as the Administrative Agent reasonably deems desirable, all
certified as being true and correct in all material respects by an Authorized Officer of the Borrower). The Borrower may
update the Borrowing Base Certificate more frequently than monthly and the most recently delivered Borrowing Base
Certificate shall be the applicable Borrowing Base Certificate for purposes of determining the Borrowing Base at any time.
6.1.11 Such other information (including non-financial information) as the Administrative Agent or any Lender may from time to time
reasonably request.
If any information which is required to be furnished to the Lenders under this Section 6.1 is required by law or regulation
to be filed by the Borrower with a government body on an earlier date, then the information required hereunder shall be furnished to
the Lenders by no later than 5 Business Days after such earlier date.
6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary to, use the proceeds of the Revolving Loans for working
capital and general corporate purposes, which may include, without limitation, purchases of Receivables Portfolios, Permitted
Acquisitions and repayment of Indebtedness under the Existing Financing Arrangements. The Borrower shall use the proceeds of Credit
Extensions in compliance with all applicable legal and regulatory requirements and any such use shall not result in a violation of
any such requirements, including, without limitation, Regulation U and X, the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, and the regulations promulgated thereunder.
6.3. Notice of Default. Within three (3) Business Days after an Authorized Officer becomes aware thereof, the Borrower will, and
will cause each Subsidiary to, give notice in writing to the Lenders of the occurrence (i) of any Default or Unmatured Default and
(ii) of any other development, financial or otherwise, which (solely with respect to this clause (ii)) could reasonably be expected
to have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each Subsidiary to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things
necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good
standing as a domestic corporation, partnership or limited liability company in its jurisdiction of incorporation or organization, as
the case may be, as in effect on the Closing Date, and maintain all requisite authority to conduct its business in each jurisdiction
in which its business is conducted, except (i) as permitted by Section 6.11 and (ii) except to the extent that the failure to
maintain any of the foregoing could not reasonably be expected to have a Material Adverse Effect.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to, timely file complete and correct United States federal and
applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and
levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles.
6.6. Insurance. The Borrower will, and will cause each Subsidiary to, maintain with financially sound and reputable insurance
companies insurance on their Property in such amounts, subject to such deductibles and self-insurance retentions, and covering such
risks as is consistent with sound business practice. The Borrower shall deliver to the Administrative Agent endorsements in form and
substance acceptable to the Administrative Agent to all general liability and other liability policies naming the Administrative
Agent as an additional insured. The Borrower shall furnish to any Lender such additional information as such Lender may reasonably
request regarding the insurance carried by the Borrower and its Subsidiaries. In the event the Borrower or any of its Subsidiaries
at any time or times hereafter shall fail to obtain or maintain any of the policies or insurance required herein or to pay any
premium in whole or in part relating thereto, then the Administrative Agent, without waiving or releasing any obligations or
resulting Default hereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain and maintain such
policies of insurance and pay such premiums and take any other action with respect thereto which the Administrative Agent deems
advisable. All sums so disbursed by the Administrative Agent shall constitute part of the Obligations, payable as provided in this
Agreement.
6.7. Compliance with Laws. The Borrower will, and will cause each Subsidiary to, comply with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Environmental
Laws, ERISA and Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002) to which it may be subject where non-compliance with
such laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards could reasonably be expected to cause a
Material Adverse Effect.
6.8. Maintenance of Properties. Subject to Section 6.12, the Borrower will, and will cause each Subsidiary to, do all things
necessary to maintain, preserve, protect and keep the tangible Property material to the operation of its business in good repair,
working order and condition, (ordinary wear and tear excepted), and make all necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly conducted at all times.
6.9. Inspection; Keeping of Books and Records. The Borrower will, and will cause each Subsidiary to, permit the Administrative
Agent and the Lenders, by their respective representatives and agents (at reasonable times and upon reasonable advance written
notice, so long as no Default or Unmatured Default has occurred and is continuing) to inspect any of the Property, including, without
limitation, the Collateral, books and financial records of the Borrower and each Credit Party, to examine and make copies of the
books of accounts and other financial records of the Borrower and each Credit Party, and to discuss the affairs, finances and
accounts of the Borrower and each Credit Party with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Administrative Agent or any Lender may designate. The Borrower shall keep and maintain, and
cause each of its Subsidiaries to keep and maintain, in all material respects, proper books of record and account in which entries in
conformity with Agreement Accounting Principles shall be made of all dealings and transactions in relation to their respective
businesses and activities. If a Default has occurred and is continuing, the Borrower, upon the Administrative Agent's request, shall
turn over copies of any such records to the Administrative Agent or its representatives.
6.10. Restricted Payments. The Borrower will not, nor will it permit any Subsidiary to, make any Restricted Payment (other than
dividends payable in its own capital stock) except that (i) any Subsidiary may declare and pay dividends or make distributions to
the Borrower or to a Guarantor, (ii) the Borrower may, so long as no Default or Unmatured Default has occurred and is continuing or
would arise after giving effect thereto, declare and pay dividends in an amount not to exceed, during any fiscal year of the
Borrower, 20% of the audited Consolidated Net Income for the then most recently completed fiscal year of the Borrower and (iii)
payments required to be made under the CFSC Transaction may be made in accordance with the terms thereof.
6.11. Merger or Dissolution. The Borrower will not, nor will it permit any Subsidiary to, merge or consolidate with or into any
other Person or dissolve, except that:
6.11.1 A Guarantor may merge into (x) the Borrower or (y) a Wholly-Owned Subsidiary that is a Guarantor or becomes a Guarantor
promptly upon the completion of the applicable merger or consolidation.
6.11.2 The Borrower or any Subsidiary may consummate any merger or consolidation in connection with any Permitted Acquisition so
long as (i) in the case of the Borrower, the Borrower is the surviving entity and (ii) in the case of any Subsidiary, the
Borrower has otherwise complied with Sections 6.25 and 6.26 in respect of the surviving entity.
6.11.3 The Borrower and the Subsidiaries may enter into the Permitted Restructuring.
6.11.4 Any of the Inactive Subsidiaries may be dissolved.
6.12. Sale of Assets. The Borrower will not, nor will it permit any other Credit Party to, lease, sell or otherwise dispose of
its Property to any other Person, except:
6.12.1 Sales of Receivables in the ordinary course of business.
6.12.2 A disposition or transfer of assets by a Credit Party to another Credit Party or a Person that becomes a Credit Party prior
to such disposition or transfer.
6.12.3 A disposition of obsolete Property, Property no longer used in the business of the Borrower or the other Credit Parties or
other assets in the ordinary course of business of the Borrower or any other Credit Party, but excluding in each case
Property (other than fixtures and personal Property) subject to a Lien under a Mortgage.
6.12.4 Leases, sales or other dispositions of its Property that, together with all other Property of the Borrower and the Credit
Parties previously leased, sold or disposed of (other than dispositions otherwise permitted by this Section 6.12) as
permitted by this Section during any fiscal year of the Borrower do not exceed one percent (1%) of Consolidated Tangible
Assets in the aggregate.
6.12.5 So long as the Borrower makes the prepayments and/or reinvestment of proceeds required under Section 2.2(a) in respect
thereof, sales or dispositions of assets outside the ordinary course of business with an aggregate fair market value not to
exceed, during the term of this Agreement, $5,000,000.
6.13. Investments and Acquisitions. The Borrower will not, nor will it permit any Subsidiary to, make or suffer to exist any
Investments (including without limitation, loans and advances to, and other Investments in, Subsidiaries), or commitments therefor,
or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any Acquisition of any
Person, except:
6.13.1 Cash Equivalent Investments.
6.13.2 Existing Investments in Subsidiaries and other Investments in existence on the date hereof and described in Schedule 6.13.
6.13.3 Acquisitions meeting the following requirements or otherwise approved by the Required Lenders (each such Acquisition
constituting a “Permitted Acquisition”):
(i) as of the date of the consummation of such Acquisition, no Default or Unmatured Default shall have occurred and be
continuing or would result from such Acquisition, and the representation and warranty contained in Section 5.11
shall be true both before and after giving effect to such Acquisition;
(ii) such Acquisition is consummated pursuant to a negotiated acquisition agreement approved by the board of directors or other
applicable governing body of the seller or entity to be acquired, and no material challenge to such Acquisition
(excluding the exercise of appraisal rights) shall be pending or threatened by any shareholder or director of the
seller or entity to be acquired;
(iii) the business to be acquired in such Acquisition is similar or related to one or more of the lines of business in which the
Borrower and its Subsidiaries are engaged on the Closing Date;
(iv) as of the date of the consummation of such Acquisition, all material governmental and corporate approvals required in
connection therewith shall have been obtained;
(v) the aggregate Purchase Price for all such Acquisitions during the term of this Agreement shall not exceed $25,000,000;
(vi) prior to the consummation of such Permitted Acquisition, the Borrower shall have delivered to the Administrative Agent a pro
forma consolidated balance sheet, income statement and cash flow statement of the Borrower and its Subsidiaries (the
“Acquisition Pro Forma”), based on the Borrower’s most recent financial statements delivered pursuant to Section
6.1.1 (using, to the extent available, historical financial statements for such entity provided by the seller(s))
which shall be complete and shall fairly present, in all material respects, the financial condition and results of
operations and cash flows of the Borrower and its Subsidiaries in accordance with Agreement Accounting Principles,
but taking into account such Permitted Acquisition and the funding of all Credit Extensions in connection therewith,
and such Acquisition Pro Forma shall reflect that, on a pro forma basis, the Borrower would have been in compliance
with the financial covenants set forth in Sections 6.21 and 6.22 for the period of four fiscal quarters reflected in
the compliance certificate most recently delivered to the Administrative Agent pursuant to Section 6.1.3 prior to
the consummation of such Permitted Acquisition (giving effect to such Permitted Acquisition and all Credit
Extensions funded in connection therewith as if made on the first day of such period); provided, however, that no
such compliance with Section 6.21 is required to be demonstrated in such Acquisition Pro Forma for an Acquisition
which is either (x) solely a purchase of assets or (y) an acquisition of an entity or a going business for which no
financial statements are available; and
(vii) prior to each such Permitted Acquisition, the Borrower shall deliver to the Administrative Agent a documentation,
information and certification package in form reasonably acceptable to the Administrative Agent and demonstrating
conformity with the applicable Acquisition Pro Forma and sufficient to describe the assets and Persons being
acquired, including, without limitation:
(A) a near-final version (with no further material amendments to be made thereto) of the acquisition agreement
for such Acquisition together with drafts of the material schedules thereto;
(B) a near-final version (with no further material amendments to be made thereto) of all documents, instruments
and agreements with respect to any Indebtedness to be incurred or assumed in connection with such
Acquisition; and
(C) such other documents or information as shall be reasonably requested by the Administrative Agent in
connection with such Acquisition.
6.13.4 The Permitted Restructuring.
6.13.5 Creation of, or investment in, a Subsidiary and in respect of which the Borrower has otherwise complied with Sections 6.25
and 6.26.
6.13.6 Investments constituting Indebtedness permitted by Section 6.14.5.
6.13.7 Investments by a Credit Party in another Credit Party.
6.14. Indebtedness. The Borrower will not, nor will it permit any Subsidiary to, create, incur or suffer to exist any
Indebtedness, except:
6.14.1 The Secured Obligations.
6.14.2 Indebtedness existing on the date hereof and described in Schedule 6.14.
6.14.3 To the extent approved by the Administrative Agent, Indebtedness arising under Rate Management Transactions.
6.14.4 Secured or unsecured purchase money Indebtedness (including Capitalized Leases) incurred by the Borrower or any of its
Subsidiaries after the Closing Date to finance the acquisition of assets used in its business, if (1) the total of all such
Indebtedness for the Borrower and its Subsidiaries taken together incurred on or after the Closing Date, when aggregated
with the Indebtedness permitted under Section 6.14.9, shall not exceed an aggregate principal amount of $5,000,000 at any
one time outstanding, (2) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed, (3)
no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at
the time of such refinancing, and (4) any Lien securing such Indebtedness is permitted under Section 6.15 (such Indebtedness
being referred to herein as “Permitted Purchase Money Indebtedness”).
6.14.5 Indebtedness arising from intercompany loans and advances (i) made by any Subsidiary to any Credit Party, (ii) made by the
Borrower to any Credit Party; provided that the Borrower agrees that all such Indebtedness shall be expressly subordinated
to the Secured Obligations pursuant to subordination provisions reasonably acceptable to the Administrative Agent or (iii)
made by the Borrower or any Subsidiary to any other Subsidiary solely for the purpose of facilitating, in the ordinary
course of business consistent with past practice, the payment of fees and expenses in connection with collection actions or
proceedings.
6.14.6 Guaranty obligations of the Borrower of any Indebtedness of any Subsidiary permitted under Section 6.14.2.
6.14.7 Guaranty obligations of any Subsidiary of the Borrower that is a Guarantor with respect to any Indebtedness of the Borrower
or any other Subsidiary permitted under this Section 6.14.
6.14.8 Indebtedness incurred pursuant to a Permitted Receivables Transaction.
6.14.9 Additional unsecured Indebtedness of the Borrower or any Subsidiary, to the extent not otherwise permitted under this
Section 6.14; provided, however, that the aggregate principal amount of such additional Indebtedness, when aggregated with
the Indebtedness permitted under Section 6.14.4 shall not exceed $5,000,000 at any time outstanding.
6.14.10 Bonds or other Indebtedness required by collections licensing laws in the ordinary course of the Credit Parties’
business.
6.15. Liens. The Borrower will not, nor will it permit any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on
the Property of the Borrower or any of its Subsidiaries, except:
6.15.1 Liens, if any, securing Secured Obligations.
6.15.2 Liens for taxes, assessments or governmental charges or levies on its Property if the same (i) shall not at the time be
delinquent or thereafter can be paid without penalty, (ii) are disclosed on Schedule 5.6 or (iii) are being contested in
good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles
shall have been set aside on its books.
6.15.3 Liens imposed by law, such as landlords’, wage earners’, carriers', warehousemen's and mechanics' liens and other similar
liens arising in the ordinary course of business which secure payment of obligations not more than 45 days past due or which
are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books.
6.15.4 Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar legislation.
6.15.5 Liens securing the Permitted Receivables Transactions existing on the Closing Date and other Liens as described in Schedule
6.15.
6.15.6 Deposits securing liability to insurance carriers under insurance or self-insurance arrangements.
6.15.7 Deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of
business.
6.15.8 Easements, reservations, rights-of-way, restrictions, survey exceptions and other similar encumbrances as to real property
of the Borrower and its Subsidiaries which customarily exist on properties of corporations engaged in similar activities and
similarly situated and which do not materially interfere with the conduct of the business of the Borrower or such Subsidiary
conducted at the property subject thereto..
6.15.9 Purchase money Liens securing Permitted Purchase Money Indebtedness (as defined in Section 6.14); provided, that such Liens
shall not apply to any property of the Borrower or its Subsidiaries other than that purchased with the proceeds of such
Permitted Purchase Money Indebtedness.
6.15.10 Liens existing on any asset of any Subsidiary of the Borrower at the time such Subsidiary becomes a Subsidiary and
not created in contemplation of such event.
6.15.11 Liens on any asset securing Indebtedness incurred or assumed for the purpose of financing or refinancing all or any
part of the cost of acquiring or constructing such asset; provided that such Lien attaches to such asset concurrently with
or, except in the case of Liens created under a Permitted Receivables Transaction, within eighteen (18) months after the
acquisition or completion or construction thereof.
6.15.12 Liens existing on any asset of any Subsidiary of the Borrower at the time such Subsidiary is merged or consolidated
with or into the Borrower or any Subsidiary and not created in contemplation of such event.
6.15.13 Liens existing on any asset prior to the acquisition thereof by the Borrower or any Subsidiary and not created in
contemplation thereof; provided that such Liens do not encumber any other property or assets.
6.15.14 Liens arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien
permitted under Sections 6.15.11 through 6.15.13; provided that (a) such Indebtedness is not secured by any additional
assets, and (b) the amount of such Indebtedness secured by any such Lien is not increased.
In addition, no Credit Party shall become a party to any agreement, note, indenture or other instrument, or take any other
action, which would prohibit the creation of a Lien on any of its Properties or other assets in favor of the Administrative Agent for
the benefit of the Holders of Secured Obligations; provided, further, that any agreement, note, indenture or other instrument in
connection with purchase money Indebtedness (including Capitalized Leases) for which the related Liens are permitted hereunder may
prohibit the creation of a Lien in favor of the Administrative Agent for the benefit of the Holders of Secured Obligations, with
respect to the assets or Property obtained with the proceeds of such Indebtedness.
6.16. Affiliates. The Borrower will not, and will not permit any Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate (other than the
Borrower and the Credit Parties) except (i) in the ordinary course of business and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than
the Borrower or such Subsidiary would obtain in a comparable arm’s-length transaction and (ii) the Permitted Restructuring.
6.17. Financial Contracts. The Borrower will not, nor will it permit any Subsidiary to, enter into or remain liable upon any Rate
Management Transactions except for those entered into in the ordinary course of business for bona fide hedging purposes and not for
speculative purposes.
6.18. Subsidiary Covenants. The Borrower will not, and will not permit any Credit Party to, create or otherwise cause to become
effective any consensual encumbrance or restriction of any kind on the ability of any Credit Party (i) to pay dividends or make any
other distribution on its stock, (ii) to pay any Indebtedness or other obligation owed to the Borrower or any other Subsidiary, (iii)
to make loans or advances or other Investments in the Borrower or any other Subsidiary, or (iv) to sell, transfer or otherwise convey
any of its property to the Borrower or any other Subsidiary.
6.19. Contingent Obligations. The Borrower will not, nor will it permit any Subsidiary to, make or suffer to exist any Contingent
Obligation (including, without limitation, any Contingent Obligation with respect to the obligations of a Subsidiary), except (i) by
endorsement of instruments for deposit or collection in the ordinary course of business, (ii) the Reimbursement Obligations, (iii)
any guaranty of the Secured Obligations, (iv) any liability of the Borrower or its Subsidiaries under the Loan Documents, (v)
Contingent Obligations in respect of customary indemnification and purchase price adjustment obligations incurred in connection with
Asset Sales or other sales of assets, (vi) customary corporate indemnification obligations under charter documents, indemnification
agreements with officers and directors and underwriting agreements, (vii) any liability of the relevant Subsidiary which is not a
Credit Party but which is a special purpose entity under the Permitted Receivables Transactions and (viii) any liability under any
Indebtedness permitted by Section 6.14 (other than liability of a Credit Party under the Permitted Receivables Transactions).
6.20. Subordinated Indebtedness, Indebtedness under Permitted Receivables Transactions and Amendments to Subordinated Note
Documents and Permitted Receivables Transactions Documents . The Borrower will not, and will not permit any Subsidiary to, directly
or indirectly voluntarily prepay, defease or in substance defease, purchase, redeem, retire or otherwise acquire, any Subordinated
Indebtedness, the Indebtedness from time to time outstanding under the Subordinated Indebtedness Documents or under any of the
Permitted Receivables Transactions Documents except, in the case of the Permitted Receivables Transactions, in accordance with the
existing terms thereof. Furthermore, the Borrower will not, and will not permit any Subsidiary to, amend the Subordinated
Indebtedness Documents, the Permitted Receivables Transactions Documents or any document, agreement or instrument evidencing any
Indebtedness incurred pursuant to the Subordinated Indebtedness Documents or any of the Permitted Receivables Transactions Documents
(or any replacements, substitutions, extensions or renewals thereof) or pursuant to which such Indebtedness is issued where such
amendment, modification or supplement provides for the following or which has any of the following effects:
(i) increases the overall principal amount of any such Indebtedness or increases the amount of any single
scheduled installment of principal or interest;
(ii) shortens or accelerates the date upon which any installment of principal or interest becomes due or adds
any additional mandatory redemption provisions;
(iii) shortens the final maturity date of such Indebtedness or otherwise accelerates the amortization schedule
with respect to such Indebtedness;
(iv) increases the rate of interest accruing on such Indebtedness;
(v) provides for the payment of additional fees or increases existing fees or changes any profit sharing
arrangements to the detriment of the Borrower or any Credit Party;
(vi) amends or modifies any financial or negative covenant (or covenant which prohibits or restricts the
Borrower or any of its Subsidiaries from taking certain actions) in a manner which is more onerous or more restrictive in
any material respect to the Borrower or such Subsidiary or which is otherwise materially adverse to the Borrower, its
Subsidiaries and/or the Lenders or, in the case of any such covenant, which places material additional restrictions on the
Borrower or such Subsidiary or which requires the Borrower or such Subsidiary to comply with more restrictive financial
ratios or which requires the Borrower to better its financial performance, in each case from that set forth in the existing
applicable covenants in the Subordinated Indebtedness Documents, the Permitted Receivables Transactions Documents or the
applicable covenants in this Agreement; or
(vii) amends, modifies or adds any affirmative covenant in a manner which (a) when taken as a whole, is
materially adverse to the Borrower, its Subsidiaries and/or the Lenders or (b) is more onerous than the existing applicable
covenant in the Subordinated Indebtedness Documents, the Permitted Receivables Transactions Documents or the applicable
covenant in this Agreement.
6.21. Cash Flow Leverage Ratio. The Borrower will not permit the ratio (the “Cash Flow Leverage Ratio”), determined as of the end
of each of its fiscal quarters, of (i) Consolidated Total Liabilities of the Borrower to (ii) Consolidated EBITDA for the then
most-recently ended four fiscal quarters to be greater than 2.5 to 1.0.
The Cash Flow Leverage Ratio shall be calculated based upon (a) for Consolidated Total Liabilities as of the last day of each such
fiscal quarter and (b) for Consolidated EBITDA, the actual amount as of the last day of each fiscal quarter for the most recently
ended four consecutive fiscal quarters.
6.22. Balance Sheet Leverage Ratio. The Borrower will not permit the ratio, determined as of the end of each of its fiscal
quarters for the then most-recently ended four fiscal quarters of (i) Consolidated Total Liabilities to (ii) Consolidated Tangible
Net Worth as of the end of such period, all calculated for the Borrower and its Subsidiaries on a consolidated basis, to be greater
than 1.75 to 1.0.
6.23. Capital Expenditures. The Borrower will not, nor will it permit any Subsidiary to, expend, or be committed to expend, in
excess of an aggregate of $5,000,000 for Capital Expenditures of the Borrower and its Subsidiaries during any fiscal year of the
Borrower.
6.24. Rentals. The Borrower shall not permit, nor shall it permit any Subsidiary to, create, pay or incur Consolidated Rentals in
excess of $2,500,000 for any fiscal year during the term of this Agreement on a consolidated basis for the Borrower and its
Subsidiaries.
6.25. Guarantors. The Borrower shall cause each of its Subsidiaries (other than the Excluded Subsidiaries) to guarantee pursuant
to the Guaranty Agreement or supplement thereto (or, in the case of a Foreign Subsidiary, any other guarantee agreement requested by
the Administrative Agent) the Secured Obligations. In furtherance of the above, the Borrower shall promptly (and in any event within
45 days thereof) (i) provide written notice to the Administrative Agent and the Lenders upon any Person becoming a Subsidiary,
setting forth information in reasonable detail describing all of the assets of such Person, (ii) cause such Person to execute a
supplement to the Guaranty Agreement and such other Collateral Documents as are necessary for the Borrower and its Subsidiaries to
comply with Section 6.26, (iii) cause the Applicable Pledge Percentage of the issued and outstanding equity interests of such Person
to be delivered to the Administrative Agent (together with undated stock powers signed in blank, if applicable) and pledged to the
Administrative Agent pursuant to an appropriate pledge agreement(s) in substantially the form of the Pledge and Security Agreement
(or joinder or other supplement thereto) and otherwise in form reasonably acceptable to the Administrative Agent and (iv) deliver
such other documentation as the Administrative Agent may reasonably request in connection with the foregoing, including, without
limitation, certified resolutions and other authority documents of such Person and, to the extent requested by the Administrative
Agent, favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect
and enforceability of the documentation referred to above), all in form, content and scope reasonably satisfactory to the
Administrative Agent. Notwithstanding the foregoing, no Foreign Subsidiary shall be required to execute and deliver the Guaranty
Agreement (or supplement thereto) or such other guarantee agreement if such execution and delivery would cause a Deemed Dividend
Problem or a Financial Assistance Problem with respect to such Foreign Subsidiary and, in lieu thereof, the Borrower and the relevant
Subsidiaries shall provide the pledge agreements required under this Section 6.25 or Section 6.26.
6.26. Collateral. The Borrower will cause, and will cause each other Credit Party to cause, all of its owned Property to be
subject at all times to first priority, perfected Liens in favor of the Administrative Agent for the benefit of the Holders of
Secured Obligations to secure the Secured Obligations in accordance with the terms and conditions of the Collateral Documents,
subject in any case to Liens permitted by Section 6.15 hereof (it being understood and agreed that (a) no control agreements will be
required hereunder in respect of bank accounts and (b) Mortgages and Mortgage Instruments will only be required hereunder in respect
of Mortgaged Properties). Without limiting the generality of the foregoing, the Borrower will (i) cause the Applicable Pledge
Percentage of the issued and outstanding equity interests of each Pledge Subsidiary directly owned by the Borrower or any other
Credit Party to be subject at all times to a first priority, perfected Lien in favor of the Administrative Agent to secure the
Secured Obligations in accordance with the terms and conditions of the Collateral Documents or such other security documents as the
Administrative Agent shall reasonably request and (ii) will, and will cause each Guarantor to, deliver Mortgages and Mortgage
Instruments with respect to real property owned by the Borrower or such Guarantor to the extent, and within such time period as is,
reasonably required by the Administrative Agent. Notwithstanding the foregoing, no pledge agreement in respect of the equity
interests of a Foreign Subsidiary shall be required hereunder to the extent such pledge thereunder is prohibited by applicable law or
its counsel reasonably determines that such pledge would not provide material credit support for the benefit of the Holders of
Secured Obligations pursuant to legally valid, binding and enforceable pledge agreements.
6.27. Sale and Leaseback Transactions. The Borrower shall not, nor shall it permit any Subsidiary to, enter into any Sale and
Leaseback Transaction.
6.28. Acquisitions of Receivables Portfolios. The Borrower will not, nor will it permit any Credit Party to, acquire any single
Receivables Portfolio with a purchase price in excess of $20,000,000.
6.29. Government Regulation. The Borrower shall not, and shall not permit any other Subsidiary to (a) be or become subject at any
time to any law, regulation, or list of any government agency (including, without limitation, the U.S. Office of Foreign Asset
Control list) that prohibits or limits any Lender from making any Credit Extension to the Borrower or from otherwise conducting
business with the Borrower, or (b) fail to provide documentary and other evidence of any Subsidiary’s identity as may be requested by
any Lender at any time to enable such Lender to verify such Subsidiary’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.
6.30. Inactive Subsidiaries. The Borrower shall not permit any Inactive Subsidiary to (i) acquire any assets, (ii) conduct any
business and (iii) incur any Indebtedness or other liabilities. Furthermore, the Borrower shall not, and shall not permit any other
Subsidiary to, sell, dispose or otherwise transfer any assets or Property to any Inactive Subsidiary.
6.31. Receivables Portfolios. The Borrower shall not, and shall not permit any Subsidiary to, acquire or purchase Receivables
which have arisen by a means other than through the use of credit cards (net of any corresponding sales of such Receivables within 30
days of such purchases) in excess of the Maximum Non-Credit Card Receivables Amount (as defined in Schedule 6.31).
6.32. Collection Accounts. The Borrower shall cause, and shall cause the Credit Parties to cause, sixty percent (60%) of all cash
collections and other proceeds of Receivables (including late charges, fees and interest arising thereon, and all recoveries with
respect thereto that have been written off as uncollectible) acquired by any Credit Party with the proceeds of a Credit Extension to
be deposited from the Initial Collection Account (as defined in Schedule 6.32) directly into the Intermediate Collection Account (as
defined in Schedule 6.32).
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute a Default:
7.1 Any representation or warranty made or deemed made by or on behalf of the Borrower or any of its Subsidiaries to the
Lenders or the Administrative Agent under or in connection with this Agreement, any Credit Extension, or any certificate or
information delivered in connection with this Agreement or any other Loan Document shall be false in any material respect on the date
as of which made or deemed made.
7.2 Nonpayment of (i) principal of any Loan when due, (ii) any Reimbursement Obligation within two Business Days after
the same becomes due, or (iii) interest upon any Loan or any Commitment Fee, LC Fee or other Obligations under any of the Loan
Documents within five (5) Business Days after such interest, fee or other Obligation becomes due.
7.3 The breach by the Borrower of any of the terms or provisions of Section 6.2, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15,
6.16, 6.17, 6.18, 6.19, 6.20, 6.21, 6.22, 6.23, 6.24, 6.25, 6.26, 6.27, 6.28, 6.29 and 6.30.
7.4 The breach by the Borrower (other than a breach which constitutes a Default under another Section of this Article
VII) of any of the terms or provisions of (i) this Agreement or (ii) any other Loan Document (beyond the applicable grace period with
respect thereto, if any), in each case which is not remedied within thirty (30) days after the earlier to occur of (x) written notice
from the Administrative Agent or any Lender to the Borrower or (y) an Authorized Officer otherwise becomes aware of any such breach.
7.5 Failure of the Borrower or any of its Subsidiaries to pay when due any Material Indebtedness (subject to any
applicable grace period with respect thereto, if any, set forth in the Material Indebtedness Agreement evidencing such Material
Indebtedness) which failure has not been (i) timely cured or (ii) waived in writing by the requisite holders of such Material
Indebtedness; or the default by the Borrower or any of its Subsidiaries in the performance (beyond the applicable grace period with
respect thereto, if any) of any term, provision or condition contained in any Material Indebtedness Agreement or any other event
shall occur or condition exist thereunder and such default has not been (x) timely cured or (y) waived in writing by the requisite
holders of the Material Indebtedness in respect thereof and the effect of such default, event or condition is to cause, or to permit
the holder(s) of such Material Indebtedness or the lender(s) under any Material Indebtedness Agreement to cause, such Material
Indebtedness to become due prior to its stated maturity or any commitment to lend under any Material Indebtedness Agreement to be
terminated prior to its stated expiration date; or any Material Indebtedness of the Borrower or any of its Subsidiaries shall be
declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the
stated maturity thereof; or the Borrower or any of its Subsidiaries shall not pay, or admit in writing its inability to pay, its
debts generally as they become due.
7.6 The Borrower or any of its Subsidiaries shall (i) have an order for relief entered with respect to it under the
Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek,
consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or
any Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief under the Federal bankruptcy laws
as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate or partnership action to authorize or effect any of the foregoing actions set
forth in this Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding described in Section 7.7.
7.7 Without the application, approval or consent of the Borrower or any of its Subsidiaries, a receiver, trustee,
examiner, liquidator or similar official shall be appointed for the Borrower or any of its Subsidiaries or any Substantial Portion of
its Property, or a proceeding described in Section 7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries and
such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days.
7.8 Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or
control of, all or any portion of the Property of the Borrower and its Subsidiaries which, when taken together with all other
Property of the Borrower and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion.
7.9 The Borrower or any of its Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge one or more
(i) judgments or orders for the payment of money in excess of $1,000,000 (or the equivalent thereof in currencies other than Dollars)
in the aggregate, or (ii) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, which judgment(s), in any such case, is/are not stayed on appeal or otherwise being appropriately
contested in good faith or otherwise not covered by a creditworthy insurer or indemnitor.
7.10 The Unfunded Liabilities of all Single Employer Plans shall exceed $1,000,000 in the aggregate, or any Reportable
Event shall occur in connection with any Plan.
7.11 Nonpayment by the Borrower or any Subsidiary of any Rate Management Obligation, when due or the breach by the
Borrower or any Subsidiary of any term, provision or condition contained in any Rate Management Transaction or any transaction of the
type described in the definition of “Rate Management Transactions,” whether or not any Lender or Affiliate of a Lender is a party
thereto.
7.12 Any Change of Control shall occur.
7.13 The Borrower or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred, pursuant to Section 4201 of ERISA, withdrawal liability to such Multiemployer Plan in an amount which,
when aggregated with all other amounts required to be paid to Multiemployer Plans by the Borrower or any other member of the
Controlled Group as withdrawal liability (determined as of the date of such notification), exceeds $1,000,000 or requires payments
exceeding $1,000,000 per annum.
7.14 The Borrower or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer
Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a
result of such reorganization or termination the aggregate annual contributions of the Borrower and the other members of the
Controlled Group (taken as a whole) to all Multiemployer Plans which are then in reorganization or being terminated have been or will
be increased, in the aggregate, over the amounts contributed to such Multiemployer Plans for the respective plan years of such
Multiemployer Plans immediately preceding the plan year in which the reorganization or termination occurs by an amount exceeding
$1,000,000.
7.15 The Borrower or any of its Subsidiaries shall violate any Environmental Law, which has resulted in liability to the
Borrower or any of its Subsidiaries in an amount equal to $1,000,000 or more, which liability is not paid, bonded or otherwise
discharged within 45 days or which is not stayed on appeal and being appropriately contested in good faith.
7.16 This Agreement (including amendments and supplements hereto), the Guaranty Agreement (including amendments and
supplements thereto) or any Collateral Document (including amendments and supplements thereto) shall fail to remain in full force or
effect or any action shall be taken to assert the invalidity or unenforceability of, or which results in the invalidity or
unenforceability of, any such Loan Document, or any Collateral Document shall, other than as permitted thereby, fail to create or
maintain for any reason a valid and perfected security interest in any collateral purported to be covered thereby.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration.
(i) If any Default described in Section 7.6 or 7.7 occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder and the obligation and power of the LC Issuer to issue Facility LCs shall automatically terminate
and the Secured Obligations shall immediately become due and payable without any election or action on the part of
the Administrative Agent, the LC Issuer or any Lender, and the Borrower will be and become thereby unconditionally
obligated, without any further notice, act or demand, to pay the Administrative Agent an amount in immediately
available funds, which funds shall be held in the Facility LC Collateral Account, equal to the difference of (x) the
amount of LC Obligations at such time less (y) the amount or deposit in the Facility LC Collateral Account at such
time which is free and clear of all rights and claims of third parties and has not been applied against the
Obligations (the “Collateral Shortfall Amount”). If any other Default occurs, the Required Lenders (or the
Administrative Agent with the consent of the Required Lenders) may (a) terminate or suspend the obligations of the
Lenders to make Loans hereunder and the obligation and power of the LC Issuer to issue Facility LCs, or declare the
Secured Obligations to be due and payable, or both, whereupon the Secured Obligations shall become immediately due
and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly
waives and (b) upon notice to the Borrower and in addition to the continuing right to demand payment of all amounts
payable under this Agreement, make demand on the Borrower to pay, and the Borrower will forthwith upon such demand
and without any further notice or act pay to the Administrative Agent the Collateral Shortfall Amount which funds
shall be deposited in the Facility LC Collateral Account.
(ii) If at any time while any Default is continuing, the Administrative Agent determines that the Collateral Shortfall Amount at
such time is greater than zero, the Administrative Agent may make demand on the Borrower to pay, and the Borrower
will, forthwith upon such demand and without any further notice or act, pay to the Administrative Agent the
Collateral Shortfall Amount, which funds shall be deposited in the Facility LC Collateral Account.
(iii) The Administrative Agent may at any time or from time to time after funds are deposited in the Facility LC Collateral
Account, apply such funds to the payment of the Secured Obligations and any other amounts as shall from time to time
have become due and payable by the Borrower to the Lenders or the LC Issuer under the Loan Documents.
(iv) At any time while any Default is continuing, neither the Borrower nor any Person claiming on behalf of or through the
Borrower shall have any right to withdraw any of the funds held in the Facility LC Collateral Account. After all of
the Secured Obligations have been indefeasibly paid in full and the Aggregate Revolving Loan Commitment has been
terminated, any funds remaining in the Facility LC Collateral Account shall be returned by the Administrative Agent
to the Borrower or paid to whomever may be legally entitled thereto at such time.
(v) If, after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans and
the obligation and power of the LC Issuer to issue Facility LCs hereunder as a result of any Default (other than any
Default as described in Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or decree for the
payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion)
shall so direct, the Administrative Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.
8.2. Amendments. Subject to the provisions of this Section 8.2, the Required Lenders (or the Administrative Agent with the
consent in writing of the Required Lenders) and the Borrower may enter into agreements supplemental hereto for the purpose of adding
or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrower hereunder or
thereunder or waiving any Default hereunder or thereunder; provided, however, that no such supplemental agreement shall, without the
consent of all of the Lenders:
8.2.1 Extend the Revolving Loan Termination Date, extend the final maturity of any Revolving Loan or extend the expiry date of any
Facility LC to a date after the Revolving Loan Termination Date, or postpone any regularly scheduled payment of principal of
any Loan or forgive all or any portion of the principal amount thereof, or any Reimbursement Obligation related thereto, or
reduce the rate or extend the time of payment of interest or fees thereon or Reimbursement Obligations related thereto
(other than (x) a waiver of the application of the default rate of interest pursuant to Section 2.11 hereof and (y) any
reduction of the amount of or any extension of the payment date for the mandatory payments required under Section 2.2, in
each case which shall only require the approval of the Required Lenders).
8.2.2 Reduce the percentage specified in the definition of Required Lenders or any other percentage of Lenders specified to be the
applicable percentage in this Agreement to act on specified matters or amend the definition of “Revolving Loan Pro Rata
Share”.
8.2.3 Increase the amount of the Revolving Loan Commitment of any Lender hereunder, or permit the Borrower to assign its rights or
obligations under this Agreement.
8.2.4 Amend this Section 8.2.
8.2.5 Other than in connection with a transaction permitted under this Agreement, release all or substantially all of the
Collateral.
8.2.6 Other than in connection with a transaction permitted under this Agreement, release any Guarantor from its obligations
thereunder.
No amendment of any provision of this Agreement relating to the Administrative Agent shall be effective without the written consent
of the Administrative Agent. The Administrative Agent may waive payment of the fee required under Section 12.3.3 without obtaining
the consent of any other party to this Agreement. No amendment of any provision of this Agreement relating to the Swing Line Lender
or any Swing Line Loan shall be effective without the written consent of the Swing Line Lender. No amendment of any provision of
this Agreement relating to the LC Issuer shall be effective without the written consent of the LC Issuer.
8.3. Preservation of Rights. No delay or omission of the Lenders, the LC Issuer or the Administrative Agent to exercise any
right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and
the making of a Credit Extension notwithstanding the existence of a Default or Unmatured Default or the inability of the Borrower to
satisfy the conditions precedent to such Credit Extension shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by, or by the Administrative Agent with the consent of, the requisite number of Lenders required pursuant to Section 8.2, and
then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded
shall be cumulative and all shall be available to the Administrative Agent, the LC Issuer and the Lenders until all of the Secured
Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties of the Borrower contained in this Agreement shall survive
the making of the Credit Extensions herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, neither the LC Issuer nor
any Lender shall be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Loan Documents.
9.4. Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrower, the Administrative
Agent, the LC Issuer and the Lenders and supersede all prior agreements and understandings among the Borrower, the Administrative
Agent, the LC Issuer and the Lenders relating to the subject matter thereof other than those contained in the fee letter described in
Section 10.13 which shall survive and remain in full force and effect during the term of this Agreement.
9.5. Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not
joint and no Lender shall be the partner or agent of any other (except to the extent to which the Administrative Agent is authorized
to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any
of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than
the parties to this Agreement and their respective successors and assigns, provided, however, that the parties hereto expressly agree
that the Arranger shall enjoy the benefits of the provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth
therein and shall have the right to enforce such provisions on its own behalf and in its own name to the same extent as if it were a
party to this Agreement.
9.6. Expenses; Indemnification. (i) The Borrower shall reimburse the Administrative Agent and the Arranger for any reasonable
costs, internal charges and out-of-pocket expenses (including reasonable attorneys' and paralegals’ fees and time charges of
attorneys for the Administrative Agent, which attorneys may be employees of the Administrative Agent and expenses of and fees for
other advisors and professionals engaged by the Administrative Agent or the Arranger) paid or incurred by the Administrative Agent or
the Arranger in connection with the investigation, preparation, negotiation, documentation, execution, delivery, syndication,
distribution (including, without limitation, via the internet), review, amendment, modification and administration of the Loan
Documents. The Borrower also agrees to reimburse the Administrative Agent, the Arranger, the LC Issuer and the Lenders for any
reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' and paralegals’ fees and time charges
and expenses of attorneys and paralegals for the Administrative Agent, the Arranger, the LC Issuer and the Lenders, which attorneys
and paralegals may be employees of the Administrative Agent, the Arranger, the LC Issuer or the Lenders) paid or incurred by the
Administrative Agent, the Arranger, the LC Issuer or any Lender in connection with the collection and enforcement of the Loan
Documents. Expenses being reimbursed by the Borrower under this Section include, without limitation, the cost and expense of
obtaining an appraisal of each parcel of real property or interest in real property described in any relevant Collateral Document,
which appraisal shall be in conformity with the applicable requirements of any law or any governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law), or any interpretation thereof, and any rules promulgated to
implement such provisions and costs and expenses incurred in connection with the Reports described in the following sentence. The
Borrower acknowledges that from time to time Bank One may prepare and may distribute to the Lenders (but shall have no obligation or
duty to prepare or to distribute to the Lenders) certain audit reports (the “Reports”) pertaining to the Borrower’s assets for
internal use by Bank One from information furnished to it by or on behalf of the Borrower, after Bank One has exercised its rights of
inspection pursuant to this Agreement.
(ii) The Borrower hereby further agrees to indemnify the Administrative Agent, the Arranger, the LC Issuer, each Lender, their
respective affiliates, and each of their directors, officers and employees against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the
Administrative Agent, the Arranger, the LC Issuer, any Lender or any affiliate is a party thereto, and all reasonable attorneys’ and
paralegals’ fees, time charges and expenses of attorneys and paralegals of the party seeking indemnification, which attorneys and
paralegals may or may not be employees of such party seeking indemnification) which any of them may pay or incur arising out of or
relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Credit Extension hereunder except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the
party seeking indemnification. The obligations of the Borrower under this Section 9.6 shall survive the termination of this
Agreement.
9.7. Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the
Administrative Agent with sufficient counterparts so that the Administrative Agent may furnish one to each of the Lenders, to the
extent that the Administrative Agent deems appropriate.
9.8. Accounting. If any changes in generally accepted accounting principles are hereafter required or permitted and are adopted
by the Borrower or any of its Subsidiaries with the agreement of its independent certified public accountants and such changes result
in a change in the method of calculation of any of the financial covenants, tests, restrictions or standards herein or in the related
definitions or terms used therein (“Accounting Changes”), the parties hereto agree, at the Borrower's request, to enter into
negotiations, in good faith, in order to amend such provisions in a credit neutral manner so as to reflect equitably such changes
with the desired result that the criteria for evaluating the Borrower's and its Subsidiaries' financial condition shall be the same
after such changes as if such changes had not been made; provided, however, until such provisions are amended in a manner reasonably
satisfactory to the Administrative Agent and the Required Lenders, no Accounting Change shall be given effect in such calculations.
In the event such amendment is entered into, all references in this Agreement to Agreement Accounting Principles shall mean generally
accepted accounting principles as of the date of such amendment. Notwithstanding the foregoing, all financial statements to be
delivered by the Borrower pursuant to Section 6.1 shall be prepared in accordance with generally accepted accounting principles in
effect at such time.
9.9. Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in
any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions
in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.
9.10. Nonliability of Lenders. The relationship between the Borrower on the one hand and the Lenders, the LC Issuer and the
Administrative Agent on the other hand shall be solely that of borrower and lender. Neither the Administrative Agent, the Arranger,
the LC Issuer nor any Lender shall have any fiduciary responsibilities to the Borrower. Neither the Administrative Agent, the
Arranger, the LC Issuer nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter
in connection with any phase of the Borrower's business or operations. The Borrower agrees that neither the Administrative Agent,
the Arranger, the LC Issuer nor any Lender shall have liability to the Borrower (whether sounding in tort, contract or otherwise) for
losses suffered by the Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is
determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross
negligence or willful misconduct of the party from which recovery is sought. Neither the Administrative Agent, the Arranger, the LC
Issuer nor any Lender shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for,
any special, indirect, consequential or punitive damages suffered by the Borrower in connection with, arising out of, or in any way
related to the Loan Documents or the transactions contemplated thereby.
9.11. Confidentiality. The Administrative Agent and each Lender agrees to hold any Confidential Information (as hereinafter
defined) which it may receive from the Borrower in connection with this Agreement in confidence, except for disclosure (i) to its
Affiliates and to the Administrative Agent and any other Lender and their respective Affiliates in connection with the transactions
contemplated by this Agreement (provided that such parties are informed of the confidential nature of the Confidential Information
and are instructed to keep such Confidential Information confidential), (ii) to legal counsel, accountants, and other professional
advisors to such Lender or to a Transferee in connection with the transactions contemplated by this Agreement (provided that such
parties are informed of the confidential nature of the Confidential Information and are instructed to keep such Confidential
Information confidential), (iii) to regulatory officials upon request or as required by law, (iv) subject to the proviso below, to
any Person as requested pursuant to or as required by law, regulation, or legal process, (v) to its direct or indirect contractual
counterparties in swap agreements related to the Credit Extensions or to legal counsel, accountants and other professional advisors
to such counterparties when provided for such purposes, (vii) permitted by Section 12.4, (viii) to rating agencies if requested or
required by such agencies in connection with a rating relating to the Credit Extensions hereunder and (ix) in connection with
enforcement of the rights and remedies of the Administrative Agent or any Lender under the Loan Documents to the extent such
disclosure is necessary or appropriate to pursue such enforcement in a commercially reasonable manner; provided that, in the case of
subsection (iv) to the extent permitted by applicable law, the Administrative Agent or relevant Lender to whom the disclosure request
or requirement is made, agrees to use its commercially reasonable efforts to promptly notify the Borrower of such request or
requirement so that the Borrower may (a) seek an appropriate protective order or other appropriate order at the Borrower’s sole cost
and expense and/or (b) waive compliance with this proviso – it being understood and agreed that if the Borrower does not have the
right to obtain such an order or if the Borrower does not commence procedures to obtain such a protective order within 5 Business
Days of receipt of such notice, the Administrative Agent and Lenders’ compliance with this proviso shall be deemed to have been
waived with respect to such disclosure. Without limiting Section 9.4, the Borrower agrees that the terms of this Section 9.11 shall
set forth the entire agreement between the Borrower and each Lender (including the Administrative Agent) with respect to any
Confidential Information previously or hereafter received by such Lender in connection with this Agreement, and this Section 9.11
shall supersede any and all prior confidentiality agreements entered into by such Lender with respect to such Confidential
Information. As used in this Section 9.11, “Confidential Information” means any information or material regarding the business
operations, procedures, methods and plans of the Borrower and its Subsidiaries, any financial data, proposed transaction or financing
structures, information relating to the Receivables or the Receivables Portfolios, and all reports (other than copies of reports
filed with the Securities and Exchange Commission) and other information provided pursuant to Section 6.1, together with all notes,
analyses, compilations, studies and other documents to the extent they contain or otherwise reflect such information; provided that
“Confidential Information” shall not include any such information which (i) is generally available to the public at the time it is
provided by, or on behalf of, the Borrower or any Subsidiary, (ii) was known to the intended recipient prior to such information
being disclosed to the Administrative Agent or any Lender and (iii) is independently developed by or for the Administrative Agent or
any Lender.
9.12. Lenders Not Utilizing Plan Assets. Each Lender represents and warrants that none of the consideration used by such Lender
to make its Credit Extensions constitutes for any purpose of ERISA or Section 4975 of the Code assets of any “plan” as defined in
Section 3(3) of ERISA or Section 4975 of the Code and the rights and interests of such Lender in and under the Loan Documents shall
not constitute such “plan assets” under ERISA.
9.13. Nonreliance. Each Lender hereby represents that it is not relying on or looking to any margin stock (as defined in
Regulation U) as collateral in the extension or maintenance of the credit provided for herein.
9.14. Disclosure. The Borrower and each Lender, including the LC Issuer, hereby acknowledge and agree that each Lender and/or its
Affiliates from time to time may hold investments in, make other loans to or have other relationships with the Borrower and its
Affiliates.
9.15. Performance of Obligations. The Borrower agrees that the Administrative Agent may, but shall have no obligation to (i) at
any time, pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against any
Collateral and (ii) after the occurrence and during the continuance of a Default make any other payment or perform any act required
of the Borrower under any Loan Document or take any other action which the Administrative Agent in its discretion deems necessary or
desirable to protect or preserve the Collateral, including, without limitation, any action to (x) effect any repairs or obtain any
insurance called for by the terms of any of the Loan Documents and to pay all or any part of the premiums therefor and the costs
thereof and (y)pay any rents payable by the Borrower which are more than 30 days past due, or as to which the landlord has given
notice of termination, under any lease. The Administrative Agent shall use its best efforts to give the Borrower notice of any
action taken under this Section 9.15 prior to the taking of such action or promptly thereafter provided the failure to give such
notice shall not affect the Borrower's obligations in respect thereof. The Borrower agrees to pay the Administrative Agent, upon
demand, the principal amount of all funds advanced by the Administrative Agent under this Section 9.15, together with interest
thereon at the rate from time to time applicable to Floating Rate Loans from the date of such advance until the outstanding principal
balance thereof is paid in full. If the Borrower fails to make payment in respect of any such advance under this Section 9.15 within
one (1) Business Day after the date the Borrower receives written demand therefor from the Administrative Agent, the Administrative
Agent shall promptly notify each Lender and each Lender agrees that it shall thereupon make available to the Administrative Agent, in
Dollars in immediately available funds, the amount equal to such Lender's Revolving Loan Pro Rata Share of such advance. If such
funds are not made available to the Administrative Agent by such Lender within one (1) Business Day after the Administrative Agent's
demand therefor, the Administrative Agent will be entitled to recover any such amount from such Lender together with interest thereon
at the Federal Funds Effective Rate for each day during the period commencing on the date of such demand and ending on the date such
amount is received. The failure of any Lender to make available to the Administrative Agent its Revolving Loan Pro Rata Share of any
such unreimbursed advance under this Section 9.15 shall neither relieve any other Lender of its obligation hereunder to make
available to the Administrative Agent such other Lender's Revolving Loan Pro Rata Share of such advance on the date such payment is
to be made nor increase the obligation of any other Lender to make such payment to the Administrative Agent. All outstanding
principal of, and interest on, advances made under this Section 9.15 shall constitute Obligations secured by the Collateral until
paid in full by the Borrower.
9.16. USA Patriot Act Notification. The following notification is provided to the Borrower pursuant to Section 326 of the USA
Patriot Act of 2001, 31 U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government of the United States of America fight the
funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record
information that identifies each Person that opens an account, including any deposit account, treasury management account, loan,
other extension of credit, or other financial services product. Accordingly, when the Borrower opens an account, the Administrative
Agent and the Lenders will ask for the Borrower's name, tax identification number, business address, and other information that will
allow the Administrative Agent and the Lenders to identify the Borrower. The Administrative Agent and the Lenders may also ask to
see the Borrower's legal organizational documents or other identifying documents.
ARTICLE X
THE ADMINISTRATIVE AGENT
10.1. Appointment; Nature of Relationship. Bank One is hereby appointed by each of the Lenders as its contractual representative
(herein referred to as the “Administrative Agent”) hereunder and under each other Loan Document, and each of the Lenders irrevocably
authorizes the Administrative Agent to act as the contractual representative of such Lender with the rights and duties expressly set
forth herein and in the other Loan Documents. The Administrative Agent agrees to act as such contractual representative upon the
express conditions contained in this Article X. Notwithstanding the use of the defined term “Administrative Agent,” it is expressly
understood and agreed that the Administrative Agent shall not have any fiduciary responsibilities to any of the Holders of Secured
Obligations by reason of this Agreement or any other Loan Document and that the Administrative Agent is merely acting as the
contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan
Documents. In its capacity as the Lenders' contractual representative, the Administrative Agent (i) does not hereby assume any
fiduciary duties to any of the Holders of Secured Obligations, (ii) is a “representative” of the Holders of Secured Obligations
within the meaning of the term “secured party” as defined in the New York Uniform Commercial Code and (iii) is acting as an
independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan
Documents. Each of the Lenders, for itself and on behalf of its Affiliates as Holders of Secured Obligations, hereby agrees to
assert no claim against the Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty,
all of which claims each Holder of Secured Obligations hereby waives.
10.2. Powers. The Administrative Agent shall have and may exercise such powers under the Loan Documents as are specifically
delegated to the Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto.
The Administrative Agent shall have no implied duties or fiduciary duties to the Lenders, or any obligation to the Lenders to take
any action thereunder except any action specifically provided by the Loan Documents to be taken by the Administrative Agent.
10.3. General Immunity. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable
to the Borrower, or any Lender or Holder of Secured Obligations for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in
a final, non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct
of such Person.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Administrative Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish
information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required
to be delivered solely to the Administrative Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e)
the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing
furnished in connection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any Collateral; or (g)
the financial condition of the Borrower or any guarantor of any of the Obligations or of any of the Borrower's or any such
guarantor's respective Subsidiaries. The Administrative Agent shall have no duty to disclose to the Lenders information that is not
required to be furnished by the Borrower to the Administrative Agent at such time, but is voluntarily furnished by the Borrower to
the Administrative Agent (either in its capacity as Administrative Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required
Lenders (or all of the Lenders in the event that and to the extent that this Agreement expressly requires such), and such
instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby
acknowledge that the Administrative Agent shall be under no duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the
Required Lenders (or all of the Lenders in the event that and to the extent that this Agreement expressly requires such). The
Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that
it may incur by reason of taking or continuing to take any such action.
10.6. Employment of Agents and Counsel. The Administrative Agent may execute any of its duties as Administrative Agent hereunder
and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative Agent shall be entitled to advice of counsel concerning
the contractual arrangement between the Administrative Agent and the Lenders and all matters pertaining to the Administrative Agent's
duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Administrative Agent shall be entitled to rely upon any Note, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex, electronic mail message, statement, paper or document believed by it to
be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the
opinion of counsel selected by the Administrative Agent, which counsel may be employees of the Administrative Agent. For purposes of
determining compliance with the conditions specified in Sections 4.1 and 4.2, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from
such Lender prior to the applicable date specifying its objection thereto.
10.8. Administrative Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Administrative
Agent ratably in proportion to the Lenders’ Revolving Loan Pro Rata Shares (i) for any amounts not reimbursed by the Borrower for
which the Administrative Agent is entitled to reimbursement by the Borrower under the Loan Documents, (ii) for any other expenses
incurred by the Administrative Agent on behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Administrative
Agent in connection with any dispute between the Administrative Agent and any Lender or between two or more of the Lenders) and (iii)
for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
and nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or
arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby
(including, without limitation, for any such amounts incurred by or asserted against the Administrative Agent in connection with any
dispute between the Administrative Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the
terms of the Loan Documents or of any such other documents, provided that (i) no Lender shall be liable for any of the foregoing to
the extent any of the foregoing is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Administrative Agent and (ii) any indemnification required pursuant to Section
3.5(vii) shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant Lender in accordance with the provisions
thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Secured Obligations and termination of
this Agreement.
10.9. Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Unmatured Default hereunder unless the Administrative Agent has received written notice from a Lender or the Borrower
referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a “notice of default”. In
the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the
Lenders.
10.10. Rights as a Lender. In the event the Administrative Agent is a Lender, the Administrative Agent shall have the same rights
and powers hereunder and under any other Loan Document with respect to its Revolving Loan Commitment and its Credit Extensions as any
Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, at any
time when the Administrative Agent is a Lender, unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent and its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any
other Person. The Administrative Agent, in its individual capacity, is not obligated to remain a Lender.
10.11. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative
Agent, the Arranger or any other Lender and based on the financial statements prepared by the Borrower and such other documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the
Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents.
10.12. Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the
Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Administrative Agent or, if no
successor Administrative Agent has been appointed, forty-five (45) days after the retiring Administrative Agent gives notice of its
intention to resign. The Administrative Agent may be removed at any time with or without cause by written notice received by the
Administrative Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any
such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrower and the Lenders, a
successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Administrative Agent's giving notice of its intention to resign, then the resigning Administrative
Agent may appoint, on behalf of the Borrower and the Lenders, a successor Administrative Agent. Notwithstanding the previous
sentence, the Administrative Agent may at any time without the consent of the Borrower or any Lender, appoint any of its Affiliates
which is a commercial bank as a successor Administrative Agent hereunder. If the Administrative Agent has resigned or been removed
and no successor Administrative Agent has been appointed, the Lenders may perform all the duties of the Administrative Agent
hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes
shall deal directly with the Lenders. No successor Administrative Agent shall be deemed to be appointed hereunder until such
successor Administrative Agent has accepted the appointment. Any such successor Administrative Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the resigning or removed Administrative Agent. Upon the effectiveness of the
resignation or removal of the Administrative Agent, the resigning or removed Administrative Agent shall be discharged from its duties
and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Administrative
Agent, the provisions of this Article X shall continue in effect for the benefit of such Administrative Agent in respect of any
actions taken or omitted to be taken by it while it was acting as the Administrative Agent hereunder and under the other Loan
Documents. In the event that there is a successor to the Administrative Agent by merger, or the Administrative Agent assigns its
duties and obligations to an Affiliate pursuant to this Section 10.12, then the term “Prime Rate” as used in this Agreement shall
mean the prime rate, base rate or other analogous rate of the new Administrative Agent.
10.13. Administrative Agent and Arranger Fees. The Borrower agrees to pay to the Administrative Agent and the Arranger, for their
respective accounts, the fees agreed to by the Borrower, the Administrative Agent and the Arranger pursuant to that certain letter
agreement dated March 10, 2004, or as otherwise agreed from time to time.
10.14. Delegation to Affiliates. The Borrower and the Lenders agree that the Administrative Agent may delegate any of its duties
under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees)
which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and
other protective provisions to which the Administrative Agent is entitled under Articles IX and X.
10.15. Co-Agents, Documentation Agent, Syndication Agent, etc. None of the Lenders, if any, identified in this Agreement as a
“co-agent”, “documentation agent” or “syndication agent” shall have any right, power, obligation, liability, responsibility or duty
under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders shall
have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect
to such Lenders as it makes with respect to the Administrative Agent in Section 10.11.
10.16. Collateral Documents. (a) Each Lender authorizes the Administrative Agent to enter into each of the Collateral Documents to
which it is a party and to take all action contemplated by such documents. Each Lender agrees that no Holder of Secured Obligations
(other than the Administrative Agent) shall have the right individually to seek to realize upon the security granted by any
Collateral Document, it being understood and agreed that such rights and remedies may be exercised solely by the Administrative Agent
for the benefit of the Holders of Secured Obligations upon the terms of the Collateral Documents.
(b) In the event that any Collateral is hereafter pledged by any Person as collateral security for the Secured
Obligations, the Administrative Agent is hereby authorized to execute and deliver on behalf of the Holders of Secured Obligations any
Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of the Administrative Agent on behalf
of the Holders of Secured Obligations.
(c) The Lenders hereby authorize the Administrative Agent, at its option and in its discretion, to release any Lien
granted to or held by the Administrative Agent upon any Collateral (i) upon termination of the Revolving Loan Commitments and payment
and satisfaction of all of the Obligations (other than contingent indemnity obligations and Rate Management Obligations) at any time
arising under or in respect of this Agreement or the Loan Documents or the transactions contemplated hereby or thereby; (ii) as
permitted by, but only in accordance with, the terms of the applicable Loan Document; or (iii) if approved, authorized or ratified in
writing by the Required Lenders, unless such release is required to be approved by all of the Lenders hereunder. Upon request by the
Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent's authority to release particular
types or items of Collateral pursuant to this Section 10.16.
(d) Upon any sale or transfer of assets constituting Collateral which is permitted pursuant to the terms of any
Loan Document, or consented to in writing by the Required Lenders or all of the Lenders, as applicable, and upon at least five
Business Days' prior written request by the Borrower to the Administrative Agent, the Administrative Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to
the Administrative Agent for the benefit of the Holders of Secured Obligations herein or pursuant hereto upon the Collateral that was
sold or transferred; provided, however, that (i) the Administrative Agent shall not be required to execute any such document on terms
which, in the Administrative Agent's opinion, would expose the Administrative Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Secured Obligations or any Liens upon (or obligations of the Borrower or any Subsidiary in respect
of) all interests retained by the Borrower or any Subsidiary, including (without limitation) the proceeds of the sale, all of which
shall continue to constitute part of the Collateral.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if the Borrower becomes
insolvent, however evidenced, or any other Default occurs, any and all deposits (including all account balances, whether provisional
or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender or any
Affiliate of any Lender to or for the credit or account of the Borrower may be offset and applied toward the payment of the Secured
Obligations owing to such Lender, whether or not the Secured Obligations, or any part thereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Outstanding Revolving
Credit Exposure (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by
any other Lender, such Lender agrees, promptly upon demand, to purchase a participation in the Aggregate Outstanding Revolving Credit
Exposure held by the other Lenders so that after such purchase each Lender will hold its Revolving Loan Pro Rata Share. If any
Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such
action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their respective Revolving
Loan Pro Rata Shares. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be
made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of
the Borrower, the Administrative Agent and the Lenders and their respective successors and assigns permitted hereby, except that (i)
the Borrower shall not have the right to assign its rights or obligations under the Loan Documents without the prior written consent
of each Lender, (ii) any assignment by any Lender must be made in compliance with Section 12.3, and (iii) any transfer by
Participation must be made in compliance with Section 12.2. Any attempted assignment or transfer by any party not made in compliance
with this Section 12.1 shall be null and void, unless such attempted assignment or transfer is treated as a participation in
accordance with Section 12.3.2. The parties to this Agreement acknowledge that clause (ii) of this Section 12.1 relates only to
absolute assignments and this Section 12.1 does not prohibit assignments creating security interests, including, without limitation,
(x) any pledge or assignment by any Lender of all or any portion of its rights under this Agreement and any Note to a Federal Reserve
Bank, (y) in the case of a Lender which is a Fund, any pledge or assignment of all or any portion of its rights under this Agreement
and any Note to its trustee in support of its obligations to its trustee or (z) any pledge or assignment by any Lender of all or any
portion of its rights under this Agreement and any Note to direct or indirect contractual counterparties in swap agreements relating
to the Loans; provided, however, that no such pledge or assignment creating a security interest shall release the transferor Lender
from its obligations hereunder unless and until the parties thereto have complied with the provisions of Section 12.3. The
Administrative Agent may treat the Person which made any Loan or which holds any Note as the owner thereof for all purposes hereof
unless and until such Person complies with Section 12.3; provided, however, that the Administrative Agent may in its discretion (but
shall not be required to) follow instructions from the Person which made any Loan or which holds any Note to direct payments relating
to such Loan or Note to another Person. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment
to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time
of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been
issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan.
12.2. Participations.
12.2.1 Permitted Participants; Effect. Any Lender may at any time sell to one or more banks or other entities (“Participants”)
participating interests in any Outstanding Revolving Credit Exposure of such Lender, any Note held by such Lender, any
Revolving Loan Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any
such sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the owner of its Outstanding Revolving Credit Exposure and the holder of any Note
issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrower under this
Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under the Loan Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect
to any Credit Extension or Revolving Loan Commitment in which such Participant has an interest which would require consent
of all of the Lenders pursuant to the terms of Section 8.2 or of any other Loan Document.
12.2.3 Benefit of Certain Provisions. The Borrower agrees that each Participant shall be deemed to have the right of setoff
provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents,
provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of
participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant,
by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received pursuant
to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant
were a Lender. The Borrower further agrees that each Participant shall be entitled to the benefits of Sections 3.1, 3.2,
3.4 and 3.5 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 12.3,
provided that (i) a Participant shall not be entitled to receive any greater payment under Section 3.1, 3.2 or 3.5 than the
Lender who sold the participating interest to such Participant would have received had it retained such interest for its own
account, unless the sale of such interest to such Participant is made with the prior written consent of the Borrower, and
(ii) any Participant not incorporated under the laws of the United States of America or any State thereof agrees to comply
with the provisions of Section 3.5 to the same extent as if it were a Lender.
12.3. Assignments.
12.3.1 Permitted Assignments. Any Lender may at any time assign to one or more banks or other entities (“Purchasers”) all or any
part of its rights and obligations under the Loan Documents. Such assignment shall be evidenced by an agreement
substantially in the form of Exhibit C or in such other form as may be agreed to by the parties thereto (each such
agreement, an “Assignment Agreement”). Each such assignment with respect to a Purchaser which is not a Lender or an
Affiliate of a Lender or an Approved Fund shall either be in an amount equal to the entire applicable Revolving Loan
Commitment and Outstanding Revolving Credit Exposure of the assigning Lender or (unless each of the Borrower and the
Administrative Agent otherwise consents) be in an aggregate amount not less than $3,000,000. The amount of the assignment
shall be based on the Revolving Loan Commitment and Outstanding Revolving Credit Exposure (if the Revolving Loan Commitment
has been terminated) subject to the assignment, determined as of the date of such assignment or as of the “Trade Date,” if
the “Trade Date” is specified in the Assignment Agreement.
12.3.2 Consents. The consent of the Borrower shall be required prior to an assignment becoming effective unless the Purchaser is a
Lender, an Affiliate of a Lender or an Approved Fund, provided that the consent of the Borrower shall not be required if (i)
a Default has occurred and is continuing or (ii) if such assignment is in connection with the physical settlement of any
Lender’s obligations to direct or indirect contractual counterparties in swap agreements relating to the Loans. The consent
of the Administrative Agent shall be required prior to an assignment becoming effective unless the Purchaser is a Lender, an
Affiliate of a Lender or an Approved Fund. Any consent required under this Section 12.3.2 shall not be unreasonably
withheld or delayed.
12.3.3 Effect; Effective Date. Upon (i) delivery to the Administrative Agent of an Assignment Agreement, together with any
consents required by Sections 12.3.1 and 12.3.2, and (ii) payment of a $3,500 fee by the relevant assignor or Purchaser to
the Administrative Agent for processing such assignment (unless such fee is waived by the Administrative Agent), such
assignment shall become effective on the effective date specified in such assignment. The Assignment Agreement shall
contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the
Revolving Loan Commitment and Outstanding Revolving Credit Exposure under the applicable Assignment Agreement constitutes
“plan assets” as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will
not be “plan assets” under ERISA. On and after the effective date of such assignment, such Purchaser shall for all purposes
be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party thereto,
and the transferor Lender shall be released with respect to the Revolving Loan Commitment and Outstanding Revolving Credit
Exposure assigned to such Purchaser without any further consent or action by the Borrower, the Lenders or the Administrative
Agent. In the case of an assignment covering all of the assigning Lender’s rights and obligations under this Agreement,
such Lender shall cease to be a Lender hereunder but shall continue to be entitled to the benefits of, and subject to, those
provisions of this Agreement and the other Loan Documents which survive payment of the Obligations and termination of the
applicable agreement. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section 12.3 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with Section 12.2. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 12.3.3, the transferor Lender, the Administrative Agent and the Borrower shall, if the transferor
Lender or the Purchaser desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as
appropriate, replacement Notes are issued to such transferor Lender, if applicable, and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Revolving
Loan Commitments (or, if the Revolving Loan Termination Date has occurred, their respective Outstanding Revolving Credit
Exposure) as adjusted pursuant to such assignment.
12.3.4 Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of
its offices in Phoenix, Arizona a copy of each Assignment Agreement delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Revolving Loan Commitments of, and principal amounts of the Credit
Extensions owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the
Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower at any reasonable
time and from time to time upon reasonable prior notice.
12.4. Dissemination of Information. The Borrower authorizes each Lender to disclose to any Participant or Purchaser or any other
Person acquiring an interest in the Loan Documents by operation of law (each a “Transferee”) and any prospective Transferee any and
all information in such Lender’s possession concerning the creditworthiness of the Borrower and its Subsidiaries, including without
limitation any information contained in any Reports; provided that each Transferee and prospective Transferee agrees to be bound by
Section 9.11 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is transferred to any Transferee which is not incorporated under the
laws of the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section 3.5(iv).
ARTICLE XIII
NOTICES
13.1. Notices; Effectiveness; Electronic Communication
13.1.1 Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and
except as provided in Section 13.1.2 below), all notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier,
in each case to the attention of the individual or office indicated, if any, as follows:
(i) if to the Borrower, at its address or telecopier number set forth on the signature page hereof;
(ii) if to the Administrative Agent, at its address or telecopier number set forth on the signature page hereof;
(iii) if to the LC Issuer, at its address or telecopier number set forth on the signature page hereof;
(iv) if to a Lender, to it at its address (or telecopier number) set forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been
given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given
during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next
Business Day for the recipient). Notices delivered through electronic communications to the extent provided in Section
13.1.2 below, shall be effective as provided in said Section 13.1.2.
13.1.2 Electronic Communications. Notices and other communications to the Lenders and the LC Issuer hereunder may be delivered or
furnished by electronic communication (including e-mail and internet or intranet websites) pursuant to procedures approved
by the Administrative Agent or as otherwise determined by the Administrative Agent, provided that the foregoing shall not
apply to notices to any Lender or the LC Issuer pursuant to Article II if such Lender or the LC Issuer, as applicable, has
notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.
The Administrative Agent or the Borrower may, in its respective discretion, agree to accept notices and other communications
to it hereunder by electronic communications pursuant to procedures approved by it or as it otherwise determines, provided
that such determination or approval may be limited to particular notices or communications. Unless the Administrative Agent
otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgment), provided that if such notice or other communication is not given
during the normal business hours of the recipient, such notice or communication shall be deemed to have been given at the
opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is available and identifying the
website address therefor.
13.2. Change of Address, Etc. Any party hereto may change its address or telecopier number for notices and other communications
hereunder by notice to the other parties hereto.
ARTICLE XIV
COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION
14.1. Counterparts; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.
Except as provided in Article IV, this Agreement shall become effective when it shall have been executed by the Borrower, the
Administrative Agent, the LC Issuer and the Lenders and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of such parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.
14.2. Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any
Assignment Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which
shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, or any other state laws based on the Uniform Electronic Transactions Act.
ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
15.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
15.2 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
ANY PARTY HERETO TO BRING PROCEEDINGS IN THE COURTS OF ANY OTHER JURISDICTION.
15.3 WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT, THE LC ISSUER, EACH LENDER, AND EACH OTHER HOLDER OF
SECURED OBLIGATIONS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
[Signature Pages Follow]
SIGNATURE PAGE TO
ENCORE CAPITAL GROUP
CREDIT AGREEMENT
IN WITNESS WHEREOF, the Borrower, the Lenders, the LC Issuer and the Administrative Agent have executed this Agreement as of
the date first above written.
ENCORE CAPITAL GROUP, INC.
as the Borrower
By: /s/ Carl C. Gregory, III
------------------------------------------------
Print Name: Carl C. Gregory, III
Title: President & CEO
-----------------------------------
5775 Roscoe Court
------------------------------------------------
San Diego, California 92123
------------------------------------------------
Attention: General Counsel
-----------------------------------------
Telephone: (858) 560-2600
FAX: (858) 309-6995
BANK ONE, NA (MAIN OFFICE CHICAGO), as a Lender, as
Swing Line Lender, as LC Issuer, and as
Administrative Agent
By: /s/ Steven J. Krakoski
------------------------------------------------
Name: Steven J. Krakoski
Title: First Vice President
--------------------------------------
201 North Central Avenue
21st Floor
Phoenix, Arizona 85004
Attention: Steven J. Krakoski
-----------------------------------------
Telephone: (602) 221-1360
FAX: (602) 221-1502
email: steven_j_krakoski@bankone.com
GUARANTY BANK, as a Lender
By /s/ Scott L. Brewer
------------------------------------------------
Name: Scott L. Brewer
Title: SVP
------------------------------------------------
BANK OF SCOTLAND, as a Lender
By /s/ Karen Workman
------------------------------------------------
Name: Karen Workman
------------------------------------------------
Title: Assistant Vice President
BANCO POPULAR NORTH AMERICA, as a Lender
By /s/ Andres Cabrero
------------------------------------------------
Name: Andres Cabrero
------------------------------------------------
Title: Senior Vice President
CALIFORNIA BANK&TRUST, as a Lender
By /s/ Michael G. Powell
------------------------------------------------
Name: Michael G. Powell
------------------------------------------------
Title: SVP & Manager
COMMITMENT SCHEDULE
Revolving Loan Commitments
Lender Amount of Revolving Loan Commitment % of Aggregate Revolving Loan
Commitment
Bank One, NA $32,500,000 43.3333334%
Guaranty Bank $12,500,000 16.6666667%
Bank of Scotland $10,000,000 13.3333333%
Banco Popular North America $10,000,000 13.3333333%
California Bank&Trust $10,000,000 13.3333333%
TOTAL $75,000,000 100%
PRICING SCHEDULE
========================= =============== =============== =============== ============== ==============
Applicable Level I Level II Level III Level IV Level V
Margin Status Status Status Status Status
------------------------- --------------- --------------- --------------- -------------- --------------
------------------------- --------------- --------------- --------------- -------------- --------------
Eurodollar Rate 2.00% 2.25% 2.50% 2.75% 3.00%
------------------------- --------------- --------------- --------------- -------------- --------------
------------------------- --------------- --------------- --------------- -------------- --------------
Floating Rate 0.00% 0.00% 0.00% 0.25% 0.50%
========================= =============== =============== =============== ============== ==============
========================= =============== =============== =============== ============== ==============
========================= =============== =============== =============== ============== ==============
========================= =============== =============== =============== ============== ==============
Applicable Fee Level I Level II Level III Level IV Level V
Rate Status Status Status Status Status
------------------------- --------------- --------------- --------------- -------------- --------------
------------------------- --------------- --------------- --------------- -------------- --------------
Commitment Fee 0.375% 0.425% 0.500% 0.500% 0.500%
========================= =============== =============== =============== ============== ==============
For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this
Schedule:
"Financials" means the annual or quarterly financial statements of the Borrower delivered pursuant to Section 6.1.1 or 6.1.2.
"Level I Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most
recent Financials, the Cash Flow Leverage Ratio is less than 0.5 to 1.0.
"Level II Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most
recent Financials, (i) the Borrower has not qualified for Level I Status and (ii) the Cash Flow Leverage Ratio is less than 1.0 to
1.0.
"Level III Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most
recent Financials, (i) the Borrower has not qualified for Level I Status or Level II Status and (ii) the Cash Flow Leverage Ratio is
less than 1.5 to 1.0.
“Level IV Status” exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most
recent Financials Level I Status or Level II Status or Level III Status and (ii) the Cash Flow Leverage Ratio is less than 2.0 to 1.0.
"Level V Status" exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most
recent Financials, the Borrower has not qualified for Level I Status or Level II Status or Level III Status or Level IV Status.
"Status" means either Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status.
The Applicable Margin and Applicable Fee Rate shall be determined in accordance with foregoing table based on the Borrower's
Status as reflected in the then most recent Financials. Adjustments, if any, to the Applicable Margin or Applicable Fee Rate shall
be effective five Business Days after the Administrative Agent has received the applicable Financials. If the Borrower fails to
deliver the Financials to the Administrative Agent at the time required pursuant to Section 6.1, then the Applicable Margin and
Applicable Fee Rate shall be the highest Applicable Margin and Applicable Fee Rate set forth in the foregoing table until five days
after such Financials are so delivered.
Notwithstanding the foregoing, Level III Status shall be deemed to be applicable until the Administrative Agent’s receipt of
the applicable Financials for the Borrower’s fiscal quarter ending on or about September 30, 2004 (unless such Financials demonstrate
that Level IV or Level V Status should have been applicable during such period, in which case Level IV or Level V Status (as
applicable) shall be deemed to be applicable during such period) and adjustments to the Applicable Margin and Applicable Fee Rate
shall thereafter be effected in accordance with the preceding paragraph.
Exhibit 10.2
EXECUTION COPY
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this “Security Agreement”) is entered into as of June 30, 2004 by
and among ENCORE CAPITAL GROUP, INC., a Delaware corporation (the “Borrower”), MIDLAND CREDIT MANAGEMENT, INC.,
a Kansas corporation, MIDLAND FUNDING NCC-2 CORPORATION, a Delaware corporation, and MIDLAND ACQUISITION
CORPORATION, a Delaware corporation (together with the Borrower, the “Initial Grantors” and together with any
additional Domestic Subsidiaries, whether now existing or hereafter formed which become parties to this Security
Agreement by executing a Supplement hereto in substantially the form of Annex I, the “Grantors”), and BANK ONE,
NA (Main Office Chicago), in its capacity as administrative agent (the “Administrative Agent”) for the lenders
party to the Credit Agreement referred to below (collectively, the “Lenders”).
PRELIMINARY STATEMENT
The Borrower, the Administrative Agent and the Lenders are entering into a Credit Agreement dated as of
the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”). The Grantors are entering into this Security Agreement in order to induce the Lenders to enter into
and extend credit to the Borrower under the Credit Agreement.
ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the Holders of Secured Obligations,
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Terms Defined in Credit Agreement. All capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Credit Agreement.
1.2. Terms Defined in New York UCC. Terms defined in the New York UCC which are not otherwise defined in
this Security Agreement are used herein as defined in the New York UCC.
1.3. Definitions of Certain Terms Used Herein. As used in this Security Agreement, in addition to the terms
defined in the Preliminary Statement, the following terms shall have the following meanings:
“Accounts” shall have the meaning set forth in Article 9 of the New York UCC.
“Article” means a numbered article of this Security Agreement, unless another document is specifically
referenced.
“Chattel Paper” shall have the meaning set forth in Article 9 of the New York UCC.
“Collateral” means all Accounts, Chattel Paper, Commercial Tort Claims, Documents, Equipment, Fixtures,
Goods, General Intangibles, Instruments, Inventory, Investment Property, Pledged Deposits, Supporting Obligations
and Other Collateral, wherever located, in which any Grantor now has or hereafter acquires any right or interest,
and the proceeds (including Stock Rights), insurance proceeds and products thereof, together with all books and
records, customer lists, credit files, computer files, programs, printouts and other computer materials and
records related thereto.
“Commercial Tort Claims” means those certain currently existing commercial tort claims of any Grantor,
including each commercial tort claim specifically described in Exhibit F.
“Control” shall have the meaning set forth in Article 8 or, if applicable, in Section 9-104, 9-105,
9-106 or 9-107 of Article 9 of the New York UCC.
“Default” means an event described in Section 5.1 hereof.
“Deposit Accounts” shall have the meaning set forth in Article 9 of the New York UCC.
“Documents” shall have the meaning set forth in Article 9 of the New York UCC.
“Equipment” shall have the meaning set forth in Article 9 of the New York UCC.
“Exhibit” refers to a specific exhibit to this Security Agreement, unless another document is
specifically referenced.
“Fixtures” shall have the meaning set forth in Article 9 of the New York UCC.
“General Intangibles” shall have the meaning set forth in Article 9 of the New York UCC.
“Goods” shall have the meaning set forth in Article 9 of the New York UCC.
“Instruments” shall have the meaning set forth in Article 9 of the New York UCC.
“Inventory” shall have the meaning set forth in Article 9 of the New York UCC.
“Investment Property” shall have the meaning set forth in Article 9 of the New York UCC.
“New York UCC” means the New York Uniform Commercial Code as in effect from time to time.
“Other Collateral” means any property of the Grantors, not included within the defined terms Accounts,
Chattel Paper, Commercial Tort Claims, Documents, Equipment, Fixtures, General Intangibles, Instruments,
Inventory, Investment Property and Pledged Deposits, including, without limitation, all cash on hand,
letter-of-credit rights, letters of credit, Stock Rights and Deposit Accounts or other deposits (general or
special, time or demand, provisional or final) with any bank or other financial institution, it being intended
that the Collateral include all real and personal property of the Grantors.
“Pledged Deposits” means all time deposits of money (other than Deposit Accounts and Instruments),
whether or not evidenced by certificates, which a Grantor may from time to time designate as pledged to the
Administrative Agent or to any Holder of Secured Obligations as security for any Obligation, and all rights to
receive interest on said deposits.
“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property, Instruments or Pledged
Deposits, and any other rights or claims to receive money which are General Intangibles or which are otherwise
included as Collateral.
“Required Secured Parties” means (x) prior to an acceleration of the Secured Obligations under the
Credit Agreement, the Required Lenders, (y) after an acceleration of the Secured Obligations under the Credit
Agreement but prior to the date upon which the Credit Agreement has terminated by its terms and all of the
Secured Obligations thereunder have been paid in full, Lenders and their Affiliates holding in the aggregate more
than 50% of the total of (i) the unpaid principal amount of the outstanding Loans and LC Obligations and (ii) the
aggregate net early termination payments and all other amounts then due and unpaid from the Borrower to the
Lenders or their Affiliates under Rate Management Transactions, as determined by the Administrative Agent in its
reasonable discretion, and (z) after the Credit Agreement has terminated by its terms and all of the Secured
Obligations thereunder have been paid in full (whether or not the Secured Obligations under the Credit Agreement
were ever accelerated), Lenders and their Affiliates holding in the aggregate more than 50% of the aggregate net
early termination payments and all other amounts then due and unpaid from the Borrower to the Lenders or their
Affiliates under Rate Management Transactions, as determined by the Administrative Agent in its reasonable
discretion.
“Section” means a numbered section of this Security Agreement, unless another document is specifically
referenced.
“Security” has the meaning set forth in Article 8 of the New York UCC.
“Stock Rights” means any securities, dividends or other distributions and any other right or property
which any Grantor shall receive or shall become entitled to receive for any reason whatsoever with respect to, in
substitution for or in exchange for any securities or other ownership interests in a corporation, partnership,
joint venture or limited liability company constituting Collateral and any securities, any right to receive
securities and any right to receive earnings, in which any Grantor now has or hereafter acquires any right,
issued by an issuer of such securities.
“Supporting Obligation” shall have the meaning set forth in Article 9 of the New York UCC.
The foregoing definitions shall be equally applicable to both the singular and plural forms of the
defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
Each of the Grantors hereby pledges, assigns and grants to the Administrative Agent, on behalf of and
for the ratable benefit of the Holders of Secured Obligations and (to the extent specifically provided herein)
their Affiliates, a security interest in all of such Grantor’s right, title and interest, whether now owned or
hereafter acquired, in and to the Collateral to secure the prompt and complete payment and performance of the
Secured Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Initial Grantors represents and warrants to the Administrative Agent and the Holders of
Secured Obligations, and each Grantor that becomes a party to this Security Agreement pursuant to the execution
of a Security Agreement Supplement in substantially the form of Annex I represents and warrants (after giving
effect to supplements to each of the Exhibits hereto with respect to such subsequent Grantor as attached to such
Security Agreement Supplement), that:
3.1. Title, Authorization, Validity and Enforceability. Such Grantor has good and valid rights in or the
power to transfer the Collateral owned by it and title to the Collateral with respect to which it has purported
to grant a security interest hereunder, free and clear of all Liens except for Liens permitted under Section
4.1.6 hereof, and has full corporate, limited liability company or partnership, as applicable, power and authority
to grant to the Administrative Agent the security interest in such Collateral pursuant hereto. The execution and
delivery by such Grantor of this Security Agreement has been duly authorized by proper corporate, limited
liability company or partnership, as applicable, other proceedings, and this Security Agreement constitutes a
legal, valid and binding obligation of such Grantor and creates a security interest which is enforceable against
such Grantor in all Collateral it now owns or hereafter acquires, except as enforceability may be limited by (i)
bankruptcy, insolvency, fraudulent conveyances, reorganization or similar laws relating to or affecting the
enforcement of creditors’ rights generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law), and (iii) requirements of reasonableness, good faith and fair dealing. When financing
statements have been filed in the appropriate offices against such Grantor in the locations listed on Exhibit E,
the Administrative Agent will have a fully perfected first priority security interest in the Collateral owned by
such Grantor in which a security interest may be perfected by filing, subject only to Liens permitted under
Section 4.1.6 hereof.
3.2. Conflicting Laws and Contracts. Neither the execution and delivery by such Grantor of this Security
Agreement, the creation and perfection of the security interest in the Collateral granted hereunder, nor
compliance with the terms and provisions hereof will violate (i) any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on such Grantor, or (ii) such Grantor’s charter, articles or
by-laws (or similar constitutive documents), or (iii) the provisions of any indenture, instrument or agreement to
which such Grantor is a party or is subject, or by which it, or its Property may be bound or affected, or
conflict with or constitute a default thereunder, or result in or require the creation or imposition of any Lien
in, of or on the Property of such Grantor pursuant to the terms of any such indenture, instrument or agreement
(other than any Lien of the Administrative Agent on behalf of the Holders of Secured Obligations).
3.3. Principal Location. Such Grantor’s mailing address and the location of its place of business (if it has
only one) or its chief executive office (if it has more than one place of business), is disclosed in Exhibit A;
such Grantor has no other places of business except those set forth in Exhibit A.
3.4. Property Locations. The Inventory, Equipment and Fixtures of each Grantor are located solely at the
locations of such Grantor described in Exhibit A. All of said locations are owned by such Grantor except for
locations (i) which are leased by such Grantor as lessee and designated in Part B of Exhibit A and (ii) at which
Inventory is held in a public warehouse or is otherwise held by a bailee or on consignment by such Grantor as
designated in Part C of Exhibit A, with respect to which Inventory such Grantor has delivered bailment
agreements, warehouse receipts, financing statements or other documents satisfactory to the Administrative Agent
to protect the Administrative Agent’s and the Holders of Secured Obligations’ security interest in such
Inventory.
3.5. No Other Names. Except as set forth in Exhibit A, such Grantor has not conducted business under any
name except the name in which it has executed this Security Agreement, which is the exact name as it appears in
such Grantor’s organizational documents, as amended, as filed with such Grantor’s jurisdiction of organization as
of the Closing Date.
3.6. No Default. No Default or Unmatured Default exists.
3.7. Intentionally Omitted.
3.8. Filing Requirements. None of the Equipment owned by such Grantor is covered by any certificate of
title, except for the vehicles described in Part A of Exhibit B. None of the Collateral owned by such Grantor is
of a type for which security interests or liens may be perfected by filing under any federal statute except for
(i) the vehicles described in Part B of Exhibit B and (ii) patents, trademarks and copyrights held by such
Grantor and described in Part C of Exhibit B. The legal description, county and street address of the property
on which any Fixtures owned by such Grantor are located is set forth in Exhibit C together with the name and
address of the record owner of each such property.
3.9. No Financing Statements. No financing statement describing all or any portion of the Collateral which
has not lapsed or been terminated naming such Grantor as debtor has been filed in any jurisdiction except
financing statements (i) naming the Administrative Agent on behalf of the Holders of Secured Obligations as the
secured party and (ii) in respect of Liens permitted by Section 6.15 of the Credit Agreement; provided, that
nothing herein shall be deemed to constitute an agreement to subordinate any of the Liens of the Administrative
Agent under the Loan Documents to any Liens otherwise permitted under Section 6.15 of the Credit Agreement.
3.10. Federal Employer Identification Number; State Organization Number; Jurisdiction of Organization. Such
Grantor’s federal employer identification number is, and if such Grantor is a registered organization, such
Grantor’s State of organization, type of organization and State of organization identification number and is, as
follows:
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
GRANTOR Federal Employer Type of State of State Organization
Identification Number Organization Incorporation Number
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
ENCORE CAPITAL GROUP, INC. 48-1090909 Corporation Delaware 3034002
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
MIDLAND CREDIT MANAGEMENT, 48-0581733 Corporation Kansas 48421
INC.
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
MIDLAND FUNDING NCC-2 51-0488211 Corporation Delaware 3683366
CORPORATION
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
MIDLAND ACQUISITION 91-2046942 Corporation Delaware 3225667
CORPORATION
- ---------------------------- ----------------------- -------------------- ----------------------- --------------------
3.11. Pledged Securities and Other Investment Property. Exhibit D sets forth a complete and accurate list of
the Instruments, Securities and other Investment Property delivered to the Administrative Agent. Each Grantor is
the direct and beneficial owner of each Instrument, Security and other type of Investment Property listed on
Exhibit D as being owned by it, free and clear of any Liens, except for the security interest granted to the
Administrative Agent for the benefit of the Holders of Secured Obligations hereunder or as permitted under
Section 4.1.6. Each Grantor further represents and warrants that (i) all such Instruments, Securities or other
types of Investment Property which are shares of stock in a corporation or ownership interests in a partnership
or limited liability company have been (to the extent such concepts are relevant with respect to such Instrument,
Security or other type of Investment Property) duly and validly issued, are fully paid and non-assessable and
constitute the percentage of the issued and outstanding shares of stock (or other equity interests) of the
respective issuers thereof indicated on Exhibit D hereto and (ii) with respect to any certificates delivered to
the Administrative Agent representing an ownership interest in a partnership or limited liability company, either
such certificates are Securities as defined in Article 8 of the New York UCC of the applicable jurisdiction as a
result of actions by the issuer or otherwise, or, if such certificates are not Securities, such Grantor has so
informed the Administrative Agent so that the Administrative Agent may take steps to perfect its security
interest therein as a General Intangible.
ARTICLE IV
COVENANTS
From the date of this Security Agreement and thereafter until this Security Agreement is terminated,
each of the Initial Grantors agrees, and from and after the effective date of any Security Agreement Supplement
applicable to any Grantor (and after giving effect to supplements to each of the Exhibits hereto with respect to
such subsequent Grantor as attached to such Security Agreement Supplement) and thereafter until this Security
Agreement is terminated each such subsequent Grantor agrees:
4.1. General.
4.1.1 Inspection. Each Grantor will permit the Administrative Agent or any Holder of Secured Obligations (at
reasonable times and upon reasonable notice so long as no Default or Unmatured Default has occurred and
is continuing) by its representatives and agents (i) to inspect the Collateral, (ii) to examine and make
copies of the records of such Grantor relating to the Collateral and (iii) to discuss the Collateral and
the related records of such Grantor with, and to be advised as to the same by, such Grantor’s officers
and employees, all at such reasonable times and intervals as the Administrative Agent or such Holder of
Secured Obligations may determine, and all at such Grantor’s expense.
4.1.2 Taxes. Such Grantor will pay when due all taxes, assessments and governmental charges and levies upon
the Collateral owned by such Grantor, except (i) those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been set aside in accordance
with Agreement Accounting Principles and with respect to which no Lien exists, (ii) those which by
reason of the amount involved or the remedies available to the taxing authority could not reasonably be
expected to have a Material Adverse Effect and (iii) those taxes disclosed in Schedule 5.6 to the Credit
Agreement.
4.1.3 Records and Reports; Notification of Default. Each Grantor shall keep and maintain complete, accurate
and proper books and records with respect to the Collateral owned by such Grantor, and furnish to the
Administrative Agent such reports relating to the Collateral as the Administrative Agent shall from time
to time reasonably request. Each Grantor will give prompt notice in writing to the Administrative Agent
and the Lenders of the occurrence of any Default or Unmatured Default and of any other development,
financial or otherwise, which might materially and adversely affect the Collateral taken as a whole.
4.1.4 Financing Statements and Other Actions; Defense of Title. Each Grantor hereby authorizes the
Administrative Agent to file, and if requested will execute and deliver to the Administrative Agent, all
financing statements describing the Collateral owned by such Grantor and other documents and take such
other actions as may from time to time reasonably be requested by the Administrative Agent in order to
maintain a first perfected security interest in and, if applicable, Control of, the Collateral owned by
such Grantor, subject to Liens permitted under Section 6.15 of the Credit Agreement; provided, that
nothing herein shall be deemed to constitute an agreement to subordinated any of the Liens of the
Administrative Agent under the Loan Documents to any Liens otherwise permitted under Section 6.15 of the
Credit Agreement. Such financing statements may describe the Collateral in the same manner as described
herein or may contain an indication or description of collateral that describes such property in any
other manner as the Administrative Agent may determine, in its sole discretion, is necessary, advisable
or prudent to ensure that the perfection of the security interest in the Collateral granted to the
Administrative Agent herein, including, without limitation, describing such property as “all assets” or
“all personal property, whether now owned or hereafter acquired.” Each Grantor will take any and all
actions necessary to defend title to the Collateral owned by such Grantor against all persons and to
defend the security interest of the Administrative Agent in such Collateral and the priority thereof
against any Lien not expressly permitted hereunder.
4.1.5 Disposition of Collateral. No Grantor will sell, lease or otherwise dispose of the Collateral owned by
such Grantor except (i) prior to the occurrence of a Default or Unmatured Default, dispositions
specifically permitted pursuant to the Credit Agreement, (ii) until such time following the occurrence
of a Default as such Grantor receives a notice from the Administrative Agent instructing such Grantor to
cease such transactions, sales of Receivables in the ordinary course of business, and (iii) until such
time as such Grantor receives a notice from the Administrative Agent pursuant to Article VII, proceeds
of Inventory and Accounts collected in the ordinary course of business.
4.1.6 Liens. No Grantor will create, incur, or suffer to exist any Lien on the Collateral owned by such
Grantor except Liens permitted pursuant to Section 6.15 of the Credit Agreement, provided, that nothing
herein shall be deemed to constitute an agreement to subordinate any of the Liens of the Administrative
Agent under the Loan Documents to any Liens otherwise permitted under Section 6.15 of the Credit
Agreement.
4.1.7 Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name. Each Grantor will,
except as permitted by the Credit Agreement:
(i) preserve its existence and corporate structure as in effect on the Closing Date;
(ii) not change its jurisdiction of organization;
(iii) not maintain its place of business (if it has only one) or its chief executive office (if it has more
than one place of business) at a location other than a location specified on Exhibit A; and
(iv) not (i) have any Inventory, Equipment or Fixtures or proceeds or products thereof (other than Inventory
and proceeds thereof disposed of as permitted by Section 4.1.5) at a location other than a
location specified in Exhibit A, (ii) change its name or taxpayer identification number or
(iii) change its mailing address,
unless, in each such case, such Grantor shall have given the Administrative Agent not less than 10 days’
prior written notice of such event or occurrence and the Administrative Agent shall have either (x)
determined that such event or occurrence will not adversely affect the validity, perfection or priority
of the Administrative Agent’s security interest in the Collateral, or (y) taken such steps (with the
cooperation of such Grantor to the extent necessary or advisable) as are necessary or advisable to
properly maintain the validity, perfection and priority of the Administrative Agent’s security interest
in the Collateral owned by such Grantor.
4.1.8 Other Financing Statements. No Grantor will suffer to exist or authorize the filing of any financing
statement naming it as debtor covering all or any portion of the Collateral owned by such Grantor,
except any Financial Statement authorized under Section 4.1.4 hereof.
4.2. Collection of Receivables. Except as otherwise provided in this Security Agreement, each Grantor will
collect and enforce, in the ordinary course of business consistent with past practice and at such Grantor’s sole
expense, amounts due or hereafter due to such Grantor under the Receivables owned by such Grantor.
4.3. Inventory and Equipment. Each Grantor will do all things necessary to maintain, preserve, protect and
keep the Inventory and the Equipment owned by such Grantor in good repair, working order and saleable condition
(ordinary wear and tear excepted) and make all necessary and proper repairs, renewals and replacements so that
its business carried on in connection therewith may be properly conducted at all times, except where the failure
to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.4. Instruments, Securities, Chattel Paper, Documents and Pledged Deposits. Each Grantor will (i) deliver
to the Administrative Agent immediately upon execution of this Security Agreement the originals of all Securities
constituting Collateral (if any then exist) listed on Exhibit D hereof, (ii) hold in trust for the Administrative
Agent upon receipt and immediately thereafter deliver to the Administrative Agent any Securities constituting
Collateral, (iii) upon the designation of any Pledged Deposits (as set forth in the definition thereof), deliver
to the Administrative Agent such Pledged Deposits which are evidenced by certificates included in the Collateral
endorsed in blank, marked with such legends and assigned as the Administrative Agent shall specify, and (iv) upon
the Administrative Agent’s request, after the occurrence and during the continuance of a Default, deliver to the
Administrative Agent (and thereafter hold in trust for the Administrative Agent upon receipt and immediately
deliver to the Administrative Agent) any Document evidencing or constituting Collateral.
4.5. Uncertificated Securities and Certain Other Investment Property. Each Grantor will permit the
Administrative Agent from time to time to cause the appropriate issuers (and, if held with a securities
intermediary, such securities intermediary) of uncertificated securities or other types of Investment Property
not represented by certificates which are Collateral owned by such Grantor to mark their books and records with
the numbers and face amounts of all such uncertificated securities or other types of Investment Property not
represented by certificates and all rollovers and replacements therefor to reflect the Lien of the Administrative
Agent granted pursuant to this Security Agreement.
4.6. Stock and Other Ownership Interests.
4.6.1 Changes in Capital Structure of Issuers. No Grantor will (i) permit or suffer any issuer of privately
held corporate securities or other ownership interests in a corporation, partnership, joint venture or
limited liability company constituting Collateral owned by such Grantor to dissolve, liquidate, retire
any of its capital stock or other Instruments or Securities evidencing ownership, reduce its capital or
merge or consolidate with any other entity, or (ii) vote any of the Instruments, Securities or other
Investment Property in favor of any of the foregoing except to the extent permitted under Section 6.11
of the Credit Agreement.
4.6.2 Issuance of Additional Securities. No Grantor will permit or suffer the issuer of privately held
corporate securities or other ownership interests in a corporation, partnership, joint venture or
limited liability company constituting Collateral to issue any such securities or other ownership
interests, any right to receive the same or any right to receive earnings, except to such Grantor;
provided, however, that the foregoing shall have no application with respect to any corporation,
partnership, joint venture or limited liability company which is not a Subsidiary of such Grantor.
4.6.3 Registration of Pledged Securities and other Investment Property. Each Grantor will permit any
registerable Collateral owned by such Grantor to be registered in the name of the Administrative Agent
or its nominee at any time at the option of the Required Secured Parties following the occurrence and
during the continuance of an Event of Default and without any further consent of such Grantor.
4.6.4 Exercise of Rights in Pledged Securities and other Investment Property. Each Grantor will permit the
Administrative Agent or its nominee at any time after the continuance of a Default, without notice, to
exercise or refrain from exercising any and all voting and other consensual rights pertaining to the
Collateral owned by such Grantor or any part thereof, and to receive all dividends and interest in
respect of such Collateral. So long as no Default has occurred and is continuing, the Grantors are
entitled to exercise any and all voting and other rights and powers relating to the Collateral.
4.7. Pledged Deposits. No Grantor will withdraw all or any portion of any Pledged Deposit or fail to
rollover said Pledged Deposit without the prior written consent of the Administrative Agent.
4.8. Letter-of-Credit Rights. Each Grantor will, upon the Administrative Agent’s request, cause each issuer
of a letter of credit, to consent to the assignment of proceeds of the letter of credit in order to give the
Administrative Agent Control of the letter-of-credit rights to such letter of credit.
4.9. Federal, State or Municipal Claims. Each Grantor will notify the Administrative Agent of any Collateral
owned by such Grantor which constitutes a claim against the United States government or any state or local
government or any instrumentality or agency thereof, the assignment of which claim is restricted by federal,
state or municipal law of which Grantor is aware.
4.10. Intellectual Property. If, after the date hereof, any Grantor obtains rights to, or applies for or
seeks registration of, any new patentable invention, trademark or copyright in addition to the patents,
trademarks and copyrights described in Part C of Exhibit B, which are all of such Grantor’s patents, trademarks
and copyrights for which registration has been sought as of the Closing Date, then such Grantor shall give the
Administrative Agent prompt notice thereof, and the security interest granted to the Administrative Agent
hereunder shall automatically apply thereto. Each Grantor agrees promptly upon request by the Administrative
Agent to execute and deliver to the Administrative Agent any supplement to this Security Agreement or any other
document reasonably requested by the Administrative Agent to evidence such security interest in a form
appropriate for recording in the applicable federal office. Each Grantor also hereby authorizes the
Administrative Agent to modify this Security Agreement unilaterally (i) by amending Part C of Exhibit B to
include any future patents, trademarks and/or copyrights of which the Administrative Agent receives notification
from such Grantor pursuant hereto and (ii) by recording, in addition to and not in substitution for this Security
Agreement, a duplicate original of this Security Agreement containing in Part C of Exhibit B a description of
such future patents, trademarks and/or copyrights.
4.11. Commercial Tort Claims. If, after the date hereof, any Grantor identifies the existence of a commercial
tort claim belonging to such Grantor that has arisen in the course of such Grantor’s business in addition to the
commercial tort claims described in Exhibit F, which are all of such Grantor’s commercial tort claims as of the
Closing Date, then such Grantor shall give the Administrative Agent prompt notice thereof, but in any event not
less frequently than quarterly. Each Grantor agrees promptly upon request by the Administrative Agent to execute
and deliver to the Administrative Agent any supplement to this Security Agreement or any other document
reasonably requested by the Administrative Agent to evidence the grant of a security interest therein in favor of
the Administrative Agent.
ARTICLE V
DEFAULT
5.1. The occurrence of any one or more of the following events shall constitute a Default:
5.1.1 Any representation or warranty made by or on behalf of any Grantor under or in connection with this
Security Agreement shall be materially false as of the date on which made.
5.1.2 The breach by any Grantor of any of the terms or provisions of Article IV or Article VII.
5.1.3 The breach by any Grantor (other than a breach which constitutes a Default under Section 5.1.1 or 5.1.2
hereof) of any of the terms or provisions of this Security Agreement which is not remedied within 10
days after the giving of written notice to such Grantor by the Administrative Agent.
5.1.4 Any material portion of the Collateral shall be transferred or otherwise disposed of, either voluntarily
or involuntarily, in any manner not permitted by Section 4.1.5 or 8.7 hereof or shall be lost, stolen,
damaged or destroyed.
5.1.5 The occurrence of any “Default” under, and as defined in, the Credit Agreement.
5.2. Acceleration and Remedies. Upon the acceleration of the Secured Obligations under the Credit Agreement
pursuant to Section 8.1 thereof, the Obligations and, to the extent provided for under the Rate Management
Transactions evidencing the same, the Rate Management Obligations, shall immediately become due and payable
without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, and the
Administrative Agent may, with the concurrence or at the direction of the Required Secured Parties, exercise any
or all of the following rights and remedies:
5.2.1 Those rights and remedies provided in this Security Agreement, the Credit Agreement, or any other Loan
Document, provided that this Section 5.2.1 shall not be understood to limit any rights or remedies
available to the Administrative Agent and the Holders of Secured Obligations prior to a Default.
5.2.2 Those rights and remedies available to a secured party under the New York UCC (whether or not the New
York UCC applies to the affected Collateral) or under any other applicable law (including, without
limitation, any law governing the exercise of a bank’s right of setoff or bankers’ lien) when a debtor
is in default under a security agreement.
5.2.3 Without notice except as specifically provided in Section 8.1 hereof or elsewhere herein, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of the Collateral or any part
thereof in one or more parcels at public or private sale, for cash, on credit or for future delivery,
and upon such other terms as the Administrative Agent may deem commercially reasonable.
The Administrative Agent, on behalf of the secured parties, may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral, and such compliance will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
If, after the Credit Agreement has terminated by its terms and all of the Obligations have been paid in full,
there remain Rate Management Obligations outstanding, the Required Secured Parties may exercise the remedies
provided in this Section 5.2 upon the occurrence of any event which would allow or require the termination or
acceleration of any Rate Management Obligations pursuant to the terms of the agreement governing any Rate
Management Transaction.
5.3. Grantors’ Obligations Upon Default. Upon the request of the Administrative Agent after the occurrence
of a Default, each Grantor will:
5.3.1 Assembly of Collateral. Assemble and make available to the Administrative Agent the Collateral and all
records relating thereto at any place or places specified by the Administrative Agent.
5.3.2 Secured Party Access. Permit the Administrative Agent, by the Administrative Agent’s representatives
and agents, to enter any premises where all or any part of the Collateral, or the books and records
relating thereto, or both, are located, to take possession of all or any part of the Collateral and to
remove all or any part of the Collateral.
5.4. License. The Administrative Agent is hereby granted a license or other right to use, following the
occurrence and during the continuance of a Default, without charge, each Grantor’s labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service marks, customer lists and advertising
matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral, and, following the occurrence and during the continuance of a
Default, such Grantor’s rights under all licenses shall inure to the Administrative Agent’s benefit.
ARTICLE VI
WAIVERS, AMENDMENTS AND REMEDIES
No delay or omission of the Administrative Agent or any Holder of Secured Obligations to exercise any
right or remedy granted under this Security Agreement shall impair such right or remedy or be construed to be a
waiver of any Default or an acquiescence therein, and any single or partial exercise of any such right or remedy
shall not preclude any other or further exercise thereof or the exercise of any other right or remedy. No
waiver, amendment or other variation of the terms, conditions or provisions of this Security Agreement whatsoever
shall be valid unless in writing signed by the Administrative Agent with the concurrence or at the direction of
the Lenders required under Section 8.2 of the Credit Agreement and each Grantor, and then only to the extent in
such writing specifically set forth, provided that the addition of any Domestic Subsidiary as a Grantor hereunder
by execution of a Security Agreement Supplement in the form of Annex I (with such modifications as shall be
acceptable to the Administrative Agent) shall not require receipt of any consent from or execution of any
documentation by any other Grantor party hereto. All rights and remedies contained in this Security Agreement or
by law afforded shall be cumulative and all shall be available to the Administrative Agent and the Holders of
Secured Obligations until the Secured Obligations have been paid in full.
ARTICLE VII
PROCEEDS; COLLECTION OF RECEIVABLES
7.1. Collection of Receivables. The Administrative Agent may at any time after the occurrence of a Default,
by giving each Grantor written notice, elect to require that the Receivables be paid directly to the
Administrative Agent for the benefit of the Holders of Secured Obligations. In such event, each Grantor shall,
and shall permit the Administrative Agent to, promptly notify the account debtors or obligors under the
Receivables owned by such Grantor of the Administrative Agent’s interest therein and direct such account debtors
or obligors to make payment of all amounts then or thereafter due under such Receivables directly to the
Administrative Agent. Upon receipt of any such notice from the Administrative Agent, each Grantor shall
thereafter hold in trust for the Administrative Agent, on behalf of the Holders of Secured Obligations, all
amounts and proceeds received by it with respect to the Receivables and Other Collateral and immediately and at
all times thereafter deliver to the Administrative Agent all such amounts and proceeds in the same form as so
received, whether by cash, check, draft or otherwise, with any necessary endorsements. The Administrative Agent
shall hold and apply funds so received as provided by the terms of Sections 7.2 hereof.
7.2. Application of Proceeds. The proceeds of the Collateral received by the Administrative Agent pursuant
to the exercise of its rights under Section 5.2 hereof shall be applied by the Administrative Agent to payment of
the Secured Obligations in the following order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all costs and expenses of the Administrative Agent incurred in
connection with the collection and enforcement of the Secured Obligations or of the security interest
granted to the Administrative Agent pursuant to this Security Agreement;
(b) SECOND, to payment of that portion of the Secured Obligations constituting accrued and
unpaid interest and fees, pro rata among the Lenders and their Affiliates in accordance with the amount
of such accrued and unpaid interest and fees owing to each of them;
(c) THIRD, to payment of the principal of the Secured Obligations and the net early
termination payments and any other Rate Management Obligations then due and unpaid from the Borrower to
any of the Lenders or their Affiliates, pro rata among the Lenders and their Affiliates in accordance
with the amount of such principal and such net early termination payments and other Rate Management
Obligations then due and unpaid owing to each of them;
(d) FOURTH, to payment of any Secured Obligations (other than those listed above) pro rata
among those parties to whom such Secured Obligations are due in accordance with the amounts owing to
each of them; and
(e) FIFTH, the balance, if any, after all of the Secured Obligations have been satisfied,
shall be distributed by the Administrative Agent to the applicable Grantor or at its direction.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Notice of Disposition of Collateral; Condition of Collateral. Each Grantor hereby waives notice of the
time and place of any public sale or the time after which any private sale or other disposition of all or any
part of the Collateral may be made. To the extent such notice may not be waived under applicable law, any notice
made shall be deemed reasonable if sent to the Borrower, addressed as set forth in Article IX, at least ten days
prior to (i) the date of any such public sale or (ii) the time after which any such private sale or other
disposition may be made. Administrative Agent shall have no obligation to clean-up or otherwise prepare the
Collateral for sale.
8.2. Compromises and Collection of Collateral. Each Grantor and the Administrative Agent recognize that
setoffs, counterclaims, defenses and other claims may be asserted by obligors with respect to certain of the
Receivables, that certain of the Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may exceed the amount that reasonably may
be expected to be recovered with respect to a Receivable. In view of the foregoing, each Grantor agrees that the
Administrative Agent may at any time and from time to time, if a Default has occurred and is continuing,
compromise with the obligor on any Receivable, accept in full payment of any Receivable such amount as the
Administrative Agent in its sole discretion shall determine or abandon any Receivable, and any such action by the
Administrative Agent shall be commercially reasonable so long as the Administrative Agent acts in good faith
based on information known to it at the time it takes any such action.
8.3. Secured Party Performance of Grantor’s Obligations. Without having any obligation to do so, the
Administrative Agent may perform or pay any obligation which any Grantor has agreed to perform or pay in this
Security Agreement and such Grantor shall reimburse the Administrative Agent for any reasonable amounts paid by
the Administrative Agent pursuant to this Section 8.3. Each Grantor’s obligation to reimburse the Administrative
Agent pursuant to the preceding sentence shall be a Secured Obligation payable on demand.
8.4. Authorization for Secured Party to Take Certain Action. Each Grantor irrevocably authorizes the
Administrative Agent at any time and from time to time in the sole discretion of the Administrative Agent and
appoints the Administrative Agent as its attorney in fact (i) to execute on behalf of such Grantor as debtor and
to file financing statements necessary or desirable in the Administrative Agent’s sole discretion to perfect and
to maintain the perfection and priority of the Administrative Agent’s security interest in the Collateral, (ii)
after the occurrence and during the continuance of a Default, to indorse and collect any cash proceeds of the
Collateral, (iii) to file a carbon, photographic or other reproduction of this Security Agreement or any
financing statement with respect to the Collateral as a financing statement and to file any other financing
statement or amendment of a financing statement (which does not add new collateral or add a debtor) in such
offices as the Administrative Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the Administrative Agent’s security interest in the Collateral, (iv)
after the occurrence and during the continuance of a Default, to contact and enter into one or more agreements
with the issuers of uncertificated securities which are Collateral owned by such Grantor and which are Securities
or with financial intermediaries holding other Investment Property as may be necessary or advisable to give the
Administrative Agent Control over such Securities or other Investment Property, (v) subject to the terms of
Section 4.1.5 hereof and after the occurrence and during the continuance of a Default, to enforce payment of the
Instruments, Accounts and Receivables in the name of the Administrative Agent or such Grantor, (vi) to apply the
proceeds of any Collateral received by the Administrative Agent to the Secured Obligations as provided in Article
VII and (vii) to discharge past due taxes, assessments, charges, fees or Liens on the Collateral (except for such
Liens as are specifically permitted hereunder or under any other Loan Document), and each Grantor agrees to
reimburse the Administrative Agent on demand for any reasonable payment made or any reasonable expense incurred
by the Administrative Agent in connection therewith, provided that this authorization shall not relieve any
Grantor of any of its obligations under this Security Agreement or under the Credit Agreement.
8.5. Specific Performance of Certain Covenants. Each Grantor acknowledges and agrees that a breach of any of
the covenants contained in Sections 4.1.5, 4.1.6, 4.4, 5.3, or 8.7 or in Article VII hereof will cause
irreparable injury to the Administrative Agent and the Holders of Secured Obligations, that the Administrative
Agent and Holders of Secured Obligations have no adequate remedy at law in respect of such breaches and therefore
agrees, without limiting the right of the Administrative Agent or the Holders of Secured Obligations to seek and
obtain specific performance of other obligations of the Grantors contained in this Security Agreement, that the
covenants of the Grantors contained in the Sections referred to in this Section 8.5 shall be specifically
enforceable against the Grantors.
8.6. Use and Possession of Certain Premises. Upon the occurrence of a Default, the Administrative Agent
shall be entitled to reasonable use and occupancy of any premises owned or leased by the Grantors where any of
the Collateral or any records relating to the Collateral are located until the Secured Obligations are paid or
the Collateral is removed therefrom, whichever first occurs, without any obligation to pay any Grantor for such
use and occupancy.
8.7. Dispositions Not Authorized. No Grantor is authorized to sell or otherwise dispose of the Collateral
except as set forth in Section 4.1.5 hereof and notwithstanding any course of dealing between any Grantor and the
Administrative Agent or other conduct of the Administrative Agent, no authorization to sell or otherwise dispose
of the Collateral (except as set forth in Section 4.1.5 hereof) shall be binding upon the Administrative Agent or
the Holders of Secured Obligations unless such authorization is in writing signed by the Administrative Agent
with the consent or at the direction of the Required Lenders.
8.8. Benefit of Agreement. The terms and provisions of this Security Agreement shall be binding upon and
inure to the benefit of the Grantors, the Administrative Agent and the Holders of Secured Obligations and their
respective successors and assigns (including all persons who become bound as a debtor to this Security
Agreement), except that the Grantors shall not have the right to assign their rights or delegate their
obligations under this Security Agreement or any interest herein, without the prior written consent of the
Administrative Agent.
8.9. Survival of Representations. All representations and warranties of the Grantors contained in this
Security Agreement shall survive the execution and delivery of this Security Agreement.
8.10. Expenses. The Grantors shall reimburse the Administrative Agent for any and all reasonable
out-of-pocket expenses and internal charges (including reasonable attorneys’, auditors’ and accountants’ fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who may be employees of the
Administrative Agent) paid or incurred by the Administrative Agent in connection with the preparation, execution,
delivery, administration, collection and enforcement of this Security Agreement and in the audit, analysis,
administration, collection, preservation or sale of the Collateral (including the expenses and charges associated
with any periodic or special audit of the Collateral). Any and all costs and expenses incurred by the Grantors
in the performance of actions required pursuant to the terms hereof shall be borne solely by the Grantors.
8.11. Headings. The title of and section headings in this Security Agreement are for convenience of reference
only, and shall not govern the interpretation of any of the terms and provisions of this Security Agreement.
8.12. Termination. This Security Agreement shall continue in effect (notwithstanding the fact that from time
to time there may be no Secured Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been indefeasibly paid and performed in full
and no commitments of the Administrative Agent or the Holders of Secured Obligations which would give rise to any
Secured Obligations are outstanding.
8.13. Entire Agreement. This Security Agreement embodies the entire agreement and understanding between the
Grantors and the Administrative Agent relating to the Collateral and supersedes all prior agreements and
understandings between the Grantors and the Administrative Agent relating to the Collateral.
8.14. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
8.15. Indemnity. Each Grantor hereby agrees, jointly with the other Grantors and severally, to indemnify the
Administrative Agent and the Holders of Secured Obligations (the “Indemnified Parties”), and their respective
successors, assigns, agents and employees, from and against any and all liabilities, damages, penalties, suits,
costs, and expenses of any kind and nature (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Administrative Agent or any Holder of Secured Obligations is a party
thereto) imposed on, incurred by or asserted against the Administrative Agent or the Holders of Secured
Obligations, or their respective successors, assigns, agents and employees, in any way relating to or arising out
of this Security Agreement, or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition, sale, return or other disposition of any Collateral (including, without
limitation, latent and other defects, whether or not discoverable by the Administrative Agent or the Holders of
Secured Obligations or any Grantor, and any claim for patent, trademark or copyright infringement), excluding any
liabilities, damages, penalties, suits, costs and expenses resulting from the gross negligence or willful
misconduct of any Indemnified Party.
8.16. Subordination of Intercompany Indebtedness. Each Grantor agrees that any and all claims of such Grantor
against any other Grantor (each an “Obligor”) with respect to any “Intercompany Indebtedness” (as hereinafter
defined), any endorser, obligor or any other guarantor of all or any part of the Secured Obligations, or against
any of its properties shall be subordinate and subject in right of payment to the prior payment, in full and in
cash, of all Secured Obligations, provided that so long as no Default has occurred and is continuing, such
Grantor may make loans to and receive payments in the ordinary course of business with respect to such
Intercompany Indebtedness from each such Obligor to the extent not prohibited by the terms of this Security
Agreement and the other Loan Documents. Notwithstanding any right of any Grantor to ask, demand, sue for, take
or receive any payment from any Obligor, all rights, liens and security interests of such Grantor, whether now or
hereafter arising and howsoever existing, in any assets of any other Obligor shall be and are subordinated to the
rights of the Holders of Secured Obligations and the Administrative Agent in those assets. No Grantor shall have
any right to possession of any such asset or to foreclose upon any such asset, whether by judicial action or
otherwise, unless and until all of the Secured Obligations (other than contingent indemnity obligations) shall
have been fully paid and satisfied (in cash) and all Commitments and Facility LCs issued under the Credit
Agreement have terminated or expired, provided that so long as no Default has occurred and is continuing, such
Grantor may make loans to and receive payments in the ordinary course of business with respect to such
Intercompany Indebtedness from each such Obligor to the extent not prohibited by the terms of this Security
Agreement and the other Loan Documents. After the occurrence and during the continuance of a Default, if all or
any part of the assets of any Obligor, or the proceeds thereof, are subject to any distribution, division or
application to the creditors of such Obligor, whether partial or complete, voluntary or involuntary, and whether
by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any
other similar action or proceeding, then, and in any such event (such events being herein referred to as an
“Insolvency Event”), any payment or distribution of any kind or character, either in cash, securities or other
property, which shall be payable or deliverable upon or with respect to any indebtedness of any Obligor to any
Grantor (“Intercompany Indebtedness”) shall be paid or delivered directly to the Administrative Agent for
application on any of the Secured Obligations, due or to become due, until such Secured Obligations (other than
contingent indemnity obligations) shall have first been fully paid and satisfied (in cash). Should any payment,
distribution, security or instrument or proceeds thereof be received by the applicable Grantor upon or with
respect to the Intercompany Indebtedness after any Insolvency Event and prior to the satisfaction of all of the
Secured Obligations (other than contingent indemnity obligations) and the termination or expiration of all
Commitments of the Lenders and Facility LCs issued pursuant to the Credit Agreement, such Grantor shall receive
and hold the same in trust, as trustee, for the benefit of the Holders of Secured Obligations and shall forthwith
deliver the same to the Administrative Agent, for the benefit of the Holders of Secured Obligations, in precisely
the form received (except for the endorsement or assignment of the Grantor where necessary), for application to
any of the Secured Obligations, due or not due, and, until so delivered, the same shall be held in trust by the
Grantor as the property of the Holders of Secured Obligations. If any such Grantor fails to make any such
endorsement or assignment to the Administrative Agent, the Administrative Agent or any of its officers or
employees is irrevocably authorized to make the same. Each Grantor agrees that until the Secured Obligations
(other than the contingent indemnity obligations) have been paid in full (in cash) and satisfied and all
Commitments and Facility LCs issued under the Credit Agreement have terminated or expired, no Grantor will assign
or transfer to any Person (other than the Administrative Agent or the Borrower or another Grantor) any claim any
such Grantor has or may have against any Obligor.
ARTICLE IX
NOTICES
9.1. Sending Notices. Any notice required or permitted to be given under this Security Agreement shall be
sent (and deemed received) in the manner and to the addresses set forth in Article XIII of the Credit Agreement;
and any such notice delivered to the Borrower shall be deemed to have been delivered to all of the Grantors.
9.2. Change in Address for Notices. Each of the Grantors, the Administrative Agent and the Lenders may
change the address for service of notice upon it by a notice in writing to the other parties.
ARTICLE X
THE ADMINISTRATIVE AGENT
Bank One, NA (Main Office Chicago) has been appointed Administrative Agent for the Holders of Secured
Obligations hereunder pursuant to Article X of the Credit Agreement. It is expressly understood and agreed by
the parties to this Security Agreement that any authority conferred upon the Administrative Agent hereunder is
subject to the terms of the delegation of authority made by the Holders of Secured Obligations to the
Administrative Agent pursuant to the Credit Agreement, and that the Administrative Agent has agreed to act (and
any successor Administrative Agent shall act) as such hereunder only on the express conditions contained in such
Article X. Any successor Administrative Agent appointed pursuant to Article X of the Credit Agreement shall be
entitled to all the rights, interests and benefits of the Administrative Agent hereunder.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, each of the Grantors and the Administrative Agent have executed this Security
Agreement as of the date first above written.
ENCORE CAPITAL GROUP, INC., as a Grantor MIDLAND CREDIT MANAGEMENT, INC., as a Grantor
By: /s/ Carl C. Gregory, III By: /s/ Carl C. Gregory, III
Name: Carl C. Gregory, III Name: Carl C. Gregory, III
Title: President&CEO Title: President & CEO
MIDLAND FUNDING NCC-2 CORPORATION, as a Grantor MIDLAND ACQUISITION CORPORATION, as a Grantor
By: /s/ Carl C. Gregory, III By: /s/ Carl C. Gregory, III
Name: Carl C. Gregory, III Name: Carl C. Gregory, III
Title: President Title: President
BANK ONE, NA, as Administrative Agent
By: /s/ Steven J. Krakoski
Name: Steven J. Krakoski
Title: First Vice President
Exhibit 10.3
EXECUTION COPY
GUARANTY
THIS GUARANTY (as the same may be amended, restated, supplemented or otherwise modified from time to
time, this “Guaranty”) is made as of June 30, 2004, by each of MIDLAND CREDIT MANAGEMENT, INC., a Kansas
corporation, MIDLAND FUNDING NCC-2 CORPORATION, a Delaware corporation, and MIDLAND ACQUISITION CORPORATION, a
Delaware corporation (each an “Initial Guarantor”, and together with any additional Domestic Subsidiaries which
become parties to this Guaranty by executing a Supplement hereto in the form attached hereto as Annex I, the
“Guarantors”), in favor of BANK ONE, NA (Main Office Chicago), as Administrative Agent (the “Administrative
Agent”) for the benefit of the Holders of Secured Obligations under the Credit Agreement described below. Each
capitalized term used herein and not defined herein shall have the meaning ascribed thereto in the Credit
Agreement described below.
WITNESSETH:
WHEREAS, Encore Capital Group, Inc., a Delaware corporation (the “Borrower”), has entered into that
certain Credit Agreement, dated as of the date hereof (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), by and among the Borrower, the financial
institutions from time to time parties thereto as lenders (the “Lenders”), and the Administrative Agent, which
Credit Agreement provides, subject to the terms and conditions thereof, for extensions of credit and other
financial accommodations by the Lenders to the Borrower;
WHEREAS, it is a condition precedent to the extensions of credit by the Lenders under the Credit
Agreement that each of the Guarantors (constituting all of the Domestic Subsidiaries of the Borrower required to
execute this Guaranty pursuant to Section 6.25 of the Credit Agreement) execute and deliver this Guaranty,
whereby each of the Guarantors, without limitation and with full recourse, shall guarantee the payment when due
of all Secured Obligations, including, without limitation, all principal, interest, letter of credit
reimbursement obligations and other amounts that shall be at any time payable by the Borrower under the Credit
Agreement or the other Loan Documents; and
WHEREAS, in consideration of the direct and indirect financial and other support that the Borrower has
provided, and such direct and indirect financial and other support as the Borrower may in the future provide, to
the Guarantors, and in order to induce the Lenders and the Administrative Agent to enter into the Credit
Agreement, each of the Guarantors is willing to guarantee the Secured Obligations under the Credit Agreement and
the other Loan Documents;
NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Representations, Warranties and Covenants. In order to induce the Administrative Agent and the
Lenders to enter into the Credit Agreement and to make the Loans and the other financial accommodations to the
Borrower and to issue the Facility LCs described in the Credit Agreement, each of the Guarantors represents and
warrants to each Lender and the Administrative Agent as of the date of this Agreement, giving effect to the
consummation of the transactions contemplated by the Loan Documents on the Closing Date, and thereafter on each
date as required by Section 4.2 of the Credit Agreement that:
(a) It (i) is a corporation, partnership or limited liability company, or partnership duly incorporated or
organized, as the case may be, validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, (ii) is duly qualified to do business as a foreign entity and is in good standing
under the laws of each jurisdiction where the business by it makes such qualification necessary, and (iii) has
all requisite corporate, partnership or limited liability power and authority, as the case may be, to own,
operate and encumber its Property and to conduct its business in each jurisdiction in which its business is
conducted.
(b) It has the requisite corporate, limited liability company or partnership, as applicable, power and
authority and legal right to execute and deliver this Guaranty and to perform its obligations hereunder. The
execution and delivery by it of this Guaranty and the performance by each of its obligations hereunder have been
duly authorized by proper proceedings, and this Guaranty constitutes a legal, valid and binding obligation of
each Guarantor, enforceable against such Guarantor, in accordance with its terms, except as enforceability may be
limited by (i) bankruptcy, insolvency, fraudulent conveyances, reorganization or similar laws relating to or
affecting the enforcement of creditors’ rights generally, (ii) general equitable principles (whether considered
in a proceeding in equity or at law), and (iii) requirements of reasonableness, good faith and fair dealing.
(c) Neither the execution and delivery by it of this Guaranty, nor the consummation by it of the
transactions herein contemplated, nor compliance by it with the terms and provisions hereof, will (i) conflict
with the charter or other organizational documents of such Guarantor, (ii) conflict with, result in a breach of
or constitute (with or without notice or lapse of time or both) a default under any law, rule, regulation, order,
writ, judgment, injunction, decree or award (including, without limitation, any environmental property transfer
laws or regulations) applicable to such Guarantor or any provisions of any indenture, instrument or agreement to
which such Guarantor is party or is subject or which it or its Property is bound or affected, or require
termination of any such indenture, instrument or agreement, (iii) result in or require the creation or imposition
of any Lien whatsoever upon any of the property or assets of such Guarantor, other than Liens permitted or
created by the Loan Documents, or (iv) require any approval of such Guarantor’s board of directors or
shareholders or unitholders except such as have been obtained. Except as set forth in Section 5.3 of the Credit
Agreement and assuming the filing of financing statements in relevant jurisdictions as required, the execution,
delivery and performance by the Guarantors of each of the Loan Documents to which such Guarantor is a party do
not and will not require any registration with, consent or approval of, or notice to, or other action to, with or
by any governmental authority, including under any environmental property transfer laws or regulations, except
filings, consents or notices which have been made.
(d) It has no Indebtedness other than Indebtedness permitted under Section 6.14 of the Credit Agreement.
In addition to the foregoing, each of the Guarantors covenants that, so long as any Lender has any
Revolving Loan Commitment and Swing Line Commitment (collectively, the “Commitments”) outstanding under the
Credit Agreement or any amount payable under the Credit Agreement or any other Secured Obligations shall remain
unpaid, it will, and, if necessary, will enable the Borrower to, fully comply with those covenants and agreements
of the Borrower applicable to such Guarantor set forth in the Credit Agreement.
Section 2. The Guaranty. Each of the Guarantors hereby unconditionally guarantees, jointly and severally
with the other Guarantors, the full and punctual payment and performance when due (whether at stated maturity,
upon acceleration or otherwise) of the Secured Obligations, including, without limitation, (i) the principal of
and interest on each Advance made to the Borrower pursuant to the Credit Agreement, (ii) any Reimbursement
Obligations of the Borrower or the performance by it of such Reimbursement Obligations, (iii) all other amounts
payable by the Borrower under the Credit Agreement and the other Loan Documents, including, without limitation,
all Rate Management Obligations, and (iv) the punctual and faithful performance, keeping, observance, and
fulfillment by the Borrower of all of the agreements, conditions, covenants, and obligations of the Borrower
contained in the Loan Documents (all of the foregoing being referred to collectively as the “Guaranteed
Obligations”). Upon (x) the failure by the Borrower, or any of its Affiliates, as applicable, to pay punctually
any such amount or perform such obligation, and (y) such failure continuing beyond any applicable grace or notice
and cure period, each of the Guarantors agrees that it shall forthwith on demand pay such amount or perform such
obligation at the place and in the manner specified in the Credit Agreement or the relevant Loan Document, as the
case may be. Each of the Guarantors hereby agrees that this Guaranty is an absolute, irrevocable and
unconditional guaranty of payment and is not a guaranty of collection.
Section 3. Guaranty Unconditional. The obligations of each of the Guarantors hereunder shall be
unconditional and absolute and, without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(i) any extension, renewal, settlement, indulgence, compromise, waiver or release of or with respect to the
Guaranteed Obligations or any part thereof or any agreement relating thereto, or with respect to any
obligation of any other guarantor of any of the Guaranteed Obligations, whether (in any such case) by
operation of law or otherwise, or any failure or omission to enforce any right, power or remedy with
respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto, or with
respect to any obligation of any other guarantor of any of the Guaranteed Obligations;
(ii) any modification or amendment of or supplement to the Credit Agreement, any agreement evidencing a Rate
Management Transaction or any other Loan Document, including, without limitation, any such amendment
which may increase the amount of, or the interest rates applicable to, any of the Guaranteed Obligations
guaranteed hereby;
(iii) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without
consideration, of any collateral securing the Guaranteed Obligations or any part thereof, any other
guaranties with respect to the Guaranteed Obligations or any part thereof, or any other obligation of
any person or entity with respect to the Guaranteed Obligations or any part thereof, or any
nonperfection or invalidity of any direct or indirect security for the Guaranteed Obligations;
(iv) any change in the corporate, partnership or other existence, structure or ownership of the Borrower or
any other guarantor of any of the Guaranteed Obligations, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Borrower or any other guarantor of the Guaranteed Obligations,
or any of their respective assets or any resulting release or discharge of any obligation of the
Borrower or any other guarantor of any of the Guaranteed Obligations;
(v) the existence of any claim, setoff or other rights which the Guarantors may have at any time against the
Borrower, any other guarantor of any of the Guaranteed Obligations, the Administrative Agent, any Holder
of Secured Obligations or any other Person, whether in connection herewith or in connection with any
unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
(vi) the enforceability or validity of the Guaranteed Obligations or any part thereof or the genuineness,
enforceability or validity of any agreement relating thereto or with respect to any collateral securing
the Guaranteed Obligations or any part thereof, or any other invalidity or unenforceability relating to
or against the Borrower or any other guarantor of any of the Guaranteed Obligations, for any reason
related to the Credit Agreement, any agreement evidencing a Rate Management Transaction or any other
Loan Document, or any provision of applicable law or regulation purporting to prohibit the payment by
the Borrower or any other guarantor of the Guaranteed Obligations, of any of the Guaranteed Obligations;
(vii) the failure of the Administrative Agent to take any steps to perfect and maintain any security interest
in, or to preserve any rights to, any security or collateral for the Guaranteed Obligations, if any;
(viii) the election by, or on behalf of, any one or more of the Holders of Secured Obligations, in any
proceeding instituted under Chapter 11 of Title 11 of the United States Code (11 U.S.C. 101 et seq.)
(the “Bankruptcy Code”), of the application of Section 1111(b)(2) of the Bankruptcy Code;
(ix) any borrowing or grant of a security interest by the Borrower, as debtor-in-possession, under Section
364 of the Bankruptcy Code;
(x) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of the claims of the
Holders of Secured Obligations or the Administrative Agent for repayment of all or any part of the
Guaranteed Obligations;
(xi) the failure of any other guarantor to sign or become party to this Guaranty or any amendment, change, or
reaffirmation hereof; or
(xii) any other act or omission to act or delay of any kind by the Borrower, any other guarantor of the
Guaranteed Obligations, the Administrative Agent, any Holder of Secured Obligations or any other Person
or any other circumstance whatsoever which might, but for the provisions of this Section 3, constitute a
legal or equitable discharge of any Guarantor’s obligations hereunder.
Section 4. Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances; Discharge of
Guaranty Upon Sale of Guarantor.
(A) Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances. Except as provided in
Section 4(B) below, each of the Guarantors’ obligations hereunder shall remain in full force and effect until all
Guaranteed Obligations shall have been paid in full in cash and the Commitments and all Facility LCs issued under
the Credit Agreement shall have terminated or expired or, in the case of all Facility LCs, are fully
collateralized on terms reasonably acceptable to the Administrative Agent. If at any time any payment of the
principal of or interest on any Advance or Reimbursement Obligation or any other amount payable by the Borrower
or any other party under the Credit Agreement, any agreement evidencing a Rate Management Transaction or any
other Loan Document is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, each of the Guarantors’ obligations hereunder with respect to such
payment shall be reinstated as though such payment had been due but not made at such time.
(B) Discharge of Guaranty Upon Sale of Guarantor. If all of the stock or partnership or membership
interests of a Guarantor or any of its successors in interest under this Guaranty shall be sold or otherwise
disposed of (including by merger, consolidation or dissolution) in a sale or other disposition not prohibited by
the Credit Agreement or that is otherwise consented to by Required Lenders, the obligations of such Guarantor or
such successor in interest, as the case may be, hereunder shall automatically be discharged and released without
any further action by any Credit Party or any other Person effective as of the time of such sale or other
disposition.
Section 5. General Waivers; Additional Waivers.
(A) General Waivers. Each of the Guarantors irrevocably waives acceptance hereof, presentment, demand or
action on delinquency, protest, the benefit of any statutes of limitations and, to the fullest extent permitted
by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by
any Person against the Borrower, any other guarantor of the Guaranteed Obligations, or any other Person.
(B) Additional Waivers. Notwithstanding anything herein to the contrary, each of the Guarantors hereby
absolutely, unconditionally, knowingly, and expressly waives:
(i) any right it may have to revoke this Guaranty as to future indebtedness or notice of acceptance hereof;
(ii) (1) notice of acceptance hereof; (2) notice of any loans or other financial accommodations made or
extended under the Loan Documents or the creation or existence of any Guaranteed Obligations; (3)notice
of the amount of the Guaranteed Obligations, subject, however, to each Guarantor’s right to make inquiry
of Administrative Agent and Holders of Secured Obligations to ascertain the amount of the Guaranteed
Obligations at any reasonable time; (4)notice of any adverse change in the financial condition of the
Borrower or of any other fact that might increase such Guarantor’s risk hereunder; (5)notice of
presentment for payment, demand, protest, and notice thereof as to any instruments among the Loan
Documents; (6)notice of any Unmatured Default or Default; and (7)all other notices (except if such
notice is specifically required to be given to such Guarantor hereunder or under the Loan Documents) and
demands to which each Guarantor might otherwise be entitled;
(iii) its right, if any, to require the Administrative Agent and the other Holders of Secured Obligations to
institute suit against, or to exhaust any rights and remedies which the Administrative Agent and the
other Holders of Secured Obligations has or may have against, the other Guarantors or any third party,
or against any Collateral provided by the other Guarantors, or any third party; and each Guarantor
further waives any defense arising by reason of any disability or other defense (other than the defense
that the Guaranteed Obligations shall have been fully and finally performed and indefeasibly paid) of
the other Guarantors or by reason of the cessation from any cause whatsoever of the liability of the
other Guarantors in respect thereof;
(iv) (a) any rights to assert against the Administrative Agent and the other Holders of Secured Obligations
any defense (legal or equitable), set-off, counterclaim, or claim which such Guarantor may now or at any
time hereafter have against the other Guarantors or any other party liable to the Administrative Agent
and the other Holders of Secured Obligations; (b) any defense, set-off, counterclaim, or claim, of any
kind or nature, arising directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Guaranteed Obligations or any security therefor; (c) any
defense such Guarantor has to performance hereunder, and any right such Guarantor has to be exonerated,
arising by reason of: the impairment or suspension of the Administrative Agent’s and the other Holders
of Secured Obligations' rights or remedies against the other Guarantors; the alteration by the
Administrative Agent and the other Holders of Secured Obligations of the Guaranteed Obligations; any
discharge of the other Guarantors’ obligations to the Administrative Agent and the other Holders of
Secured Obligations by operation of law as a result of the Administrative Agent’s and the other Holders
of Secured Obligations' intervention or omission; or the acceptance by the Administrative Agent and the
other Holders of Secured Obligations of anything in partial satisfaction of the Guaranteed Obligations;
and (d) the benefit of any statute of limitations affecting such Guarantor's liability hereunder or the
enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations
applicable to the Guaranteed Obligations shall similarly operate to defer or delay the operation of such
statute of limitations applicable to such Guarantor's liability hereunder; and
(v) any defense arising by reason of or deriving from (a) any claim or defense based upon an election of
remedies by the Administrative Agent and the other Holders of Secured Obligations; or (b) any election
by the Administrative Agent and the other Holders of Secured Obligations under Section 1111(b) of Title
11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect (or any successor
statute), to limit the amount of, or any collateral securing, its claim against the Guarantors:
Section 6. Subordination of Subrogation. Until the Guaranteed Obligations have been fully and finally
performed and indefeasibly paid (other than contingent indemnity obligations) the Guarantors (i) shall have no
right of subrogation with respect to such Guaranteed Obligations and (ii) waive any right to enforce any remedy
which the LC Issuer, Holders of Secured Obligations or the Administrative Agent now have or may hereafter have
against the Borrower, any endorser or any guarantor of all or any part of the Secured Obligations or any other
Person, and until such time the Guarantors waive any benefit of, and any right to participate in, any security or
collateral given to the Holders of Secured Obligations and the Administrative Agent to secure the payment or
performance of all or any part of the Guaranteed Obligations or any other liability of the Borrower to the
Holders of Secured Obligations. Should any Guarantor have the right, notwithstanding the foregoing, to exercise
its subrogation rights, each Guarantor hereby expressly and irrevocably (A) subordinates any and all rights at
law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off that the
Guarantor may have to the payment in full in cash of the Guaranteed Obligations until the Guaranteed Obligations
are paid in full in cash (other than contingent indemnity obligations) and (B) waives any and all defenses
available to a surety, guarantor or accommodation co-obligor until the Guaranteed Obligations are paid in full in
cash. Each Guarantor acknowledges and agrees that this subordination is intended to benefit the Administrative
Agent and the Holders of Secured Obligations and shall not limit or otherwise affect such Guarantor’s liability
hereunder or the enforceability of this Guaranty, and that the Administrative Agent, the Holders of Secured
Obligations and their respective successors and assigns are intended third party beneficiaries of the waivers and
agreements set forth in this Section 6.
Section 7. Contribution with Respect to Guaranteed Obligations.
(a) To the extent that any Guarantor shall make a payment under this Guaranty (a “Guarantor Payment”) which,
taking into account all other Guarantor Payments then previously or concurrently made by any other Guarantor,
exceeds the amount which otherwise would have been paid by or attributable to such Guarantor if each Guarantor
had paid the aggregate Guaranteed Obligations satisfied by such Guarantor Payment in the same proportion as such
Guarantor’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Guarantors as determined immediately prior to the making
of such Guarantor Payment, then, following payment in full in cash of the Guarantor Payment and the Guaranteed
Obligations, and all Commitments and Facility LCs have terminated or expired or, in the case of all Facility LCs,
are fully collateralized on terms reasonably acceptable to the Administrative Agent, such Guarantor shall be
entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Guarantor
for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior
to such Guarantor Payment.
(b) As of any date of determination, the “Allocable Amount” of any Guarantor shall be equal to the maximum
amount of the claim which could then be recovered from such Guarantor under this Guaranty without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 7 is intended only to define the relative rights of the Guarantors, and nothing set forth
in this Section 7 is intended to or shall impair the obligations of the Guarantors, jointly and severally, to pay
any amounts as and when the same shall become due and payable in accordance with the terms of this Guaranty.
(d) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall
constitute assets of the Guarantor or Guarantors to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Guarantors against other Guarantors under this Section 7 shall be
exercisable upon the full and indefeasible payment of the Guaranteed Obligations in cash and the termination or
expiry (or in the case of all Facility LCs full collateralization) on terms reasonably acceptable to the
Administrative Agent of the Commitments and all Facility LCs issued under the Credit Agreement.
Section 8. Stay of Acceleration. If acceleration of the time for payment of any amount payable by the
Borrower under the Credit Agreement, any counterparty to any agreement evidencing a Rate Management Transaction
or any other Loan Document is stayed upon the insolvency, bankruptcy or reorganization of the Borrower or any of
their Affiliates, all such amounts otherwise subject to acceleration under the terms of the Credit Agreement, any
agreement evidencing a Rate Management Transaction or any other Loan Document shall nonetheless be payable by
each of the Guarantors hereunder forthwith on demand by the Administrative Agent.
Section 9. Notices. All notices, requests and other communications to any party hereunder shall be given
in the manner prescribed in Article XIII of the Credit Agreement with respect to the Administrative Agent at its
notice address therein and, with respect to any Guarantor, in the care of the Borrower at the address of the
Borrower set forth in the Credit Agreement, or such other address or telecopy number as such party may hereafter
specify for such purpose by notice to the Administrative Agent in accordance with the provisions of such Article
XIII.
Section 10. No Waivers. No failure or delay by the Administrative Agent or any Holders of Secured
Obligations in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in this Guaranty, the Credit Agreement, any
agreement evidencing a Rate Management Transaction and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 11. Successors and Assigns. This Guaranty is for the benefit of the Administrative Agent and the
Holders of Secured Obligations and their respective successors and permitted assigns, provided, that no Guarantor
shall have any right to assign its rights or obligations hereunder without the consent of all of the Lenders, and
any such assignment in violation of this Section 11 shall be null and void; and in the event of an assignment of
any amounts payable under the Credit Agreement, any agreement evidencing a Rate Management Transaction or the
other Loan Documents in accordance with the respective terms thereof, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such indebtedness. This Guaranty shall be
binding upon each of the Guarantors and their respective successors and assigns.
Section 12. Changes in Writing. Other than in connection with the addition of additional Subsidiaries,
which become parties hereto by executing a Supplement hereto in the form attached as Annex I, neither this
Guaranty nor any provision hereof may be changed, waived, discharged or terminated orally, but only in writing
signed by each of the Guarantors and the Administrative Agent with the consent of the Required Lenders under the
Credit Agreement (or all of the Lenders if required pursuant to the terms of Section 8.2 of the Credit Agreement).
Section 13. CHOICE OF LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
Section 14. CONSENT TO JURISDICTION; JURY TRIAL.
(A) CONSENT TO JURISDICTION. EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF ANY PARTY HERETO TO
BRING PROCEEDINGS IN THE COURTS OF ANY OTHER JURISDICTION.
(B) WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
Section 15. No Strict Construction. The parties hereto have participated jointly in the negotiation and
drafting of this Guaranty. In the event an ambiguity or question of intent or interpretation arises, this
Guaranty shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Guaranty.
Section 16. Expenses of Enforcement, Etc. Subject to the terms of the Credit Agreement, after the
occurrence of a Default under the Credit Agreement, the Lenders shall have the right at any time to direct the
Administrative Agent to commence enforcement proceedings with respect to the Guaranteed Obligations. The
Guarantors agree to reimburse the Administrative Agent and the Holders of Secured Obligations for any costs and
out-of-pocket expenses (including reasonable attorneys’ fees and time charges of attorneys for the Administrative
Agent and the Holders of Secured Obligations), paid or incurred by the Administrative Agent or any Holders of
Secured Obligations in connection with the collection and enforcement of amounts due under the Loan Documents,
including without limitation this Guaranty. The Administrative Agent agrees to distribute payments received from
any of the Guarantors hereunder to the Holders of Secured Obligations on a pro rata basis for application in
accordance with the terms of the Credit Agreement.
Section 17. Setoff. At any time after all or any part of the Guaranteed Obligations have become due and
payable (by acceleration or otherwise), each Holder of Secured Obligations and the Administrative Agent may,
without notice to any Guarantor and regardless of the acceptance of any security or collateral for the payment
hereof, appropriate and apply toward the payment of all or any part of the Guaranteed Obligations (i) any
indebtedness due or to become due from such Holder of Secured Obligations or the Administrative Agent to any
Guarantor, and (ii)any moneys, credits or other property belonging to any Guarantor, at any time held by or
coming into the possession of such Holder of Secured Obligations or the Administrative Agent or any of their
respective affiliates.
Section 18. Financial Information. Each Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of the Borrower and any and all endorsers and/or other Guarantors of all or
any part of the Guaranteed Obligations, and of all other circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations, or any part thereof, that diligent inquiry would reveal, and each Guarantor hereby agrees
that none of the Holders of Secured Obligations or the Administrative Agent shall have any duty to advise such
Guarantor of information known to any of them regarding such condition or any such circumstances. In the event
any Holder of Secured Obligations or the Administrative Agent, in its sole discretion, undertakes at any time or
from time to time to provide any such information to a Guarantor, such Holder of Secured Obligations or the
Administrative Agent shall be under no obligation (i) to undertake any investigation not a part of its regular
business routine, (ii) to disclose any information which such Holder of Secured Obligations or the Administrative
Agent, pursuant to accepted or reasonable commercial finance or banking practices, wishes to maintain
confidential or (iii) to make any other or future disclosures of such information or any other information to
such Guarantor.
Section 19. Severability. Wherever possible, each provision of this Guaranty shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining provisions of this Guaranty.
Section 20. Merger. This Guaranty represents the final agreement of each of the Guarantors with respect to
the matters contained herein and may not be contradicted by evidence of prior or contemporaneous agreements, or
subsequent oral agreements, between the Guarantor and any Holder of Secured Obligations or the Administrative
Agent.
Section 21. Headings. Section headings in this Guaranty are for convenience of reference only and shall
not govern the interpretation of any provision of this Guaranty.
[SIGNATURE PAGES TO FOLLOW]
Signature Page to Guaranty
IN WITNESS WHEREOF, each Initial Guarantor has caused this Guaranty to be duly executed by its
authorized officer as of the day and year first above written.
Midland Credit Management, Inc. , as a Guarantor Midland Funding NCC-2 Corporation, as a Guarantor
By: /s/ Carl C. Gregory, III By: /s/ Carl C. Gregory, III
Name: Carl C. Gregory, III Name: Carl C. Gregory, III
Title: President & CEO Title: President
MIDLAND ACQUISITION CORPORATION, as a Guarantor
By: /s/ Carl C. Gregory, III
Name: Carl C. Gregory, III
Title: President
Acknowledged and Agreed to:
BANK ONE, NA (MAIN OFFICE CHICAGO),
as Administrative Agent
By: /s/ Steven J. Krakoski
Name: Steven J. Krakoski
Title: First Vice President
ANNEX I TO GUARANTY
Reference is hereby made to the Guaranty (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Guaranty”), dated as of June 30, 2004, made by each of MIDLAND CREDIT
MANAGEMENT, INC., a Kansas corporation, MIDLAND FUNDING NCC-2 CORPORATION, a Delaware corporation, and MIDLAND
ACQUISITION CORPORATION, a Delaware corporation, (each an “Initial Guarantor”, and together with any additional
Domestic Subsidiaries which become parties to the Guaranty by executing a Supplement thereto substantially
similar in form and substance hereto, the “Guarantors”), in favor of the Administrative Agent, for the ratable
benefit of the Holders of Secured Obligations, under the Credit Agreement. Each capitalized term used herein and
not defined herein shall have the meaning given to it in the Guaranty. By its execution below, the undersigned,
[NAME OF NEW GUARANTOR], a [corporation] [partnership] [limited liability company], agrees to become, and does
hereby become, a Guarantor under the Guaranty and agrees to be bound by such Guaranty as if originally a party
thereto. By its execution below, the undersigned represents and warrants as to itself that all of the
representations and warranties contained in Section 1 of the Guaranty are true and correct in all respects as of
the date hereof.
IN WITNESS WHEREOF, [NAME OF NEW GUARANTOR], a [corporation] [partnership] [limited liability company]
has executed and delivered this Annex I counterpart to the Guaranty as of this __________ day of _________, ____.
[NAME OF NEW GUARANTOR]
By:____________________________________
Title:__________________________________