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IMAGISTICS INTERNATIONAL INC.,
as Borrower,
and
THE GUARANTORS PARTY HERETO
----------------------
$225,000,000
CREDIT AGREEMENT
Dated as of November 9, 2001
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MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
as Lead Arranger, Sole Book-Runner and Syndication Agent,
and
FLEET CAPITAL CORPORATION,
as Administrative Agent,
and
THE INDUSTRIAL BANK OF JAPAN, LTD.
(a member of the MIZUHO FINANCIAL GROUP),
as Documentation Agent,
and
THE LENDERS PARTY HERETO
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<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached
but is inserted for convenience of reference only.
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Section 1. Definitions, Accounting Matters and Rules of Construction......1
1.01. Certain Defined Terms..........................................1
1.02. Accounting Terms and Determinations...........................37
1.03. Classes and Types of Loans....................................38
1.04. Rules of Construction.........................................38
Section 2. Commitments, Letters of Credit, Conversions and
Continuations, Fees, Register, Prepayments and
Replacement of Lenders........................................39
2.01. Loans.........................................................39
2.02. Borrowings....................................................41
2.03. Letters of Credit.............................................41
2.04. Termination and Reductions of Commitments.....................46
2.05. Fees..........................................................47
2.06. Lending Offices...............................................47
2.07. Several Obligations of Lenders................................47
2.08. Notes; Register...............................................47
2.09. Optional Prepayments and Conversions or Continuations
of Loans...................................................48
2.10. Mandatory Prepayments and Commitment Reductions...............48
2.11. Replacement of Lenders........................................50
Section 3. Payments of Principal and Interest............................51
3.01. Repayment of Loans............................................51
3.02. Interest......................................................51
Section 4. Payments; Pro Rata Treatment; Computations; Etc...............52
4.01. Payments......................................................52
4.02. Pro Rata Treatment............................................53
4.03. Computations..................................................53
4.04. Minimum Amounts...............................................54
4.05. Certain Notices...............................................54
4.06. Non-Receipt of Funds by Administrative Agent..................56
4.07. Right of Setoff; Sharing of Payments; Etc.....................56
Section 5. Yield Protection, Etc.........................................57
5.01. Additional Costs..............................................57
5.02. Inability To Determine Interest Rate..........................59
5.03. Illegality....................................................59
5.04. Treatment of Affected Loans...................................59
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5.05. Compensation..................................................60
5.06. Net Payments..................................................60
Section 6. Guarantee.....................................................63
6.01. The Guarantee.................................................63
6.02. Obligations Unconditional.....................................63
6.03. Reinstatement.................................................64
6.04. Subrogation; Subordination....................................64
6.05. Remedies......................................................65
6.06. Continuing Guarantee..........................................65
6.07. General Limitation on Guarantee Obligations...................65
Section 7. Conditions Precedent..........................................65
7.01. Conditions to Effectiveness...................................65
7.02. Conditions to Initial Extension of Credit.....................66
7.03. Conditions to Initial and Subsequent Extensions of Credit.....69
7.04. Determinations Under Section 7................................70
Section 8. Representations and Warranties................................70
8.01. Corporate Existence; Compliance with Law......................70
8.02. Financial Condition; Etc......................................70
8.03. Litigation....................................................71
8.04. No Breach.....................................................71
8.05. Action........................................................71
8.06. Approvals.....................................................72
8.07. ERISA and Foreign Employee Benefit Matters....................72
8.08. Taxes.........................................................72
8.09. Investment Company Act; Public Utility Holding Company
Act; Other Restrictions....................................72
8.10. Environmental Matters.........................................73
8.11. Use of Proceeds...............................................73
8.12. Subsidiaries, Etc.............................................73
8.13. Ownership of Property; Liens..................................74
8.14. Security Interest; Absence of Financing Statements; Etc.......74
8.15. Licenses and Permits..........................................74
8.16. True and Complete Disclosure..................................74
8.17. Solvency......................................................75
8.18. Contracts.....................................................75
8.19. Labor Matters.................................................75
8.20. Intellectual Property.........................................75
8.21. Existing Indebtedness.........................................76
8.22. Accuracy of Borrowing Base Components.........................76
Section 9. Covenants.....................................................76
9.01. Financial Statements, Etc.....................................76
9.02. Litigation, Etc...............................................79
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9.03. Existence; Compliance with Law; Payment of Taxes;
Inspection Rights; Performance of Obligations; Etc.........79
9.04. Insurance.....................................................80
9.05. Limitation on Lines of Business...............................81
9.06. Limitation on Fundamental Changes, Acquisitions or
Dispositions...............................................81
9.07. Limitation on Liens and Negative Pledges......................84
9.08. Prohibition on Disqualified Capital Stock; Limitation on
Indebtedness and Contingent Obligations....................85
9.09. Limitation on Investments; Limitation on Creation of
Subsidiaries...............................................87
9.10. Limitation on Dividend Payments...............................88
9.11. Financial Covenants...........................................89
9.12. Additional Security; Equal Security for Loans and Notes;
Landlord Consents..........................................91
9.13. Security Interests; Further Assurances........................92
9.14. Compliance with Environmental Laws............................92
9.15. Limitation on Transactions with Affiliates and Related
Persons....................................................93
9.16. Limitation on Accounting Changes; Limitation on Investment
Company Status.............................................93
9.17. Limitation on Modifications of Certain Documents, Etc.........93
9.18. Interest Rate Protection Agreements...........................93
9.19. Limitation on Certain Restrictions Affecting Subsidiaries.....94
9.20. Additional Obligors...........................................94
9.21. Customer Rental Agreements....................................95
Section 10. Events of Default.............................................95
Section 11. Agents........................................................98
11.01. General Provisions............................................98
11.02. Indemnification..............................................100
11.03. Consents Under Other Credit Documents........................100
Section 12. Miscellaneous................................................101
12.01. Waiver.......................................................101
12.02. Notices......................................................101
12.03. Expenses, Indemnification, Etc...............................101
12.04. Amendments, Etc..............................................103
12.05. Successors and Assigns.......................................106
12.06. Survival.....................................................108
12.07. Captions.....................................................108
12.08. Counterparts; Interpretation; Effectiveness..................108
12.09. Governing Law; Submission to Jurisdiction; Waivers; Etc......108
12.10. Confidentiality..............................................109
12.11. Independence of Representations, Warranties and Covenants....109
12.12. Severability.................................................110
12.13. No Reliance on Margin Stock..................................110
Signatures..................................................................S-1
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ANNEX A - Commitments
ANNEX B - Inventory Locations
SCHEDULE 1.01(a) - Applicable Margins Before Trigger Date
SCHEDULE 1.01(b) - Applicable Margins After Trigger Date
SCHEDULE 1.01(c) - Applicable Revolving Credit Fee Percentage
SCHEDULE 1.01(d) - Guarantors
SCHEDULE 1.01(e) - Excluded Subsidiaries at Effective Date
SCHEDULE 3.01(b) - Amortization Schedule
SCHEDULE 8.02(B) - Certain Contingent Obligations of Companies
SCHEDULE 8.03 - Litigation
SCHEDULE 8.08 - Tax Matters
SCHEDULE 8.10 - Environmental Matters
SCHEDULE 8.13 - Subsidiaries, Etc.
SCHEDULE 8.15 - Security Interests
SCHEDULE 8.19 - Labor Matters
SCHEDULE 8.20 - Intellectual Property Matters
SCHEDULE 8.21(A) - Indebtedness Outstanding as of the Effective Date
SCHEDULE 8.21(B) - Certain Indebtedness To Remain Outstanding After the
Closing Date
SCHEDULE 9.04 - Insurance
SCHEDULE 9.07 - Certain Existing Liens
SCHEDULE 9.09 - Investments
SCHEDULE 9.12(C) - Landlord Consents Required at Effective Date
SCHEDULE 9.15 - Existing Affiliate Agreements
SCHEDULE 9.19 - Certain Restrictions Applicable to Subsidiaries
EXHIBIT A-1 - Form of Revolving Note
EXHIBIT A-2 - Form of Term B Facility Note
EXHIBIT A-3 - Form of Swing Loan Note
EXHIBIT B - Form of Intercompany Note
EXHIBIT C-1 - Form of Interest Rate Certificate
EXHIBIT C-2 - Form of Solvency Certificate
EXHIBIT D - Form of Security Agreement
EXHIBIT E-1 - Form of Counsel Opinion at Closing Date
EXHIBIT E-2 - Form of Local Counsel Opinion
EXHIBIT F - Form of Notice of Borrowing
EXHIBIT G - Form of Notice of Conversion/Continuation
EXHIBIT H - Form of Joinder Agreement
EXHIBIT I - Form of Foreign Lender Certificate
EXHIBIT J-1 - Form of Landlord Consent
EXHIBIT J-2 - Form of Bailee Letter
EXHIBIT K - Form of Assignment Agreement
EXHIBIT L - Form of Perfection Certificate
EXHIBIT M - Form of Borrowing Base Certificate
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<PAGE>
CREDIT AGREEMENT dated as of November 9, 2001, among IMAGISTICS
INTERNATIONAL INC., as Borrower; the Guarantors party hereto; each of the
lenders that is a signatory hereto identified under the caption "LENDERS" on the
signature pages hereto or that, pursuant to Section 12.06(b), shall become a
"Lender" hereunder (individually, a "Lender" and, collectively, the "Lenders");
MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
("Merrill Lynch"), as sole book-running lead arranger (in such capacity,
together with its successors in such capacity, the "Lead Arranger"); FLEET
CAPITAL CORPORATION, as administrative agent (in such capacity, together with
its successors in such capacity, "Administrative Agent"); THE INDUSTRIAL BANK OF
JAPAN, LTD. (a member of the MIZUHO FINANCIAL GROUP), as documentation agent (in
such capacity, together with its successors in such capacity, "Documentation
Agent"); and MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, as syndication agent (in such capacity, together with its
successors in such capacity, "Syndication Agent").
The parties hereto agree as follows:
Section 1. Definitions, Accounting Matters and Rules of Construction.
1.01. Certain Defined Terms. As used herein, the following terms shall have
the following meanings:
"ABR Loans" shall mean Loans that bear interest at rates based upon the
Alternate Base Rate.
"Account Debtor" shall mean any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper or a General
Intangible.
"Accounts" shall mean "accounts" (as that term is defined in the UCC) and
any and all supporting obligations in respect thereof; provided, however, that
the amount of Accounts shall be reduced by 50% of the "advance billings" of the
Obligors.
"Accrued Billings" shall mean, as at any date, Accounts created by the
Obligors and the BPCs in the ordinary course of their business for which no
bill, invoice or other request for payment has been issued to the Account Debtor
as such Accounts are shown on the books and records of the Obligors.
"Acquisition" shall mean, with respect to any Person, any transaction or
series of related transactions for the direct or indirect (a) acquisition of all
or substantially all of the Property of any other Person, or of any business or
division of any other Person, (b) acquisition of more than 50% of the Equity
Interests of any other Person, or otherwise causing any other Person to become a
Subsidiary of such Person, or (c) merger or consolidation or any other
combination with any other Person.
"Acquisition Consideration" shall mean the purchase consideration for any
Acquisition and all other payments made and liabilities incurred by any Company
in exchange for, or as part of the purchase price for, any Acquisition, whether
paid in cash or by exchange of Equity Interests or of Property or otherwise and
whether payable at or prior to the consummation of such Acquisition or
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deferred for payment at any future time, whether or not any such future payment
is subject to the occurrence of any contingency, and includes any and all
payments and liabilities representing the purchase price and any assumptions of
liabilities, "earn-outs" and other Profit Payment Agreements and non-competition
agreements, in each case in accordance with, and at the time required under,
GAAP.
"Adjusted Net Income" shall mean, for any period, Consolidated Net Income
for such period, adjusted by excluding (to the extent taken into account in the
calculation of such Consolidated Net Income) the effect of (a) gains or losses
for such period from sales or other Dispositions not in the ordinary course of
business, and the tax consequences thereof, (b) any non-recurring or
extraordinary items of income (other than the proceeds of business interruption
insurance) or expense for such period and the tax consequences thereof, and (c)
non-cash charges associated with the issuance by Borrower of its Equity
Interests or Equity Rights to employees of any Company.
"Administrative Agent" see the introduction hereto.
"Administrative Agent's Fee Letter" shall mean the fee letter dated the
date hereof between Borrower and Administrative Agent.
"Advance Date" see Section 4.06.
"Affiliate" shall mean, with respect to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Affiliate Transaction" see Section 9.15.
"Agent" shall mean any of Administrative Agent, Lead Arranger or
Syndication Agent.
"Aggregate Offshore Currency Exposure" see Section 2.03(k).
"Agreement" shall mean this Credit Agreement, as amended from time to time.
"Alternate Base Rate" shall mean for any day, the higher of (i) the
corporate base rate of interest announced by Bank from time to time, changing
when said corporate base rate changes, and (ii) the Federal Funds Rate plus
0.50% per annum. The corporate base rate is not necessarily the lowest rate
charged by Bank to its customers.
"Amortization Payment" shall mean each scheduled principal payment on the
Term B Facility Loans set forth in Section 3.01(b).
"Applicable Currency" means, as to any particular payment or Letter of
Credit, Dollars or the Offshore Currency in which it is denominated or is
payable.
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"Applicable Lending Office" shall mean, for each Lender and for each Type
of Loan, the "Lending Office" of such Lender (or of an Affiliate of such Lender)
designated for such Type of Loan on the signature pages hereof or such other
office of such Lender (or of an Affiliate of such Lender) as such Lender may
from time to time specify to Administrative Agent and Borrower as the office by
which its Loans of such Type are to be made and maintained.
"Applicable Margin" shall be, for any Type and Class of Loan, (A) prior to
the Trigger Date, the percentage per annum set forth on Schedule 1.01(a) for
such Type and Class of Loan, and (B) on and after the date (the "Trigger Date")
which is the first date after the Closing Date on which Borrower has delivered
to the Lenders the financial statements and Interest Rate Certificate required
by Sections 9.01(a), (b) and (e) and an Officers' Certificate demonstrating the
then applicable Total Leverage Ratio for a fiscal quarter ended at least six
months after the Closing Date, the Applicable Margin shall be the percentage per
annum set forth on Schedule 1.01(b) for such Type and Class of Loan set forth
opposite the relevant Total Leverage Ratio in such Schedule as evidenced in the
most recent Interest Rate Certificate delivered hereunder. After the Trigger
Date, any change in the Total Leverage Ratio shall be effective to adjust the
Applicable Margin as of the date of receipt by Administrative Agent of the
Interest Rate Certificate most recently delivered pursuant to Section 9.01(e).
If Borrower fails to deliver the financial statements or Interest Rate
Certificate within the times specified in Sections 9.01(a), (b) and (e), the
Total Leverage Ratio shall be deemed to be greater than 1.25:1.0 from the date
of any such failure to deliver until Borrower delivers such Interest Rate
Certificate and financial statements.
"Applicable Percentage" shall mean, for the fiscal year ending December 31,
2001, 0%, for the fiscal year ending December 31, 2002, 20%, for the fiscal year
ending December 31, 2003, 15%, for the fiscal year ending December 31, 2004,
20%, and for each fiscal year thereafter, 25%.
"Applicable R/C Fee Percentage" shall mean 0.500% per annum; provided,
however, that on and after the Trigger Date, the Applicable R/C Fee Percentage
shall mean the percentage per annum set forth on Schedule 1.01(c), opposite the
Total Leverage Ratio set forth in the most recent Interest Rate Certificate
delivered hereunder. After the Trigger Date, any change in the Total Leverage
Ratio shall be effective to adjust the Applicable R/C Fee Percentage as of the
date of receipt by Administrative Agent of the Interest Rate Certificate most
recently delivered pursuant to Section 9.01(e). If Borrower fails to deliver the
financial statements and Interest Rate Certificates within the times specified
in Sections 9.01(a), (b) and (e), the Applicable R/C Fee Percentage shall be
deemed to equal 0.500%.
"Approved Fund" shall mean 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.
"Bank" shall mean Fleet National Bank, its successors and assigns.
"Bankruptcy Code" shall mean the United States Federal Bankruptcy Code of
1978, as amended or supplemented.
"Base Amount" see Section 9.11(c).
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"Borrower" shall mean Imagistics International Inc., a Delaware
corporation.
"Borrowing Base" shall mean, as at any date, the lesser of: (i) the
aggregate amount of the Revolving Commitments on such date, or (ii) an amount
equal to (a) the sum, as of the last day the most recently ended month for which
a Borrowing Base Certificate shall have been delivered (but subject to
adjustment in Administrative Agent's Discretion, as set forth in the definitions
of Eligible Receivables, Eligible Rental Assets, Eligible Accrued Billings and
Eligible Inventory), of: 85% of the amount of Eligible Receivables (other than
those of any BPC) outstanding at such date; plus 85% of the amount of Eligible
Rental Assets (other than those of any BPC) outstanding at such date; plus 75%
of the amount of Eligible Accrued Billings (other than those of any BPC)
outstanding at such date; plus the sum of (x) 60% of the value of Eligible
Inventory (other than that of any BPC) excluding parts, and (y) 15% of the value
of Eligible Inventory (other than that of any BPC) consisting of parts; plus the
BPC Borrowing Base; minus (b) the amount outstanding under the Term B Facility
on such date; minus (c) Reserves as of such date; minus (d) if the last day of
the most recently ended month for which a Borrowing Base Certificate shall have
been delivered pursuant to Section 7.02(ii) or 9.01(i) is before the Contra
Accounts Trigger Date, $1,000,000; minus (e) the Offshore Currency Buffer most
recently calculated by Administrative Agent on or prior to such date pursuant to
Section 2.03(k).
"Borrowing Base Certificate" shall mean a certificate of a Financial
Officer of Borrower, substantially in the form of Exhibit M and appropriately
completed.
"BPC" shall mean a retail or other business product center owned or
controlled by any Obligor or any Affiliate or Subsidiary of any Obligor, but
only for so long as the components that would constitute the BPC Borrowing Base
of such retail or business product center are not included in the Enterprise
Resource Planning System of Borrower described to the Lenders before the
Effective Date.
"BPC Account" shall mean an Account of any BPC.
"BPC Accrued Billings" shall mean Accrued Billings of any BPC.
"BPC Borrowing Base" shall mean, at any date, the sum of: 75% of the amount
of Eligible BPC Receivables outstanding at such date; plus 85% of the amount of
Eligible BPC Rental Assets outstanding at such date; plus 75% of the amount of
Eligible BPC Accrued Billings outstanding at such date; plus the sum of (I) 60%
of the value of Eligible BPC Inventory excluding parts, and (II) 15% of the
value of Eligible BPC Inventory consisting of parts.
"BPC Inventory" shall mean all Inventory of any BPC.
"BPC Rental Assets" shall mean Rental Assets of any BPC.
"Business Day" shall mean any day, except a Saturday or Sunday, (a) on
which commercial banks are not authorized or required to close in New York City
and (b) if such day relates to a borrowing of, a payment or prepayment of
principal of or interest on, a Continuation or Conversion of or into, or an
Interest Period for, a LIBOR Loan or a notice by Borrower with respect to any
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such borrowing, payment, prepayment, Continuation, Conversion or Interest
Period, that is also a day on which dealings in Dollar deposits are carried out
in the London interbank market.
"Capital Expenditures" shall mean, for any period, any direct or indirect
(by way of acquisition of securities of a Person or the expenditure of cash or
the transfer of Property or the incurrence of Indebtedness) expenditures in
respect of the purchase or other acquisition of fixed or capital assets
determined in conformity with GAAP, excluding (i) normal replacement and
maintenance programs properly charged to current operations, (ii) any
expenditure in an amount not to exceed the Net Available Proceeds of any
Disposition Event, to the extent such Net Available Proceeds are not required to
be applied to the prepayment of the Loans in accordance with Section
2.10(a)(iii), (iii) any expenditure made with the proceeds of any Excluded
Disposition (other than sales of inventory or Rental Assets in the ordinary
course of business), (iv) expenditures in an amount not to exceed the sum of (x)
the Net Available Proceeds of any Casualty Event to the extent such Net
Available Proceeds are not required to be applied to the prepayment of the Loans
in accordance with Section 2.10(a)(i) and (y) the amount of any applicable
insurance deductibles with respect to such Casualty Event to the extent such
amount is applied as set forth in clause (x) of Section 2.10(a)(i) within the
period specified therein, (v) expenditures to effect Permitted Acquisitions,
(vi) Investments permitted under Section 9.09, (vii) any expenditures in respect
of Rental Assets made with (or in an amount not exceeding) the net proceeds
received by Borrower and its Subsidiaries as consideration from the issuance of
Equity Interests and Equity Rights of Borrower, other than Disqualified Capital
Stock and Equity Interests in respect of Disqualified Capital Stock, and (viii)
the purchase price of equipment to the extent that the consideration therefor
consists of used or surplus equipment being traded in at such time or the
proceeds of a substantially concurrent sale of such used or surplus equipment.
"Capital Lease," as applied to any Person, shall mean any lease of any
Property by that Person as lessee which, in conformity with GAAP, is required to
be classified and accounted for as a capital lease on the balance sheet of that
Person.
"Capital Lease Obligations" shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a Capital Lease, and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
"Cash Equivalents" shall mean, for any Person: (a) direct obligations of
the United States of America, or of any agency thereof, or obligations
guaranteed by the United States of America, or by any agency thereof, in either
case maturing not more than one year from the date of acquisition thereof by
such Person; (b) time deposits, certificates of deposit or bankers' acceptances
(including eurodollar deposits) issued by (i) any Lender or any Affiliate of a
Lender or (ii) any bank or trust company organized under the laws of the United
States of America or any state thereof (or the United States branch of any other
bank or trust company) and having capital, surplus and undivided profits of at
least $500,000,000; (c) commercial paper issued by a Lender or rated A-1 or
better by S&P or P-1 or better by Moody's and maturing not more than 270 days
from the date of acquisition thereof by such Person; (d) repurchase obligations
with a term of not more than one year for underlying securities of the types
described in clause (a) above entered into with (i) a Lender or any Affiliate of
a Lender, (ii) a bank meeting the qualifications described in clause (b) above
or (iii) any other financial institution whose unsecured long-term debt (or the
unsecured long-term debt of whose direct or indirect parent) is rated A- or
better by S&P or A-3 or better by Moody's or whose commercial paper (or the
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commercial paper of whose direct or indirect parent) is rated A-1 or better by
S&P or P-1 or better by Moody's; (e) securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least A by S&P or A by
Moody's or MIG-1/1+ by S&P or Moody's; (f) money market or similar funds that
invest primarily in the foregoing items; and (g) with respect to any Person
organized or conducting operations outside of the United States, investments
denominated in the currency of the jurisdiction in which such Person is
organized or conducting business (so long as such jurisdiction is a member of
the Organization for Economic Cooperation and Development) which are similar to
the items specified in clauses (a) through (f) above (other than the nationality
of the governmental or non-governmental issuer or counterparty involved).
"Casualty Event" shall mean, with respect to any Property of any Person,
any loss of title of such Property or any loss of or damage to or destruction
of, or any condemnation or other taking (including by any Governmental
Authority) of, such Property; provided, however, no such event shall constitute
a Casualty Event if such proceeds or other compensation in respect thereof is
less than $5,000,000. "Casualty Event" shall include but not be limited to any
taking of all or any part of any Real Property of any Company, in or by
condemnation or other eminent domain proceedings pursuant to any Law, or by
reason of the temporary requisition of the use or occupancy of all or any part
of any Real Property of any Company by any Governmental Authority, civil or
military.
"CERCLA" see Section 8.10.
"Change of Control" shall mean any transaction or event occurring on or
after the date hereof as a direct or indirect result of which (a) any Person or
any group shall (A) beneficially own (directly or indirectly) in the aggregate
Equity Interests of Borrower having 35% or more of the aggregate voting power of
all Equity Interests of Borrower at the time outstanding or (B) have the right
or power to appoint a majority of the board of directors of Borrower; or (b)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the board of directors of Borrower (together with any
new directors whose election by such board of directors or whose nomination for
election by the shareholders of Borrower was approved by a vote of a majority of
the directors of Borrower then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute at least a majority
of the board of directors of Borrower then in office. For purposes of this
definition, the terms "beneficially own" and "group" shall have the respective
meanings ascribed to them pursuant to Section 13(d) of the Exchange Act, except
that a Person or group shall be deemed to "beneficially own" all securities that
such Person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time.
"Class" see Section 1.03.
"Closing Date" see Section 7.02.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
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"Collateral" shall mean all of the Pledged Collateral and any other
property, whether now owned or hereafter acquired, upon which a Lien securing
the Obligations is granted or purported to be granted under any Security
Document.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Commitment Letter" shall mean the Credit Facilities Commitment Letter
among Merrill Lynch Capital Corporation and Borrower dated August 1, 2001,
together with Exhibit A thereto.
"Commitments" shall mean the Revolving Commitments and the Term B Facility
Commitments.
"Companies" shall mean Borrower and the Subsidiaries and each BPC; and
"Company" shall mean any one of them.
"Consolidated Companies" shall mean Borrower and its Consolidated
Subsidiaries.
"Consolidated EBITDA" shall mean, for any period, the sum (without
duplication) of the amounts for such period of Adjusted Net Income, plus, in
each case to the extent deducted in calculating such Adjusted Net Income, (1)
provision for income taxes, (2) interest expense, (3) depreciation and
amortization expense, (4) other non-cash items of expense other than to the
extent requiring an accrual or reserve for future cash expenses that are payable
in cash prior to the Final Maturity Date and (5) to the extent such items of
expense are incurred in 2001, an amount of up to $28,000,000 in respect of
certain non-recurring expenses and charges described to the Lenders before the
Effective Date, all as determined on a consolidated basis for the Consolidated
Companies; provided that if any material acquisition or disposition of a
business or assets (other than sales, leases and rents in the ordinary course of
business of inventory and assets held for sale, lease or rent) is made during
such period, then Consolidated EBITDA for such period shall include or exclude,
as the case may be, the actual Consolidated EBITDA (without making any pro forma
adjustments in respect of such acquisition or disposition) generated by the
business or assets that were the subject of such acquisition or disposition from
the first day of such period until the day such acquisition or disposition is
consummated.
"Consolidated Net Income" shall mean, for any period, the consolidated net
income (or loss) of the Consolidated Companies for such period, determined in
conformity with GAAP.
"Consolidated Subsidiary" shall mean, for any Person, each Subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should be) consolidated with the
financial statements of such Person in accordance with GAAP.
"Contested Collateral Lien Conditions" shall mean, with respect to any
Permitted Customary Liens of the type described in clause (a), (b), (c) or (d)
of the definition of Permitted Customary Liens or otherwise described in Section
9.03 hereof, that any proceeding instituted contesting such Lien shall
conclusively operate to stay the sale or forfeiture of any portion of the
Collateral on account of such Lien.
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"Contingent Obligation" shall mean, as to any Person, any direct or
indirect liability of such Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of such Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each of (i)-(iv), a "Guaranty Obligation"); (b)
with respect to any Surety Instrument (other than any Letter of Credit) issued
for the account of such Person or as to which such Person is otherwise liable
for reimbursement of drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services of, another Person if
the relevant contract or other related document or obligation requires that
payment for such materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever performed or
tendered; or (d) in respect of any Swap Contract; provided, however, that the
term "Contingent Obligation" shall not include endorsements of instruments for
deposit or collection or standard contractual indemnities entered into, in each
case in the ordinary course of business. The amount of any Contingent Obligation
shall (x) in the case of a Guaranty Obligation, be deemed equal to the lesser of
(i) the stated or determinable amount of the primary obligation in respect of
which such Guaranty Obligation is made or, if not stated or if indeterminable,
the maximum reasonably anticipated liability in respect thereof and (ii) any
express limit in the amount of such Contingent Obligation, and (y) in the case
of other Contingent Obligations, be equal to (i) the lesser of the maximum
reasonably anticipated liability in respect thereof and (ii) any express limit
in the amount of such Contingent Obligation.
"Continue," "Continuation" and "Continued" shall refer to the continuation
pursuant to Section 2.09 of a LIBOR Loan from one Interest Period to the next
Interest Period.
"Contra Accounts Trigger Date" shall mean the date that Borrower shall have
completed the implementation of a system, reasonably satisfactory in all
respects to Administrative Agent, for reporting the amount of all Accounts
within the meaning of clause (i) of the definition of Eligible Receivables.
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any mortgage, security agreement, pledge
agreement, indenture, credit agreement, securities purchase agreement, debt
instrument, contract, agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its Property is bound or subject.
"Convert," "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.09 of one Type of Loans into another Type of Loans, which
may be accompanied by the transfer by a Lender (at its sole discretion) of a
Loan from one Applicable Lending Office to another.
"Covered Taxes" see Section 5.06(a).
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"Credit Documents" shall mean this Agreement, the Notes, the L/C Documents
and the Security Documents, as amended from time to time.
"Credit Facilities" shall mean the Term B Facility and the Revolving
Facility.
"Creditor" shall mean each of (i) each Agent, (ii) each L/C Lender, (iii)
each Lender, and (iv) each party to a Swap Contract relating to the Loans if at
the date of entering into such Swap Contract such Person was a Lender or an
Affiliate of a Lender.
"Debt Issuance" shall mean the incurrence by any Company of any
Indebtedness after the Effective Date.
"Default" shall mean any event or condition that constitutes an Event of
Default or that would become, with notice or lapse of time or both, an Event of
Default.
"Designated Deposit Account" means any "deposit account" (as such term is
defined in the UCC) with respect to which an Obligor has entered into a Control
Agreement (as such term is defined in the Security Agreement).
"Discretion" shall mean a determination made by Administrative Agent in
good faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment consistent with its practices as applied
to similarly situated borrowers and based on the nature and quality of the
applicable components of the Borrowing Base; provided, however, that
Administrative Agent shall give reasonable prior notice to Borrower of its
intention to exercise Discretion, along with a brief description of the basis
for and nature of such exercise.
"Disposition" shall mean (i) any conveyance, sale, lease, assignment,
transfer or other disposition (including by way of merger or consolidation and
including any Sale and Leaseback Transaction) of any Property (including
Accounts of any Company and Equity Interests of any Person owned by any Company)
(whether owned on the Effective Date or thereafter acquired) by any Company to
any Person (other than to any Company), (ii) any issuance or sale by any
Subsidiary of its Equity Interests to any Person (other than any Company), and
(iii) any liquidating dividend or distribution received by any Company in
respect of any Minority Interest, excluding, however, in each case any Excluded
Disposition (except for purposes of defining the term "Excluded Disposition").
"Disposition Event" shall mean the receipt by any Company of cash proceeds
or cash distributions of any kind in consideration for a Disposition.
"Disqualified Capital Stock" shall mean, with respect to any Person, any
Equity Interest of such Person 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 (excluding any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily redeemable (other
than solely for Qualified Capital Stock), pursuant to a sinking fund obligation
or otherwise, or is redeemable at the sole option of the holder thereof (other
than solely for Qualified Capital Stock) or exchangeable or convertible into
debt securities of the issuer thereof at the sole option of the holder thereof,
in whole or in part, on or prior to the date which is 90 days after the Final
Maturity Date; provided that an Equity
<PAGE>
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Interest shall not be deemed to constitute Disqualified Capital Stock solely on
account of the inclusion therein of provisions requiring the mandatory
redemption thereof, or the making of an offer to redeem such Equity Interest, in
each case in whole or in part, upon the occurrence of a change of control or
similar event or a sale, lease or other disposition of assets, so long as such
provision is expressly subject to the prior payment of the Obligations.
"Dividend Payment" shall mean dividends (in cash, Property or obligations)
on, or other payments or distributions on account of, or the setting apart of
money for a sinking or other analogous fund for, or the purchase, redemption,
retirement or other acquisition of, any Equity Interests or Equity Rights of any
Company, but excluding dividends paid through the issuance of additional shares
of Qualified Capital Stock and any redemption or exchange of any Qualified
Capital Stock of a Company through the issuance of Qualified Capital Stock of
such Company.
"Documentation Agent" see the introduction hereto.
"Dollar Equivalent" means, at any time, (a) as to any amount denominated in
Dollars, the amount thereof at such time, and (b) as to any amount denominated
in any Offshore Currency, the equivalent amount in Dollars as determined by
Administrative Agent at such time on the basis of the Spot Rate for the purchase
of Dollars with such Offshore Currency and after giving effect to any currency
hedging arrangements to the extent such arrangements apply to such amount.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Domestic Subsidiary" shall mean any Subsidiary other than a Foreign
Subsidiary.
"Effective Date" see Section 7.01.
"Eligible Accrued Billings" shall mean those Accrued Billings created by
the Obligors in the ordinary course of their business, that arise out of their
sale, lease or rent of goods or rendition of services and that are not excluded
as ineligible by virtue of one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised from time to time
by Administrative Agent in Administrative Agent's Discretion, including to
address the results of any audit performed by Administrative Agent from time to
time after the Closing Date. In determining the amount to be included, Eligible
Accrued Billings shall be calculated net of deposits in respect of Eligible
Accrued Billings. Eligible Accrued Billings shall not include Accrued Billings
that do not (or would not) constitute Eligible Receivables, unless such Accrued
Billings are excluded from the definition of Eligible Receivables solely by
virtue of the fact that the subject Account is shown on the books and records of
the applicable Obligor and no bill, invoice or other request for payment has
been issued to the Account Debtor.
"Eligible Assignee" shall mean (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund; and (d) any other Person (other than a natural Person)
approved by Administrative Agent and, in the case of any assignment of a
Revolving Commitment, any L/C Lender, and, unless (x) such Person is taking
delivery of an assignment in connection with physical settlement of a credit
derivatives transaction or (y) a Default or an Event of Default has occurred and
is continuing, Borrower (each such approval not to be unreasonably withheld or
delayed). If the consent of Borrower to
<PAGE>
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an assignment which does not meet the minimum assignment thresholds specified in
paragraph (b)(i) of Section 12.05 is not received, Borrower shall be deemed to
have given its consent five Business Days after the date notice thereof has been
delivered by the assigning Lender (through Administrative Agent) unless such
consent is expressly refused by Borrower prior to such fifth Business Day.
"Eligible BPC Accrued Billings" shall mean Eligible Accrued Billings of the
BPCs.
"Eligible BPC Inventory" shall mean Eligible Inventory of the BPCs.
"Eligible BPC Receivables" shall mean Eligible Receivables of the BPCs;
provided however, that Eligible BPC Receivables shall not include Accounts that
the Account Debtor has failed to pay within 90 days of the original invoice
date.
"Eligible BPC Rental Assets" shall mean Eligible Rental Assets of the BPCs.
"Eligible Inventory" shall mean Inventory of the Obligors (other than
Rental Assets) consisting of new, used, refurbished and remanufactured goods,
supplies for customers and service parts for customers (which, in the case of
new goods, supplies and parts shall be first quality finished goods, supplies
and parts), in each case held for sale, lease or rent in the ordinary course of
the Obligors' business that is not excluded as ineligible by virtue of one or
more of the criteria set forth below; provided, however, that such criteria may
be fixed and revised from time to time by Administrative Agent in Administrative
Agent's Discretion, including to address the results of any audit or appraisal
performed by Administrative Agent from time to time after the Closing Date. The
value of Eligible Inventory shall be calculated on the basis of the lower of
cost or market with the cost of raw materials and finished goods calculated in
accordance with the "first-in, first-out" method of accounting for inventory and
in accordance with GAAP. An item of Inventory shall not be included in Eligible
Inventory if:
(a) it is at a location other than (i) a location set forth on Annex B
(as such Annex may be amended or supplemented from time to time by
Borrower, such amendment or supplement to be effective upon receipt thereof
by Administrative Agent) or (ii) in transit between any locations referred
to in the immediately preceding clause (i), to the extent the Inventory
located at such location, when taken together with the Inventory located at
all other locations not referred to in clause (i) or (ii) of this clause
(a), contains more than 10.0% of the aggregate Inventory,
(b) the applicable Obligor does not have good, valid and marketable
title thereto,
(c) it is located on real property leased by one of the Obligors or in
a contract warehouse, unless (i) Borrower has elected to establish a
Reserve equal to three months' rent in respect of Inventory located at such
location or (ii) it is subject to a Landlord Consent executed by the
lessor, warehouseman or other third party, as the case may be, and unless
it is segregated or otherwise separately identifiable from goods of others,
if any, stored on the premises,
<PAGE>
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(d) it is subject to any Lien (other than a Lien permitted by the
Credit Documents) or it is not subject to a valid and perfected first
priority security Lien in favor of the Creditors securing the Obligations,
(e) it consists of goods that are obsolete or slow moving, bill and
hold goods, defective goods, "seconds" or Inventory acquired on
consignment,
(f) it is subject to a negotiable document of title not in the
possession of an Obligor or Administrative Agent,
(g) it is not either (i) located in the United States or (ii) loaded
freight charges and insurance premiums paid, upon a vessel bound for a port
in the United States or
(h) it is goods acquired by one of the Obligors in or as part of a
"bulk" transfer or sale of assets and such acquisition is not consummated
in the ordinary course of business unless Borrower (i) has complied with
all applicable bulk sales or bulk transfer laws in connection with such
acquisition or (ii) has received adequate assurances from the seller of
such goods that the Companies will be made whole for all losses resulting
from a violation of the bulk sales or bulk transfer laws.
"Eligible Receivables" shall mean (without duplication) those Accounts of
the Obligor, that arise out of the sale, lease or rent of goods or the rendition
of services in the ordinary course of business and that are not excluded as
ineligible by virtue of one or more of the criteria set forth below; provided,
however, that such criteria may be fixed and revised from time to time by
Administrative Agent in Administrative Agent's Discretion, including to address
the results of any audit performed by Administrative Agent from time to time
after the Closing Date. In determining the amount to be included, Eligible
Receivables shall be calculated (to the extent not already reflected on the
books and records of the applicable Obligor) net of customer deposits and
unapplied cash remitted to the Obligors, and less any and all returns, rebates,
discounts (which may, at the option of Administrative Agent, be calculated on
shortest terms), credits, allowances or excise taxes of any nature at any time
issued, claimed by Account Debtors, granted or payable in connection with such
Accounts at such time. Eligible Receivables shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 120 days
of original invoice date,
(b) Accounts that are owed by an Account Debtor where more than 50% of
all Accounts owed by such Account Debtor are determined ineligible under
clause (a) above; provided, however, that until Borrower shall have
implemented a system, reasonably satisfactory in all respects to
Administrative Agent, for reporting such Accounts, the amount of Eligible
Accounts shall be reduced by an amount equal to 15% of the Accounts that
are deemed ineligible under clause (a) above instead of excluding Accounts
referred to in this clause (b),
(c) Accounts that the Account Debtor has failed to pay for more than
90 days but less than 120 days after the original invoice date, to the
extent that the aggregate amount of such Accounts exceeds $4,000,000,
<PAGE>
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(d) Accounts with respect to which the Account Debtor is an employee
or Affiliate of any Company,
(e) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a bill and hold or any other terms by reason of which the
payment by the Account Debtor may be conditional,
(f) Accounts that are not payable in Dollars,
(g) Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States; provided,
that if the applicable Account Debtor is a United States division or
subsidiary of a non-United States Person, and such division or subsidiary
is located in any state of the United States, the District of Columbia or
Puerto Rico, the corresponding Account shall not be excluded, or (ii) is
not organized under the laws of the United States, any state thereof, the
District of Columbia or Puerto Rico; provided, however, that if the
applicable Account Debtor is a United States division or subsidiary of a
non-United States Person, and such division or subsidiary is located in any
state of the United States, the District of Columbia or Puerto Rico, the
corresponding Account shall not be excluded, or (iii) is the government of
any foreign country or sovereign state, or of any state, province,
municipality or other political subdivision thereof, or of any department,
agency, public corporation or other instrumentality thereof, unless (x) the
Account is due from Pitney Bowes of Canada Ltd., (y) the Account is
supported by an irrevocable letter of credit satisfactory to Administrative
Agent (as to form, substance and issuer or domestic confirming bank) that
has been delivered to Administrative Agent and is directly drawable by
Administrative Agent or (z) the Account is covered by credit insurance in
form, substance and amount, and by an insurer, satisfactory to
Administrative Agent,
(h) Until the Federal Accounts Trigger Date, 1% of all Accounts, and
thereafter, Accounts with respect to which the Account Debtor is the United
States or any department, agency or instrumentality of the United States
(exclusive, however, of Accounts with respect to which the applicable
Obligor has complied, to the reasonable satisfaction of Administrative
Agent, with the Assignment of Claims Act, 31 U.S.C. ss. 3727),
(i) After the Contra Accounts Trigger Date, Accounts with respect to
which the Account Debtor is a supplier or creditor of any Company (unless
such Person has waived setoff in a manner acceptable to Administrative
Agent), has or has asserted a right of setoff, has disputed its liability,
or has made any claim with respect to its obligation to pay the Account, to
the extent of such claim, right of setoff or dispute,
(j) Accounts with respect to an Account Debtor whose total obligations
owing to Borrower exceed 15% (or, in the case of an Account Debtor whose
long-term debt is rated Investment Grade, 20%) of all Eligible Receivables,
to the extent of the obligations owing by such Account Debtor in excess of
such percentage,
(k) Accounts with respect to which the Account Debtor is known to an
executive or financial officer of Borrower to be subject to an Insolvency
Proceeding or to have gone out of
<PAGE>
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business, or as to which any such executive or financial officer has
received notice of an imminent Insolvency Proceeding with respect to such
Account Debtor or has reason to believe that such Account Debtor is not
able to pay its debts as they become due,
(l) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota or West Virginia (or any other state
that requires a creditor to file a business activity report or similar
document in order to bring suit or otherwise enforce its remedies against
such Account Debtor in the courts or through any judicial process of such
state), unless the applicable Obligor has qualified to do business in New
Jersey, Minnesota, West Virginia or such other states, or has filed a
business activities report with the applicable division of taxation, the
department of revenue or with such other state offices, as appropriate, for
the then-current year, or is exempt from such filing requirement,
(m) Accounts that are not subject to a valid and perfected first
priority Lien in favor of the Creditors securing the Obligations,
(n) Accounts representing any manufacturer's or supplier's credits,
discounts, incentive plans or similar arrangements entitling any Company to
discounts on future purchases therefrom,
(o) Accounts which do not constitute an "account," "instrument" or
"chattel paper" within the meaning of the Uniform Commercial Code of the
state in which the Account is located, and
(p) Accounts which are required to be or have been written off as
uncollectible in accordance with GAAP.
"Eligible Rental Assets" shall mean (without duplication) all Rental Assets
of any Obligor held for sale, rent or lease or rented or leased by any Obligor
as lessor in the ordinary course of business and not deemed by Administrative
Agent (after at least two Business Days' prior notice to Borrower by
Administrative Agent) in Administrative Agent's Discretion to be ineligible for
inclusion in the calculation of Borrowing Base in accordance with clauses (a)
through (c) below. In determining the amount to be so included, such Rental
Assets shall be valued on a net book value basis consistent with Borrower's
consolidated month-end balance sheet. Unless otherwise approved in writing by
Administrative Agent, no Rental Assets shall be deemed Eligible Rental Assets
if:
(a) the Rental Assets are not owned (including owned subject to a
lease) solely by such Obligor and with respect to which such Obligor does
not have good, valid and marketable title, or is held by a third-party for
sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval
or consignment basis;
(b) the Rental Assets are not subject to a perfected first priority
Lien in favor of Administrative Agent except to the extent subject only to
Permitted Liens, provided that the value of any Rental Assets shall be
reduced by the amount of any obligations secured by Permitted Liens which
are prior to the Lien in favor of Administrative Agent; or
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(c) the Rental Assets are not located in any state of the United
States, the District of Columbia or Puerto Rico unless arrangements for the
granting and perfection of a security interest in such Rental Assets have
been made in a manner acceptable to Administrative Agent in its discretion.
"Employee Benefit Plan" shall mean an employee benefit plan (as defined in
Section 3(3) of ERISA) that is maintained or contributed to by any ERISA Entity
or with respect to which Borrower or a Subsidiary could incur liability.
"Environmental Claim" shall mean, with respect to any Person, any written
notice, claim, demand or other communication (collectively, a "claim") by any
other Person alleging such Person's liability for any costs, cleanup costs,
response or corrective action costs, damages to natural resources or other
Property, personal injuries, fines or penalties arising out of or resulting from
(i) the presence, Release or threatened Release into the environment, of any
Hazardous Material at any location, whether or not owned by such Person, or (ii)
any violation of any Environmental Law. The term "Environmental Claim" shall
include any claim by any Person seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from the presence of
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"Environmental Laws" shall mean any and all present and future applicable
laws, rules or regulations of any Governmental Authority, any orders, decrees,
judgments or injunctions and the common law in each case as now or hereafter in
effect, relating to pollution or protection of human health, safety or the
environment, including without limitation, ambient air, indoor air, soil, or
surface water, ground water, land or subsurface strata, and natural resources
such as wetlands, flora or fauna, including, without limitation, those relating
to Releases or threatened Releases of Hazardous Materials into the environment,
or otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, discharge, disposal, collection, transfer, transport or
handling of Hazardous Materials.
"Equity Interests" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or non-voting), of capital of such
Person, including, if such Person is a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership, whether outstanding on the date
hereof or issued after the Effective Date.
"Equity Proceeds" shall mean, as of any date of determination, the
aggregate amount of the net proceeds received by Borrower from the sale or sales
of, or capital contributions with respect to, its Equity Interests or Equity
Rights, after deduction of costs, discounts and commissions incurred in
connection with such sale or sales, to such date of determination.
"Equity Rights" shall mean, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any stockholders' or voting trust agreements) for the
issuance, sale, registration or voting of, or outstanding securities convertible
into, any additional shares of Equity Interests of any class, or partnership or
other ownership interests of any type in, such Person.
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"ERISA" shall mean the United States Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Entity" shall mean any member of an ERISA Group.
"ERISA Event" shall mean (a) any "reportable event," as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Pension
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Pension Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived, the failure to make by its due date a required
installment under Section 412(m) of the Code with respect to any Pension Plan or
the failure to make any required contribution to a Multiemployer Plan; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Pension Plan; (d) the incurrence by any ERISA Entity of any liability under
Title IV of ERISA with respect to the termination of any Pension Plan under
Section 4041(c) or 4042 of ERISA; (e) the receipt by any ERISA Entity from the
PBGC or a plan administrator of any notice relating to an intention to terminate
any Pension Plan under Section 4041(c) or 4042 of ERISA or to appoint a trustee
to administer any Pension Plan, or the occurrence of any event or condition
which could reasonably constitute grounds under ERISA for such termination of or
the appointment of a trustee to administer, any Pension Plan; (f) the incurrence
by any ERISA Entity of any liability with respect to the withdrawal or partial
withdrawal from any Pension Plan or Multiemployer Plan; (g) the receipt by an
ERISA Entity of any notice, or the receipt by any Multiemployer Plan from any
ERISA Entity of any notice, concerning the imposition of Withdrawal Liability or
a determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; (h) the making of
any amendment to any Pension Plan which could result in the imposition of a lien
or the posting of a bond or other security; or (i) the occurrence of a nonexempt
prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could result in any material liability to any
Company.
"ERISA Group" shall mean any Company and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with such Company, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code.
"Event of Default" see Section 10.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Excluded Dispositions" shall mean (i) Dispositions for fair market value
resulting in no more than $5,000,000 in aggregate proceeds in any fiscal year
(not including in the computation of such limit any Dispositions referred to in
clause (vi) of this definition); (ii) an exchange of equipment or inventory for
other equipment or inventory, provided that the Company effecting such exchange
receives at least substantially equivalent value in such exchange for the
Property disposed of; (iii) the attachment or granting of any Permitted Lien,
the making of any Investment permitted by Section 9.09 and the making of any
Dividend Payment permitted by Section 9.10; (iv) the sale or lease of inventory
<PAGE>
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or Rental Assets in the ordinary course of business; (v) the sale of used or
worn out equipment in the ordinary course of business consistent with past
practice; and (vi) any Disposition for fair market value that, together with all
related Dispositions effected as part of a common plan, results in aggregate
proceeds of less than $100,000.
"Excluded Subsidiary" shall mean each Subsidiary existing on the Effective
Date identified on Schedule 1.01(e) as an Excluded Subsidiary, or any Subsidiary
acquired or formed after the Effective Date, in each case unless and until
either (a) such Subsidiary has consolidated assets in excess of $1,000,000 or
(b) such Subsidiary's consolidated revenues for any fiscal year of Borrower
(determined on a pro forma basis in the case of any such Subsidiary acquired or
formed after the Effective Date) exceed 1.0% of Borrower's consolidated revenues
for such fiscal year (and thereafter, and for so long as either of the
conditions in clause (a) or (b) of this sentence remains true, such Subsidiary
shall be deemed not an "Excluded Subsidiary").
"Excluded Taxes" see Section 5.06(a).
"Existing Affiliate Agreements" see Section 9.15.
"fair market value" shall mean, with respect to any Property, a price
(after taking into account any liabilities relating to such Property), as
determined by Borrower in good faith, that is within a reasonable range of
prices which could be negotiated in an arm's-length free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of which is
under any compulsion to complete the transaction.
"Federal Accounts Trigger Date" shall mean the date that Borrower shall
have completed the implementation of a system, reasonably satisfactory in all
respects to Administrative Agent, for reporting the amount of all Accounts
within the meaning of clause (h) of the definition of Eligible Receivables.
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided, however, that (a) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate quoted to Bank on such Business Day on such
transactions by three federal funds brokers of recognized standing, as
determined by Administrative Agent.
"Fee Letter" shall mean the Credit Facilities Fee Letter dated as of August
1, 2001 between Merrill Lynch Capital Corporation and Borrower.
"Final Maturity Date" shall mean the sixth anniversary of the Effective
Date.
<PAGE>
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"Financial Maintenance Covenants" shall mean the covenants set forth in
Sections 9.11(a) and (b).
"Foreign Lender Certificate" see Section 5.06.
"Foreign Plan" shall mean any employee benefit plan, program, policy,
arrangement or agreement (other than a Pension Plan or any other employee
benefit plan subject to ERISA) maintained or contributed to by, or entered into
with, any Company with respect to employees employed outside the United States.
"Foreign Subsidiary" shall mean any direct or indirect Subsidiary organized
outside of the United States as defined in Section 7701(a)(9) of the Code (or
any successor provision).
"Fund" shall mean 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.
"Funding Date" shall mean the date of the making of any extension of credit
hereunder (including the Closing Date).
"GAAP" shall mean, as of any date of determination, generally accepted
accounting principles set forth as of such date in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the U.S. accounting profession), which are
applicable to the circumstances as of such date.
"Governmental Authority" shall mean any government or political subdivision
of the United States or any other country or any agency, authority, board,
bureau, central bank, commission, department or instrumentality thereof or
therein, including, without limitation, any court, tribunal, grand jury or
arbitrator or any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to such government or political
subdivision.
"Guarantee" shall mean the guarantee of each Guarantor pursuant to Section
6.
"Guaranteed Obligations" see Section 6.01.
"Guarantors" shall mean each Subsidiary listed on Schedule 1.01(d) and each
Subsidiary that after the Effective Date guarantees the payment of the
Obligations pursuant to Section 9.20.
"Guaranty Obligation" see the definition of Contingent Obligation.
"Hazardous Material" shall mean any pollutant, contaminant, toxic,
hazardous or extremely hazardous substance, constituent or waste, or any other
constituent, waste, material, compound or substance subject to regulation under
any Environmental Law including, without limitation, petro-
<PAGE>
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leum or any petroleum product, including crude oil or any fraction thereof,
polychlorinated biphenyls, urea-formaldehyde insulation and asbestos.
"in the ordinary course of business" shall mean in the ordinary course of
business of the Companies.
"incur" shall mean, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or to grant or create a Lien upon any Property
of such Person to secure any Indebtedness of another Person (and "incurrence,"
"incurred" and "incurring" shall have meanings correlative to the foregoing).
"Indebtedness" shall mean, for any Person, without duplication, (a) all
indebtedness for borrowed money of such Person; (b) all obligations of such
Person for the deferred purchase price of Property or services (other than trade
payables and accrued expenses arising in the ordinary course of business); (c)
all obligations of such Person to reimburse or prepay any other Person in
respect of amounts paid under letters of credit (including Letters of Credit),
banker's acceptances or similar instruments, whether drawn or undrawn; (d) all
obligations of such Person evidenced by notes, bonds (other than bid or
performance bonds), debentures or similar instruments; (e) all indebtedness of
such Person created or arising under any conditional sale or other title
retention agreement with respect to Property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such Property), but
excluding operating leases; (f) all Capital Lease Obligations of such Person;
(g) all indebtedness of other Persons referred to in clauses (a) through (f)
above secured by (or for which the holder of such indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in Property
(including accounts and contracts rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such indebtedness
(provided that the amount of indebtedness shall be deemed to be limited to the
fair market value of such Property if such Person has not assumed or become
liable for the payment of such indebtedness); (h) all obligations of such Person
under synthetic leases; (i) all obligations of such Person under Swap Contracts;
and (j) all Guaranty Obligations of such Person in respect of indebtedness or
obligations of any other Person of the kinds referred to in clauses (a) through
(i) above. Indebtedness shall not include accounts extended by suppliers in the
ordinary course of business in connection with the purchase of goods and
services. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness (i) provide that such Person is not
liable therefor or (ii) limit the liability of such Person for such
Indebtedness.
"Indemnitee" see Section 12.03(b).
"Insolvency Proceeding" shall mean any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, compositions or proceedings seeking reorganization, arrangement or
other similar relief.
<PAGE>
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"Intellectual Property" see Section 8.21.
"Interest Period" shall mean, with respect to any LIBOR Loan, each period
commencing on the date such LIBOR Loan is made or Converted from an ABR Loan or
the last day of the next preceding Interest Period for such LIBOR Loan and
(subject to the requirements of Section 2.09) ending on the numerically
corresponding day in the first, second, third, sixth or, to the extent available
to the relevant Lenders, ninth or twelfth calendar month thereafter, as Borrower
may select as provided in Section 4.05, except that each Interest Period that
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (i) if any Interest Period for any
Revolving Loan would otherwise end after the R/C Termination Date, such Interest
Period shall end on the R/C Termination Date; (ii) no Interest Period for any
Term B Facility Loan may commence before and end after any Principal Payment
Date, unless, after giving effect thereto, the aggregate principal amount of the
Term B Facility Loans having Interest Periods that end after such Principal
Payment Date shall be equal to or less than the aggregate principal amount of
the Term B Facility Loans scheduled to be outstanding after giving effect to the
payments of principal required to be made on such Principal Payment Date; (iii)
each Interest Period that would otherwise end on a day that is not a Business
Day shall end on the next succeeding Business Day (or, if such next succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day); and (iv) notwithstanding clauses (i) and (ii) above, unless
consented to by the Lead Arranger and Administrative Agent, no Interest Period
shall have a duration of less than one month and, if the Interest Period for any
LIBOR Loan would otherwise be a shorter period, such Loan shall not be available
hereunder as a LIBOR Loan for such period; provided, that the first Interest
Period with respect to Term B Facility Loans that commences after the primary
syndication of the Term B Facility is completed will end on the last Business
Day of the month during which, absent this proviso, such Interest Period would
otherwise end.
"Interest Rate Certificate" shall mean an Officers' Certificate
substantially in the form of Exhibit C-1, delivered pursuant to Section 9.01(e),
demonstrating in reasonable detail the calculation of the Total Leverage Ratio
as of any Test Date.
"Interest Rate Protection Agreement" shall mean, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more financial institutions providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
"Inventory" shall mean, collectively, with respect to each Company, all
"inventory," as such term is defined in the UCC, of such Company wherever
located and of every class, kind and description and, in any event, shall
include, without limitation, (i) all goods (including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by
such Company as lessor and goods that are furnished by such Company under a
contract of service), merchandise, raw materials, work-in-process, returned
goods, finished goods, samples and consigned goods (to the extent of the
consignee's interest therein), materials and supplies of any kind or nature
which are or might be used in connection with the manufacture, printing,
publication, packing, shipping, advertising, selling or finishing of any such
goods and all other products, goods, materials and supplies, (ii) all inventory
as is temporarily out of such Company's custody or possession, items in transit
and any re-
<PAGE>
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turns and repossessions upon any Accounts and (iii) all substitutions therefor
or replacements thereof, and all additions and accessions thereto.
"Investment" shall mean, for any Person: (a) the acquisition (whether for
cash, Property, services, securities or otherwise) of Equity Interests, Equity
Rights, bonds, notes, debentures or other securities of any other Person; (b)
the making of any deposit with, or advance, loan or other extension of credit
to, any other Person (including the purchase of Property from another Person
subject to an understanding or agreement, contingent or otherwise, to resell
such Property to such Person); (c) any capital contribution to (by means of any
transfer of cash or other Property to others or any payment for Property or
services for the account or use of others) any other Person; and (d) the
entering into, or direct or indirect incurrence, of any Guaranty Obligation with
respect to Indebtedness or other liability of any other Person. In determining
the aggregate amount of Investments outstanding at any particular time: (a) the
amount of any Investment represented by a Guaranty Obligation shall be equal to
the lesser of (i) the principal amount of the Indebtedness or other obligation
guaranteed thereby that is still outstanding and (ii) the amount, if any, to
which such Guaranty Obligation is expressly limited; (b) there shall be deducted
in respect of each such Investment any amount received as a dividend on, or a
repurchase, redemption, retirement or repayment of, such Investment and (c) the
amount of any Investment shall not be increased or decreased on account of any
change in the value thereof.
"Investment Grade" shall mean a credit rating of at least Baa3 (or the
equivalent) by Moody's, together with a rating of at least BBB- (or the
equivalent) by S&P.
"Joinder Agreement" shall mean a Joinder Agreement substantially in the
form of Exhibit H.
"Landlord Consents" shall mean a landlord lien waiver and access agreement,
substantially in the form of Exhibit J-1 hereto, bailee letter, substantially in
the form of Exhibit J-2 hereto, or acknowledgment agreement of any lessor,
warehouseman, processor, consignee or other Person in possession of, having a
Lien upon or having rights or interests in the Inventory, in each case, in form
and substance satisfactory to Administrative Agent.
"Laws" shall mean, collectively, all common law and all international,
foreign, federal, state and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes and administrative or judicial precedents,
including without limitation the interpretation thereof by any Governmental
Authority charged with the enforcement thereof.
"L/C Documents" shall mean, with respect to any Letter of Credit,
collectively, any other agreements, instruments, guarantees or other documents
(whether general in application or applicable only to such Letter of Credit)
governing or providing for (a) the rights and obligations of the parties
concerned or at risk with respect to such Letter of Credit or (b) any collateral
security for any of such obligations, each as the same may be modified and
supplemented and in effect from time to time.
"L/C Interest" shall mean, for each Revolving Lender, such Lender's
participation interest (or, in the case of any L/C Lender, such L/C Lender's
retained interest) in the L/C Lenders' li-
<PAGE>
-22-
abilities under Letters of Credit and such Lender's rights and interests in
Reimbursement Obligations and fees, interest and other amounts payable in
connection with Letters of Credit and Reimbursement Obligations.
"L/C Lender" shall mean Administrative Agent, Bank or the respective
Affiliates of either, and any other Lender or Lenders, or Affiliates of any
Lender or Lenders, selected by Borrower that shall have agreed in writing to be
an L/C Lender hereunder, as the issuer of Letters of Credit under Section 2.03,
together, in each case, with its successors and assigns in such capacity.
"L/C Liability" shall mean, without duplication, at any time and in respect
of any Letter of Credit, the sum of (a) the undrawn available amount of such
Letter of Credit, plus (b) the aggregate unpaid principal amount of all
Reimbursement Obligations at such time due and payable in respect of all
drawings made under such Letter of Credit.
"Lead Arranger" see the introduction hereto.
"Lender" and "Lenders" see the introduction hereto.
"Letter of Credit" see Section 2.03.
"LIBO Rate" shall mean, for any LIBOR Loan for any Interest Period
therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) determined by Bank for Administrative Agent to be equal to the LIBOR Base
Rate for such Loan for such Interest Period divided by 1 minus the Reserve
Requirement (if any) for such Loan for such Interest Period.
"LIBOR Base Rate" shall mean, as applicable to any LIBOR loan for any
Interest Period therefor, the rate per annum (rounded upward, if necessary, to
the nearest 1/32 of 1%) as determined by Bank for Administrative Agent on the
basis of the offered rates for deposits in Dollars, for a term comparable to
such Interest Period which appears on the Telerate page 3750 as of 11:00 a.m.
(London time) on the day that is two (2) Business Days preceding the first day
of such Interest Period, provided, however, that if the rate described above
does not appear on the Telerate System on any applicable interest determination
date, the LIBOR Base Rate shall be the rate (rounded upward as described above,
if necessary) for deposits in Dollars for a period substantially equal to the
interest on the Reuters Page "LIBO" (or such other page as may replace the LIBO
Page on that service for the purpose of displaying such rates), as of 11:00 a.m.
(London Time), on the day that is two (2) Business Days prior to the beginning
of such Interest Period. If both the Telerate and Reuters systems are
unavailable, then the rate for that date will be determined on the basis of the
offered rates for deposits in Dollars for a time comparable to such Interest
Period which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. (London time), on the day that is two (2) Business Days
preceding the first day of such Interest Period as selected by Bank for
Administrative Agent. The principal office of each of the major London banks so
selected will be requested to provide a quotation of its Dollar deposit offered
rate. If at least two (2) such quotations are provided, the rate for that date
will be the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that date will be determined on the basis of
the rates quoted for loans in Dollars to leading European banks for a period of
time comparable to such Interest Period offered by major banks in New York City
at approximately 11:00 a.m. (New York City time), on the day that is
<PAGE>
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two (2) Business Days preceding the first day of such Interest Period. In the
event that Bank is unable to obtain any such quotation for Administrative Agent
as provided above, it will be deemed that the LIBOR Base Rate for such Interest
Period cannot be determined.
"LIBOR Loans" shall mean Loans that bear interest at rates based on rates
referred to in the definition of "LIBO Rate" in this Section 1.01.
"Lien" shall mean, with respect to any Property, any mortgage, lien,
pledge, claim, charge, security interest or encumbrance of any kind, any other
type of preferential arrangement in respect of such Property having the effect
of a security interest, including any easement, right-of-way or other
encumbrance on title to Real Property.
"Loans" shall mean the Revolving Loans, the Swing Loans and the Term B
Facility Loans.
"Losses" of any Person shall mean the losses, liabilities, claims
(including those based upon negligence, strict or absolute liability and
liability in tort), damages, reasonable expenses, obligations, penalties,
actions, judgments, encumbrances, liens, penalties, fines, suits, reasonable and
documented costs or disbursements of any kind or nature whatsoever (including
reasonable fees and expenses of counsel in connection with any Proceeding
commenced or threatened in writing, whether or not such Person shall be
designated a party thereto) at any time (including following the payment of the
Obligations) incurred by, imposed on or asserted against such Person.
"Majority Lenders" shall mean (i) at any time prior to the Closing Date,
Lenders holding at least a majority of the aggregate principal amount of the
Commitments, and (ii) at any time after the Closing Date, Lenders holding at
least a majority of the sum of (without duplication) (a) the aggregate principal
amount of outstanding Loans (including outstanding Swing Loans for this purpose
as being Loans of each Lender in an amount equal to the aggregate principal
amount of Swing Loans outstanding multiplied by the R/C Percentage of such
Lender), plus (b) the Dollar Equivalent of the aggregate amount of all L/C
Liabilities, plus (c) the aggregate Unutilized R/C Commitments then in effect
(calculated for this purpose as if all outstanding Swing Loans were, instead,
Revolving Loans made by the Revolving Lenders in amounts equal to their
respective R/C Percentages of the aggregate amount of such outstanding Swing
Loans); provided, however, that (a) for purposes of this definition only, at any
time of determination, the sum of Obligations and Commitments held by Pitney
Bowes Inc. and its Affiliates shall be deemed to be the lesser of (x)
$25,000,000 and (y) the amount of Obligations and Commitments actually held by
Pitney Bowes Inc. and such Affiliates at such time (for the avoidance of doubt
and without duplication, the denominator being used to calculate the majority in
principal amount shall be reduced by the amount of any adjustments required by
this proviso) and (b) from and after the time that, due solely to sales of their
Obligations and Commitments in bona fide arms'-length transactions to Persons
that are not Affiliates of Pitney Bowes Inc. or any of its Affiliates, Pitney
Bowes Inc. and such Affiliates hold, in the aggregate, $25,000,000 or less in
Obligations and Commitments, the provisions of the immediately preceding clause
(a) shall no longer be effective, regardless of whether after such time, Pitney
Bowes Inc. and such Affiliates hold, in the aggregate, in excess of $25,000,000
in Obligations and Commitments.
<PAGE>
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"Majority Revolving Lenders" shall mean (i) at any time prior to the
Closing Date, Lenders holding at least a majority of the aggregate amount of the
Revolving Commitment and (ii) at any time after the Closing Date, Lenders
holding at least a majority of the sum of (without duplication) (a) the
aggregate principal amount of outstanding Revolving Loans, plus (b) the Dollar
Equivalent of the aggregate amount of all L/C Liabilities, plus (c) the
aggregate Unutilized R/C Commitments then in effect (calculated for this purpose
as if all outstanding Swing Loans were, instead, Revolving Loans made by the
Revolving Lenders in amounts equal to their respective R/C Percentages of the
aggregate amount of such outstanding Swing Loans), plus (d) the aggregate amount
of Swing Loans then outstanding (treating an amount equal to the aggregate
principal amount of Swing Loans outstanding multiplied by the R/C Percentage of
each Lender as being held by such Lender for purposes of this definition).
"Margin Stock" shall mean margin stock within the meaning of Regulations U
and X.
"Material Adverse Change" shall mean a material adverse change in the
business, results of operations, financial condition or prospects of the
Companies, taken as a whole.
"Material Adverse Effect" shall mean an event, circumstance, occurrence, or
condition which has caused as of any date of determination any of (a) a material
adverse effect on the business, results of operations, financial condition or
prospects of the Companies, taken as a whole, (b) a material adverse effect on
the ability of the Obligors to consummate in a timely manner the Transactions or
to perform any of their material obligations under any Credit Document or (c) a
material adverse effect on the legality, binding effect or enforceability of any
Credit Document or any of the material rights and remedies of any Creditor
thereunder or the legality, priority or enforceability of the Lien on a material
portion of the Collateral.
"Merrill Lynch" see the introduction to this Agreement.
"Minority Interest" shall mean an Investment in any Person that is not a
Subsidiary (including any joint venture).
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA (i) to which any ERISA Entity is then making or
accruing an obligation to make contributions, (ii) to which any ERISA Entity has
within the preceding five plan years made contributions, including any Person
which ceased to be an ERISA Entity during such five year period, or (iii) with
respect to which any Company could incur liability.
"NAIC" shall mean the National Association of Insurance Commissioners.
"Net Available Proceeds" shall mean:
(i) in the case of any Disposition Event, the amount of Net Cash
Payments received by the Person consummating such Disposition Event in
connection with such Disposition Event;
<PAGE>
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(ii) in the case of any Casualty Event, the aggregate amount of cash
proceeds of insurance, condemnation awards and other compensation received
by the Company whose Property was subject to such Casualty Event in respect
of such Casualty Event net of (A) fees and expenses incurred by such
Company in connection with recovery thereof, (B) repayments of Indebtedness
(other than the Obligations) to the extent secured by a Lien on such
Property that is permitted by the Credit Documents, (C) amounts required to
be paid to any Person (other than a Company) owning a direct or indirect
beneficial interest in the subject Property and (D) any taxes paid or
payable by any Company in respect of the amount so recovered (after
application of all credits and other offsets); and
(iii) in the case of any Debt Issuance, the aggregate amount of all
cash received in respect thereof by the Company consummating such Debt
Issuance in respect thereof net of (x) all investment banking fees,
discounts and commissions, legal fees, consulting fees, accountants' fees,
underwriting discounts and commissions and other fees and expenses,
actually incurred in connection therewith and (y) in the case of any Debt
Issuance by a Person that is not a Qualified Company, any amount required
to be paid to any Person (other than a Company) owning a direct or indirect
interest in the Person effecting such Debt Issuance in connection with the
payment by such Person of such proceeds to a Qualified Company.
"Net Cash Payments" shall mean, with respect to any Disposition Event, the
aggregate amount of all cash payments (including any cash payments received by
way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or otherwise, but only as and
when received) received by any Company directly or indirectly in connection with
such Disposition Event, net (without duplication) of (i) the amount of all fees
and expenses paid by any Company in connection with such Disposition Event (the
"Relevant Disposition"); (ii) any taxes paid or estimated to be payable by any
Company as a result of the Relevant Disposition or, in the case of payment
received by any Foreign Subsidiary, repatriation of the proceeds thereof to the
United States (after application of all credits and other offsets); (iii) any
repayments by any Company of Indebtedness (other than the Obligations) to the
extent that such Indebtedness is secured by a Lien on such Property that is
permitted by the Credit Documents; (iv) amounts required to be paid to any
Person (other than any Company) owning a direct or indirect beneficial interest
in the subject Property; and (v) amounts reserved, in accordance with GAAP,
against any liabilities associated with such Relevant Disposition and retained
by any Company after such Relevant Disposition and related thereto, including
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Relevant Disposition.
"Non-Qualified Subsidiary" shall mean any Subsidiary other than a Qualified
Subsidiary.
"Non-U.S. Lender" see Section 5.06(b).
"Notes" shall mean the Revolving Notes, the Term B Facility Notes and the
Swing Loan Notes.
<PAGE>
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"Notice of Borrowing" shall mean a notice of borrowing substantially in the
form of Exhibit F.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing by any
Obligor to any Creditor or any of its Related Parties or their respective
successors, transferees or assignees pursuant to the terms of any Credit
Document or any Swap Contract (including, without duplication, any Interest Rate
Protection Agreement) relating to the Loans or secured by any of the Security
Documents, whether or not the right of such Person to payment in respect of such
obligations and liabilities is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured and whether or not such claim is discharged, stayed or
otherwise affected by any bankruptcy case or insolvency or liquidation
proceeding.
"Obligors" shall mean Borrower and the Guarantors.
"Officers' Certificate" shall mean, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the Board,
its Chief Executive Officer, its President, any of its Vice Presidents (or an
equivalent officer), its Chief Financial Officer, its Secretary, its Treasurer
(or an equivalent officer), any Assistant Treasurer, its Controller or any
Assistant Secretary, in their official (and not individual) capacities.
"Offshore Currency" shall mean the yen or the euro.
"Offshore Currency Buffer" see Section 2.03(k).
"Organic Document" shall mean, relative to any Person, its certificate of
incorporation, its by-laws, its partnership agreement, its memorandum and
articles of association, share designations or similar organization documents
and all shareholder agreements, voting trusts and similar arrangements to which
it is a party applicable to any of its authorized Equity Interests.
"Original Lenders" shall mean the Lenders named on the signature pages
hereof who were Lenders at the Effective Date.
"Other Taxes" see Section 5.06(c).
"Participant" see Section 12.05(d).
"Payment Date" shall mean any Principal Payment Date and each date on which
interest is due and payable on any Loan.
"Payor" see Section 4.06.
"PBGC" shall mean the United States Pension Benefit Guaranty Corporation or
any successor thereto.
<PAGE>
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"Pension Plan" shall mean an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code or Section 302 of ERISA
and is maintained or contributed to by any ERISA Entity or with respect to which
any Company could incur liability.
"Permits" see Section 8.16.
"Permitted Acquisition" shall mean any Acquisition effected in compliance
with Section 9.06(h).
"Permitted Customary Liens" shall mean (a) Liens imposed by any
Governmental Authority for taxes, assessments or charges not yet due or which
(i) are being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the Companies, in
accordance with GAAP or (ii) in the aggregate would not have a Material Adverse
Effect; (b) Liens imposed by law which were incurred in the ordinary course of
business, such as carriers', warehousemen's, landlords' and mechanics' Liens and
other similar Liens, in each case for sums the payment of which is not then
required to have been made by Section 9.03; (c) pledges or deposits under
workers' compensation, unemployment insurance and other social security
legislation (including the Federal Employer's Liability Act) or deposits
securing the liability to insurance carriers, in each case arising in the
ordinary course of business; provided, however, that such Liens shall only
extend to or cover cash and Cash Equivalents not in the Designated Deposit
Accounts in an aggregate amount not to exceed $8,000,000 at any time
outstanding; (d) pledges or 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 under insurance or self insurance
agreements; (e) easements, rights-of-way, restrictions or defects or
irregularities in title incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Real Property or minor imperfections in title thereto
which, in the aggregate, do not materially detract from the value of the Real
Property subject thereto or interfere with the ordinary conduct of the business
of any Company; (f) Liens consisting of judgment or judicial attachment Liens
which do not result in an Event of Default under Section 10(h) or (n); (g) any
obligations or duties affecting any of the Property of any Company to any
municipality or public authority with respect to any franchise, grant, license
or permit which do not materially impair the use of such Property for the
purposes for which it is held; (h) leases or subleases granted to third Persons
not interfering in any material respect with the business of any Company; (i)
Liens arising from UCC financing statements regarding leases permitted by this
Agreement; (j) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of custom duties in connection with the
importation of goods so long as such Liens attach only to the imported goods;
(k) Liens arising out of consignment or similar arrangements for the sale of
goods entered into by any Company in the ordinary course of business; (l) Liens
that are contractual, statutory or common law rights of setoff; and (m) Liens on
Intellectual Property to the extent such Liens arise from the granting of
licenses to use such Intellectual Property in the ordinary course of business of
any Company; provided, however, that (x) with respect to clauses (a), (b), (c),
and (d) hereof (i) the obligations secured by such Liens are not yet delinquent
or, to the extent such amounts are so delinquent, such amounts are being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP, or (ii) in the aggregate such
Liens would
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not have a Material Adverse Effect and (y) in the case of any such Lien against
any of the Collateral, such Lien and the contest thereof shall satisfy the
Contested Collateral Lien Conditions.
"Permitted Investments" shall mean: (a) operating deposit accounts and
certificates of deposit with banks in the ordinary course of business; (b)
Investments that constitute Indebtedness or Contingent Obligations permitted
under Section 9.08; (c) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business and prepayments and other credits to
suppliers made in the ordinary course of business; (d) pledges or deposits in
connection with workers' compensation, unemployment insurance and other social
security or similar legislation; (e) pledges or deposits in connection with (i)
the performance of bids, trade contracts (other than for borrowed money), leases
or statutory obligations, (ii) contingent obligations on surety or appeal bonds,
and (iii) other non-delinquent obligations of a like nature, in each case
incurred in the ordinary course of business; (f) investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the ordinary course of
business; (g) Capital Expenditures (other than Acquisitions), expenditures
referred to in clauses (i) through (viii) of the proviso to the definition of
Capital Expenditure and Liens not prohibited by this Agreement; and (h) cash and
Cash Equivalents.
"Permitted Liens" see Section 9.07.
"Permitted Obligations" shall mean: (a) Contingent Obligations in respect
of operating leases; (b) Indebtedness and Contingent Obligations arising from
honoring a check, draft or similar instrument against insufficient funds;
provided, however, that such Indebtedness is extinguished within five Business
Days of its incurrence; (c) Swap Contracts entered into in the ordinary course
of business as a bona fide hedge and not for speculative purposes; (d)
Contingent Obligations in connection with Excluded Dispositions or Dispositions
permitted under Section 9.06, arising in connection with indemnification and
other agreements in respect of any contract relating to such Excluded
Disposition or Disposition (expressly excluding, however, any Contingent
Obligation in respect of any obligation of any third Person incurred in
connection with the acquisition of the Property which is the subject of such
Excluded Disposition or Disposition); (e) Indebtedness or Contingent Obligations
of any Company to (including obligations in respect of letters of credit for the
benefit of) any Person providing workers' compensation, health, disability or
other employee benefits or property, casualty or liability insurance to any
Company; and (f) Indebtedness or Contingent Obligations of any Company in
respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations and trade letters of credit, in each case provided in the ordinary
course of business, including those incurred to secure health, safety and
environmental obligations in the ordinary course of business.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"Pledged Collateral" shall mean all Property pledged pursuant to the
Security Agreement.
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"Principal Office" shall mean the principal office of Administrative Agent,
located on the Effective Date at 200 Glastonbury Boulevard, Glastonbury,
Connecticut 06033, or such other office as may be designated by Administrative
Agent.
"Principal Payment Date" shall mean, with respect to the Term B Facility
Loan, each Quarterly Date or other date set forth on Schedule 3.01(b) on which a
payment of principal is due with respect to the Term B Facility Loan.
"Prior Liens" shall mean Liens which, pursuant to the provisions of any
Security Document, are or may be superior to the Lien of such Security Document.
"Proceeding" shall mean any claim, counterclaim, action, judgment, suit,
hearing, governmental investigation, arbitration or proceeding by or before any
Governmental Authority, whether judicial or administrative, or arbitrator.
"Profit Payment Agreement" shall mean any agreement to make any payment the
amount of which is, or the terms of payment of which are, in any respect subject
to or contingent upon the revenues, income, cash flow, earnings or profits (or
the like) of any Person or business, other than any such agreements with
officers, directors or employees of the Borrower pursuant to employment
arrangements entered into in the ordinary course of business.
"Pro Forma Balance Sheet" see Section 8.02(D).
"Pro Forma Date" see Section 8.02(D).
"Property" shall mean any right, title or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including Equity Interests or other ownership
interests in any Person.
"Qualified Capital Stock" shall mean with respect to any Person any Equity
Interests of such Person which are not Disqualified Capital Stock.
"Qualified Company" shall mean Borrower and each Qualified Subsidiary.
"Qualified Subsidiary" shall mean any Wholly Owned Subsidiary of Borrower
that is or is required to be a Guarantor and a party to the Security Agreement.
"Quarter" shall mean each three month period ending on March 31, June 30,
September 30 and December 31.
"Quarterly Dates" shall mean the last Business Day of each Quarter in each
year, commencing with the last Business Day of the first full Quarter after the
Closing Date; provided, however, that solely for purposes of Sections 2.05(a)
and (b), the Quarterly Dates shall commence with the last Business Day of the
first full Quarter after the Effective Date.
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"R/C Percentage" shall mean, with respect to any Revolving Lender, the
ratio of (a) the amount of the Revolving Commitment of such Lender to (b) the
aggregate amount of the Revolving Commitments of all of the Lenders.
"R/C Termination Date" shall mean the date that is the fifth anniversary of
the Effective Date.
"Real Property" shall mean all right, title and interest of any Company
(including, without limitation, any leasehold estate) in and to a parcel of real
property owned or operated by any Company, whether by lease, license or other
use or occupancy agreement, together with, in each case, all improvements and
appurtenant fixtures, equipment, personal property, easements and other property
and rights incidental to the ownership, lease or operation thereof or thereon.
"redeem" shall mean redeem, repurchase, repay, defease or otherwise acquire
or retire for value; and "redemption" and "redeemed" have correlative meanings.
"refinance" shall mean refinance, renew, extend, replace, defease or
refund, in whole or in part, including successively; and "refinancing" and
"refinanced" have correlative meanings.
"Register" see Section 12.05(c).
"Regulation D" shall mean Regulation D (12 C.F.R. Part 204) of the Board of
Governors of the United States Federal Reserve System.
"Regulations U and X" shall mean, respectively, Regulation U (12 C.F.R.
Part 221) and Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
United States Federal Reserve System (or any successor), as the same may be
modified and supplemented and in effect from time to time.
"Regulatory Change" shall mean, with respect to any Lender, any change
after the Effective Date in United States Federal, state or foreign law or
regulations (including Regulation D) or the adoption or making after such date
of any interpretation, directive or request applying to a class of banks or
other financial institutions including such Lender of or under any Federal,
state or foreign law or regulations (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) by any court or
governmental or monetary authority or any other regulatory agency with proper
authority, including non-governmental agencies or bodies, charged with the
interpretation or administration thereof or by the NAIC.
"Reimbursement Obligations" shall mean, at any time, the obligations of
Borrower then outstanding, or that may thereafter arise in respect of all
Letters of Credit then outstanding, to reimburse amounts paid by L/C Lender in
respect of any drawings under a Letter of Credit.
"Related Parties" see Section 11.01.
"Related Person" of any Person shall mean any other Person owning directly
or indirectly (a) 10% or more of the outstanding common stock of such Person or
(b) 10% or more of the
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Voting Equity Interests of such Person in each case, excluding any Person that
files a Schedule 13G with respect to such Person pursuant to the Exchange Act
(and is qualified to do so).
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the environment.
"Rental Assets" shall mean the assets of the Companies which are leased or
rented, or held for lease, rent or sale to their customers in the ordinary
course of business; provided, however, that any such assets that are held by any
Company and that are not the subject of a lease, contract or other agreement
with a customer of such Company shall not be included as Rental Assets but shall
instead be included as Inventory.
"Replaced Lender" see Section 2.11.
"Replacement Lender" see Section 2.11.
"Required Payment" see Section 4.06.
"Requirement of Law" shall mean as to any Person, the Organic Documents of
such Person, and any Law or determination of any Governmental Authority, in each
case applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Requisite Tranche Lenders" shall mean (i) with respect to Lenders having
Revolving Commitments or Revolving Loans, Majority Revolving Lenders, and (ii)
with respect to Lenders having Term B Facility Loans or Term B Facility
Commitments, Lenders having at least a majority of the aggregate sum of the Term
B Facility Loans and Term B Facility Commitments then outstanding; provided,
however, that (a) for the purposes of clause (ii) of this definition only, at
any time of determination, the amount of Term B Facility Loans and Term B
Facility Commitments held by Pitney Bowes Inc. and its Affiliates shall be
deemed to be the lesser of (x) $25,000,000 and (y) the amount of Term B Facility
Loans and Term B Facility Commitments actually held by Pitney Bowes Inc. and
such Affiliates at such time (for the avoidance of doubt and without
duplication, the denominator being used to calculate the majority in principal
amount shall take into account any adjustments required by this proviso) and (b)
from and after the time that, due solely to sales of their Obligations and
Commitments in bona fide arms'-length transactions to Persons that are not
Affiliates of any of Pitney Bowes Inc. or its Affiliates, Pitney Bowes Inc. and
such Affiliates hold, in the aggregate, $25,000,000 or less in Obligations and
Commitments, the provisions of the immediately preceding clause (a) shall no
longer be effective, regardless of whether after such time, Pitney Bowes Inc.
and such Affiliates hold, in the aggregate, in excess of $25,000,000 in
Obligations and Commitments.
"Reserve Requirement" shall mean, for any Interest Period for any LIBOR
Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the United States Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
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"Reserves" shall mean such reserves, if any, as Administrative Agent may
establish in such amounts, and with respect to such matters, as Administrative
Agent may deem necessary or appropriate in Administrative Agent's Discretion,
against the amount of Revolving Loans and Swing Loans which the Obligors may
otherwise request under Section 2.01, with respect to (a) sums chargeable to the
Obligors as Revolving Loans or Swing Loans under any section of this Agreement,
(b) amounts owing by any Obligor to any Person to the extent secured by any Lien
(other than Liens permitted under this Agreement) on, or trust over, any
Property of any Obligor and (c) a sum equal to three months' rent for each
Inventory location that is not subject to a Landlord Consent executed by the
lessor, warehouseman or other third party in favor of Administrative Agent for
the benefit of Lenders and as to which Borrower has made the election referred
to in clause (c)(i) of the definition of Eligible Inventory.
"Responsible Officer" shall mean, with respect to any Company, the chief
executive officer, the president, the chief financial officer, any vice
president, the treasurer, any assistant treasurer, the controller, the secretary
or any assistant secretary of such Company.
"Revolving Commitment" shall mean, for each Revolving Lender, the
obligation of such Lender to make Revolving Loans in an aggregate principal
amount at any one time outstanding up to but not exceeding the amount set
opposite the name of such Lender on Annex A under the caption "Revolving
Commitment" (as the same may be reduced from time to time pursuant to Section
2.04 or changed pursuant to Section 12.05(b)). The initial aggregate amount of
the Revolving Commitments of all Lenders is $125,000,000.
"Revolving Facility" shall mean the credit facility comprising the
Revolving Commitments.
"Revolving Facility Maturity Date" shall mean the fifth anniversary of the
Closing Date.
"Revolving Lenders" shall mean (a) on the Effective Date, the Original
Lenders having Revolving Commitments, as indicated on Annex A hereto, and (b)
thereafter, the Lenders from time to time holding Revolving Loans and/or
Revolving Commitments after giving effect to any assignments thereof und