EXHIBIT 10.16
INTERNAL WORKING DRAFT
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COMPOSITE COPY
OF CREDIT AGREEMENT
AMONG MODUS MEDIA INTERNATIONAL, INC.
AS BORROWER AND THE OTHER PARTIES THERETO
AS AMENDED BY
THE FIRST AMENDMENT TO CREDIT AGREEMENT DATED AS
OF FEBRUARY 18,1998,
THE SECOND AMENDMENT TO CREDIT AGREEMENT
DATED AS OF FEBRUARY 27, 1998,
THE THIRD AMENDMENT TO CREDIT
AGREEMENT DATED AS OF AUGUST 10, 1998,
THE FOURTH AMENDMENT TO
CREDIT AGREEMENT AND WAIVER DATED AS OF NOVEMBER 6, 1998,
THE FIFTH AMENDMENT TO CREDIT AGREEMENT DATED
AS OF DECEMBER 31, 1998,
THE SIXTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER DATED AS
OF MAY 10, 1999,
THE SEVENTH AMENDMENT TO CREDIT AGREEMENT AND
WAIVER DATED AS OF JUNE 25, 1999,
AND
THE EIGHTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER
DATED AS OF SEPTEMBER 30, 1999
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COMPOSITE COPY
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CREDIT AGREEMENT
among
MODUS MEDIA INTERNATIONAL, INC.,
AS BORROWER,
MODUS MEDIA INTERNATIONAL HOLDINGS, INC.,
VARIOUS LENDING INSTITUTIONS,
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES, INC.,
AS ARRANGER AND SYNDICATION AGENT,
CITICORP USA, INC.,
AS DOCUMENTATION AGENT, COLLATERAL AGENT
AND MULTI-CURRENCY AGENT
and
NATIONSBANK OF TEXAS, N.A.,
AS ADMINISTRATIVE AGENT
________________________
Dated as of December 15, 1997
________________________
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TABLE OF CONTENTS
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Page
SECTION 1. Amount and Terms of Credit............................................................. 2
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1.01 Commitments............................................................................ 2
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1.02 Minimum Borrowing Amounts, Etc......................................................... 8
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1.03 Notice of Borrowing.................................................................... 8
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1.04 Disbursement of Funds.................................................................. 10
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1.05 Notes 11
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1.06 Conversions............................................................................ 11
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1.07 Pro Rata Borrowings.................................................................... 12
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1.08 Interest............................................................................... 12
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1.09 Interest Periods....................................................................... 13
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1.10 Increased Costs, Illegality, Etc....................................................... 14
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1.11 Compensation........................................................................... 17
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1.12 Change of Lending Office............................................................... 18
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1.13 Replacement of Banks................................................................... 18
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1.14 Additional Borrowers and Credit Parties................................................ 19
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1.15 Borrower Liability..................................................................... 19
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SECTION 2. Letters of Credit...................................................................... 19
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2.01 Letters of Credit...................................................................... 19
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2.02 Letter of Credit Requests; Notices of Issuance......................................... 22
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2.03 Agreement to Repay Letter of Credit Drawings........................................... 23
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2.04 Letter of Credit Participations........................................................ 24
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2.05 Increased Costs........................................................................ 26
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SECTION 3. Fees; Commitments...................................................................... 27
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3.01 Fees 27
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3.02 Voluntary Termination or Reduction of Commitments...................................... 28
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3.03 Mandatory Adjustments of Commitments, Etc.............................................. 29
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SECTION 4. Payments............................................................................... 29
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Voluntary Prepayments.................................................................. 29
4.01 ---------------------
Mandatory Prepayments.................................................................. 30
4.02 ---------------------
Method and Place of Payment............................................................ 34
4.03 ---------------------------
Net Payments........................................................................... 35
4.04 ------------
SECTION 5. Conditions Precedent.................................................................... 37
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5.01 Execution of Agreement; Notes.......................................................... 37
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5.02 No Default; Representations and Warranties............................................. 37
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5.03 Officer's Certificate.................................................................. 38
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5.04 Opinions of Counsel.................................................................... 38
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5.05 Corporate Proceedings.................................................................. 38
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5.06 Adverse Change, Etc.................................................................... 39
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5.07 Litigation............................................................................. 39
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5.08 Approvals.............................................................................. 39
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5.09 Consummation of the Transaction........................................................ 40
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5.10 Security Documents..................................................................... 40
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5.11 Guaranties............................................................................. 41
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5.12 CST Guaranty........................................................................... 42
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5.13 Plans; Existing Indebtedness Agreements; Shareholders' Agreements; Management
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Agreements; Employment Agreements; Non-Compete Agreements; Tax Allocation Agreements;
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Material Contracts..................................................................... 42
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5.14 Solvency Certificate; Evidence of Insurance; Financial Statements...................... 43
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5.15 Pro Forma Balance Sheet................................................................ 44
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5.16 Projections............................................................................ 44
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5.17 Existing Indebtedness.................................................................. 44
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5.18 Field Examinations; Initial Borrowing Base Certificate................................. 45
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5.19 Due Diligence.......................................................................... 45
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5.20 Payment of Fees........................................................................ 45
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5.21 Total Unutilized Commitment............................................................ 46
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5.22 Notice of Borrowing; Letter of Credit Request.......................................... 46
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5.23 Process Agent Letters.................................................................. 46
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5.24 Proceeds............................................................................... 46
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SECTION 6. Representations, Warranties and Agreements............................................. 47
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6.01 Corporate Status....................................................................... 47
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6.02 Corporate Power and Authority.......................................................... 47
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6.03 No Violation........................................................................... 48
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6.04 Litigation............................................................................. 48
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6.05 Use of Proceeds: Margin Regulations................................................... 48
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6.06 Approvals.............................................................................. 49
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6.07 Investment Company Act................................................................. 49
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6.08 Public Utility Holding Company Act..................................................... 49
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6.09 True and Complete Disclosure........................................................... 49
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6.10 Financial Condition; Financial Statements.............................................. 50
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6.11 Security Interests..................................................................... 51
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6.12 Representations and Warranties in Other Documents...................................... 52
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6.13 Transaction............................................................................ 52
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6.14 Compliance with ERISA.................................................................. 52
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6.15 Capitalization......................................................................... 53
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6.16 Subsidiaries........................................................................... 54
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6.17 Intellectual Property.................................................................. 54
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6.18 Compliance with Statutes, Etc.......................................................... 54
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6.19 Environmental Matters.................................................................. 54
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6.20 Properties............................................................................. 55
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6.21 Labor Relations........................................................................ 55
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6.22 Tax Returns and Payments............................................................... 55
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6.23 Existing Indebtedness.................................................................. 56
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6.24 Investments............................................................................ 56
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6.25 Stamp Tax.............................................................................. 56
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6.26 Immunity............................................................................... 57
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6.27 Proper Legal Form...................................................................... 57
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6.28 Borrowing Base Availability............................................................ 57
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6.29 MMI-Singapore.......................................................................... 58
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SECTION 7. Affirmative Covenants.................................................................. 58
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7.01 Information Covenants.................................................................. 58
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7.02 Books, Records and Inspections......................................................... 62
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7.03 Insurance.............................................................................. 62
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7.04 Payment of Taxes....................................................................... 63
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7.05 Corporate Franchises................................................................... 63
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7.06 Compliance with Statutes, Etc.......................................................... 63
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7.07 Compliance with Environmental Laws..................................................... 63
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7.08 ERISA.................................................................................. 64
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7.09 Good Repair............................................................................ 64
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7.10 End of Fiscal Years; Fiscal Quarters................................................... 65
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7.11 Additional Security Further Assurances................................................. 65
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7.12 Interest Rate Protection............................................................... 66
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7.13 Register............................................................................... 66
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7.14 Foreign Subsidiaries Security.......................................................... 67
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7.15 Compliance with Terms of Leaseholds.................................................... 68
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7.16 Performance of Transaction Documents................................................... 68
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7.18 Cash Collateral Accounts............................................................... 68
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7.19 Conditions Subsequent to Closing....................................................... 68
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SECTION 8. Negative Covenants..................................................................... 76
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8.01 Changes in Business.................................................................... 76
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8.02 Consolidation, Merger, Sale or Purchase of Assets, Etc................................. 76
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8.03 Liens.................................................................................. 78
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8.04 Indebtedness........................................................................... 80
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8.05 Leases................................................................................. 81
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8.06 Advances, Investments and Loans........................................................ 82
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8.07 Dividends, Etc......................................................................... 83
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8.08 Transactions with Affiliates........................................................... 84
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8.09 Capital Expenditures................................................................... 85
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8.10 Minimum Tangible Net Worth............................................................. 86
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8.11 Minimum Consolidated EBITDA............................................................ 86
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8.12 Interest Coverage Ratio................................................................ 86
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8.13 Leverage Ratio......................................................................... 86
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8.14 Limitation on Voluntary Payments and Modifications of Indebtedness; Modifications of
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Certificate of Incorporation, By-Laws and Certain Other Agreements; Negative Pledge;
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Limitations on Speculative Transactions; Issuances of Capital Stock; Etc............... 87
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8.15 Limitation on the Creation of Subsidiaries............................................. 88
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SECTION 9. Events of Default...................................................................... 89
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9.01 Payments............................................................................... 89
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9.02 Representations, Etc................................................................... 89
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9.03 Covenants.............................................................................. 89
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9.04 Default Under Other Agreements......................................................... 89
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9.05 Bankruptcy, Etc........................................................................ 90
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9.06 ERISA.................................................................................. 90
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9.07 Security Documents..................................................................... 91
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9.08 Guaranties............................................................................. 91
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9.09 Judgments.............................................................................. 91
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9.10 Ownership.............................................................................. 91
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9.11 Credit Documents....................................................................... 91
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9.12 Material Contracts..................................................................... 91
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9.13 Borrowing Base Deficiency.............................................................. 92
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9.14 Material Adverse Change................................................................ 92
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9.15 CST Guaranty........................................................................... 92
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9.16. Spinoff Transaction.................................................................... 92
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SECTION 10. Definitions............................................................................ 93
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SECTION 11. The Agents............................................................................. 126
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11.01 Appointment............................................................................ 126
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11.02 Delegation of Duties................................................................... 127
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11.03 Exculpatory Provisions................................................................. 127
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11.04 Reliance by Agents..................................................................... 127
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11.05 Notice of Default...................................................................... 128
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11.06 Nonreliance on Agents and Other Banks.................................................. 128
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11.07 Indemnification........................................................................ 129
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11.08 Agents in Their Individual Capacity.................................................... 129
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11.09 Holders................................................................................ 129
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11.10 Resignation of any Agent; Successor Agents............................................. 130
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SECTION 12. Miscellaneous.......................................................................... 130
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12.01 Payment of Expenses, Etc............................................................... 130
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12.02 Right of Setoff........................................................................ 131
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12.03 Notices................................................................................ 132
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12.04 Benefit of Agreement................................................................... 132
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12.05 No Waiver; Remedies Cumulative......................................................... 134
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12.06 Payments Pro Rata...................................................................... 134
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12.07 Calculations; Computations............................................................. 135
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12.08 Governing Law; Submission to Jurisdiction; Venue....................................... 135
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12.09 Counterparts........................................................................... 136
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12.10 Effectiveness.......................................................................... 136
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12.11 Headings Descriptive................................................................... 137
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12.12 Amendment or Waiver; Etc............................................................... 137
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12.13 Survival............................................................................... 138
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12.14 Domicile of Loans...................................................................... 138
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12.15 Confidentiality........................................................................ 138
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12.16 Interest............................................................................... 139
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12.17A Judgment Currency...................................................................... 140
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12.17B Substitution of Currency............................................................... 141
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12.17C Interpretation......................................................................... 141
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12.18 Waiver of July Trial................................................................... 141
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EXHIBITS
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EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Revolving Note
EXHIBIT B-2 Form of Swingline Note
EXHIBIT C Form of Section 4.04(b)(ii) Certificate
EXHIBIT D Form of Opinion of ▇▇▇▇ & ▇▇▇▇ LLP
EXHIBIT E Form of Officers' Certificate
EXHIBIT F-1 Form of US Security Agreement
EXHIBIT F-2 Form of Foreign Subsidiary Security Agreement
EXHIBIT F-3 Form of Japanese Security Assignment
EXHIBIT G-1 Form of Parent Guaranty
EXHIBIT G-2 Form of US Subsidiary Guaranty
EXHIBIT G-3 Form of Foreign Subsidiary Guaranty
EXHIBIT H Form of Borrowing Base Certificate
EXHIBIT I Form of Assignment and Assumption Agreement
EXHIBIT J Form of Intercompany Note
EXHIBIT K Form of Process Agent Letter
EXHIBIT L Form of CST Guaranty
EXHIBIT M Form of Credit Agreement Supplement
ANNEXES
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ANNEX I Commitments
ANNEX II Bank Addresses for Notices
ANNEX 5.05 Credit Parties On Initial Borrowing Date
ANNEX 5.11 List of Subsidiary Guarantors
ANNEX 5.16 Projections
ANNEX 6.15 Capitalization
ANNEX 6.16 Subsidiaries
ANNEX 6.20 Properties
ANNEX 6.23 Existing Indebtedness
ANNEX 6.24 Existing Investments
ANNEX 7.03 Insurance
ANNEX 8.03D Existing Liens
ANNEX 8.06E Advances, Investments and Loans
ANNEX 8.14B Joint Ventures
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CREDIT AGREEMENT, dated as of December 15, 1997, among MODUS MEDIA
INTERNATIONAL HOLDINGS, INC., a Delaware corporation ("MMI Holdings"), MODUS
MEDIA INTERNATIONAL, INC., a Delaware corporation ("MMI"), the lenders from time
to time party hereto (each, a "Bank" and, collectively, the "Banks"),
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES, INC., as Arranger and Syndication Agent (in
such capacity, the "Syndication Agent"), CITICORP USA, INC. ("Citicorp"), as
Multi-Currency Agent, Documentation Agent and Collateral Agent, and NATIONSBANK
OF TEXAS, N.A., as Administrative Agent (in such capacity, the "Administrative
Agent"). Unless otherwise defined herein, all capitalized terms used herein and
defined in Section 10 are used herein as so defined.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Contribution Agreement dated as of
December 15, 1997 (the "Contribution Agreement") among Stream International
Inc., a Delaware corporation (f/k/a Stream International Holdings, Inc.)
("Stream International"), MMI Holdings and MMI and certain of its subsidiaries
have agreed (i) to contribute to MMI Holdings on the Closing Date Stream
International's software sale and licensing business (the "MMI Business") in
exchange for voting common stock and shares of non-voting 9.5% PIK preferred
stock of MMI Holdings, (ii) immediately thereafter, causing MMI Holdings to
transfer the MMI Business to MMI (together with the transactions described in
clause (i), the "Drop-down") and (iii) to distribute to Stream International's
stockholders all of the oustanding voting common stock of the MMI Holdings no
later than January 15, 1998 (such referred to as the "Spinoff Transaction");
WHEREAS, on the Closing Date, ▇.▇. ▇▇▇▇▇▇▇▇▇ & Sons Company ("RRD")
will exchange certain net debt owed to RRD by Stream allocable to the MMI
Business for shares of non-voting 9.5% PIK preferred stock of MMI Holdings; and
WHEREAS, the Borrowers have asked the Banks severally to extend credit
to the Borrowers for the purpose of refinancing the existing indebtedness
associated with the MMI Business, paying fees and expenses incurred in
connection with the Spinoff Transaction and for working capital and other
general corporate purposes of the Borrowers and their respective Subsidiaries,
and each Bank has severally agreed to extend such credit, on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
SECTION 1. Amount and Terms of Credit.
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2
1.01 Commitments. (A) Subject to and upon the terms and conditions
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herein set forth, each Bank severally agrees to make a loan or loans to the
Borrowers, which loans shall be drawn, as set forth below:
(a) (1) Each loan (each, a "Revolving Loan" and, collectively, the
"Revolving Loans") (i) shall be made at any time and from time to time on
and after the Initial Borrowing Date and prior to the Maturity Date, (ii)
shall be denominated in US Dollars or an Approved Foreign Currency, (iii)
except as hereinafter provided, may, at the option of the Borrower to which
such Revolving Loan was made, be incurred and maintained as and/or
converted into Base Rate Loans or Eurodollar Loans, provided that (x) all
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Revolving Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Revolving Loans of the same Type
and (y) unless the Administrative Agent has determined that the Syndication
Date has occurred (at which time this clause (y) shall no longer be
applicable), each Borrowing of Eurodollar Loans may only have an Interest
Period of one month, (iv) shall not exceed for all Banks at any time
outstanding that aggregate principal amount which, when added to the
aggregate principal amount of all Revolving Loans then outstanding, the
aggregate principal amount of all Swingline Loans (exclusive of Swingline
Loans which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) then
outstanding and the aggregate amount of all Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time, equals the lesser of (A) the Total Borrowing
Base at such time (based on the Borrowing Base Certificate last delivered)
and (B) the Total Revolving Loan Commitment at such time; and (v) may be
repaid and reborrowed in accordance with the provisions hereof.
Notwithstanding the foregoing the principal amount available to be borrowed
under the US Borrowing Base shall be reduced, without duplication, by an
amount equal to the principal amount of any advances made and outstanding
at any time pursuant to Section 8.06(k) hereof.
(2) Subject to clause (1) above, each Bank severally agrees, on the
terms and conditions set forth herein, to make Revolving Loans denominated
in US Dollars (each, a "US Revolving Loan" and, collectively, the "US
Revolving Loans") to MMI from time to time in an amount for each such US
Revolving Loan which (i) shall not exceed for any Bank at any time
outstanding that aggregate principal amount which, when combined with such
Bank's RL Percentage, if any, of (A) the aggregate principal amount of all
Revolving Loans then outstanding, (B) the aggregate principal amount of all
Swingline Loans (exclusive of Swingline Loans which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) then outstanding and (C) the aggregate
amount of all Letter of Credit Outstandings (exclusive of Unpaid Drawings
which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time,
equals the Revolving Loan Commitment, if any, of such Bank at such time
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and (ii) shall not exceed for all Banks at any time outstanding that
aggregate principal amount which, when added to the aggregate principal
amount of all US Revolving Loans then outstanding, the aggregate principal
amount of all Swingline Loans (exclusive of Swingline Loans which are
prepaid with the proceeds of, and simultaneously with the incurrence of,
the respective incurrence of US Revolving Loans) then outstanding and the
aggregate amount of all US Letter of Credit Outstandings (exclusive of
Unpaid Drawings which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of US Revolving Loans) at
such time, equals the lesser of (A) the US Borrowing Base at such time
(based on the Borrowing Base Certificate last delivered) and (B) Foreign
Availability Amount then in effect. Notwithstanding the foregoing the
principal amount available to be borrowed under the US Borrowing Base shall
be reduced, without duplication, by an amount equal to the principal amount
of any advances made and outstanding at any time pursuant to Section
8.06(k) hereof.
(3) Subject to clause (1) above and clause (4) below, each Multi-
Currency Bank agrees, on the terms and conditions set forth herein, to make
Revolving Loans denominated in the currency (which shall be an Approved
Foreign Currency) of the jurisdiction where the applicable Local Currency
Borrower is located (each, a "Multi-Currency Revolving Loan", and,
collectively, the "Multi-Currency Revolving Loans") to any Local Currency
Borrower from time to time in an amount which (i) shall not exceed at any
time outstanding that aggregate principal amount which, when added to the
aggregate principal amount of all Multi-Currency Revolving Loans then
outstanding and owed by such Local Currency Borrower, the aggregate amount
of all Multi-Currency Letter of Credit Outstandings (exclusive of Unpaid
Drawings under such Multi-Currency Letters of Credit which are prepaid with
the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Multi-Currency Revolving Loans) issued for the account of
such Local Currency Borrower at such time, equals the lesser of (A) the
Foreign Borrowing Base with respect to such Local Currency Borrower at such
time (based on the Borrowing Base Certificate last delivered), (B) the
Currency Sublimit and (C) an amount equal to the Multi-Currency Revolving
Sublimit less the sum of (x) the aggregate principal amount of all Multi-
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Currency Revolving Loans then outstanding and (y) the aggregate amount of
all Multi-Currency Letter of Credit Outstandings (exclusive of Unpaid
Drawings under such Multi-Currency Letters of Credit which are prepaid with
the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Multi-Currency Revolving Loans) at such time.
(4) Notwithstanding anything herein to the contrary, no Multi-Currency
Revolving Loans shall be made to any Local Currency Borrower at any time
prior to the satisfaction of the conditions with respect to such Local
Currency Borrower set forth in Section 7.19.
4
(B) (i) At any time that a Multi-Currency Bank makes a Multi-Currency
Loan or issues a Multi-Currency Letter of Credit, each other Bank shall be
deemed, without further action by any Person, to have purchased from such Multi-
Currency Bank or Multi-Currency Letter of Issuer, as the case may be, an
unfunded participation in any such Multi-Currency Loan or Multi-Currency Letter
of Credit, as the case may be, in an amount equal to such Bank's RL Percentage
of the aggregate principal amount of such Multi-Currency Revolving Loan or
Stated Amount of such Multi-Currency Letter of Credit and shall be obligated to
fund such participation at such time and in the manner provided below, whereupon
such Bank shall be entitled to receive on each Quarterly Payment Date (i) on
which interest is paid on any such Multi-Currency Revolving Loan an amount (only
to the extent such amount shall have been paid to the Multi-Currency Bank by any
Borrower) equal to such Bank's RL Percentage of the portion of such interest
payment attributable to the Applicable Base Rate Margin or Applicable Eurodollar
Margin, as the case may be, in effect at such time for Such Revolving Loan and
(ii) on which any MC/LC Fee is paid in respect of any such Multi-Currency Letter
of Credit, an amount (only to the extent such amount shall have been paid to the
Multi-Currency Letter of Credit Issuer by any Borrower) equal to such Bank's RL
percentage of such MC/LC Fee. Upon (I) the occurrence and during the
continuance of a Default, and (II) the demand (confirmed within a reasonable
time in writing) (notwithstanding any other fact or circumstance) by any Multi-
Currency Bank or Multi-Currency Letter of Credit of Credit Issuer, as the case
may be to the Multi-Currency Agent and the Administrative Agent (with prompt
telephonic notice of such demand followed by a copy of such written demand to
each other Bank, each such other Bank, a "Multi-Currency Participant") and each
Borrower with respect to any outstanding Multi-Currency Revolving Loan made by
such Multi-Currency Bank or Unpaid Drawing in respect of any drawing under a
Multi-Currency Letter of Credit, each Multi-Currency Participant shall purchase
from such Multi-Currency Bank or Multi-Currency Letter of Credit Issuer, as the
case may be, without recourse to such Multi-Currency Bank or Multi-Currency
Letter of Credit Issuer, as the case may be (except in the case of a breach of
the representation and warranty set forth below in this clause (II)), and such
Multi-Currency Bank shall sell and assign to each such Multi-Currency
Participant, such Multi-Currency Participant's RL Percentage of the aggregate
principal amount of such outstanding Multi-Currency Revolving Loan or such
Unpaid Drawing in respect of a drawing under a Multi-Currency Letter of Credit
as of the date of such demand.
Any such demand made by a Multi-Currency Bank shall specify the amount
of US Dollars (based upon the actual exchange rate at which the Multi-Currency
Agent anticipates being able to obtain the relevant Foreign Currency (with any
excess payment being refunded to the Multi-Currency Participants and any
deficiency remaining payable by the Multi-Currency Participants)) required from
such Multi-Currency Participant in order to effect the purchase and funding by
such Multi-Currency Participant of its RL Percentage of the aggregate principal
amount of any such Multi-Currency Revolving Loan or such Unpaid Drawing in
respect of a drawing under a Multi-Currency Letter of Credit. Each Multi-
Currency Participant shall effect such purchase, sale assignment and funding by
making available to the Administrative Agent for the account of such Multi-
Currency Bank or Multi-Currency Letter of Credit Issuer, as the
5
case may be, by deposit to the Appropriate Payment Office, in same day funds in
US Dollars, such amount required to effect the purchase by such Multi-Currency
Participant of its RL Percentage of the aggregate principal amount of such
outstanding Multi-Currency Revolving Loan or such Unpaid Drawing in respect of a
drawing under a Multi-Currency Letter of Credit. Each Borrower hereby agrees to
each such purchase, sale and assignment. Each Multi-Currency Participant agrees
to purchase and fund its RL Percentage of the aggregate principal amount of an
outstanding Multi-Currency Revolving Loan or Unpaid Drawing in respect of any
drawing under a Multi-Currency Letter of Credit on (1) the US Business Day on
which demand therefor is made by a Multi-Currency Bank or Multi-Currency Letter
of Credit Issuer, as the case may be, provided that notice of such demand is
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given not later than 11:00 a.m. (Dallas time) on such US Business Day or (2) the
first US Business Day next succeeding such demand if notice of such demand is
given after such time.
Upon any such purchase, sale and assignment by a Multi-Currency Bank
to any Multi-Currency Participant of a portion of a Multi-Currency Revolving
Loan or Unpaid Drawing in respect of any drawing under a Multi-Currency Letter
of Credit, such Multi-Currency Bank or Multi-Currency Letter of Credit Issuer
represents and warrants to such Multi-Currency Participant that such Multi-
Currency Bank or Multi-Currency Letter of Credit Issuer is the legal and
beneficial owner of such interest being sold and assigned by it, but makes no
other representation or warranty and assumes no responsibility with respect to
such Multi-Currency Revolving Loan or Multi-Currency Letter of Credit, the
Credit Documents or any Credit Party. If and to the extent that any Multi-
Currency Participant shall not have so made the amount of its purchase price
with respect to such Multi-Currency Revolving Loan or Unpaid Drawing in respect
of any drawing under a Multi-Currency Letter of Credit available to the
Administrative Agent, such Multi-Currency Participant agrees to pay to the
Administrative Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by such Multi-Currency Bank or
Multi-Currency Letter of Credit Issuer to the date such amount is paid to the
Administrative Agent, at the Federal Funds Rate. If such Multi-Currency
Participant shall pay to the Administrative Agent such amount for the account of
a Multi-Currency Bank or Multi-Currency Letter of Credit Issuer on any Business
Day, such amount so paid in respect of principal shall constitute a Multi-
Currency Revolving Loan made by such Multi-Currency Participant in its capacity
as a Bank (and for such purposes such Bank shall be deemed to be a Multi-
Currency Bank with respect to such Multi-Currency Revolving Loan) on such
Business Day for purposes of this Agreement, and the outstanding principal
amount of such Multi-Currency Revolving Loan originally made by such Multi-
Currency Bank shall be reduced by such amount on such Business Day. Each Multi-
Currency Participant acknowledges and agrees that, notwithstanding anything in
this Agreement to the contrary, its obligation to purchase and fund its RL
Percentage of the aggregate principal amount of any Multi-Currency Revolving
Loan or Unpaid Drawing in respect of any drawing under a Multi-Currency Letter
of Credit hereunder is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, (i) the occurrence
and continuance of any Default or Event of Default, (ii) the existence of any
claim, set-off, defense or other right that such Multi-Currency Participant may
6
have at any time against any Multi-Currency Bank, any Multi-Currency Letter of
Credit Issuer, any other Bank, any Borrower or any other Person, whether in
connection with the transactions contemplated by this Agreement or any unrelated
transaction or (iii) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, such Multi-Currency Participant.
(ii) If, and for so long as any Multi-Currency Participant's public
debt rating (as defined below) is below A- (or BBB in the case of each of ▇▇▇▇▇▇
Financial, Sanwa Business Credit and IBJ ▇▇▇▇▇▇▇▇ Business Credit) by S&P or
▇▇▇▇▇'▇ (or, with respect to any Multi-Currency Participant that does not have
such a public debt rating at any time of determination, the Multi-Currency Banks
shall determine that such Multi-Currency Participant's ability to meet such
Multi-Currency Participant's obligations under clause (I) above has declined
since the date such Multi-Currency Participant became a Multi-Currency
Participant hereunder), (1) such Multi-Currency Participant shall, immediately
upon demand by any Multi-Currency Bank, cash collateralize its RL Percentage of
the aggregate principal amount of all outstanding Multi-Currency Revolving Loans
and all outstanding Multi-Currency Letters of Credit by depositing an amount
equal to such RL Percentage into a cash collateral account designated by the
Administrative Agent (and, if necessary, established for such purposes and, so
long as no Default or Event of Default has occurred and is continuing,
established in such location as determined after consultation with the
Borrowers), and (2) each such Multi-Currency Participant shall, if so demanded
by any Multi-Currency Bank in its sole discretion by written notice to the
Administrative Agent, the Multi-Currency Agent, the Borrowers and such Multi-
Currency Participant, prior to the funding by the Multi-Currency Bank of any
Multi-Currency Revolving Loans in connection with each additional Multi-Currency
Revolving Loan and prior to the issuance of each additional Multi-Currency
Letter of Credit, deposit to such cash collateral account an amount equal to
such Multi-Currency Participant's RL Percentage of the aggregate amount of such
Multi-Currency Revolving Loan or the Letter of Credit Outstandings with respect
to such Multi-Currency Letter of Credit, as the case may be. Amounts deposited
by any Multi-Currency Participant in any such cash collateral account shall be
held for the benefit of the Multi-Currency Banks, shall be applied by the
Administrative Agent to satisfy such Multi-Currency Participant's obligations
under clause (i) above and shall, to the extent such amounts exceed at any time
such Multi-Currency Participant's RL Percentage of all outstanding Multi-
Currency Revolving Loans and all outstanding Multi-Currency Letters of Credit,
be returned to such Multi-Currency Participant. The term "public debt rating"
means, as of any date with respect to any Person, the rating that has been most
recently announced by either S&P or ▇▇▇▇▇'▇, as the case may be, for any class
of non-credit enhanced long-term senior unsecured debt issued by such Person.
(iii) The Multi-Currency Agent shall furnish to the Administrative
Agent and each Bank on the first Business Day of each week a written report
summarizing the aggregate principal amount of Multi-Currency Revolving Loans
outstanding in each Approved Foreign
7
Currency (including the U.S. Dollar Foreign Currency Equivalent thereof) during
the preceding week.
(C) Subject to and upon the terms and conditions herein set forth, the
Swingline Bank in its individual capacity agrees to make at any time and from
time to time after the Initial Borrowing Date and prior to the Swingline Expiry
Date, a loan or loans to MMI (each, a "Swingline Loan" and, collectively, the
"Swingline Loans"), which Swingline Loans (i) shall be made and maintained as
Base Rate Loans, (ii) shall be denominated in US Dollars, (iii) may be repaid
and reborrowed in accordance with the provisions hereof, (iv) shall not exceed
in aggregate principal amount at any time outstanding, when combined with the
aggregate principal amount of all Revolving Loans then outstanding and the
aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time, an
amount equal to the lesser of (A) the US Borrowing Base at such time (based on
the Borrowing Base Certificate last delivered) and (B) the Total Revolving Loan
Commitment then in effect and (v) shall not exceed in aggregate principal amount
at any time outstanding the Maximum Swingline Amount. The Swingline Bank shall
not be obligated to make any Swingline Loans at a time when a Bank Default
exists unless the Swingline Bank has entered into arrangements satisfactory to
it and the Borrowers to eliminate the Swingline Bank's risk with respect to the
Defaulting Bank's or Banks' participation in such Swingline Loans, including by
cash collateralizing such Defaulting Bank's or Banks' RL Percentage of the
outstanding Swingline Loans. The Swingline Bank will not make a Swingline Loan
after it has received written notice from any Borrower or the Required Banks
stating that a Default or an Event of Default exists until such time as the
Swingline Bank shall have received a written notice of (i) rescission of such
notice from the party or parties originally delivering the same or (ii) a waiver
of such Default or Event of Default from the Required Banks. No Swingline Loan
shall be used for the purpose of funding the payment of principal of any other
Swingline Loan. Each Swingline Loan shall mature on the seventh day following
the making thereof, and if not repaid on such date shall be deemed and shall be
treated as a U.S. Revolving Loan.
(D) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the ▇▇ ▇▇▇▇▇ that its outstanding Swingline Loans
shall be funded with a Borrowing of US Revolving Loans (provided that each such
--------
notice shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default under Section 9.05 or upon the exercise of any of
the remedies provided in the last paragraph of Section 9), in which case a
Borrowing of US Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be made on the immediately succeeding
Business Day by all ▇▇ ▇▇▇▇▇ pro rata based on each RL Bank's RL Percentage, and
--- ----
the proceeds thereof shall be applied directly to repay the Swingline Bank for
such outstanding Swingline Loans. Each RL Bank hereby irrevocably agrees to
make Base Rate Loans upon one Business Day's notice pursuant to each Mandatory
Borrowing in the amount and in the manner specified in the preceding sentence
and on the date specified in writing by the Swingline Bank notwithstanding (i)
that the amount of the Mandatory Borrowing may not
8
comply with the Minimum Borrowing Amount otherwise required hereunder, (ii)
whether any conditions specified in Section 5 are then satisfied, (iii) whether
a Default or an Event of Default has occurred and is continuing, (iv) the date
of such Mandatory Borrowing and (v) the amount of the US Borrowing Base or the
Total Revolving Loan Commitment at such time. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code in respect of any Borrower), each RL Bank (other than
the Swingline Bank which made the Swingline Loan giving rise to such Mandatory
Borrowing) hereby agrees that it shall forthwith purchase from the Swingline
Bank (without recourse or warranty) such assignment of the outstanding Swingline
Loans as shall be necessary to cause the ▇▇ ▇▇▇▇▇ to share in such Swingline
Loans ratably based upon their respective RL Percentages, provided that all
--------
interest payable on the Swingline Loans shall be for the account of the
Swingline Bank making the Swingline Loan giving rise to such Mandatory Borrowing
until the date the respective assignment is purchased and, to the extent
attributable to the purchased assignment, shall be payable to the RL Bank
purchasing same from and after such date of purchase.
1.02 Minimum Borrowing Amounts, Etc. The aggregate principal
------------------------------
amount of each Borrowing shall not be less than the Minimum Borrowing Amount for
such Borrowing. More than one Borrowing may be incurred on any day; provided
--------
that at no time shall there be outstanding to any one Borrower more than six
Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever a Borrower desires to incur
-------------------
Loans (excluding Borrowings of Swingline Loans and Revolving Loans made pursuant
to a Mandatory Borrowing), (i) with respect to any Borrowing of US Revolving
Loans, it shall give the Administrative Agent at the Appropriate Notice Office,
prior to 11:00 A.M. (Dallas time), (x) at least three Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of Eurodollar Loans and (y) at least one Business Day's prior (or, at
the discretion of the Administrative Agent, same day) written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans to be made hereunder and (ii) with respect to any Borrowing of Multi-
Currency Revolving Loans, it shall give the Multi-Currency Agent at the
Appropriate Notice Office, prior to 11:00 A.M. (Relevant Currency Time), (x) at
least three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Eurodollar Loans and (y) at least one
Business Day's prior written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing of Base Rate Loans to be made hereunder. Each such
notice (each, a "Notice of Borrowing") shall, except as provided in Section
1.10, be irrevocable, and, in the case of each written notice and each
confirmation of telephonic notice, shall be in the form of Exhibit A,
appropriately completed to specify (i) the aggregate principal amount and the
Approved Foreign Currency of the Loans to be made pursuant to such Borrowing,
(ii) the date of such Borrowing (which shall be a Business Day), (iii) whether
the respective Borrowing shall consist of Base Rate Loans or, to the extent
permitted hereunder, Eurodollar Loans and, if Eurodollar Loans, the Interest
Period to be initially applicable thereto and (iv) in the case of a
9
Borrowing of Multi-Currency Loans, the Multi-Currency Bank requested to make
such Multi-Currency Revolving Loan. The Administrative Agent or the Multi-
Currency Agent, as the case may be, shall promptly give each Bank written notice
(or telephonic notice promptly confirmed in writing) of each proposed Borrowing,
of such Bank's proportionate share thereof, if any, and of the other matters
covered by the Notice of Borrowing.
(b) (i) Whenever MMI desires to incur Swingline Loans hereunder, it
shall give the Swingline Bank not later than 12:00 Noon (Dallas time) on the day
such Swingline Loan is to be made, written notice (or telephonic notice promptly
confirmed in writing) of each Swingline Loan to be made hereunder. Each such
notice shall be irrevocable and shall specify in each case (x) the date of such
Borrowing (which shall be a Business Day) and (y) the aggregate principal amount
of the Swingline Loan to be made pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(D), with MMI irrevocably agreeing, by the incurrence of any
Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section 1.01(D).
(c) Without in any way limiting the obligation of any Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent, the Multi-Currency Agent, or the Swingline Bank (in the
case of a Borrowing of Swingline Loans) or any Letter of Credit Issuer (in the
case of the issuance of Letters of Credit), as the case may be, may prior to
receipt of written confirmation act without liability upon the basis of such
telephonic notice, believed by the Administrative Agent, the Multi-Currency
Agent, the Swingline Bank or such Letter of Credit Issuer, as the case may be,
in good faith to be from an Authorized Officer of the relevant Borrower. In
each such case, each Borrower hereby waives the right to dispute the
Administrative Agent's, the Multi-Currency Agent's, the Swingline Bank's or any
Letter of Credit Issuer's record of the terms of such telephonic notice.
(d) In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Eurodollar Loans, MMI and the requesting
Borrower shall indemnify each Bank against any loss, cost or expense incurred by
such Bank as a result of any failure to fulfill on or before the date specified
in such Notice of Borrowing for such Borrowing the applicable conditions set
forth in Section 5, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Bank to fund the Loan to be made by such Bank as part of such
Borrowing when such Loan, as a result of such failure, is not made on such date.
1.04 Disbursement of Funds. (a)(i) Not later than 1:00 P.M. (Dallas
---------------------
time) on the date specified in each Notice of Borrowing relating to a Borrowing
of US Revolving Loans (or (x) in the case of Swingline Loans, not later than
2:00 P.M. (Dallas time) on the date specified in Section 1.03(b)(i) or (y) in
the case of Mandatory Borrowings, not later than 12:00 Noon (Dallas time) on the
date specified in Section 1.01(C)), each Bank will make
10
available its pro rata share, if any, of each Borrowing requested to be made on
--- ----
on such date (or in the case of Swingline Loans, the Swingline Bank shall make
available the full amount thereof) in the manner provided below. All amounts
shall be made available to the Administrative Agent in US dollars in immediately
available funds at the Appropriate Payment Office and upon fulfillment of the
applicable conditions set forth in Section 5, the Administrative Agent promptly
will make available to the requesting Borrower by depositing to its account at
such Appropriate Payment Office the aggregate of the amounts so made available
in the type of funds received. Unless the Administrative Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Administrative Agent its portion of the
Borrowing or Borrowings to be made on such date, the Administrative Agent may
assume that such Bank has made such amount available to the Administrative Agent
on such date of Borrowing, and the Administrative Agent, in reliance upon such
assumption, may (in its sole discretion and without any obligation to do so)
make available to the requesting Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Bank and the Administrative Agent has made available same to the
requesting Borrower, the Administrative Agent shall be entitled to recover such
corresponding amount from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's demand therefor,
the Administrative Agent shall promptly notify the requesting Borrower, and such
Borrower shall immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to recover from the Bank
or the requesting Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to such Borrower to the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (x) if paid by such Bank, the Federal Funds Rate or (y) if paid
by a Borrower, the then applicable rate of interest, calculated in accordance
with Section 1.08, for the respective Loans.
(ii) Not later than 1:00 P.M. (Relevant Currency Time) on the date
specified in each Notice of Borrowing relating to a Borrowing of Multi-Currency
Loans, the Multi-Currency Bank requested to make such Borrowing shall make
available to the Multi-Currency Agent in the requested Currency in immediately
available funds at the Appropriate Payment Office upon fulfillment of the
applicable conditions set forth in Section 5, the Multi-Currency Agent will
promptly make available to the requesting Local Currency Borrower by depositing
to its account at the Appropriate Payment Office, the aggregate principal amount
so made available in the type of funds received.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrowers may have against any Bank as a result of any default by such Bank
hereunder.
1.05 Notes. (a) Each Borrower's obligation to pay the principal
-----
of, and interest on, all the Loans made to it by each Bank shall be evidenced
(i) if Revolving Loans, by a promissory note substantially in the form of
Exhibit B-1 with blanks appropriately completed in conformity herewith (each, a
"Revolving Note" and, collectively, the "Revolving Notes")
11
and (ii) if Swingline Loans, by a promissory note substantially in the form of
Exhibit B-2 with blanks appropriately completed in conformity herewith (the
"Swingline Note").
(b) The Revolving Note issued by each Borrower to each Bank shall (i)
be executed by such Borrower, (ii) be payable to such Bank or its registered
assigns and be dated the Initial Borrowing Date, (iii) be in a stated principal
amount equal to the Revolving Loan Commitment of such Bank and be payable in the
principal amount of the outstanding Revolving Loans evidenced thereby from time
to time, (iv) mature on the Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(c) The Swingline Note issued by MMI to the Swingline Bank shall (i)
be executed by MMI, (ii) be payable to the Swingline Bank or its registered
assigns and be dated the Initial Borrowing Date, (iii) be in a stated principal
amount equal to the Maximum Swingline Amount and be payable in the principal
amount of the outstanding Swingline Loans evidenced thereby from time to time,
(iv) mature on the Swingline Expiry Date, (v) bear interest as provided in
Section 1.08 in respect of the Base Rate Loans evidenced thereby, (vi) be
subject to voluntary prepayment as provided in Section 4.01, and mandatory
repayment as provided in Section 4.02 and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.
(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in such notation shall not affect the Borrowers' obligations in
respect of such Loans.
1.06 Conversions. The Borrowers shall have the option to convert on
-----------
any Business Day occurring after the Initial Borrowing Date, all or a portion at
least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of the Loans (other than Swingline Loans which at all times
shall be maintained as Base Rate Loans) owing by any Borrower into a Borrowing
or Borrowings of another Type of Loan; provided that (i) except as otherwise
--------
provided in Section 1.10(b), no partial conversion of a Borrowing of Eurodollar
Loans shall reduce the outstanding principal amount of the Eurodollar Loans made
pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Base Rate Loans may only be converted into Eurodollar Loans if no
Default or Event of Default is in existence on the date of the conversion, and
(iii) Borrowings of Eurodollar Loans resulting from this Section 1.06 shall be
limited in number as provided in Section 1.02. Each such conversion shall be
effected by any Borrower by giving the Appropriate Agent at its Appropriate
Notice Office, prior to 11:00 A.M. (Relevant Currency Time), at least three
Business Days' (or one Business Day's in the case of a conversion into Base Rate
Loans) prior
12
written notice (or telephonic notice promptly confirmed in writing) (each, a
"Notice of Conversion") specifying the Loans to be so converted, the Type of
Loans to be converted into and, if to be converted into a Borrowing of
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent or the Multi-Currency Agent, as the case may be, shall give
each Bank prompt notice of any such proposed conversion affecting any of its
Loans.
1.07 Pro Rata Borrowings. All Borrowings of Loans (other than
-------------------
Swingline Loans and Multi-Currency Revolving Loans) under this Agreement shall
be made by the Banks pro rata on the basis of their Revolving Loan Commitments,
--- ----
as the case may be. It is understood that no Bank shall be responsible for any
default by any other Bank of its obligation to make Loans hereunder and that
each Bank shall be obligated to make the Loans to be made by it hereunder,
regardless of the failure of any other Bank to fulfill its commitments
hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
--------
Loan shall bear interest from the date of the Borrowing thereof until the
earlier of (i) the maturity (whether by acceleration or otherwise) of such Base
Rate Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan
pursuant to Section 1.06, at a rate per annum which shall at all times be the
Base Rate in effect from time to time plus the Applicable Margin for Base Rate
Loans in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Eurodollar Loan and (ii)
the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section
1.06, 1.09 or 1.10(b), as applicable, at a rate per annum which shall at all
times during each Interest Period applicable thereto be the relevant Eurodollar
Rate for such Interest Period plus the Applicable Margin for Eurodollar Loans in
effect from time to time.
(c) Overdue principal and, to the fullest extent permitted by law, the
amount of any overdue interest in respect of each Loan, Fee, or other amount
payable hereunder, shall bear interest at a rate per annum equal to the greater
of (x) the rate which is 2% in excess of the rate then borne by such Loans and
(y) the rate which is 2% in excess of the rate otherwise applicable to Base Rate
Loans from time to time. Interest which accrues under this Section 1.08(c)
shall be payable on demand.
(d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable by the
Borrowers (i) in respect of each Base Rate Loan, quarterly in arrears on each
Quarterly Payment Date, (ii) in respect of each Eurodollar Loan, on (x) the date
of any prepayment or repayment thereof (on the amount prepaid or repaid), (y)
the date of any conversion into a Base Rate Loan pursuant to Section 1.06, 1.09
or 1.10(b), as applicable (on the amount converted) and (z) the last day
13
of each Interest Period applicable thereto and, in the case of an Interest
Period in excess of three months, on each date occurring at three month
intervals after the first day of such Interest Period and (iii) in respect of
each Loan, at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance
with Section 12.07(b).
(f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Loans for any interest Period, shall promptly notify
the Borrowers and the Banks thereof.
1.09 Interest Periods. At the time any Borrower gives a Notice of
----------------
Borrowing or a Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 11:00 A.M. (Relevant Currency Time) on
the third Business Day prior to the expiration of an Interest Period applicable
to a Borrowing of Eurodollar Loans, it shall have the right to elect by giving
the Appropriate Agent written notice (or telephonic notice promptly confirmed in
writing) of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of such Borrower (but otherwise subject to the
provisions of Section 1.01(A)(a)(1)(iii)), be a one, two, three or six month
period. Notwithstanding anything to the contrary contained above:
(i) all Eurodollar Loans comprising a Borrowing shall have the same
Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding Interest Period expires;
(iii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
--------
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
14
(v) no Interest Period for a Borrowing may be elected if it would
extend beyond the Maturity Date; and
(vi) unless the Required Banks otherwise agree in writing, no Interest
Period may be elected at any time when a Default or an Event of Default is
then in existence.
If upon the expiration of any Interest Period, any Borrower has failed to elect,
or is not permitted to elect by virtue of the application of clause (vi) above,
a new Interest Period to be applicable to the respective Borrowing of Eurodollar
Loans as provided above, such Borrower shall be deemed to have elected to
convert such Borrowing into a Borrowing of Base Rate Loans effective as of the
expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, Etc. (a) In the event that (x) in
--------------------------------
the case of clause (i) below, the Required Lenders shall notify the
Administrative Agent or (y) in the case of clauses (ii) and (iii) below, any
Bank shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period, that, (x) adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate or (y) the Eurodollar Rate for such Interest Period will
not adequately reflect the cost to such Banks of making, funding or
maintaining their Eurodollar Loans for such Interest Period; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
agreeing to make or of making, funding or maintaining any Eurodollar Loans
(other than any increased cost or reduction in the amount received or
receivable resulting from the imposition of or a change in the rate of net
income taxes or similar charges imposed by the United States or by the
foreign jurisdiction or state under the laws of which such Bank is
organized or has its applicable lending office or any political subdivision
thereof) because of (x) (A) any change after the date hereof in any law,
rule, regulation, guideline, order or request (whether or not having the
force of law), or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
guideline, order or request (such as, for example, but not limited to, a
change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) or (B) the compliance with any
guideline or request after the date hereof from any central bank or other
governmental authority (whether or not having the force of law) and/or (y)
other circumstances occurring after the date hereof affecting the interbank
Eurodollar market or the position of such Bank in such market; or
(iii) at any time that the performance of its obligations hereunder
to make Eurodollar Loans or the continuance by such Bank of funding or
maintaining any
15
Eurodollar Loan has become unlawful by compliance by such Bank with, or by
the introduction of or change in or in the interpretation of, any law,
governmental rule, regulation, guideline or order (or would conflict with
any such governmental rule, regulation, guideline or order not having the
force of law but with which such Bank customarily complies even though the
failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market, or any central bank or other governmental authority shall assert
that making, funding or maintaining such Eurodollar Loan is unlawful;
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within five Business Days of
the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrowers and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Banks). Thereafter, (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be advanced until such time as the
Administrative Agent notifies the Borrowers and the Banks that the circumstances
giving rise to such notice by the Administrative Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by any Borrower with respect
to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by such Borrower, (y) in the case of clause (ii) above, such Borrower agrees to
pay to such Bank, upon written demand therefor (accompanied by the written
notice referred to below), such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to compensate
such Bank for such increased costs or reductions in amounts received or
receivable hereunder (a written notice as to the additional amounts owed to such
Bank, showing the basis for the calculation thereof, submitted to the Borrowers
by such Bank shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, such
Borrower shall take one of the actions specified in Section 1.10(b) as promptly
as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the affected Borrower
may (and in the case of a Eurodollar Loan affected pursuant to Section
1.10(a)(iii), such Borrower shall) either (i) if the affected Eurodollar Loan is
then being made pursuant to a Borrowing, cancel said Borrowing by giving the
Administrative Agent telephonic notice (confirmed promptly in writing) thereof
on the same date that such Borrower was notified by a Bank pursuant to Section
1.10(a)(ii) or (iii) or (ii) if the affected Eurodollar Loan is then
outstanding, upon at least three Business Days' notice to the Administrative
Agent, require the affected Bank to convert each such Eurodollar Loan into a
Base Rate Loan (which conversion, in the case of the circumstances described in
Section 1.10(a)(iii), shall occur no later than the last day of the Interest
Period then applicable to such Eurodollar Loan (or such earlier date as shall be
required by applicable law)); provided that if more than one Bank is affected at
--------
any time, then all affected Banks must
16
be treated the same pursuant to this Section 1.10(b), and in the case of clauses
(i) and (iii) above, the obligation of the Banks to make, or to convert Loans
into, Eurodollar Loans shall be suspended until the Administrative Agent has
determined that the circumstances causing such suspension no longer exist.
(c) If any Bank shall have determined that the adoption or
effectiveness after the date hereof of, any law, rule, regulation, guideline or
request (whether or not having the force of law), or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency, or compliance by such Bank or any
corporation controlling such Bank with any request or directive (whether or not
having the force of law), of any such authority, central bank or comparable
agency affects or would affect the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank and that the
amount of such capital is increased by or based upon the existence of such
Bank's commitment to lend hereunder and other commitments of such type or the
issuance or maintenance of the Letters of Credit (or similar contingent
obligations), then from time to time, upon written demand by such Bank (with a
copy to the Administrative Agent), accompanied by the notice referred to in the
last sentence of this clause (c), the affected Borrower severally shall pay to
such Bank such additional amount or amounts as will compensate such Bank or such
other corporation in the light of such circumstances, to the extent that such
Bank reasonably determines such increase in capital to be allocable to the
existence of such Bank's commitment to lend hereunder or to the issuance or
maintenance of any Letters of Credit. Each Bank, upon determining in good faith
that any additional amounts will be payable pursuant to this Section 1.10(c),
will give prompt written notice thereof to the Borrowers, which notice shall set
forth the basis of the calculation of such additional amounts (a written notice
as to the additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to the Borrowers by such Bank shall, absent
manifest error, be final and conclusive and binding upon all parties hereto),
although the failure to give any such notice shall not release or diminish each
Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice within 90 days of such
determination.
1.11 Compensation. (a) Each Borrower severally shall compensate each
------------
Bank, upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Bank to fund such Borrower's Eurodollar Loans which such Bank
may sustain: (i) if for any reason (other than a default by such Bank or the
Administrative Agent) a Borrowing of Eurodollar Loans does not occur on a date
specified therefor in a Notice of Borrowing or Notice of Conversion (whether or
not withdrawn by the Borrower delivering such notice or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including any repayment
made pursuant to Section 4.01 or 4.02 or as a result of an acceleration of the
Loans pursuant to Section 9) or conversion of any Eurodollar Loans occurs
17
on a date which is earlier than the last day of an Interest Period applicable
thereto; (iii) if any prepayment of any Eurodollar Loans is not made on any date
specified in a notice of prepayment given by any Borrower; or (iv) as a
consequence of (x) any other default by any Borrower to repay its Eurodollar
Loans when required by the terms of this Agreement or (y) an election made
pursuant to Section 1.10(b). Calculation of all amounts payable to a Bank under
this Section 1.11(a) shall be made as though that Bank had actually funded its
relevant Eurodollar Loan through the purchase of a Eurodollar deposit bearing
interest at the Eurodollar Rate in an amount equal to the amount of that Loan,
having a maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office of that Bank to a
domestic office of that Bank in the United States of America; provided, however,
-------- -------
that each Bank may fund each of its Eurodollar Loans in any manner it sees fit
and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section 1.11(a). It is further understood and agreed
that if any repayment of Eurodollar Loans pursuant to Section 4.01 or any
conversion of Eurodollar Loans pursuant to Section 1.06 in either case occurs on
a date which is not the last day of an Interest Period applicable thereto, such
repayment or conversion shall be accompanied by any amounts owing to any Bank
pursuant to this Section 1.11(a).
(b) In addition to the foregoing, until the earlier of (i) the
Syndication Date and (ii) the 180th day following the Initial Borrowing Date,
each Borrower severally shall compensate each Bank (including each Person that
becomes a Bank pursuant to Section 12.04(b)), upon its written request (which
request shall set forth the basis for requesting such compensation), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Bank to fund such Borrower's
Eurodollar Loans including loss of anticipated profit with respect to any
Eurodollar Loans) which such Bank may sustain in connection with the
Administrative Agent's and the Syndication Agent's syndication of this Agreement
to additional Banks during such period to the extent that such losses, expenses
and liabilities arise from assignments of, incurrences of, or repayments of,
Eurodollar Loans.
1.12 Change of Lending Office. Each Bank agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.05 or 4.04 with respect to such Bank, it will, if requested by
any Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans or Letters of
Credit affected by such event; provided that such designation is made on such
--------
terms that, in the sole judgment of such Bank, such Bank and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequences of the event giving rise to the operation of any such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of any Borrower or the right of any Bank provided in Section 1.10,
2.05 or 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting
--------------------
Bank or (y) upon the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii),
18
Section 1.10(c), Section 2.05 or Section 4.04 with respect to any Bank which
results in such Bank charging to any Borrower increased costs in excess of those
being generally charged by the other Banks, the Borrowers shall have the right,
if no Default or Event of Default then exists, to replace such Bank (the
"Replaced Bank") with one or more other Eligible Transferee or Transferees, none
of whom shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank") and each of whom shall be reasonably
acceptable to the Administrative Agent, provided that (i) at the time of any
--------
replacement pursuant to this Section 1.13, the Replacement Bank shall enter into
one or more Assignment and Assumption Agreements pursuant to Section 12.04(b)
(and with all fees payable pursuant to said Section 12.04(b) to be paid by the
Replacement Bank) pursuant to which the Replacement Bank shall acquire all of
the Commitments and outstanding Loans of, and in each case participations in
Letters of Credit by, the Replaced Bank and, in connection therewith, shall pay
to (x) the Replaced Bank in respect thereof an amount equal to the sum of (A) an
amount equal to the principal of, and all accrued interest on, all outstanding
Loans of the Replaced Bank, (B) an amount equal to all Unpaid Drawings that have
been funded by (and not reimbursed to) such Replaced Bank, together with all
then unpaid interest with respect thereto at such time and (C) an amount equal
to all accrued, but theretofore unpaid, Fees owing to the Replaced Bank pursuant
to Section 3.01, (y) each Letter of Credit Issuer, an amount equal to such
Replaced Bank's RL Percentage of any Unpaid Drawing (which at such time remains
an Unpaid Drawing) under the Letters of Credit issued by such Letter of Credit
Issuer to the extent such amount was not theretofore funded by such Replaced
Bank and (z) the Swingline Bank an amount equal to such Replaced Bank's RL
Percentage of any Mandatory Borrowing arising from the Swingline Loans made by
the Swingline Bank to the extent such amount was not theretofore funded by such
Replaced Bank, and (ii) all obligations of the Borrowers owing to the Replaced
Bank (other than those specifically described in clause (i) above in respect of
which the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Replaced Bank concurrently with such replacement.
Upon the execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, recordation of the
assignment on the Register by the Administrative Agent pursuant to Section 7.13
and, if so requested by the Replacement Bank, delivery to the Replacement Bank
of the appropriate Note or Notes executed by each Borrower, the Replacement Bank
shall become a Bank hereunder and the Replaced Bank shall cease to constitute a
Bank hereunder, except with respect to indemnification provisions under this
Agreement, which shall survive as to such Replaced Bank.
1.14 Additional Borrowers and Credit Parties. Upon the execution
---------------------------------------
and delivery by any Subsidiary of MMI acceptable to the Required Banks of a
supplement to this Agreement, in substantially the form of Exhibit M hereto (a
"Credit Agreement Supplement"), (i) such Person shall be referred to as a
----------------------------
"Borrower" and shall be and become a Borrower, and each reference in this
Agreement to a "Borrower" shall also mean and be a reference to such Borrower
and each reference in any other Credit Document to a "Borrower" or a "Credit
Party" shall also mean and be a reference to such Borrower, and (ii) such Person
shall assume all of the Obligations of a Borrower hereunder. Upon the execution
and delivery by any
19
Subsidiary of MMI after the Initial Borrowing Date of a Subsidiary Guaranty,
such Person shall be referred to as a "Credit Party" and shall be and become a
"Credit Party", and each reference in this Agreement to a "Credit Party" shall
also mean and be a reference to such Credit Party and each reference in any
other Credit Document to a "Credit Party" shall also mean and be a reference to
such Credit Party. The Administrative Agent shall promptly notify each Bank of
each such additional Borrower and Credit Party.
1.15 Borrower Liability. MMI shall be jointly and severally
------------------
liable for all Borrowings and other liabilities hereunder or under any other
Credit Document by or of itself or any Local Currency Borrower. Notwithstanding
any other provision of this Agreement or any provision of any other Transaction
Document which provides to the contrary, no Local Currency Borrower shall have
any liability for any Borrowing or other liabilities hereunder or under any
other Credit Document by or of MMI or (except as may otherwise be provided in
such Local Currency Borrower's Subsidiary Guaranty) any other Local Currency
Borrower.
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions herein set forth, any Borrower may request any Appropriate Letter of
Credit Issuer at any time and from time to time on or after the Initial
Borrowing Date and prior to the Business Day (or the 30th day in the case of the
Trade Letters of Credit) preceding the Maturity Date to issue, for the account
of such Borrower and in support of (x) trade obligations of such Borrower or any
of its Subsidiaries that arise in the ordinary course of business and are in
respect of general corporate purposes of such Borrower or any of its
Subsidiaries, as the case may be, (y) on a standby basis, L/C Supportable
Indebtedness of such Borrower or any of its Subsidiaries, and/or (z) obligations
of such Borrower under existing foreign currency facilities and, subject to and
upon the terms and conditions herein set forth, the US Letter of Credit Issuer
severally agrees to issue from time to time, irrevocable Trade Letters of Credit
and Standby Letters of Credit available for drawing in US Dollars (each a "US
Letter of Credit", and collectively, the "US Letters of Credit"), and the Multi-
Currency Letter of Credit Issuer severally agrees to issue from time to time,
irrevocable Trade Letters of Credit and Standby Letters of Credit available for
drawing in an Approved Foreign Currency (each a "Multi-Currency Letter of
Credit" and, collectively, the "Multi-Currency Letters of Credit"; the US
Letters of Credit and the Multi-Currency Letters of Credit being collectively,
the "Letters of Credit"), in each case in such form as may be approved by such
Letter of Credit Issuer. Notwithstanding the foregoing, none of the Letter of
Credit Issuers shall be under any obligation to issue any Letter of Credit if at
the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter of
Credit Issuer from issuing such Letter of Credit or any requirement of law
applicable to such Letter of Credit Issuer or any request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over such Letter of Credit Issuer
20
shall prohibit, or request that such Letter of Credit Issuer refrain from,
the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Letter of Credit Issuer with respect
to such Letter of Credit any restriction or reserve or capital requirement
(for which such Letter of Credit Issuer is not otherwise compensated) not
in effect on the date hereof, or any unreimbursed loss, cost or expense
which was not applicable, in effect or known to such Letter of Credit
Issuer as of the date hereof and which such Letter of Credit Issuer in good
▇▇▇▇▇ ▇▇▇▇▇ material to it; or
(ii) such Letter of Credit Issuer shall have received notice from any
Borrower or the Required Banks prior to the issuance of such Letter of
Credit of the type described in clause (viii) of Section 2.01(b).
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit), at such times would
exceed the lesser (x) US$5,000,000 (or the Foreign Currency Equivalent thereof)
and (y) when added to the aggregate principal amount of all Revolving Loans and
Swingline Loans then outstanding, the lesser of (A) the Total Borrowing Base at
such time (based on the Borrowing Base Certificate last delivered) and (B) the
Total Revolving Loan Commitment at such time; (ii) no Multi-Currency Letter of
Credit shall be issued the Stated Amount of which, when added to the Multi-
Currency Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid on the date of, and prior to the issuance of, the respective Multi-
Currency Letter of Credit) at such time would exceed, when added to the
aggregate principal amount of Multi-Currency Revolving Loans then outstanding,
the lesser of (A) the Multi-Currency Revolving Loan Sublimit, (B) the Multi-
Currency L/C Currency Sublimit for the Foreign Currency in which such Multi-
Currency Letter of Credit is denominated and (C) the aggregate Foreign Borrowing
Base; (iii) no Multi-Currency Letter of Credit shall be issued for the account
of any Local Currency Borrower, the Stated Amount of which, when added to the
Multi-Currency Letter of Credit Outstandings in respect of Multi-Currency
Letters of Credit issued for the account of such Local Currency Borrower
(exclusive of Unpaid Drawings which are repaid on the date of, and prior to the
issuance of the respective Multi-Currency Letter of Credit) at such time would
exceed, when added to the aggregate principal amount of Multi-Currency Loans
then outstanding and owed by such Local Currency Borrower, the Foreign Borrowing
Base for such Local Currency Borrower, (iv) (x) each Standby Letter of Credit
shall have an expiry date occurring not later than one year after such Letter of
Credit's date of issuance, provided that any such Letter of Credit may be
--------
automatically extendable for periods of up to one year so long as such Letter of
Credit provides that the Letter of Credit Issuer issuing such Letter of Credit
retains an option, satisfactory to such Letter of Credit Issuer, to terminate
such Letter of Credit within a specified period of time prior to each scheduled
extension date and (y) each Trade Letter of Credit shall have an expiry date
occurring not later than 60 days after such Letter of Credit's date of issuance;
(v) no Letter of Credit shall have an expiry date occurring later than 30 days
prior to the
21
Maturity Date; (vi) each Letter of Credit shall be denominated in US Dollars or
an Approved Foreign Currency; (vii) the Stated Amount of each Letter of Credit
shall not be less than $100,000 (or the Foreign Currency Equivalent thereof) or
such lesser amount as is acceptable to the Appropriate Letter of Credit Issuer
issuing such Letter of Credit; and (viii) none of the Letter of Credit Issuers
will issue or renew any Letter of Credit after it has received written notice
from any Borrower or the Required Banks stating that a Default or an Event of
Default exists until such time as the Letter of Credit Issuers shall have
received a written notice of (x) rescission of such notice from the party or
parties originally delivering the same or (y) a waiver of such Default or Event
of Default by the Required Banks.
(c) Notwithstanding the foregoing, in the event a Bank Default exists,
no Letter of Credit Issuer shall not be required to issue any Letter of Credit
unless such Letter of Credit Issuer has entered into arrangements satisfactory
to it and the Borrowers to eliminate the Letter of Credit Issuer's risk with
respect to the participation in Letters of Credit of the Defaulting Bank or
Banks, including by cash collateralizing such Defaulting Bank's or Banks' RL
Percentage of the Letter of Credit Outstandings.
2.02 Letter of Credit Requests; Notices of Issuance. (a) Whenever
----------------------------------------------
any Borrower desires that a Letter of Credit be issued, such Borrower shall give
(i) in the case of a US Letter of Credit, the Administrative Agent and the US
Letter of Credit Issuer written notice (or telephonic notice confirmed in
writing) thereof prior to 12:00 Noon (Dallas time) and (ii) in the case of a
Multi-Currency Letter of Credit, the Multi-Currency Agent and the Multi-Currency
Letter Issuer written notice (or telephone notice confirmed in writing) thereof
prior to 12:00 Noon (Relevant Currency Time) at the Appropriate Notice Office.
Each such notice (a "Letter of Credit Request") shall be given of at least five
Business Days (or such shorter period as may be acceptable to the Appropriate
Letter of Credit Issuer) prior to the proposed date of issuance (which shall be
a Business Day). Each Letter of Credit Request shall include (A) the requested
date of such issuance (which shall be a Business Day); (B) the requested Stated
Amount of such Letter of Credit; (C) the requested expiration date of such
Letter of Credit; (D) the requested Currency in which such Letter of Credit
shall be denominated, which shall be US dollars or, in the case of a Multi-
Currency Letter of Credit, an Approved Foreign Currency; (E) the requested name
and address of the beneficiary of such Letter of Credit; (F) the requested form
of such Letter of Credit; and (G) any other documents as such Letter of Credit
Issuer customarily requires in connection therewith and shall be accompanied by
such application and agreement for letter of credit (a "Letter of Credit
Agreement") as such Letter of Credit Issuer may specify to such requesting
Borrower for use in connection with such requested Letter of Credit. The
Administrative Agent or the Multi-Currency Agent, as the case may be, shall
promptly transmit copies of each Letter of Credit Request to each RL Bank. If
the requested form of such Letter of Credit is acceptable to the Appropriate
Letter of Credit Issuer that is issuing such Letter of Credit in its sole
discretion, such Letter of Credit Issuer will, upon fulfillment of the
applicable conditions set forth in Section 5, make such Letter of Credit
available to the requesting Borrower at the Appropriate Payment Office or as
otherwise agreed with such Borrower in connection with such issuance. In the
event and to the extent
22
that the provisions of any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern. A Letter of Credit
shall be deemed to have been issued for the account of the Borrower delivering
the Letter of Credit Request therefor.
(b) Each Letter of Credit Issuer shall, on the date of each issuance
of, or amendment or modification to, a Letter of Credit, give the Administrative
Agent, the Multi-Currency Agent (in the case of the issuance of a Multi-Currency
Letter of Credit), each RL Bank and the Borrowers written notice of the issuance
of, or amendment or modification to, such Letter of Credit, accompanied by a
copy to the Administrative Agent and the Multi-Currency Agent (in the case of
the issuance of a Multi-Currency Letter of Credit) of the Letter of Credit or
Letters of Credit issued by it and each such amendment or modification thereto.
(c) Each Letter of Credit Issuer shall furnish to the Administrative
Agent, the Multi-Currency Agent (in the case of the Multi-Currency Letter of
Credit Issuer) and each Bank on the first Business Day of each month a written
report summarizing issuance and expiration dates of Letters of Credit issued by
such Letter of Credit Issuer during the preceding month and drawings during such
month under all Letters of Credit issued by such Letter of Credit Issuer and
setting forth the average daily aggregate Stated Amount, and with respect to any
Multi-Currency Letter of Credit Issuer, the Foreign Currency Equivalent thereof
in US Dollars during the preceding month of all Letters of Credit issued by such
Letter of Credit Issuer.
2.03 Agreement to Repay Letter of Credit Drawings. (a) MMI hereby
--------------------------------------------
agrees to reimburse each Letter of Credit Issuer, and each Local Currency
Borrower hereby agrees to reimburse the Multi-Currency Letter of Credit Issuer
with respect to Letters of Credit it has requested, by making payment to the
Appropriate Agent in immediately available funds in the Currency in which any
such Letter of Credit is denominated at the Appropriate Payment Office, for any
payment or disbursement made by such Letter of Credit Issuer under any Letter of
Credit issued by such Letter of Credit Issuer (each such amount so paid or
disbursed until reimbursed, an "Unpaid Drawing") for the account of such Local
Currency Borrower or, in the case of MMI, for the account of any Borrower no
later than one Business Day following the date of such payment or disbursement,
with interest on the amount so paid or disbursed by such Letter of Credit
Issuer, to the extent not reimbursed prior to 1:00 P.M. (Dallas time) in the
case of any US Letter of Credit and 1:00 P.M. (Relevant Currency Time) in the
case of any Multi-Currency Letter of Credit on the date of such payment or
disbursement, from and including the date paid or disbursed to but not including
the date such Letter of Credit Issuer is reimbursed therefor at a rate per annum
which shall be the sum of the Base Rate as in effect from time to time plus the
Applicable Margin for Base Rate Loans then in effect with respect to Revolving
Loans (plus an additional 2% per annum if not reimbursed by the second Business
Day after the date of such payment or disbursement), such interest also to be
payable on demand. Each Letter of Credit Issuer shall provide the Borrowers
prompt notice of any payment or disbursement made by it under any Letter of
Credit, although the failure of, or
23
delay in, giving any such notice shall not release or diminish the obligations
of any Borrower under this Section 2.03(a) or under any other Section of this
Agreement.
(b) Each Borrower's obligation under this Section 2.03 to reimburse
the Appropriate Letter of Credit Issuers with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances, including, without limitation, any of the
circumstances set forth in Section 2.04(e) below, and irrespective of any
setoff, counterclaim or defense to payment which the Borrowers or any of their
Subsidiaries may have or have had against the Appropriate Letter of Credit
Issuer, the Administrative Agent, the Multi-Currency Agent or any Bank,
including, without limitation, any defense based upon the failure of any drawing
under a Letter of Credit to conform to the terms of such Letter of Credit or any
nonapplication or misapplication by the beneficiary of the proceeds of such
drawing; provided, however, that no Borrower shall be obligated to reimburse any
-------- -------
Letter of Credit Issuer for any wrongful payment made by such Letter of Credit
Issuer under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of such Letter of Credit
Issuer.
2.04 Letter of Credit Participations. (a) (i) Immediately upon the
-------------------------------
issuance by the US Letter of Credit Issuer of any US Letter of Credit, such
Letter of Credit Issuer shall be deemed to have sold and transferred to each
other RL Bank, and each such RL Bank (each, a "L/C Participant") shall be deemed
and unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such L/C Participant's RL Percentage, in such Letter of Credit,
each substitute letter of credit, each drawing made thereunder and the
obligations of the Borrowers under this Agreement with respect thereto (although
Letter of Credit Fees shall be payable directly to the Administrative Agent for
the account of the ▇▇ ▇▇▇▇▇ as provided in Section 3.01(b) and the L/C
Participants shall have no right to receive any portion of any Facing Fees with
respect to such Letters of Credit) and any security therefor or guaranty
pertaining thereto.
(ii) Participations in any Multi-Currency Letters of Credit shall be
sold, purchased, transferred and funded in accordance with Section 1.01(B).
(iii) Upon any change in the Revolving Loan Commitments of the ▇▇
▇▇▇▇▇ pursuant to Section 1.13 or 12.04(b), it is hereby agreed that, with
respect to all outstanding Letters of Credit and Unpaid Drawings, there shall be
an automatic adjustment to the participations pursuant to this Section 2.04 to
reflect the new RL Percentages of the assigning and assignee Bank.
(b) In determining whether to pay under any Letter of Credit, the
Letter of Credit Issuer that issued such Letter of Credit shall not have any
obligation relative to the L/C Participants other than to determine that any
documents required to be delivered under such Letter of Credit have been
delivered and that they appear to substantially comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted to be taken
by any
24
Letter of Credit Issuer under or in connection with any Letter of Credit issued
by such Letter of Credit Issuer if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such Letter of Credit
Issuer any resulting liability.
(c) In the event that any Letter of Credit Issuer makes any payment
under any Letter of Credit issued by such Letter of Credit Issuer and no
Borrower shall have reimbursed such amount in full to such Letter of Credit
Issuer pursuant to Section 2.03(a), such Letter of Credit Issuer shall promptly
notify the Administrative Agent, and the Administrative Agent shall promptly
notify each L/C Participant of such failure, and each L/C Participant shall
promptly and unconditionally pay to the Administrative Agent for the account of
such Letter of Credit Issuer, the amount of such L/C Participant's RL Percentage
of such payment in US Dollars and in same day funds. If the Administrative
Agent so notifies any L/C Participant required to fund a payment under a Letter
of Credit prior to 11:00 A.M. (Dallas time) on any Business Day, such L/C
Participant shall make available to the Administrative Agent for the account of
such Letter of Credit Issuer such L/C Participant's RL Percentage of the amount
of such payment on such Business Day in same day funds. If and to the extent
such L/C Participant shall not have so made its RL Percentage of the amount of
such payment available to the Administrative Agent for the account of such
Letter of Credit Issuer, such L/C Participant agrees to pay to the
Administrative Agent for the account of such Letter of Credit Issuer, forthwith
on demand such amount, together with interest thereon, for each day from such
date until the date such amount is paid to the Administrative Agent for the
account of such Letter of Credit Issuer at the Federal Funds Rate. The failure
of any L/C Participant to make available to the Administrative Agent for the
account of any Letter of Credit Issuer its RL Percentage of any payment under
any Letter of Credit shall not relieve any other L/C Participant of its
obligation hereunder to make available to the Administrative Agent for the
account of such Letter of Credit Issuer its RL Percentage of any payment under
any Letter of Credit issued by such Letter of Credit Issuer on the date
required, as specified above, but no L/C Participant shall be responsible for
the failure of any other Participant to make available to the Administrative
Agent for the account of such Letter of Credit Issuer such other L/C
Participant's RL Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of such Letter of Credit Issuer any payments from the L/C
Participants pursuant to clause (c) above, such Letter of Credit Issuer shall
pay to the Administrative Agent and the Administrative Agent shall promptly pay
to each L/C Participant which has paid its RL Percentage thereof, in US Dollars
and in same day funds, an amount equal to such L/C Participant's RL Percentage
of the principal amount thereof and interest thereon accruing after the purchase
of the respective participations.
(e) The obligations of the L/C Participants to make payments to the
Administrative Agent for the account of any Letter of Credit Issuer with respect
to Letters of Credit issued by such Letter of Credit Issuer shall be irrevocable
and not subject to
25
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement, any
of the other Credit Documents, any Letter of Credit Agreement, any Letter
of Credit or any other agreement or instrument relating thereto (all of the
foregoing being, collectively, the "L/C Related Documents");
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of any Borrower in respect
of any L/C Related Document or any other amendment or waiver of or any
consent to departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other right
which any Borrower or any of its Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such beneficiary or transferee may be
acting), the Administrative Agent, any Letter of Credit Issuer, any Bank,
or other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between any Borrower or any of its
Subsidiaries and the beneficiary named in any such Letter of Credit);
(iv) any draft, certificate or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by any Letter of Credit Issuer under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(vi) any exchange, release or non-perfection of any Collateral or
other collateral, or any release or amendment or waiver of or consent to
departure from any Guaranty or any other guarantee, for all or any of the
obligations of the Borrowers in respect of the L/C Related Documents;
(vii) the occurrence of any Default or Event of Default; or
(viii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Borrower or a guarantor.
26
2.05 Increased Costs. If, after the date hereof, the adoption or
---------------
effectiveness of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Letter of Credit
Issuer or any L/C Participant with any request or directive (whether or not
having the force of law) by any such authority, central bank or comparable
agency shall either (i) impose, modify or make applicable any reserve deposit,
capital adequacy or similar requirement against Letters of Credit issued by such
Letter of Credit Issuer or such L/C Participant's participation therein, or (ii)
impose on such Letter of Credit Issuer or any L/C Participant any other
conditions affecting this Agreement, any Letter of Credit or such L/C
Participant's participation therein; and the result of any of the foregoing is
to increase the cost to such Letter of Credit Issuer or such L/C Participant of
issuing, maintaining or participating in any Letter of Credit, or to reduce the
amount of any sum received or receivable by such Letter of Credit Issuer or such
Participant hereunder, then, upon written demand to the Borrowers by such Letter
of Credit Issuer or such L/C Participant (a copy of which notice shall be sent
by such Letter of Credit Issuer or such L/C Participant to the Administrative
Agent), accompanied by the certificate described in the last sentence of this
Section 2.05, the applicable Borrower shall pay to such Letter of Credit Issuer
or such L/C Participant such additional amount or amounts as will compensate
such Letter of Credit Issuer or such L/C Participant for such increased cost or
reduction. A certificate submitted to such Borrower by such Letter of Credit
Issuer or such L/C Participant, as the case may be (a copy of which certificate
shall be sent by such Letter of Credit Issuer or such L/C Participant to the
Administrative Agent), setting forth the basis for the determination of such
additional amount or amounts necessary to compensate such Letter of Credit
Issuer or such L/C Participant as aforesaid shall be final and conclusive and
binding on such Borrower absent manifest error, although the failure to deliver
any such certificate shall not release or diminish such Borrower's obligations
to pay additional amounts pursuant to this Section 2.05 upon subsequent receipt
of such certificate.
SECTION 3. Fees; Commitments.
-----------------
3.01 Fees. (a) The Borrowers severally shall pay to the
----
Administrative Agent for distribution to each Bank a commitment fee (the
"Commitment Fee") for the period from the earlier to occur of (i) the Commitment
Date and (ii) the Effective Date to, but not including, the date the Total
Revolving Loan Commitment has been terminated, computed (x) at the rate of
0.500% per annum on the daily Aggregate Unutilized Commitment of such Bank if
the Leverage Ratio of MMI the day after the date on which the Administrative
Agent receives the financial statements required to be delivered pursuant to
Section 7.01(b) and (c), and a certificate of the chief financial officer of MMI
demonstrating the applicable Leverage Ratio, (such date being the "Date of
Determination") immediately prior to the date the applicable Accrued Commitment
Fee is due and payable is equal to or greater than 1.0:1.0, or (y) at the rate
of 0.375% per annum on the Aggregate Unutilized Commitment of such Bank if, but
only if, the Leverage Ratio of MMI on the Date of Determination immediately
prior to the
27
date the applicable Accrued Commitment Fee is due and payable is less than
1.0:1.0., provided, however, that the Applicable Margin shall be at the rate of
0.500% per annum for so long as the Borrower has not submitted to the
Administrative Agent the information described in clause (x) above of this
Section as and when required under Section 7.01(b) or (c), as the case may be.
Accrued Commitment Fees shall be due and payable quarterly in arrears on each
Quarterly Payment Date and the date upon which the Revolving Loan Commitment is
terminated.
(b) The Borrowers severally shall pay to the Multi-Currency Agent for
distribution to each Multi-Currency Bank a fronting fee (the "Fronting Fee") for
the period from the Effective Date to the Maturity Date computed at __ of 1% per
annum on the amount equal to the aggregate principal amount of Multi-Currency
Revolving Loans outstanding at any time. Accrued Fronting Fees shall be due and
payable on the Effective Date and thereafter quarterly in arrears on each
Quarterly Payment Date on the Maturity Date.
(c) The Borrowers severally shall pay to the Administrative Agent (i)
for the account of the ▇▇ ▇▇▇▇▇ pro rata on the basis of their RL Percentages, a
--- ----
fee in respect of each US Letter of Credit (the "US/LC Fee") in US Dollars and
(ii) for the account of the Multi-Currency Letter of Credit Issuer, a fee in
respect of each Multi-Currency Letter of Credit (the "MC/LC Fee"), and together
with the US/LC Fee, the "Letter of Credit Fees") in the Currency in which such
Letter of Credit is denominated, in each case computed at a rate per annum equal
to the Applicable Margin for Eurodollar Loans then in effect with respect to
Revolving Loans on the average daily Stated Amount of such Letter of Credit.
Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on
each Quarterly Payment Date and upon the first day on or after the termination
of the Total Revolving Loan Commitment upon which no Letters of Credit remain
outstanding.
(d) The Borrowers severally shall pay to the Administrative Agent as a
facing fee (the "Facing Fees") in respect of each Letter of Credit for the
account of (i) the US Letter of Credit Issuer a fee payable in US Dollars in
respect of each US Letter of Credit computed at the rate of __ of 1% per annum
and (ii) the Multi-Currency Letter of Credit Issuer a fee in receipt of each
Multi-Currency Letter of Credit in the currency in which such Multi-Currency
Letter of Credit is denominated computed at a rate of __ of 1% per annum, in
each case, on the average daily Stated Amount of such Letter of Credit. Accrued
Facing Fees shall be due and payable quarterly in arrears on each Quarterly
Payment Date and upon the first day on or after the termination of the Total
Revolving Loan Commitment upon which no Letters of Credit remain outstanding.
(e) The Borrowers severally shall pay directly to each Letter of
Credit Issuer upon each issuance of, drawing under, and/or amendment to, each
Letter of Credit issued by such Letter of Credit Issuer such amount as shall at
the time of such issuance, drawing or amendment be the administrative charge
which such Letter of Credit Issuer is customarily charging for issuances of,
drawings under or amendments to, letters of credit issued by it.
28
(f) The Borrowers severally shall pay to the Administrative Agent, for
its own account, such fees as may be agreed to from time to time between the
Borrowers and the Administrative Agent, when and as due.
(g) All computations of Fees shall be made in accordance with Section
12.07(b).
3.02 Voluntary Termination or Reduction of Commitments. Upon at
-------------------------------------------------
least five Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) to the Administrative Agent at its Notice Office (which
notice the Administrative Agent shall promptly transmit to each of the Banks),
the Borrowers shall have the right, without premium or penalty, to terminate in
whole or partially reduce the Total Unutilized Revolving Loan Commitment,
provided that (x) any such termination or partial reduction shall apply to
--------
proportionately and permanently reduce the Revolving Loan Commitment of each of
the ▇▇ ▇▇▇▇▇ and (y) any partial reduction pursuant to this Section 3.02 shall
be in the amount of at least $250,000 and in integral multiples of $100,000 in
excess thereof.
3.03 Mandatory Adjustments of Commitments, Etc. (a) The Total
-----------------------------------------
Revolving Loan Commitment (and the Revolving Loan Commitment of each RL Bank)
shall automatically terminate in its entirety on the earlier of (i) December 20,
1997 unless the Initial Borrowing Date has occurred on or before such date, (ii)
the date on which a Change of Control Event occurs and (iii) the Maturity Date.
(b) On each date upon which a mandatory repayment pursuant to Section
4.02(A)(c) is required, the Total Revolving Loan Commitment shall be
automatically and permanently reduced by the amount, if any, by which the amount
required to be applied pursuant to said Section exceeds the aggregate principal
amount of Revolving Loans then outstanding.
(c) Each reduction to the Total Revolving Loan Commitment pursuant to
this Section 3.03 shall apply proportionately to the Revolving Loan Commitment
of each Bank.
SECTION 4. Payments.
--------
4.01 Voluntary Prepayments. MMI shall have the right to prepay the
---------------------
Loans and each Local Currency Borrower shall have the right to prepay the Loans
made to such Borrower, in whole or in part, without premium or penalty except as
otherwise provided in this Agreement, from time to time on the following terms
and conditions: (i) each such Borrower shall give the Administrative Agent at
the Appropriate Notice Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay the Loans, whether such Loans are
Revolving Loans or Swingline Loans, the amount of such prepayment and (in the
case of Eurodollar Loans) the specific Borrowing(s) pursuant to which made,
which notice
29
shall be given by such Borrower prior to 11:00 A.M. (Dallas Time) (x) at least
one Business Day prior to the date of such prepayment in the case of US
Revolving Loans maintained as Base Rate Loans, (y) on the date of such
prepayment in the case of Swingline Loans and (z) at least three Business Days
prior to the date of such prepayment in the case of Eurodollar Loans or Multi-
Currency Revolving Loans, which notice shall, except in the case of Swingline
Loans, promptly be transmitted by the Administrative Agent to the Multi-Currency
Agent and each of the Banks; (ii) each prepayment shall be in an aggregate
principal amount of at least US$250,000 (or the Foreign Currency Equivalent
thereof) (or US$100,000 in the case of Swingline Loans), provided that no
--------
partial prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce
the aggregate principal amount of the Loans outstanding pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; (iii) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans, provided that at any
--- ---- --------
Borrower's election in connection with any prepayment of Revolving Loans
pursuant to this Section 4.01, such prepayment shall not be applied to any
Revolving Loans of a Defaulting Bank.
4.02 Mandatory Prepayments.
---------------------
(A) Requirements.
------------
(a) (i) If on any date the sum of (x) the aggregate outstanding
principal amount of Revolving Loans and Swingline Loans (after giving effect to
all other repayments thereof on such date) plus (y) the Letter of Credit
Outstandings on such date exceeds the lesser of (A) the Total Borrowing Base at
such time (based on the Borrowing Base Certificate last delivered) or (B) the
Total Revolving Loan Commitment as then in effect, MMI shall repay on such date
the principal amount of Swingline Loans, and if no Swingline Loans are or remain
outstanding, either (i) MMI shall repay the principal amount of Revolving Loans
then outstanding in an aggregate principal amount equal to such excess or (ii)
each Borrower shall repay the principal amount of Revolving Loans then
outstanding and owed by such Borrower in an aggregate principal amount equal to
such Borrower's Prepayment Pro Rata Share of such excess. If, after giving
effect to the prepayment of all outstanding Swingline Loans and Revolving Loans,
the aggregate amount of all Letter of Credit Outstandings exceeds the lesser of
(A) the Total Borrowing Base at such time (based on the Borrowing Base
Certificate last delivered) and (B) the Total Revolving Loan Commitment as then
in effect, either (i) MMI shall pay to the Administrative Agent on such date an
amount equal to such excess or (ii) each Borrower shall repay the principal
amount of Revolving Loans then outstanding and owed by such Borrower in an
aggregate principal amount equal to such Borrower's Prepayment Pro Rata Share of
such excess (up to the aggregate amount of all Letter of Credit Outstandings at
such time) and the Administrative Agent shall hold such payment as security for
the respective obligations of each Borrower under this clause (a)(i) pursuant to
a cash collateral agreement to be entered into in form and substance reasonably
satisfactory to the Administrative Agent (which shall permit certain investments
in Cash Equivalents reasonably satisfactory to the
30
Administrative Agent and the Collateral Agent until the proceeds are applied to
the secured obligations).
(ii) If on any date the sum of (x) the aggregate principal amount of
US Revolving Loans and Swingline Loans (after giving effect to all other
repayments thereof on such date) outstanding at such time plus (y) the US Letter
of Credit Outstandings on such date exceeds the lesser of (A) the US Borrowing
Base at such time (based on the Borrowing Base Certificate last delivered) and
(B) the Foreign Availability Amount in effect at such time, MMI shall repay on
such date the principal amount of Swingline Loans, and if no Swingline Loans are
or remain outstanding, the principal amount of US Revolving Loans, in each case
in an aggregate principal amount equal to such excess. If, after giving effect
to the prepayment of all outstanding Swingline Loans and US Revolving Loans, the
aggregate amount of all US Letter of Credit Outstandings exceeds the lesser of
(A) the US Borrowing Base at such time (based on the Borrowing Base Certificate
last delivered) and (B) the Foreign Availability Amount as then in effect, MMI
shall pay to the Administrative Agent on such date an amount equal to such
excess (up to the aggregate amount of all US Letter of Credit Outstandings at
such time) and the Administrative Agent shall hold such payment as security for
the obligations of MMI hereunder pursuant to a cash collateral agreement to be
entered into in form and substance reasonably satisfactory to the Administrative
Agent (which shall permit certain investments in Cash Equivalents reasonably
satisfactory to the Administrative Agent and the Collateral Agent until the
proceeds are applied to the secured obligations).
(iii) If on any date the sum of (i) the aggregate outstanding
principal amount of Multi-Currency Revolving Loans (after giving effect to all
other repayments thereof on such date) plus (ii) the Multi-Currency Letter of
Credit Outstandings in respect of the Multi-Currency Letters of Credit on such
date exceeds the lesser of (A) the aggregate Foreign Borrowing Base at such time
(based on the Borrowing Base Certificate last delivered) and (B) 110% of the
Multi-Currency Revolving Loan Sublimit as then in effect, either (i) MMI shall
repay on such date the principal amount of Multi-Currency Revolving Loans in an
aggregate amount equal to such excess or (ii) each Borrower shall pay to the
Multi-Currency Agent on such date the principal amount of Multi-Currency
Revolving Loans then outstanding and owed by such Borrower in an aggregate
principal amount equal to such Borrower's Prepayment Pro Rata Share of such
excess. If, after giving effect to the prepayment of all such outstanding
Multi-Currency Revolving Loans, the aggregate amount of all Multi-Currency
Letter of Credit Outstandings in respect of the Multi-Currency Letters of
Credit, exceeds the lesser of (A) the aggregate Foreign Borrowing Base at such
time (based on the Borrowing Base Certificate last delivered) and (B) 110% of
the Multi-Currency Revolving Loan Sublimit as then in effect, either (i) MMI
shall pay to the Multi-Currency Agent on such date an amount equal to such
excess or (ii) each Borrower shall repay the principal amount of Multi-Currency
Revolving Loans then outstanding and owed by such Borrower in an aggregate
principal amount equal to such Borrower's Prepayment Pro Rata Share of such
excess (up to the aggregate amount of all Multi-Currency Letter of Credit
Outstandings at such time, in respect of the Multi-Currency Letters of Credit)
and the Multi-Currency Agent shall hold such
31
payment as security for the respective obligations of each Borrower under this
clause (a)(iii) pursuant to a cash collateral agreement to be entered into in
form and substance reasonably satisfactory to the Administrative Agent (which
shall permit certain investments in Cash Equivalents reasonably satisfactory to
the Administrative Agent and the Collateral Agent until the proceeds are applied
to the secured obligations).
(iv) If on any date the sum of (i) the aggregate principal amount of
Mutli-Currency Revolving Loans denominated in any Approved Foreign Currency and
owed by any Local Currency Borrower (after giving effect to all other repayment,
thereof on such date) plus the Multi-Currency Letter of Credit Outstandings in
----
respect of Multi-Currency Letters of Credit denominated in such Approved Foreign
Currency on such date exceeds the lesser of (A) the Foreign Borrowing Base with
respect to such Local Currency Borrower at such time (based on the Borrowing
Base Certificate last delivered) and (B) 110% of the Currency Sublimit for such
Approved Foreign Currency, such Local Currency Borrower shall repay the
principal amount of Multi-Currency Loans owed by such Local Currency Borrower in
an aggregate amount to such excess.
(b) On the Business Day after the date of receipt thereof by any
Credit Party and/or any of their respective Subsidiaries of Cash Proceeds from
any Asset Sale, an amount equal to 100% of the Net Cash Proceeds from such Asset
Sale shall be applied as a mandatory repayment of principal of the outstanding
Revolving Loans owed by such Credit Party or, in the case of MMI, owed by any
Credit Party, provided that with respect to no more than $1,000,000 in the
--------
aggregate of such Net Cash Proceeds in any fiscal year of MMI, such Net Cash
Proceeds shall not be required to be so applied on such date to the extent that
no Default or Event of Default then exists and the Borrowers deliver a
certificate to the Administrative Agent on or prior to such date stating that
such Net Cash Proceeds shall be used to purchase assets used or to be used in
the businesses referred to in Section 8.01(a) (including, without limitation
(but only to the extent permitted by Section 8.02), capital stock of a
corporation engaged in any such business) within 90 days following the date of
such Asset Sale (which certificate shall set forth the estimates of the proceeds
to be so expended), provided further that (1) if all or any portion of such Net
-------- -------
Cash Proceeds not so applied to the repayment of outstanding Revolving Loans are
not so used (or contractually committed to be used) within such 90 day period,
such remaining portion shall be applied on the last day of such period as a
mandatory repayment of principal of outstanding Revolving Loans as provided
above in this Section 4.02(A)(b) and (2) if all or any portion of such Net Cash
Proceeds are not required to be applied on the 90th day referred to in clause
(1) above because such amount is contractually committed to be used and
subsequent to such date such contract is terminated or expires without such
portion being so used, then such remaining portion shall be applied on the date
of such termination or expiration as a mandatory repayment of principal of
outstanding Revolving Loans as provided above in this Section 4.02(A)(b).
(c) On the Business Day after the date of the receipt thereof by any
Credit Party or any of its Subsidiaries of Cash Proceeds from the sale or
issuance by such Credit
32
Party or such Subsidiary of any capital stock or other ownership or profit
interest, any securities convertible into or exchangeable for capital stock or
other ownership or profit interest or any warrants, rights or options to acquire
capital stock or other ownership or profit interest (other than equity issued in
connection with the exercise by employees of any Credit Party or any of its
Subsidiaries of employee stock option), an amount equal to 100% of the Net Cash
Proceeds from such sale or issuance of equity shall be applied as a mandatory
repayment of principal of the outstanding Revolving Loans owed by such Credit
Party or, in the case of MMI, owed by any Credit Party.
(d) On the Business Day after the date of the receipt thereof by any
Credit Party or any of its Subsidiaries of Cash Proceeds from the incurrence or
issuance of Indebtedness by such Credit Party or such Subsidiary, an amount
equal to 100% of the Net Cash Proceeds from such incurrence or issuance of
Indebtedness (other than Indebtedness permitted to be incurred by Section 8.04)
shall be applied by such Credit Party or MMI as a mandatory repayment of
principal of the outstanding Revolving Loans owed by such Credit Party or, in
the case of MMI, owed by any Credit Party.
(e) Within 5 days following each date on which any Credit Party or any
of its Subsidiaries receives any proceeds from any Extraordinary Receipt, an
amount equal to 100% of the Net Cash Proceeds of such Extraordinary Receipt
shall be applied by such Credit Party or MMI as a mandatory repayment of
principal of outstanding Revolving Loans owed by such Credit Party or, in the
case of MMI, owed by any Credit Party; provided that so long as no Default or
--------
Event of Default then exists and such proceeds received in respect of a Recovery
Event do not exceed $1,500,000, such proceeds shall not be required to be so
applied on such date to the extent that the Borrowers have delivered a
certificate to the Administrative Agent on or prior to such date stating that
such proceeds shall be used to replace or restore any properties or assets in
respect of which such proceeds were paid within 180 days following the date of
the receipt of such proceeds (which certificate shall set forth the estimates of
the proceeds to be so expended), and provided further that (i) if the amount of
-------- -------
such proceeds received in respect of a Recovery Event exceeds $1,500,000, then
the entire amount and not just the portion in excess of $1,500,000 shall be
applied as a mandatory repayment of principal of the outstanding Revolving Loans
as provided above in this Section 4.02(A)(e), (ii) if all or any portion of such
proceeds not required to be applied to the repayment of outstanding Revolving
Loans pursuant to the preceding proviso are not so used (or contractually
committed to be used) within 180 days after the date of the receipt of such
proceeds, such remaining portion shall be applied on the last day of such period
as a mandatory repayment of principal of the outstanding Revolving Loans as
provided above in this Section 4.02(A)(e) and (iii) if all or any portion of
such proceeds are not required to be applied on the 180th day referred to in
clause (ii) above because such amount is contractually committed to be used and
subsequent to such date such contract is terminated or expires without such
portion being so used, then such remaining portion shall be applied on the date
of such termination or expiration as a mandatory repayment of principal of
outstanding Revolving Loans as provided above in this Section 4.02(A)(e).
33
(f) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid in full
on the Swingline Expiry Date and (ii) all other then outstanding Loans shall be
repaid in full on the Maturity Date.
(B) Application.
-----------
(a) With respect to each repayment of Loans required by this Section
4.02, the Borrowers may designate the Types of Loans which are to be repaid and
the specific Borrowing(s) pursuant to which made; provided that (i) if any
--------
payment to be made under Section 4.02(A) on account of Eurodollar Loans would be
made other than on the last day of an Interest Period applicable to such
Eurodollar Loan, the Borrower which is making such prepayment shall compensate
the Banks in accordance with Section 1.11; (ii) if any repayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount, such Borrowing shall be immediately converted into a Borrowing of Base
Rate Loans; and (iii) each repayment of any Loans made pursuant to a Borrowing
shall be applied pro rata among such Loans; provided that no repayment pursuant
--- ---- --------
to Section 4.02(A)(a) shall be applied to any Revolving Loans of a Defaulting
Bank. In the absence of a designation by the Borrowers as described in the
preceding sentence, the Administrative Agent shall, subject to the above, make
such designation in its sole discretion with a view, but no obligation, to
minimize breakage costs owing under Section 1.11.
(b) All prepayments under this Section 4 shall be made together with
accrued interest to the date of such prepayment on the principal amount repaid.
(c) Amounts prepaid pursuant to Sections 4.02(A)(a), (b), (d) and (e)
may be reborrowed. Amounts prepaid pursuant to Sections 4.02(A)(c) may not be
reborrowed.
4.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement or under any Note shall be
made to the Appropriate Agent for the ratable account of the Banks entitled
thereto, not later than 12:00 Noon (Relevant Currency Time) on the date when
due, and shall be made in immediately available funds and in US Dollars, or in
the case of any Multi-Currency Revolving Loan or Multi-Currency Letter of Credit
in the Approved Foreign Currency in which such Multi-Currency Loan or Multi-
Currency Letter of Credit is denominated at the Appropriate Payment Office, it
being understood that written, telex or facsimile transmission notice by a
Borrower to the Appropriate Agent to make a payment from the funds in such
Borrower's accounts at the Appropriate Payment Office shall constitute the
making of such payment to the extent of such funds held in such account. Any
payments under this Agreement or under any Note which are made later than 12:00
Noon (Relevant Currency Time) shall be deemed to have been made on the next
succeeding Business Day. Whenever any payment to be made hereunder shall be
34
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
4.04 Net Payments. (a) All payments made by each Borrower hereunder
------------
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Bank pursuant to the laws
of the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located or any
subdivision thereof or therein or Australian income tax levied on a Bank
pursuant to Section 25(2) of the Income Tax Assessment ▇▇▇ ▇▇▇▇ (Commonwealth))
and all interest, penalties or similar liabilities with respect thereto (all
such non-excluded taxes, levies, imposts, duties, fees, assessments or other
charges being referred to collectively as "Taxes"). If any Taxes are so levied
or imposed, each Borrower making any payment agrees to pay the full amount of
such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement or under any Note, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or in such Note. If any amounts are payable by
any Borrower in respect of Taxes pursuant to the preceding sentence, such
Borrower agrees to reimburse each Bank, upon the written request of such Bank,
for Taxes imposed on or measured by the net income or net profits of such Bank
pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Bank is located and for
any withholding of Taxes as such Bank shall determine are payable by, or
withheld from, such Bank in respect of such amounts so paid to or on behalf of
such Bank pursuant to the preceding sentence and in respect of any amounts paid
to or on behalf of such Bank pursuant to this sentence. Each Borrower will
furnish to the Administrative Agent within 30 days after the date the payment of
any Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by such Borrower. Each Borrower agrees to indemnify and
hold harmless each Bank, and reimburse such Bank upon its written request, for
the amount of any Taxes so levied or imposed and paid by such Bank.
(b) Each Bank agrees to deliver to the Borrowers and the
Administrative Agent on or prior to the Effective Date, or in the case of a Bank
that is an assignee or transferee of an interest under this Agreement pursuant
to Section 1.13 or 12.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or
35
transfer), on the date of such assignment or transfer to such Bank, any form or
certificate that is required by any taxing authority to demonstrate such Bank's
entitlement to an exemption from or reduction in Home Jurisdiction Withholding
Taxes (as defined below), if any, with respect to payments to be made under this
Agreement including, if applicable, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit C (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments to be made under this Agreement and under any Note;
provided, however, that such Bank shall have been advised in writing by each
-------- -------
Borrower of the form or certificate applicable to it, determined by reference to
the jurisdiction of organization and applicable lending office of such Bank set
forth on Annex I hereto, in the case of a Bank that is an assignee or transferee
of an interest under this Agreement pursuant to Section 1.13 or 12.04 (unless
the respective Bank was already a Bank thereunder immediately prior to such
assignment or transfer), the jurisdiction of organization and applicable lending
office of such Bank set forth in the Assignment and Assumption Agreement
pursuant to which it became a Bank, or such other branch or office of any Bank
designated by such Bank from time to time. If any form or document referred to
in this subsection (b) requires the disclosure of information greater than that
required on the date hereof by Forms 1001 or 4224 and which a Bank reasonably
considers to be confidential, such Bank shall give notice thereof to the
Borrowers and shall not be obligated to include in such form or document such
confidential information. In addition, each Bank agrees that from time to time
after the Effective Date, when a lapse in time or change in circumstances
renders the previous certification obsolete or inaccurate in any material
respect, upon the written request of a Borrower (but only if the Bank remains
lawfully able to do so) it will deliver to such Borrower and the Administrative
Agent a new accurate and complete form or certificate that is required by any
taxing authority including, if applicable, two new accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-
8 and a Section 4.04(b)(ii) Certificate, as the case may be, and such other
forms as may be required in order to confirm or establish the entitlement of
such Bank to a continued exemption from or reduction in Home Jurisdiction
Withholding Taxes, if any, with respect to payments under this Agreement and any
Note, or it shall immediately notify such Borrower and the Administrative Agent
of its inability to deliver any such Form or Certificate, in which case such
Bank shall not be required to deliver any such Form or Certificate pursuant to
this Section 4.04(b). Notwithstanding anything to the contrary contained in
Section 4.04(a), but subject to Section 12.04(b) and the immediately succeeding
sentence, (x) each Borrower shall be entitled, to the extent it is required to
do so by law, to deduct or withhold income or similar taxes from interest, fees
or other amounts payable hereunder for the account of any Bank to the extent
that such Bank has not provided to such Borrower the form or certificate that
establishes a complete exemption from, or entitlement to a reduction of, such
deduction or withholding and (y) such
36
Borrower shall not be obligated pursuant to Section 4.04(a) hereof to gross-up
payments to be made to a Bank in respect of income or similar taxes imposed if
(I) such Bank has not provided to the Borrowers the form or certificate required
to be provided to the Borrowers pursuant to this Section 4.04(b) or (II) in the
case of a payment, other than interest, to a Bank described in clause (ii)
above, to the extent that such form or certificate does not establish a complete
exemption from, or entitlement to a reduction of, withholding of such taxes.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 4.04 and except as set forth in Section 12.04(b), each
Borrower agrees to pay additional amounts and to indemnify each Bank in the
manner set forth in Section 4.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any amounts
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes after the Effective Date, or, in the case of a Bank that
is an assignee or transferee of an interest under this Agreement pursuant to
Sections 1.13 or 12.04(b) (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), after the date of
such assignment or transfer to such Bank, in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of income or similar Taxes.
SECTION 5. Conditions Precedent.
--------------------
The obligation of each Bank to make each Loan to any Borrower
hereunder, and the obligation of each Letter of Credit Issuer to issue each
Letter of Credit hereunder, is subject, at the time of the making of each such
Loan or the issuance of each such Letter of Credit (except as otherwise
hereinafter indicated), to the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the Initial
-----------------------------
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Administrative Agent for the account of each Bank the
appropriate Revolving Note executed by MMI and to the Swingline Bank the
Swingline Note, executed by MMI, in each case, in the amount, maturity and as
otherwise provided herein.
5.02 No Default; Representations and Warranties. At the time of each
------------------------------------------
Credit Event and also after giving effect thereto and to the application of the
proceeds therefrom (i) no event shall have occurred and be continuing which
constitutes a Default and (ii) all representations and warranties contained
herein and in the other Credit Documents in effect at such time shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.
5.03 Officer's Certificate. On the Initial Borrowing Date, the
---------------------
Administrative Agent shall have received a certificate of MMI dated such date
signed by an appropriate officer
37
of such Borrower stating that all of the applicable conditions set forth in
Sections 5.02, 5.05, 5.07, 5.08, 5.09 and 5.17 exist as of such date.
5.04 Opinions of Counsel. On the Initial Borrowing Date, the
-------------------
Administrative Agent shall have received favorable opinions, addressed to the
Administrative Agent, the Collateral Agent and each of the Banks and dated the
Initial Borrowing Date, from (i) ▇▇▇▇ and ▇▇▇▇ LLP, counsel to the Credit
Parties, which opinion shall be in substantially the form of Exhibit D and as to
such other matters incident to the transactions contemplated herein as the
Agents may reasonably request, and (ii) Japanese counsel to the Credit Parties
and/or the Agents reasonably satisfactory to the Agents, which opinion shall
cover such matters incident to the transactions contemplated herein and in the
other Credit Documents as the Agents may reasonably request and shall be in form
and substance reasonably satisfactory to the Agents.
5.05 Corporate Proceedings. (a) On the Initial Borrowing Date, the
---------------------
Administrative Agent shall have received from each Credit Party listed on Annex
5.05 a certificate, dated the Initial Borrowing Date, signed by the chairman, a
vice chairman, the president, any vice president or representative director of
such Credit Party, and attested to by the secretary or any assistant secretary
of such Credit Party, in the form of Exhibit E with appropriate insertions,
together with copies of the Certificate of Incorporation and By-Laws or the
Articles of Incorporation and the Corporate Registry or the Memorandum and
Articles of Association of such Credit Party, all amendments thereto, if any,
and the resolutions of the Board of Directors of such Credit Party referred to
in such certificate. All of the foregoing (including such Certificate of
Incorporation, By-Laws and amendments) shall approve the Transaction, this
Agreement and the other Documents to which the applicable Credit Party is or is
to be a party and be reasonably satisfactory to the Administrative Agent.
(b) On the Initial Borrowing Date, all corporate and legal proceedings
and all instruments and agreements in connection with the transactions
contemplated by this Agreement and the other Documents and necessary for the
approval thereof or consent thereto shall be in form and substance reasonably
satisfactory to the Administrative Agent, and the Administrative Agent shall
have received all information and copies of all certificates, documents and
papers, including good standing certificates, bring-down certificates and any
other records of corporate proceedings and governmental approvals, if any, which
the Administrative Agent reasonably may have requested in connection therewith,
such documents and papers, where appropriate, to be certified by proper
corporate or governmental authorities reasonably satisfactory to the
Administrative Agent and the Collateral Agent.
(c) On the Initial Borrowing Date, the ownership, capital, corporate
and legal structure (including, without limitation, the terms of any capital
stock, options, warrants or other securities issued by any Borrower or any of
its Subsidiaries), and the management of MMI and each of its Subsidiaries, and
each related agreement and instrument, in each case after giving effect to the
Transaction, shall be acceptable to the Administrative Agent and the Required
Banks.
38
(d) On the Initial Borrowing Date, the Administrative Agent shall have
received with respect to each Credit Party listed on Annex 5.05 a copy of (i) a
certificate of the Secretary of State of the jurisdiction of incorporation of
such Credit Party dated reasonably near the Initial Borrowing Date, listing the
charter of such Credit Party and each amendment thereto on file in such
Secretary of State's office and certifying that (A) such charter is a true and
correct copy thereof, (B) such amendments are the only amendments to such Credit
Party's charter on file in such Secretary of State's office, (C) such Credit
Party has paid all franchise taxes to the date of such certificate and (D) such
Credit Party is duly incorporated and in good standing under the laws of the
State of the jurisdiction of its incorporation or (ii) the equivalent thereof in
any jurisdiction outside of the United States in which any Credit Party is
organized, except that in respect to MMI-Australia certified evidence
(including, without limitation, a certified except of the corporate registry) of
such information may be received.
5.06 Adverse Change, Etc. On or prior to the Initial Borrowing
-------------------
Date, nothing shall have occurred (and neither the Banks nor the Administrative
Agent shall have become aware of any facts or conditions not previously known)
which the Required Banks or the Administrative Agent shall determine (a)
constitutes, or could reasonably be expected to constitute, a Material Adverse
Change since December 31, 1996 or (b) has, or could reasonably be expected to
have, a Material Adverse Effect.
5.07 Litigation. On the Initial Borrowing Date, there shall be no
----------
actions, suits, investigations, litigations or proceedings pending or threatened
before any court, governmental agency or arbitrator (a) which purport to affect
the legality, validity or enforceability of the Transaction, this Agreement or
any other Document or (b) which the Administrative Agent or the Required Banks
shall determine could reasonably be expected to (i) have a Material Adverse
Effect or (ii) have a material adverse effect on the Transaction.
5.08 Approvals. On or prior to the Initial Borrowing Date, all
---------
necessary governmental (domestic and foreign), corporate, shareholder and third
party approvals and consents including, but not limited to, the delivery to the
Administrative Agent of reasonable proof of any notice to, filing with, or
approval of, the Japanese Minister of Finance required to be made or procured
pursuant to the Foreign Exchange and Foreign Trade Control Law (Law No. 228 of
1949 as amended), in connection with the Transaction, the transactions
contemplated by the Documents, the Documents and otherwise referred to herein or
therein shall have been obtained and remain in effect, all applicable waiting
periods shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon the consummation of the Transaction, the transactions contemplated by the
Documents and otherwise referred to herein or therein, or that could threaten or
seek to threaten any of the foregoing and no law, regulation or rule shall be
applicable to any Credit Party or to the Transaction which in the judgment of
the Administrative Agent could threaten or seek to threaten any of the
foregoing. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a
39
hearing seeking injunctive relief or other restraint pending or notified
prohibiting or imposing materially adverse conditions upon the consummation of
the Transaction or the making of Loans.
5.09 Consummation of the Transaction. (a) On the Initial Borrowing
-------------------------------
Date, the Dropdown shall have been consummated strictly in accordance with the
Transaction Documents and all applicable laws and regulations, each of the
conditions precedent to the consummation of the Dropdown (including, without
limitation, the accuracy in all material respects of the representations and
warranties contained in the Transaction Documents) shall have been satisfied and
not waived (except with the written consent of the Administrative Agent and the
Required Banks) to the satisfaction of the Administrative Agent and the Required
Banks, and the Transaction Documents shall be in full force and effect. On the
Initial Borrowing Date, the assets comprising the MMI Business shall be
transferred to MMI and its Subsidiaries free and clear of all Liens other than
Permitted Liens.
(b) On or prior to the Initial Borrowing Date, there shall have been
delivered to the Administrative Agent certified true and correct copies of all
Documents entered into on or prior to such date in connection with the
Transaction (including, without limitation, all of the Transaction Documents),
and all of the terms and conditions of such Documents, as well as the structure
of the Transaction, in all material respects, shall be in form and substance
satisfactory to the Administrative Agent and the Required Banks.
(c) On the Initial Borrowing Date, MMI and its Subsidiaries, after
giving effect to the Transaction, shall be in compliance with all existing
financial obligations.
(d) On the Initial Borrowing Date, the Administrative Agent shall have
received evidence in form, scope and substance reasonably satisfactory to it
that the matters set forth in this Section 5.09 have been satisfied on such
date.
5.10 Security Documents. On the Initial Borrowing Date, each Credit
------------------
Party listed on Annex 5.05 shall have duly authorized, executed and delivered a
Security Agreement in the form of Exhibit F-1 or F-3, as appropriate, covering
all of the Security Agreement Collateral, together with:
(A) all of the Pledged Securities referred to in each Security
Agreement and owned by such Credit Party endorsed in blank in the case of
promissory notes or accompanied by executed and undated stock powers in the
case of capital stock;
(B) acknowledgment copies or stamped receipt copies of proper
Financing Statements (Form UCC-1) or appropriate local equivalent duly
filed under the UCC or appropriate local equivalent of each jurisdiction as
the Collateral Agent may deem necessary or desirable to perfect and protect
the first priority security interests created by each Security Agreement;
40
(C) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, each of a recent date listing all effective
financing statements that name such Credit Party or any of its Subsidiaries
as debtor or otherwise relate to the MMI Business and that are filed in the
jurisdictions referred to in clause (B) above, together with copies of such
financing statements (none of which shall cover the Collateral except (x)
those with respect to which appropriate termination statements executed by
the secured lender thereunder have been delivered to the Administrative
Agent and (y) to the extent evidencing Permitted Liens);
(D) evidence of the completion of all other action, recordings and
filings of or with respect to each Security Agreement delivered pursuant to
this Section 5.10 as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable, to perfect the security interests created by
the Security Agreement;
(E) evidence of the insurance required by the terms of the Security
Agreements;
(F) copies of the Assigned Agreements, referred to in each Security
Agreement; and
(G) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable, to perfect the security
interests created by the Security Agreement have been taken;
and each Security Agreement delivered pursuant to this Section 5.10 shall be in
full force and effect.
5.11 Guaranties. On the Initial Borrowing Date, each of MMI Holdings
----------
and MMI shall have duly authorized, executed and delivered a Parent Guaranty in
the form of Exhibit G-1 (as modified, amended or supplemented from time to time
in accordance with the terms thereof and hereof, each a "Parent Guaranty"), and
each Subsidiary Guarantor listed on Annex 5.11 shall have duly authorized,
executed and delivered a Subsidiary Guaranty in the form of Exhibit G-2 or G-3,
as appropriate (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, each a "Subsidiary Guaranty", and,
together with each Parent Guaranty, the "Guaranties"), and each Guaranty shall
be in full force and effect.
5.12 CST Guaranty. On the Initial Borrowing Date, Corporate Software
------------
& Technology, Inc. shall have duly authorized, executed and delivered a guaranty
in the form of Exhibit L (the "CST Guaranty"), and the CST Guaranty shall be in
full force and effect.
41
5.13 Plans; Existing Indebtedness Agreements; Shareholders'
------------------------------------------------------
Agreements; Management Agreements; Employment Agreements; Non-Compete
---------------------------------------------------------------------
Agreements; Tax Allocation Agreements; Material Contracts. On or prior to the
---------------------------------------------------------
Initial Borrowing Date, there shall have been delivered to the Administrative
Agent copies, certified as true and correct by an appropriate officer of MMI,
of:
(a) all Plans of MMI or any of its Subsidiaries after giving effect to
the consummation of the Transaction and for each such Plan (i) that is a
"single-employer plan" (as defined in Section 4001(a)(15) of ERISA) the
most recently completed actuarial valuation prepared therefor by such
Plan's regular enrolled actuary and the Schedule B, "Actuarial Information"
to the IRS Form 5500 (Annual Report) most recently filed with the Internal
Revenue Service and (ii) that is a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA), each of the documents referred to in clause
(i) either in the possession of any Credit Party or any ERISA Affiliate or
reasonably available thereto from the sponsor or trustees of such Plan;
(b) all agreements evidencing or relating to the Existing Indebtedness
that are to remain in effect after giving effect to the consummation of the
Transaction (collectively, the "Existing Indebtedness Agreements");
(c) all other agreements entered into by MMI or any of its
Subsidiaries governing the terms and relative rights of its membership
interests or capital stock, as the case may be, and any agreements entered
into by members or shareholders, as the case may be, relating to any such
entity with respect to their capital stock, in each case that are to remain
in effect after giving effect to the consummation of the Transaction
(collectively, the "Shareholders' Agreements");
(d) any material agreements (or the forms thereof) with members of, or
with respect to, the management of MMI or any of its Subsidiaries involving
consideration payable to or by MMI or any of its Subsidiaries of $500,000
or more in any year that are to remain in effect after giving effect to the
consummation of the Transaction (collectively, the "Management
Agreements");
(e) any material employment agreements entered into by MMI or any of
its Subsidiaries involving consideration payable by MMI or any of its
Subsidiaries of $500,000 or more in any year (collectively, the "Employment
Agreements");
(f) any tax sharing or tax allocation agreements entered into by MMI
or any of its Subsidiaries (collectively, the "Tax Allocation Agreements");
and
(g) any material contracts entered into by MMI or any of its
Subsidiaries, the breach or termination of which would have a Material
Adverse Effect (collectively, the "Material Contracts");
42
all of which Plans, Existing Indebtedness Agreements, Shareholders' Agreements,
Management Agreements, Employment Agreements, Non-Compete Agreements, Tax
Allocation Agreements and Material Contracts shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall be in full force
and effect on the Initial Borrowing Date.
5.14 Solvency Certificate; Evidence of Insurance; Financial
------------------------------------------------------
Statements. On the Initial Borrowing Date, the Administrative Agent shall
----------
have received:
(a) a certificate from the chief financial officer of each of MMI
addressed to the Administrative Agent and each of the Banks and dated the
Initial Borrowing Date and certifying that, after giving effect to the
Transaction and the incurrence of all financings contemplated therein and
herein, each such Borrower individually, and each such Borrower and its
Subsidiaries (on a consolidated basis) are not insolvent and will not be
rendered insolvent by the indebtedness incurred in connection herewith,
will not be left with unreasonably small capital with which to engage in
their respective businesses and will not have incurred debts beyond their
ability to pay such debts as they mature and become due and that no
proceeds of the Loans will be used to purchase assets or capital stock in
connection with the Transaction;
(b) evidence of insurance complying with the requirements of Section
7.03 for the business and properties of MMI and its Subsidiaries
(including, without limitation, the MMI Business), in scope, form and
substance reasonably satisfactory to the Administrative Agent and the
Required Banks and naming the Collateral Agent as an additional insured
and/or loss payee, and stating that such insurance shall not be cancelled
or revised without at least 30 days' (or 10 days' in the case of non-
payment of premium) prior written notice by the insurer to the Collateral
Agent;
(c) the annual audited consolidated financial statements and
consolidating financial statements for the MMI Business for the most
recently completed fiscal year and such other prior fiscal years as may be
available, including balance sheets and statements of income and cash flow,
and all of the foregoing shall have been audited by independent public
accountants of recognized national standing and prepared in accordance with
GAAP (and containing an unqualified opinion of such accountants) and shall
be in form and substance satisfactory to the Administrative Agent and the
Required Banks;
(d) the unaudited balance sheets, statements of income and cash flow
of the MMI Business for each fiscal month in 1997 ending on or before the
Initial Borrowing Date, together with working capital detail of the MMI
Business for the prior twelve months and working capital detail for each
Borrower for the twelve months immediately succeeding the Initial Borrowing
Date, and all of the foregoing shall be in
43
form and substance satisfactory to the Administrative Agent and the
Required Banks; and
(e) such financial, business and other information regarding each
Credit Party and its Subsidiaries as the Banks or the Administrative Agent
shall have requested.
5.15 Pro Forma Balance Sheet. On or prior to the Initial Borrowing
-----------------------
Date, there shall have been delivered to the Administrative Agent an unaudited
pro forma consolidated balance sheet as of the Initial Borrowing Date of each of
--- -----
MMI and its Subsidiaries and each Borrower and its Subsidiaries after giving
effect to the Transaction and prepared in accordance with GAAP, together with a
related funds flow statement, which pro forma balance sheets and funds flow
--- -----
statement shall be in form and substance reasonably satisfactory to the
Administrative Agent and the Required Banks.
5.16 Projections. On or prior to the Initial Borrowing Date, the
-----------
Banks shall have received (i) the financial projections (the "Projections") set
forth in Annex 5.16, which include the projected results of the Borrowers and
their respective Subsidiaries and of MMI Holdings and its Subsidiaries, taken
as a whole for the four fiscal years ended after the Initial Borrowing Date and
(ii) a pro forma monthly borrowing base for the Borrowers for each month of the
--- -----
12-month period immediately following the Initial Borrowing Date.
5.17 Existing Indebtedness. On the Initial Borrowing Date and
---------------------
after giving effect to the Transaction and the Loans incurred on the Initial
Borrowing Date, neither MMI Holdings nor any of its Subsidiaries shall have any
Preferred Stock or Indebtedness outstanding except for the MMI Holdings
Preferred Stock, the Obligations and the Existing Indebtedness. On and as of
the Initial Borrowing Date, all of the Existing Indebtedness shall remain
outstanding after giving effect to the Transaction and the other transactions
contemplated hereby without any default or event of default existing thereunder
or arising as a result of the Transaction and the other transactions
contemplated hereby, and there shall not be any amendments or modifications to
the Existing Indebtedness Agreements other than as requested or approved by the
Administrative Agent or the Required Banks. On and as of the Initial Borrowing
Date, the Administrative Agent and the Required Banks shall be satisfied with
the amount of and the terms and conditions of all Existing Indebtedness.
Furthermore, the Banks shall be satisfied that all Indebtedness of each Borrower
other than such Indebtedness permitted under this Agreement has been prepaid,
redeemed or defeased in full or otherwise satisfied or extinguished.
5.18 Field Examinations; Initial Borrowing Base Certificate. (a)
------------------------------------------------------
On or prior to the Initial Borrowing Date, the Administrative Agent shall have
completed a field examination of the accounts receivable, inventory, payables,
controls and systems of MMI and its Subsidiaries (including the MMI Business),
the results of which examination shall be satisfactory to the Collateral Agent
and the Required Banks. Furthermore, the Administrative
44
Agent shall have received asset valuation reports with respect to all the Real
Property and personal property owned by MMI or its Subsidiaries, in form and
substance satisfactory to the Administrative Agent.
(b) On or prior to the Initial Borrowing Date, the Administrative
Agent shall have received an initial Borrowing Base Certificate for MMI meeting
the requirements of Section 7.01(i).
5.19 Due Diligence. On or prior to the Initial Borrowing Date, the
-------------
Banks shall have completed a due diligence investigation of MMI and its
Subsidiaries and the MMI Business in scope, and with results, satisfactory to
the Banks, and nothing shall have come to the attention of the Banks during the
course of such due diligence investigation to lead them to believe (i) that any
information provided to the Agents and the Banks by, or on behalf of, the
Borrowers was or has become misleading, incorrect or incomplete in any material
respect, (ii) that, following the consummation of the Dropdown, MMI and its
Subsidiaries would not have good and marketable title to all material assets of
the MMI Business and (iii) the Transaction will have a Material Adverse Effect;
without limiting the generality of the foregoing, the Banks shall have been
given such access to the management, records, books of account, contracts and
properties of MMI and its Subsidiaries as they shall have requested.
5.20 Payment of Fees. On the Initial Borrowing Date, all costs,
---------------
fees and expenses, and all other compensation contemplated by this Agreement,
due to the Administrative Agent, the Syndication Agent or the Banks (including,
without limitation, legal fees and expenses) shall have been paid.
5.21 Total Unutilized Commitment. On the Initial Borrowing Date
---------------------------
and concurrently with the incurrence of Loans on such date, the principal amount
of Loans to be incurred on such date, when added to an amount equal to
$5,000,000, shall not exceed the Total Borrowing Base.
5.22 Notice of Borrowing; Letter of Credit Request. The
---------------------------------------------
Administrative Agent shall have received a Notice of Borrowing satisfying the
requirements of Section 1.03 with respect to each incurrence of Loans, and if a
Letter of Credit is to be issued, the Administrative Agent and the Appropriate
Letter of Credit Issuer shall have received a Letter of Credit Request
satisfying the requirements of Section 2.02 with respect to each issuance of a
Letter of Credit.
5.23 Process Agent Letters. Intentionally Omitted.
---------------------
5.24 Proceeds. On the Initial Borrowing Date, MMI Holdings and MMI
--------
shall have received net proceeds from the sale of a certain Portland, Oregon
printing plant in an amount equal to at least $3,500,000. As of the Initial
Borrowing Date, MMI anticipates that
45
during the 60-day period following the Initial Borrowing Date, the operation of
its business will generate at least $10,000,000 from a permanent reduction in
Working Capital.
5.25 Other Documents. On or before the Initial Borrowing Date, the
---------------
Administrative Agent shall have received such other approvals, opinions or
documents as any Bank through the Administrative Agent may reasonably request.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Credit Party to the Administrative Agent and
each of the Banks that all of the applicable conditions specified above exist or
shall have been satisfied as of the date of such Credit Event. All of the
certificates, legal opinions and other documents and papers referred to in this
Section 5, unless otherwise specified, shall be delivered to the Administrative
Agent at its Notice Office for the account of each of the Banks and, except for
the Notes, in sufficient counterparts for each of the Banks and shall be
satisfactory in form and substance to the Administrative Agent and the Required
Banks.
For purposes of determining compliance with the conditions specified
in this Section 5, each Bank shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Banks or the Required Banks unless an officer of the Administrative Agent
responsible for the transactions contemplated by the Credit Documents shall have
received notice from such Bank prior to the initial Credit Event specifying its
objection thereto and if such initial Credit Event is a Loan, such Bank shall
not have made available to the Administrative Agent such Bank's ratable portion
of such Loan.
SECTION 6. Representations, Warranties and Agreements.
------------------------------------------
In order to induce the Banks to enter into this Agreement and to make
the Loans and issue and/or participate in the Letters of Credit provided for
herein, each Credit Party makes the following representations, warranties and
agreements with the Banks, in each case after giving effect to the Transaction,
all of which shall survive the execution and delivery of this Agreement, the
making of the Loans and the issuance of the Letters of Credit (with the
occurrence of each Credit Event being deemed to constitute a representation and
warranty that the matters specified in this Section 6 are true and correct in
all material respects on and as of the date of each such Credit Event, unless
stated to relate to a specific earlier date in which all representations and
warranties shall be true and correct in all material respects as of such earlier
date):
6.01 Corporate Status. Each Credit Party and each of their
----------------
respective Subsidiaries (i) is a duly organized, or incorporated, and validly
existing corporation in good standing (however, the good standing requirement
does not have to be met in those jurisdictions where the concept does not exist)
under the laws of the jurisdiction of its organization, (ii) has the corporate
power and authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties
46
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in all jurisdictions where it is required to be so
qualified or licensed except with respect to clause (iii) where the failure to
be so qualified or authorized to do business would not have a Material Adverse
Effect.
6.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Documents to which it is a party. Each Credit Party has duly executed and
delivered each Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Credit Party
enforceable against such Credit Party in accordance with its terms, except to
the extent that the enforceability thereof may be limited by applicable voidable
preference, bankruptcy, insolvency, reorganization, moratorium or similar laws
generally affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law).
6.03 No Violation. Neither the execution, delivery or performance
------------
by any Credit Party of the Documents to which it is a party nor compliance by
any Credit Party with the terms and provisions thereof, nor the consummation of
the transactions contemplated herein or therein, (i) will contravene any
applicable provision of any law, statute, rule or regulation, or any order,
writ, injunction, judgment, award, determination or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, any contract, indenture, mortgage, deed of
trust, lease, loan agreement, credit agreement or any other material agreement
or instrument to which any Credit Party or any of its Subsidiaries is a party or
by which it or any of its property or assets are bound or to which it may be
subject or (other than pursuant to the Security Documents) result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of any Credit Party or any of its Subsidiaries, as
the case may be, except with respect to the execution, delivery or performance
of the Transaction Documents, for such breaches or defaults which, either
individually or in the aggregate, would not be expected to have a Material
Adverse Effect, or (iii) will violate any provision of the Certificate of
Incorporation, By-Laws, Articles of Incorporation, Memorandum or Articles of
Association or other similar constitutional documents of any Credit Party or
any of its Subsidiaries. No Credit Party or any of its Subsidiaries is in
violation of any such law, statute, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in breach of any such contract,
loan agreement, indenture, mortgage, deed of trust, lease, loan agreement,
credit agreement or other material agreement or other instrument, the violation
or breach of which could have a Material Adverse Effect.
6.04 Litigation. There are no actions, investigations,
----------
litigations, suits or proceedings pending or, to the knowledge of MMI or any of
its Subsidiaries, threatened,
47
before any court, governmental agency or arbitrator with respect to MMI or any
of its Subsidiaries or the MMI Business (i) that could reasonably be expected to
have a Material Adverse Effect or (ii) purports to affect the legality, validity
or enforceability of the Transaction, this Agreement or any other Document or
the consummation of the transactions contemplated hereby. Additionally, there
does not exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the occurrence of any Credit Event.
6.05 Use of Proceeds: Margin Regulations.
------------------------------------
(a) The proceeds of all Loans shall be utilized for the general
corporate and working capital purposes of the Borrowers and their respective
Subsidiaries; provided that proceeds of the U.S. Revolving Loans and Swingline
--------
Loans in an amount not to exceed $5,000,000 may be used to finance the
Transaction and to pay the fees and expenses incurred in connection therewith.
(b) If applicable, neither the making of any Loan, nor the use of the
proceeds thereof, will violate the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System and no part of the proceeds of
any Loan will be used to purchase or carry any Margin Stock or to extend credit
for the purpose of purchasing or carrying any Margin Stock.
6.06 Approvals. Except as may have been obtained or made on or
---------
prior to the Initial Borrowing Date (and which remain in full force and effect
on the Initial Borrowing Date) or as may be required to be obtained pursuant to
Section 7.19, no order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, or notice to,
any foreign or domestic governmental or public body or authority or any other
third party, or any subdivision thereof, is required to authorize or is required
in connection with (i) the due execution, delivery, recordation, filing and
performance by any Credit Party of any Document to which it is or is to be a
party or for the consummation of the Transaction or the other transactions
contemplated hereby, (ii) the legality, validity, binding effect or
enforceability of any Document, (iii) the grant by any Credit Party of the Liens
granted by it pursuant to the Security Documents, (iv) the perfection or
maintenance of the Liens created by the Security Documents (including the first
priority nature thereof) or (v) the exercise by the Administrative Agent or the
Collateral Agent or any Bank of its rights under, or the remedies in respect of
the Collateral pursuant to, the Credit Documents.
6.07 Investment Company Act. If applicable, neither any Credit
----------------------
Party nor any of its Subsidiaries is an "investment company," or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended. Neither the making of any Loans, nor the issuance of any Letters of
Credit, nor the application of the proceeds or repayment thereof by any
Borrower, nor the consummation of the other transactions contemplated hereby,
will violate any provision of such Act or any rule, regulation or order of the
SEC thereunder.
48
6.08 Public Utility Holding Company Act. If applicable, neither
----------------------------------
any Credit Party nor any of its Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
6.09 True and Complete Disclosure. All factual information
----------------------------
heretofore or contemporaneously furnished by or on behalf of MMI or any of its
Subsidiaries in writing to the Administrative Agent or any Bank (including,
without limitation, all information contained in the Documents) for purposes of,
or in connection with this Agreement or any transaction contemplated herein is,
and all other such factual information hereafter furnished by or on behalf of
any such Persons in writing to the Administrative Agent or any Bank will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information not misleading at such time in
light of the circumstances under which such information was provided.
6.10 Financial Condition; Financial Statements. (a) On and as of
-----------------------------------------
the Initial Borrowing Date, on a pro forma basis after giving effect to the
--- -----
Transaction and to all Indebtedness incurred, and to be incurred (including,
without limitation, the Loans), and Liens created, and to be created, by each
Credit Party in connection therewith, with respect to each of MMI and its
Subsidiaries (on a consolidated basis) and each of the Borrowers (on a stand-
alone basis) (x) the sum of the assets, at a fair valuation, of each of MMI and
its Subsidiaries (on a consolidated basis) and each of the Borrowers (on a
stand-alone basis) will exceed its debts, (y) it has not incurred nor intended
to, nor believes that it will, incur debts beyond its ability to pay such debts
as such debts mature and (z) it will have sufficient capital with which to
conduct its business. For purposes of this Section 6.10, "debt" means any
liability on a claim, and "claim" means (i) right to payment whether or not such
a right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
or (ii) right to an equitable remedy for breach of performance if such breach
gives rise to a payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(b) The consolidated and consolidating balance sheets of the MMI
Business at December 31, 1996 and at September 30, 1997 and the related
statements of income and cash flow of the MMI Business for the fiscal year or
nine-month period (accompanied (i) in the case of the balance sheets and
statements relating to the 1996 fiscal year, by an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
independent public accountants and (ii) in the case of the balance sheets and
statements relating to the 1997 period, a certificate of the chief financial
officer of MMI), as the case may be, ended as of said dates, copies of which
have heretofore been furnished to each Bank, present fairly the consolidated
financial position of the MMI Business at the dates of said balance sheets and
statements and the results of operations for the periods covered
49
thereby. All such balance sheets and financial statements have been (or will be,
as the case may be) prepared in accordance with GAAP consistently applied except
to the extent provided in the notes to said financial statements and subject, in
the case of the September 30, 1997 balance sheets and statements, to normal
year-end audit adjustments and the absence of footnotes.
(c) Since December 31, 1996 (but after giving effect to the
Transaction as if same had occurred prior thereto), nothing has occurred that
has had or could reasonably be expected to have a Material Adverse Effect nor
has there occurred any Material Adverse Change.
(d) Except as fully reflected in the balance sheets and financial
statements described in Section 6.10(b) and the Indebtedness incurred and
permitted under this Agreement, there were as of the Initial Borrowing Date (and
after giving effect to any Loans made on such date), no liabilities or
obligations (excluding current obligations incurred in the ordinary course of
business) with respect to MMI or any of its Subsidiaries or the MMI Business of
any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due), and no Borrower knows of any basis for the assertion
against any Borrower or any of its Subsidiaries or with respect to the MMI
Business of any such liability or obligation which, either individually or in
the aggregate, are or would be reasonably likely to have, a Material Adverse
Effect.
(e) The Projections are based on good faith estimates and assumptions
made by the management of MMI, and on the Initial Borrowing Date such management
believed that the Projections were reasonable and attainable, it being
recognized by the Banks, however, that projections as to future events are not
to be viewed as facts and that the actual results during the period or periods
covered by the Projections probably will differ from the projected results and
that the differences may be material. There is no fact known to MMI or any of
its Subsidiaries which would have a Material Adverse Effect, which has not been
disclosed herein or in such other documents, certificates and statements
furnished to the Banks for use in connection with the transactions contemplated
hereby.
(f) The consolidated and consolidating pro forma balance sheets of MMI
--- -----
and its Subsidiaries as at September 30, 1997, and the related consolidated and
consolidating pro forma statements of income and cash flows of MMI and its
--- -----
Subsidiaries for the nine-months then ended, certified by the chief financial
officer of MMI, copies of which have been furnished to each Bank, fairly present
the consolidated and consolidating pro forma financial condition of MMI and its
--- -----
Subsidiaries as at such date and the consolidated and consolidating pro forma
--- -----
results of operations of MMI and its Subsidiaries for the period ended on such
date, in each case giving effect to the Transaction and the other transactions
contemplated hereby, all in accordance with GAAP.
50
6.11 Security Interests. On and after the Initial Borrowing Date,
------------------
each of the Security Documents creates (or after the execution and delivery and
perfection thereof will create), as security for the Obligations stated to be
secured thereby, a valid and enforceable equitable interest or perfected first
priority security interest in and Lien on all of the Collateral subject thereto,
superior to and prior to the rights of all third Persons, and subject to no
other Liens (except that the Security Agreement Collateral, the Mortgaged
Properties and the Collateral covered by the Additional Security Documents may
be subject to Permitted Liens relating thereto), in favor of the Collateral
Agent. No filings or recordings are required in order to perfect the security
interests created under any Security Document except for filings or recordings
required in connection with any such Security Document which shall have been
made on or prior to the Initial Borrowing Date as contemplated by Section
5.10(B) or on or prior to the execution and delivery thereof as contemplated by
Sections 7.11, 7.14 and 8.15. The Credit Parties are the legal and beneficial
owners of the Collateral free and clear of any Lien, except for the Liens and
security interests created or permitted under the Credit Documents or otherwise
permitted hereunder.
6.12 Representations and Warranties in Other Documents. All
-------------------------------------------------
representations and warranties set forth in the other Documents were true and
correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Initial Borrowing Date as if such representations and warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date.
6.13 Transaction. At the time of consummation thereof, the
-----------
Dropdown and the Spinoff Transaction shall have been consummated in accordance
with the terms of the respective Documents and all applicable laws. At the time
of consummation thereof, all consents and approvals of, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required to make or consummate the
Dropdown and the Spinoff Transaction have been obtained, given, filed or taken
or waived and are or will be in full force and effect (or effective judicial
relief with respect thereto has been obtained) except where the failure to
obtain, give, file, take or waive would not reasonably be expected to have a
Material Adverse Effect. All applicable waiting periods with respect thereto
have or, prior to the time when required, will have, expired without, in all
such cases, any action being taken by any competent authority which restrains,
prevents, or imposes material adverse conditions upon the Dropdown and the
Spinoff Transaction or the rights of the Credit Parties or their respective
Subsidiaries freely to transfer or otherwise dispose of, or to create any Lien
on, any properties now owned or hereafter acquired by any of them.
Additionally, there does not exist any judgment, order or injunction prohibiting
or imposing material adverse conditions upon the Dropdown and the Spinoff
Transaction, or the occurrence of any Credit Event or the performance by MMI and
its Subsidiaries of their obligations under the Documents and all applicable
laws.
51
6.14 Compliance with ERISA. (a) Each Plan is in substantial
---------------------
compliance with ERISA and the Code so that such Plans would have no Material
Adverse Effect on any Credit Party or any ERISA Affiliate; no Reportable Event
has occurred with respect to a Plan which could result in a Material Adverse
Effect to any Credit Party or any ERISA Affiliate; no Plan is insolvent or in
reorganization; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for a waiver
of the minimum funding standard or an extension of any amortization period
within the meaning of Section 412 of the Code; all contributions required to be
made with respect to a Plan and a Foreign Pension Plan have been timely made
unless such failure would not have a Material Adverse Effect on any Credit Party
or any ERISA Affiliate; none of any Credit Party or any ERISA Affiliate has
incurred a liability to or on account of a Plan which will have a Material
Adverse Effect on any Credit Party or any ERISA Affiliate pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or reasonably expects to
incur any material liability (including any indirect, contingent or secondary
liability) under any of the foregoing Sections with respect to any Plan (other
than liabilities of any ERISA Affiliate which could not, by operation of law or
otherwise, become a liability of any of the Credit Parties); no proceedings have
been instituted to terminate, or to appoint a trustee to administer, any Plan;
no condition exists which presents a material risk to any of the Credit Parties
or any ERISA Affiliate of incurring a liability to or on account of a Plan
pursuant to the foregoing provisions of ERISA and the Code which would have a
Material Adverse Effect; using actuarial assumptions and computation methods
consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of the Credit Parties and their ERISA Affiliates to all Plans which
are multiemployer plans (as defined in Section 4001 (a)(3) of ERISA) in the
event of a complete withdrawal therefrom, as of the close of the most recent
fiscal year of each such Plan ended prior to the date of the most recent Credit
Event, would not result in a Material Adverse Effect; no lien imposed under the
Code or ERISA on the assets of any Credit Party or any ERISA Affiliate exists or
is likely to arise on account of any Plan; and no Credit Party maintains or
contributes to any employee welfare benefit plan (as defined in Section 3(l) of
ERISA) which provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any employee pension benefit
plan (as defined in Section 3(2) of ERISA) the obligations with respect to which
are not recorded in MMI's financial statements and any footnotes related
thereto and which could reasonably be expected to have a Material Adverse
Effect.
(b) No Credit Party has incurred, nor is any Credit Party expected to
incur liability in connection with any Foreign Pension Plan or the termination
of or withdrawal from any Foreign Pension Plan that would have a Material
Adverse Effect.
6.15 Capitalization. On the Initial Borrowing Date and after
--------------
giving effect to the Transaction and the other transactions contemplated hereby,
the authorized capital stock of each Borrower shall consist of the number of
shares of common stock and with par values per share as set forth on Annex 6.15,
all of which shares shall be validly issued and outstanding, are fully paid and
non-assessable and owned by the Persons listed on Annex 6.15, free and
52
clear of all Liens, except those created under the Security Document. None of
the Borrowers has outstanding any securities convertible into or exchangeable
for its capital stock or outstanding any rights to subscribe for or to purchase,
or any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
6.16 Subsidiaries. (a) On and as of the Initial Borrowing Date
------------
and after giving effect to the consummation of the Transaction, the Borrowers
have no Subsidiaries other than such Subsidiaries listed on Annex 6.16.
(b) Annex 6.16 shall include, as of the date hereof (as to each
Subsidiary listed thereon) the jurisdiction of its incorporation, the number of
shares of each class of capital stock authorized, and the number outstanding, on
the date hereof and the percentage of the outstanding shares of each such class
owned (directly or indirectly) by the applicable Credit Party and the number of
shares covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights at the date hereof.
6.17 Intellectual Property. Each of MMI and each of its
---------------------
Subsidiaries owns or holds a valid license to use all the material patents,
trademarks, permits, service marks, trade names, technology, know-how and
formulas or other rights with respect to the foregoing, free from restrictions
that are materially adverse to the use thereof, that are used in the operation
of the business of MMI and each of its Subsidiaries as presently conducted.
6.18 Compliance with Statutes, Etc. Each of MMI and each of its
-----------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including compliance with all applicable Environmental Laws
with respect to any Real Property or governing its business and the requirements
of any permits issued under such Environmental Laws with respect to any such
Real Property or the operations of MMI or any of its Subsidiaries), except where
such non-compliance is not expected to, individually or in the aggregate, have a
Material Adverse Effect.
6.19 Environmental Matters. Except as would not be reasonably
---------------------
expected, either individually or in the aggregate, to result in a Material
Adverse Effect,
(a) Each of MMI and each of its Subsidiaries has complied with, and on
the date of each Credit Event is in compliance with, all applicable
Environmental Laws and the requirements of any permits issued under such
Environmental Laws. There are no pending or, to the best knowledge of MMI and
each Borrower, past or threatened Environmental Claims against MMI or any of its
Subsidiaries or any Real Property owned or operated by MMI or any of its
Subsidiaries. There are no facts, circumstances, conditions or occurrences on
any Real
53
Property owned or operated by MMI or any of its Subsidiaries or, to the
best knowledge of MMI and each Borrower, on any property adjoining or in the
vicinity of any such Real Property that would reasonably be expected (i) to form
the basis of an Environmental Claim against MMI or any of its Subsidiaries or
any such Real Property or (ii) to cause any such Real Property to be subject to
any restrictions on the ownership, occupancy, use or transferability of such
Real Property by MMI or any of its Subsidiaries under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by MMI or any of its Subsidiaries where such generation, use, treatment
or storage has violated or would reasonably be expected to violate any
Environmental Law. Hazardous Materials have not at any time been Released on or
from any Real Property owned or operated by MMI or any of its Subsidiaries in a
manner that could reasonably be expected to form the basis for an Environmental
Claim against MMI or any of its Subsidiaries. There are not now any underground
storage tanks located on any Real Property owned or operated by MMI or any of
its Subsidiaries which could reasonably be expected to form the basis for an
Environmental Claim against MMI or any of its Subsidiaries.
6.20 Properties. All Real Property owned by MMI or any of its
----------
Subsidiaries and all material Leaseholds leased by MMI or any of its
Subsidiaries, in each case as of the Initial Borrowing Date and after giving
effect to the Transaction, and the nature of the interest therein, is correctly
set forth in Annex 6.20. Each of MMI and each of its Subsidiaries has good and
marketable title to, or a validly subsisting leasehold interest in, all material
properties owned or leased by it, including all Real Property reflected in Annex
6.20 or in the financial statements referred to in Section 6.10(b), free and
clear of all Liens, other than Permitted Liens.
6.21 Labor Relations. If applicable, neither MMI nor any of its
---------------
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a Material Adverse Effect. There is (i) no unfair labor
practice complaint pending against MMI or any of its Subsidiaries or, to the
best knowledge of MMI and each Borrower, threatened against any of them, before
the National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against MMI or any of its Subsidiaries or, to the best knowledge of MMI and each
Borrower, threatened against any of them, (ii) no strike, labor dispute,
slowdown or stoppage pending against MMI or any of its Subsidiaries or, to the
best knowledge of MMI and each Borrower, threatened against MMI or any of its
Subsidiaries and (iii) to the best knowledge of MMI and each Borrower, no union
representation question existing with respect to the employees of MMI or any of
its Subsidiaries and, to the best knowledge of MMI and each Borrower, no union
organizing activities are taking place, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as is not reasonably likely to have a Material Adverse Effect.
54
6.22 Tax Returns and Payments. All Federal, state and other
------------------------
material returns, statements, forms and reports for taxes (the "Returns")
required to be filed by or with respect to the income, properties or operations
of MMI and/or any of its Subsidiaries have been timely filed with the
appropriate taxing authority. The Returns accurately reflect all liability for
taxes of MMI and its Subsidiaries for the periods covered thereby. MMI and each
of its Subsidiaries have paid all taxes payable by them other than immaterial
taxes and other taxes which are not yet due and payable, and other than taxes
contested in good faith and for which adequate reserves have been established in
accordance with GAAP. There is no action, suit, proceeding, investigation,
audit, or claim now pending or, to the knowledge of MMI or each Borrower,
threatened by any authority regarding any taxes relating to MMI or any of its
Subsidiaries which would reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect. As of the Initial Borrowing Date,
neither MMI nor any of its Subsidiaries has entered into an agreement or waiver
or been requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of MMI or any of its
Subsidiaries, or is aware of any circumstances that would cause the taxable
years or other taxable periods of MMI or any of its Subsidiaries not to be
subject to the normally applicable statute of limitations. Neither MMI nor any
of its Subsidiaries has incurred, or will incur, any material tax liability in
connection with the Transaction and the other transactions contemplated hereby.
6.23 Existing Indebtedness. Annex 6.23 sets forth a true and
---------------------
complete list of all Indebtedness of MMI and its Subsidiaries as of the Initial
Borrowing Date and which is to remain outstanding after giving effect to the
Transaction and the incurrence of Loans on such date (excluding the Loans and
the Letters of Credit, the "Existing Indebtedness"), in each case showing the
aggregate principal amount thereof and the name of the respective borrower and
any other entity which directly or indirectly guaranteed such debt.
6.24 Investments. Set forth on Annex 6.24 hereto is a complete and
-----------
accurate list of all investments held by any Credit Party or any of its
Subsidiaries, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.
6.25 Stamp Tax. Other than (i) a withholding tax of 10% on
---------
payments of interest or in the nature of interest by or on behalf of MMI-
Australia under this Agreement or the Notes pursuant to Division 11A of Part III
of the Australian Income Tax Assessment Act (ii), (iii) a withholding tax at the
rate of 15% on payments of interest by MMI-Singapore, (iv) a stamp duty imposed
in respect MMI-Singapore with respect to execution of the Credit Agreement, its
Subsidiary Guaranty, the Debenture and its Security Agreement, and (v) a stamp
duty imposed in respect of each original of any Credit Document (other than a
Security Document) if executed in Japan under the Stamp Duty Law (Law No. 23 of
1967 as amended), if executed in Korea under the Stamp Tax Law of Korea (Law No.
4452 of 1991), and Stamp and financial institutions duties under the New South
Wales Duties Act, 1920 or ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ as described in the
opinion of Australian counsel to MMI-Australia to
55
be delivered to the Administrative Agent pursuant to Section 7.19, no income,
stamp or other taxes (other than taxes on, or measured by, net income or net
profits) or levies, imposts, deductions, charges, compulsory loans or
withholdings whatsoever are or will be, under applicable law in any jurisdiction
in which any Credit Party is organized as of such date, imposed, assessed,
levied or collected by such jurisdiction or any political subdivision or taxing
authority thereof or therein either (i) on or by virtue of the execution or
delivery of this Agreement, the Notes or any other Credit Document or (ii) on
any payment to be made by any Credit Party pursuant to any Credit Document.
6.26 Immunity. None of the Credit Parties or any of their
--------
respective properties has any immunity from jurisdiction of any court or from
set-off or any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) under
the laws of the jurisdiction of its organization.
6.27 Proper Legal Form. Each Credit Document to which a non-U.S.
-----------------
Borrower, Subsidiary Guarantor or Subsidiary Grantor is a party is in proper
legal form under the law of the jurisdiction in which such Borrower, Subsidiary
Guarantor or Subsidiary Grantor is organized or incorporated for the enforcement
thereof against such Credit Party under the law of such jurisdiction; and to
ensure the legality, validity, enforceability or admissibility in evidence of
each such Credit Document in such jurisdiction, it is not necessary that any
such Credit Document or any other document be filed or recorded with any court
or other authority of such jurisdiction (other than the registration of the
Mortgage with the Registry of Titles and Deeds in Singapore and the filing of
the Debenture and the Security Agreement executed by MMI-Singapore with the
Registry of Companies and Businesses in Singapore and any other filings required
to complete the conditions of Section 7.19) or that any stamp or similar tax
(other than as described in Section 6.25) be paid on or in respect of any such
Credit Document.
6.28 Borrowing Base Availability. On the Initial Borrowing Date,
---------------------------
after giving effect to the consummation of the Dropdown and the satisfaction by
MMI's Subsidiaries of the conditions set forth in Sections 7.19(b), (c) and
(d), MMI reasonably believes that the availability under the Total Borrowing
Base shall support Borrowings sufficient to satisfy the ongoing working capital
needs of the business of MMI Holdings and its Subsidiaries as such business is
currently conducted.
6.29 MMI-Singapore. MMI is not aware, having made all due enquiry,
-------------
of any fact, matter, thing or circumstance which would prevent the due and
proper completion of the procedures set out in Section 76(10) and all other
relevant provisions of the Companies Act, Chapter 50 of Singapore (the
"Singapore Companies Act") in relation to the giving of financial assistance
by the entry of MMI-Singapore into the Security Agreement to which it will
become a party as soon as possible after the Initial Borrowing Date, but in no
event later than the Singapore Credit Supplement Date and in particular sees no
reason why any of the
56
persons listed in Section 76(12) of the Singapore Companies Act should object to
the due and proper completion of such procedures.
SECTION 7. Affirmative Covenants.
---------------------
MMI Holdings and each Borrower hereby covenants and agrees that as of
the Effective Date and thereafter for so long as this Agreement is in effect and
until the Total Revolving Loan Commitment has terminated, no Letters of Credit
or Notes are outstanding and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations (other than any indemnities described
in Section 12.13 which are not then due and payable) incurred hereunder, are
paid in full:
7.01 Information Covenants. MMI Holdings will furnish to each
---------------------
Bank:
(a) Monthly Reports. Within 30 days after the end of each fiscal
---------------
month of MMI Holdings, the consolidated and consolidating balance sheets of MMI
and its Subsidiaries as at the end of such fiscal month and the related
consolidated and consolidating statements of income and retained earnings and a
consolidated statement of cash flow for such fiscal month and for the elapsed
portion of the fiscal year ended with the last day of such fiscal month, in each
case setting forth comparative figures for the corresponding fiscal month in the
prior fiscal year and comparable budgeted figures (delivered in accordance with
Section 7.01(d)) for such fiscal month, all of which shall be certified by the
chief financial officer of MMI, subject to normal year-end audit adjustments and
the absence of footnotes.
(b) Quarterly Financial Statements. Within 45 days after the close of
------------------------------
the first three quarterly accounting periods in each fiscal year of MMI
Holdings, the consolidated and consolidating balance sheets of MMI Holdings and
its Subsidiaries as at the end of such quarterly accounting period and the
related consolidated and consolidating statements of income and retained
earnings and consolidated statement of cash flow for such quarterly accounting
period and for the elapsed portion of the fiscal year ended with the last day of
such quarterly accounting period, in each case setting forth (i) at any time
after the end of the fiscal year of MMI Holdings ending December 31, 1998,
comparative figures for the corresponding quarterly accounting period in the
prior fiscal year and (ii) comparable budgeted figures (delivered in accordance
with Section 7.01(d)) for each quarterly accounting period, all of which, in
each case, shall be in reasonable detail and certified by the chief financial
officer of MMI that they fairly present in all material respects the financial
condition of MMI Holdings and its Subsidiaries as of the dates indicated and the
results of their operations and changes in their cash flow for the periods
indicated, subject to normal year-end audit adjustments and the absence of
footnotes.
(c) Annual Financial Statements. Within 90 days after the close of
---------------------------
each fiscal year of MMI Holdings, the consolidated and consolidating balance
sheets of MMI Holdings and its Subsidiaries as at the end of such fiscal year
and the related consolidated and
57
consolidating statements of income and retained earnings and consolidated
statement of cash flow for such fiscal year and setting forth (i) at any time
after the end of the fiscal year of MMI Holdings ending December 31, 1998,
comparative consolidated figures for the preceding fiscal year and (ii)
comparable budgeted figures (delivered in accordance with Section 7.01(d)) for
such fiscal year and, except for such comparable budgeted figures, certified by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or such other independent certified public accountants of
recognized national standing as shall be reasonably acceptable to the
Administrative Agent, in each case to the effect that such statements fairly
present in all material respects the financial condition of MMI Holdings and its
Subsidiaries as of the dates indicated and the results of their operations and
changes, together with a certificate of such accounting firm stating that in the
course of its regular audit of the business of MMI Holdings and its
Subsidiaries, which audit was conducted in accordance with generally accepted
auditing standards, no Default or Event of Default which has occurred and is
continuing has come to their attention or, if such a Default or an Event of
Default has come to their attention a statement as to the nature thereof.
(d) Budgets, Etc. Ten (10) days prior to the commencement of each
------------
fiscal year of MMI Holdings, budgets of MMI Holdings and its Subsidiaries in
reasonable detail for each of the twelve fiscal months of such fiscal year, as
customarily prepared by management for its internal use setting forth, with
appropriate discussion, the principal assumptions upon which such budgets are
based.
(e) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Sections 7.01(b) and 7.01(c), a certificate
of the chief financial officer of MMI to the effect that no Default or Event of
Default exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate shall set forth (in reasonable
detail) the calculations required to establish whether MMI Holdings and its
Subsidiaries were in compliance with the provisions of Sections 8.10, 8.11, 8.12
and 8.13, as at the end of such fiscal quarter or year, as the case may be.
(f) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within two Business Days (or 10 Business Days in the case of clause (y) below)
after any officer of any Borrower obtains knowledge thereof, notice of (x) the
occurrence of any event which constitutes a Default or an Event of Default,
which notice shall specify the nature thereof, the period of existence thereof
and what action such Borrower proposes to take with respect thereto and (y) the
commencement of, or threat of, or any significant development in, any action,
suit, investigation, litigation or governmental proceeding pending against MMI
or any of its Subsidiaries which is likely to have a Material Adverse Effect.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of each
-----------------
report or "management letter" submitted to MMI Holdings or any of its
Subsidiaries by its independent accountants in connection with any annual,
interim or special audit made by them of the books of MMI Holdings or any of its
Subsidiaries and the management's responses thereto.
58
(h) Environmental Matters. Promptly after obtaining knowledge of any
---------------------
of the following, written notice of:
(A) any pending or threatened material Environmental Claim against MMI
Holdings or any of its Subsidiaries or any Real Property owned or operated
by MMI Holdings or any of its Subsidiaries;
(B) any condition or occurrence on any Real Property owned or operated
by MMI Holdings or any of its Subsidiaries that (x) results in material
noncompliance by MMI Holdings or any of its Subsidiaries with any
applicable Environmental Law or (y) could reasonably be anticipated to form
the basis of a material Environmental Claim against MMI Holdings or any of
its Subsidiaries or any such Real Property;
(C) any condition or occurrence on any Real Property owned or operated
by MMI Holdings or any of its Subsidiaries that could reasonably be
anticipated to cause such Real Property to be subject to any material
restrictions on the ownership, occupancy, use or transferability by MMI
Holdings or any such Subsidiary, as the case may be, of its interest in
such Real Property under any Environmental Law; and
(D) the taking of any material removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any Real
Property owned or operated by MMI Holdings or any of its Subsidiaries.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and MMI
Holdings' or any Borrower's response thereto. In addition, MMI Holdings
agrees to provide the Banks with copies of all material written communications
by MMI Holdings or any of its Subsidiaries with any Person, government or
governmental agency relating to any of the matters set forth in clauses (i)-(iv)
above, and such detailed reports relating to any of the matters set forth in
clauses (i)-(iv) above as may reasonably be requested by the Administrative
Agent or the Required Banks.
(i) Borrowing Base Certificate. (x) On the Initial Borrowing Date
--------------------------
and on each Credit Party Supplement Date on which any Subsidiary of MMI becomes
a Borrower, and (y) not later than 12:00 Noon (Dallas time) on the tenth day
after the last day of each fiscal month (or more frequently as the
Administrative Agent may request) commencing with the fiscal month ending
January 31, 1998, a borrowing base certificate in the form of Exhibit H (each, a
"Borrowing Base Certificate") for each Borrower, which shall be prepared as of
December 15, 1997 (in the case of the initial Borrowing Base Certificate) and as
of two days prior to any such Credit Party Supplement Date (in the case of any
Credit Party Supplement Date) or as of the last Business Day of the preceding
fiscal month or quarter, as the case may
59
be (in the case of subsequent Borrowing Base Certificates) and certified by the
chief financial officer of each such Borrower.
(j) Financial Report. As soon as possible after the end of each fiscal
----------------
month, the financial report of MMI for the preceding fiscal month.
(k) Other Financial Information. Promptly (but in any event within
---------------------------
three Business Days) upon transmission thereof, copies of any filings and
registrations with, and reports to, the SEC by MMI Holdings or any of its
Subsidiaries and copies of all financial statements, proxy statements, notices
and reports as MMI Holdings or any of its Subsidiaries shall send generally to
analysts, or the holders of their capital stock (in each case to the extent not
theretofore delivered to the Banks pursuant to this Agreement) and, with
reasonable promptness, such other information or documents (financial or
otherwise) as the Administrative Agent on its own behalf or on behalf of any
Bank may reasonably request from time to time.
(k) Creditor Reports. Promptly after the furnishing thereof, copies
----------------
of any statement or report furnished to any other holder of the securities of
MMI Holdings or of any of its Subsidiaries pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required to be
furnished to the Administrative Agent or the Banks pursuant to any other clause
of this Section 7.
(l) Agreement Notices. Promptly upon receipt thereof, copies of all
-----------------
notices, requests and other documents received by MMI Holdings or any of its
Subsidiaries under or pursuant to any Transaction Document or indenture, loan or
credit or similar agreement and, from time to time upon request by the
Administrative Agent, such information and reports regarding the Transaction
Documents as the Administrative Agent may reasonably request.
(m) Other Information. Such other information respecting the
-----------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of MMI or any of its Subsidiaries as any Bank (through
the Administrative Agent) may from time to time reasonably request.
(n) Pledged Debt. Within 45 days after the end of each fiscal
------------
quarter, an updated Schedule IA, Part II, to the US Security Agreement dated
December 15, 1997, showing the current pledged debt existing as of the last
Business Day of such preceding fiscal quarter, in the form of Schedule IA, Part
II to such US Security Agreement, as amended.
7.02 Books, Records and Inspections. (a) MMI Holdings will keep,
------------------------------
and cause each of its Subsidiaries to keep, proper books of record and account,
in which full and correct entries shall be made of all financial transactions
and the assets and business of MMI Holdings and each such Subsidiary in
accordance with GAAP and (b) MMI Holdings will, and
60
will cause each of its Subsidiaries to, permit, upon reasonable prior notice to
the chief financial officer MMI Holdings or any Borrower, (x) officers and
designated representatives of the Administrative Agent, the Collateral Agent or
any Bank to visit and inspect any of the properties or assets of MMI Holdings
and any of its Subsidiaries in whomsoever's possession, and to examine the books
of account of MMI Holdings and any of its Subsidiaries and discuss the affairs,
finances and accounts of MMI Holdings and of any of its Subsidiaries with, and
be advised as to the same by, their officers and independent accountants, all at
such reasonable times and intervals and to such reasonable extent as the
Administrative Agent, the Collateral Agent or any Bank may desire (it being
understood that so long as no Default or Event of Default is then in existence,
any such visit, inspection or examination shall be arranged in coordination with
MMI Holdings or the relevant Borrower, the Administrative Agent and the
Collateral Agent) and (y) the Administrative Agent and the Collateral Agent, at
the request of the Required Banks, to conduct, at MMI Holdings or the Borrowers'
expense, an audit of the inventories and accounts receivable of the Borrowers
and their Subsidiaries at such times and with such frequency (but no less
frequently than once a year unless an Event of Default has occurred and is
continuing) as the Required Banks shall reasonably require.
7.03 Insurance. MMI Holdings will, and will cause each of its
---------
Subsidiaries to, at all times from and after the Effective Date, maintain in
full force and effect insurance with reputable and solvent insurance carriers in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice and
at such levels to the extent then generally available (but in any event within
the deductible or self-insured retention limitations set forth above) or
otherwise as are reasonably acceptable to the Administrative Agent. MMI
Holdings will furnish to the Administrative Agent on the Initial Borrowing Date
a summary of the insurance carried in respect of MMI Holdings and its
Subsidiaries and the assets of MMI Holdings and its Subsidiaries together with
certificates of insurance and other evidence of such insurance, if any, naming
the Collateral Agent as certificate holder, mortgagee and loss payee with
respect to real property, certificate holder and loss payee with respect to
personal property, additional insured with respect to general liability and
umbrella liability coverage and certificate holder with respect to workers'
compensation insurance.
7.04 Payment of Taxes. MMI Holdings will pay and discharge, and
----------------
will cause each of its Subsidiaries to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, when due and all lawful claims
for sums that have become due and payable when due which, if unpaid, might
become a Lien not otherwise permitted under Section 8.03(a) or charge upon any
properties of MMI Holdings or any of its Subsidiaries; provided that neither MMI
--------
Holdings nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim which is being contested in good faith and by
proper proceedings if it has maintained adequate reserves with respect thereto
in accordance with GAAP.
61
7.05 Corporate Franchises. MMI Holdings will do, and will cause
--------------------
each of its Subsidiaries to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, legal structure, legal
name, rights (charter or statutory), permits, licenses, approvals, privileges,
franchises and authority to do business; provided, however, that any transaction
-------- -------
permitted by Section 8.02 will not constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, Etc. MMI Holdings will, and will
-----------------------------
cause each of its Subsidiaries to, comply with all applicable laws, statutes,
regulations, rules and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls) except where such noncompliance as would not have a Material Adverse
Effect.
7.07 Compliance with Environmental Laws. (a) MMI Holdings will
----------------------------------
pay, and will cause each of its Subsidiaries to pay, all costs and expenses
incurred by it in keeping in compliance with all Environmental Laws, and will
keep or cause to be kept all Real Properties owned or operated by MMI Holdings
or any of its Subsidiaries free and clear of any Liens imposed pursuant to such
Environmental Laws; and (b) neither MMI Holdings nor any of its Subsidiaries
will generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of, Hazardous Materials
on any Real Property owned or operated by MMI Holdings or any of its
Subsidiaries, or transport or permit the transportation of Hazardous Materials
to or from any such Real Property, unless the failure to comply with the
requirements specified in clause (a) or (b) above, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
If MMI Holdings or any of its Subsidiaries, or any tenant or occupant of any
Real Property owned or operated by MMI Holdings or any of its Subsidiaries,
cause or permit any intentional or unintentional act or omission resulting in
the presence or Release of any Hazardous Material (except in compliance with
applicable Environmental Laws), each of the Borrowers agrees to undertake,
and/or to cause any of its Subsidiaries, tenants or occupants to undertake, at
their sole expense, any clean up, removal, remedial or other action required
pursuant to Environmental Laws to remove and clean up any Hazardous Materials
from any Real Property except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect; provided that neither MMI Holdings
--------
nor any of its Subsidiaries shall be required to comply with any such order or
directive which is being contested in good faith and by proper proceedings so
long as it has maintained adequate reserves with respect to such compliance to
the extent required in accordance with GAAP.
7.08 ERISA. As soon as possible and, in any event, within 10 days
-----
after any Credit Party or any ERISA Affiliate knows or has reason to know of the
occurrence of any of the following events to the extent that one or more of such
events is reasonably likely to result in a material liability to any Credit
Party, MMI will deliver to each of the Banks a certificate of the chief
financial officer of MMI setting forth details as to such occurrence and the
action, if any, which such Credit Party or such ERISA Affiliate is required or
proposes to take,
62
together with any notices required or proposed to be given to or filed with or
by such Credit Party, such ERISA Affiliate, the PBGC, a Plan participant or the
Plan administrator with respect thereto: that a Reportable Event has occurred,
that an accumulated funding deficiency has been incurred or an application may
be or has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required installment
payments) or an extension of any amortization period under Section 412 of the
Code with respect to a Plan; that a contribution required to be made to a Plan
or Foreign Pension Plan has not been timely made; that a Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current Liability giving rise to a lien under
ERISA or the Code; that proceedings may be or have been instituted to terminate
or appoint a trustee to administer a Plan; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan;
that any Credit Party or any ERISA Affiliate will or may incur any material
liability (including any contingent or secondary liability) to or on account of
the termination of or withdrawal from a Plan under Section 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section
401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) of
ERISA; provided, however, that the obligation to report such material liability
-------- -------
shall only apply to the extent to which any Credit Party knows or has reason to
know of such material liability. At the request of any Bank, MMI will deliver to
such Bank a complete copy of the annual report (Form 5500) of each Plan required
to be filed with the Internal Revenue Service. In addition to any certificates
or notices delivered to the Banks pursuant to the first sentence hereof, copies
of annual reports and any notices received by any Credit Party or any ERISA
Affiliate with respect to any Plan or Foreign Pension Plan shall be delivered to
the Banks upon request.
7.09 Good Repair. MMI Holdings will, and will cause each of its
-----------
Subsidiaries to, ensure that its material properties and equipment used in its
business are kept in good repair, working order and condition, normal wear and
tear and damage by casualty excepted, and, subject to Section 8.09, that from
time to time there are made in such properties and equipment all needful and
proper repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.
7.10 End of Fiscal Years; Fiscal Quarters. MMI Holdings will, for
------------------------------------
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.11 Additional Security Further Assurances. Subject to Section
--------------------------------------
7.19,
(a) MMI Holdings will, and will cause each of its Domestic
Subsidiaries and, subject to Section 7.14, each of its Foreign Subsidiaries to,
and the other Borrowers will cause their respective Subsidiaries to, grant to
the Collateral Agent security interests, pledges,
63
assignments, and mortgages in such assets and properties of MMI and such
Subsidiaries as are not covered by the original Security Documents, and as may
be requested from time to time by the Administrative Agent, the Collateral Agent
or the Required Banks (collectively, the "Additional Security Documents"). All
such security interests and mortgages shall be granted pursuant to documentation
satisfactory in form and substance to the Administrative Agent and the
Collateral Agent and shall constitute valid and enforceable first priority
perfected security interests and mortgages superior to and prior to the rights
of all third Persons and subject to no other Liens except for Permitted Liens.
The Additional Security Documents or instruments related thereto shall have been
duly recorded or filed in such manner and in such places as are required by law
to establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted pursuant to the Additional Security Documents or if
perfection cannot be accomplished by delivery and filing then all other actions
required by law to establish, perfect, preserve and protect the Liens in favor
of the Collateral Agent shall have been taken and all taxes, fees and other
charges payable in connection therewith shall have been paid in full.
(b) MMI Holdings will, and will cause each of its Subsidiaries to, at
the expense of MMI Holdings and the Borrowers, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps relating to the
collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, MMI Holdings and the Borrowers shall cause to
be delivered to the Collateral Agent such opinions of counsel, title insurance
and other related documents as may be reasonably requested by the Administrative
Agent to assure themselves that this Section 7.11 has been complied with.
(c) If the Administrative Agent or the Required Banks determine that
they are required by law or regulation to have appraisals prepared in respect of
the Real Property of MMI Holdings and its Subsidiaries constituting Collateral,
the Borrowers shall provide to the Administrative Agent and the Collateral Agent
appraisals which satisfy the applicable requirements of the Real Estate
Appraisal Reform Amendments of the Financial Institution Reform, Recovery and
Enforcement Act of 1989 and which shall be in form and substance reasonably
satisfactory to the Administrative Agent.
(d) MMI Holdings and the Borrowers agree that each action required
above by this Section 7.11 shall be completed within 30 days after such action
is either requested to be taken by the Administrative Agent or the Required
Banks or required to be taken by the Borrowers and their respective Subsidiaries
pursuant to the terms of this Section 7.11.
7.12 Intentionally omitted
---------------------
7.13 Register. The Borrowers hereby designate the Administrative
--------
Agent to serve as the Borrowers' agent, solely for purposes of this Section
7.13, to maintain a register
64
(the "Register") on which it will record the Commitments from time to time of
each of the Banks, the Loans made by each of the Banks and each repayment in
respect of the principal amount of the Loans of each Bank. Failure to make any
such recordation, or any error in such recordation shall not affect the
Borrowers' obligations in respect of such Loans. With respect to any Bank, the
transfer of the Revolving Loan Commitments of such Bank and the rights to the
principal of, and interest on, any Loan made pursuant to such Revolving Loan
Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Revolving Loan Commitments and Loans and prior to such recordation all
amounts owing to the transferor with respect to such Revolving Loan Commitments
and Loans shall remain owing to the transferor. The registration of assignment
or transfer of all or part of any Revolving Loan Commitments and Loans shall be
recorded by the Administrative Agent on the Register only upon the acceptance by
the Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 12.04(b). Coincident with the delivery
of such an Assignment and Assumption Agreement to the Administrative Agent for
acceptance and registration of assignment or transfer of all or part of a Loan,
or as soon thereafter as practicable, the assigning or transferor Bank shall
surrender the Note evidencing such Loan, and thereupon one or more new Notes in
the same aggregate principal amount shall be issued to the assigning or
transferor Bank and/or the new Bank. The Borrowers agree to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this Section
7.13.
7.14 Foreign Subsidiaries Security. If following a change in the
-----------------------------
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder which permits (i)
MMI to pledge more than 66 2/3% of the total combined voting power of all
classes of capital stock of any of its Foreign Subsidiaries or pledge any
promissory note issued by such Foreign Subsidiary to MMI or any of its Domestic
Subsidiaries or (ii) any Foreign Subsidiary of MMI to enter into a Security
Agreement or a Subsidiary Guaranty, in each case without causing the
undistributed earnings of such Foreign Subsidiary as determined for Federal
income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax purposes, and
thereafter counsel for the Borrowers reasonably acceptable to the Administrative
Agent does not, within 30 days after a request from the Administrative Agent or
the Required Banks, deliver evidence, in form and substance mutually
satisfactory to the Administrative Agent and the Borrowers, with respect to any
Foreign Subsidiary of MMI which has not already had all of its stock pledged
pursuant to the Security Agreement that (A) a pledge (x) of 66-2/3% or more of
the total combined voting power of all classes of capital stock of such Foreign
Subsidiary entitled to vote and (y) of any promissory note issued by such
Foreign Subsidiary to MMI or any of its Domestic Subsidiaries, (B) the entering
into by such Foreign Subsidiary of a security agreement in substantially the
form of the Security Agreement and (C) the entering into by such Foreign
Subsidiary of a guaranty in substantially the form of a Subsidiary Guaranty, in
any such case would cause the undistributed earnings of such Foreign Subsidiary
65
as determined for Federal income tax purposes to be treated as a deemed dividend
to such Foreign Subsidiary's United States parent for Federal income tax
purposes, then in the case of a failure to deliver the evidence described in
clause (A) above, that portion of such Foreign Subsidiary's outstanding capital
stock or any promissory notes so issued by such Foreign Subsidiary, in each case
not theretofore pledged pursuant to the Security Agreement shall be pledged to
the Collateral Agent for the benefit of the Secured Creditors pursuant to the
Security Agreement (or another security agreement in substantially similar form,
if needed), and in the case of a failure to deliver the evidence described in
clause (B) above, such Foreign Subsidiary shall execute and deliver the Security
Agreement (or another security agreement in substantially similar form, if
needed), granting the Secured Creditors a security interest in all of such
Foreign Subsidiary's assets and securing the Obligations of the Borrowers under
the Credit Documents and under any Interest Rate Protection Agreement or Other
Hedging Agreement and, in the event the Subsidiary Guaranty shall have been
executed by such Foreign Subsidiary, the obligations of such Foreign Subsidiary
thereunder, and in the case of a failure to deliver the evidence described in
clause (C) above, such Foreign Subsidiary shall execute and deliver the
Subsidiary Guaranty (or another guaranty in substantially similar form, if
needed), guaranteeing the Obligations of the Borrowers under the Credit
Documents and under any Interest Rate Protection Agreement or Other Hedging
Agreement, in each case to the extent that the entering into such Security
Agreement or Subsidiary Guaranty is permitted by the laws of the respective
foreign jurisdiction and with all documents delivered pursuant to this Section
7.14 to be in form and substance reasonably satisfactory to the Administrative
Agent.
7.15 Compliance with Terms of Leaseholds. MMI Holdings shall, and
-----------------------------------
shall cause each of its Subsidiaries to make all payments and otherwise perform
all obligations in respect of all leases of Real Property to which MMI Holdings
or any of its Subsidiaries is a party, keep such leases in full force and effect
and not allow such leases to lapse or be terminated or any rights to renew such
leases to be forfeited or cancelled, notify the Administrative Agent of any
default by any party with respect to such leases and cooperate with the
Administrative Agent in all respects to cure any such default, and cause each of
its Subsidiaries to do so, except where the failure to do so, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
7.16 Performance of Transaction Documents. MMI Holdings shall, and
------------------------------------
shall cause each of its Subsidiaries to perform and observe all of the terms and
provisions of each Transaction Document to be performed or observed by it,
maintain each such Transaction Document in full force and effect, enforce such
Transaction Document in accordance with its terms, take all such action to such
end as may be from time to time requested by the Administrative Agent and, upon
request of the Administrative Agent, make to each other party to each such
Transaction Document such demands and requests for information and reports or
for action as MMI Holdings or any such Subsidiary is entitled to make under such
Transaction Document.
7.18 Cash Collateral Accounts. MMI shall, and shall cause each of
------------------------
its Subsidiaries to maintain main cash collateral accounts with Citicorp into
which all proceeds of
66
Collateral will be paid upon the occurrence of an Event of Default and Lockbox
Accounts (as defined in the Security Agreement) with one or more banks
acceptable to the Administrative Agent and the Collateral Agent that have
accepted the assignment of such accounts to the Administrative Agent pursuant to
each Security Agreement.
7.19 Conditions Subsequent to Closing. (a) Additional Credit
-------------------------------- -----------------
Parties. On any date following the Initial Borrowing Date on which any Credit
-------
Party delivers a Credit Agreement Supplement and/or a Subsidiary Guaranty (a
"Credit Party Supplement Date"), the following conditions shall be complied
with to the satisfaction of the Agents and the Agents agree to reasonably
cooperate with the Borrowers to allow the Borrowers to comply with such
conditions:
(A) Execution of Credit Agreement Supplement; Notes. On or prior to
-----------------------------------------------
each Credit Party Supplement Date, (i) each Subsidiary of MMI which shall become
a Borrower on such date shall have duly authorized, executed and delivered to
the Administrative Agent a Credit Agreement Supplement and (ii) shall have
delivered to the Administrative Agent for the account of each Bank the
appropriate Revolving Note executed by such Borrower, if any, in the amount,
maturity and as otherwise provided herein.
(B) Officer's Certificate. On each Credit Party Supplement Date, the
---------------------
Administrative Agent shall have received a certificate of each Subsidiary of MMI
which shall become a Borrower on such date dated such date signed by an
appropriate officer of such Borrower stating that all of the applicable
conditions set forth in Sections 5.02 (provided, however, that the
-------- -------
representations and warranties referred to therein may be qualified, to the
reasonable satisfaction of the Administrative Agent, to take into account
requirements of the local laws of the jurisdiction in which such Borrower is
organized and/or the commercial practices therein), 7.19(a)(D), and 7.19(a)(F),
exist as of such date.
(C) Opinions of Counsel. On each Credit Party Supplement Date, the
-------------------
Administrative Agent shall have received favorable opinions, addressed to the
Administrative Agent, the Collateral Agent and each of the Banks and dated as of
such Credit Party Supplement Date from local counsel to such Credit Party and/or
the Agents reasonably satisfactory to the Agents, which opinion shall cover such
matters incident to the transactions contemplated herein and in the other Credit
Documents as the Agents may reasonably request and shall be in form and
substance reasonably satisfactory to the Agents.
(D) Corporate Proceedings. (i) On each Credit Party Supplement Date,
---------------------
the Administrative Agent shall have received from each Subsidiary of MMI which
shall become a Credit Party on such date a certificate, dated such Credit Party
Supplement Date, signed by the chairman, a vice chairman, the president, any
vice president or representative director of such Credit Party, and attested to
by the secretary or any assistant secretary of such Credit Party, in the form of
Exhibit E with appropriate insertions, together with copies of the Certificate
of Incorporation and By-Laws or the Articles of Incorporation and the Corporate
Registry or, the
67
Memorandum and Articles of Association and the Register of Members or similar
constitutional documents of such Credit Party, all amendments thereto, if any,
and the resolutions of the Board of Directors of such Credit Party referred to
in such certificate. All of the foregoing (including (to the extent applicable)
such Certificate of Incorporation, By-Laws, the Memorandum and Articles of
Association or the Register of Members or similar constitutional documents and
amendments) shall approve the Transaction, this Agreement and the other
Documents to which such Credit Party is or is to be a party and be reasonably
satisfactory to the Administrative Agent.
(ii) On such Credit Party Supplement Date, all corporate and legal
proceedings and all instruments and agreements to be taken or delivered, as the
case may be, by such Credit Party in connection with the transactions
contemplated by this Agreement and the other Documents and necessary for the
approval thereof or consent thereto shall be in form and substance reasonably
satisfactory to the Administrative Agent, and the Administrative Agent shall
have received all information and copies of all certificates, documents and
papers, including good standing certificates, bring-down certificates and any
other records of corporate proceedings and governmental approvals, if any, which
the Administrative Agent reasonably may have requested in connection therewith,
such documents and papers, where appropriate, to be certified by proper
corporate or governmental authorities reasonably satisfactory to the
Administrative Agent and the Collateral Agent.
(iii) On such Credit Party Supplement Date, the Administrative Agent
shall have received with respect to such Credit Party a copy of (i) a
certificate of the Secretary of State of the jurisdiction of incorporation of
such Credit Party dated reasonably near such Credit Party Supplement Date,
listing the charter of such Credit Party and each amendment thereto on file in
such Secretary of State's office and certifying that (A) such charter is a true
and correct copy thereof, (B) such amendments are the only amendments to such
Credit Party's charter on file in such Secretary of State's office, (C) such
Credit Party has paid all franchise taxes to the date of such certificate and
(D) such Credit Party is duly incorporated and in good standing under the laws
of the State of the jurisdiction of its incorporation or (ii) the equivalent, if
any, thereof in any jurisdiction outside of the United States in which any
Credit Party is organized or incorporated, except that in respect MMI-Australia
certified evidence (including, without limitation, a certified except of the
corporate registry) of such information may be received.
(E) Approvals. On or prior to each Credit Party Supplement Date, all
---------
necessary governmental (domestic and foreign), corporate, shareholder and third
party approvals and consents in connection with the transactions contemplated by
this Agreement and the other Credit Documents, including the effectiveness of
any Subsidiary Guaranty to be delivered on such Credit Party Supplement Date or
the effectiveness of any pledge of Collateral to be made on such Credit Party
Supplement Date and otherwise referred to herein or therein shall have been
obtained and remain in effect, all applicable waiting periods shall have expired
without any action being taken which restrains, prevents or imposes materially
adverse conditions upon the transactions contemplated by the Documents and
otherwise
68
referred to herein or therein, or that could threaten or seek to threaten any of
the foregoing and no law, regulation or rule shall be applicable to any Credit
Party which in the judgment of the Administrative Agent could threaten or seek
to threaten any of the foregoing.
(F) Security Documents. On each Credit Party Supplement Date, each
------------------
Subsidiary of MMI which shall become a Credit Party on such date shall have duly
authorized, executed and delivered a Security Agreement in form and substance
satisfactory to the Agent, covering all of the Security Agreement Collateral,
together with:
(1) all of the Pledged Securities referred to in each Security
Agreement and owned by such Credit Party endorsed in blank in the case of
promissory notes or accompanied by executed and undated stock powers in the
case of capital stock;
(2) evidence of the completion of all other action, recordings and
filings of or with respect to each Security Agreement delivered pursuant to
this clause (F) as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable, to perfect the security interests created by
each such Security Agreement;
(3) evidence of the insurance required by the terms of each Security
Agreements, if any; and
(4) evidence that all other actions if any necessary or, in the
reasonable opinion of the Collateral Agent, desirable, to perfect the
security interests created by each such Security Agreement have been taken;
and each such Security Agreement delivered pursuant to this clause (F) shall be
in full force and effect.
(G) Guaranties. On each Credit Party Supplement Date, each Subsidiary
----------
of MMI which shall become a Credit Party on such date shall have duly
authorized, executed and delivered a Subsidiary Guaranty substantially in the
form of Exhibit G-3 and each such Guaranty shall be in full force and effect.
(H) Solvency Certificate; On each Credit Party Supplement Date, the
---------------------
Administrative Agent shall have received a certificate from the chief financial
officer of each Subsidiary of MMI which shall become a Borrower on such date
addressed to the Administrative Agent and each of the Banks and dated such
Credit Party Supplemental Date and certifying that, after giving effect to the
Transaction and the incurrence of all financings contemplated therein and
herein, each such Borrower individually, and each such Borrower and its
Subsidiaries (on a consolidated basis) are not insolvent and will not be
rendered insolvent by the indebtedness incurred in connection herewith, will not
be left with unreasonably small capital with which to engage in their respective
businesses and will not have incurred debts beyond their ability to pay such
debts as they mature and become due and
69
that no proceeds of the Loans will be used to purchase assets or capital stock
in connection with the Transaction.
(I) Borrowing Base Certificate. On or prior to each Credit Party
--------------------------
Supplement Date, the Administrative Agent shall have received an initial
Borrowing Base Certificate for each Subsidiary of MMI which shall become a
Borrower on such date meeting the requirements of Section 7.01(i).
(J) Payment of Fees. On each Credit Party Supplement Date, all unpaid
---------------
costs, fees and expenses, and all other compensation contemplated by this
Agreement, due to the Administrative Agent, the Syndication Agent or the Banks
(including, without limitation, legal fees and expenses) shall have been paid.
(K) Notice of Borrowing; Letter of Credit Request. On or prior to
---------------------------------------------
each Credit Party Supplement Date, if any Subsidiary of MMI which shall become a
Borrower on such date intends to make a Borrowing on such date, the
Administrative Agent and the Multi Currency Agent shall have received from such
Borrower on such date a Notice of Borrowing satisfying the requirements of
Section 1.03 with respect to each incurrence of Loans, and if a Letter of Credit
is to be issued, the Administrative Agent and the Appropriate Letter of Credit
Issuer shall have received a Letter of Credit Request satisfying the
requirements of Section 2.02 with respect to each issuance of a Letter of
Credit.
(L) Process Agent Letters. On or prior to each Credit Party
---------------------
Supplement Date, the Administrative Agent shall have reviewed a letter from the
Process Agent dated on or before such date, substantially in the form of Exhibit
K hereto, agreeing to act as Process Agent on behalf of each Subsidiary of MMI
which shall be an Credit Party on such date.
(M) Other Documents. On or before each Credit Party Supplement
---------------
Date, the Administrative Agent shall have received such other approvals,
opinions or documents as any Bank through the Administrative Agent may
reasonably request.
All of the certificates, legal opinions and other documents and papers referred
to in this Section 7.19(a), unless otherwise specified, shall be delivered to
the Administrative Agent at its Appropriate Notice Office for the account of
each of the Banks and, except for the Notes, in sufficient counterparts for each
of the Banks and shall be satisfactory in form and substance to the
Administrative Agent and the Required Banks.
(b) MMI-Ireland. As soon as possible after the Initial Borrowing
-----------
Date, but in no event later than January 15, 1998, MMI shall cause MMI-Ireland
to have duly completed, to the satisfaction of the Agents, the procedures
required by applicable law to be taken to permit MMI-Ireland to duly authorize,
execute and deliver to the Administrative Agent the Subsidiary Guaranty in the
form of Exhibit G-3 and the Security Agreement to which it is to become a party
pursuant to Sections 7.19(a)(G) and (F) above.
70
(c) Stock Pledges; MMI-UK; MMI-Ireland. As soon as possible after the
----------------------------------
Initial Borrowing Date, but in no event later than January 30, 1998: (i) MMI
shall (A) have duly authorized, executed and delivered Security Agreements
covering the pledge by MMI of its shares of MMI-UK, MMI-Ireland, MMI-Singapore,
MMI-Netherlands and MMI-France, in each case, in form and substance satisfactory
to the Agents and their local counsel, (B) take all such other action as the
Collateral Agent or its local counsel may deem necessary or desirable to
perfect, protect and maintain the security interest of the Secured Creditors in
the Pledged Shares and other Collateral identified in each such Security
Agreement and (C) deliver opinions of Korean, English, Irish and Singaporean
counsel in form and substance satisfactory to the Administrative Agent and the
Collateral Agent; and
(ii) MMI shall cause each of MMI-UK and MMI-Ireland, to the extent
permitted by applicable law, to become Credit Parties and to fully satisfy all
of the conditions set forth in Section 7.19(a).
(d) MMI Singapore. (i) As soon as possible after the Initial
-------------
Borrowing Date, but in no event later than February 15, ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇▇
Credit Supplement Date"), MMI shall cause MMI-Singapore to:
(W) duly complete, to the satisfaction of the Collateral Agent,
the procedures set out in Section 76(10) and all other
relevant provisions of the Singapore Companies Act in
relation to the giving by it of financial assistance by its
entry into of the Security Agreement to which it is to
become a party;
(X) procure the delivery to the Collateral Agent of a
certificate, signed by not less than two of its directors,
or by one of its directors and its secretary, stating that
the requirements of Section 76(10)(a) to (j), inclusive of
the Singapore Companies Act, have bene complied with in
relation to the aforesaid giving by it of financial
assistance;
(Y) on request by the Collateral Agent do or procure the doing
of all such acts and will execute or procure the execution
of all such documents as the Collateral Agent may reasonably
consider necessary for completing and giving full effect to
the procedures set out in Section 76(10) and all other
relevant provisions of Singapore Companies Act in relation
to the giving by it of financial assistance by its entry
into the Security Agreement to which it is to become a
party; and
71
(Z) cause its Memorandum and Articles of Association to be
amended in the manner requested by the Collateral Agent for
the purpose of ensuring that:-
(A) its objects specifically permit the issuing by it of
the guarantees and the creation by it of the security
contemplated by this Agreement;
(B) its directors shall not be entitled to decline to
register, or suspend the registration of, any transfer
of any shares where such transfer is executed (whether
as transferor or transferee) by any bank or financial
institution to whom such shares shall have been charged
or pledged by way of security, or by any nominee of
such bank or financial institution; and
(C) all pre-emption rights contained therein shall not
apply to any transfer of any shares which have been
charged or pledged by way of security to any bank or
financial institution or any nominee of such bank or
financial institution.
(ii) On or prior to the Singapore Credit Supplement Date, MMI shall
cause MMI-Singapore to satisfy the following conditions to the satisfaction of
the Agents:
(I) On the Singapore Credit Supplement Date, MMI-Singapore shall
have satisfied all of the conditions set forth in Section 7.19(a).
(II) Mortgage. On the Singapore Supplement Date, the Collateral
--------
Agent shall have received the following:
(A) Legal Mortgage in form and substance satisfactory to the
Collateral Agent (as amended, modified or supplemented from time
to time in accordance with the terms thereof and hereof (the
"Mortgage") with respect to the Mortgaged Property, duly
executed by MMI-Singapore and stamped with the consent of the
Housing & Development Board, Singapore (the "HDB") the
lessor of the Mortgaged Property), duly endorsed thereon;
(B) HDB[_]s written confirmation that after the execution of the
Security Agreement to be executed by MMI-Singapore (the
"Debenture"):
72
(i) the HDB will not distrain upon the Collateral (as defined in
the Debenture; and
(ii) upon termination of the Instrument of Lease No. 1/00125L
(the "Lease") relating to the Mortgaged Property, the
HDB will allow the Collateral Agent to enter upon the
Mortgaged Property for the purpose of removing the
Collateral;
(C) HDB's written confirmation that there are no breaches of the
terms of the Lease relating to the Mortgaged Property;
(D) (x) either HDB's written confirmation that notwithstanding the
provisions of the Lease, HDB will not treat any notice of
termination served by MMI-Singapore pursuant to the provisions of
Clause 6 of the Lease as an effective notice of termination
unless the Collateral Agent under the Mortgage has endorsed its
consent on such termination notice, (y) an executed amendment to
Clause 6 of the Lease in form satisfactory to the Agents, to
require MMI-Singapore not to exercise its termination rights so
long as any Loan, Unpaid Drawing, Letter of Credit or Commitment
remains outstanding; or (z) an absolute assignment to the
Administrative Agent, for the benefit of the Banks, of the Lease
with all necessary action and all documentation necessary to
effectuate such assignment or an agreement to absolutely assign
to the Administrative Agent, for the benefit of the Banks the
Lease (or other similar agreement) in each case, in form
satisfactory to the Agents and MMI shall cause MMI-Singapore to
pay any and all fees, expenses and costs incurred in connection
with any such assignment;
(E) All replies to legal requisitions in respect of the Mortgaged
Property being found satisfactory to the Collateral Agent and the
title in respect of the Mortgaged Property being in order and
free from encumbrances;
(F) Duplicate Certificate of Title Volume 458 Folio 196 and Duplicate
Lease No. 1/00125L both relating to the Mortgaged Property; and
(G) All risks insurance policy in the joint names of MMI-Singapore
and the Collateral Agent with insurance companies as the
Collateral Agent may approve, fully insuring the Mortgaged
Property against, inter alia, loss or damage by fire and all
other risks commonly covered with respect to properties of
similar kind, and such policy shall be in such amount and shall
contain such terms and provisions as shall be approved by the
Collateral Agent and shall contain standard mortgagee clauses
naming as loss payee the Collateral Agent.
73
(iii) On or prior to the Singapore Credit Supplement Date, MMI-
Singapore shall have caused the Mortgages to be recorded in all places
to the extent necessary or desirable, in the judgment of the Collateral
Agent, effectively to create a valid and enforceable first priority mortgage
lien, subject only to Permitted Encumbrances, on each such Mortgaged
Property in favor of the Collateral Agent (or such other trustee as may be
required or desired under Singapore law) for the benefit of the Secured
Creditors.
(iv) In the event that MMI-Singapore shall fail to satisfy the
conditions set forth in clauses (i), (ii) and (iii) above by the
Singapore Credit Supplement Date, MMI shall be obligated on such date to
execute and deliver a subordinated note in substantially the form of
Exhibit A to the CST Guaranty and to incur the CST Subordinated Loan and
shall receive the proceeds thereof in accordance with the CST Guaranty.
(e) Blocked Account Letters. As soon as possible after the Initial
-----------------------
Borrowing Date, but in no event later than 45 days thereafter, MMI and its
Domestic Subsidiaries shall deliver to the Collateral Agent the Lockbox Letters
referred to in the Security Agreement to which MMI is a party, duly executed by
each Lockbox Bank referred to in such Security Agreement.
SECTION 8. Negative Covenants.
------------------
MMI Holdings and the Borrowers hereby covenant and agree that as of
the Effective Date and thereafter for so long as this Agreement is in effect and
until the Commitments have terminated, no Letters of Credit or Notes are
outstanding and the Loans, together with interest, Fees and all other
Obligations (other than any indemnities described in Section 12.13 which are not
then due and payable) incurred hereunder, are paid in full:
8.01 Changes in Business. (a) MMI Holdings and its Subsidiaries
-------------------
will not engage in any business other than the businesses engaged in by the MMI
Business as of the Initial Borrowing Date and activities directly related
thereto, and similar or related businesses.
(b) Notwithstanding the foregoing, MMI Holdings will not engage in any
business other than its ownership of the capital stock of MMI.
8.02 Consolidation, Merger, Sale or Purchase of Assets, Etc. MMI
------------------------------------------------------
Holdings will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease, transfer or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or any part of its
property or assets (other than sales of inventory in the ordinary course of
business), or enter
74
into any partnerships, joint ventures or sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) any
part of the property or assets (other than purchases or other acquisitions of
inventory, materials and equipment in the ordinary course of business) of any
Person, except that the following shall be permitted:
(a) the Borrowers may, as lessees, enter into operating leases in the
ordinary course of business with respect to real or personal property to
the extent permitted by Section 8.05;
(b) the advances, investments and loans permitted pursuant to Section
8.06;
(c) the Borrowers and their respective Subsidiaries may sell for cash
and for fair value assets as contemplated and provided for in the
Projections;
(d) (i) the Borrowers may sell for cash and for fair value its shares
in Nimbus CD International, Inc., and (ii) the Borrowers and their
respective Subsidiaries may sell for cash and for fair value other assets
having a fair market value not to exceed in the aggregate $1,000,000 in any
fiscal year of MMI Holdings; provided that in the case of both clause (i)
--------
and (ii) above, the Net Cash Proceeds therefrom are either applied to repay
Revolving Loans (or reduce the Total Revolving Loan Commitment) as provided
in Section 4.02(A)(c) or reinvested in replacement assets to the extent
permitted by Section 4.02(A)(b);
(e) the Borrowers and their respective Subsidiaries may sell or
discount, in each case without recourse, accounts receivable arising in the
ordinary course of business, but only in connection with the compromise or
collection of past due amounts thereof and as consistent with past
practices;
(f) the Borrowers and their respective Subsidiaries may sell or
exchange specific items of equipment, so long as the purpose of each such
sale or exchange is to acquire (and results within 60 days of such sale or
exchange in the acquisition of) replacement items of equipment which are
the functional equivalent of the item of equipment so sold or exchanged;
(g) the Borrowers and their respective Subsidiaries may, in the
ordinary course of business, license patents, trademarks, copyrights and
know-how to third Persons and to one another, so long as each such license
is permitted to be assigned pursuant to the Security Agreement (to the
extent that a security interest in such patents, trademarks, copyrights and
know-how is granted thereunder) and does not otherwise prohibit the
granting of a Lien pursuant to the Security Agreement in the intellectual
property covered by such license;
75
(h) any Subsidiary of a Borrower may merge with and into, or be
dissolved or liquidated into, such Borrower so long as (i) immediately
after giving effect thereto, no event shall occur and be continuing that
constitutes a Default, (ii) such Borrower is the surviving corporation of
any such merger, dissolution or liquidation and (iii) the security
interests granted to the Collateral Agent for the benefit of the Secured
Creditors pursuant to the Security Documents in the assets of such
Subsidiary so merged shall remain in full force and effect and perfected
(to at least the same extent as in effect immediately prior to such
merger);
(i) any Subsidiary of a Borrower may merge with and into, or be
dissolved or liquidated into, any Wholly-Owned Domestic Subsidiary of such
Borrower so long as (i) immediately after giving effect thereto, no event
shall occur and be continuing that constitutes a Default, (ii) such Wholly-
Owned Domestic Subsidiary is the surviving corporation of any such merger,
dissolution or liquidation, (iii) such Wholly-Owned Domestic Subsidiary
shall assume such Subsidiary's obligations and performance of such
Subsidiary's obligations under the Credit Documents to which it is or is to
be a party in a writing satisfactory in form and substance to the Required
Banks, and (iv) the security interests granted to the Collateral Agent for
the benefit of the Secured Creditors pursuant to the Security Documents in
the assets of such Subsidiary shall remain in full force and effect and
perfected (to at least the same extent as in effect immediately prior to
such merger);
(j) leases or subleases granted by the Borrowers or any of their
respective Subsidiaries to third Persons not interfering in any material
respect with the business of MMI Holdings or any of the Borrowers or any of
their respective Subsidiaries;
(k) any Borrower may transfer assets in an arm's length transaction
to any Credit Party which has executed and delivered a Security Agreement
pursuant to Section 5.10 or 7.19.
To the extent the Required Banks waive the provisions of this Section 8.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise disposed of as permitted by this Section 8.02, such Collateral
in each case shall be sold or otherwise disposed of free and clear of the Liens
created by the Security Documents and the Administrative Agent shall take such
actions (including, without limitation, directing the Collateral Agent to take
such actions) as are appropriate in connection therewith.
8.03 Liens. MMI Holdings will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of MMI Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or sign or file or suffer to exist under the Uniform
Commercial Code of any jurisdiction, a financing statement that names any of MMI
Holdings or any of its Subsidiaries as debtor, or sign or suffer to exist any
76
security agreement authorizing any secured party thereunder to file such
financing statement, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to MMI
Holdings or any of its Subsidiaries) or assign any accounts or other right to
receive income (other than as permitted by Section 8.02(d)), except for the
following (collectively, the "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with GAAP and as to which no enforcement, collection,
execution, levy or foreclosure proceeding shall have been commenced;
(b) Liens in respect of property or assets of MMI Holdings or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business and which have not arisen to secure Indebtedness for borrowed
money, such as carriers', warehousemen's, mechanics', materialmen's,
workmen's and repairmen's Liens, statutory landlord's Liens, and other
similar Liens arising in the ordinary course of business, and which either
(x) do not in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of
the business of MMI Holdings or any of its Subsidiaries or (y) are being
contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property or asset
subject to such Lien and as to which no enforcement, collection, execution,
levy or foreclosure proceeding shall have been commenced;
(c) Liens created by or pursuant to this Agreement and the Security
Documents;
(d) Liens in existence on the Initial Borrowing Date which are listed,
and the property subject thereto described, in Annex 8.03(d), without
giving effect to any extensions or renewals thereof;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09;
(f) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation law, unemployment insurance law
and other types of social security legislation, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business (exclusive
of obligations in respect of the payment for borrowed money) and
77
as to which no enforcement, collection, execution, levy or foreclosure
proceeding shall have been commenced;
(g) licenses, leases or subleases granted to third Persons not
interfering in any material respect with the business of MMI Holdings or
any of its Subsidiaries and otherwise permitted under this Agreement;
(h) Liens arising from precautionary UCC financing statements
regarding operating leases permitted by this Agreement;
(i) any interest or title of a licensor, lessor or sublessor under any
license or lease permitted by this Agreement;
(j) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(b) and (d); provided that no such Lien shall extend to or
--------
cover any Collateral or assets other than the assets subject to such
Capital Leases;
(k) Permitted Encumbrances;
(l) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price of assets
acquired after the Initial Borrowing Date in the ordinary course of
business, or extensions, renewals or replacements of any of the foregoing
for the same or a lesser amount, provided that (i) any such Liens attach
--------
only to the assets so purchased, (ii) the aggregate principal amount of the
Indebtedness secured by any such Lien does not exceed 100%, nor is less
than 70%, of the lesser of the fair market value or the purchase price of
the property being purchased at the time of the incurrence of such
Indebtedness and (iii) the aggregate principal amount of the Indebtedness
secured thereby is permitted to be incurred pursuant to Section 8.04(d);
(m) additional Liens incurred by the Borrowers and their respective
Subsidiaries so long as the value of the property subject to such Liens,
and the Indebtedness and other obligations secured thereby, do not exceed
$50,000 in the aggregate; provided that no such Lien shall extend to or
--------
cover any Collateral; and
(n) Liens created in respect of receivables of MMI-France under the
French Francs Facility.
8.04 Indebtedness. MMI Holdings will not, and will not permit any
------------
of its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
78
(b) Existing Indebtedness outstanding on the Initial Borrowing Date
and listed on Annex 6.23, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(c) Indebtedness of the Borrowers under Interest Rate Protection
Agreements entered into to protect the Borrowers against fluctuations in
interest rates in respect of Indebtedness otherwise permitted under this
Agreement in an aggregate notional amount not to exceed $50,000,000;
(d) Capitalized Lease Obligations and Indebtedness of the Borrowers
and their respective Subsidiaries incurred pursuant to purchase money Liens
permitted under Sections 8.03(j) and (l), provided that (i) all such
--------
Capitalized Lease Obligations are permitted under Section 8.09 and (ii) the
sum of (x) the aggregate Capitalized Lease Obligations outstanding at any
time plus (y) the aggregate principal amount of such purchase money
Indebtedness outstanding at such time shall not exceed $30,000,000;
(e) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 8.06(g);
(f) obligations of MMI Holdings and its Subsidiaries contemplated
under the Transaction Documents;
(g) indebtedness of MMI-Ireland under the AIB Facility;
(h) Subordinated Indebtedness of MMI under the CST Subordinated Loan
in an amount not to exceed $25,000,000;
(i) additional unsecured Indebtedness of the Borrowers and their
Subsidiaries not otherwise permitted hereunder not exceeding $20,000,000 in
aggregate principal amount at any time outstanding;
(j) indebtedness of MMI-France under the French Francs Facility in an
amount no exceeding 13 million French Francs; and
(k) Contingent Obligations of MMI Holdings in respect of the
guaranties in favor of the Industrial Development Agency (Ireland) ("▇▇▇")
guaranteeing the obligations of Modus Media International (Ireland)
Holdings ("Ireland Holdings"), Modus Media International Fulfillment
Services Europe, Modus Media International Dublin and Modus Media
International Kildare (the "Irish Subsidiaries") under certain grants
received by Ireland Holdings and/or the Irish Subsidiaries from the ▇▇▇,
not to exceed in the aggregate the equivalent in Irish pounds of
$12,000,000.
79
8.05 Leases. MMI Holdings will not permit the aggregate
------
obligations of MMI Holdings and its Subsidiaries on a consolidated basis to make
payments (including, without limitation, any property taxes paid as additional
rent or lease payments) under any agreement to rent, hire or lease any real or
personal property (excluding Capitalized Lease Obligations) having an original
term of one year or more to exceed (x) $22,000,000 for the fiscal year of MMI
Holdings ended December 31, 1998 (y) $25,000,000 for the fiscal year ended
December 31, 1999 and (z) $30,000,000 for each fiscal year of MMI Holdings
thereafter.
8.06 Advances, Investments and Loans. MMI Holdings will not, and
-------------------------------
will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any capital stock or other
ownership or profit interest, warrants, rights, options, obligations or other
securities of, or any other interest in, or make any capital contribution to or
any other investment in, any Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents, except:
(a) the Borrowers and their respective Subsidiaries may invest in cash
and Cash Equivalents in an aggregate principal amount not to exceed
$25,000,000 at any time outstanding;
(b) the Borrowers and their respective Subsidiaries may acquire and
hold receivables owing to them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms (including the dating of receivables) of the
Borrowers or any such Subsidiary;
(c) the Borrowers and their respective Subsidiaries may acquire and
own 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;
(d) Interest Rate Protection Agreements entered into in compliance
with Section 8.04(c);
(e) advances, loans and investments in existence on the Initial
Borrowing Date and listed on Annex 8.06(e), without giving effect to any
additions thereto or replacements thereof shall be permitted;
(f) deposits made in the ordinary course of business consistent with
past practices to secure the performance of leases shall be permitted;
80
(g) the Borrowers may make intercompany loans and advances to any
Subsidiary Guarantor, and any Subsidiary Guarantor may make intercompany
loans and advances to the Borrower of which it is a Subsidiary, or any
other Subsidiary Guarantor (collectively, "Intercompany Loans"), duly
stamped where required by the laws of any jurisdiction for its
enforceability provided that (x) each Intercompany Loan shall be evidenced
--------
by an Intercompany Note duly stamped where required by the laws of any
jurisdiction for its enforceability, and (y) each such Intercompany Note
shall be pledged to the Collateral Agent pursuant to the Security Agreement
executed by the payee of such Intercompany Note;
(h) loans and advances by the Borrowers and their respective
Subsidiaries to their employees for moving and travel expenses and other
similar expenses, in each case incurred in the ordinary course of business,
in an aggregate outstanding principal amount not to exceed $1,000,000 at
any time (determined without regard to any write-downs or write-offs of
such loans and advances) shall be permitted;
(i) the Borrowers and their respective Subsidiaries may own the
capital stock of their respective Subsidiaries created or acquired in
accordance with the terms of this Agreement and other loans, advances or
investments in an aggregate amount invested not to exceed $1,000,000;
provided that with respect to loans, advances and investments made under
--------
this clause (j): (1) any newly acquired or created Subsidiary of any
Borrower or any of its Subsidiaries shall be a Wholly-Owned Subsidiary
thereof; (2) immediately before and after giving effect thereto, no Default
shall have occurred and be continuing or would result therefrom; and (3)
any business acquired or invested in pursuant to this clause (j) shall be
in the same line of business as the business of the Borrowers or any of
their respective Subsidiaries;
(j) in addition to investments permitted by clauses (a) through (i) of
this Section 8.06, the Borrowers and their respective Subsidiaries may make
additional loans, advances and investments to or in a Person not an
Affiliate in an aggregate amount for all loans, advances and investments
made pursuant to this clause (j) not to exceed $1,000,000; provided that
--------
with respect to loans, advances and investments made under this clause (j):
(1) any newly acquired or created Subsidiary of any Borrower or any of its
Subsidiaries shall be a Wholly Owned Subsidiary thereof (in the case of any
newly acquired or created Foreign Subsidiary, to the extent permitted by
the law of the jurisdiction of its organization); (2) immediately before
and after giving effect thereto, no Default shall have occurred and be
continuing or would result therefrom; and (3) any business acquired or
invested in pursuant to this clause (j) shall be in the same line of
business as the business of the Borrowers or any of their respective
Subsidiaries; and
(k) in addition to investments, loans and advances permitted by
clauses (a) through (j) of this Section 8.06, MMI may make additional
advances to Sasatoku ▇▇▇▇▇▇▇▇ ▇▇, a Japanese joint venture of which it is a
partner, in an aggregate principal
81
amount for all advances, not to exceed $3,000,000; provided that
--------
immediately before and after giving effect thereto, no Default shall have
occurred and be continuing or would result therefrom; and provided further
--------- -------
that the amount available to be borrowed under the US Borrowing Base by any
Borrower under Section 1.01(A)(a)(1) or 1.01(A)(a)(2) shall be reduced by
the principal amount of any advances made and outstanding at any time
pursuant to this clause (k).
8.07 Dividends, Etc. MMI Holdings will not, and will not permit any
--------------
of its Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in common stock of any such Borrower or any such Subsidiary, as
the case may be), or return any capital to, its stockholders or authorize or
make any other distribution, payment or delivery of property, capital stock,
warrants, rights, options, obligations, securities or cash to its stockholders
as such, or redeem, retire, purchase, defease or otherwise acquire, directly or
indirectly, for a consideration, any shares of any class of its capital stock,
now or hereafter outstanding (or any warrants for or options or rights in
respect of any of such shares), or set aside any funds for any of the foregoing
purposes, MMI Holdings will not permit any of its Subsidiaries to purchase,
redeem, retire, defease or otherwise acquire for consideration any shares of any
class of the capital stock of MMI Holdings or any such other Subsidiary, as the
case may be, now or hereafter outstanding (or any options or warrants or rights
issued by such Person with respect to its capital stock) (all of the foregoing
"Dividends"), except that, so long as no Default shall have occurred and be
continuing at the time of any action described in clauses (i) through (v) below
or would result therefrom:
(i) MMI may, following December 31, 1998, declare and pay cash
Dividends to its stockholders and purchase, redeem, retire, defease or
otherwise acquire shares of its own outstanding capital stock for cash
solely out of 25% Consolidated Net Income of MMI arising after December 31,
1998 and computed on a cumulative, unconsolidated basis in accordance with
GAAP;
(ii) any Subsidiary of any Borrower may pay Dividends to such
Borrower or any Wholly-Owned Subsidiary of such Borrower;
(iii) MMI Holdings may purchase, redeem, defease or retire the MMI
Holdings Preferred Stock in whole or in part for cash at any time and from
time to time after the second anniversary of the Initial Borrowing Date,
only if, (1) after giving effect to such purchase, redemption, defeasance
or retirement no Default shall exist and (2) the aggregate purchase or
redemption price in any one year does not exceed 25% of Consolidated Net
Income for the immediately preceding fiscal year of MMI;
(iv) MMI may pay cash Dividends to MMI Holdings so long as the cash
proceeds thereof are promptly used by MMI Holdings for the purposes
described in clause (iii) of this Section 8.07;
82
(v) MMI may purchase or retire any options to purchase any capital
stock of MMI issued to and held by employees of MMI pursuant to the
Employee Stock Option Plan, only if (1) after giving effect to such
purchase or retirement no Default shall exist and (2) the aggregate
purchase price in any one year does not exceed $500,000;
(vi) MMI-Singapore may redeem its preference shares with the consent
of the Required Banks; and
(vii) MMI may grant options and issue stock to members of management,
employees and shareholders of MMI pursuant to the Employee Stock Option
Plan, provided that after giving effect to such grant of options no Default
--------
shall exist.
8.08 Transactions with Affiliates. MMI Holdings will not, and will
----------------------------
not permit any of its Subsidiaries to, enter into any transaction or series of
transactions with any Affiliate other than on terms and conditions substantially
as favorable to MMI Holdings or such Subsidiary as would be reasonably expected
to be obtainable by MMI Holdings or such Subsidiary at the time in a comparable
arm's-length transaction with a Person other than an Affiliate; provided that
--------
the following shall in any event be permitted: (i) the Transaction; (ii) the
payment, on a quarterly basis, of management fees to ▇▇▇▇ Capital in an
aggregate amount (for all such Persons taken together) not to exceed $375,000 in
any fiscal quarter of MMI Holdings, provided that if during any fiscal quarter
--------
of MMI Holdings a Default or an Event of Default exists and is continuing, only
one-half of such fee for such fiscal quarter may be paid, and the remaining one-
half of such fee may continue to accrue and may be paid at such time as all
Defaults and Events of Default have been cured or waived; and (iii) intercompany
transactions among MMI Holdings and its Subsidiaries to the extent expressly
permitted by Sections 8.02, 8.04, 8.06 and 8.07.
8.09 Capital Expenditures. (a) MMI Holdings will not, and will not
--------------------
permit any of its Subsidiaries to, make any Capital Expenditures, except that,
at any time after the Initial Borrowing Date, the Borrowers and their respective
Subsidiaries may make Capital Expenditures so long as the aggregate amount of
such Capital Expenditures does not exceed (i) $3,000,000 at any time prior to
December 31, 1997, (ii) $20,000,000 at any time prior to December 31, 1998 and
(iii) $25,000,000 in any fiscal year of MMI Holdings thereafter.
(b) Notwithstanding the foregoing, in the event that the amount of
Capital Expenditures permitted to be made by the Borrowers and their respective
Subsidiaries pursuant to clause (a) above in any fiscal year (before giving
effect to any increase in such permitted expenditure amount pursuant to this
clause (b)) is greater than the amount of such Capital Expenditures made by the
Borrowers and their respective Subsidiaries during such fiscal year, such excess
(the "Rollover Amount") may be carried forward and utilized to make Capital
Expenditures in succeeding fiscal years, provided that in no event shall the
--------
aggregate amount
83
of Capital Expenditures made by the Borrowers and their respective Subsidiaries
during any fiscal year pursuant to Section 8.09(a) and this Section 8.09(b)
exceed $30,000,000.
(c) Notwithstanding the foregoing, the Borrowers and their respective
Subsidiaries may make Capital Expenditures with the Net Cash Proceeds of Asset
Sales to the extent such proceeds are not required to be applied to repay
Revolving Loans pursuant to Section 4.02(A)(b) (or reduce the Total Revolving
Loan Commitment pursuant to Section 4.02(A)(c).
(d) Notwithstanding the foregoing, the Borrowers and their respective
Subsidiaries may make Capital Expenditures with the insurance proceeds received
by any such Person from any Recovery Event so long as such Capital Expenditures
are to replace or restore any properties or assets in respect of which such
proceeds were paid within 180 days following the date of the receipt of such
insurance proceeds to the extent such insurance proceeds are not required to be
applied to repay Revolving Loans pursuant to Section 4.02(A)(e).
8.10 Minimum Tangible Net Worth. MMI Holdings will not permit its
--------------------------
Tangible Net Worth at the end of each fiscal quarter to be less than an amount
equal to the sum of (i) 85% of the Tangible Net Worth of MMI as of September 30,
1999 after giving effect to the redemption of the MMI Holdings Preferred Stock
plus (ii) 75% of cumulative Consolidated Net Income of MMI Holdings without
----
deduction for losses for all fiscal quarters ending after September 30, 1999
plus (iii) 100% of the Net Cash Proceeds from the issuance or sale by MMI
----
Holdings or any of its Subsidiaries to any Person other than MMI Holdings or any
of its Subsidiaries of any capital stock or other ownership or profit interest,
any securities convertible into or exchangeable for capital stock or other
ownership or profit interest or any warrants, rights or options to acquire
capital stock or other ownership or profit interest (other than equity issued in
connection with the exercise by employees of any Credit Party or any of its
Subsidiaries of employee stock option).
8.11 Minimum Consolidated EBITDA. MMI Holdings will not permit
---------------------------
Consolidated EBITDA for any Test Period ending on a date set forth below to be
less than the amount set forth opposite such date:
Date Minimum Consolidated EBITDA
---- ---------------------------
March 31, 1998 $(2,500,000)
June 30, 1998 $3,000,000
September 30, 1998 $12,500,000
December 31, 1998 $26,000,000
March 31, 1999 $28,000,000
June 30, 1999 $32,000,000
September 30, 1999 $35,000,000
December 31, 1999 $35,000,000
84
March 31, 2000
and the last day of each fiscal
quarter ended thereafter $40,000,000
8.12 Interest Coverage Ratio. MMI Holdings will not permit the Interest
-----------------------
Coverage Ratio for any Test Period ending on a date set forth below to be less
than the ratio set forth opposite such date:
Date Ratio
---- -----
June 30, 1998 2.5:1.00
September 30, 1998 3.0:1.00
and the last day of each
fiscal quarter ended
thereafter
8.13 Leverage Ratio. MMI will not permit the Leverage Ratio for any Test
--------------
Period ending date set forth below to be more than the ratio set forth opposite
such date:
Date Ratio
---- -----
December 31, 1998 3.5:1.00
March 31, 1999 3.0:1.00
and thereafter
8.14 Limitation on Voluntary Payments and Modifications of Indebtedness;
-------------------------------------------------------------------
Modifications of Certificate of Incorporation, By-Laws and Certain Other
------------------------------------------------------------------------
Agreements; Negative Pledge; Limitations on Speculative Transactions; Issuances
-------------------------------------------------------------------------------
of Capital Stock; Etc. None of the Borrowers will, and will not permit any of
---------------------
its Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of, or
redeem, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner (including, without limitation, by way of depositing
with the trustee with respect thereto or any other Person money or
securities before due for the purpose of paying when due), or make any
payment in violation of any subordination terms of, any Indebtedness other
than (x) the prepayment of the Loans in accordance with the terms of this
Agreement, (y) regularly scheduled or required repayments or redemptions of
Existing Indebtedness, or amend, modify or change in any manner any term or
condition of any Existing Indebtedness, other than, so long as no Default
or Event of Default shall have occurred and is continuing, to prepay any
Indebtedness payable to any Borrower or any Subsidiary of a Borrower
whether by cash or set-off, and (z) the repayment of the CST Subordinated
Loan in accordance with Section 4 of the promissory note evidencing the CST
Subordinated Loan;
85
(ii) amend its certificate of incorporation or bylaws or Memorandum
or Articles of Association or other documents;
(iii) make any change in (i) accounting policies or reporting
practices, except as required or permitted by generally accepted accounting
principles or (ii) fiscal year in effect on the Effective Date;
(iv) cancel or terminate any Transaction Document or consent to or
accept any cancellation or termination thereof, amend, modify or change in
any manner any material term or condition of any Transaction Document or
give any consent, waiver or approval thereunder, waive any default under or
any breach of any material term or condition of any Transaction Document,
agree in any manner to any other amendment, modification or change of any
term or condition of any Transaction Document or take any other action in
connection with any Transaction Document that would impair the value of the
interest or rights of any Credit Party thereunder or that would impair the
rights or interests of the Administrative Agent or any Bank;
(v) enter into or suffer to exist any agreement prohibiting or
conditioning the creation or assumption of any Lien upon any of its
property or assets other than (x) in favor of the Secured Parties, (y) such
prohibitions existing on the date hereof contained in certain agreements
with customers of any of the Borrowers or their Subsidiaries and (z) with
respect to assets subject to purchase money security interests or
Capitalized Leases; provided, however that such Borrower and such of its
-------- -------
Subsidiaries shall only be required to use its commercially reasonable
efforts to not enter into or suffer to exist any such negative pledge
agreement with any of its customers;
(vi) engage in any transaction involving commodity options or futures
contracts or any similar speculative transactions except for Interest Rate
Protection Agreements permitted under Section 8.04(c); or
(vii) become a general partner in any general or limited partnership
or joint venture, or permit any of its Subsidiaries to do so, other than
any Subsidiary the sole assets of which consist of its interest in such
partnership or joint venture or such joint ventures set forth on Annex
8.14B.
8.15 Limitation on the Creation of Subsidiaries. Notwithstanding
------------------------------------------
anything to the contrary contained in this Agreement, MMI Holdings will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Initial Borrowing Date any Subsidiary; provided that the Borrowers and their
--------
respective Wholly-Owned Subsidiaries shall be permitted to establish or create
Wholly-Owned Subsidiaries so long as (i) at least 30 days' prior written notice
thereof is given to the Administrative Agent (or such shorter notice as may be
acceptable to the Administrative Agent), (ii) the capital stock of such new
Subsidiary is
86
pledged pursuant to, and to the extent required by, the Security Agreement and
the certificates representing such stock, together with stock powers duly
executed in blank, are delivered to the Collateral Agent, (iii) such new
Subsidiary (other than a Foreign Subsidiary except to the extent otherwise
required pursuant to Section 7.14) executes a Subsidiary Guaranty and the
Security Agreement and (iv) to the extent requested by the Administrative Agent
or the Required Banks, such new Subsidiary takes all actions required pursuant
to Section 7.11. In addition, each new Wholly-Owned Subsidiary of any Borrower
shall execute and deliver, or cause to be executed and delivered, all other
relevant documentation of the type described in Sections 5.05, 5.10 and, if
required by the Administrative Agent, 5.04, in each case as such new Subsidiary
would have had to deliver if such new Subsidiary were a Credit Party on the
Initial Borrowing Date.
SECTION 9. Events of Default.
-----------------
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
9.01 Payments. Any Borrower or other Credit Party shall (i) default
--------
in the payment when due of any principal of the Loans or the payment when due of
any Unpaid Drawing or (ii) default, and such default shall continue for three or
more days, in the payment when due of any interest on the Loans or Unpaid
Drawings or any Fees or any other amounted owing hereunder or under any other
Credit Document; or
9.02 Representations, Etc. Any representation, warranty or statement
--------------------
made by any Credit Party herein or in any other Credit Document or in any
statement or certificate delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed made; or
9.03 Covenants. Any Credit Party shall (a) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Section 7.01, 7.05, 7.08, 7.11, 7.21 or 8, or (b) default in the due performance
or observance by it of any term, covenant or agreement (other than those
referred to in Section 9.01, 9.02 or clause (a) of this Section 9.03) contained
in this Agreement or any other Credit Document and such default shall continue
unremedied for a period of at least 10 days after notice to the defaulting party
by the Administrative Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) Any Credit Party or any of
------------------------------
its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
provided in the instrument or agreement under which Indebtedness was created or
(ii) default in the observance or performance of any agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder
87
or holders of such Indebtedness (or a trustee or agent on behalf of such holder
or holders) to cause any such Indebtedness to become due prior to its stated
maturity; or (b) any Indebtedness (other than the Obligations) of any Credit
Party or any of its Subsidiaries shall be declared to be due and payable, or
shall be required to be prepaid or redeemed other than by a regularly scheduled
required prepayment or as a mandatory prepayment, purchased or defeased, or an
offer to prepay, redeem, purchase or defease such Indebtedness shall be required
to be made, in each case, prior to the stated maturity thereof; provided that it
--------
shall not constitute an Event of Default pursuant to clause (a) or (b) of this
Section 9.04 unless the principal amount of any one issue of such Indebtedness,
or the aggregate amount of all such Indebtedness referred to in clauses (a) and
(b) above, exceeds $1,500,000 at any one time; or
9.05 Bankruptcy, Etc. Any Credit Party or any of its Subsidiaries
---------------
or, so long as the CST Guaranty shall be in effect, CST shall generally not pay
its debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any Credit Party,
any of its Subsidiaries or, so long as the CST Guaranty shall be in effect, CST
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, administration,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, administrator,
examiner or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it) that is being diligently contested by it in good faith, either
such proceeding shall remain undismissed or unstayed for a period of 30 days or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
administrator, custodian or other similar official for, it or any substantial
part of its property) shall occur; or any Credit Party, any of its Subsidiaries
or, so long as the CST Guaranty shall be in effect, CST shall take any corporate
action to authorize any of the actions set forth above in this Section 9.05; or
9.06 ERISA. (a) Any ERISA Event shall have occurred with respect to
-----
a Plan and the sum (determined as of the date of occurrence of such ERISA Event)
of the liability that has been or is reasonably expected to be incurred of such
Plan and the liability that has been or is reasonably expected to be incurred of
any and all other Plans with respect to which an ERISA Event shall have occurred
and then exist (or the liability of the Credit Parties and the ERISA Affiliates
related to such ERISA Event) exceeds $1,000,000; or
(b) any Credit Party or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability
to such Multiemployer Plan in an amount that, when aggregated with all other
amounts required to be paid to Multiemployer Plans by the Credit Parties and the
ERISA Affiliates as Withdrawal Liability (determined as of the date of such
notification), exceeds $1,000,000 or requires payments exceeding $500,000 per
annum; or
88
(c) any Credit Party or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
and as a result of such reorganization or termination the aggregate annual
contributions of the Credit Parties and the ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer
Plans for the plan years of such Multiemployer Plans immediately preceding the
plan year in which such reorganization or termination occurs by an amount
exceeding $500,000; or
9.07 Security Documents. (a) Any Security Document shall cease to be
------------------
in full force and effect, or shall cease to give the Collateral Agent the Liens,
rights, powers and privileges purported to be created thereby in favor of the
Collateral Agent (including, without limitation, a perfected first priority
security interest in, and Lien on, all of the Collateral (subject to Permitted
Liens)), or (b) any Credit Party shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Security Document and such default (except to the
extent that same will adversely affect the continued perfection and priority of
the Liens created by any such Security Document in Collateral with an aggregate
value in excess of $50,000, in which case clause (a) of this Section 9.07 will
be applicable) shall continue unremedied for a period of 10 days; or
9.08 Guaranties. The Guaranties or any provision thereof shall cease
----------
to be in full force and effect, or any Guarantor or any Person acting by or on
behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations
under any Guaranty or any Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any Guaranty; or
9.09 Judgments. (i) Any judgment or order for the payment of money
---------
in excess of $1,000,000 shall be rendered against any Credit Party or any of its
Subsidiaries and either (A) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order which have not been stayed within 5
days of such commencement or (B) there shall be any period of 10 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or (ii) any non-monetary
judgment or order shall be rendered against any Credit Party or any of its
Subsidiaries that could have a Material Adverse Effect, and there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
9.10 Ownership. A Change of Control Event shall have occurred; or
---------
9.11 Credit Documents. Any provision of any Credit Document after
----------------
delivery thereof pursuant to Section 5 or 7.11 shall for any reason cease to be
valid and
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binding on or enforceable against any Credit Party to it, or any such Credit
Party shall so state in writing; or
9.12 Material Contracts. Any Material Contract which, if suspended,
------------------
revoked or otherwise terminated could, either individually or in the aggregate,
could have a Material Adverse Effect shall at any time and for any reason be
suspended, revoked or otherwise terminated prior to the scheduled termination
thereof by the other party thereto, or shall otherwise cease to be in full force
and effect; or
9.13 Borrowing Base Deficiency. Any Borrowing Base Deficiency shall
-------------------------
occur after expiration of the period of time required for prepayment in
accordance with Section 4.02(A); or
9.14 Material Adverse Change. There shall occur any Material Adverse
-----------------------
Change; or
9.15 CST Guaranty. The CST Guaranty or any provision thereof shall
------------
cease to be in full force and effect other than in accordance with its terms, or
CST or any Person acting by or on behalf of CST shall deny or disaffirm CST's
obligations under the CST Guaranty or CST shall default in the due performance
or observance of any term, covenant or agreement on its part to be performed or
observed pursuant to the CST Guaranty, including the obligation of CST to make
the CST Subordinated Loan in accordance with the terms of the CST Guaranty;
9.16. Spinoff Transaction. The Spinoff Transaction shall not have
-------------------
occurred on or prior to January 15, 1998.
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the request or
with the consent of the Required Banks, by written notice to the Borrowers, take
any or all of the following actions, without prejudice to the rights of the
Administrative Agent or any Bank to enforce its claims against any Guarantor or
any Borrower, except as otherwise specifically provided for in this Agreement
(provided that if an Event of Default specified in Section 9.05 shall occur with
--------
respect to any Borrower, the result which would occur upon the giving of written
notice by the Administrative Agent as specified in clauses (i) and (ii) below
shall occur automatically without the giving of any such notice): (i) declare
the Revolving Loan Commitment terminated, whereupon the Commitment of each Bank
shall forthwith terminate immediately and any Commitment Fees shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans and all
Obligations owing hereunder (including Unpaid Drawings) to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrowers; (iii) enforce, as Collateral Agent (or direct the Collateral Agent to
enforce), any or all of the Liens and security interests created
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pursuant to the Security Documents; (iv) terminate any Letter of Credit which
may be terminated in accordance with its terms; and (v) direct the Borrowers to
pay (and each Borrower hereby agrees upon receipt of such notice, or upon the
occurrence of any Event of Default specified in Section 9.05, to pay) to the
Collateral Agent at the Payment Office such additional amounts of cash, to be
held as security for the Borrowers' reimbursement obligations in respect of
Letters of Credit then outstanding, equal to the aggregate Stated Amount of all
Letters of Credit then outstanding.
SECTION 10. Definitions.
-----------
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this
Agreement shall include in the singular number the plural and in the plural the
singular:
"Additional Charges" shall have the meaning provided in Section
12.16(b).
"Additional Security Documents" shall have the meaning provided in
Section 7.11.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 11.10.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise. In addition, for purposes of this
Agreement, an Affiliate of ▇▇▇▇ Capital shall include any ▇▇▇▇ Capital investor
or any investment fund under common control with the Bain Investors.
"Agents" shall mean the Administrative Agent, the Collateral Agent and
the Multi-Currency Agent.
"Aggregate Unutilized Commitment" shall mean, with respect to any Bank
at any time, such Bank's Revolving Loan Commitment at such time, if any, less
----
the sum of (A) the aggregate outstanding principal amount of all US Revolving
Loans made by such Bank, (B) such Bank's RL Percentage of the Letter of Credit
Outstandings at such time, (C) such Bank's RL Percentage of the aggregate
principal amount of all Multi-Currency Revolving Loans made by the Multi-
Currency Banks pursuant to Section 1.01(A)(b)(3) and outstanding at such time as
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to which such Bank has a contingent obligation to fund participations in Multi-
Currency Loans pursuant to Section 1.01(B), (C) such Bank's RL Percentage of the
aggregate Stated Amount of all Letters of Credit outstanding at such time as to
which such Bank has a contingent obligation to fund Unpaid Drawings in respect
of drawings under such Multi-Currency Letters of Credit pursuant to Section
1.01(B) and (D) such Bank's RL Percentage of the aggregate principal amount of
all Unpaid Drawings in respect of all drawings under Multi-Currency Letters of
Credit outstanding at such time and as to which such Bank has a contingent
obligation to fund Unpaid Drawings pursuant to Section 1.01(B).
"Agreement" shall mean this Credit Agreement, as the same may be from
time to time modified, amended and/or supplemented.
"AIB Facility" shall mean any debt facility, as amended, modified
and supplemented from time to time between Allied Irish Banks p.l.c. or an
Affiliate thereof ("AIB") and one or more direct or indirect Subsidiaries of
MMI.
"Applicable Margin" shall mean a percentage per annum determined by
reference to the Leverage Ratio as set forth below:
=====================================================================================
Leverage Ratio Eurodollar Loans Base Rate Loans
-------------------------------------------------------------------------------------
U.S. Revolving Multi-Currency
Loans Loans
=====================================================================================
Level I
------- 2.00% 1.75% 1.00%
less than 1.0:1.0
Level II
--------
1.0:1.0 or greater,
but less than 2.0:1.0 2.25% 2.00% 1.25%
Level III
---------
2.0: 1.0 or greater 2.50% 2.25% 1.50%
=====================================================================================
The Applicable Margin for each Loan shall be determined by reference to the
Leverage Ratio in effect from time to time; provided, however, that (A) no
change in the Applicable Margin shall be effective until three Business Days
after the date on which the Administrative Agent receives the financial
statements required to be delivered pursuant to Section 7.01(b) and (c), and a
certificate of the chief financial officer of MMI demonstrating such Leverage
Ratio, and
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(B) the Applicable Margin shall be at Level III for so long as the Borrower has
not submitted to the Administrative Agent the information described in clause
(A) of this proviso as and when required under Section 7.01(b) or (c), as the
case may be.
"Appropriate Agent" means, at any time, with respect to matters
relating to US Revolving Loans or US Letters of Credit, the Administrative Agent
and, with respect to matters relating to Multi-Currency Revolving Loans or
Multi-Currency Letters of Credit, the Multi-Currency Agent.
"Appropriate Letter of Credit Issuer" means, at any time, with respect
to matters relating to US Letters of Credit, the US Letter of Credit Issuer and,
with respect to matters relating to Multi-Currency Letters of Credit issued for
the account of any Local Currency Borrower, the Multi-Currency Letter of Credit
Issuer.
"Appropriate Notice Office" shall mean with respect (i) to US
Revolving Loans, US Letters of Credit and funding of participations in Multi-
Currency Revolving Loans or Unpaid Drawings in respect of drawings under Multi-
Currency Letters of Credit, the office of the Administrative Agent located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ Oxford,
Agency Services, or such other office as the Administrative Agent may designate
to the Borrowers and the Banks from time to time and (ii) Multi-Currency
Revolving Loans and Multi-Currency Letters of Credit denominated in any
Currency, the office of the Multi-Currency Agent set forth on Schedule I
opposite such Currency or such other office as the Multi-Currency Agent may
designate to the Local Currency Borrowers and the Banks from time to time.
"Appropriate Payment Office" shall mean with respect (i) to US
Revolving Loans, US Letters of Credit and funding of participations in Multi-
Currency Revolving Loans or Unpaid Drawings in respect of drawings under Multi-
Currency Letters of Credit, the office of the Administrative Agent located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ Oxford,
Agency Services, or such other office as the Administrative Agent may designate
to the Borrowers and the Banks from time to time, and (ii) Multi-Currency
Revolving Loans and Multi-Currency Letters of Credit denominated in any
Currency, the office of the Multi-Currency Agent set forth on Schedule II
opposite the relevant Currency or such other office as the Multi-Currency Agent
may designate to the Local Currency Borrowers and the Banks from time to time.
"Approved Foreign Currency" shall mean each of Japanese Yen,
Singaporean Dollars, Australian Dollars, South Korean Won, Irish Pounds, Pounds
Sterling, French Francs, Dutch Guilders and such other currencies as shall be
agreed among the relevant Local Currency Borrower, the other Borrowers, the
Multi-Currency Agent and the Administrative Agent from time to time.
93
"Asset Sale," with respect to any Person, shall mean any sale,
transfer or other disposition (in one or a series of related transactions) by
such Person or any of its Subsidiaries to any other Person other than any
Wholly-Owned Subsidiary of such selling Person of any asset (including, without
limitation, any capital stock or other securities of another Person, but
excluding the sale by such Person of its own capital stock) of such selling
Person or such Subsidiary other than (i) sales, transfers or other dispositions
of inventory made in the ordinary course of business and (ii) sales of assets
pursuant to Sections 8.02(e), (f), (g) and (h).
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit I (appropriately
completed).
"Authorized Officer" shall mean any senior officer of any Credit Party
designated as such in writing to the Administrative Agent by such Credit Party,
in each case to the extent reasonably acceptable to the Administrative Agent.
"Bain Affiliates" shall mean any Affiliate of ▇▇▇▇ Capital, provided
that for purposes of the definition of "Change of Control Event" and for
purposes of Section 9.12, the term Bain Affiliate shall not include (x) any
portfolio company of either ▇▇▇▇ Capital or any Affiliate of ▇▇▇▇ Capital or (y)
any officer or director of MMI or any of its Subsidiaries that is not also a
partner or stockholder of ▇▇▇▇ Capital on the Effective Date.
"▇▇▇▇ Capital" shall mean ▇▇▇▇ Capital, Inc., a Delaware corporation.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of an RL Bank to make available its portion of any Borrowing
(including any Mandatory Borrowing) or to fund its portion of any unreimbursed
payment under Section 2.04(c) or (ii) an RL Bank having notified the
Administrative Agent and/or the Borrowers that it does not intend to comply with
the obligations under Section 1.01(A)(c), 1.01(C) or 2.04(c).
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher of (x) the rate which is
" of 1% in excess of the Federal Funds Rate and (y) the Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" means each of MMI and each Subsidiary of MMI that has
delivered a Credit Agreement Supplement which has become effective.
94
"Borrowing" shall mean the incurrence of one Type of Loan by any
Borrower from all of the Banks on a pro rata basis on a given date (or resulting
--- ----
from conversions on a given date), having in the case of Eurodollar Loans the
same Interest Period.
"Borrowing Base Certificate" shall have the meaning provided in
Section 7.01(i).
"Borrowing Base Deficiency" means, at any time, the failure of the
value of the Eligible Collateral as determined by the Agents in their reasonable
judgment at such time to equal or exceed the sum of the aggregate principal
amount of the Revolving Loans and the Swingline Loans outstanding at such time
and the Letter of Credit Outstanding at such time.
"Business Day" shall mean (i) for all purposes other than as covered
by clauses (ii) and (iii) below, any day excluding Saturday, Sunday and any day
which shall be in New York, New York or Dallas, Texas a legal holiday or a day
on which banking institutions are authorized by law or other governmental
actions to close, (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (i) and which is also a day
for trading by and between banks in US dollar deposits in the London interbank
Eurodollar market, and (iii) if the applicable Business Day relates to any
Multi-Currency Loans or Multi-Currency Letters of Credit, any day on which banks
are not required or authorized to close in the city of the jurisdiction of such
Currency where the Appropriate Payment Office for such Currency is located.
"Capital Expenditures" shall mean, with respect to any Person, the sum
of (a) all amounts expended, directly or indirectly, by such Person or any of
its Subsidiaries for equipment, fixed assets, real property or improvements, or
for replacements or substitutions therefor or additions thereto, which have been
or should be shown as capital expenditures in accordance with GAAP on a
consolidated balance sheet of such Person (including, without limitation,
expenditures for maintenance and repairs which should be capitalized in
accordance with GAAP) or have a useful life of more than one year plus (b)
(without duplication) the aggregate principal amount of all Indebtedness
(including the amount of all Capitalized Lease Obligations incurred by such
Person) assumed or incurred in connection with any such expenditures.
"Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, has been or should be accounted for as a capital lease on
the balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Credit Parties or any of their respective Subsidiaries in
each case taken at the amount thereof accounted for as liabilities in accordance
with GAAP.
95
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
--------
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) US dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank or
(y) any bank whose short-term commercial paper rating or that of its parent
company from S&P is at least A-1 or the equivalent thereof or from ▇▇▇▇▇'▇ is at
least P-1 or the equivalent thereof (any such bank or Bank, an "Approved Bank"),
in each case with maturities of not more than one year from the date of
acquisition, (iii) commercial paper issued by any Approved Bank or by the parent
company of any Approved Bank and commercial paper issued by, or guaranteed by,
any industrial or financial company with a short-term commercial paper rating of
at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's, or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within one
year after the date of acquisition, (iv) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one year from
the date of acquisition thereof and, at the time of acquisition, having one of
the two highest ratings obtainable from either S&P or Moody's and (v)
investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through (iv)
above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, issuance
or sale of debt or equity or Extraordinary Receipt, the aggregate cash payments
(including any cash received by way of deferred payment pursuant to a note
receivable issued in connection therewith, other than the portion of such
deferred payment constituting interest, but only as and when so received)
received by MMI and/or any of its Subsidiaries from such Asset Sale, issuance or
sale of debt or equity or Extraordinary Receipt.
"Change of Control Event" shall mean (a) MMI Holdings shall cease to
own directly or indirectly 100% of the economic and voting interest in the
capital stock of MMI, (b) at any time after the consummation of the Spinoff
Transaction and prior to the date of a Qualified IPO, the former holders of
Class B Common Stock of Stream International Holdings, Inc. (the "Stream
Holders") and RRD shall cease, in the aggregate, to own directly or indirectly
at least 51% on a fully diluted basis of the economic and voting interest in the
capital stock of MMI Holdings, or (c) at any time on or after the date of a
Qualified IPO, any Person or "group" (within the meaning of Rules 13d-3 and 13d-
5 under the Securities Exchange Act of 1934, as in effect on the Initial
Borrowing Date), other than the Stream Holders, ▇▇▇▇ Capital and/or the Bain
Affiliates or RRD, shall beneficially own, directly or indirectly, 30% or more
on a fully diluted basis of the voting and/or economic interest in the capital
stock of MMI Holdings or MMI, or (d) any Person or two or more Persons acting in
concert other than the Stream Holders, ▇▇▇▇ Capital and/or the Bain Affiliates
or RRD, shall have acquired by contract or otherwise, or shall have entered into
a contract or arrangement that, upon
96
consummation, will result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence over the management or policies
of MMI, or (e) the Board of Directors of MMI Holdings shall cease to consist of
a majority of Continuing Directors; provided, however, that the consummation of
-------- -------
the Spinoff Transaction in accordance with the Transaction Documents shall not
constitute a Change of Control Event.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean Citicorp acting as collateral agent and
shall include any successor to the Collateral Agent appointed pursuant to
Section 11.10.
"Commitment Fee" shall have the meaning provided in Section 3.01(a).
"Consolidated Current Assets" shall mean, at any time, all assets of
MMI and its Subsidiaries at such time determined on a consolidated basis that
would, in accordance with GAAP, be classified as current assets of a company
conducting a business the same or similar to that of MMI, after deducting
adequate resources in each case in which a reserve is proper in accordance with
GAAP.
"Consolidated Current Liabilities" shall mean, at any time, (a) all
Indebtedness of MMI and its Subsidiaries (other than Indebtedness under the AIB
Facility) determined on a consolidated basis that by its terms is payable on
demand or matures within one year after the date of its creation and (b) all
other items (including taxes accrued as estimated) that in accordance with GAAP
would be classified as current liabilities of MMI and its Subsidiaries.
"Consolidated Debt" shall mean, at any time, the sum of (without
duplication) (i) all Indebtedness of MMI and its Subsidiaries as would be
required to be reflected on the liability side of a balance sheet of such Person
in accordance with GAAP as determined on a consolidated basis, (ii) all
Indebtedness of MMI and its Subsidiaries of the type described in clause (iii)
of the definition of Indebtedness and (iii) all Contingent Obligations of MMI
and its Subsidiaries in respect of Indebtedness of other Persons of the type
referred to in preceding clauses (i) and (ii) of this definition.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income, before (i) interest expense, whether cash or non-cash, of MMI and its
Subsidiaries determined on a consolidated basis, and (ii) provisions for taxes
based on income, and determined without giving effect to any extraordinary gains
or losses or gains or losses from sales of assets other
97
than from inventory sold in the ordinary course of business, determined in
accordance with GAAP for such period.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of all depreciation expense and
amortization expense that were deducted in determining Consolidated EBIT for
such period.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in accordance
with GAAP) of MMI and its Subsidiaries determined on a consolidated basis with
respect to all outstanding Indebtedness of MMI and its Subsidiaries, including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and net
costs or benefits under Interest Rate Protection Agreements, but excluding,
however, amortization of original issue discount, any payments made to obtain
any Interest Rate Protection Agreement, deferred financing costs, any interest
expense on deferred compensation arrangements and any other non-cash interest
expense to the extent included in total interest expense.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss), after provision for taxes, of MMI and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) 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 (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of MMI Holdings on the
Effective Date, including ▇▇▇▇ Affiliates and each other director if such
director's nomination for the election to the Board of Directors of MMI Holdings
is recommended by a majority of the then Continuing Directors.
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"Contribution Agreement" shall have the meaning provided in the second
paragraph of this Agreement.
"Credit Agreement Supplement" shall have the meaning provided in
Section 1.14.
"Credit Documents" shall mean this Agreement, the Notes, the
Guaranties, each Security Document and any Credit Agreement Supplement entered
into by a Borrower.
"Credit Party Supplement Date" shall have the meaning provided in
Section 7.19(a).
"Credit Event" shall mean the making of a Loan (other than a Revolving
Loan made pursuant to a Mandatory Borrowing) or the issuance of a Letter of
Credit.
"Credit Party" shall mean each of MMI Holdings, each of the Borrowers
and each Subsidiary Guarantor.
"CST" shall mean Corporate Software & Technology, Inc.
"CST Guaranty" shall mean the Guaranty dated December 15, 1997 made by
CST in favor of the Guaranteed Creditors.
"CST Subordinated Loan" shall mean the Subordinated loan made by CST
to MMI pursuant to the CST Guaranty and Section 7.19 hereof.
"Currency" shall mean US Dollars or any Approved Foreign Currency.
"Currency Sublimit" shall mean, with respect to any Currency, the
amount from time to time equal to the amount of US Dollars set forth on Schedule
III under the heading "Currency Sublimit" opposite such Currency and the name of
the related Local Currency Borrower, as such amount may be changed from time to
time by the relevant Local Currency Borrower with the consent of the Multi-
Currency Agent, such consent not to be unreasonably withheld.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
99
"Dividends" shall have the meaning provided in Section 8.07.
"Documents" shall mean the Credit Documents and the Transaction
Documents.
"Domestic Subsidiary" shall mean each Subsidiary incorporated or
organized in the United States or any State or territory thereof.
"Dropdown" shall have the meaning provided in the first "WHEREAS"
clause hereof.
"Effective Date" shall have the meaning provided in Section 12.10.
"Eligible Collateral" shall mean the Eligible Fixed Assets, the
Eligible Inventory and the Eligible Receivables.
"Eligible Fixed Assets" shall mean, collectively, the Eligible US
Fixed Assets and the aggregate Eligible Foreign Fixed Assets of the Local
Currency Borrowers.
"Eligible Foreign Fixed Assets" shall mean, with respect to any Local
Currency Borrower, the orderly liquidation value (as determined by an
independent appraiser acceptable to the Agents) of the tangible property of such
Local Currency Borrower and its Subsidiaries used in the operation of their
respective businesses, which conform to the representations and warranties
contained in the Security Agreement to which such Local Currency Borrower is a
party, which in each case continue to be acceptable to the Agents in their
reasonable judgment, including, without limitation, plant, machinery, and
equipment, furniture and fixtures, and leasehold improvements. The value of
such fixed assets shall be determined by the Agents in their reasonable
judgment.
"Eligible Foreign Inventory" shall mean, with respect to any Local
Currency Borrower, the gross dollar value (valued at the lower of cost or market
value) of the inventory of such Local Currency Borrower which conforms to the
representations and warranties contained in the Security Agreement to which such
Local Currency Borrower is a party and which continues to be acceptable to the
Agents in their reasonable judgment, less (i) any goods returned or rejected
(except to the extent that such returned or rejected goods continue to conform
to the representations and warranties contained in such Security Agreement) by
customers and goods to be returned to suppliers, (ii) the amount of any advance
payments made by customers with respect to inventory of such local Currency
Borrower and (iii) reserves required by the Agents in their reasonable judgment.
The value of such inventory shall be determined by the Agents in their
reasonable judgment.
"Eligible Foreign Receivables" shall mean, with respect to any Local
Currency Borrower, the total face amount of the receivables of such Local
Currency Borrower which conform to the representations and warranties contained
in the Security Agreement to which
100
such Local Currency Borrower is a party, which in each case continue to be
acceptable to the Agents in their reasonable judgment less any returns,
discounts, claims, credit and allowances of any nature (whether issued, owing,
granted or outstanding) and less reserves for any other matter affecting the
creditworthiness of account debtors owing the receivables. The value of such
receivables shall be determined by the Agents in their reasonable judgment
taking into consideration, among other factors, their book value determined in
accordance with GAAP.
"Eligible Inventory" shall mean, collectively, the Eligible US
Inventory and the aggregate Eligible Foreign Inventory of the Local Currency
Borrowers.
"Eligible Receivables" shall mean, collectively, the Eligible US
Receivables and the aggregate Eligible Foreign Receivables of the Local Currency
Borrowers.
"Eligible US Fixed Assets" shall mean, the orderly liquidation value
(as determined by an independent appraiser acceptable to the Agents) of the
tangible property of MMI and its Domestic Subsidiaries used in the operation of
their respective businesses, which conform to the representations and warranties
contained in the Security Agreement to which MMI is a party, which in each case
continues to be acceptable to the Agents in their reasonable judgment,
including, without limitation, plant, machinery and equipment, furniture and
fixtures, and leasehold improvements.
"Eligible US Inventory" shall mean the gross dollar value (valued at
the lower of cost or market value) of the inventory of MMI and its Domestic
Subsidiaries which conforms to the representations and warranties contained in
the Security Agreement to which each of MMI and its Domestic Subsidiaries is a
party and which continues to be acceptable to the Agents in its reasonable
judgment, less (i) any goods returned or rejected (except to the extent that
such returned or rejected goods continue to conform to the representations and
warranties contained in such Security Agreement) by customers and goods to be
returned to suppliers, (ii) the amount of any advance payments made by customers
with respect to inventory of MMI and such Domestic Subsidiary and (iii) reserves
required by the Agents in their reasonable judgment. The value of such
inventory shall be determined by the Agents in their reasonable judgment. By
way of example only, and without limiting the discretion of the Agents to
consider any inventory not to be Eligible US Inventory, the Agents may consider
any of the following classes of inventory not to be Eligible US Inventory:
---
(a) inventory consisting of "perishable agricultural commodities"
within the meaning of the Perishable Agricultural Commodities Act of 1930,
as amended, and the regulations thereunder, or on which a Lien has arisen
or may arise in favor of agricultural producers under comparable state or
local laws;
(b) inventory located on leaseholds as to which the lessor has not
entered into, within 90 days from the Initial Borrowing Date, a consent and
agreement
101
providing the Agents with the right to receive notice of default, the right
to repossess such Inventory at any time and such other rights as may be
acceptable to the Agents;
(c) inventory that is obsolete, unusable or otherwise unavailable for
sale;
(d) inventory that fails to meet all standards imposed by any
governmental agency, or department or division thereof, having regulatory
authority over such inventory or its use or sale;
(e) inventory that is subject to any licensing, patent, royalty,
trademark, trade name or copyright agreement with any third party from whom
MMI or any Domestic Subsidiary has received notice of a dispute in respect
of any such agreement;
(f) inventory located outside the United States;
(g) inventory that is not in the possession of or under the sole
control of MMI or any Domestic Subsidiary; and
(h) inventory that is covered by agreements prohibiting or restricting
the granting of liens or creation of security interests in such inventory;
and
(i) inventory in respect of which the Security Agreement, after giving
effect to the related filings of financing statements that have then been
made, if any, does not or has ceased to create a valid and perfected first
priority lien or security interest in favor of the Secured Creditors
securing the Secured Obligations.
"Eligible US Receivables" shall mean the total face amount of the
receivables of MMI and its Domestic Subsidiaries which conform to the
representations and warranties contained in the Security Agreement to which each
of MMI and its Domestic Subsidiaries is a party, which in each case continue to
be acceptable to the Agents in their reasonable judgment less any returns,
discounts, claims, credit and allowances of any nature (whether issued, owing,
granted or outstanding) and less reserves for any other matter affecting the
creditworthiness of account debtors owing the receivables. The value of such
receivables shall be determined by the Agents in their reasonable judgment
taking into consideration, among other factors, their book value determined in
accordance with GAAP. By way of example only, and without limiting the
discretion of the Agents to consider any receivables not to be Eligible US
Receivables, the Agents may consider any of the following classes of receivables
not to be Eligible US Receivables:
---
(a) receivables that do not arise out of sales of goods or rendering
of services in the ordinary course of MMI or any Domestic Subsidiary's
business;
102
(b) receivables on terms other than those normal or customary in MMI
or any Domestic Subsidiary's business;
(c) receivables owing from any Person that is an Affiliate of MMI or
any Domestic Subsidiary;
(d) receivables more than 90 days past original invoice date or more
than 60 days past the date due;
(e) receivables owing from any Person from which an aggregate amount
of more than 20% of the receivables owing is more than 60 days past due;
(f) receivables owing from any Person that (i) has disputed liability
for any receivable owing from such Person or (ii) has otherwise asserted
any claim, demand or liability, whether by action, suit, counterclaim or
otherwise;
(g) receivables owing from any Person that shall take or be the
subject of any action or proceeding of a type described in Section 9.05;
(h) receivables (i) owing from any Person that is also a supplier to
or creditor of MMI or any Domestic Subsidiary or (ii) representing any
manufacturer's or supplier's credits, discounts, incentive plans or similar
arrangements entitling MMI or any Domestic Subsidiary to discounts on
future purchase therefrom;
(j) receivables arising out of sales to account debtors outside the
United States unless such Receivables are fully backed by an irrevocable
letter of credit on terms, and issued by a financial institution,
acceptable to the Agents and such irrevocable letter of credit is in the
possession of the Agents;
(k) receivables arising out of sales on a ▇▇▇▇-and-hold, guaranteed
sale, sale-or-return, sale on approval or consignment basis or subject to
any right of return, set-off or charge-back;
(l) receivables owing from an account debtor that is an agency,
department or instrumentality of the United States or any State thereof;
(m) receivables the full and timely payment of which the Agents in
their reasonable judgment believes to be doubtful; and
(n) receivables in respect of which the Security Agreement, after
giving effect to the related filings of financing statements that have then
been made, if any, does not or has ceased to create a valid and perfected
first priority lien or security interest in favor of the Secured Creditors
securing the Secured Obligations.
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"Eligible Transferee" shall mean (i) a Bank; (ii) an Affiliate of a
Bank; (iii) a commercial bank organized under the laws of the United States, or
any State thereof, and having total assets in excess of $1,000,000,000; (iv) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof, and having total assets in excess of
$1,000,000,000; (v) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development (the "OECD") or has concluded special lending arrangements with the
International Monetary Fund associated with its General Arrangements to Borrow
or of the Cayman Islands, or a political subdivision of any such country, and
having total assets in excess of $1,000,000,000, so long as such bank is acting
through a branch or agency located in the United States; (vi) the central bank
of any country that is a member of the OECD; (vii) a finance company, insurance
company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
and having total assets in excess of $1,000,000,000; and (viii) any other Person
approved by the Agents and the Borrowers, such approval not to be unreasonably
withheld or delayed; provided, however, that neither any Credit Party nor any
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Affiliate of a Credit Party shall qualify as an Eligible Transferee under this
definition.
"Employee Stock Option Plan" shall mean any stock option plan now or
hereafter adopted by MMI.
"Employment Agreements" shall have the meaning provided in Section
5.13.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any violation (or alleged violation) by MMI or any of its
Subsidiaries under any Environmental Law (hereafter "Claims") or any permit
issued to MMI or any of its Subsidiaries under any such law, including, without
limitation, (a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any federal, state or local policy,
statute, law, rule, regulation, ordinance, code or rule of common law now or
hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment (for purposes of this definition
(collectively, "Laws")), relating to the environment, or Hazardous Materials or
health and safety to the extent such health and safety issues arise under the
Occupational Safety and Health Act of 1970, as amended, or any such similar
Laws.
104
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder. Section references to ERISA are to ERISA as in
effect at the date of this Agreement and any subsequent provisions of ERISA
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with any Credit Party would be deemed to be a "single
employer" within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"ERISA Event" means (a)(i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan unless the
30-day notice requirement with respect to such event has been waived by the
PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA
(without regard to subsection (2) of such Section) are met with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and
an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c)
of ERISA is reasonably expected to occur with respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver with respect
to a Plan; (c) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any
Credit Party or any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA; (e) the withdrawal by any Credit Party or any ERISA Affiliate
from a Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for
imposition of a lien under Section 302(f) of ERISA shall have been met with
respect to any Plan; (g) the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the
institution by the PBGC of proceedings to terminate a Plan pursuant to Section
4042 of ERISA, or the occurrence of any event or condition described in Section
4042 of ERISA that constitutes grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean for the Interest Period for each
Eurodollar Loan comprising part of the same Borrowing, a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
---------------------------------
1 - Eurodollar Reserve Percentage
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"Eurodollar Reserve Percentage" shall mean for any day, that
percentage (expressed as a decimal) which is in effect from time to time under
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor), as such regulation may be amended from time to time or any successor
regulation, as the maximum reserve requirement (including, without limitation,
any basic, supplement, emergency, special, or marginal reserves) applicable with
respect to Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate of Eurodollar Loans is determined), whether or not a
Bank has any Eurocurrency liabilities subject to such reserve requirement at
that time. Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
benefits of credits for proration, exceptions or offsets that may be available
from time to time to a Bank. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurodollar
Reserve Percentage.
"Event of Default" shall have the meaning provided in Section 9.
"Existing Indebtedness" shall have the meaning provided in Section
6.23.
"Existing Indebtedness Agreement" shall have the meaning provided in
Section 5.13.
"Extraordinary Receipt" means any cash received by or paid to or for
the account of any Person not in the ordinary course of business, including,
without limitation, tax refunds, pension plan reversions, proceeds from any
Recovery Event and indemnity payments.
"Facing Fee" shall have the meaning provided in Section 3.01(d).
"Federal Funds Rate" shall mean for any period, a fluctuating interest
rate (rounded upward, if necessary, to the nearest 1/100th of 1%) equal for each
day during such period to the weighted average of the rates on overnight Federal
Funds transactions with members of the Federal Reserve System arranged by
Federal Funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal Funds brokers of
recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Foreign Availability Amount" shall mean an amount equal to the Total
Revolving Loan Commitment less the sum of (x) the aggregate principal amount of
----
Multi-
106
Currency Revolving Loans then outstanding, (y) the aggregate amount of Multi-
Currency Letter of Credit Outstandings at such time and (z) $5,000,000.
"Foreign Borrowing Base", with respect to any Local Currency Borrower,
shall mean, as at any date on which the amount thereof is being determined, an
amount equal to the sum of (i) up to 85% of the Eligible Foreign Receivables of
such Local Currency Borrower, (ii) up to 60% of Eligible Foreign Inventory of
such Local Currency Borrower, and (iii) up to 75% of Eligible Foreign Fixed
Assets of such Local Currency Borrower (such amount of Eligible Foreign Fixed
Assets being reduced by up to 20% each fiscal year of MMI Holdings commencing on
January 1, 1999), in each case, as such percentages shall be determined by the
Agents in their sole discretion, and each as determined from the Borrowing Base
Certificate of such Local Currency Borrower most recently delivered pursuant to
Section 7.01(i).
"Foreign Corporation" mean any "controlled foreign corporation" within
the meaning of Section 957(a) of the Internal Revenue Code as to which MMI or
any of its Subsidiaries is a "United States shareholder" as defined in Section
951(b) of the Internal Revenue Code.
"Foreign Currency Equivalent" shall mean, on any date of
determination, the equivalent in any Foreign Currency of an amount in US
dollars, or in US dollars of an amount in any Foreign Currency, determined at
the rate of exchange quoted by the Multi-Currency Agent in New York City, at
9:00 A.M. (New York City time) on such date of determination, to prime banks in
New York City for the spot purchase in the New York foreign exchange market of
such amount of US dollars with such Foreign Currency or such amount of such
Foreign Currency or with US dollars.
"Foreign Outstanding" shall mean, at any time, the sum of (i) the
aggregate principal amount of Multi-Currency Revolving Loans then outstanding
plus (ii) the aggregate amount of Multi-Currency Letter of Credit Outstandings
at such time.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by MMI or any one or more of its
Subsidiaries primarily for the benefit of employees of MMI or such Subsidiaries
residing outside the United States of America, which plan, fund or other similar
program provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary other than a Domestic
Subsidiary.
"French Francs Facility" shall mean, collectively, the following
credit facilities: (i) loan arrangements between MMI-France, as borrower and
Banque Nationale de
107
Paris and (ii) loan arrangements between MMI-France, as borrower and Banque
Populaire Val de France each as in effect on the date hereof and any
replacement, extension or renewal of any such credit facility entered into by
MMI-France pursuant to clauses (i) and (ii) above with a comparable bank or
other comparable financing institution.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as promulgated by the
Financial Accounting Standards Board (or any successor thereto); it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Guaranteed Creditors" shall mean and include each of the
Administrative Agent, the Syndication Agent, the Collateral Agent, the Banks and
each party (other than any Credit Party) party to an Interest Rate Protection
Agreement or Other Hedging Agreement to the extent that such party constitutes a
Secured Creditor under the Security Documents.
"Guaranteed Obligations" shall mean (i) the principal and interest on
each Note issued by each Borrower to each Bank, and Loans made, under this
Agreement and all reimbursement obligations and Unpaid Drawings with respect to
Letters of Credit, together with all the other obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of each Borrower to such
Bank, the Administrative Agent, the Syndication Agent and the Collateral Agent
now existing or hereafter incurred under, arising out of or in connection with
this Agreement or any other Credit Document and the due performance and
compliance with all the terms, conditions and agreements contained in the Credit
Documents by the Credit Parties and (ii) all obligations (including obligations
which, but for the automatic stay under Section 362(a) of the Bankruptcy Code,
would become due) and liabilities of the Credit Parties or any of their
respective Subsidiaries owing under any Interest Rate Protection Agreement or
Other Hedging Agreement entered into by any Credit Party or any of its
Subsidiaries with any Bank or any affiliate thereof (even if such Bank
subsequently ceases to be a Bank under this Agreement for any reason) so long as
such Bank or affiliate participate in such Interest Rate Protection Agreement or
Other Hedging Agreement, and their subsequent assigns, if any, whether now in
existence or hereafter arising, and the due performance and compliance with all
terms, conditions and agreements contained therein.
"Guarantor" shall mean each of MMI Holdings, MMI and each Subsidiary
Guarantor.
"Guaranty" shall mean and include each Parent Guaranty and each
Subsidiary Guaranty.
108
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous wastes,"
"restrictive hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar meaning and regulatory
effect.
"Highest Lawful Rate" shall mean, with respect to any indebtedness
owed to any Bank hereunder or under any other Credit Document, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received by such Bank with respect
to such indebtedness under applicable law.
"Home Jurisdiction Withholding Taxes" means, in the case of each
Borrower, withholding taxes imposed by the jurisdiction or political subdivision
or taxing authority thereof or therein in which such Borrower is organized.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller's
assignees which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person, (iii) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (v) all obligations, contingent or otherwise, of such Person under
acceptance or similar facilities, (vi) all Capitalized Lease Obligations of such
Person, (vii) all obligations of such Person to pay a specified purchase price
for goods or services whether or not delivered or accepted, i.e., take-or-pay
----
and similar obligations, (viii) all obligations under Interest Rate Protection
Agreements and Other Hedging Agreements, (ix) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (x) all
obligations 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), (xi) all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any capital stock of or
other ownership or profit interest in such Person or any other Person or any
warrants, rights or options to acquire such capital stock, valued, in the case
of redeemable preferred stock, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends but excluding the MMI
Holdings Preferred Stock, and (xii) all Contingent Obligations of such Person,
provided that Indebtedness shall not include trade or services payables not
--------
overdue by more than 60 days and accrued expenses, in each case arising in the
ordinary course of business, and provided,
--------
109
further, that for the purposes of Sections 8.10, 8.12, and 8.13, Indebtedness
-------
shall not include the Contingent Obligations of MMI contemplated under the
Transaction Documents.
"Initial Borrowing Date" shall mean the date upon which Loans are
initially incurred hereunder.
"Intercompany Loan" shall have the meaning provided in Section
8.06(g).
"Intercompany Notes" shall mean promissory notes, in the form of
Exhibit J, evidencing Intercompany Loans.
"Interest Coverage Ratio" shall mean, for any period, the ratio of
Consolidated EBITDA to Consolidated Interest Expense for such period.
"Interest Period," with respect to any Eurodollar Loan, shall mean the
interest period applicable thereto, as determined Pursuant to Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"L/C Participant" shall have the meaning provided in Section 2.04.
"L/C Supportable Indebtedness" shall mean (i) obligations of MMI and
its Subsidiaries incurred in the ordinary course of business with respect to
insurance obligations and workers' compensation, surety bonds and other similar
statutory obligations and (ii) such other obligations of MMI and its
Subsidiaries, as are reasonably acceptable to the Administrative Agent and the
Letter of Credit Issuers and otherwise permitted to exist pursuant to the terms
of this Agreement.
"Leasehold" of any Person shall mean all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letters of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fees" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean any US Letter of Credit Issuer or
any Multi-Currency Letter of Credit Issuer.
"Letter of Credit Outstandings" shall mean the US Letter of Credit
Outstandings and the Multi-Currency Letter of Credit Outstandings.
110
"Letter of Credit Request" shall have the meaning provided in Section
2.02(a).
"Leverage Ratio" shall mean, at any time, the ratio of (x)
Consolidated Debt at such time to (y) Consolidated EBITDA for the Test Period
then last ended.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Loan" shall mean each and every Loan made by any Bank hereunder,
Revolving Loans or Swingline Loans.
"Local Currency Borrower" shall mean any Borrower organized under the
laws of a jurisdiction outside of the United States.
"London Interbank Offered Rate" shall mean, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of interest
per annum appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, if more than one rate
--------
is specified on Telerate Page 3750, the applicable rate shall be the arithmetic
mean of all such rates. If, for any reason, such rate is not available, the
term "London Interbank Offered Rate" shall mean, with respect to any Eurodollar
Loan for the Interest Period applicable thereto, the rate per annum appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest period;
provided further, if more than one rate is specified on Reuters Screen LIBO
-------- -------
Page, the applicable rate shall be the arithmetic mean of all such rates.
"Management Agreements" shall have the meaning provided in Section
5.13.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(D).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, properties, assets, liabilities, condition (financial or
otherwise) or prospects of any Credit Party or of any Credit Party and its
Subsidiaries taken as a whole or, prior to the Dropdown, the MMI Business, (b)
the rights and remedies of the Administrative Agent or any Bank under any Credit
Document or any other Document or (c) the ability of any Credit Party
111
to perform its obligations under any Credit Document or any other Document to
which it is a party.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Credit Party or any of its Subsidiaries.
"Maturity Date" shall mean December 17, 2001.
"Maximum Swingline Amount" shall mean $5,000,000.
"Minimum Borrowing Amount" shall mean (i) $1,000,000 for US Revolving
Loans, $1,000,000 (or the Foreign Currency Equivalent thereof), (iii) for Multi-
Currency Revolving Loans denominated in any Approved Foreign Currency, the
amount set forth on Schedule IV opposite such Approved Foreign Currency, and
(iii) for Swingline Loans, $250,000.
"MMI" shall have the meaning provided in the first paragraph of this
Agreement.
"MMI-Australia" shall mean Modus Media International Pty. Ltd. ACN
062 349 222, an Australian company.
"MMI-France" shall mean Modus Media International France S.A., a
French company registered with the Commercial Registry of Orleans under the
Number B390185346.
"MMI-Ireland" shall mean Modus Media International Ireland (Holdings)
and its Subsidiaries, Irish companies.
"MMI-Netherlands" shall mean Modus Media International B.V., a
Netherlands company.
"MMI- Singapore" shall mean Modus Media International Pte. Ltd., a
Singaporean company.
"MMI-UK" shall mean Modus Media International Limited (UK).
"MMI Business" shall mean all of the assets and liabilities
contributed by Stream to MMI, pursuant to the Transaction Documents.
"MMI Holdings" shall have the meaning provided in the first paragraph
of this Agreement.
112
"MMI Holdings Preferred Stock" shall mean the 9.5% PIK Preferred Stock
of MMI Holdings issued to RRD on the Initial Borrowing Date.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgaged Properties" means the whole of Lot 4406 of Mukim 23
together with the building(s) erected thereon and known as ▇▇.▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, held under Instrument of Lease No. 1/00125L dated the 2nd December
1996 and comprised of a leasehold estate for unexpired portion of a terms of 30
years commencing from the 1st January 1990;
"Multi-Currency Agent" shall mean Citicorp and shall include any
successor to the Multi-Currency Agent appointed pursuant to Section 11.10.
"Multi-Currency Bank" shall mean each of Citicorp and such other Banks
as shall be agreed from time to time among the Multi-Currency Agent, the
Administrative Agent and the Borrowers.
"Multi-Currency L/C Currency Sublimit" shall mean, with respect to
Multi-Currency Letter of Credits denominated in any Currency, the amount from
time to time equal to the amount of US Dollars set forth an Schedule III under
the heading "Multi-Currency L/C Currency Sublimit" opposite each Currency and
the name of the related Local Currency Borrower.
"Multi-Currency Letter of Credit" shall mean a Letter of Credit
denominated in a Foreign Currency.
"Multi-Currency Letter of Credit Issuer" shall mean Citicorp.
"Multi-Currency Letter of Credit Outstandings" shall mean, at any
time, the sum of, without duplication, (i) the aggregated stated amount of all
outstanding Multi-Currency Letters of Credit and (ii) the aggregate amount of
all Unpaid Drawings in respect of such Letters of Credit.
"Multi-Currency Participant" shall have the meaning provided in
Section 1.01(B).
"Multi-Currency Revolving Loan Sublimit" shall mean the Foreign
Currency Equivalent of U.S. $50,000,000.
"NationsBank" shall mean NationsBank of Texas, N.A., in its individual
capacity, and any successor corporation thereto by merger, consolidation or
otherwise.
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"Net Cash Proceeds" shall mean, with respect to any Asset Sale or the
sale or issuance of any Indebtedness or capital stock or other ownership or
profit interest, any securities convertible into or exchangeable for capital
stock or other ownership or profit interest or any warrants, rights, options or
other securities to acquire capital stock or other ownership or profit interest
by any Person, or any Extraordinary Receipt received by or paid to or for the
account of any Person, the aggregate amount of cash received from time to time
(whether as initial consideration or through payment or disposition of deferred
consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without duplication) (a) reasonable
and customary brokerage commissions, underwriting fees and discounts, legal
fees, finder's fees and other similar fees and commissions and (b) the amount of
taxes payable in connection with or as a result of such transaction, in each
case to the extent, but only to the extent, that the amounts so deducted are, at
the time of receipt of such cash, actually paid to a Person that is not an
Affiliate of such Person or any Credit Party or any Affiliate of any Credit
Party and are properly attributable to such transaction or to the asset that is
the subject thereof.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Note" shall mean each Revolving Note and each Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent, the Collateral Agent or any Bank pursuant to the terms
of this Agreement or any other Credit Document.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations in currency values.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Encumbrances" shall mean (i) those liens, encumbrances and
other matters affecting title to any Mortgaged Property listed in the Mortgage
Policies in respect thereof and found reasonably acceptable by the Agents, (ii)
as to any particular Mortgaged Property at any time, such easements,
encroachments, covenants, rights of way, minor defects, irregularities or
encumbrances on title which do not, in the reasonable opinion of the Agents,
materially impair such Mortgaged Property for the purpose for which it is held
by the mortgagor thereof, or the lien held by the Collateral Agent, (iii) zoning
and other municipal
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ordinances which are not violated in any material respect by the existing
improvements and the present use made by the mortgagor thereof of the Premises
(as defined in the respective Mortgage), (iv) general real estate taxes and
assessments not yet delinquent, and (v) such other items as the Agents may
consent to (such consent not to be unreasonably withheld).
"Permitted Liens" shall have the meaning provided in Section 8.03.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan as defined
in Section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute of) any Credit Party or any ERISA Affiliate
and each such plan for the five calendar year period immediately following the
latest date on which any Credit Party or any ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan.
"Pledged Securities" shall mean all the Pledged Securities as defined
the Security Agreement.
"Preferred Stock" means, with respect to any corporation, capital
stock issued by such corporation that is entitled to a preference or priority
over any other capital stock issued by such corporation upon any distribution of
such corporation's assets, whether by dividend or upon liquidation.
"Prepayment Pro Rata Share" of any amount, with respect to any
Borrower at any time, (i) with respect to all Revolving Loans an amount equal to
(x) a fraction the numerator of which is the aggregate principal amount of
outstanding Revolving Loans owed by such Borrower at such time and the
denominator of which is the aggregate principal amount of all Revolving Loans
outstanding at such time, multiplied by (y) such amount; (ii) with respect to
all Letter of Credit Outstandings, an amount equal to (x) a fraction, the
numerator of which is the aggregate amount of all Letter of Credit Outstandings
in respect of drawings under Letters of Credit issued for the account of such
Borrower and the denominator of which is the aggregate amount of all Letter of
Credit multiplied by (y) such amount; (iii) with respect to Multi-Currency
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Revolving Loans an amount equal to (x) a fraction the numerator of which is the
aggregate principal amount of outstanding Multi-Currency Revolving Loans owed by
such Borrower at such time and the denominator of which is the aggregate
principal amount of all Multi-Currency Revolving Loans outstanding at such time,
multiplied by (y) such amount; and (iv) with respect to Multi-Currency Letter of
Credit Outstandings, an amount equal to (x) a fraction, the numerator of which
is the aggregate amount of all Multi-
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Currency Letter of Credit Outstandings in respect of drawings under Multi-
Currency Letters of Credit issued for the account of such Borrower and the
denominator of which is the aggregate amount of all Multi-Currency Letter of
Credit Outstandings in respect of drawings under all Letters of Credit
Outstandings in respect of drawings under all Letters of Credit multiplied by
----------
(y) such amount.
"Prime Lending Rate" shall mean the rate which NationsBank announces
from time to time at its principal office in Dallas, Texas (or such other
principal office as communicated in writing to the Borrowers and the Banks) as
its prime lending rate, the Prime Lending Rate to change when and as such prime
lending rate changes. The Prime Lending Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
NationsBank may make commercial loans or other loans at rates of interest at,
above or below the Prime Lending Rate.
"Process Agent" shall have the meaning provided in Section 12.08.
"Projections" shall have the meaning provided in Section 5.16.
"Qualified IPO" shall mean an initial registered public offering by
MMI of its capital stock which results in net cash proceeds to MMI of at least
$25,000,000.
"Quarterly Payment Date" shall mean each March 31, June 30, September
30 and December 31.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by MMI or any of its
Subsidiaries of any insurance or condemnation proceeds payable (i) by reason of
theft, physical destruction or damage or any other similar event with respect to
any properties or assets of MMI or any of its Subsidiaries, (ii) by reason any
condemnation, taking, seizing or similar event with respect to any properties or
assets of MMI or any of its Subsidiaries and (iii) under any policy of insurance
required to be maintained under Section 7.03.
"Register" shall have the meaning provided in Section 7.13.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or any portion thereof.
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"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from to time in effect and any successor to all or
any portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or any portion thereof.
"Related Business" shall mean any business permitted to be conducted
by MMI or any of its Subsidiaries pursuant to Section 8.01
"Release" shall mean any disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Relevant Currency Time" means, for any Borrowing in any currency, the
local time in the city where the Appropriate Payment Office for such currency is
located.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" shall mean collectively (and not individually) Non-
Defaulting Banks whose Revolving Loan Commitments (or, if after the Total
Revolving Loan Commitment has been terminated, outstanding Revolving Loans and
RL Percentages of outstanding Swingline Loans and Letter of Credit Outstandings)
constitute greater than 50% of the Total Revolving Loan Commitment less the
aggregate Revolving Loan Commitments of Defaulting Banks (or, if after the Total
Revolving Loan Commitment has been terminated, the total outstanding Revolving
Loans of Non-Defaulting Banks and the aggregate RL Percentages of all Non-
Defaulting Banks of the total outstanding Swingline Loans and Letter of Credit
Outstandings at such time).
"Responsible Officer" shall mean with respect to any Person an officer
of such Person holding the office of Chief Executive Officer, Chief Financial
Officer or Treasurer.
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"Returns" shall have the meaning provided in Section 6.22.
"Revolving Loan" shall have the meaning provided in Section
1.01(A)(a).
"Revolving Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I directly below the column
entitled "Revolving Loan Commitment," as the same may be reduced from time to
time pursuant to Section 3.02, Section 3.03 and/or Section 9.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"RL Bank" shall mean at any time each Bank with a Revolving Loan
Commitment or with outstanding Revolving Loans.
"RL Percentage" shall mean at any time for each RL Bank, the
percentage obtained by dividing such RL Bank's Revolving Loan Commitment by the
Total Revolving Loan Commitment, provided that if the Total Revolving Loan
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Commitment has been terminated, the RL Percentage of each RL Bank shall be
determined by dividing such RL Bank's Revolving Loan Commitment immediately
prior to such termination by the Net Revolving Loan Commitment immediately prior
to such termination.
"Rollover Amount" shall have the meaning provided in Section 8.09(b).
"RRD" shall mean ▇▇ ▇▇▇▇▇▇▇▇▇ & Sons Company.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning provided in the Security
Documents.
"Security Agreement" shall mean each security agreement delivered by
MMI pursuant to Section 5.10 and each other security agreement, pledge
agreement, debenture, charge, mortgage, notarial deed or similar security
document executed and delivered by any other Borrower or any Subsidiary
Guarantor pursuant to this Agreement.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean and include each Security Agreement,
each Mortgage and each Additional Security Document, if any.
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"Shareholders' Agreements" shall have the meaning set forth in Section
5.13.
"Singapore Credit Supplement Date" shall have the meaning provided in
Section 7.19(d)
"Singapore Dollars" and "S$" each means lawful money of Singapore.
"Solvent" and "Solvency" shall mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts of liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc.
"Spinoff Transaction" shall have the meaning provided in the second
paragraph of this Agreement.
"Standby Letter of Credit" shall mean any Letter of Credit issued,
other than a Trade Letter of Credit.
"Stated Amount" of each Letter of Credit shall mean the maximum amount
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Stream" shall mean Stream International, Inc.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or
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other entity (other than a corporation) in which such Person directly or
indirectly through Subsidiaries, has more than a 50% equity interest at the
time.
"Subsidiary Grantor" shall mean each Subsidiary of a Borrower which
executes a Security Agreement.
"Subsidiary Guarantor" shall mean (i) with respect to MMI, each
Domestic Subsidiary of MMI and, to the extent provided in Section 7.14, each
Foreign Subsidiary of MMI that is or becomes a party to a Subsidiary Guaranty
and (ii) with respect to any other Borrower, each Subsidiary of MMI which
becomes a party to a Subsidiary Guaranty pursuant to which such Subsidiary
guarantees the obligations of such Borrower.
"Subsidiary Guaranty" shall have the meaning provided in Section 5.11.
"Swingline Bank" shall mean NationsBank.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(C).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Syndication Date" shall mean the date upon which the Administrative
Agent determines (and notifies the Borrowers) that the primary syndication (and
resultant addition of Persons as Banks pursuant to Section 12.04(b)) has been
completed (it being understood and agreed that prior to the 180th day after the
Initial Borrowing Date the Administrative Agent agrees to use its reasonable
efforts to have the Syndication Date occur on the last day of an Interest Period
applicable to outstanding Eurodollar Loans).
"Tangible Net Worth" shall mean, at any time, an amount equal to the
excess at such time of (i) the total tangible assets of MMI Holdings and its
Subsidiaries at such time over (ii) the total liabilities of MMI Holdings and
its Subsidiaries at such time, in each case determined on a consolidated basis.
"Tax Allocation Agreements" shall have the meaning provided in Section
5.13.
"Taxes" shall have the meaning provided in Section 4.04.
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"Test Period" shall mean (a) with respect to Sections 8.11 and 8.12
(i) for any determination made on and prior to June 30, 1998, the period from
January 1, 1998 to the last day of the fiscal quarter of MMI Holdings then last
ended (taken as one accounting period), and (ii) for any determination made
thereafter, the four consecutive fiscal quarters of MMI Holdings then last ended
(taken as one accounting period) and (b) with respect to Section 8.13, the four
consecutive fiscal quarters of MMI Holdings then last ended (taken as one
accounting period).
"Total Borrowing Base" shall mean, as at any date on which the amount
thereof is being determined, an amount equal to the sum of the US Borrowing Base
and the aggregate Foreign Borrowing Base for all the Local Currency Borrowers.
"Total Outstanding" shall mean, at any time, the sum of (i) the
aggregate principal amount of Revolving Loans and Swingline Loans then
outstanding plus (ii) the aggregate amount of Letter of Credit Outstandings at
such time.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving
Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
(i) the Total Revolving Loan Commitment at such time less (ii) the sum of the
aggregate principal amount of all Revolving Loans outstanding at such time plus
the Letter of Credit Outstandings at such time.
"Trade Letter of Credit" means any Letter of Credit that is issued for
the benefit of a supplier of inventory to any Borrower or any of its
Subsidiaries to effect payment for such inventory.
"Transaction" shall mean, collectively, (i) the Dropdown, (ii) the
Spinoff Transaction, (iii) the incurrence of Loans on the Initial Borrowing Date
and (iv) the payment of fees and expenses in connection with the foregoing.
"Transaction Documents" shall mean each of the agreements listed on
Schedule V, and all other agreements and documents relating to the Transaction.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.
----
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the
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close of its most recent plan year exceeds the fair market value of the assets
allocable thereto, each determined in accordance with Statement of Financial
Accounting Standards No. 87, based upon the actuarial assumptions used by the
Plan's actuary in the most recent annual valuation of the Plan.
"Unpaid Drawing" shall have the meaning provided in Section 2.03(a).
"US Borrowing Base" shall mean as at any date on which the amount
thereof is being determined, an amount equal to the sum of (i) up to 85% of
Eligible US Receivables, (ii) up to 60% of Eligible US Inventory and (iii) up to
75% of Eligible US Fixed Assets (such amount of Eligible US Fixed Assets being
reduced by up to 20% each fiscal year of MMI Holdings commencing on January 1,
1999), in each case, as such percentages shall be determined by the Agents in
their sole discretion.
"US Business Day" shall mean any day excluding Saturday, Sunday and
any day which shall be in New York, New York or Dallas, Texas a legal holiday or
a day on which banking institutions are authorized by law or other governmental
action to close.
"US Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States of America.
"US Letter of Credit Issuer" shall mean NationsBank.
"US Letter of Credit Outstandings" shall mean, at any time, the sum
of, without duplication, (i) the aggregate Stated Amount of all outstanding US
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings in
respect of such Letters of Credit.
"US Outstanding" shall mean at any time, the sum of (i) the aggregate
principal amount of US Revolving Loans, and Swingline Loans then outstanding
plus (ii) the aggregate amount of US Letter of Credit Outstandings at such time.
"US Revolving Loan" shall have the meaning provided in Section
1.01(B).
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying shares
and/or other nominal amounts of shares required to be held other than by such
Person under applicable law) is at the time owned by such Person and/or one or
more Wholly-Owned Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
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"Working Capital" shall mean the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
"Written" (whether lower or upper case) or "in writing" shall mean any
form of written communication or a communication by means of telex, facsimile
device, telegraph or cable.
"Yen" and "[_]" each means lawful money of Japan.
SECTION 11. The Agents.
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11.01 Appointment. Each Bank hereby irrevocably designates and
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appoints NationsBank as Administrative Agent of such Bank (such term to include
for purposes of this Section 11, NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc. acting
as Syndication Agent) and Citicorp as Collateral Agent, Multi-Currency Agent and
Documentation Agent, in each case to act as specified herein and in the other
Credit Documents, and each such Bank hereby irrevocably authorizes NationsBank
as the Administrative Agent, and Citicorp as the Collateral Agent (and agrees
that the Collateral Agent shall act as trustee of the security, rights and
benefits constituted by Security Documents executed or to be executed by MMI-
Ireland and its subsidiaries and the Collateral Agent hereby declares that it
will hold such security and such rights and benefits in trust for the benefit of
each Bank subject to the terms of these presents), to take such action on its
behalf under the provisions of this Agreement and the other Credit Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent and the Collateral Agent by the terms of this Agreement
and the other Credit Documents, together with such other powers as are
reasonably incidental thereto. Among other things, the Collateral Agent shall
act on behalf of the Banks in order to fully effectuate a right of pledge in
favor of the Banks on approximately 66% of the issued shares of MMI-Netherlands
by executing a notarial deed (the [_]Netherlands Share Pledge Deed[_]) to that
effect. The Collateral Agent shall act on behalf of the Banks in all matters in
connection with or in relation to or concerning the Netherlands Share Pledge
Deed and all transactions, matters and things contemplated thereby. The
Collateral Agent shall therefore be authorized to exercise on behalf of the
Banks all such rights as are granted to the Banks under the laws of the
Netherlands, and all such rights as are granted to them in the Netherlands Share
Pledge Deed. Each Agent agrees to act as such upon the express conditions
contained in this Section 11. Notwithstanding any provision to the contrary
elsewhere in this Agreement or in any other Credit Document, no Agent shall have
any duties or responsibilities, except those expressly set forth herein or in
the other Credit Documents, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against such
Agent. The provisions of this Section 11 are solely for the benefit of the
Agents and the Banks, and neither MMI nor any of its Subsidiaries shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Credit
Documents,
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each Agent shall act solely as agent of the Banks and shall not assume and shall
not be deemed to have assumed any obligation or relationship of agency or trust
with or for MMI or any of its Subsidiaries. The Banks hereby acknowledge and
agree that NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc. shall have no duties or
obligations (and shall have no liability to the Banks) under this Agreement or
any other Credit Document.
11.02 Delegation of Duties. Each Agent may execute any of its duties
--------------------
under this Agreement or any other Credit Document by or through affiliates,
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Agent shall be responsible
for the negligence or misconduct of any affiliates, agents or attorneys-in-fact
selected by it with reasonable care except to the extent otherwise required by
Section 11.03.
11.03 Exculpatory Provisions. Neither of the Agents nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or the other Credit Documents
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by MMI, any of its Subsidiaries or any of
their respective officers contained in this Agreement or the other Credit
Documents, any other Document or in any certificate, report, statement or other
document referred to or provided for in, or received by any Agent under or in
connection with, this Agreement or any other Document or for any failure of MMI
or any of its Subsidiaries or any of their respective officers to perform its
obligations hereunder or thereunder. No Agent shall be under any obligation to
any Bank to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement or the other
Documents, or to inspect the properties, books or records of MMI or any of its
Subsidiaries. No Agent shall be responsible to any Bank for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any other Document or for any representations, warranties, recitals
or statements made herein or therein or made in any written or oral statement or
in any financial or other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished or made by any
Agent to the Banks or by or on behalf of MMI or any of its Subsidiaries to any
Agent or any Bank or be required to ascertain or inquire as to the performance
or observance of any of the terms, conditions, provisions, covenants or
agreements contained herein or therein or as to the use of the proceeds of the
Loans or of the existence or possible existence of any Default or Event of
Default.
11.04 Reliance by Agents. The Agents shall be entitled to rely, and
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shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal
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counsel (including, without limitation, counsel to MMI or any of its
Subsidiaries), independent accountants and other experts selected by any Agent.
The Agents shall be fully justified in failing or refusing to take any action
under this Agreement or any other Credit Document unless they shall first
receive such advice or concurrence of the Required Banks as they deem
appropriate or it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agents shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Credit Documents in accordance with a request of the Required
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks.
11.05 Notice of Default. No Agent shall be deemed to have knowledge
-----------------
or notice of the occurrence of any Default or Event of Default unless such Agent
has actually received notice from a Bank or any Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that any Agent receives such a
notice, such Agent shall give prompt notice thereof to the Banks. The Agents
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Banks; provided that, unless and until
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the Agents shall have received such directions, the Agents may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Banks.
11.06 Nonreliance on Agents and Other Banks. Each Bank expressly
-------------------------------------
acknowledges that neither of the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of MMI or any of its Subsidiaries,
shall be deemed to constitute any representation or warranty by such Agent to
any Bank. Each Bank represents to each Agent that it has, independently and
without reliance upon such Agent or any other Bank, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial and
other condition, prospects and creditworthiness of MMI and its Subsidiaries and
made its own decision to make its Loans hereunder and enter into this Agreement.
Each Bank also represents that it will, independently and without reliance upon
any Agent or any other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, assets, operations, property, financial and other condition, prospects
and creditworthiness of MMI and its Subsidiaries. No Agent shall have any duty
or responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of MMI or any of its Subsidiaries which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
125
11.07 Indemnification. The Banks agree to indemnify each Agent in its
---------------
capacity as such ratably according to their respective "percentages" as used in
determining the Required Banks at such time (with such "percentages" to be
determined as if there are no Defaulting Banks), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against any Agent in its
capacity as such in any way relating to or arising out of this Agreement or any
other Credit Document, or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted to be taken
by such Agent under or in connection with any of the foregoing, but only to the
extent that any of the foregoing is not paid by MMI or any of its Subsidiaries;
provided that no Bank shall be liable to such Agent for the payment of any
--------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
gross negligence or willful misconduct of such Agent. To the extent any Bank
would be required to indemnify any Agent pursuant to the immediately preceding
sentence but for the fact that it is a Defaulting Bank, such Defaulting Bank
shall not be entitled to receive any portion of any payment or other
distribution hereunder until each other Bank shall have been reimbursed for the
excess, if any, of the aggregate amount paid by such Bank under this Section
11.07 over the aggregate amount such Bank would have been obligated to pay had
such first Bank not been a Defaulting Bank. If any indemnity furnished to any
Agent for any purpose shall, in the opinion of such Agent be insufficient or
become impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section 11.07 shall survive the payment of
all Obligations.
11.08 Agents in Their Individual Capacity. The Agents and their
-----------------------------------
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with MMI and its Subsidiaries and Affiliates as though such
Agents were not the Administrative Agent, Collateral Agent and Multi-Currency
Agent hereunder. With respect to the Loans made by it and all Obligations owing
to it, each Agent shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not an Agent and the terms
"Bank" and "Banks" shall include the Agents in their individual capacity.
11.09 Holders. The Agents may deem and treat the payee of any Note
-------
as the owner thereof for all purposes hereof unless and until a written notice
of the assignment, transfer or endorsement thereof, as the case may be, shall
have been filed with the Administrative Agent. Any request, authority or
consent of any Person or entity who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
126
11.10 Resignation of any Agent; Successor Agents. (a) Any Agent may
------------------------------------------
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving 20 Business Days' prior
written notice to the Borrowers and the Banks. Such resignation shall take
effect upon the appointment of a successor Agent pursuant to clauses (b) and (c)
below or as otherwise provided below.
(b) Upon any such notice of resignation by any Agent, the Required
Banks shall appoint a successor Agent hereunder who shall be a commercial bank
or trust company reasonably acceptable to the Borrowers.
(c) If a successor Agent shall not have been so appointed within such
20 Business Day period, such retiring Agent, with the consent of the Borrowers,
which consent shall not be unreasonably withheld, shall then appoint a successor
Agent who shall serve as Agent hereunder until such time, if any, as the
Required Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b) or
(c) above by the 25th Business Day after the date such notice of resignation was
given by the retiring Agent, the retiring Agent's resignation shall become
effective and the Required Banks shall thereafter perform all the duties of the
retiring Agent hereunder and/or under any other Credit Document until such time,
if any, as the Required Banks appoint a successor Agent as provided above.
(e) After the resignation of any Agent hereunder, the provisions of
this Section 11 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was an Agent under this Agreement.
SECTION 12. Miscellaneous.
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12.01 Payment of Expenses, Etc. MMI, jointly and severally, agrees,
------------------------
and each other Borrower severally agrees with respect to its obligations
hereunder to: (i) whether or not the transactions herein contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent, the Syndication Agent, the Documentation Agent and the
Collateral Agent (including, without limitation, the reasonable fees and
disbursements of Shearman & Sterling and local counsel) in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein, advising the Administrative Agent
of its rights and responsibilities under this Agreement and any amendment,
waiver or consent relating thereto and in connection with the Administrative
Agent's and the Syndication Agent's syndication efforts with respect to this
Agreement; (ii) pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent, the Syndication Agent, the Collateral Agent and each of
the Banks in connection with the enforcement of the Credit Documents and the
documents and instruments referred to
127
therein and, after an Event of Default shall have occurred and be continuing,
the protection of the rights of the Administrative Agent, the Syndication Agent,
the Collateral Agent and each of the Banks thereunder (including, without
limitation, the reasonable fees and disbursements of counsel (including in-house
counsel) for the Administrative Agent, the Syndication Agent, the Collateral
Agent and for each of the Banks); (iii) pay on demand by the Administrative
Agent all stamp, loan, transaction, registration and similar taxes or duties,
and all duties or other imposts arising in respects of the debits from or credit
to any bank account in connection with the payment or receipt of any moneys
hereunder (including New South Wales financial institutions duty and debits tax)
and all stamp duty in respect of any purchase, sale or assignment pursuant to
Section 1.01B of any Multi-Currency Revolving Loan or Unpaid Drawing or of any
interest in any Multi-Currency Revolving Loan or Unpaid Drawing which may be
payable (whether by a Credit Party or by the Administrative Agent, the
Syndication Agent, the Collateral Agent or any Bank) to, or may be required to
be paid by, any appropriate authority or is determined to be payable in
connection with the execution, delivery, performance or enforcement of any
Credit Document or any transaction contemplated by any of them, and will
indemnify and keep indemnified the Administrative Agent, the Syndication Agent,
the Collateral Agent and each Bank against any loss or liability incurred or
suffered by any of them as a result of the delay or failure of any Borrower to
pay any such duties, taxes or imposts; and (iv) indemnify the Administrative
Agent, the Syndication Agent, the Collateral Agent and each Bank, their
respective officers, directors, employees, representatives and agents from and
hold each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Administrative Agent, the Syndication
Agent, the Collateral Agent or any Bank is a party thereto, whether or not any
such investigation, litigation or other proceeding is between or among the
Administrative Agent, the Syndication Agent the Collateral Agent, any Bank, any
Credit Party or any third Person or otherwise and whether or not such
investigation, litigation or other proceeding is brought by any Credit Party or
any other Person) related to the entering into and/or performance of this
Agreement or any other Document or the use of the proceeds of any Loans
hereunder or the Transaction or the consummation of any other transactions
contemplated in any Document (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified), or (b) the
actual or alleged presence of Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real Property or any
Environmental Claim, in each case, including, without limitation, the reasonable
fees and disbursements of counsel and independent consultants incurred in
connection with any such investigation, litigation or other proceeding.
12.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, the Administrative
Agent and each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Borrower
or any of its Subsidiaries or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all
128
deposits (general or special) and any other Indebtedness at any time held or
owing by the Administrative Agent or such Bank (including, without limitation,
by branches and agencies of the Administrative Agent and such Bank wherever
located) to or for the credit or the account such Borrower or any of its
Subsidiaries against and on account of the Obligations of such Borrower and
liabilities of MMI or any of its Subsidiaries to the Administrative Agent or
such Bank under this Agreement or under any of the other Credit Documents,
including, without limitation, all interests in Obligations of such Borrower or
any of its Subsidiaries purchased by such Bank pursuant to Section 12.06(b), and
all other claims of any nature or description arising out of or connected with
this Agreement or any other Credit Document, irrespective of whether or not such
Bank shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
12.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to any Borrower, at
the address specified opposite its signature below or in the applicable Credit
Agreement Supplement or in the other relevant Credit Documents, as the case may
be; if to the Administrative Agent, at the Appropriate Notice Office; if to any
Bank, at its address specified for such Bank on Annex II; or, at such other
address as shall be designated by any party in a written notice to the other
parties hereto. All such notices and communications shall be mailed,
telegraphed, telexed, telecopied or cabled or sent by overnight courier, and
shall be effective when received.
12.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, the Borrowers may not
-------- -------
assign or transfer any of their rights, obligations or interest hereunder or
under any other Credit Document without the prior written consent of the Banks
and, provided further that, although any Bank may grant participations in its
-------- -------
rights hereunder, such Bank shall remain a "Bank" for all purposes hereunder
(and may not transfer or assign all or any portion of its Commitments hereunder
except as provided in Section 12.04(b)) and the participant shall not constitute
a "Bank" hereunder and provided further that no Bank shall grant any
-------- -------
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Maturity Date) in which such participant is
participating, or reduce the rate or extend the time of payment of interest or
Fees thereon (except in connection with a waiver of applicability of any post-
default increase in interest rates) or reduce the principal amount thereof, or
increase the amount of the participant's participation over the amount thereof
then in effect (it being understood that a waiver of any Default or Event of
Default or of a mandatory reduction in the Revolving Loan Commitment shall not
constitute a change in the terms of such participation, and that an increase in
any Commitment or Loan shall be permitted without the consent of any participant
if the participant's participation is not
129
increased as a result thereof), (ii) consent to the assignment or transfer by
any Borrower of any of its rights and obligations under this Agreement or (iii)
release all or substantially all of the Collateral under all of the Security
Documents (except as expressly provided in the Credit Documents) supporting the
Loans hereunder in which such participant is participating. In the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights against
such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by the Borrowers hereunder shall be determined as if
such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (x) assign all or a portion of its Revolving Loan
Commitment (and related outstanding Obligations hereunder) to its parent company
and/or any affiliate of such Bank which is at least 50% owned by such Bank or
its parent company or to one or more Banks or (y) assign all, or if less than
all, a portion equal to at least $5,000,000 in the aggregate for the assigning
Bank, of such Revolving Loan Commitments hereunder to one or more Eligible
Transferees, each of which assignees shall become a party to this Agreement as a
Bank by execution of an Assignment and Assumption Agreement, provided that (i)
--------
at such time Annex I shall be deemed modified to reflect the Revolving Loan
Commitments of such new Bank and of the existing Banks, (ii) upon surrender of
the old Notes, new Notes will be issued, at the Borrower's expense, to such new
Bank and to the assigning Bank, such new Notes to be in conformity with the
requirements of Section 1.05 (with appropriate modifications) to the extent
needed to reflect the revised Revolving Loan Commitments, (iii) the consent of
the Administrative Agent and the Borrowers shall be required in connection with
any such assignment pursuant to clause (y) of this Section 12.04(b) (which
consent shall not be unreasonably withheld or delayed) and (iv) the
Administrative Agent shall receive at the time of each such assignment, from the
assigning or assignee Bank, the payment of a nonrefundable assignment fee of
$3,500 and provided further that such transfer or assignment will not be
-------- -------
effective until recorded by the Administrative Agent on the Register pursuant to
Section 7.13. To the extent of any assignment pursuant to this Section
12.04(b), the assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Commitments. At the time of each assignment pursuant to
this Section 12.04(b) to a Person which is not already a Bank hereunder and
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Bank shall provide to the Borrowers and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable a Section
4.04(b)(ii) Certificate) described in Section 4.04(b). To the extent that an
assignment of all or any portion of a Bank's Revolving Loan Commitment and
related outstanding Obligations pursuant to Section 1.13 or this Section
12.04(b) would, at the time of such assignment, result in increased costs under
Section 1.10, 1.11, 2.05 or 4.04 from those being charged by the respective
assigning Bank prior to such assignment, then no Borrower shall not be obligated
to pay such increased costs (although the Borrowers shall be obligated to pay
any other increased costs of the type described above resulting from changes
after the date of the respective assignment).
130
(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Administrative Agent, the Collateral Agent or any Bank in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between any Credit Party and the Administrative Agent, the
Collateral Agent or any Bank shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or under
any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Administrative Agent, the Collateral Agent
or any Bank would otherwise have. No notice to or demand on any Credit Party in
any case shall entitle any Credit Party to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent, the Collateral Agent or the Banks to any other or further
action in any circumstances without notice or demand.
12.06 Payments Pro Rata. (a) The Administrative Agent agrees that
-----------------
promptly after its receipt of each payment from or on behalf of any Credit Party
in respect of any Obligations of such Credit Party, it shall, except as
otherwise provided in this Agreement, distribute such payment to the Banks
(other than any Bank that has consented in writing to waive its pro rata share
--- ----
of such payment) pro rata based upon their respective shares, if any, of the
--- ----
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings or Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the respective Credit Party to such Banks in such amount as shall result in a
proportional participation by all of the Banks in such amount; provided that if
--------
all or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
12.07 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or
131
as otherwise disclosed in writing by any Borrower to the Banks); provided that
--------
except as otherwise specifically provided herein, all computations determining
compliance with Sections 4.02 and 8, including definitions used therein, shall
utilize accounting principles and policies in effect at the time of the
preparation of, and in conformity with those used to prepare, the December 31,
1996 financial statements of the MMI Business referred to in Section 6.10(b),
but shall not give effect to purchase accounting adjustments required or
permitted by APB 16 (including non-cash write-ups and non-cash charges relating
to inventory, fixed assets and in-process research and development, in each case
arising in connection with the Acquisition) and APB 17 (including non-cash
charges relating to intangibles and goodwill arising in connection with the
Transaction).
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
12.08 Governing Law; Submission to Jurisdiction; Venue. (a) THIS
------------------------------------------------
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, each
Credit Party hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Credit Party hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Credit Party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or any
other Credit Document brought in any of the aforesaid courts, that any such
court lacks jurisdiction over such Credit Party. Each Credit Party agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Solely for the purposes of this Agreement, to the full extent
permitted by law each Credit Party organized under the laws of a jurisdiction
outside of the United States hereby irrevocably appoints CT Corporation System
with an office on the date hereof at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ (the
"Process Agent"), as its agent to receive on behalf of such Credit Party and its
property service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding. Each Credit Party
irrevocably consents to the service of process in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to such Credit Party, at its address for notices pursuant to Section
12.03, such service to become effective 30 days after such mailing. Each Credit
Party hereby irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any action or
proceeding commenced hereunder or under any other Credit Document that service
of process was in any way invalid or ineffective. Nothing herein shall affect
the right of the Administrative Agent, the Collateral Agent, any Bank or the
holder of any Note to serve process in any other manner permitted by
132
law or to commence legal proceedings or otherwise proceed against any Credit
Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(c) To the extent that any Credit Party has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
Credit Party to the extent permitted by law hereby irrevocably waives such
immunity in respect of its obligations under this Agreement and, without
limiting the generality of the foregoing, agrees that the waivers set forth in
this subsection (c) shall have the fullest scope permitted under the United
States Foreign Sovereign Immunities Act of 1976, as amended, or any other
similarly applicable foreign law and are intended to be irrevocable for purposes
of such Act or any other similarly applicable foreign law.
12.09 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete set of
counterparts executed by all the parties hereto shall be lodged with MMI, the
Borrowers and the Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Effective Date") on which each of the Borrowers, the Administrative
Agent and each of the Banks shall have signed a counterpart hereof (whether the
same or different counterparts) and shall have delivered the same to the
Administrative Agent at the Notice Office or, in the case of the Banks, shall
have given to the Administrative Agent telephonic (confirmed in writing),
written, telex or facsimile notice (actually received) at such office that the
same has been signed and mailed to it. The Administrative Agent will give the
Borrowers and each Bank prompt written notice of the occurrence of the Effective
Date.
12.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 Amendment or Waiver; Etc. Neither this Agreement nor any other
------------------------
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or
133
terminated unless such change, waiver, discharge or termination is in writing
signed by the respective Credit Parties party thereto and the Required Banks,
provided that no such change, waiver, discharge or termination shall, without
--------
the consent of each Bank (other than a Defaulting Bank), (i) waive any of the
conditions specified in Section 5, (ii) change the number of Banks or the
percentage of (x) the Commitments, (y) the aggregate unpaid principal amount of
the Loans or (z) the aggregate Stated Amount of outstanding Letters of Credit
that, in each case, shall be required for the Banks or any of them to take any
action hereunder, (iii) reduce or limit the obligations of any Guarantor under
Section 1 of the Guaranty to which such Guarantor is a party or otherwise limit
such Guarantor's liability with respect to the obligations owing to the
Administrative Agent and the Banks, (iv) release any portion of the Collateral
(other than assets permitted to be sold pursuant to the terms of this Agreement)
in any transaction or series of related transactions or permit the creation,
incurrence, assumption or existence of any Lien on any portion of Collateral in
any transaction or series of related transactions to secure any obligations
other than obligations owing to the Secured Creditors under the Credit Documents
and other than Indebtedness owing to any other Person, provided that, in the
--------
case of any Lien (other than Permitted Liens) on any item of Collateral to
secure Indebtedness owing to any other Person, (A) the Borrowers shall, on the
date such Indebtedness shall be incurred or issued, prepay the Loans pursuant
to, and in the order of priority set forth in, Section 4.02(c) in an aggregate
principal amount equal to the amount of such Net Cash Proceeds to the extent
required to do so under Section 3.03 and (B) the Required Banks shall otherwise
permit the creation, incurrence, assumption or existence of such Lien and of
such Indebtedness, (v) amend this Section 12.12, (vi) increase the Commitments
of the Banks or subject the Banks to any additional obligations, (vii) reduce
the principal of, or interest on, the Notes or any Fees or other amounts payable
hereunder, (viii) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any Fees or other amounts payable hereunder or amend
Section 4.02, (ix) limit the liability of any Credit Party under any of the
Credit Documents; provided further that no amendment, waiver or consent shall,
-------- -------
unless in writing and signed by the Swingline Bank or each Letter of Credit
Issuer, as the case may be, in addition to the Banks required above to take such
action, affect the rights or obligations of the Swingline Banks or of the Letter
of Credit Issuers, as the case may be, under this Agreement; and provided
--------
further that no amendment, waiver or consent shall, unless in writing and signed
-------
by the Administrative Agent in addition to the Banks required above to take such
action, affect the rights or duties of the Agent under this Agreement, (x)
increase the Multi-Currency Sublimit to an amount in excess of U.S. $70,000,000
and (xi) to increase the maximum percentages set forth in the definitions of
each of [_]Foreign Borrowing Base[_] and [_]U.S. Borrowing Base.[_]
12.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Section 1.10, 1.11, 2.05, 4.04, 11.07 or 12.01, shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans. The agreements and obligations of each Borrower contained in Section 4.04
shall survive the execution and delivery of this Agreement and the making and
repayment of the Loans.
134
12.14 Domicile of Loans. Each Bank may transfer and carry its Loans
-----------------
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank; provided that the Borrowers shall not be responsible for costs arising
--------
under Section 1.10, 1.11, 2.05 or 4.04 resulting from any such transfer (other
than a transfer pursuant to Section 1.12) to the extent such costs would not
otherwise be applicable to such Bank in the absence of such transfer.
12.15 Confidentiality. (a) Each of the Banks agrees that it will
---------------
use its reasonable efforts not to disclose without the prior consent of the
Borrowers (other than to its employees, auditors, counsel or other professional
advisors, to affiliates (in accordance with Section 12.15(b)) or to another Bank
if the Bank or such Bank's holding or parent company in its sole discretion
determines that any such party should have access to their information) any
information with respect to the Borrowers or any of their Subsidiaries which is
furnished pursuant to this Agreement; provided that any Bank may disclose any
--------
such information (a) as has become generally available to the public, (b) as may
be required or appropriate in any report, statement or testimony submitted to
any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in response to any summons or subpoena or in connection with any litigation, (d)
to comply with any law, order, regulation or ruling applicable to such Bank, and
(e) to any prospective transferee in connection with any contemplated transfer
of any of the Notes or any interest therein by such Bank; provided that such
--------
prospective transferee executes an agreement with such Bank, for the benefit of
such Bank and the Borrowers, containing provisions substantially identical to
those contained in this Section.
(b) Each of the Borrowers hereby acknowledges and agrees that each
Bank may share with any of its affiliates for the purposes of this Agreement and
the transactions contemplated hereby any information related to MMI Holdings or
any of its Subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of MMI and its Subsidiaries, provided
that such Persons shall be subject to the provisions of this Section 12.15 to
the same extent as such Bank).
12.16 Interest. (a) It is the intention of the parties hereto that
--------
each Bank shall conform strictly to usury laws applicable to it. Accordingly,
the parties hereto stipulate and agree that none of the terms and provisions
contained in the Notes, this Agreement or any of the other Credit Documents
shall ever be construed to create a contract to pay to any Bank for the use,
forbearance or detention of money at a rate in excess of the Highest Lawful Rate
applicable to such Bank, and that for purposes hereof, "interest" shall include
the aggregate of all charges or other consideration which constitute interest
under applicable laws and are contracted for, taken, reserved, charged or
received under any of this Agreement, the Notes or any of the other Credit
Documents or otherwise in connection with the transactions contemplated by this
Agreement. Further, if the transactions contemplated hereby would be
135
usurious as to any Bank under laws applicable to it then, in that event,
notwithstanding anything to the contrary in the Notes, this Agreement or in any
of the other Credit Documents or agreements entered into in connection with or
as security for the Notes, it is agreed as follows: the aggregate of all
consideration which constitutes interest under law applicable to each such Bank
that is contracted for, taken, reserved, charged or received by such Bank under
the Notes, this Agreement or under any of the other aforesaid Credit Documents
or agreements or otherwise in connection with the Notes shall under no
circumstances exceed the maximum amount allowed by the law applicable to such
Bank and any excess shall be credited by such Bank on the principal amount of
the Indebtedness of the Borrower owed to such Bank (or, if the principal amount
of such Indebtedness shall have been paid in full, to the extent such interest
has been received by a Bank it shall be refunded by such Bank to the Borrower).
The provisions of this Section 12.16(a) shall control over all other provisions
of this Agreement, the Notes and the other Credit Documents which may be in
apparent conflict herewith. The parties hereto further stipulate and agree that,
without limitation of the foregoing, all calculations of the rate or amount of
interest contracted for, taken, reserved, charged or received under any of this
Agreement, the Notes and the other Credit Documents which are made for the
purpose of determining whether such rate or amount exceed the Highest Lawful
Rate shall be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating and spreading during the period of the full stated term of
the Indebtedness, and if longer and if permitted by applicable law, until
payment in full, all interest at any time so contracted for, taken, reserved,
charged or received.
(b) If at any time the effective rate of interest which would
otherwise apply to any Indebtedness evidenced by any Bank's Notes would exceed
the Highest Lawful Rate applicable to such Bank (taking into account the
interest rate applicable to such Indebtedness pursuant to the other provisions
of this Agreement, plus all additional charges and consideration which have been
contracted for, taken, reserved, charged or received under this Agreement, such
Bank's Notes and the other Credit Documents, or any of them, and which
additional charges or consideration (the "Additional Charges") constitute
interest with respect to such Indebtedness), the effective interest rate to
apply to such Indebtedness made by a Bank shall be limited to the Highest Lawful
Rate, but any subsequent reductions in the interest rate applicable to such
Indebtedness owed to such Bank shall not reduce the effective interest rate to
apply to such Indebtedness owed to such Bank below the Highest Lawful Rate
applicable to such Bank until the total amount of interest accrued on such
Indebtedness equals the amount of interest which would have accrued if the
Interest Rate from time to time applicable to such Indebtedness owed to such
Bank had at all times been in effect with respect to such Indebtedness pursuant
to the other provisions of this Agreement and if the Banks had collected all
Additional Charges called for under this Agreement, the Notes and the other
Credit Documents. If at maturity or final payment of such Bank's Notes the
total amount of interest accrued on such Bank's Notes (including amounts
designated as "interest" plus any Additional Charges which constitute interest
with respect to such Bank's Notes, and taking into account the limitations of
the first sentence of this Section 12.16(b)) is less that the total amount of
interest which would have accrued if the interest rate or interest rates
applicable to the Indebtedness from time to time outstanding under such Bank's
Notes had at all times been in
136
effect pursuant to the other provisions of this Agreement, then the Borrower
agrees, to the fullest extent permitted by the laws applicable to such Bank, to
pay to such Bank an amount equal to the difference between (i) the lesser of (1)
the amount of interest which would have accrued on such Bank's Notes if the
Highest Lawful Rate had at all times been in effect (but excluding, for purposes
of calculating such amount of interest, any Additional Charges which constitute
interest with respect to such Bank's Notes), or (2) the amount of interest which
would have accrued on such Bank's Notes if the interest rate or interest rates
applicable to the Indebtedness from time to time outstanding under such Bank's
Notes had at all times been in effect pursuant to the other provisions of this
Agreement (including amounts designated as "interest" plus any Additional
Charges which constitute interest with respect to such Bank's Notes) less (ii)
the amount of interest actually accrued on such Bank's Notes (including amounts
designated as "interest" plus any Additional Charges which constitute interest
with respect to such Bank's Notes).
12.17A Judgment Currency. (a) If, for the purposes of obtaining
-----------------
judgment in any court, it is necessary to convert a sum due hereunder or under
the Notes in U.S. Dollars into another currency, the parties hereto agree, to
the fullest extent that they may effectively do so, that the rate of exchange
used shall be that at which, in accordance with normal banking procedures, the
Multi-Currency Agent or each Multi-Currency Bank, as the case may be, could
purchase U.S. Dollars with such other currency at New York City on the U.S.
Business Day preceding that on which final, nonappealable judgment is given.
(b) The obligations of the Borrowers in respect of any sum due to any
Agent or any of the Banks hereunder or under the Notes shall, notwithstanding
any judgment in a currency other than U.S. Dollars, be discharged only to the
extent that on the Business Day following receipt by any Agent or such Bank, as
the case may be, of any sum adjudged to be so due in such other currency, any
Agent or any Bank, as the case may be, may, in accordance with normal,
reasonable banking procedures, purchase U.S. Dollars with such other currency.
If the amount of U.S. Dollars so purchased is less than the sum originally due
to such Agent or such Bank, in U.S. Dollars, each Borrower agrees, to the
fullest extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Agent or such Bank, as the
case may be, against such loss.
12.17B Substitution of Currency. If any countries parties to the
------------------------
Treaty on the European Economic and Monetary Union adopts the Euro in
substitution for its national currency in effect on the date hereof, the
regulations of the European Commission relating to the Euro shall apply to this
Agreement and the Notes. The circumstances and consequences described in this
Section 12.18 entitle none of the Borrowers, any Agent or any Bank to recission,
notice, repudiation, adjustment or renegotiation of the terms and conditions of
this Agreement or the Notes or to raise other defenses or to request any
compensation claim, nor will they affect any of the other obligations of any
Borrower under this Agreement and the Notes.
137
12.17C Interpretation. Any reference in this Agreement to U.S. legal
--------------
concepts shall be interpreted to mean the closest equivalent in the non-U.S.
jurisdiction where such term or condition is required to be enforced.
12.18 Waiver of July Trial. EACH OF THE PARTIES TO THIS AGREEMENT
--------------------
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
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▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ MODUS MEDIA
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ INTERNATIONAL, INC.
By ___________________________________
Title:
28-7, Kamiochio chiai 2-chome MODUS ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ KABUSHIKI KAISHA
By ___________________________________
Title:
MODUS MEDIA INTERNATIONAL
HOLDINGS, INC.
By ___________________________________
Title:
NATIONSBANK OF TEXAS, N.A.,
individually and as
Administrative Agent
138
By ___________________________________
Title:
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇
SECURITIES, INC.,
as Arranger and Syndication Agent
By ___________________________________
Title:
CITICORP USA, INC.
individually and as Collateral Agent,
Documentation Agent and Multi-
Currency Agent
By ___________________________________
Title:
EXHIBIT A
FORM OF NOTICE OF BORROWING
[NationsBank of Texas, N.A., as
Administrative Agent for the
Banks party to the Credit Agreement
referred to below
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ______________]/1/
[Citicorp USA, Inc., as
Multi-Currency Agent for the
Banks party to the Credit Agreement
referred to below
_________________________
_________________________
Attention: ______________]/2/
[Date]
Ladies and Gentlemen:
The undersigned, [Name of Borrower], refers to the Credit Agreement
dated as of December 15, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), among the undersigned, [Modus Media International,
Inc.], [Modus Media International Kabushiki Kaisha], [Modus Media International
Holdings, Inc.], various banks party thereto, NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities,
Inc., as Arranger and Syndication Agent, Citicorp USA, Inc., as Multi-Currency
Agent, Documentation Agent and Collateral Agent, and NationsBank of Texas, N.A.,
as Administrative Agent for said Banks, and hereby gives you notice,
irrevocably, pursuant to Section 1.03(a) of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by Section 1.03(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _______ __,____.
(ii) The Currency of the Proposed Borrowing is [US Dollars][Japanese
Yen][Singaporean Dollars][South Korean Won][Pounds Sterling][Irish
Pounds][Australian Dollars].
-------------------
/1/ Insert for Loans denomination in US Dollars.
/2/ Insert for Multi-Currency Revolving Loans
(iii) The Type of Loans comprising the Proposed Borrowing is [Base
Rate Loans] [Eurodollar Loans].
(iv) The aggregate principal amount of the Proposed Borrowing is
[US$___][Y___][S$___][SKW___][pounds___][A$___].
[(v) The initial Interest Period for each Eurodollar Loan made as
part of the Proposed Borrowing is ______ month[s].]
[(vi) We request _____________, a Multi-Currency Bank, to make the
Multi-Currency Revolving Loan.]
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true at the time of the Proposed Borrowing
and also after giving effect thereto and to the application of the proceeds
therefrom:
(A) all representations and warranties contained in each Credit
Document in effect at such time shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the Proposed Borrowing, unless stated to
relate to a specific earlier date, in which case such representations and
warranties are true and correct in all material respects as of such earlier
date; and.
(B) on the date of the Proposed Borrowing and after giving effect
thereto, the aggregate Total Outstanding will not exceed an amount equal to the
lesser of (i) the Total Revolving Loan Commitment at such time and (ii) the
Total Borrowing Base at such time and $
(C) no event shall have occurred and be continuing which constitutes
a Default.
Very truly yours,
[NAME OF BORROWER]
By ______________________________
Name:
Title:
EXHIBIT B-1
FORM OF REVOLVING NOTE
US $_____________ Dated: _________ __, 199_
FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER] (the
"Borrower"), HEREBY PROMISES TO PAY_________________________ or its registered
assigns (the "Bank") the aggregate principal amount of the Revolving Loans (as
defined below) owing to the Bank by the Borrower pursuant to the Credit
Agreement dated as of December 15, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; terms defined therein being
used herein as therein defined) among the undersigned, [Modus Media
International, Inc.], [Modus Media International Kabushiki Kaisha], [Modus Media
International Holdings, Inc.], the Bank and certain other banks party thereto,
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc., as Arranger and Syndication Agent,
Citicorp USA, Inc., as Multi-Currency Agent, Documentation Agent and Collateral
Agent, and NationsBank of Texas, N.A., as Administrative Agent for the Bank and
such other Banks on the Revolving Loan Maturity Date.
The Borrower promises to pay to the Bank interest on the unpaid
principal amount of each Revolving Loan from the date of such Revolving Loan
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.
Both principal and interest in respect of each Revolving Loan made to
it (a) US Dollars are payable in lawful money of the United States of America to
NationsBank of Texas, N.A., as Administrative Agent, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, in same day funds and (b) in any Approved Foreign
Currency are payable in such currency at the Appropriate Payment Office of the
Multi-Currency Agent specified in the Credit Agreement for payments in such
currency in same day funds. Each Revolving Loan owing to the Bank by the
Borrower and the maturity thereof, and all payments made on account of principal
thereof, shall be recorded by the Bank and, prior to any transfer hereof,
endorsed on the grid attached hereto, which is part of this Revolving Note.
This Revolving Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of loans (the "Revolving Loans") by
the Bank to the Borrower from time to time in an aggregate amount not to exceed
at any time outstanding the U.S. dollar amount first above mentioned (or the
equivalent in other currencies), the indebtedness of the Borrower resulting from
each such Revolving Loan being evidenced by this Revolving Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms
and conditions therein specified. The obligations of the Borrower under this
Note, and under the Credit Documents, are secured by the Collateral as provided
in the Credit Documents.
[NAME OF BORROWER]
By _____________________________________
Name:
Title:
REVOLVING LOANS AND PAYMENTS OF PRINCIPAL
======================================================================================================
Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Revolving Loan or Prepaid Balance Made By
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EXHIBIT B-2
FORM OF SWINGLINE NOTE
US $5,000,000 Dated: _________ __, 199_
FOR VALUE RECEIVED, the undersigned, MODUS MEDIA INTERNATIONAL, INC.
(the "Borrower"), HEREBY PROMISES TO PAY to NationsBank of Texas, N.A. or its
registered assigns (the "Swingline Bank") the aggregate principal amount of the
Swingline Loans (as defined below) owing to the Swingline Bank by the Borrower
pursuant to the Credit Agreement dated as of December 15, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
terms defined therein being used herein as therein defined) among the
undersigned, Modus Media International Kabushiki Kaisha, Modus Media
International Holdings, Inc., the Bank and certain other banks party thereto,
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc., as Arranger and Syndication Agent,
Citicorp USA, Inc., as Multi-Currency Agent, Documentation Agent and Collateral
Agent, and NationsBank of Texas, N.A., as Administrative Agent for the Swingline
Bank and the other Banks on the Revolving Loan Maturity Date.
The Borrower promises to pay to the Swingline Bank or its registered
assigns interest on the unpaid principal amount of each Swingline Loan from the
date of such Swingline Loan until such principal amount is paid in full, at such
interest rates, and payable at such times, as are specified in the Credit
Agreement.
Both principal and interest are payable in lawful money of the United
States of America to NationsBank of Texas, N.A., as Administrative Agent, at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, in same day funds. Each Swingline
Loan owing to the Swingline Bank by the Borrower and the maturity thereof, and
all payments made on account of principal thereof, shall be recorded by the
Swingline Bank and, prior to any transfer hereof, endorsed on the grid attached
hereto, which is part of this Swingline Note.
This Swingline Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of loans (the "Swingline Loans") by
the Swingline Bank to the Borrower from time to time in an aggregate principal
amount not to exceed at any time outstanding when combined with the aggregate
principal amount of all Revolving Loans then outstanding and the aggregate
amount of all Letter of Credit Outstandings (exclusive of unpaid drawings which
are repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) at such time, an amount equal to the
lesser of (x) the U.S. Borrowing Base at such time (based on the Borrowing Base
Certificate last delivered) and (y) an amount equal to the Total Revolving Loan
Commitment then in effect and (z) shall not exceed the aggregate principal
amount at any time outstanding, and (ii) contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified. The obligations of the Borrower under
this Swingline Note, and under the Credit Documents, are secured by the
Collateral as provided in the Credit Documents.
MODUS MEDIA INTERNATIONAL, INC.
By ________________________________________
Name:
Title:
SWINGLINE LOANS AND PAYMENTS OF PRINCIPAL
======================================================================================================
Amount of Unpaid
Amount of Principal Paid Principal Notation
Date Swingline Loan or Prepaid Balance Made By
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SECURITY AGREEMENT
SECURITY AGREEMENT dated ________ __, 1997 made by the Persons listed on
the signature pages hereof and the Additional Grantors (as defined in Section
25(b)) (such Persons so listed and the Additional Grantors being, collectively,
the "Grantors"), to Citicorp USA, Inc. ("Citibank"), as collateral agent (the
"Collateral Agent") for itself, the Administrative Agent, the Syndication Agent,
Citibank, N.A., as Multi-Currency Agent and Documentation Agent, the Banks and
the [Hedge Banks] (in each case as defined in the Credit Agreement referred to
below) (each being a "Secured Creditor", and collectively, the "Secured
Creditors").
PRELIMINARY STATEMENTS.
(1) Modus Media International, Inc., a Delaware corporation ("MMI"), [Name
of Borrowing Subsidiary] (the "Borrowing Subsidiary"), [Modus Media
International Ireland, an Irish company ("MMI-Ireland")], [Modus Media
International Kabushiki Kaisha, a Japanese company ("MMI-KK")], [Modus Media
International Limited, an English company ("MMI-UK")], [Modus Media
International Pte. Ltd., a Singapore company ("MMI-Singapore")], [Modus Media
International Pty. Ltd., an Australian company ("MMI-Australia")], [Modus Media
International Korea Ltd., a Korean company ("MMI-Korea")], [Modus Media
International B.V., a Netherlands company ("MMI-Netherlands")]and [Modus Media
International S.A., a French company ("MMI-France"] and, together with MMI-
Ireland, MMI-KK, MMI-UK, MMI-Singapore, MMI-Australia and MMI-Netherlands, the
"Local Currency Borrowers"; MMI and the Local Currency Borrowers are referred to
herein collectively as the "Borrowers"), have entered into a Credit Agreement
dated as of ___________, 1997 (such Credit Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "Credit
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined) with NationsBank of Texas, N.A., as
Administrative Agent, NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc., as Arranger and
Syndication Agent, Citicorp USA, Inc., as Multi-Currency Agent and Documentation
Agent, the Collateral Agent and the Banks party thereto.
(2) Each Grantor is the owner of the shares of stock set forth opposite
such Grantor's name in Part I of Schedule I hereto and issued by the
corporations named therein and of the indebtedness set forth opposite such
Grantor's name in Part II of Schedule I hereto and issued by the obligors named
therein.
(3) The Borrowing Subsidiary has opened a non-interest bearing cash
concentration account (the "Cash Concentration Account") with Citibank at its
office at _______________, ________, ________ _____, Account No. __________, in
the name of such Grantor but under the sole control and dominion of the
Collateral Agent and subject to the terms of this Agreement.
2
(4) It is a condition precedent to the making of Loans and the issuance of
Letters of Credit by the Banks under the Credit Agreement that each Grantor
shall have granted the assignment and security interest and made the pledge and
assignment contemplated by this Agreement.
(5) Each Grantor will derive substantial direct and indirect benefit from
the transactions contemplated by the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Banks to make Loans and to issue Letters of Credit under the Credit Agreement
each Grantor hereby agrees with the Collateral Agent for the ratable benefit of
the Secured Creditors as follows:
Section 1. Grant of Security. Each Grantor hereby assigns and pledges to
-----------------
the Collateral Agent for the ratable benefit of the Secured Creditors, and
hereby grants to the Collateral Agent for the ratable benefit of the Secured
Creditors a security interest in, the following (collectively, the
"Collateral"):
(a) all of such Grantor's right, title and interest, whether now owned or
hereafter acquired, in and to all equipment in all of its forms, wherever
located, now or hereafter existing (including, but not limited to, all (i)
furniture, furnishings, trade fixtures, machinery and appliances, (ii)
production, manufacturing, distribution, selling, data processing, computer
and office equipment, (iii) all Proprietary Works (as defined in Section 1(g)
below) in the form of equipment and all physical representations of or media
containing Proprietary Works or other information (including, without
limitation, notebooks, drawings, diagrams, plans, manuals, computer
peripherals, hardware, firmware, software, data storage tapes, disks,
diskettes and other computerized information and (iv) all [name other specific
items or types of equipment]), all fixtures and all parts thereof and all
accessions and additions thereto, appurtenances thereof, substitutions
therefor and replacements thereof (any and all such equipment, fixtures,
parts, accessions, additions, appurtenances, substitutions and replacements
being the "Equipment");
(b) all of such Grantor's right, title and interest, whether now owned or
hereafter acquired, in and to all inventory in all of its forms, wherever
located, now or hereafter existing (including, but not limited to, (i) all
[name specific items or types of inventory] and raw materials and work in
process therefor, finished goods thereof and materials used or consumed in the
manufacture, production or preparation thereof, (ii) goods in which such
Grantor has an interest in mass or a joint or other interest or right of any
kind (including, without limitation, goods in which such Grantor has an
interest or right as consignee) and (iii) goods that are returned to or
repossessed or stopped in transit by such Grantor), and all accessions thereto
and products thereof and
3
documents therefor (any and all such inventory, accessions, products and
documents being the "Inventory");
(c) all of such Grantor's right, title and interest, whether now owned
or hereafter acquired, in and to all accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles and all other
obligations of any kind, now or hereafter existing, whether or not arising
out of or in connection with the sale or lease of goods or the rendering of
services and whether or not earned by performance (including, without
limitation, any rights with respect to workers' compensation or other
deposits made by such Grantor and any rights to receive tax refunds or
other refunds, reimbursements and payments from any federal, state or local
government or any political subdivision, agency or instrumentality
thereof), and all rights now or hereafter existing in and to all security
agreements, leases and other contracts securing or otherwise relating to
any such accounts, contract rights, chattel paper, instruments, deposit
accounts, general intangibles or obligations (any and all such accounts,
contract rights, chattel paper, instruments, deposit accounts, general
intangibles and obligations, to the extent not referred to in clause (d),
(e), (f) or (g) below, being the "Receivables", and any and all such
leases, security agreements and other contracts being the "Related
Contracts");
(d) all of the following (the "Security Collateral"):
[(i) the shares of stock set forth opposite such Grantor's name
in Part I of Schedule I hereto and issued by the corporations
indicated therein (collectively referred to herein as the "Initial
Pledged Shares", and together with the shares referred to in clause
(iii) below, the "Pledged Shares"), together with the certificates
representing such Initial Pledged Shares, and all dividends, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such Initial Pledged Shares;]
(ii) the indebtedness (whether or not evidenced by instruments)
set forth opposite such Grantor's name in Part II of Schedule I hereto
and issued by the obligors indicated therein (collectively referred to
herein as the "Initial Pledged Debt", and together with the
indebtedness referred to in clause (iv) below, the "Pledged Debt") and
the instruments (if any) evidencing such initial Pledged Debt, all
security therefor and all interest, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
initial Pledged Debt (the Initial Pledged Shares and the Initial
Pledged Debt together being the "Pledged Securities");
4
(iii) all additional shares of stock from time to time acquired
by such Grantor in any manner, and the certificates representing such
additional shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
shares; and
(iv) all additional indebtedness from time to time owed to such
Grantor and the instruments evidencing such indebtedness, all security
therefor and all interest, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such indebtedness;
[provided, however, that none of the Grantors shall be required to pledge
-----------------
any shares of stock in any Foreign Corporation owned or otherwise held
thereby which, when aggregated with all of the other shares of stock in
such Foreign Corporation pledged by such Grantor and the other Grantors,
would result in more than 66% of the shares of stock in such Foreign
Corporation entitled to vote (within the meaning of Treasury Regulation
Section 1.956-2(c)(2) promulgated under the Internal Revenue Code) (the
"Voting Shares") (on a fully diluted basis) being pledged to the Collateral
Agent, on behalf of the Secured Creditors, under this Agreement and the
other Collateral Documents (although all of the shares of stock in such
Foreign Corporation not entitled to vote (within the meaning of Treasury
Regulation Section 1.956-2(c)(2) promulgated under the Internal Revenue
Code) (the "Non-Voting Shares") shall be pledged by each of the Grantors
that owns or otherwise holds any such Non-Voting Shares therein); provided
--------
that, if, as a result of any change in the tax laws of the United States of
America after the date of this Agreement, the pledge by such Grantor of any
additional shares of stock in any such Foreign Corporation to the
Collateral Agent, on behalf of the Secured Creditors, under this Agreement
or any of the other Collateral Documents would not result in an increase in
the aggregate net consolidated tax liabilities of the Borrower and its
Subsidiaries, then, promptly after the change in such laws, all such
additional shares of stock shall be so pledged under this Agreement or such
other Collateral Document, as applicable;]
(e) all of such Grantor's right, title and interest in and to each of
the agreements listed on Schedule II, as such agreements may be amended,
supplemented or otherwise modified from time to time (collectively, the
"Assigned Agreements"), including, without limitation, (i) all rights of
such Grantor to receive moneys due and to become due under or pursuant to
the Assigned Agreements, (ii) all rights of such Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to
the Assigned Agreements, (iii) claims of such Grantor for damages arising
out of or for breach of or default under the Assigned Agreements and (iv)
the right of such Grantor to terminate the Assigned Agreements, to perform
thereunder and to
compel performance and otherwise exercise all remedies thereunder (all such
Collateral being the "Agreement Collateral");
(f) all of the following (collectively, the "Account Collateral"):
(i) the Cash Concentration Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing the Cash Concentration Account;
(ii) all Blocked Accounts (as hereinafter defined), all funds
held therein and all certificates and instruments, if any, from time
to time representing or evidencing the Blocked Accounts;
(iii) all other deposit accounts of such Grantor, all funds held
therein and all certificates and instruments, if any, from time to
time representing or evidencing such deposit accounts;
(iv) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time
to time representing or evidencing the Collateral Investments;
(v) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Collateral Agent for or on behalf of
such Grantor, including, without limitation, those delivered or
possessed in substitution for or in addition to any or all of the then
existing Account Collateral; and
(vi) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Account Collateral;
(g) all of such Grantor's right, title and interest, whether now
owned or hereafter acquired, in and to all general intangibles, now or
hereafter existing (other than general intangibles for money due or to
become due, which are covered by Section 1(c) above), including, but not
limited to, (i) all partnership, corporate and other interests in and to
any Person (other than any Security Collateral and subject to the
limitations set forth in the provisos to Section 1(d)), (ii) all
governmental permits, licenses (and any subsequent renewals thereof),
franchises, registrations, authorizations and approvals, (iii) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, and any
other designs or sources of business identifiers, indicia of origin or
similar devices, all registrations with respect thereto, all applications
with respect to the foregoing, and all
6
extensions and renewals with respect to any of the foregoing, together with
all of the goodwill associated therewith, throughout the world, and all
rights and interests associated with the foregoing, (iv) all copyrights,
and all copyrights of works based on, incorporated in, derived from or
relating to works covered by such copyrights, and all right, title and
interest to make and exploit all derivative works based on or adopted from
works covered by such copyrights, all registrations with respect thereto,
all applications with respect to the foregoing, and all extensions and
renewals with respect to any of the foregoing, together with all rights and
interest associated with the foregoing, (v) all United States and foreign
patents and patent applications, and licenses and rights in, and the right
to ▇▇▇ for all past, present and future infringements of, any and all such
patents and patent applications, and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (vi)
all certificates, records, circulation lists, subscriber lists, advertiser
lists, supplier lists, customer lists, customer and supplier contracts,
sales orders, purchasing records and other rights, privileges and goodwill
obtained or used in connection with the Collateral and (vii) all sales
literature, promotional literature, processes, practices, techniques,
procedures, trade secrets, know-how and other information and data,
including, without limitation, designs, drawings, compilations of data,
specifications, assembly procedures, software and firmware (all such
Collateral being the "Proprietary Works"); and
(h) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) through (g) of this Section 1) and, to the
extent not otherwise included, all (i) payments under insurance (whether or
not the Collateral Agent is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing Collateral and (ii) cash.
Section 2. Security for Obligations. This Agreement secures the
------------------------
payment of all Obligations of the Grantors now or hereafter existing under the
Credit Documents, whether for principal, interest, fees, expenses or otherwise
(all such Obligations being the "Secured Obligations"). Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
that constitute part of the Secured Obligations of the Grantors and that would
be owed by any Grantor to the Secured Creditors under the Credit Documents but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving any Grantor.
Section 3. Grantors Remain Liable. Anything herein to the contrary
----------------------
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Collateral Agent of any
of the rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the
7
Collateral and (c) no Secured Creditor shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement or any other Credit Document, nor shall any
Secured Creditor be obligated to perform any of the obligations or duties
of any Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
Section 4. Delivery of Security Collateral and Account Collateral.
------------------------------------------------------
All certificates or instruments representing or evidencing Security Collateral
or Account Collateral (and, to the extent requested by the Collateral Agent, any
other Collateral) shall be delivered to and held by or on behalf of the
Collateral Agent pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Collateral
Agent. The Collateral Agent shall have the right, at any time in its discretion
and without notice to any Grantor, to transfer to or to register in the name of
the Collateral Agent or any of its nominees any or all of the Security
Collateral and Account Collateral, subject only to the revocable rights
specified in Section 14(a). In addition, the Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing Security Collateral or Account Collateral for certificates or
instruments of smaller or larger denominations.
Section 5. Maintaining the Cash Concentration Account. So long as any
------------------------------------------
Loan shall remain unpaid, any Letter of Credit shall be outstanding or any Bank
shall have any Commitment under the Credit Agreement:
(a) The Borrowing Subsidiary will maintain the Cash Concentration
Account with Citibank.
(b) It shall be a term and condition of the Cash Concentration
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the Cash Concentration Account, and except as
otherwise provided by the provisions of Section 8 and Section 21, that no
amount (including interest on Collateral Investments) shall be paid or
released to or for the account of, or withdrawn by or for the account of,
the Borrowing Subsidiary or any other Person from the Cash Concentration
Account.
The Cash Concentration Account shall be subject to such applicable laws, and
such applicable regulations of the [Board of Governors of the Federal Reserve
System and of any other] appropriate banking or governmental authority, as may
now or hereafter be in effect.
Section 6. Maintaining the Blocked Accounts. So long as any Loan
--------------------------------
shall remain unpaid, any Letter of Credit shall be outstanding or any Bank shall
have any Commitment under the Credit Agreement:
(a) Each Grantor shall maintain blocked deposit accounts ("Blocked
8
Accounts") only with banks ("Blocked Account Banks") that have entered into
letter agreements in substantially the form of Exhibit A with such Grantor
and the Collateral Agent ("Blocked Account Letters").
(b) Each Grantor shall immediately instruct each Person obligated at
any time to make any payment to such Grantor for any reason (an "Obligor")
to make such payment to a Blocked Account or to the Cash Concentration
Account and shall pay to the Collateral Agent for deposit in the Cash
Concentration Account all proceeds of Collateral.
(c) [Upon the occurrence of a Default, and the demand of the
Collateral Agent,] each Grantor shall instruct each Blocked Account Bank to
transfer to the Cash Concentration Account, at the end of each Business
Day, in same day funds, an amount equal to the credit balance of the
Blocked Account in such Blocked Account Bank.
(d) Upon any termination of any Blocked Account Letter or other
agreement with respect to the maintenance of a Blocked Account by any
Grantor or any Blocked Account Bank, such Grantor shall immediately notify
all Obligors that were making payments to such Blocked Account to make all
future payments to another Blocked Account or to the Cash Concentration
Account. Each Grantor agrees to terminate any or all Blocked Accounts and
Blocked Account Letters upon request by the Collateral Agent.
Section 7. Investing of Amounts in the Cash Concentration Account and
----------------------------------------------------------
the L/C Cash Concentration Account. If requested by the Borrowing Subsidiary,
----------------------------------
the Collateral Agent will, subject to the provisions of Section 8 and Section
21, from time to time (a) invest amounts on deposit in the Cash Concentration
Account in such Cash Equivalents in the name of the Collateral Agent as the
Borrowing Subsidiary may select and the Collateral Agent may approve and (b)
invest interest paid on the Cash Equivalents referred to in clause (a) above,
and reinvest other proceeds of any such Cash Equivalents that may mature or be
sold, in each case in such Cash Equivalents in the name of the Collateral Agent
as the Borrowing Subsidiary may select and the Collateral Agent may approve (the
Cash Equivalents referred to in clauses (a) and (b) above being collectively
"Collateral Investments"). Interest and proceeds that are not invested or
reinvested in Collateral Investments as provided above shall be deposited and
held in the Cash Concentration Account.
Section 8. Release of Amounts. If in its sole discretion it elects to
------------------
do so, the Collateral Agent may pay and release to the Borrowing Subsidiary or
at its order and at the request of the Borrowing Subsidiary, the amount, if any,
by which the credit balance of the Cash Concentration Account exceeds all
amounts then due and payable by the Borrowing Subsidiary under the Credit
Documents together with all accrued and unpaid interest and fees under the
Credit Agreement.
9
Section 9. Representations and Warranties. Each Grantor represents and
------------------------------
warrants as follows:
(a) All of the Equipment and Inventory of such Grantor are located at
the places specified in Schedule III hereto. The chief place of business
and chief executive office of such Grantor and the office where such
Grantor keeps its records concerning the Receivables, and the original
copies of each Assigned Agreement and all originals of all Related
Contracts and all chattel paper that evidence Receivables (other than those
delivered to the Collateral Agent), are located at the address set forth
below such Grantor's name on the signature pages hereof. Such Grantor has
delivered to the Collateral Agent the originals of all agreements,
certificates or instruments representing or evidencing any Collateral and
all security therefor and guaranties thereof, in each case to the extent
that the delivery thereof to the Collateral Agent is required under Section
4 or Section 10. None of the Receivables or Agreement Collateral is
evidenced by a promissory note or other instrument.
(b) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option or right of
others except for the security interest created by this Agreement and
except as permitted under Section 8.03 of the Credit Agreement. No
effective financing statement or other instrument similar in effect
covering all or any part of such Collateral (including, without limitation,
accounts and general intangibles relating to the Collateral) or listing
such Grantor or any of its Subsidiaries or any trade name of such Grantor
or any of its Subsidiaries as debtor is on file in any recording office,
except such as may have been filed (i) in favor of the Collateral Agent
relating to the Credit Documents or (ii) in connection with Liens permitted
under Section 8.03 of the Credit Agreement.
(c) Such Grantor has exclusive possession and control of the Equipment
and Inventory of such Grantor.
(d) The Pledged Shares owned or otherwise held by such Grantor
constitute the type and percentage of the issued and outstanding shares of
stock in the issuers thereof set forth opposite the name of such Grantor in
Part I of Schedule I hereto, and such Grantor does not own or otherwise
hold any shares of stock of any kind in any Person other than [(i)] the
issued and outstanding shares of stock set forth opposite the name of such
Grantor in Part I of Schedule I hereto[, and (ii) Voting Shares in one or
more of the Foreign Corporations that, when aggregated with all of the
other Voting Shares in each such Foreign Corporation owned by such Grantor
and the other Grantors, do not exceed 34% of the issued and outstanding
Voting Shares in such Foreign Corporation (on a fully diluted basis).] All
of the Pledged Shares have been duly authorized and validly issued and are
fully paid and non-assessable.
10
(e) The Pledged Debt held by such Grantor has been duly authorized,
authenticated or issued and delivered, is the legal, valid and binding
obligation of the issuers thereof and is not in default. The Initial
Pledged Debt constitutes all of the outstanding indebtedness for money
borrowed or for the deferred purchase price of property owed to such
Grantor by the issuers thereof.
(f) The Assigned Agreements to which such Grantor is a party, true and
complete copies of which have been furnished to each Bank, have been duly
authorized, executed and delivered by all parties thereto, have not been
amended or otherwise modified, are in full force and effect and are binding
upon and enforceable against all parties thereto in accordance with their
terms. There exists no default under any Assigned Agreement to which such
Grantor is a party by such Grantor, and to the best of such Grantor's
knowledge, there exists no default under any such Assigned Agreement by any
party thereto. Each party to any Assigned Agreement to which such Grantor
is a party (other than such Grantor) has executed and delivered to such
Grantor a consent, in substantially the form of Exhibit B hereto, to the
assignment of the Agreement Collateral to the Collateral Agent pursuant to
this Agreement.
(g) Such Grantor has no Blocked Accounts or other deposit accounts
other than the Blocked Accounts listed on Schedule IV hereto. Each Grantor
has instructed all existing Obligors to make all payments to either a
Blocked Account or the Cash Concentration Account.
(h) This Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral pursuant
hereto create in favor of the Collateral Agent a valid and perfected first
priority security interest in the Collateral of such Grantor, securing the
payment of the Secured Obligations of such Grantor, and all filings and
other actions necessary or desirable to perfect and protect such security
interest have been duly taken.
(i) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required (i) for the grant
by such Grantor of the assignment and security interest granted hereby, for
the pledge by such Grantor of the Security Collateral pursuant hereto or
for the execution, delivery or performance of this Agreement by such
Grantor, (ii) for the perfection or maintenance of the pledge, assignment
and security interest created hereby (including the first priority nature
of such pledge, assignment and security interest), except for the filing of
financing and continuation statements under the Uniform Commercial Code,
which financing statements have been duly filed, or (iii) for the exercise
by the Collateral Agent of its voting or other rights provided for in this
Agreement or the remedies in respect of the
11
Collateral pursuant to this Agreement, except as may be required in
connection with the disposition of any portion of the Security Collateral
by laws affecting the offering and sale of securities generally.
(j) Such Grantor has no trade names except as set forth on Schedule V
hereto; such trade names were adopted in good faith; and, to the best of
such Grantor's knowledge, there exist no adverse claims against such trade
names.
(k) The execution, delivery and performance by such Grantor of this
Agreement is within such Grantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene (i)
such Grantor's memorandum and articles of incorporation or equivalent
corporate documents, or (ii) any law or any contractual restriction binding
on or affecting such Grantor;
(l) This Agreement is the legal, valid and binding obligation of such
Grantor enforceable against such Grantor in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and to general principles of equity (regardless
of whether the issue of enforceability is considered in a proceeding in
equity or at law.)
(m) Such Grantor is, and, after giving effect to the transactions
contemplated hereby, individually and together with its Subsidiaries, will
be, Solvent.
(n) Neither such Grantor nor the Pledged Shares of such Grantor has
any immunity from jurisdiction of any court or from set-off or any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise);
(o) There is no tax, levy, impost, deduction, charge or withholding
imposed by the jurisdiction of its incorporation or organization or any
political subdivision thereof on or by virtue of the execution or delivery
of this Agreement; and
(p) To ensure the legality, validity, enforceability or admissibility
in evidence of this Agreement in the jurisdiction of its incorporation or
organization, it is not necessary that this Agreement or any other document
be filed or recorded with any court or other authority in such jurisdiction
or that any stamp or similar tax be paid on or in respect of this
Agreement.
Section 10. Further Assurances. (a) Each Grantor agrees that from time
------------------
to time, at the expense of such Grantor, such Grantor will promptly execute and
deliver all
12
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may request, in order to
perfect and protect any pledge, assignment or security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor will: (i) ▇▇▇▇
conspicuously each document included in the Inventory of such Grantor and each
chattel paper included in the Receivables, Related Contracts, and Assigned
Agreements of such Grantor and, at the request of the Collateral Agent, each of
its records pertaining to the Collateral, with a legend, in form and substance
satisfactory to the Collateral Agent, indicating that such document, chattel
paper, Related Contract, Assigned Agreement or other Collateral is subject to
the security interest granted hereby; (ii) if any Collateral shall be evidenced
by a promissory note or other instrument or chattel paper, deliver and pledge to
the Collateral Agent hereunder such note or instrument or chattel paper duly
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Collateral Agent; (iii) deliver
and pledge to the Collateral Agent hereunder certificates representing the
Pledged Shares accompanied by undated stock powers executed in blank and
promissory notes representing the Pledged Debt and accompanied by undated note
powers and evidence that all other action that the Collateral Agent may deem
necessary or desirable in order to perfect and protect the liens and security
interests created under this Agreement has been taken; and (iv) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Collateral
Agent may request, in order to perfect and preserve the pledge, assignment and
security interest granted or purported to be granted hereby.
(b) Each Grantor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.
(c) Each Grantor will furnish to the Collateral Agent, biennially on or
before _________ __ of each odd year (commencing _________ __, 1999), an opinion
of counsel acceptable to the Required Banks to the effect that all financing or
continuation statements have been filed, and all other action has been taken, to
perfect and validate continuously from the date hereof the assignment and
security interest granted hereby.
Section 11. As to Equipment and Inventory. (a) Each Grantor shall keep
-----------------------------
the Equipment and Inventory (other than Inventory sold in the ordinary course of
business) at the places therefor specified in Section 9(a) or, upon 30 days'
prior written notice to the Collateral Agent, at such other places in a
jurisdiction where all action required by Section 10 shall have been taken with
respect to the Equipment and Inventory.
(b) Each Grantor shall cause the Equipment to be maintained and preserved
13
in the same condition, repair and working order as when new, ordinary wear and
tear excepted, and in accordance with any manufacturer's manual therefor, and
shall forthwith, or in the case of any loss or damage to any of the Equipment as
quickly as practicable after the occurrence thereof, make or cause to be made
all repairs, replacements and other improvements in connection therewith that
are necessary or desirable to such end. Each Grantor shall promptly furnish to
the Collateral Agent a statement respecting any loss or damage to any of the
Equipment.
(c) Each Grantor shall pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment and
Inventory, to the extent required under Section 7.04 of the Credit Agreement.
Section 12. Insurance. (a) Each Grantor shall, at its own expense,
---------
maintain insurance with respect to the Equipment and Inventory in such amounts,
against such risks, in such form and with such insurers, as shall be
satisfactory to the Collateral Agent from time to time. Each policy for
liability insurance shall provide for all losses to be paid on behalf of the
Collateral Agent and such Grantor as their interests may appear, and each policy
for property damage insurance shall provide for all losses (except for losses of
less than $__________ per occurrence) to be paid directly to the Collateral
Agent. Each such policy shall in addition (i) name such Grantor and the
Collateral Agent as insured parties thereunder (without any representation or
warranty by or obligation upon the Collateral Agent) as their interests may
appear, (ii) contain the agreement by the insurer that any loss thereunder shall
be payable to the Collateral Agent notwithstanding any action, inaction or
breach of representation or warranty by such Grantor, (iii) provide that there
shall be no recourse against the Collateral Agent for payment of premiums or
other amounts with respect thereto and (iv) provide that at least 10 days' prior
written notice of cancellation or of lapse shall be given to the Collateral
Agent by the insurer. Each Grantor shall, if so requested by the Collateral
Agent, deliver to the Collateral Agent original or duplicate policies of such
insurance and, as often as the Collateral Agent may reasonably request, a report
of a reputable insurance broker with respect to such insurance. Further, each
Grantor shall, at the request of the Collateral Agent, duly exercise and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 10 and cause the insurers to acknowledge notice of such
assignment.
(b) Reimbursement under any liability insurance maintained by any Grantor
pursuant to this Section 12 may be paid directly to the Person who shall have
incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory of any Grantor when subsection (c) of this
Section 12 is not applicable, such Grantor shall make or cause to be made the
necessary repairs to or replacements of such Equipment or Inventory, and any
proceeds to such Grantor of insurance maintained by such Grantor pursuant to
this Section 12 shall be paid to such Grantor as reimbursement for the costs of
such repairs or replacements or shall be applied to preparing Loans, in each
case to the extent required under
14
the Credit Agreement.
(c) Upon the occurrence and during the continuance of any Default or the
actual or constructive total loss (in excess of $__________ per occurrence) of
any Equipment or Inventory, all insurance payments in respect of such Equipment
or Inventory shall be paid to and applied by the Collateral Agent as specified
in Section 21(b) except to the extent otherwise required in the Credit
Agreement.
Section 13. Place of Perfection; Records; Collection of Receivables. (a)
-------------------------------------------------------
Each Grantor shall keep its chief place of business and chief executive office
and the office where it keeps its records concerning the Collateral of such
Grantor, and the original copies of the Assigned Agreements, Related Contracts
and all chattel paper that evidence Receivables (to the extent not required to
be delivered to the Collateral Agent hereunder), at the location therefor
specified in Section 9(a) or, upon 30 days' prior written notice to the
Collateral Agent, at such other locations in a jurisdiction where all actions
required by Section 10 shall have been taken with respect to the Collateral.
Each Grantor will hold and preserve such records, Assigned Agreements, Related
Contracts and chattel paper and will permit representatives of the Collateral
Agent at any time during normal business hours to inspect and make abstracts
from such records, Assigned Agreements, Related Contracts and chattel paper.
(b) Except as otherwise provided in this subsection (b), each Grantor shall
continue to collect, at its own expense, all amounts due or to become due such
Grantor under the Receivables and Related Contracts. In connection with such
collections, such Grantor may take (and, at the Collateral Agent's direction,
shall take) such action as such Grantor or the Collateral Agent may deem
necessary or advisable to enforce collection of the Receivables and Related
Contracts; provided, however, that the Collateral Agent shall have the right at
-------- -------
any time, upon written notice to such Grantor of its intention to do so, to
notify the Obligors under any Receivables and Related Contracts of the
assignment of such Receivables to the Collateral Agent and to direct such
Obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to the Collateral Agent and, upon such notification and at
the expense of such Grantor, to enforce collection of any such Receivables and
Related Contracts, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by such Grantor of the notice from the Collateral Agent
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including instruments) received by such Grantor in respect of the
Receivables and Related Contracts shall be received in trust for the benefit of
the Collateral Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary indorsement) to be deposited in the Cash
Concentration Account and either (A) released to the Borrowing Subsidiary on the
terms set forth in Section 8 so long as no Default shall have occurred and be
continuing or (B) if any Default shall have occurred and be continuing, applied
as provided under Section 21(b) and (ii) such Grantor shall not adjust, settle
or compromise the amount or
15
payment of any Receivable, release wholly or partly any Obligor thereof, or
allow any credit or discount thereon. Anything contained herein to the contrary
notwithstanding, such Grantor shall not permit or agree to subordination of its
rights to payment under any of the Receivables to any other indebtedness or
obligations of the Obligor thereof.
Section 14. Voting Rights; Dividends; Etc. (a) So long as no Default
-----------------------------
shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Security Collateral of such
Grantor or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the other Credit Documents; provided, however, that no
-------- -------
Grantor shall exercise or refrain from exercising any such right if, in the
Collateral Agent's judgment, such action would have a material adverse
effect on the value of the Security Collateral of such Grantor or any part
thereof; and, provided further that such Grantor shall give the Collateral
Agent at least five days' written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right.
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends and interest paid in respect of the Security Collateral of such
Grantor; provided, however, that any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Security
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Security Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Security
Collateral
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Security Collateral and shall, if received by any Grantor, be received
in trust for the benefit of the Collateral Agent, be segregated from the
other property or funds of such Grantor and be forthwith delivered to the
Collateral Agent as Security Collateral in the same form as so received
(with any necessary indorsement).
(iii) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor
16
may reasonably request for the purpose of enabling such Grantor to exercise
the voting and other rights that it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends or interest payments that
it is authorized to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of a Default:
(i) All rights of each Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 14(a)(i) shall, upon notice to
such Grantor by the Collateral Agent, cease and (y) to receive the
dividends and interest payments that it would otherwise be authorized to
receive and retain pursuant to Section 14(a)(ii) shall automatically cease,
and all such rights shall thereupon become vested in the Collateral Agent,
which shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights and to receive and hold
as Security Collateral such dividends and interest payments.
(ii) All dividends and interest payments that are received by any
Grantor contrary to the provisions of paragraph (i) of this Section 14(b)
shall be received in trust for the benefit of the Collateral Agent, shall
be segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent as Security Collateral in the same form as so
received (with any necessary indorsement).
Section 15. As to the Assigned Agreements. (a) Each Grantor shall at
-----------------------------
its expense:
(i) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements to which it is a party in full force and effect, enforce the
Assigned Agreements in accordance with their terms and take all such action
to such end as may be from time to time requested by the Collateral Agent;
and
(ii) furnish to the Collateral Agent promptly upon receipt thereof
copies of all notices, requests and other documents received by such
Grantor under or pursuant to the Assigned Agreements to which it is a
party, and from time to time (A) furnish to the Collateral Agent such
information and reports regarding the Collateral of such Grantor as the
Collateral Agent may reasonably request and (B) upon request of the
Collateral Agent make to each other party to any Assigned Agreement to
which it is a party such demands and requests for information and reports
or for action as such Grantor is entitled to make thereunder.
(b) Each Grantor agrees that it shall not:
17
(i) cancel or terminate any Assigned Agreement to which it is a
party or consent to or accept any cancellation or termination thereof;
(ii) amend or otherwise modify any Assigned Agreement to which it is
a party or give any consent, waiver or approval thereunder;
(iii) waive any default under or breach of any Assigned Agreement to
which it is a party;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with any Assigned Agreement to which it
is a party, except as expressly provided therein; or
(v) take any other action in connection with any Assigned Agreement
to which it is a party that would impair the value of the interest or
rights of such Grantor thereunder or that would impair the interest or
rights of any Secured Creditor.
(c) Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Collateral Agent for the
ratable benefit of the Banks of each Assigned Agreement to which it is a party
by any other Grantor hereunder.
Section 16. Payments Under the Assigned Agreements. (a) Each Grantor
--------------------------------------
agrees, and has effectively so instructed each other party to each Assigned
Agreement to which it is a party, that all payments due or to become due under
or in connection with such Assigned Agreement shall be made directly to the Cash
Concentration Account.
(b) Except as set forth in Section 21, all moneys received or
collected pursuant to subsection (a) above shall be applied as set forth in
Section 8.
Section 17. Transfers and Other Liens; Additional Shares. (a) Except
--------------------------------------------
to the extent permitted by the Credit Agreement, no Grantor shall (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Collateral of such Grantor, except sales of
Inventory in the ordinary course of business, or (ii) create or suffer to exist
any Lien upon or with respect to any of the Collateral of such Grantor except
for the pledge, assignment and security interest created by this Agreement.
(b) Each Grantor shall (i) cause each issuer of the Pledged Shares of
such Grantor not to issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to such
Grantor, and (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, subject to the provisos set forth in Section 1(d), any
and all additional shares of stock or other securities.
18
Section 18. Collateral Agent Appointed Attorney-in-Fact. Each
-------------------------------------------
Grantor hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the Collateral
Agent's discretion, to take any action and to execute any instrument that the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent pursuant to Section 12,
(b) to ask for, demand, collect, ▇▇▇ for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any proceedings
that the Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with
the terms and conditions of any Assigned Agreement or the rights of the
Collateral Agent with respect to any of the Collateral.
Section 19. Collateral Agent May Perform. If any Grantor fails to
----------------------------
perform any agreement contained herein, the Collateral Agent may, but without
any obligation to do so and without further notice, itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by such Grantor under
Section 23(b).
Section 20. The Collateral Agent's Duties. The powers conferred on
-----------------------------
the Collateral Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Security Collateral, whether or not the Collateral Agent
or any other Secured Creditor has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve rights against
any parties or any other rights pertaining to any Collateral. The Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which it accords its own property.
19
Section 21. Remedies. If any Event of Default shall have occurred
--------
and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the Uniform Commercial Code in effect in the State of New
York at such time (the "N.Y. Uniform Commercial Code") (whether or not the
N.Y. Uniform Commercial Code applies to the affected Collateral) and also
may (i) require any Grantor to, and each Grantor hereby agrees that it will
at its expense and upon request of the Collateral Agent forthwith, assemble
all or part of the Collateral as directed by the Collateral Agent and make
it available to the Collateral Agent at a place and time to be designated
by the Collateral Agent that is reasonably convenient to both parties, (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable, (iii) occupy any premises owned or leased by any
Grantor where the Collateral or any part thereof is assembled or located
for a reasonable period in order to effectuate its rights and remedies
hereunder or under law, without obligation to such Grantor in respect of
such occupation, and (iv) exercise any and all rights and remedies of any
Grantor under or in connection with the Assigned Agreements, the
Receivables and the Related Contracts or otherwise in respect of the
Collateral, including, without limitation, any and all rights of such
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Assigned Agreements, the Receivables
and the Related Contracts. Each Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to such Grantor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) All cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 23) in whole or in part by the Collateral Agent for the
ratable benefit of the Secured Creditors against, all or any part of the
Secured Obligations in such order as the Collateral Agent shall elect. Any
surplus of such cash or cash
20
proceeds held by the Collateral Agent and remaining after payment in full
of all the Secured Obligations shall be paid over to the Grantors or to
whomsoever may be lawfully entitled to receive such surplus.
(c) The Collateral Agent may exercise any and all rights and remedies
of any Grantor under or in connection with the Assigned Agreements or
otherwise in respect of the Collateral, including, without limitation, any
and all rights of such Grantor to demand or otherwise require payment of
any amount under, or performance of any provision of, any Assigned
Agreement.
(d) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any
necessary indorsement).
(e) The Collateral Agent may, without notice to any Grantor except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against the Cash
Concentration Account or the L/C Cash Concentration Account or any part
thereof.
Section 22. Registration Rights. If the Collateral Agent shall
-------------------
determine to exercise its right to sell all or any of the Security Collateral
pursuant to Section 21, each Grantor agrees that, upon request of the Collateral
Agent, such Grantor will, at its own expense:
(a) execute and deliver, and cause each issuer of the Security
Collateral of such Grantor contemplated to be sold and the directors and
officers thereof to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts and things, as
may be necessary or, in the opinion of the Collateral Agent, advisable to
register such Security Collateral under the provisions of the Securities
Act of 1933, as from time to time amended (the "Securities Act"), to cause
the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to be
furnished and to make all amendments and supplements thereto and to the
related prospectus that, in the opinion of the Collateral Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Security Collateral of such
Grantor under the state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Security Collateral of
such Grantor, as requested by the
21
Collateral Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act;
(d) provide the Collateral Agent with such other information and
projections as may be necessary or, in the opinion of the Collateral Agent,
advisable to enable the Collateral Agent to effect the sale of such
Security Collateral of such Grantor; and
(e) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Security Collateral of such Grantor or
any part thereof valid and binding and in compliance with applicable law.
The Collateral Agent is authorized, in connection with any sale of the Security
Collateral pursuant to Section 21, to deliver or otherwise disclose to any
prospective purchaser of the Security Collateral (i) any registration statement
or prospectus, and all supplements and amendments thereto, prepared pursuant to
clause (a) above, (ii) any information and projections provided to it pursuant
to clause (d) above and (iii) any other information in its possession relating
to the Security Collateral.
Section 23. Indemnity and Expenses. (a) Each Grantor agrees to
----------------------
defend, protect, indemnify and hold harmless each Secured Creditor from and
against any and all claims, losses and liabilities growing out of or resulting
from this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from such Secured
Creditor's gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction.
(b) Each Grantor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Collateral of such Grantor, (iii) the
exercise or enforcement of any of the rights of the Collateral Agent or any
other Secured Creditor hereunder or (iv) the failure by such Grantor to perform
or observe any of the provisions hereof.
Section 24. Security Interest Absolute. The Obligations of each
--------------------------
Grantor under this Agreement are independent of the Secured Obligations, and a
separate action or actions may be brought and prosecuted against each Grantor to
enforce this Agreement, irrespective of whether any action is brought against
any other Credit Party or whether any other Credit Party is joined in any such
action or actions. All rights of the Collateral Agent and the pledge,
22
assignment and security interest hereunder, and all obligations of each Grantor
hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any Credit Document or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other amendment
or waiver of or any consent to any departure from any Credit Document,
including, without limitation, any increase in the Secured Obligations
resulting from the extension of additional credit to any Grantor or any of
its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of any Grantor or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its subsidiaries; or
(f) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, such Grantor or a third party grantor of a
security interest.
Section 25. Amendments; Waivers; Etc. (a) No amendment or waiver
------------------------
of any provision of this Agreement, and no consent to any departure by any
Grantor herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Collateral Agent and the Grantors, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Collateral Agent
to exercise, and no delay in exercising any right hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.
(b) Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit C hereto (each a
"Security Agreement Supplement") pursuant to Section 7.11 of the Credit
Agreement, (i) such Person shall be referred to as an "Additional Grantor" and
shall be and become a Grantor and each reference in this Agreement to "Grantor"
shall also mean and be a reference to such Additional Grantor,
23
and (ii) the annexes attached to each Security Agreement Supplement shall be
incorporated into and become a part of and supplement Schedules I, II, III, IV
and V hereto, and the Collateral Agent may attach such annexes as supplements to
such Schedules; and each reference to such Schedules shall mean and be a
reference to such Schedules as supplemented pursuant hereto.
Section 26. Addresses for Notices. All notices and other
---------------------
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and, if to any Grantor, mailed,
telegraphed, telecopied, telexed, cabled or delivered to it addressed to it at
the address set forth on the signature pages hereto beneath such Grantor's name
and, if to the Collateral Agent, mailed, telegraphed, telecopied or delivered to
it addressed to it at its address specified in the Credit Agreement or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms of
this Section 26. All such notices and other communications shall, when mailed,
telecopied, telegraphed, telexed or cabled, respectively, be effective when
deposited in the mails, telecopied, delivered to the telegraph or cable company
or confirmed by telex answerback, respectively, addressed as aforesaid.
Section 27. Continuing Security Interest; Assignments. This
-----------------------------------------
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the later of the payment in full
in cash of the Secured Obligations and the Maturity Date, (b) be binding upon
each Grantor, its successors and assigns and (c) inure, together with the rights
and remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent, the other Secured Creditors and their respective successors, transferees
and assigns. Without limiting the generality of the foregoing clause (c), any
Bank may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitment, the Loans owing to it and the Note or Notes held
by it to any other Person, and such other Person shall thereupon become vested
with all the obligations and benefits in respect thereof granted to such Bank
herein or otherwise, in each case as provided in Section 12.04(b) of the Credit
Agreement.
Section 28. Release and Termination. (a) Upon any sale, lease,
-----------------------
transfer or other disposition of any item of Collateral in accordance with the
terms of the Credit Documents (other than sales of Inventory in the ordinary
course of business), the Collateral Agent will, at the applicable Grantor's
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence the release of such item of Collateral from
the assignment and security interest granted hereby; provided, however, that
-------- -------
(i) at the time of such request and such release no Default shall have occurred
and be continuing, (ii) such Grantor shall have delivered to the Collateral
Agent, at least ten Business Days prior to the date of the proposed release, a
written request for release describing the item of Collateral and the terms of
the sale, lease, transfer or other disposition in reasonable detail, including
the price thereof and any expenses in connection therewith, together with a form
of release for execution by the Collateral Agent and a certification by the
Borrower to the effect
24
that the transaction is in compliance with the Credit Documents and as to such
other matters as the Collateral Agent may request, (iii) the proceeds of any
such sale, lease, transfer or other disposition required to be applied in
accordance with Section 4 of the Credit Agreement shall be paid to, or in
accordance with the instructions of, the Collateral Agent at the closing and
(iv) the Collateral Agent shall have approved such sale, lease, transfer or
other disposition in writing.
(b) Upon the latest of the payment in full in cash of the Secured
Obligations and the Maturity Date, the pledge, assignment and security interest
granted hereby shall automatically terminate and all rights to the Collateral
shall revert to the Grantors. Upon any such termination, the Collateral Agent
will, at the Grantor's expense, execute and deliver to the Grantors such
documents as the Grantors shall reasonably request to evidence such termination.
[Section 29. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and leases, letting and licenses
of, and contracts and agreements relating to the lease of real property, and the
terms of this Agreement shall be controlling in the case of all other
Collateral.]
Section 30. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 31. Governing Law; Terms; Submission to Jurisdiction. (a)
------------------------------------------------
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, except to the extent that the validity or perfection of
the security interest hereunder, or remedies hereunder, in respect of any
particular Collateral are governed by the laws of a jurisdiction other than the
State of New York. Unless otherwise defined herein or in the Credit Agreement,
terms used in Article 8 or Article 9 of the N.Y. Uniform Commercial Code are
used herein as therein defined.
(b) Any legal action or proceeding with respect to this Agreement or
any other Credit Document may be brought in the courts of the State of New York
or of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, each Grantor hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each Grantor hereby further irrevocably
waives any claim that any such courts lack jurisdiction over such Grantor, and
agrees not to plead or claim, in any legal action or proceeding with respect to
this
25
Agreement or any other Credit Document brought in any of the aforesaid courts,
that any such court lacks jurisdiction over such Grantor. Each Grantor agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Solely for the purposes of this Agreement, to the full
extent permitted by law each Grantor hereby irrevocably appoints [CT Corporation
System] with an office on the date hereof at [1633 ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇] (the "Process Agent"), as its agent to receive on behalf of the such
Grantor and its property service of copies of the summons and complaint and any
other process which may be served in any such action or proceeding. Each Grantor
irrevocably consents to the service of process in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Process Agent, such service to become effective 30 days after
such mailing. Each Grantor hereby irrevocably waives any objection to such
service of process and further irrevocably waives and agrees not to plead or
claim in any action or proceeding commenced hereunder or under any other Credit
Document that service of process was in any way invalid or ineffective. Nothing
herein shall affect the right of any Secured Creditor to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against any Grantor in any other jurisdiction.
(c) Each Grantor hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (b) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(d) To the extent that any Grantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
Grantor to the extent permitted by law hereby irrevocably waives such immunity
in respect of its obligations under this Agreement and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this
subsection (d) shall have the fullest scope permitted under the United States
Foreign Sovereign Immunities Act of 1976, as amended, and are intended to be
irrevocable for purposes of such Act.
(e) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in any currency (the "Original
Currency") into another currency (the "Other Currency") the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Collateral Agent could purchase the Original Currency with the
Other Currency at 11:00 A.M. on the second Business Day preceding that on which
final judgment is given.
26
(f) The obligation of each Grantor in respect to any sum due in the
Original Currency from it to any Secured Creditor hereunder or held by such
Secured Creditor shall, notwithstanding any judgment in any Other Currency, be
discharged only to the extent that, on the Business Day following receipt by
such Secured Creditor of any sum adjudged to be so due in such Other Currency,
such Secured Creditor may, in accordance with normal banking procedures,
purchase the Original Currency with such Other Currency; if the amount of the
Original Currency so purchased is less than the sum originally due to such
Secured Creditor in the Original Currency, such Grantor agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify such Secured
Creditor against such loss, and if the amount of the Original Currency so
purchased exceeds the sum originally due to any Secured Creditor in the Original
Currency, such Secured Creditor agrees to remit to the Grantor such excess.
(g) Each Grantor hereby irrevocably waives all right to trial by jury
in any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of this Agreement or any of the
other Credit Documents, the transactions contemplated thereby or the actions of
the Collateral Agent or any other Secured Creditor in the negotiation,
administration, performance or enforcement thereof.
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[NAME OF BORROWING SUBSIDIARY]
By
-------------------------------------------
Name:
Title:
Address of Chief Executive Office and
for Notices:
[NAME OF EACH SUBSIDIARY OF
THE BORROWING SUBSIDIARY]
By
-------------------------------------------
Name:
Title:
Address of Chief Executive Office and
27
for Notices:
[ETC.]
Schedule I
PLEDGED SHARES AND PLEDGED DEBT
Part I
================================================================================================================
Name of Grantor Stock Issuer Class of Stock Par Stock Number of Shares Percentage
Value Certificate of Outstanding
No(s) Shares
================================================================================================================
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
================================================================================================================
Part II
================================================================================================================
Name of Grantor Debt Issuer Description of Debt Debt Certificate Final Maturity Original
No(s). Principal
Amount
================================================================================================================
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
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Schedule II
ASSIGNED AGREEMENTS
Schedule III
LOCATIONS OF EQUIPMENT AND INVENTORY
Locations of Equipment:
Locations of Inventory:
Schedule IV
BLOCKED ACCOUNTS
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Name and Address of Bank Mailing Address of Blocked Account Number
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Account
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Schedule V
TRADE NAMES
EXHIBIT A
FORM OF BLOCKED ACCOUNT LETTER
_______________, 19__
[Name and address of
Blocked Account Bank]
[Name of the Grantor]
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Ladies and Gentlemen:
Reference is made to deposit account no. __________ into which certain
monies, instruments and other properties are deposited from time to time and
deposit account no. __________ (collectively, the "Blocked Account") maintained
with you by ____________________ (the "Grantor"). Pursuant to the Security
Agreement dated ________ __, 1997 (the "Security Agreement"), the Grantor has
granted to Citibank, N.A., as collateral agent (the "Collateral Agent") for the
Secured Creditors referred to in the Credit Agreement dated as of ________ __,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") with _________________ (the "Borrowing Subsidiary") and the
other borrowers parties thereto, a security interest in certain property of the
Grantor, including, among other things, the following (the "Account
Collateral"): the Blocked Account, all funds held therein and all certificates
and instruments, if any, from time to time representing or evidencing the
Blocked Account, all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the then existing Account Collateral and all
proceeds of any and all of the foregoing Account Collateral and, to the extent
not otherwise included, all (i) payments under insurance (whether or not the
Collateral Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Account Collateral and (ii) cash. It is a condition to the
continued maintenance of the Blocked Account with you that you agree to this
letter agreement.
By signing this letter agreement, you acknowledge notice of, and
consent to the terms and provisions of, the Security Agreement and confirm to
the Collateral Agent that the description of the Blocked Account set forth on
Schedule IV of the Security Agreement is correct and that you have received no
notice of any other pledge or assignment of the Blocked Account. Further, you
hereby agree with the Collateral Agent that:
(a) Notwithstanding anything to the contrary in any other agreement
relating
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to the Blocked Account, the Blocked Account is and will be subject to the
terms and conditions of the Security Agreement, will be maintained solely
for the benefit of the Collateral Agent, will be entitled "Citibank, N.A.,
as Collateral Agent, Re: [name of the Grantor]" and will be subject to
written instructions only from an officer of the Collateral Agent.
(b) You will collect mail from the Blocked Account on each of your
business days at times that coincide with the delivery of mail thereto.
(c) You will follow your usual operating procedures for the handling
of any remittance received in the Blocked Account that contains restrictive
endorsements, irregularities (such as a variance between the written and
numerical amounts), undated or postdated items, missing signatures,
incorrect payees, etc.
(d) You will endorse and process all eligible checks and other
remittance items not covered by paragraph (c) and deposit such checks and
remittance items in the Blocked Account.
(e) You will maintain a record of all checks and other remittance
items received in the Blocked Account and, in addition to providing the
Borrowing Subsidiary with photostats, vouchers, enclosures, etc. of such
checks and remittance items on a daily basis, furnish to the Collateral
Agent (i) a monthly statement of the Blocked Account and (ii) a daily
collection and check float report, to be transmitted electronically to the
Collateral Agent at: _______________.
(f) You will transfer, in same day funds, on each of your business
days, all amounts collected from the Blocked Account on such day to the
following account (the "Cash Concentration Account"):
[Name of the Grantor]
Account No. ____________
________________________
________________________,
_________, _______ _____
Attention: ____________
or to such other account as may be notified to you by the Collateral Agent in
writing from time to time.
Each such transfer of funds shall neither comprise only part of a remittance nor
reflect the rounding off of any funds so transferred.
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(g) All transfers referred to in paragraph (f) above shall be made by
the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and the
undersigned will not seek to recover from the Collateral Agent for any
reason any such payment once made.
(h) All service charges and fees with respect to the Blocked Account
shall be payable by the Grantor, and deposited checks returned for any
reason shall not be charged to the Blocked Account, but may be charged to
another account maintained by the Grantor with you.
(i) The Collateral Agent shall be entitled to exercise any and all
rights of the Grantor in respect of the Blocked Account in accordance with
the terms of the Security Agreement, and the undersigned shall comply in
all respects with such exercise.
This letter agreement shall be binding upon you and your successors
and assigns and shall inure to the benefit of the Collateral Agent, the Secured
Parties and their successors, transferees and assigns. You may terminate this
letter agreement only upon thirty days' prior written notice to the Grantor and
the Collateral Agent. Upon such termination you shall close the Blocked Account
and transfer all funds in the Blocked Account to the Cash Concentration Account
or such other account as may be notified to you in writing by the Collateral
Agent. After any such termination, you shall nonetheless remain obligated
promptly to transfer to the Cash Concentration Account all funds and other
property received in respect of the Blocked Account.
A-4
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York.
Very truly yours,
[NAME OF GRANTOR]
By:
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Name:
Title:
CITIBANK, N.A., as Collateral Agent
By:
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Name:
Title:
Acknowledged and agreed to as of
the date first above written:
[NAME OF BLOCKED ACCOUNT BANK]
By:
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Name:
Title:
EXHIBIT B
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the
terms and provisions of, the Security Agreement dated ________ __, 1997 (the
"Security Agreement", the terms defined therein being used herein as therein
defined) from ________________________, a ______________ corporation (the
"Borrowing Subsidiary") and certain other parties thereto (together with the
Borrower, the "Grantors") to Citibank, N.A. as collateral agent (the "Collateral
Agent") for the Secured Creditors referred to therein, and hereby agrees with
the Collateral Agent that:
(a) The undersigned will make all payments to be made by it under or
in connection with the __________ Agreement dated _______________, ____
(the "Assigned Agreement") between the undersigned and the applicable
Grantor directly to the Cash Concentration Account or otherwise in
accordance with the instructions of the Collateral Agent.
(b) All payments referred to in paragraph (a) above shall be made by
the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and the
undersigned will not seek to recover from the Collateral Agent or any
Secured Creditor for any reason any such payment once made.
(c) The Collateral Agent shall be entitled to exercise any and all
rights and remedies of such Grantor under the Assigned Agreement in
accordance with the terms of the Security Agreement, and the undersigned
shall comply in all respects with such exercise.
(d) The undersigned will not, without the prior written consent of the
Collateral Agent, (i) cancel or terminate the Assigned Agreement or consent
to or accept any cancellation or termination thereof, (ii) amend or
otherwise modify the Assigned Agreement, or (iii) make any prepayment of
amounts to become due under or in connection with the Assigned Agreement,
except as expressly provided therein.
[In order to induce the Banks to make Loans and to issue Letters of
Credit under the Credit Agreement, the undersigned repeats and reaffirms for the
benefit of the Secured Creditors and the Collateral Agent the representations
and warranties made in Section _____ of the Assigned Agreement.]
This Consent and Agreement shall be binding upon the undersigned and
its successors and assigns, and shall inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Secured
Creditors and their successors, transferees and
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assigns.
This Consent and Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this Consent and
Agreement as of the date set opposite its name below.
Dated: _______________, ____ [NAME OF OBLIGOR]
By:
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Name:
Title:
EXHIBIT C
FORM OF SECURITY AGREEMENT SUPPLEMENT
NationsBank, N.A., as Administrative
Agent under the Credit Agreement
referred to below and
Citibank, N.A. as Collateral
Agent under the Security Agreement
referred to below
[Address]
[Date]
Attention: ___________
Security Agreement dated ________ __, 1997
made by Modus Media International, Inc.
and the other Grantors to Citibank, N.A., as Collateral Agent
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Ladies and Gentlemen:
Reference is made to the above-captioned Security Agreement (such
Security Agreement, as in effect on the date hereof and as it may hereafter be
amended, modified or otherwise supplemented from time to time, being the
"Security Agreement"). The terms defined in the Security Agreement (or in the
Credit Agreement referred to therein) and not otherwise defined herein are used
herein as therein defined.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to "Grantor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Collateral Agent for
the
ratable benefit of the Secured Creditors, and hereby grants to the Collateral
Agent for the ratable benefit of the Secured Creditors as security for the
Secured Obligations a lien on and security interest in, all of the right, title
and interest of the undersigned, whether now owned or hereafter acquired, in and
to the Collateral owned by the undersigned, including, but not limited to, the
property listed on Annex I hereto. Schedules I, II, III, IV and V to the
Security Agreement are hereby supplemented by Annexes I, II, III, IV and V
hereto, respectively. The undersigned hereby certifies that such Annexes have
been prepared by the undersigned in substantially the form of Schedules I, II,
III, IV and V to the Security Agreement and are accurate and complete as of the
date hereof.
The undersigned hereby makes each representation and warranty set
forth in Section 9 of the Security Agreement (as supplemented by the attached
Annexes) to the same extent as each other Grantor and hereby agrees to be bound
as a Grantor by all of the terms and provisions of the Security Agreement to the
same extent as each other Grantor.
This Security Agreement Supplement shall be governed by, and construed
in accordance with, the laws of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
By_______________________________________
Name:
Title:
Address of Chief Executive
Office and for Notices:
S&S DRAFT 11/18/97
EXHIBIT F-2
FORM OF FOREIGN SUBSIDIARY SECURITY AGREEMENT
Dated _________ __, 1997
From
THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF
as Grantors
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to
CITICORP USA, INC.
as Collateral Agent
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T A B L E O F C O N T E N T S
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Section Page
1. Grant of Security ....................................................... 2
2. Security for Obligations ................................................ 6
3. Grantors Remain Liable .................................................. 6
4. Delivery of Security Collateral and Account Collateral .................. 6
5. Maintaining the Cash Concentration Account .............................. 7
6. Maintaining the Blocked Accounts ........................................ 7
7. Investing of Amounts in the Cash Concentration Account and the L/C
Cash Concentration Account ............................................ 8
8. Release of Amounts ...................................................... 8
9. Representations and Warranties .......................................... 8
10. Further Assurances ...................................................... 11
11. As to Equipment and Inventory ........................................... 12
12. Insurance ............................................................... 13
13. Place of Perfection; Records; Collection of Receivables ................. 14
14. Voting Rights; Dividends; Etc ........................................... 15
15. As to the Assigned Agreements ........................................... 16
16. Payments Under the Assigned Agreements .................................. 17
17. Transfers and Other Liens; Additional Shares ............................ 17
18. Collateral Agent Appointed Attorney-in-Fact ............................. 18
19. Collateral Agent May Perform ............................................ 18
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Section Page
20. The Collateral Agent's Duties ........................................... 18
21. Remedies ................................................................ 19
22. Registration Rights ..................................................... 20
23. Indemnity and Expenses .................................................. 21
24. Security Interest Absolute .............................................. 22
25. Amendments; Waivers; Etc ................................................ 22
26. Addresses for Notices ................................................... 23
27. Continuing Security Interest; Assignments ............................... 23
28. Release and Termination ................................................. 23
29. The Mortgages ........................................................... 24
30. Execution in Counterparts ............................................... 24
31. Governing Law; Terms; Submission to Jurisdiction ........................ 24
Schedules
Schedule I - Pledged Shares and Pledged Debt
Schedule II - Assigned Agreements
Schedule III - Locations of Equipment and Inventory
Schedule IV - Blocked Accounts
Schedule V - Trade Names
Exhibits
Exhibit A - Form of Blocked Account Letter
Exhibit B - Form of Consent and Agreement
Exhibit C - Form of Security Agreement Supplement
PARENT GUARANTY
Dated December __, 1997
From
THE GUARANTORS NAMED HEREIN
as Guarantors
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in favor of
THE GUARANTEED CREDITORS REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
T A B L E O F C O N T E N T S
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Section Page
1. Guaranty; Limitation of Liability 1
2. Guaranty Absolute 2
3. Waivers and Acknowledgments 4
4. Subrogation 4
5. Net Payments 5
6. Representations and Warranties 7
7. Covenants 9
8. Amendments, Etc. 10
9. Notices, Etc. 10
10. No Waiver; Remedies 11
11. Right of Set-off 11
12. Indemnification 11
13. Continuing Guaranty; Assignments
under the Credit Agreement 11
14. Governing Law; Jurisdiction;
Waiver of Jury Trial, Etc. 12
GUARANTY
GUARANTY dated ________ __, 1997 made by the Persons listed on the
signature pages hereof (each a "Guarantor", and collectively the "Guarantors"),
in favor of the Guaranteed Creditors (as defined in the Credit Agreement
referred to below).
PRELIMINARY STATEMENT. Modus Media International, Inc., a Delaware
corporation ("MMI"), Modus Media International Kabushiki Kaisha, a Japanese
company ("MMI-KK" and together with MMI, the "Borrowers"), are parties to a
Credit Agreement dated as of December __, 1997 (such Credit Agreement, as it
may hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement", the capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined) with certain
Banks party thereto, Modus Media International Holdings, Inc. ("Holdings"),
NationsBank of Texas, N.A. ("NationsBank"), as administrative agent (the
"Administrative Agent") for the Banks, NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.,
as Arranger and Syndication Agent and Citicorp USA, Inc., as Documentation
Agent, Collateral Agent and Multi-Currency Agent. It is a condition precedent
to the making of Loans and the issuance of Letters of Credit by the Banks under
the Credit Agreement from time to time that each Guarantor shall have executed
and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Banks to make Loans and to issue Letters of Credit under the Credit Agreement
from time to time, each Guarantor, jointly and severally with each other
Guarantor, hereby agrees as follows:
Section 1. Guaranty; Limitation of Liability. (a) Each Guarantor hereby
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absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at stated maturity, by acceleration or otherwise, of all
Obligations of the Credit Parties and each other Guarantor now or hereafter
existing under the Credit Documents, whether for principal, interest, fees,
expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and
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agrees to pay any and all expenses (including counsel fees and expenses)
incurred by the Administrative Agent or any other Guaranteed Creditor in
enforcing any rights under this Guaranty and the other Credit Documents.
Without limiting the generality of the foregoing, each Guarantor's liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by any Credit Party to the Administrative Agent or any other
Guaranteed Creditor under the Credit Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Credit Party.
(b) Each Guarantor, and by its acceptance of this Guaranty, the
Administrative Agent and each other Guaranteed Creditor, hereby confirms that it
is the intention of all such parties that this Guaranty not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law (as defined
below), the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to this Guaranty. To effectuate the
foregoing intention, the Administrative Agent, the other Guaranteed Creditors
and the Guarantors hereby irrevocably agree that the Obligations of each
Guarantor under this Guaranty shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
Obligations of such other Guarantor under this Guaranty, result in the
Obligations of such Guarantor under this Guaranty not constituting a fraudulent
transfer or conveyance. For purposes hereof, "Bankruptcy Law" means Title 11,
U.S. Code, or any similar Federal or state law for the relief of debtors.
(c) Each Guarantor agrees that in the event any payment shall be required
to be made to the Guaranteed Creditors under this Guaranty or any other
guaranty, such Guarantor will contribute, to the maximum extent permitted by
law, such amounts to each other Guarantor so as to maximize the aggregate amount
paid to the Guaranteed Creditors under the Credit Documents.
Section 2. Guaranty Absolute. Each Guarantor guarantees that the
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Guaranteed Obligations will be paid strictly in accordance with the terms of the
Credit Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any other Guaranteed Creditor with respect thereto. The
Obligations of each Guarantor under this Guaranty are independent of the
Guaranteed Obligations or any other Obligations of any other Credit Party under
the Credit Documents, and a separate action or actions may be brought and
prosecuted against each Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against any Borrower or any other Credit Party or
whether any Borrower or any other Credit Party is joined in any such action or
actions. The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any or all of the following:
(a) any lack of validity or enforceability of any Credit Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations or any other Obligations
of any other Credit Party under the Credit Documents, or any other
amendment or waiver of or any consent to departure from any Credit
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to any
Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral, or
any taking, release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to all or
any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Credit Party under the Credit
Documents or any other assets of any Credit Party or any of its
Subsidiaries;
(e) any change, restructuring or termination of the corporate structure or
existence of any Credit Party or any of its Subsidiaries;
(f) any failure of any Guaranteed Creditor to disclose to any Credit Party
any information relating to the financial condition, operations, properties
or prospects of any other Credit Party now or in the future known to any
Guaranteed Creditor (each Guarantor waiving any duty on the part of the
Guaranteed Creditor to disclose such information);
(g) the failure of any other person to execute this Guaranty or any other
guaranty or agreement or the release or reduction of liability of any
Guarantor or other surety with respect to the Guaranteed Obligations; or
(h) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by the
Administrative Agent or any other Guaranteed Creditor that might otherwise
constitute a defense available to, or a discharge of, any Credit Party or
any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Guaranteed Creditor or any other holder of
a Note upon the insolvency, bankruptcy or reorganization of any Borrower or any
other Credit Party or otherwise, all as though such payment had not been made.
Section 3. Waivers and Acknowledgments. (a) Each Guarantor hereby waives
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promptness, diligence, notice of acceptance, presentment, demand for
performance, notice of nonperformance, default, acceleration, protest or
dishonor and any other notice with respect to any of the Guaranteed Obligations
and this Guaranty and any requirement that the Administrative Agent or any other
Guaranteed Creditor protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Credit Party
or any other Person or any Collateral.
(b) Each Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
(c) Each Guarantor hereby waives (i) any defense arising by reason of any
claim or defense based upon an election of remedies by the Guaranteed Creditors
which in any manner impairs, reduces, releases or otherwise adversely affects
such Guarantor's subrogation,
reimbursement, exoneration, contribution or indemnification rights or other
rights to proceed against any Credit Party or any other person or any
Collateral, and (ii) any defense based on any right of set-off or counterclaim
(other than a compulsory counterclaim) against or in respect of such Guarantor's
obligations hereunder.
(d) Each Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Credit
Documents and that the waivers set forth in Section 2 and this Section 3 are
knowingly made in contemplation of such benefits.
Section 4. Subrogation. No Guarantor will exercise any rights that it may
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now or hereafter acquire against any Borrower or any other insider guarantor
that arise from the existence, payment, performance or enforcement of such
Guarantor's Obligations under this Guaranty or any other Credit Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of any Guaranteed Creditor against any Borrower or any other
insider guarantor or any Collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from any Borrower or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash and the Commitments shall have
expired or terminated. If any amount shall be paid to any Guarantor in
violation of the preceding sentence at any time prior to the later of (i) the
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty and (ii) the Maturity Date, such amount shall be
held in trust for the benefit of the Guaranteed Creditors and shall forthwith be
paid to the Administrative Agent to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Credit Documents, or to be
held as Collateral for any Guaranteed Obligations or other amounts payable under
this Guaranty thereafter arising. If (i) any Guarantor shall make payment to
the Administrative Agent or any other Guaranteed Creditor of all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall be paid in full in cash and (iii) the
Maturity Date shall have occurred, the Administrative Agent and the other
Guaranteed Creditors will, at such Guarantor's request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by such Guarantor.
Section 5. Net Payments (a) All payments made by any Guarantor hereunder
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will be made without setoff, counterclaim or other defense. Except as provided
in Section 5(b), all such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding,
except as provided in the second succeeding sentence, any tax imposed on or
measured by the net income or net profits of a Bank pursuant to the laws of the
jurisdiction in which it is organized or the jurisdiction in which the principal
office or applicable lending office of such Guaranteed Creditor is located or
any subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, such Guarantor agrees to pay
the full amount of such Taxes, and such additional amounts as may be necessary
so that every payment of all amounts due under this Guaranty, after withholding
or deduction for or on account of any Taxes, will not be less than the amount
provided for herein. If any amounts are payable in respect of Taxes pursuant to
the preceding sentence, such Guarantor agrees to reimburse each Guaranteed
Creditor, upon the written request of such Guaranteed Creditor, for Taxes
imposed on or measured by the net income or net profits of such Guaranteed
Creditor pursuant to the laws of the jurisdiction in which the principal office
or applicable lending office of such Guaranteed Creditor is located or under the
laws of any political subdivision or taxing authority of any such jurisdiction
in which the principal office or applicable lending office of such Guaranteed
Creditor is located and for any withholding of Taxes as such Guaranteed Creditor
shall determine are payable by, or withheld from, such Bank in respect of such
amounts so paid to or on behalf of such Guaranteed Creditor pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of such
Guaranteed Creditor pursuant to this sentence. Each Guarantor will furnish to
the Administrative Agent within 30 days after the date the payment of any Taxes
is due pursuant to applicable law certified copies of tax receipts evidencing
such payment by such Guarantor. Each Guarantor agrees to indemnify and hold
harmless each Guaranteed Creditor, and reimburse such Bank upon its written
request, for the amount of any Taxes so levied or imposed and paid by such
Guaranteed Creditor.
(b) Each Guaranteed Creditor agrees to deliver to each Guarantor and the
Administrative Agent on or prior to the Effective Date, or in the case of a
Guaranteed Creditor that is an assignee or transferee of an interest under the
Credit Agreement pursuant to Section 1.13 or 12.04 thereof (unless the
respective Guaranteed Creditor was already a Guaranteed Creditor thereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Guaranteed Creditor, any form or certificate that
is required by any taxing authority to demonstrate such Guaranteed Creditor's
entitlement to an exemption from or reduction in Home Jurisdiction Withholding
Taxes (as defined below), if any, with respect to payments to be made under this
Guaranty including, if applicable (i) two accurate and complete original signed
copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Guaranteed Creditor's entitlement to a complete exemption
from United States withholding tax with respect to payments to be made under
this Guaranty, or (ii) if the Guaranteed Creditor is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit C to the Credit Agreement (any
such certificate, a "Section 4.04(b)(ii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Guaranteed Creditor's entitlement to a
complete exemption from United States withholding tax with respect to payments
to be made under this Guaranty, provided, however,
-------- -------
that such Guaranteed Creditor shall have been advised in writing by each
Guarantor of the form or certificate applicable to it, determined by reference
to the jurisdiction of organization and applicable lending office of such
Guaranteed Creditor set forth on Annex I to the Credit Agreement, or in the case
of a Guaranteed Creditor that is an assignee or transferee of an interest under
the Credit Agreement pursuant to Sections 1.13 or 12.04 thereof (unless the
respective Guaranteed Creditor was already a Guaranteed Creditor thereunder
immediately prior to such assignment or transfer) the jurisdiction of
organization and Applicable Lending Office of such Guaranteed Creditor set forth
in the Assignment and Assumption Agreement pursuant to which it became a
Guaranteed Creditor, or such other branch or office of any Guaranteed Creditor
designated by such Guaranteed Creditor from time to time. If any form or
document referred to in this subsection (b) requires the disclosure of
information greater than that required on the date hereof by Forms 1001 or 4224
and which a Guaranteed Creditor reasonably considers to be confidential, such
Guaranteed Creditor shall give notice thereof to each Guarantor and shall not be
obligated to include in such form or document such confidential information. In
addition, each Guaranteed Creditor agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, upon the
written request of any Guarantor (but only if the Guaranteed Creditor remains
lawfully able to do so) it will deliver to such Guarantor and the Administrative
Agent a new accurate and complete form or certificate that is required by any
taxing authority including, if applicable, two new accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-
8 and a Section 4.04(b)(ii) Certificate, as the case may be, and such other
forms as may be required in order to confirm or establish the entitlement of
such Guaranteed Creditor to a continued exemption from or reduction in Home
Jurisdiction Withholding Taxes, if any, with respect to payments under this
Guaranty, or it shall immediately notify such Guarantor and the Administrative
Agent of its inability to deliver any such Form or Certificate, in which case
such Guaranteed Creditor shall not be required to deliver any such Form or
Certificate pursuant to this Section 5(b). Notwithstanding anything to the
contrary contained in Section 5(a), but subject to Section 12.04(b) of the
Credit Agreement and the immediately succeeding sentence, (x) each Guarantor
shall be entitled, to the extent it is required to do so by law, to deduct or
withhold income or similar taxes from interest, fees or other amounts payable
hereunder for the account of any Guaranteed Creditor to the extent that such
Guaranteed Creditor has not provided to such Guarantor the form or certificate
that establishes a complete exemption from, or entitlement to a reduction of,
such deduction or withholding and (y) each Guarantor shall not be obligated
pursuant to Section 5(a) to gross-up payments to be made to a Guaranteed
Creditor in respect of income or similar taxes imposed if (I) such Guaranteed
Creditor has not provided to such Guarantor the form or certificate required to
be provided to such Guarantor pursuant to this Section 5(b) or (II) in the case
of a payment, other than interest, to a Guaranteed Creditor described in clause
(ii) above, to the extent that such form or certificate does not establish a
complete exemption from, or entitlement to a reduction of, withholding of such
taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 5 and except as set forth in Section
12.04(b) of the Credit Agreement, each Guarantor agrees to pay additional
amounts and to indemnify each Guaranteed Creditor in the manner set forth in
Section 5(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any amounts deducted or
withheld by it as described in the immediately preceding sentence as a result of
any changes after the Effective Date in any applicable law, treaty, governmental
rule, regulation, guideline or order, or in the interpretation thereof, relating
to the deducting or withholding of income or similar Taxes. "Home Jurisdiction
Withholding Taxes" means, in the case of each Guarantor, withholding taxes
imposed by the jurisdiction or political subdivision or taxing authority thereof
or therein in which such Guarantor is organized.
(c) Without prejudice to the survival of any other agreement of any
Guarantor hereunder or under any other Credit Document, the agreements and
obligations of each Guarantor contained in this Section 5 and in Section 12
shall survive the payment in full of the Guaranteed Obligations and all other
amounts payable under this Guaranty.
Section 6. Representations and Warranties. Each Guarantor hereby
------------------------------
represents and warrants as follows:
(a) Such Guarantor (i) is a duly organized and validly existing corporation
in good standing under the laws of the jurisdiction of its organization, (ii)
has the corporate power and authority (including, without limitation, all
governmental licenses, permits and other approvals) to own or lease and operate
its properties and assets and to transact the business in which it is engaged
and presently proposes to engage and (iii) is duly qualified and is authorized
to do business and is in good standing in all jurisdictions where it is required
to be so qualified or licensed.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Guaranty. Such Guarantor has duly executed and delivered
this Guaranty and this Guaranty constitutes the legal, valid and binding
obligation of such Guarantor enforceable against such Guarantor in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by such Guarantor of
this Guaranty nor compliance by such Guarantor with the terms and provisions
thereof, nor the consummation of the transactions contemplated herein, (i) will
contravene any applicable provision of any law, statute, rule or regulation, or
any order, writ, injunction, judgment, award, determination or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, any contract, indenture, mortgage,
deed of trust, lease, loan agreement, credit agreement or any other material
agreement or instrument to which such Guarantor or any of its Subsidiaries is a
party or by which it or any of its property or assets are bound or to which it
may be subject or (other than pursuant to the Security Documents) result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of such Guarantor or any of its Subsidiaries or
(iii) will violate any provision of the Certificate of Incorporation or By-Laws
of such Guarantor or any
of its Subsidiaries. Neither such Guarantor nor any of its Subsidiaries is in
violation of any such law, statute, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in breach of any such contract,
loan agreement, indenture, mortgage, deed of trust, lease, loan agreement,
credit agreement or other material agreement or other instrument, the violation
or breach of which could have a Material Adverse Effect.
(d) There are no actions, investigations, litigations, suits or proceedings
pending or, to the knowledge of such Guarantor or any of its Subsidiaries,
threatened, before any court, governmental agency or arbitrator with respect to
such Guarantor or any of its Subsidiaries (i) that could reasonably be expected
to have a Material Adverse Effect or (ii) purports to affect the legality,
validity or enforceability of this Guaranty.
(e) Except as may have been obtained or made on or prior to the Initial
Borrowing Date (and which remain in full force and effect on the Initial
Borrowing Date), no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
notice to, any foreign or domestic governmental or public body or authority or
any other third party, or any subdivision thereof, is required to authorize or
is required in connection with (i) the due execution, delivery, recordation,
filing and performance by such Guarantor of this Guaranty or for the
consummation of the transactions contemplated hereby, or (ii) the legality,
validity, binding effect or enforceability of this Guaranty.
(f) There are no conditions precedent to the effectiveness of this Guaranty
that have not been satisfied or waived.
(g) Each Guarantor has, independently and without reliance upon the
Administrative Agent or any other Guaranteed Creditor and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty, and such Guarantor has
established adequate means of obtaining from any other Credit Parties on a
continuing basis information pertaining to, and is now and on a continuing basis
will be completely familiar with, the financial condition, operations,
properties and prospects of such other Credit Parties.
(h) Each Guarantor is, and, after giving effect to the transactions
contemplated hereby, individually and together with its Subsidiaries, will be
Solvent.
Section 7. Covenants. Each Guarantor covenants and agrees that, so long
---------
as any part of the Guaranteed Obligations shall remain unpaid (other than
indemnity and similar contingent obligations in respect of which no claim has
been made and no amount remains outstanding), any Letter of Credit shall be
outstanding or any Bank shall have any Commitment, such Guarantor will, unless
the Required Banks shall otherwise consent in writing as follows:
(a) Payment of Taxes. Each Guarantor will pay and discharge, and
----------------
will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any properties belonging to it, when due and all lawful claims for
sums that have become due and payable when due which, if unpaid, might become
a Lien not otherwise permitted under Section 8.03(a) of the Credit Agreement
or charge upon any properties of such Guarantor or any of its Subsidiaries;
provided that neither such Guarantor nor any of its Subsidiaries shall be
--------
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP.
(b) Corporate Franchises. Such Guarantor will do, and will cause each
--------------------
of its Subsidiaries to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, legal structure,
legal name, rights (charter or statutory), permits, licenses, approvals,
privileges, franchises and authority to do business.
(c) Compliance with Statutes, Etc. Each Guarantor will, and will cause
-----------------------------
each of its Subsidiaries to, comply with all applicable laws, statutes,
regulations, rules and orders of, and all applicable restrictions imposed
by, all governmental bodies, domestic or foreign, in respect of the conduct
of its business and the ownership of its property (including applicable
statutes, regulations, orders and restrictions relating to environmental
standards and controls) except where such noncompliance as would not have a
Material Adverse Effect.
Section 8. Amendments, Etc. No amendment or waiver of any provision of
----------------
this Guaranty and no consent to any departure by any Guarantor therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agent (on behalf of the Banks or the Required Banks, as the case
may be) and the Guarantors, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless in writing
-------- -------
and signed by all of the Guaranteed Creditors (other than any Bank that is, at
such time, a Defaulting Bank), (a) reduce or limit the liability of any
Guarantor hereunder or release any Guarantor hereunder, (b) postpone any date
fixed for payment hereunder or (c) change the number of Guaranteed Creditors
required to take any action hereunder.
Section 9. Notices, Etc. All notices and other communications provided
-------------
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to any Guarantor, addressed to it at the address set forth below such
Guarantor's name on the signature pages hereof, if to the Administrative Agent
or any Bank, at its address specified in the Credit Agreement, or as to any
party at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall,
when mailed, telegraphed, telecopied or telexed, be effective when deposited in
the mails, delivered to the telegraph company, transmitted by telecopier or
confirmed by telex answerback, respectively. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Guaranty shall be effective as delivery of a manually executed counterpart
thereof.
Section 10. No Waiver; Remedies. No failure on the part of the
-------------------
Administrative Agent or any other Guaranteed Creditor to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 11. Right of Set-off. Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 9 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of such Section 9, each Guaranteed Creditor and each of its
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Guaranteed Creditor or such
Affiliate to or for the credit or the account of any Guarantor against any and
all of the Obligations of such Guarantor now or hereafter existing under this
Guaranty, whether or not such Guaranteed Creditor shall have made any demand
under this Guaranty and although such Obligations may be unmatured. Each
Guaranteed Creditor agrees promptly to notify each Guarantor after any such set-
off and application; provided, however, that the failure to give such notice
-------- -------
shall not affect the validity of such set-off and application. The rights of
each Guaranteed Creditor and its respective Affiliates under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Guaranteed Creditor and its respective Affiliates
may have.
Section 12. Indemnification. Without limitation on any other Obligations
---------------
of any Guarantor or remedies of the Guaranteed Creditors under this Guaranty,
each Guarantor shall, to the fullest extent permitted by law, indemnify, defend
and save and hold harmless each Guaranteed Creditor from and against, and shall
pay on demand, any and all losses, liabilities, damages, costs, expenses and
charges (including the fees and disbursements of such Guaranteed Creditor's
legal counsel) suffered or incurred by such Guaranteed Creditor as a result of
any failure of any Guaranteed Obligations to be the legal, valid and binding
obligations of any Credit Party enforceable against such Credit Party in
accordance with their terms.
Section 13. Continuing Guaranty; Assignments under the Credit Agreement.
-----------------------------------------------------------
This Guaranty is a continuing guaranty and shall (a) remain in full force and
effect until the latest of (i) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty and (ii) Maturity
Date, (b) be binding upon each Guarantor, its successors and assigns and (c)
inure to the benefit of and be enforceable by the Administrative Agent and the
other Guaranteed Creditors and their successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Guaranteed
Creditor may assign or otherwise transfer all or any portion of its rights under
the Credit Agreement (including, without limitation, all or any portion of its
Commitments, the Loans owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon
become vested with all the obligations and benefits in respect thereof granted
to such Guaranteed Creditor herein or otherwise, in each case as and to the
extent provided in Section 12.04(b) of the Credit Agreement. No Guarantor shall
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Guaranteed Creditors.
Section 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
-------------------------------------------------------
This Guaranty shall be governed by, and construed in accordance with, the laws
of the State of New York.
(b) Any legal action or proceeding with respect to this Guaranty may be
brought in the courts of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
each Guarantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Guarantor hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Guarantor, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Guaranty brought
in any of the aforesaid courts, that any such court lacks jurisdiction over such
Guarantor. Each Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Solely for the
purposes of this Guaranty, to the full extent permitted by law each Guarantor
and its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Each Guarantor
irrevocably consents to the service of process in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Process Agent, such service to become effective 30 days after
such mailing. Each Guarantor hereby irrevocably waives any objection to such
service of process and further irrevocably waives and agrees not to plead or
claim in any action or proceeding commenced hereunder that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
any Guaranteed Creditor to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against any Guarantor in any
other jurisdiction.
(c) Each Guarantor hereby irrevocably waives any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Guaranty brought in the
courts referred to in clause (b) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
(d) To the extent that such Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
Guarantor to the extent permitted by law hereby irrevocably waives such immunity
in respect of its obligations under this Guaranty and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this
subsection (d) shall have the fullest scope permitted under the United States
Foreign Sovereign Immunities Act of 1976, as amended, and are intended to be
irrevocable for purposes of such Act.
(e) If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder in any currency (the "Original Currency") into
another currency (the "Other Currency") the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Administrative
Agent could purchase the Original Currency with the Other Currency at 11:00 A.M.
on the second Business Day preceding that on which final judgment is given.
(f) The obligation of each Guarantor in respect to any sum due in the
Original Currency from it to any Guaranteed Creditor hereunder or held by such
Guaranteed Creditor shall, notwithstanding any judgment in any Other Currency,
be discharged only to the extent that, on the Business Day following receipt by
such Guaranteed Creditor of any sum adjudged to be so due in such Other Currency
such Guaranteed Creditor may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency; if the amount of the
Original Currency so purchased is less than the sum originally due to such
Guaranteed Creditor in the Original Currency, such Guarantor agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Guaranteed Creditor against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to any Guaranteed Creditor
in the Original Currency, such Guaranteed Creditor agrees to remit to such
Guarantor such excess.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
(g) Each Guarantor hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of this Guaranty, the transactions
contemplated hereby or the actions of the Collateral Agent or any other
Guaranteed Creditor in the negotiation, administration, performance or
enforcement hereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Address: MODUS MEDIA INTERNATIONAL, INC.
________________
________________
By
Attention: Name:
Title:
Address: MODUS MEDIA INTERNATIONAL HOLDINGS INC.
________________
________________
Attention: By
Name:
Title:
Acknowledged and Agreed:
NATIONSBANK OF TEXAS, N.A.
as Administrative Agent
By_____________________________
Name:
Title:
U.S. SUBSIDIARY GUARANTY
Dated December ___, 1997
From
THE GUARANTORS NAMED HEREIN
as Guarantors
-------------
in favor of
THE GUARANTEED CREDITORS REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
T A B L E O F C O N T E N T S
- - - - - - - - - - - - - - -
Section Page
1. Guaranty; Limitation of Liability 1
2. Guaranty Absolute 2
3. Waivers and Acknowledgments 4
4. Subrogation 4
5. Net Payments 5
6. Representations and Warranties 8
7. Covenants 9
8. Amendments, Etc. 10
9. Notices, Etc. 10
10. No Waiver; Remedies 11
11. Right of Set-off 11
12. Indemnification 11
13. Continuing Guaranty; Assignments
under the Credit Agreement 11
14. Governing Law; Jurisdiction;
Waiver of Jury Trial, Etc. 12
GUARANTY
GUARANTY dated ________ __, 1997 made by the Persons listed on the
signature pages hereof (each a "Guarantor", and collectively the "Guarantors"),
in favor of the Guaranteed Creditors (as defined in the Credit Agreement
referred to below).
PRELIMINARY STATEMENT. Modus Media International, Inc., a Delaware
corporation ("MMI"), Modus Media International Kabushiki Kaisha, a Japanese
company ("MMI-KK" and together with MMI, the "Borrowers"), are parties to a
Credit Agreement dated as of December __, 1997 (such Credit Agreement, as it
may hereafter be amended, supplemented or otherwise modified from time to time,
being the "Credit Agreement", the capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined) with certain
Banks party thereto, Modus Media International Holdings, Inc. ("Holdings"),
NationsBank of Texas, N.A. ("NationsBank"), as administrative agent (the
"Administrative Agent") for the Banks, NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.,
as Arranger and Syndication Agent and Citicorp USA, Inc., as Documentation
Agent, Collateral Agent and Multi-Currency Agent. It is a condition precedent
to the making of Loans and the issuance of Letters of Credit by the Banks under
the Credit Agreement from time to time that each Guarantor shall have executed
and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Banks to make Loans and to issue Letters of Credit under the Credit Agreement
from time to time, each Guarantor, jointly and severally with each other
Guarantor, hereby agrees as follows:
Section 1. Guaranty; Limitation of Liability. (a) Each Guarantor hereby
---------------------------------
absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at stated maturity, by acceleration or otherwise, of all
Obligations of the Credit Parties and each other Guarantor now or hereafter
existing under the Credit Documents, whether for principal, interest, fees,
expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and
----------------------
agrees to pay any and all expenses (including counsel fees and expenses)
incurred by the Administrative Agent or any other Guaranteed Creditor in
enforcing any rights under this Guaranty and the other Credit Documents.
Without limiting the generality of the foregoing, each Guarantor's liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by any Credit Party to the Administrative Agent or any other
Guaranteed Creditor under the Credit Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Credit Party.
(b) Each Guarantor, and by its acceptance of this Guaranty, the
Administrative Agent and each other Guaranteed Creditor, hereby confirms that it
is the intention of all such parties that this Guaranty not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law (as defined
below), the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar federal or state law to
the extent applicable to this Guaranty. To effectuate the foregoing intention,
the Administrative Agent, the other Guaranteed Creditors and the Guarantors
hereby irrevocably agree that the Obligations of each Guarantor under this
Guaranty shall be limited to the maximum amount as will, after giving effect to
such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the Obligations of such other
Guarantor under this Guaranty, result in the Obligations of such Guarantor under
this Guaranty not constituting a fraudulent transfer or conveyance. For purposes
hereof, "Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal or
state law for the relief of debtors.
(c) Each Guarantor agrees that in the event any payment shall be required
to be made to the Guaranteed Creditors under this Guaranty or any other
guaranty, such Guarantor will contribute, to the maximum extent permitted by
law, such amounts to each other Guarantor so as to maximize the aggregate amount
paid to the Guaranteed Creditors under the Credit Documents.
Section 2. Guaranty Absolute. Each Guarantor guarantees that the
-----------------
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Credit Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any other Guaranteed Creditor with respect thereto. The
Obligations of each Guarantor under this Guaranty are independent of the
Guaranteed Obligations or any other Obligations of any other Credit Party under
the Credit Documents, and a separate action or actions may be brought and
prosecuted against each Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against any Borrower or any other Credit Party or
whether any Borrower or any other Credit Party is joined in any such action or
actions. The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any or all of the following:
(a) any lack of validity or enforceability of any Credit Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations or any other Obligations
of any other Credit Party under the Credit Documents, or any other
amendment or waiver of or any consent to departure from any Credit
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to any
Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral, or
any taking, release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to all or
any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Credit Party under the Credit
Documents or any other assets of any Credit Party or any of its
Subsidiaries;
(e) any change, restructuring or termination of the corporate structure or
existence of any Credit Party or any of its Subsidiaries;
(f) any failure of any Guaranteed Creditor to disclose to any Credit Party
any information relating to the financial condition, operations, properties
or prospects of any other Credit Party now or in the future known to any
Guaranteed Creditor (each Guarantor waiving any duty on the part of the
Guaranteed Creditor to disclose such information);
(g) the failure of any other person to execute this Guaranty or any other
guaranty or agreement or the release or reduction of liability of any
Guarantor or other surety with respect to the Guaranteed Obligations; or
(h) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by the
Administrative Agent or any other Guaranteed Creditor that might otherwise
constitute a defense available to, or a discharge of, any Credit Party or
any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Guaranteed Creditor or any other holder of
a Note upon the insolvency, bankruptcy or reorganization of any Borrower or any
other Credit Party or otherwise, all as though such payment had not been made.
Section 3. Waivers and Acknowledgments. (a) Each Guarantor hereby waives
---------------------------
promptness, diligence, notice of acceptance, presentment, demand for
performance, notice of nonperformance, default, acceleration, protest or
dishonor and any other notice with respect to any of the Guaranteed Obligations
and this Guaranty and any requirement that the Administrative Agent or any other
Guaranteed Creditor protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Credit Party
or any other Person or any Collateral.
(b) Each Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
(c) Each Guarantor hereby waives (i) any defense arising by reason of any
claim or defense based upon an election of remedies by the Guaranteed Creditors
which in any manner impairs, reduces, releases or otherwise adversely affects
such Guarantor's subrogation,
reimbursement, exoneration, contribution or indemnification rights or other
rights to proceed against any Credit Party or any other person or any
Collateral, and (ii) any defense based on any right of set-off or counterclaim
(other than a compulsory counterclaim) against or in respect of such Guarantor's
obligations hereunder.
(d) Each Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Credit
Documents and that the waivers set forth in Section 2 and this Section 3 are
knowingly made in contemplation of such benefits.
Section 4. Subrogation. No Guarantor will exercise any rights that it may
-----------
now or hereafter acquire against any Borrower or any other insider guarantor
that arise from the existence, payment, performance or enforcement of such
Guarantor's Obligations under this Guaranty or any other Credit Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of any Guaranteed Creditor against any Borrower or any other
insider guarantor or any Collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from any Borrower or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash and the Commitments shall have
expired or terminated. If any amount shall be paid to any Guarantor in
violation of the preceding sentence at any time prior to the later of (i) the
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty and (ii) the Maturity Date, such amount shall be
held in trust for the benefit of the Guaranteed Creditors and shall forthwith be
paid to the Administrative Agent to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Credit Documents, or to be
held as Collateral for any Guaranteed Obligations or other amounts payable under
this Guaranty thereafter arising. If (i) any Guarantor shall make payment to
the Administrative Agent or any other Guaranteed Creditor of all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall be paid in full in cash and (iii) the
Maturity Date shall have occurred, the Administrative Agent and the other
Guaranteed Creditors will, at such Guarantor's request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by such Guarantor.
Section 5. Net Payments (a) All payments made by any Guarantor hereunder
------------
will be made without setoff, counterclaim or other defense. Except as provided
in Section 5(b), all such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax imposed on or measured by
the net income or net profits of a Bank pursuant to the laws of the jurisdiction
in which it is organized or the jurisdiction in which the principal office or
applicable lending office of such Guaranteed Creditor is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, such Guarantor agrees to pay
the full amount of such Taxes, and such additional amounts as may be necessary
so that every payment of all amounts due under this Guaranty, after withholding
or deduction for or on account of any Taxes, will not be less than the amount
provided for herein. If any amounts are payable in respect of Taxes pursuant to
the preceding sentence, such Guarantor agrees to reimburse each Guaranteed
Creditor, upon the written request of such Guaranteed Creditor, for Taxes
imposed on or measured by the net income or net profits of such Guaranteed
Creditor pursuant to the laws of the jurisdiction in which the principal office
or applicable lending office of such Guaranteed Creditor is located or under the
laws of any political subdivision or taxing authority of any such jurisdiction
in which the principal office or applicable lending office of such Guaranteed
Creditor is located and for any withholding of Taxes as such Guaranteed Creditor
shall determine are payable by, or withheld from, such Bank in respect of such
amounts so paid to or on behalf of such Guaranteed Creditor pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of such
Guaranteed Creditor pursuant to this sentence. Each Guarantor will furnish to
the Administrative Agent within 30 days after the date the payment of any Taxes
is due pursuant to applicable law certified copies of tax receipts evidencing
such payment by such Guarantor. Each Guarantor agrees to indemnify and hold
harmless each Guaranteed Creditor, and reimburse such Bank upon its written
request, for the amount of any Taxes so levied or imposed and paid by such
Guaranteed Creditor.
(b) Each Guaranteed Creditor agrees to deliver to each Guarantor and the
Administrative Agent on or prior to the Effective Date, or in the case of a
Guaranteed Creditor that is an assignee or transferee of an interest under the
Credit Agreement pursuant to Section 1.13 or 12.04 thereof (unless the
respective Guaranteed Creditor was already a Guaranteed Creditor thereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Guaranteed Creditor, any form or certificate that
is required by any taxing authority to demonstrate such Guaranteed Creditor's
entitlement to an exemption from or reduction in Home Jurisdiction Withholding
Taxes (as defined below), if any, with respect to payments to be made under this
Guaranty including, if applicable (i) two accurate and complete original signed
copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Guaranteed Creditor's entitlement to a complete exemption
from United States withholding tax with respect to payments to be made under
this Guaranty, or (ii) if the Guaranteed Creditor is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit C to the Credit Agreement (any
such certificate, a "Section 4.04(b)(ii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Guaranteed Creditor's entitlement to a
complete exemption from United States withholding tax with respect to payments
to be made under this Guaranty, provided, however,
-------- -------
that such Guaranteed Creditor shall have been advised in writing by each
Guarantor of the form or certificate applicable to it, determined by reference
to the jurisdiction of organization and applicable lending office of such
Guaranteed Creditor set forth on Annex I to the Credit Agreement, or in the case
of a Guaranteed Creditor that is an assignee or transferee of an interest under
the Credit Agreement pursuant to Sections 1.13 or 12.04 thereof (unless the
respective Guaranteed Creditor was already a Guaranteed Creditor thereunder
immediately prior to such assignment or transfer) the jurisdiction of
organization and Applicable Lending Office of such Guaranteed Creditor set forth
in the Assignment and Assumption Agreement pursuant to which it became a
Guaranteed Creditor, or such other branch or office of any Guaranteed Creditor
designated by such Guaranteed Creditor from time to time. If any form or
document referred to in this subsection (b) requires the disclosure of
information greater than that required on the date hereof by Forms 1001 or 4224
and which a Guaranteed Creditor reasonably considers to be confidential, such
Guaranteed Creditor shall give notice thereof to each Guarantor and shall not be
obligated to include in such form or document such confidential information. In
addition, each Guaranteed Creditor agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, upon the
written request of any Guarantor (but only if the Guaranteed Creditor remains
lawfully able to do so) it will deliver to such Guarantor and the Administrative
Agent a new accurate and complete form or certificate that is required by any
taxing authority including, if applicable, two new accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-
8 and a Section 4.04(b)(ii) Certificate, as the case may be, and such other
forms as may be required in order to confirm or establish the entitlement of
such Guaranteed Creditor to a continued exemption from or reduction in Home
Jurisdiction Withholding Taxes, if any, with respect to payments under this
Guaranty, or it shall immediately notify such Guarantor and the Administrative
Agent of its inability to deliver any such Form or Certificate, in which case
such Guaranteed Creditor shall not be required to deliver any such Form or
Certificate pursuant to this Section 5(b). Notwithstanding anything to the
contrary contained in Section 5(a), but subject to Section 12.04(b) of the
Credit Agreement and the immediately succeeding sentence, (x) each Guarantor
shall be entitled, to the extent it is required to do so by law, to deduct or
withhold income or similar taxes from interest, fees or other amounts payable
hereunder for the account of any Guaranteed Creditor to the extent that such
Guaranteed Creditor has not provided to such Guarantor the form or certificate
that establishes a complete exemption from, or entitlement to a reduction of,
such deduction or withholding and (y) each Guarantor shall not be obligated
pursuant to Section 5(a) to gross-up payments to be made to a Guaranteed
Creditor in respect of income or similar taxes imposed if (I) such Guaranteed
Creditor has not provided to such Guarantor the form or certificate required to
be provided to such Guarantor pursuant to this Section 5(b) or (II) in the case
of a payment, other than interest, to a Guaranteed Creditor described in clause
(ii) above, to the extent that such form or certificate does not establish a
complete exemption from, or entitlement to a reduction of, withholding of such
taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 5 and except as set forth in Section
12.04(b) of the Credit Agreement, each Guarantor agrees to pay additional
amounts and to indemnify each Guaranteed Creditor in the manner set forth in
Section 5(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any amounts deducted or
withheld by it as described in the immediately preceding sentence as a result of
any changes after the Effective Date in any applicable law, treaty, governmental
rule, regulation, guideline or order, or in the interpretation thereof, relating
to the deducting or withholding of income or similar Taxes. "Home Jurisdiction
Withholding Taxes" means, in the case of each Guarantor, withholding taxes
imposed by the jurisdiction or political subdivision or taxing authority thereof
or therein in which such Guarantor is organized.
(c) Without prejudice to the survival of any other agreement of any
Guarantor hereunder or under any other Credit Document, the agreements and
obligations of each Guarantor contained in this Section 5 and in Section 12
shall survive the payment in full of the Guaranteed Obligations and all other
amounts payable under this Guaranty.
Section 6. Representations and Warranties. Each Guarantor hereby
------------------------------
represents and warrants as follows:
(a) Such Guarantor (i) is a duly organized and validly existing corporation
in good standing under the laws of the jurisdiction of its organization, (ii)
has the corporate power and authority (including, without limitation, all
governmental licenses, permits and other approvals) to own or lease and operate
its properties and assets and to transact the business in which it is engaged
and presently proposes to engage and (iii) is duly qualified and is authorized
to do business and is in good standing in all jurisdictions where it is required
to be so qualified or licensed.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Guaranty. Such Guarantor has duly executed and delivered
this Guaranty and this Guaranty constitutes the legal, valid and binding
obligation of such Guarantor enforceable against such Guarantor in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by such Guarantor of
this Guaranty nor compliance by such Guarantor with the terms and provisions
thereof, nor the consummation of the transactions contemplated herein, (i) will
contravene any applicable provision of any law, statute, rule or regulation, or
any order, writ, injunction, judgment, award, determination or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, any contract, indenture, mortgage,
deed of trust, lease, loan agreement, credit agreement or any other material
agreement or instrument to which such Guarantor or any of its Subsidiaries is a
party or by which it or any of its property or assets are bound or to which it
may be subject or (other than pursuant to the Security Documents) result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of such Guarantor or any of its Subsidiaries or
(iii) will
violate any provision of the Certificate of Incorporation or By-Laws of such
Guarantor or any of its Subsidiaries. Neither such Guarantor nor any of its
Subsidiaries is in violation of any such law, statute, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or in breach of any
such contract, loan agreement, indenture, mortgage, deed of trust, lease, loan
agreement, credit agreement or other material agreement or other instrument, the
violation or breach of which could have a Material Adverse Effect.
(d) There are no actions, investigations, litigations, suits or proceedings
pending or, to the knowledge of such Guarantor or any of its Subsidiaries,
threatened, before any court, governmental agency or arbitrator with respect to
such Guarantor or any of its Subsidiaries (i) that could reasonably be expected
to have a Material Adverse Effect or (ii) purports to affect the legality,
validity or enforceability of this Guaranty.
(e) Except as may have been obtained or made on or prior to the Initial
Borrowing Date (and which remain in full force and effect on the Initial
Borrowing Date), no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
notice to, any foreign or domestic governmental or public body or authority or
any other third party, or any subdivision thereof, is required to authorize or
is required in connection with (i) the due execution, delivery, recordation,
filing and performance by such Guarantor of this Guaranty or for the
consummation of the transactions contemplated hereby, or (ii) the legality,
validity, binding effect or enforceability of this Guaranty.
(f) There are no conditions precedent to the effectiveness of this Guaranty
that have not been satisfied or waived.
(g) Each Guarantor has, independently and without reliance upon the
Administrative Agent or any other Guaranteed Creditor and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty, and such Guarantor has
established adequate means of obtaining from any other Credit Parties on a
continuing basis information pertaining to, and is now and on a continuing basis
will be completely familiar with, the financial condition, operations,
properties and prospects of such other Credit Parties.
(h) Each Guarantor is, and, after giving effect to the transactions
contemplated hereby, individually and together with its Subsidiaries, will be
Solvent.
Section 7. Covenants. Each Guarantor covenants and agrees that, so long
---------
as any part of the Guaranteed Obligations shall remain unpaid (other than
indemnity and similar contingent obligations in respect of which no claim has
been made and no amount remains outstanding), any Letter of Credit shall be
outstanding or any Bank shall have any Commitment, such Guarantor will, unless
the Required Banks shall otherwise consent in writing as follows:
(a) Payment of Taxes. Each Guarantor will pay and discharge, and
----------------
will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, when due and all
lawful claims for sums that have become due and payable when due which, if
unpaid, might become a Lien not otherwise permitted under Section 8.03(a) of
the Credit Agreement or charge upon any properties of such Guarantor or any of
its Subsidiaries; provided that neither such Guarantor nor any of its
--------
Subsidiaries shall be required to pay any such tax, assessment, charge, levy
or claim which is being contested in good faith and by proper proceedings if
it has maintained adequate reserves with respect thereto in accordance with
GAAP.
(b) Corporate Franchises. Such Guarantor will do, and will cause each
--------------------
of its Subsidiaries to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, legal structure,
legal name, rights (charter or statutory), permits, licenses, approvals,
privileges, franchises and authority to do business.
(c) Compliance with Statutes, Etc. Each Guarantor will, and will cause
-----------------------------
each of its Subsidiaries to, comply with all applicable laws, statutes,
regulations, rules and orders of, and all applicable restrictions imposed
by, all governmental bodies, domestic or foreign, in respect of the conduct
of its business and the ownership of its property (including applicable
statutes, regulations, orders and restrictions relating to environmental
standards and controls) except where such noncompliance as would not have a
Material Adverse Effect.
Section 8. Amendments, Etc. No amendment or waiver of any provision of
----------------
this Guaranty and no consent to any departure by any Guarantor therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agent (on behalf of the Banks or the Required Banks, as the case
may be) and the Guarantors, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless in writing
-------- -------
and signed by all of the Guaranteed Creditors (other than any Bank that is, at
such time, a Defaulting Bank), (a) reduce or limit the liability of any
Guarantor hereunder or release any Guarantor hereunder, (b) postpone any date
fixed for payment hereunder or (c) change the number of Guaranteed Creditors
required to take any action hereunder.
Section 9. Notices, Etc. All notices and other communications provided
-------------
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to any Guarantor, addressed to it at the address set forth below such
Guarantor's name on the signature pages hereof, if to the Administrative Agent
or any Bank, at its address specified in the Credit Agreement, or as to any
party at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall,
when mailed, telegraphed, telecopied or telexed, be effective when deposited in
the mails, delivered to the telegraph company, transmitted by telecopier or
confirmed by telex answerback, respectively. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Guaranty shall be effective as delivery of a manually executed counterpart
thereof.
Section 10. No Waiver; Remedies. No failure on the part of the
-------------------
Administrative Agent or any other Guaranteed Creditor to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 11. Right of Set-off. Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 9 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of such Section 9, each Guaranteed Creditor and each of its
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Guaranteed Creditor or such
Affiliate to or for the credit or the account of any Guarantor against any and
all of the Obligations of such Guarantor now or hereafter existing under this
Guaranty, whether or not such Guaranteed Creditor shall have made any demand
under this Guaranty and although such Obligations may be unmatured. Each
Guaranteed Creditor agrees promptly to notify each Guarantor after any such set-
off and application; provided, however, that the failure to give such notice
-------- -------
shall not affect the validity of such set-off and application. The rights of
each Guaranteed Creditor and its respective Affiliates under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Guaranteed Creditor and its respective Affiliates
may have.
Section 12. Indemnification. Without limitation on any other Obligations
---------------
of any Guarantor or remedies of the Guaranteed Creditors under this Guaranty,
each Guarantor shall, to the fullest extent permitted by law, indemnify, defend
and save and hold harmless each Guaranteed Creditor from and against, and shall
pay on demand, any and all losses, liabilities, damages, costs, expenses and
charges (including the fees and disbursements of such Guaranteed Creditor's
legal counsel) suffered or incurred by such Guaranteed Creditor as a result of
any failure of any Guaranteed Obligations to be the legal, valid and binding
obligations of any Credit Party enforceable against such Credit Party in
accordance with their terms.
Section 13. Continuing Guaranty; Assignments under the Credit Agreement.
-----------------------------------------------------------
This Guaranty is a continuing guaranty and shall (a) remain in full force and
effect until the latest of (i) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty and (ii) Maturity
Date, (b) be binding upon each Guarantor, its successors and assigns and (c)
inure to the benefit of and be enforceable by the Administrative Agent and the
other Guaranteed Creditors and their successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Guaranteed
Creditor may assign or otherwise transfer all or any portion of its rights under
the Credit Agreement (including, without limitation, all or any portion of its
Commitments, the Loans owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
obligations and benefits in respect thereof granted to such
Guaranteed Creditor herein or otherwise, in each case as and to the extent
provided in Section 12.04(b) of the Credit Agreement. No Guarantor shall have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Guaranteed Creditors.
Section 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
-------------------------------------------------------
This Guaranty shall be governed by, and construed in accordance with, the laws
of the State of New York.
(b) Any legal action or proceeding with respect to this Guaranty may be
brought in the courts of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
each Guarantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Guarantor hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Guarantor, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Guaranty brought
in any of the aforesaid courts, that any such court lacks jurisdiction over such
Guarantor. Each Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Solely for the
purposes of this Guaranty, to the full extent permitted by law each Guarantor
and its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Each Guarantor
irrevocably consents to the service of process in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Process Agent, such service to become effective 30 days after
such mailing. Each Guarantor hereby irrevocably waives any objection to such
service of process and further irrevocably waives and agrees not to plead or
claim in any action or proceeding commenced hereunder that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
any Guaranteed Creditor to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against any Guarantor in any
other jurisdiction.
(c) Each Guarantor hereby irrevocably waives any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Guaranty brought in the
courts referred to in clause (b) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
(d) To the extent that such Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
Guarantor to the extent permitted by law hereby irrevocably waives such immunity
in respect of its obligations under this Guaranty and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this
subsection (d) shall have the fullest scope permitted under the United States
Foreign Sovereign Immunities Act of 1976, as amended, and are intended to be
irrevocable for purposes of such Act.
(e) If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder in any currency (the "Original Currency") into
another currency (the "Other Currency") the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Administrative
Agent could purchase the Original Currency with the Other Currency at 11:00 A.M.
on the second Business Day preceding that on which final judgment is given.
(f) The obligation of each Guarantor in respect to any sum due in the
Original Currency from it to any Guaranteed Creditor hereunder or held by such
Guaranteed Creditor shall, notwithstanding any judgment in any Other Currency,
be discharged only to the extent that, on the Business Day following receipt by
such Guaranteed Creditor of any sum adjudged to be so due in such Other Currency
such Guaranteed Creditor may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency; if the amount of the
Original Currency so purchased is less than the sum originally due to such
Guaranteed Creditor in the Original Currency, such Guarantor agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Guaranteed Creditor against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to any Guaranteed Creditor
in the Original Currency, such Guaranteed Creditor agrees to remit to such
Guarantor such excess.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
(g) Each Guarantor hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of this Guaranty, the transactions
contemplated hereby or the actions of the Collateral Agent or any other
Guaranteed Creditor in the negotiation, administration, performance or
enforcement hereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Address: MODUS MEDIA INTERNATIONAL
DOCUMENTATION SERVICES
------------------------ LIMITED (IRELAND)
------------------------
By
Name:
Title:
Address: MODUS MEDIA INTERNATIONAL
(IRELAND) LIMITED
------------------------
------------------------
Attention: By
Name:
Title:
Address: MODUS MEDIA INTERNATIONAL
HOLDINGS (AUSTRALIA) LIMITED
------------------------
------------------------
Attention: By
Name:
Title:
Acknowledged and Agreed:
NATIONSBANK OF TEXAS, N.A.
as Administrative Agent
By
----------------------
Name:
Title:
FOREIGN SUBSIDIARY GUARANTY
Dated December __, 1997
From
THE GUARANTOR NAMED HEREIN
as Guarantor
------------
in favor of
THE GUARANTEED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
GUARANTY
GUARANTY dated December 15, 1997 made by the Modus Media International
Kabushiki Kaisha, a Japanese company (the "Guarantor"), in favor of the
Guaranteed Creditors (as defined in the Credit Agreement referred to below).
PRELIMINARY STATEMENT. Modus Media International, Inc., a Delaware
corporation ("MMI") and the Guarantor (the Guarantor and MMI are referred to
herein collectively as the "Borrowers"), are parties to a Credit Agreement dated
as of December __, 1997 (such Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Credit
Agreement", the capitalized terms defined therein and not otherwise defined
herein being used herein as therein defined) with certain Banks party thereto,
Modus Media International Holdings, Inc. (Holdings") NationsBank of Texas, N.A.
("NationsBank"), as Administrative Agent for the Banks, NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities, Inc., as Arranger and Syndication Agent, and Citicorp USA, Inc., as
Documentation Agent, Collateral Agent and Multi-Currency Agent. The Guarantor
may receive a portion of the proceeds of the Loans under the Credit Agreement
and will derive substantial direct and indirect benefit from the transactions
contemplated by the Credit Agreement. It is a condition precedent to the making
of Loans and the issuance of Letters of Credit by the Banks under the Credit
Agreement from time to time that the Guarantor shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Banks to make Loans and to issue Letters of Credit under the Credit Agreement
from time to time, the Guarantor, hereby agrees as follows:
Section 1. Guaranty; Limitation of Liability. The Guarantor hereby
---------------------------------
absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at stated maturity, by acceleration or otherwise, of all
Obligations of MMI-Singapore (the "Relevant Credit Party") now or hereafter
existing under the Credit Documents, whether for principal, interest, fees,
expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and
agrees to pay any and all expenses (including counsel fees and expenses)
incurred by the Administrative Agent or any other Guaranteed Creditor in
enforcing any rights under this Guaranty and the other Credit Documents. Without
limiting the generality of the foregoing, each Guarantor's liability shall
extend to all amounts that constitute part of the Guaranteed Obligations and
would be owed by any Credit Party to the Administrative Agent or any other
Guaranteed Creditor under the Credit Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Credit Party.
Section 2. Guaranty Absolute. The Guarantor guarantees that the Guaranteed
-----------------
Obligations will be paid strictly in accordance with the terms of the Credit
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any other Guaranteed
Creditor with respect thereto. The Obligations of the Guarantor under this
Guaranty are independent of the Guaranteed Obligations or any other Obligations
of any other Credit Party under the Credit Documents, and a separate action or
actions may be brought and prosecuted against the Guarantor to enforce this
Guaranty, irrespective of whether any action is brought against any Borrower or
any other Credit Party or whether any Borrower or any other Credit Party is
joined in any such action or actions. The liability of the Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional irrespective of, and
the Guarantor hereby irrevocably waives any defenses it may now or hereafter
have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Credit Document
or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Credit Party under the Credit Documents, or any
other amendment or waiver of or any consent to departure from any Credit
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to any
Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Credit Party under the Credit
Documents or any other assets of any Credit Party or any of its
Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Credit Party or any of its Subsidiaries;
(f) any failure of any Guaranteed Creditor to disclose to any
Credit Party any information relating to the financial condition,
operations, properties or prospects of any other Credit Party now or in the
future known to any Guaranteed Creditor (each Guarantor waiving any duty on
the part of the Guaranteed Creditor to disclose such information);
(g) the failure of any other person to execute this Guaranty or any
other guaranty or agreement or the release or reduction of liability of any
Guarantor or other surety with respect to the Guaranteed Obligations; or
(h) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the Administrative
Agent or any other Guaranteed Creditor that might otherwise constitute a
defense available to, or a discharge of, any Credit Party or any other
guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Guaranteed Creditor or any other holder of
a Note upon the insolvency, bankruptcy or reorganization of the Relevant Credit
Party or otherwise, all as though such payment had not been made.
Section 3. Waivers and Acknowledgments. (a) The Guarantor hereby waives
---------------------------
promptness, diligence, notice of acceptance, presentment, demand for
performance, notice of nonperformance, default, acceleration, protest or
dishonor and any other notice with respect to any of the Guaranteed Obligations
and this Guaranty and any requirement that the Administrative Agent or any other
Guaranteed Creditor protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Credit Party
or any other Person or any Collateral.
(b) The Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
(c) The Guarantor hereby waives (i) any defense arising by reason of any
claim or defense based upon an election of remedies by the Guaranteed Creditors
which in any manner impairs, reduces, releases or otherwise adversely affects
the Guarantor's subrogation, reimbursement, exoneration, contribution or
indemnification rights or other rights to proceed against any Credit Party or
any other Person or any Collateral, and (ii) any defense based on any right of
set-off or counterclaim (other than a compulsory counterclaim) against or in
respect of such Guarantor's obligations hereunder.
(d) The Guarantor acknowledges that it will receive substantial direct
and indirect benefits from the financing arrangements contemplated by the Credit
Documents and that the waivers set forth in Section 2 and this Section 3 are
knowingly made in contemplation of such benefits.
Section 4. Subrogation. The Guarantor will not exercise any rights that it
-----------
may now or hereafter acquire against any Borrower or any other insider guarantor
that arise from the existence, payment, performance or enforcement of the
Guarantor's Obligations under this Guaranty or any other Credit Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of any Guaranteed Creditor against any Borrower or any other
insider guarantor or any Collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from any Borrower or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash and the
Commitments shall have expired or terminated. If any amount shall be paid to the
Guarantor in violation of the preceding sentence at any time prior to the later
of (i) the payment in full in cash of the Guaranteed Obligations and all other
amounts payable under this Guaranty and (ii) the Maturity Date, such amount
shall be held in trust for the benefit of the Guaranteed Creditors and shall
forthwith be paid to the Administrative Agent to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of the Credit
Documents, or to be held as Collateral for any Guaranteed Obligations or other
amounts payable under this Guaranty thereafter arising. If (i) the Guarantor
shall make payment to the Administrative Agent or any other Guaranteed Creditor
of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall be paid in
full in cash and (iii) the Maturity Date shall have occurred, the Administrative
Agent and the other Guaranteed Creditors will, at the Guarantor's request and
expense, execute and deliver to the Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Guarantor.
Section 5. Net Payments. (a) All payments made by the Guarantor hereunder
------------
will be made without set-off, counterclaim or other defense. Except as provided
in Section 5(b), all such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax imposed on or measured by
the net income or net profits of a Guaranteed Creditor pursuant to the laws of
the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Guaranteed Creditor is
located or any subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect thereto (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Guarantor
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Guaranty, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein. If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, the Guarantor agrees to reimburse each
Guaranteed Creditor, upon the written request of such Guaranteed Creditor, for
Taxes imposed on or measured by the net income or net profits of such Guaranteed
Creditor pursuant to the laws of the jurisdiction in which the principal office
or applicable lending office of such Guaranteed Creditor is located or under the
laws of any political subdivision or taxing authority of any such jurisdiction
in which the principal office or applicable lending office of such Guaranteed
Creditor is located and for any withholding of Taxes as such Guaranteed Creditor
shall determine are payable by, or withheld from, such Guaranteed Creditor in
respect of such amounts so paid to or on behalf of such Guaranteed Creditor
pursuant to the preceding sentence and in respect of any amounts paid to or on
behalf of such Guaranteed Creditor pursuant to this sentence. The Guarantor will
furnish to the Administrative Agent within 30
days after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by such Guarantor. The
Guarantor agrees to indemnify and hold harmless each Guaranteed Creditor, and
reimburse such Guaranteed Creditor upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Guaranteed Creditor.
(b) Each Guaranteed Creditor agrees to deliver to the Guarantor and the
Administrative Agent on or prior to the Effective Date, or in the case of a
Guaranteed Creditor that is an assignee or transferee of an interest under the
Credit Agreement pursuant to Section 1.13 or 12.04 thereof (unless the
respective Guaranteed Creditor was already a Guaranteed Creditor thereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Guaranteed Creditor, any form or certificate that
is required by any taxing authority to demonstrate such Guaranteed Creditor's
entitlement to an exemption from or reduction in Home Jurisdiction Withholding
Taxes (as defined below), if any, with respect to payments to be made under this
Guaranty including, if applicable (i) two accurate and complete original signed
copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Guaranteed Creditor's entitlement to a complete exemption
from United States withholding tax with respect to payments to be made under
this Guaranty, or (ii) if the Guaranteed Creditor is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit C to the Credit Agreement (any
such certificate, a "Section 4.04(b)(ii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Guaranteed Creditor's entitlement to a
complete exemption from United States withholding tax with respect to payments
to be made under this Guaranty, provided, however, that such Guaranteed Creditor
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shall have been advised in writing by the Guarantor of the form or certificate
applicable to it, determined by reference to the jurisdiction of organization
and applicable lending office of such Guaranteed Creditor set forth on Annex I
to the Credit Agreement, or in the case of a Guaranteed Creditor that is an
assignee or transferee of an interest under the Credit Agreement pursuant to
Sections 1.13 or 12.04 thereof (unless the respective Guaranteed Creditor was
already a Guaranteed Creditor thereunder immediately prior to such assignment or
transfer) the jurisdiction of organization and Applicable Lending Office of such
Guaranteed Creditor set forth in the Assignment and Assumption Agreement
pursuant to which it became a Guaranteed Creditor, or such other branch or
office of any Guaranteed Creditor designated by such Guaranteed Creditor from
time to time. If any form or document referred to in this subsection (b)
requires the disclosure of information greater than that required on the date
hereof by Forms 1001 or 4224 and which a Guaranteed Creditor reasonably
considers to be confidential, such Guaranteed Creditor shall give notice thereof
to the Guarantor and shall not be obligated to include in such form or document
such confidential information. In addition, each Guaranteed Creditor agrees that
from time to time after the Effective Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or inaccurate in any
material respect, upon the written request of the Guarantor (but only if the
Guaranteed Creditor remains lawfully able to do so) it will deliver to the
Guarantor and the Administrative Agent a new accurate and complete form or
certificate that is required by any taxing authority including, if applicable,
two new accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001, or Form
W-8 and a Section 4.04(b)(ii) Certificate, as the case may be, and such other
forms as may be required in order to confirm or establish the entitlement of
such Guaranteed Creditor to a continued exemption from or reduction in Home
Jurisdiction Withholding Taxes, if any, with respect to payments under this
Guaranty, or it shall immediately notify the Guarantor and the Administrative
Agent of its inability to deliver any such Form or Certificate, in which case
such Guaranteed Creditor shall not be required to deliver any such Form or
Certificate pursuant to this Section 5(b). Notwithstanding anything to the
contrary contained in Section 5(a), but subject to Section 12.04(b) of the
Credit Agreement and the immediately succeeding sentence, (x) the Guarantor
shall be entitled, to the extent it is required to do so by law, to deduct or
withhold income or similar taxes from interest, fees or other amounts payable
hereunder for the account of any Guaranteed Creditor to the extent that such
Guaranteed Creditor has not provided to the Guarantor the form or certificate
that establishes a complete exemption from, or entitlement to a reduction of,
such deduction or withholding and (y) the Guarantor shall not be obligated
pursuant to Section 5(a) to gross-up payments to be made to a Guaranteed
Creditor in respect of income or similar taxes imposed if (I) such Guaranteed
Creditor has not provided to the Guarantor the form or certificate required to
be provided to the Guarantor pursuant to this Section 5(b) or (II) in the case
of a payment, other than interest, to a Guaranteed Creditor described in clause
(ii) above, to the extent that the form or certificate does not establish a
complete exemption from, or entitlement to a reduction of, withholding of such
taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 5 and except as set forth in Section
12.04(b) of the Credit Agreement, the Guarantor agrees to pay additional amounts
and to indemnify each Guaranteed Creditor in the manner set forth in Section
5(a) (without regard to the identity of the jurisdiction requiring the deduction
or withholding) in respect of any amounts deducted or withheld by it as
described in the immediately preceding sentence as a result of any changes after
the Effective Date or, in the case of a Guaranteed Creditor that is an assignee
or transferee of an interest under the Credit Agreement pursuant to Sections
1.13 or 12.04(b) of the Credit Agreement (unless the respective Guaranteed
Creditor was already a Guaranteed Creditor immediately prior to such assignment
or transfer), after the date of such assignment or transfer to such Guaranteed
Creditor, in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes. "Home Jurisdiction Withholding Taxes"
means, in the case of the Guarantor, withholding taxes imposed by the
jurisdiction or political subdivision or taxing authority thereof or therein in
which such Guarantor is organized.
(c) Without prejudice to the survival of any other agreement of the
Guarantor hereunder or under any other Credit Document, the agreements and
obligations of the Guarantor contained in this Section 5 and in Section 12 shall
survive the payment in full of the Guaranteed Obligations and all other amounts
payable under this Guaranty.
Section 6. Representations and Warranties. The Guarantor hereby represents
------------------------------
and warrants as follows:
(a) The Guarantor (i) is a duly organized and validly existing
corporation under the laws of the jurisdiction of its organization, (ii) has the
corporate power and authority (including, without limitation, all governmental
licenses, permits and other approvals) to own or lease and operate its
properties and assets and to transact the business in which it is engaged and
presently proposes to engage and (iii) is duly qualified and is authorized to do
business and, if applicable, is in good standing in all jurisdictions where it
is required to be so qualified or licensed except where a failure to be so
qualified or authorized to do business would not have a Material Adverse Effect.
(b) The Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Guaranty. The Guarantor has duly executed and delivered this
Guaranty and this Guaranty constitutes the legal, valid and binding obligation
of the Guarantor enforceable against the Guarantor in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable voidable preference, bankruptcy, insolvency, reorganization,
moratorium or similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law).
(c) Neither the execution, delivery or performance by such Guarantor of
this Guaranty nor compliance by the Guarantor with the terms and provisions
thereof, nor the consummation of the transactions contemplated herein, (i) will
contravene any applicable provision of any law, statute, rule or regulation, or
any order, writ, injunction, judgment, award, determination or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the material terms, covenants,
conditions or provisions of, or constitute a default under, any material
contract, indenture, mortgage, deed of trust, lease, loan agreement, credit
agreement or any other material agreement or instrument to which the Guarantor
or any of its Subsidiaries is a party or by which it or any of its property or
assets are bound or to which it may be subject or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of the
Guarantor or any of its Subsidiaries or (iii) will violate any provision of the
Articles of Association or equivalent constituent documents of the Guarantor.
The Guarantor is not in violation of any such law, statute, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed of trust, lease,
loan agreement, credit agreement or other material agreement or other
instrument, the violation or breach of which could have a Material Adverse
Effect.
(d) There are no actions, investigations, litigations, suits or
proceedings pending or, to the knowledge of the Guarantor or any of its
Subsidiaries, threatened, before any court, governmental agency or arbitrator
with respect to the Guarantor or any of its Subsidiaries (i) that could
reasonably be expected to have a Material Adverse Effect or (ii) purports to
affect the legality, validity or enforceability of this Guaranty.
(e) Except as may have been obtained or made on or prior to the Initial
Borrowing Date (and which remain in full force and effect on the Initial
Borrowing Date), no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
notice to, any foreign or domestic governmental or public body or authority or
any other third party, or any subdivision thereof, is required to authorize or
is required in connection with (i) the due execution, delivery, recordation,
filing and performance by the Guarantor of this Guaranty or for the consummation
of the transactions contemplated hereby or (ii) the legality, validity, binding
effect or enforceability of this Guaranty.
(f) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(g) The Guarantor has, independently and without reliance upon the
Administrative Agent or any other Guaranteed Creditor and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty, and the Guarantor has
established adequate means of obtaining from any other Credit Parties on a
continuing basis information pertaining to, and is now and on a continuing basis
will be completely familiar with, the financial condition, operations,
properties and prospects of such other Credit Parties.
(h) The Guarantor is, and, after giving effect to the transactions
contemplated hereby, will be, Solvent.
Section 7. Covenants. The Guarantor covenants and agrees that, so long as
---------
any part of the Guaranteed Obligations shall remain unpaid (other than indemnity
and similar contingent obligations in respect of which no claim has been made
and no amount remains outstanding), any Letter of Credit shall be outstanding or
any Bank shall have any Commitment, unless the Required Banks shall otherwise
consent in writing, as follows:
(a) Payment of Taxes. The Guarantor will pay and discharge all taxes,
----------------
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, when due and all
lawful claims for sums that have become due and payable when due which, if
unpaid, might become a Lien not otherwise permitted under Section 8.03(a) of the
Credit Agreement or charge upon any properties of the Guarantor; provided that
--------
the Guarantor shall not be required to pay any such tax, assessment, charge,
levy or claim which is being contested in good faith and by proper proceedings
if it has maintained adequate reserves with respect thereto in accordance with
GAAP.
(b) Corporate Franchises. The Guarantor will do, or cause to be done, all
--------------------
things necessary to preserve and keep in full force and effect its existence,
legal structure, legal name, rights (charter or statutory), permits, licenses,
approvals, privileges, franchises and authority to do business.
(c) Compliance with Statutes, Etc. The Guarantor will comply with all
------------------------------
applicable laws, statutes, regulations, rules and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property
(including applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls) except where such noncompliance would not
have a Material Adverse Effect.
Section 8. Amendments, Etc. No amendment or waiver of any provision of this
----------------
Guaranty and no consent to any departure by the Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by the
Administrative Agent (on behalf of the Banks or the Required Banks, as the case
may be) and the Guarantor, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless in writing
-------- -------
and signed by all of the Guaranteed Creditors (other than any Bank that is, at
such time, a Defaulting Bank), (a) reduce or limit the liability of the
Guarantor hereunder or release the Guarantor hereunder, (b) postpone any date
fixed for payment hereunder or (c) change the number of Guaranteed Creditors
required to take any action hereunder.
Section 9. Notices, Etc. All notices and other communications provided for
-------------
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to the Guarantor, addressed to it at the address set forth below the
Guarantor's name on the signature pages hereof, if to the Administrative Agent
or any Bank, at its address specified in the Credit Agreement, or as to any
party at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall,
when mailed, telegraphed, telecopied or telexed, be effective when deposited in
the mails, delivered to the telegraph company, transmitted by telecopier or
confirmed by telex answerback, respectively. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Guaranty shall be effective as delivery of a manually executed counterpart
thereof.
Section 10. No Waiver; Remedies. No failure on the part of the
-------------------
Administrative Agent or any other Guaranteed Creditor to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 11. Right of Set-off. Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 9 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of such Section 9, each Guaranteed Creditor and each of its
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Guaranteed Creditor or such
Affiliate to or for the
credit or the account of the Guarantor against any and all of the Obligations of
such Guarantor now or hereafter existing under this Guaranty, whether or not
such Guaranteed Creditor shall have made any demand under this Guaranty and
although such Obligations may be unmatured. Each Guaranteed Creditor agrees
promptly to notify such Guarantor after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
-------- -------
validity of such set-off and application. The rights of each Guaranteed Creditor
and its respective Affiliates under this Section are in addition to other rights
and remedies (including, without limitation, other rights of set-off) that such
Guaranteed Creditor and its respective Affiliates may have.
Section 12. Indemnification. Without limitation on any other Obligations of
---------------
the Guarantor or remedies of the Guaranteed Creditors under this Guaranty, the
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless each Guaranteed Creditor from and against, and shall pay
on demand, any and all losses, liabilities, damages, costs, expenses and charges
(including the fees and disbursements of such Guaranteed Creditor's legal
counsel) suffered or incurred by such Guaranteed Creditor as a result of any
failure of any Guaranteed Obligations to be the legal, valid and binding
obligations of any Relevant Credit Party enforceable against such Relevant
Credit Party in accordance with their terms.
Section 13. Continuing Guaranty; Assignments under the Credit Agreement.
-----------------------------------------------------------
This Guaranty is a continuing guaranty and shall (a) remain in full force and
effect until the latest of (i) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty and (ii) Maturity
Date, (b) be binding upon the Guarantor, its successors and assigns and (c)
inure to the benefit of and be enforceable by the Administrative Agent and the
other Guaranteed Creditors and their successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Guaranteed
Creditor may assign or otherwise transfer all or any portion of its rights under
the Credit Agreement (including, without limitation, all or any portion of its
Commitments, the Loans owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
obligations and benefits in respect thereof granted to such Guaranteed Creditor
herein or otherwise, in each case as and to the extent provided in Section
12.04(b) of the Credit Agreement. The Guarantor shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Guaranteed Creditors.
Section 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
-------------------------------------------------------
This Guaranty shall be governed by, and construed in accordance with, the laws
of the State of New York.
(b) Any legal action or proceeding with respect to this Guaranty or any
other Credit Document may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, the Guarantor hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Guarantor hereby
further irrevocably waives any claim that any such courts lack jurisdiction over
the Guarantor, and agrees not to plead or claim, in any legal action or
proceeding with respect to this Guaranty or any other Credit Document brought in
any of the aforesaid courts, that any such court lacks jurisdiction over the
Guarantor. The Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Solely for the
purposes of this Agreement, to the full extent permitted by law the Guarantor
hereby appoints, as renewable invoices are paid in due course, CT Corporation
System with an office on the date hereof at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (the "Process Agent"), as its agent to receive on behalf of the Guarantor
and its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. The Guarantor
irrevocably consents to the service of process in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Process Agent, such service to become effective 30 days after
such mailing. The Guarantor hereby irrevocably waives any objection to such
service of process and further irrevocably waives and agrees not to plead or
claim in any action or proceeding commenced hereunder or under any other Credit
Document that service of process was in any way invalid or ineffective. Nothing
herein shall affect the right of any Guaranteed Creditor to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Guarantor in any other jurisdiction.
(c) The Guarantor hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (b) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(d) To the extent that the Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
Guarantor to the extent permitted by law hereby irrevocably waives such immunity
in respect of its obligations under this Agreement and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this
subsection (d) shall have the fullest scope permitted under the United States
Foreign Sovereign Immunities Act of 1976, as amended, and are intended to be
irrevocable for purposes of such Act.
(e) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in any currency (the "Original
Currency") into another currency (the "Other Currency") the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Administrative Agent could purchase the Original Currency with
the Other Currency at 11:00 A.M. on the second Business Day preceding that on
which final judgment is given.
(f) The obligation of the Guarantor in respect to any sum due in the
Original Currency from it to any Guaranteed Creditor hereunder or held by such
Guaranteed Creditor shall, notwithstanding any judgment in any Other Currency,
be discharged only to the extent that, on the Business Day following receipt by
such Guaranteed Creditor of any sum adjudged to be so due in such Other
Currency, such Guaranteed Creditor may, in accordance with normal banking
procedures, purchase the Original Currency with such Other Currency; if the
amount of the Original Currency so purchased is less than the sum originally due
to such Guaranteed Creditor in the Original Currency, the Guarantor agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Guaranteed Creditor against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to any Guaranteed Creditor
in the Original Currency, such Guaranteed Creditor agrees to remit to the
Guarantor such excess.
(g) The Guarantor hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of this Agreement or any of the
other Credit Documents, the transactions contemplated thereby or the actions of
the Administrative Agent or any other Guaranteed Creditor in the negotiation,
administration, performance or enforcement thereof.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Address: MODUS MEDIA INTERNATIONAL
________________ KABUSHIKI KAISHA
________________
By
Attention: Name:
Title:
Acknowledged and Agreed:
NATIONSBANK OF TEXAS, N.A.
as Administrative Agent
By_____________________________
Name:
Title:
MODUS MEDIA INTERNATIONAL
Borrowing Base Certificate
As of November 30, 1997
(Calculated on 12/15/97)
(U.S.$000s)
U.S. Japan Singapore Scotland Total
Accounts Receivable
Eligible A/R -- -- -- -- --
Advance Rate 85% 85% 85% 85% 85%
A/R Availability - sub total -- -- -- -- --
Inventory
Total Inventory 15,626 -- -- -- 15,626
---------------
Eligible Inventory 13,288 -- -- -- 13,288
Advance Rate 60% 60% 60% 60% 60%
Inventory Availability 7,937 -- -- -- 7,937
Fixed Assets
Eligible Fixed Assets (OLV) N/A N/A
Advance Rate 75% 75% 75%
Fixed Asset Availability 5,000 5,000
Other Assets
CST Guarantee 10,000 10,000
Total Availability 12,937 10,000 -- -- 22,937
CITICORP North America
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.:
Pursuant to the provisions of the credit agreement, the undersigned officer of
Modus Media International (the "Company") certifies the truth, accuracy and
completeness of the attached information with respect to the accounts receivable
and inventory of the company as of close of business on 11/30/97.
MODUS MEDIA INTERNATIONAL
Borrowing Base Certificate
As of November 30, 1997
(U.S.$000s)
U.S. Japan Singapore Scotland Total
Accounts Receivable
Beginning A/R Balance:
Plus: Sales
Minus: Cash Collection
Plus/Minus: Net Debits/Credits
Ending A/R Balance
Balance Sheet --
Gross Accounts Receivable -- --
Less: Past Due & Ineligibles --
-----------------------------
Past Dues greater than 60 Days --
Credit in Past Due --
Total Past Dues --
Ineligibles --
-----------
Chargeback --
Contras --
Cross-age (50%) --
Intercompany A/R --
Non Trade A/R --
Unbilled A/R --
Other (estimated 5%) -- -- -- --
Total Ineligible -- -- -- --
Total Past Dues & Ineligibles -- -- -- --
Eligible A/R -- -- -- --
Advance Rate 85% 85% 85% 85% 85%
A/R Availability - Sub Total -- -- -- --
MODUS MEDIA INTERNATIONAL
Borrowing Base Certificate
As of November 30, 1997
(Calculated on 12/15/97)
(U.S.$000s)
U.S. Japan Singapore Scotland Total
Inventory
Balance Sheet: Net 24,612 24,612
Gross 15,626 15,626
-----
Less: Ineligible --
Unrealized Profit --
Inventory in Transit --
Inventory @ Third Party --
Transfer Pricing 1,147
Aged Inventory greater
than Six Months -- --
Obsolete & Slow Moving 1,251 1,251
Other: Not Pledgable -- --
Retention of Titles --
Total Ineligible 2,398 2,398
Eligible Inventory 13,228 13,228
Advance Rate 60% 60% 60% 60% 60%
Inventory Availability 7,937 -- -- -- 7,937
MODUS MEDIA INTERNATIONAL
Borrowing Base Certificate
As of September 30, 1997
Calculated by NationsBank
-------------------------
(U.S.$000s)
U.S.
Accounts Receivable
Beginning A/R Balance:
Plus: Sales
Minus: Cash Collection
Plus/Minus: Net Debits/Credits
Ending A/R Balance
Amount % Aging Difference
Gross Accounts Receivable 53,036 100.0% 66,494 13,458 Due to TLC write offs
Less: Past Dues & Ineligibles
------------------------------
Past Dues greater than 60 Days 8,301 15.7%
Credit in Past Due 260 0.5%
Total Past Dues 8,561 16.1%
Ineligibles
-----------
Chargeback 0.0%
Contras 765 1.4%
Cross-age (50%) 51 0.1%
Intercompany A/R 0.0%
Amts. Exceeding Customer Limit 0.0%
Unbilled A/R 0.0%
Other: Foreign 1,474 2.8%
Total Ineligible 2,290 4.3%
Total Past Dues & Ineligibles 10,851 20.5%
Eligible A/R 42,185 79.5%
Advance Rate 85%
A/R Availability - Sub Total 35,857 67.6%
Dilution 5.9% With TLC
2.9% Without TLC
Turnover 69 days
EXHIBIT H
FORM OF BORROWING BASE CERTIFICATE
MODUS MEDIA INTERNATIONAL
Borrowing Base Certificate
As of November 30, 1997
(Calculated on 12/15/97)
(U.S.$000s)
U.S. Japan Singapore Scotland Total
Accounts Receivable
Eligible A/R -- -- -- -- --
Advance Rate 85% 85% 85% 85% 85%
A/R Availability - sub total -- -- -- -- --
Inventory
Total Inventory 15,626 -- -- -- 15,626
---------------
Eligible Inventory 13,288 -- -- -- 13,288
Advance Rate 60% 60% 60% 60% 60%
Inventory Availability 7,937 -- -- -- 7,937
Fixed Assets
Eligible Fixed Assets (OLV) N/A N/A
Advance Rate 75% 75% 75%
Fixed Asset Availability 5,000 5,000
Other Assets
CST Guarantee 10,000 10,000
Total Availability 12,937 10,000 -- -- 22,937
CITICORP North America
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.:
Pursuant to the provisions of the credit agreement, the undersigned officer of
Modus Media International (the "Company") certifies the truth, accuracy and
completeness of the attached information with respect to the accounts receivable
and inventory of the company as of close of business on 11/30/97.
EXHIBIT I
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Date: _________ ___, ____
Reference is made to the Credit Agreement dated as of December 15, 1997,
among the Borrowers, the banks from time to time party thereto, NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities, Inc., as Arranger and Syndication Agent, Citicorp USA,
Inc., as Multi-Currency Agent, Documentation Agent and Collateral Agent, and
NationsBank of Texas, N.A., as Administrative Agent (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"). Unless defined in
Annex I attached hereto, terms defined in the Credit Agreement are used herein
as therein defined. ____________ (the "Assignor") and ____________ (the
"Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without recourse
and without representation or warranty (other than as expressly provided
herein), and the Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obligations under the Credit
Agreement as of the date hereof which represents the percentage interest
specified in Item 2 of Annex I (the "Assigned Share") of all of the outstanding
rights and obligations under the Credit Agreement relating to the facility
listed in Item 2 of Annex 1, including, without limitation, all rights and
obligations with respect to the Assigned Share of the Total Loan Commitment and
of any outstanding Term Loans, Revolving Loans, Swingline Loans and Letters of
Credit.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any liens or security interests; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers or any of their Subsidiaries or the performance or observance by the
Borrowers or any of their Subsidiaries of any of their respective obligations
under the Credit Agreement or the other Credit Documents or any other instrument
or document furnished pursuant thereto; and (iv) attaches the Note or Notes held
by the Assignor and requests that the Agent exchange such Note or Notes for a
new Note or Notes payable to the order of the Assignee in an amount equal to the
Commitments assumed by the Assignee pursuant hereto or new Notes payable to the
order of the Assignee in an amount equal to the Commitments assumed by the
Assignee pursuant hereto and the Assignor in an amount equal to the Commitments
retained by the Assignor under the Credit Agreement, respectively, as specified
on Annex I hereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement and the other Credit Documents, together with copies of the financial
statements referred to therein and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Assumption Agreement; (ii) agrees that it will,
independently and without reliance upon the Administrative Agent, the Assignor
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) confirms that it is an
Eligible Transferee; (iv) appoints and authorizes the Administrative Agent and
the Collateral Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Credit Documents as are
delegated to the Administrative Agent and the Collateral Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; [and]
(v) agrees that it will perform all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank in accordance with
such terms[; and (vi) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's status for purposes
of determining exemption from United States withholding taxes with respect to
all payments to be made to the Assignee under the Credit Agreement or such other
documents as are necessary to indicate that all such payments are subject to
such taxes at a rate reduced by an applicable tax treaty]./1/
4. Following the execution of this Assignment and Assumption Agreement by
the Assignor and the Assignee, an executed original hereof (together with all
attachments) will be delivered to the Administrative Agent. The effective date
of this Assignment and Assumption Agreement shall be the date on which (a) it is
executed by the Assignor and the Assignee, (b) to the extent required by the
Credit Agreement, the consent of the Administrative Agent and the Borrowers is
received, (c) the Administrative Agent receives the assignment fee referred to
in Section 12.04(b) of the Credit Agreement and (d) the registration of the
transfer on the Register as provided in Section 7.12 of the Credit Agreement is
made, or such later date as otherwise specified in Item 3 of Annex I (such date
of effectiveness being the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a Bank thereunder and
under the other Credit Documents and (ii) the Assignor shall, to the extent
provided in this Assignment and Assumption Agreement, relinquish its rights and
be released from its obligations under the Credit Agreement and the other Credit
Documents.
6. It is agreed that upon the effectiveness hereof, the Assignee shall be
entitled to (x) all interest on the Assigned Share of the Loans at the rates
specified in Item 4 of Annex I, (y) all Commitment Fees (if applicable) on the
Assigned Share of the respective Commitments at the rate specified in Item 5 of
Annex I and (z) all Letter of Credit Fees (if applicable) on the Assignee's
participation in all Letters of Credit at the rate specified in Item 6 of Annex
I, which, in each case, accrue on and after the Settlement Date, such interest
and, if applicable, Commitment Fees and Letter of Credit Fees, to be paid by the
Administrative Agent directly to the Assignee. It is further
-------------------------
1 Include if the Assignee is organized under the laws of a jurisdiction
outside the United States.
3
agreed that all payments of principal made on the Assigned Share of the Loans
which occur on and after the Settlement Date will be paid directly by the
Administrative Agent to the Assignee. Upon the Settlement Date, the Assignee
shall pay to the Assignor an amount specified by the Assignor in writing which
represents the Assigned Share of the principal amount of the respective Loans
made by the Assignor pursuant to the Credit Agreement which are outstanding on
the Settlement Date, net of any closing costs, and which are being assigned
hereunder. The Assignor and the Assignee shall make all appropriate adjustments
in payments under the Credit Agreement for periods prior to the Settlement Date
directly between themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Annex I to this Assignment and Acceptance by telecopier shall be
effective as delivery of a manually executed counterpart of this Assignment and
Acceptance.
4
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution also being made
on Annex I hereto.
[NAME OF ASSIGNOR],
as Assignor
By___________________________
Name:
Title:
[NAME OF ASSIGNEE],
as Assignee
By___________________________
Name:
Title:
[Acknowledged and Agreed:
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
By_________________________
Name:
Title:
MODUS MEDIA INTERNATIONAL, INC.
By_________________________
Name:
Title:]/2/
--------------------
2 The consent of the Administrative Agent and the Borrowers is required only
in connection
--------------------------------------------------------------------------------
with assignments pursuant to clause (y) of Section 12.04(b)
of the Credit Agreement (which consent shall not be unreasonably withheld
or delayed).
ANNEX I TO ASSIGNMENT
AND ASSUMPTION AGREEMENT
ANNEX I FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Date of Assignment and Assumption Agreement:
2. Amounts (as of the date set forth in item #1 above):
Total Revolving
Loan Commitment
---------------
a. Aggregate Amount for all Banks $_________
b. Assigned Share _________%
c. Amount of Assigned Share $_________
3. Settlement Date:
4. Rate of Interest
to the Assignee: As set forth in Section 1.08 of the Credit Agreement
(unless otherwise agreed to by the Assignor and the
Assignee)
5. Commitment
Fee Rate: As set forth in Section 3.01 of the Credit Agreement
(unless otherwise agreed to by the Assignor and the
Assignee)
-------------------
3 The Borrowers and the Administrative Agent shall direct the entire amount
of the interest to the Assignee at the rate set forth in Section 1.08 of
the Credit Agreement, with the Assignor and Assignee effecting any agreed
upon sharing of interest through payments by the Assignee to the Assignor.
4 The Borrowers and the Administrative Agent shall direct the entire amount
of the interest
6. Letter of Credit
--------------------------------------------------------------------------------
to the Assignee at the rate set forth in Section 3.01(a) of
the Credit Agreement, with the Assignor and Assignee effecting any agreed
upon sharing of interest through payments by the Assignee to the Assignor.
4
Fee Rate: As set forth in Section 3.01(b) of the Credit
Agreement (unless otherwise agreed to by the
Assignor and the Assignee)5
Effective Date (if other than date of acceptance by Agent):
6
________ __, 199_
[NAME OF ASSIGNOR], as Assignor
By__________________________________
Name:
Title:
Dated: _________ __, 199_
[NAME OF ASSIGNEE], as Assignee
By__________________________________
Name:
--------------------------
5 The Borrowers and the Administrative Agent shall direct the entire amount
of the interest to the Assignee at the rate set forth in Section 3.01(b) of
the Credit Agreement, with the Assignor and Assignee effecting any agreed
upon sharing of interest through payments by the Assignee to the Assignor.
6 This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance to the Agent.
5
Dated: , 199_
Domestic Lending Office:
Eurodollar Lending Office:
EXHIBIT J-1
FORM OF INTERCOMPANY PROMISSORY NOTE
[Local Currency]___________
________ ___, ____
FOR VALUE RECEIVED, ______________________, a ____________
corporation (the "Payor"), HEREBY PROMISES TO PAY ON DEMAND to the order of
____________, or its registered assigns (the "Payee"), [LOCAL CURRENCY IN WORDS]
or such lesser principal amount as may from time to time be outstanding
hereunder and be owing by the Payor to the Payee in lawful money of the
[Applicable Jurisdiction] in immediately available funds, at such location in
the [Applicable Jurisdiction] as the Payee shall from time to time designate.
1. The Payor promises also to pay interest on the unpaid
principal amount from time to time outstanding hereunder in like money at said
office from the date hereof until paid at such rate per annum as shall be agreed
upon from time to time by the Payor and Payee.
2. This Intercompany Promissory Note is one of the
Intercompany Notes referred to in the Credit Agreement dated as of ________ __,
1997, among Modus Media International, Inc., a Delaware corporation ("MMI"),
Modus Media International Limited, an English company ("MMI-UK"), Modus Media
International Ireland (Holdings), an Irish company, ("Ireland Holdings"), Modus
Media International Pte. Ltd., a Singapore company ("MMI-Singapore"), Modus
Media International Pty. Ltd., an Australian company ("MMI-Australia") and Modus
Media International B.V., a Netherlands company ("MMI-Netherlands" and, together
with MMI-UK, Ireland Holdings, MMI-Singapore, MMI-Australia and MMI-Netherlands,
the "Local Currency Borrowers"; MMI and the Local Currency Borrowers are
referred to herein collectively as the "Borrowers"), Modus Media International
Holdings, Inc., the lenders from time to time party thereto, NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities, LLC, as Arranger and Syndication Agent, Citibank, N.A.,
as Multi-Currency Agent, Documentation Agent and Collateral Agent, and
NationsBank, N.A., successor in interest by merger with NationsBank of Texas,
N.A., as Administrative Agent (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"; terms defined in the Credit Agreement
and not otherwise defined herein being used herein as therein defined) and is
subject to the terms thereof, and shall be pledged by the Payee pursuant to the
Security Agreement. The Payor hereby acknowledges and agrees that the Collateral
Agent pursuant to
2
and as defined in the Security Agreement may exercise all rights provided
therein with respect to this Intercompany Promissory Note.
3. The indebtedness evidenced by this Intercompany
Promissory Note (together with any interest or other amounts payable hereunder
or in connection herewith, the "Subordinated Indebtedness") is, and shall be,
subordinate and subject in right of payment, to the extent and in the manner
hereinafter set forth and in accordance with the provisions of Section 8.14(i)
of the Credit Agreement, as amended by that certain Seventh Amendment to Credit
Agreement and Waiver dated as of June , 1999, to the prior payment in full in
cash of all obligations of the Payor now or hereafter existing under or in
respect of:
(a) the Credit Documents, whether for principal, interest
(including, without limitation, interest accruing after the filing of a
petition initiating any proceeding referred to in paragraph 7 below,
whether or not such interest accrues after the filing of such petition
for purposes of the U.S. Federal Bankruptcy Code or is an allowed claim
in such proceeding), fees, commissions, expenses or otherwise; and
(b) any and all amendments, modifications, extensions,
refinancings, renewals and refundings of the obligations referred to in
clause (a) of this paragraph 3 that are made in accordance with the
applicable terms thereof (all such obligations under clauses (a) and
(b) of this paragraph being, collectively, the "Senior Indebtedness").
For the purposes of the provisions hereof, the Senior Indebtedness shall not be
deemed to have been paid in full until the date of payment in full in cash of
the aggregate principal amount of all outstanding Loans and all interest accrued
thereon, all fees and expenses then due and payable in connection therewith and
all other Senior Indebtedness then due and payable.
4. So long as the Senior Indebtedness shall not have been
paid in full, the Payee shall not (a) ask, demand, ▇▇▇ for, take or receive from
the Payor, directly or indirectly, in cash or other property or by setoff or in
any manner (including, without limitation, from or by way of collateral),
payment of all or any of the Subordinated Indebtedness, except as and to the
extent expressly permitted hereunder and under Section 8.14 of the Credit
Agreement, as amended by that certain Seventh Amendment to Credit Agreement and
Waiver dated as of June , 1999, or (b) commence, or join with any creditor other
than the Administrative Agent or any Bank in commencing, or assist the Payor in
commencing, any proceeding referred to in paragraph 7 below.
5. Upon the occurrence and during the continuance of a
Default, no payment or distribution of any assets of the Payor of any kind or
character (including, without limitation, any payment that may be payable by
reason of any other indebtedness of the Payor
3
being subordinated to payment of the Subordinated Indebtedness) shall be made by
or on behalf of the Payor for or on account of any Subordinated Indebtedness,
and the Payee shall not ask, demand, ▇▇▇ for, take or receive from the Payor,
directly or indirectly, in cash or other property or by setoff or in any other
manner (including, without limitation, from or by way of collateral), payment of
all or any of the Subordinated Indebtedness, unless and until such Default shall
have been cured or waived in writing or such Senior Indebtedness shall have been
paid in full, after which the Payor may resume making any and all required
payments in respect of the Subordinated Indebtedness (including any missed
payments).
6. The Payee shall promptly notify the Administrative Agent
of the occurrence of any default under the Subordinated Indebtedness.
7. In the event of any dissolution, winding up,
liquidation, arrangement, reorganization, adjustment, protection, relief or
composition of the Payor or its debts, whether voluntary or involuntary, in any
bankruptcy, insolvency, arrangement, reorganization, receivership, relief or
other similar case or proceeding under any federal (whether U.S. or otherwise)
or state bankruptcy or similar law or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of the Payor or
otherwise, the Banks shall be entitled to receive payment in full of all of the
Senior Indebtedness before the Payee is entitled to receive any payment or
distribution of any kind or character on account of all or any of the
Subordinated Indebtedness, and, to that end, any payment or distribution of any
kind (whether in cash, property or securities) that otherwise would be payable
or deliverable upon or with respect to the Subordinated Indebtedness in any such
dissolution, winding up, liquidation, case, proceeding, assignment, marshalling
or otherwise (including, without limitation, any payment that may be payable by
reason of any other indebtedness of the Payor being subordinated to payment of
the Subordinated Indebtedness) shall be paid or delivered directly to the
Administrative Agent for the account of the Banks for application (in the case
of cash) to, or as collateral (in the case of noncash property or securities)
for, the payment or prepayment of the Senior Indebtedness until all of the
Senior Indebtedness shall have been paid in full.
8. Subject to the provisions of Section 8.14(i) of the
Credit Agreement, as amended by that certain Seventh Amendment to Credit
Agreement and Waiver dated as of June , 1999, in the event that any Subordinated
Indebtedness is declared due and payable before its stated maturity, if any, the
Banks shall be entitled to receive payment in full of all amounts due or to
become due on or in respect of all of the Senior Indebtedness before the Payee
is entitled to receive any payment (including, without limitation, any payment
that may be payable by reason of the payment of any other indebtedness of the
Payor being subordinated to the payment of the Subordinated Indebtedness) by the
Payor on account of the Subordinated Indebtedness.
4
9. Until such time as the Senior Indebtedness has been paid
in full, if any proceeding referred to in paragraph 7 above is commenced by or
against the Payor:
(a) the Administrative Agent is hereby irrevocably
authorized and empowered (in its own name or in the name of the Payee
or otherwise), but shall have no obligation, to demand, ▇▇▇ for,
collect and receive every payment or distribution referred to in
paragraph 7 above and give acquittance therefor, and to file claims and
proofs of claim and take such other action (including, without
limitation, voting the Subordinated Indebtedness or enforcing any lien
or any other security interest securing payment of the Subordinated
Indebtedness) as it may deem necessary or advisable for the exercise or
enforcement of any of the rights or interests of the Administrative
Agent hereunder; and
(b) the Payee shall duly and promptly take such action as
the Administrative Agent may request (i) to collect the Subordinated
Indebtedness for the account of the Banks and to file appropriate
claims or proofs of claim in respect of the Subordinated Indebtedness,
(ii) to execute and deliver to the Administrative Agent such powers of
attorney, assignments or other instruments as the Administrative Agent
may request in order to enable the Administrative Agent to enforce any
and all claims with respect to, and any liens and any other security
interests securing payment of, the Subordinated Indebtedness and (iii)
to collect and receive any and all payments or distributions that may
be payable or deliverable upon or with respect to the Subordinated
Indebtedness.
10. The Payor agrees that it will not make any payment upon
or with respect to any of the Subordinated Indebtedness, or take any other
action, in contravention of the provisions of this Intercompany Promissory Note.
11. All payments or distributions upon or with respect to
the Subordinated Indebtedness that are received by the Payee contrary to the
provisions of this Intercompany Promissory Note shall be received in trust for
the benefit of the Banks, shall be segregated from other property or funds held
by the Payee and shall be forthwith paid over or delivered directly to the
Administrative Agent for the account of the Banks in the same form as so
received (with any necessary endorsement) to be applied (in the case of cash)
to, or held as collateral (in the case of noncash property or securities) for,
the payment or prepayment of the Senior Indebtedness in accordance with the
terms of the Credit Documents.
12. The Administrative Agent is hereby authorized to demand
specific performance of these provisions, whether or not the Payor shall have
complied with any of the provisions hereof applicable to it, at any time when
the Payee shall have failed to comply with any of these provisions. The Payee
hereby irrevocably waives any defense based on the
5
adequacy of a remedy at law, which might be asserted as a bar to such remedy of
specific performance.
13. Other than as and to the extent permitted in the Credit
Agreement, the Payee will not:
(a) (i) cancel or otherwise discharge any of the
Subordinated Indebtedness (except upon payment in full of the Senior
Indebtedness); (ii) convert or exchange any of the Subordinated
Indebtedness into or for any other indebtedness or equity interest; or
(iii) subordinate any of the Subordinated Indebtedness to any
indebtedness of the Payor other than the Senior Indebtedness;
(b) sell, assign, pledge, encumber or otherwise dispose of
any of the Subordinated Indebtedness other than the pledge of the
instruments evidencing the Subordinated Indebtedness to the Collateral
Agent for its benefit and the benefit of the Banks; or
(c) permit the terms of any of the Subordinated Indebtedness
to be changed in such a manner as could reasonably be expected to have
an adverse effect upon the rights or interests of the Administrative
Agent or any Bank hereunder.
14. No payment or distribution to the Administrative Agent
pursuant to the provisions hereof shall entitle the Payee to exercise any rights
of subrogation in respect thereof until the Senior Indebtedness shall have been
paid in full provided however that the Payee shall not be precluded from
exercising its rights to receive payment from the Payor hereunder until the
payment in full of the debt evidenced by this Intercompany Promissory Note.
15. In accordance with the terms and conditions of the
Credit Agreement, the holders of the Senior Indebtedness may, at any time and
from time to time, without any consent of or notice to the Payee or any other
holder of the Subordinated Indebtedness and without impairing or releasing the
obligations of the Payee hereunder:
(a) change the time, manner or place of payment of, or any
other term of, all or any of the Senior Indebtedness (including any
change in the rate of interest thereon) or any other obligations of the
Payor or the Borrowers under the Credit Documents, or amend or waive or
consent to any departure from any Credit Document, including, without
limitation, any increase in the Obligations resulting from the
extension of additional credit to the Borrowers or any of their
Subsidiaries or otherwise;
6
(b) take, exchange, release or not perfect any collateral,
or take, release, amend, waive or consent to any departure from any
other guaranty, or all or any of the Senior Indebtedness;
(c) apply collateral, or proceeds thereof, to all or any of
the Obligations, or sell or otherwise dispose of any collateral for all
or any of the Obligations or any other Obligations of the Borrowers or
any of their Subsidiaries under the Credit Documents or any other
assets of the Borrowers or any of their Subsidiaries;
(d) consent to the change, restructuring or termination of
the corporate structure or existence of the Borrowers or any of their
Subsidiaries;
(e) fail to disclose to the Borrowers any information
relating to the financial condition, operations, properties or
prospects of the Borrowers now or in the future known to any holder of
Senior Indebtedness (the Payor waiving any duty on the part of each
such holder of Senior Indebtedness to disclose such information);
(f) exercise or refrain from exercising any rights against
the Payor or any other Person; and
(g) apply to the Senior Indebtedness any sums from time to
time received.
16. The foregoing provisions regarding subordination are and
are intended solely for the purpose of defining the relative rights of the
holders of the Senior Indebtedness, on the one hand, and the holders of the
Subordinated Indebtedness, on the other hand. Such provisions are for the
benefit of the holders of the Senior Indebtedness and shall inure to the benefit
of, and shall be enforceable by, the Administrative Agent and the Banks,
directly against the holders of the Subordinated Indebtedness, and no holder of
the Senior Indebtedness shall be prejudiced in its right to enforce
subordination of any of the Subordinated Indebtedness by any act or failure to
act by the Payor or anyone in custody of its property or assets. Nothing
contained in the foregoing provisions is intended to or shall impair, as between
the Payor and the holders of the Subordinated Indebtedness, the obligations of
the Payor to such holders.
17. The Payee is hereby authorized (but not required) to
record all loans and advances made by it to the Payor (all of which shall be
evidenced by this Intercompany Promissory Note), and all repayments or
prepayments thereof, in its books and records, such books and records
constituting prima facie evidence of the accuracy of the information contained
therein provided, however, that the failure of the Payee to so record such
information shall not affect the Payor's obligations hereunder.
7
18. The undersigned agrees to pay on demand all reasonable
costs and expenses (including reasonable fees and expenses of counsel) incurred
by the Payee in enforcing this Intercompany Promissory Note.
19. The Payor hereby waives presentment for payment,
demands, notice of dishonor and protest of this Intercompany Promissory Note and
further agrees that none of the terms or provisions hereof may be waived,
altered, modified or amended, except as the Payee may consent in a writing duly
signed for and on their behalf.
20. No amendment, waiver or modification of this
Intercompany Promissory Note (including, without limitation, the subordination
provisions hereof), and no consent to any departure herefrom, shall adversely
affect the Administrative Agent or the Banks in any manner unless the same shall
be in writing and signed by the Administrative Agent and the Banks, and then
such waiver, modification or consent shall be effective only in the specific
instance and for the specific purpose for which given.
21. All rights and interests of the Administrative Agent and
the Banks hereunder, and all agreements and obligations of the Payee and Payor
under this Intercompany Promissory Note, shall remain in full force and effect
irrespective of:
(a) any lack of validity or enforceability of the
Credit Agreement, the Notes, and any other Credit Document or any other
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations of the
Borrowers under any Credit Document, or any other amendment or waiver
of or any consent to departure from the Credit Agreement or the Notes
or any other Credit Document, including, without limitation, any
increase in such Obligations resulting from the extension of additional
credit to the Borrowers or any of their Subsidiaries or otherwise;
(c) any taking, exchange, release or nonperfection of
any other collateral or any taking, release or amendment or waiver of
or consent to any departure from any guaranty, for all or any of the
Obligations of the Borrowers under any Credit Document;
(d) any manner of application of collateral, or
proceeds thereof, to all or any of the Obligations of the Borrowers
under any Credit Document, or any manner of sale or other disposition
of any collateral for all or any of such Obligations or any other
assets of the Borrowers or any of their Subsidiaries;
(e) any change, restructuring or termination of the
structure or existence of the Borrowers or any of their Subsidiaries;
(f) any other circumstances (including, without
limitation, any statute of limitations to the fullest extent permitted
by applicable law or any existence of or reliance on any representation
by the Administrative Agent or any Bank) which might otherwise
constitute a defense available to, or a discharge of, the Borrowers or
any other guarantor or surety or the Payee.
This Intercompany Promissory Note shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations of the Borrowers under any Credit Document is rescinded or must
otherwise be returned by the Borrowers, the Administrative Agent or any Bank
upon the insolvency, bankruptcy or reorganization of the Payor, the Borrowers or
otherwise, all as though such payment had not been made.
8
22. All notices and other communications provided for
hereunder shall be in writing (including telecopier, telegraphic, telex or cable
communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered
to it, if to the Payee, the Payor, the Administrative Agent or any Bank, at its
address specified in the Credit Agreement, or as to each party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
23. This Intercompany Promissory Note is a continuing
agreement and shall (i) remain in full force and effect until the payment in
full of the debt evidenced hereby, (ii) be binding upon the Payee, the Payor and
their respective successors and assigns, and (iii) inure to the benefit of, and
be enforceable by, the Administrative Agent, the Banks and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), any Bank may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitment, the Loan and any Notes
to be held by it) to any other person or entity shall thereupon become vested
with all the rights in respect thereof granted to such Bank herein or otherwise,
subject, however, to the provisions of Section 11 (concerning the Agent) of the
Credit Agreement.
24. No failure on the part of the Administrative Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
25. No failure or delay on the part of the Payee in
exercising any of its rights, powers or privileges hereunder shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege. The remedies
provided herein are cumulative and are not exclusive of any remedies provided by
law.
26. All payments under this Intercompany Promissory Note
shall be made without counterclaim or deduction of any kind.
27. THIS INTERCOMPANY PROMISSORY NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.
28. By its acceptance hereof in the space provided below,
the Payee hereby (1) acknowledges and agrees that this Intercompany Promissory
Note amends and restates in its
9
entirety each and every other promissory note heretofore executed by the
undersigned in favor of the Payee and (2) unconditionally and irrevocably
waives, to the extent permitted by law, all right to trial by jury in any
action, proceeding or counterclaim arising out of or relating to this
Intercompany Promissory Note, any other Credit Document or the transactions
contemplated thereby.
[NAME OF PAYOR]
By
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Name:
Title:
Pay to the order of
[NAME OF PAYEE]
By
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Name:
Title:
10
ADVANCE AND PAYMENTS OF PRINCIPAL
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Amount of
Date Amount of Principal Paid Unpaid Principal Notation
Advance or Prepaid Balance Made by
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Exhibit K
.
FORM OF PROCESS AGENT LETTER
[Letterhead of CT Corporation]
December __, 1997
To: Each of the Lenders party to the
Credit Agreement referred to below
and to NationsBank of Texas, N.A., as
Administrative Agent for such Lenders
Corporate Software and Technology Holdings, Inc., Corporate Software
--------------------------------------------------------------------
and Technology, Inc., Corporate Software and Technology GmbH, Topsoft
----------------------------------------------------------------------
Mailorder GmgH, Corporate Software and Technology Limited and
-------------------------------------------------------------
International Software Limited
------------------------------
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of
December __, 1997 (as amended, supplemented or otherwise modified from time to
time, being the "Credit Agreement", the terms defined therein being used herein
----------------
with the same meaning) among Corporate Software and Technology Holdings, Inc.
and Corporate Software and Technology, Inc. as the Borrowers, various banks
party thereto (the [_]Lenders[_]), NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc., as
Arranger and Syndication Agent and NationsBank of Texas, N.A., as Administrative
Agent for the Lenders. Unless otherwise defined herein, capitalized terms used
in this Certificate shall have the meanings set forth in the Credit Agreement.
Pursuant to [Section 5.23] of the Credit Agreement, the Borrowers have
appointed the undersigned (with an office on the date hereof at ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇) as Process Agent to receive on behalf
of the Borrowers and their property service of copies of the summons and
complaint and any other process which may be served in any action or proceeding
in any New York State or federal court sitting in New York City arising out of
or relating to the Credit Agreement, any of the Transaction Documents or any
other documents contemplated by the Credit Agreement.
The undersigned hereby accepts such appointment as Process Agent and agrees
with each of you that (i) the undersigned will not terminate the undersigned's
agency as such Process Agent prior to 2 years after termination of Credit
Agreement (and hereby acknowledges that the undersigned has been paid in full by
the Borrowers for its services as Process Agent through such date), (ii) the
undersigned will maintain an office in New York City through such date and will
give the Agent prompt notice of any change of address of the undersigned, (iii)
the undersigned will perform its duties as Process Agent in accordance with
[Section 5.23] of the Credit Agreement and (iv) the undersigned will forward
forthwith to the Borrowers at the address specified opposite their respective
signature in the Credit Agreement or in the other relevant Transaction
Documents, as the case may be, copies of any summons, complaint and other
process which the undersigned receives in connection with its appointment as
Process Agent.
This acceptance and agreement shall be binding upon the undersigned and all
successors of the undersigned including all persons hereafter acting in the
capacity of the undersigned or otherwise in charge of the office of the
undersigned.
Very truly yours,
CT CORPORATION SYSTEM
By:__________________
Name:
Title:
EXECUTION COPY
PARENT GUARANTY
Dated December 15, 1997
From
THE GUARANTORS NAMED HEREIN
as Guarantors
-- ----------
in favor of
THE GUARANTEED CREDITORS REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
T A B L E O F C O N T E N T S
- - - - - - - - - - - - - -
Section Page
1. Guaranty; Limitation of Liability 1
2. Guaranty Absolute 1
3. Waivers and Acknowledgments 3
4. Subrogation 3
5. Net Payments 4
6. Representations and Warranties 7
7. Covenants 8
8. Amendments, Etc. 9
9. Notices, Etc. 9
10. No Waiver; Remedies 10
11. Right of Set-off 10
12. Indemnification 10
13. Continuing Guaranty; Assignments under the Credit Agreement 11
14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. 11
GUARANTY
GUARANTY dated December 15, 1997 made by Corporate Software & Technology
Holdings, Inc. (the "Guarantor"), in favor of the Guaranteed Creditors (as
defined in the Credit Agreement referred to below).
PRELIMINARY STATEMENT. Corporate Software & Technology Holdings, Inc., a
Delaware corporation ("Holdings"), Corporate Software & Technology, Inc., a
Delaware Corporation (the "Borrower"), are parties to a Credit Agreement dated
as of December 15, 1997 (such Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "Credit
Agreement", the capitalized terms defined therein and not otherwise defined
herein being used herein as therein defined) with certain Banks party thereto,
NationsBank, N.A. ("NationsBank"), as administrative agent (the "Administrative
Agent") for the Banks and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc., as Arranger
and Syndication Agent. The Guarantor may receive a portion of the proceeds of
the Loans under the Credit Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement. It
is a condition precedent to the making of Loans and the issuance of Letters of
Credit by the Banks under the Credit Agreement from time to time that the
Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Banks to make Loans and to issue Letters of Credit under the Credit Agreement
from time to time, each Guarantor, jointly and severally with each other
Guarantor, hereby agrees as follows:
Section 1. Guaranty; Limitation of Liability. The Guarantor hereby
---------------------------------
absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at stated maturity, by acceleration or otherwise, of all
Obligations of the Credit Parties now or hereafter existing under the Credit
Documents, whether for principal, interest, fees, expenses or otherwise (such
Obligations being the "Guaranteed Obligations"), and agrees to pay any and all
----------------------
expenses (including counsel fees and expenses) incurred by the Administrative
Agent or any other Guaranteed Creditor in enforcing any rights under this
Guaranty and the other Credit Documents. Without limiting the generality of the
foregoing, each Guarantor's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any Credit
Party to the Administrative Agent or any other Guaranteed Creditor under the
Credit Documents but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving such Credit Party.
Section 2. Guaranty Absolute. The Guarantor guarantees that the
-----------------
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Credit Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Administrative
Agent or any other Guaranteed Creditor with respect thereto. The Obligations of
the Guarantor under this Guaranty are independent of the Guaranteed Obligations
or any other Obligations of any other Credit Party under the Credit Documents,
and a separate action or actions may be brought and prosecuted against the
Guarantor to enforce this Guaranty, irrespective of whether any action is
brought against any Borrower or any other Credit Party or whether any Borrower
or any other Credit Party is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and the Guarantor hereby irrevocably waives
any defenses it may now or hereafter have in any way relating to, any or all of
the following:
(a) any lack of validity or enforceability of any Credit Document or
any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Credit Party under the Credit Documents, or any
other amendment or waiver of or any consent to departure from any Credit
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to any
Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Credit Party under the Credit
Documents or any other assets of any Credit Party or any of its
Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Credit Party or any of its Subsidiaries;
(f) any failure of any Guaranteed Creditor to disclose to any Credit
Party any information relating to the financial condition, operations,
properties or prospects of any other Credit Party now or in the future
known to any Guaranteed Creditor (each Guarantor waiving any duty on the
part of the Guaranteed Creditor to disclose such information);
(g) the failure of any other person to execute this Guaranty or any
other guaranty or agreement or the release or reduction of liability of any
Guarantor or other surety with respect to the Guaranteed Obligations; or
(h) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by
the Administrative Agent or any other Guaranteed Creditor that might
otherwise constitute a defense available to, or a discharge of, any Credit
Party or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Guaranteed Creditor or any other holder of
a Note upon the insolvency, bankruptcy or reorganization of any Borrower or any
other Credit Party or otherwise, all as though such payment had not been made.
Section 3. Waivers and Acknowledgments. (a) The Guarantor hereby
---------------------------
waives promptness, diligence, notice of acceptance, presentment, demand for
performance, notice of nonperformance, default, acceleration, protest or
dishonor and any other notice with respect to any of the Guaranteed Obligations
and this Guaranty and any requirement that the Administrative Agent or any other
Guaranteed Creditor protect, secure, perfect or insure any Lien or any property
subject thereto or exhaust any right or take any action against any Credit Party
or any other Person or any Collateral.
(b) The Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
(c) The Guarantor hereby waives (i) any defense arising by reason of
any claim or defense based upon an election of remedies by the Guaranteed
Creditors which in any manner impairs, reduces, releases or otherwise adversely
affects the Guarantor's subrogation, reimbursement, exoneration, contribution or
indemnification rights or other rights to proceed against any Credit Party or
any other Person or any Collateral, and (ii) any defense based on any right of
set-off or counterclaim (other than a compulsory counterclaim) against or in
respect of such Guarantor's obligations hereunder.
(d) The Guarantor acknowledges that it will receive substantial direct
and indirect benefits from the financing arrangements contemplated by the Credit
Documents and that the waivers set forth in Section 2 and this Section 3 are
knowingly made in contemplation of such benefits.
Section 4. Subrogation. The Guarantor will not exercise any rights
-----------
that it may now or hereafter acquire against any Borrower or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's Obligations under this Guaranty or any other Credit Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of any Guaranteed Creditor against any Borrower or any other
insider guarantor or any Collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from any Borrower or any other insider
guarantor, directly or indirectly, in
cash or other property or by set-off or in any other manner, payment or security
on account of such claim, remedy or right, unless and until all of the
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and the Commitments shall have expired or terminated. If
any amount shall be paid to the Guarantor in violation of the preceding sentence
at any time prior to the later of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and
(ii) the Maturity Date, such amount shall be held in trust for the benefit of
the Guaranteed Creditors and shall forthwith be paid to the Administrative Agent
to be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in accordance with
the terms of the Credit Documents, or to be held as Collateral for any
Guaranteed Obligations or other amounts payable under this Guaranty thereafter
arising. If (i) the Guarantor shall make payment to the Administrative Agent or
any other Guaranteed Creditor of all or any part of the Guaranteed Obligations,
(ii) all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall be paid in full in cash and (iii) the Maturity Date shall have
occurred, the Administrative Agent and the other Guaranteed Creditors will, at
the Guarantor's request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by the
Guarantor.
Section 5. Net Payments (a) All payments made by the Guarantor
------------
hereunder will be made without set off, counterclaim or other defense. Except
as provided in Section 5(b), all such payments will be made free and clear of,
and without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding,
except as provided in the second succeeding sentence, any tax imposed on or
measured by the net income or net profits of a Guaranteed Creditor pursuant to
the laws of the jurisdiction in which it is organized or the jurisdiction in
which the principal office or applicable lending office of such Guaranteed
Creditor is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
the Guarantor agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Guaranty, after withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence, the Guarantor agrees to
reimburse each Guaranteed Creditor, upon the written request of such Guaranteed
Creditor, for Taxes imposed on or measured by the net income or net profits of
such Guaranteed Creditor pursuant to the laws of the jurisdiction in which the
principal office or applicable lending office of such Guaranteed Creditor is
located or under the laws of any political subdivision or taxing authority of
any such jurisdiction in which the principal office or applicable lending office
of such Guaranteed Creditor is located and for any withholding of Taxes as such
Guaranteed Creditor shall determine are payable by, or withheld from, such
Guaranteed Creditor in respect of such amounts so paid to or on behalf of such
Guaranteed Creditor pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Guaranteed
Creditor pursuant to this sentence. The Guarantor will furnish to the
Administrative Agent within 30 days after the date the payment of any Taxes is
due pursuant to applicable law certified copies of tax receipts evidencing such
payment by such Guarantor. The Guarantor agrees to indemnify and hold harmless
each Guaranteed Creditor, and reimburse such Guaranteed Creditor upon its
written request, for the amount of any Taxes so levied or imposed and paid by
such Guaranteed Creditor.
(b) Each Guaranteed Creditor agrees to deliver to the Guarantor and
the Administrative Agent on or prior to the Effective Date, or in the case of a
Guaranteed Creditor that is an assignee or transferee of an interest under the
Credit Agreement pursuant to Section 1.13 or 12.04 thereof (unless the
respective Guaranteed Creditor was already a Guaranteed Creditor thereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Guaranteed Creditor, any form or certificate that
is required by any taxing authority to demonstrate such Guaranteed Creditor's
entitlement to an exemption from or reduction in Home Jurisdiction Withholding
Taxes (as defined below), if any, with respect to payments to be made under this
Guaranty including, if applicable (i) two accurate and complete original signed
copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Guaranteed Creditor's entitlement to a complete exemption
from United States withholding tax with respect to payments to be made under
this Guaranty, or (ii) if the Guaranteed Creditor is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit C to the Credit Agreement (any
such certificate, a "Section 4.04(b)(ii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Guaranteed Creditor's entitlement to a
complete exemption from United States withholding tax with respect to payments
to be made under this Guaranty, provided, however, that such Guaranteed Creditor
-------- -------
shall have been advised in writing by the Guarantor of the form or certificate
applicable to it, determined by reference to the jurisdiction of organization
and applicable lending office of such Guaranteed Creditor set forth on Annex I
to the Credit Agreement, or in the case of a Guaranteed Creditor that is an
assignee or transferee of an interest under the Credit Agreement pursuant to
Sections 1.13 or 12.04 thereof (unless the respective Guaranteed Creditor was
already a Guaranteed Creditor thereunder immediately prior to such assignment or
transfer) the jurisdiction of organization and Applicable Lending Office of such
Guaranteed Creditor set forth in the Assignment and Assumption Agreement
pursuant to which it became a Guaranteed Creditor, or such other branch or
office of any Guaranteed Creditor designated by such Guaranteed Creditor from
time to time. If any form or document referred to in this subsection (b)
requires the disclosure of information greater than that required on the date
hereof by Forms 1001 or 4224 and which a Guaranteed Creditor reasonably
considers to be confidential, such Guaranteed Creditor shall give notice thereof
to the Guarantor and shall not be obligated to include in such form or document
such confidential information. In addition, each Guaranteed Creditor agrees
that from time to time after the Effective Date, when a lapse in time or change
in circumstances renders the previous certification obsolete or inaccurate in
any material respect, upon the written request of the Guarantor (but only if the
Guaranteed Creditor remains lawfully able to do so) it will deliver to
such Guarantor and the Administrative Agent a new accurate and complete form or
certificate that is required by any taxing authority including, if applicable,
two new accurate and complete original signed copies of Internal Revenue Service
Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) Certificate, as the
case may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Guaranteed Creditor to a continued exemption
from or reduction in Home Jurisdiction Withholding Taxes, if any, with respect
to payments under this Guaranty, or it shall immediately notify the Guarantor
and the Administrative Agent of its inability to deliver any such Form or
Certificate, in which case such Guaranteed Creditor shall not be required to
deliver any such Form or Certificate pursuant to this Section 5(b).
Notwithstanding anything to the contrary contained in Section 5(a), but subject
to Section 12.04(b) of the Credit Agreement and the immediately succeeding
sentence, (x) each Guarantor shall be entitled, to the extent it is required to
do so by law, to deduct or withhold income or similar taxes from interest, fees
or other amounts payable hereunder for the account of any Guaranteed Creditor to
the extent that such Guaranteed Creditor has not provided to the Guarantor the
form or certificate that establishes a complete exemption from, or entitlement
to a reduction of, such deduction or withholding and (y) the Guarantor shall not
be obligated pursuant to Section 5(a) to gross-up payments to be made to a
Guaranteed Creditor in respect of income or similar taxes imposed if (I) such
Guaranteed Creditor has not provided to the Guarantor the form or certificate
required to be provided to the Guarantor pursuant to this Section 5(b) or (II)
in the case of a payment, other than interest, to a Guaranteed Creditor
described in clause (ii) above, to the extent that such form or certificate does
not establish a complete exemption from, or entitlement to a reduction of,
withholding of such taxes. Notwithstanding anything to the contrary contained in
the preceding sentence or elsewhere in this Section 5 and except as set forth in
Section 12.04(b) of the Credit Agreement, the Guarantor agrees to pay additional
amounts and to indemnify each Guaranteed Creditor in the manner set forth in
Section 5(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any amounts deducted or withheld by it
as described in the immediately preceding sentence as a result of any changes
after the Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes. "Home Jurisdiction
Withholding Taxes" means, in the case of the Guarantor, withholding taxes
imposed by the jurisdiction or political subdivision or taxing authority thereof
or therein in which such Guarantor is organized.
(c) Without prejudice to the survival of any other agreement of the
Guarantor hereunder or under any other Credit Document, the agreements and
obligations of the Guarantor contained in this Section 5 and in Section 12 shall
survive the payment in full of the Guaranteed Obligations and all other amounts
payable under this Guaranty.
Section 6. Representations and Warranties. The Guarantor hereby
------------------------------
represents and warrants as follows:
(a) The Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority (including, without
limitation, all governmental licenses, permits and
other approvals) to own or lease and operate its properties and assets and to
transact the business in which it is engaged and presently proposes to engage
and (iii) is duly qualified and is authorized to do business and is in good
standing in all jurisdictions where it is required to be so qualified or
licensed.
(b) The Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Guaranty. Such Guarantor has duly executed and delivered
this Guaranty and this Guaranty constitutes the legal, valid and binding
obligation of such Guarantor enforceable against such Guarantor in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty nor compliance by the Guarantor with the terms and provisions
thereof, nor the consummation of the transactions contemplated herein, (i) will
contravene any applicable provision of any law, statute, rule or regulation, or
any order, writ, injunction, judgment, award, determination or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, any contract, indenture, mortgage,
deed of trust, lease, loan agreement, credit agreement or any other material
agreement or instrument to which the Guarantor or any of its Subsidiaries is a
party or by which it or any of its property or assets are bound or to which it
may be subject or (other than pursuant to the Security Documents) result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of the Guarantor or any of its Subsidiaries or
(iii) will violate any provision of the Certificate of Incorporation or By-Laws
of the Guarantor or any of its Subsidiaries. Neither the Guarantor nor any of
its Subsidiaries is in violation of any such law, statute, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed of trust, lease,
loan agreement, credit agreement or other material agreement or other
instrument, the violation or breach of which could have a Material Adverse
Effect.
(d) There are no actions, investigations, litigations, suits or
proceedings pending or, to the knowledge of the Guarantor or any of its
Subsidiaries, threatened, before any court, governmental agency or arbitrator
with respect to such Guarantor or any of its Subsidiaries (i) that could
reasonably be expected to have a Material Adverse Effect or (ii) purports to
affect the legality, validity or enforceability of this Guaranty.
(e) Except as may have been obtained or made on or prior to the
Initial Borrowing Date (and which remain in full force and effect on the Initial
Borrowing Date), no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
notice to, any foreign or domestic governmental or public body or authority or
any other third party, or any subdivision thereof, is required to
authorize or is required in connection with (i) the due execution, delivery,
recordation, filing and performance by the Guarantor of this Guaranty or for the
consummation of the transactions contemplated hereby, or (ii) the legality,
validity, binding effect or enforceability of this Guaranty.
(f) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(g) The Guarantor has, independently and without reliance upon the
Administrative Agent or any other Guaranteed Creditor and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty, and the Guarantor has
established adequate means of obtaining from any other Credit Parties on a
continuing basis information pertaining to, and is now and on a continuing basis
will be completely familiar with, the financial condition, operations,
properties and prospects of such other Credit Parties.
(h) The Guarantor is, and, after giving effect to the transactions
contemplated hereby, individually and together with its Subsidiaries, will be
Solvent.
Section 7. Covenants. The Guarantor covenants and agrees that, so
---------
long as any part of the Guaranteed Obligations shall remain unpaid (other than
indemnity and similar contingent obligations in respect of which no claim has
been made and no amount remains outstanding), any Letter of Credit shall be
outstanding or any Bank shall have any Commitment, the Guarantor will, unless
the Required Banks shall otherwise consent in writing as follows:
(a) Payment of Taxes. The Guarantor will pay and discharge, and
----------------
will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, when due and all
lawful claims for sums that have become due and payable when due which, if
unpaid, might become a Lien not otherwise permitted under Section 8.03(a)
of the Credit Agreement or charge upon any properties of the Guarantor or
any of its Subsidiaries; provided that neither the Guarantor nor any of its
--------
Subsidiaries shall be required to pay any such tax, assessment, charge,
levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with GAAP.
(b) Corporate Franchises. Such Guarantor will do, and will cause
--------------------
each of its Subsidiaries to do, or cause to be done, all things necessary
to preserve and keep in full force and effect its existence, legal
structure, legal name, rights (charter or statutory), permits, licenses,
approvals, privileges, franchises and authority to do business.
(c) Compliance with Statutes, Etc. Each Guarantor will, and will
-----------------------------
cause each of its Subsidiaries to, comply with all applicable laws,
statutes, regulations,
rules and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards
and controls) except where such noncompliance would not have a Material
Adverse Effect.
Section 8. Amendments, Etc. No amendment or waiver of any provision
----------------
of this Guaranty and no consent to any departure by the Guarantor therefrom
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Banks or the Required Banks, as
the case may be) and the Guarantor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by all of the Guaranteed Creditors (other than any Bank that
is, at such time, a Defaulting Bank), (a) reduce or limit the liability of the
Guarantor hereunder or release the Guarantor hereunder, (b) postpone any date
fixed for payment hereunder or (c) change the number of Guaranteed Creditors
required to take any action hereunder.
Section 9. Notices, Etc. All notices and other communications
-------------
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to it, if to the Guarantor, addressed to it at the address set forth below the
Guarantor's name on the signature pages hereof, if to the Administrative Agent
or any Bank, at its address specified in the Credit Agreement, or as to any
party at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall,
when mailed, telegraphed, telecopied or telexed, be effective when deposited in
the mails, delivered to the telegraph company, transmitted by telecopier or
confirmed by telex answerback, respectively. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Guaranty shall be effective as delivery of a manually executed counterpart
thereof.
Section 10. No Waiver; Remedies. No failure on the part of the
-------------------
Administrative Agent or any other Guaranteed Creditor to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 11. Right of Set-off. Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 9 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes due and payable pursuant
to the provisions of such Section 9, each Guaranteed Creditor and each of its
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Guaranteed Creditor or such
Affiliate to or for the credit or the account of the Guarantor against any and
all of the Obligations of such Guarantor now or hereafter existing under this
Guaranty, whether or not such Guaranteed Creditor shall
have made any demand under this Guaranty and although such Obligations may be
unmatured. Each Guaranteed Creditor agrees promptly to notify the Guarantor
after any such set-off and application; provided, however, that the failure to
-------- -------
give such notice shall not affect the validity of such set-off and application.
The rights of each Guaranteed Creditor and its respective Affiliates under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Guaranteed Creditor and its
respective Affiliates may have.
Section 12. Indemnification. Without limitation on any other
---------------
Obligations of the Guarantor or remedies of the Guaranteed Creditors under this
Guaranty, the Guarantor shall, to the fullest extent permitted by law,
indemnify, defend and save and hold harmless each Guaranteed Creditor from and
against, and shall pay on demand, any and all losses, liabilities, damages,
costs, expenses and charges (including the fees and disbursements of such
Guaranteed Creditor's legal counsel) suffered or incurred by such Guaranteed
Creditor as a result of any failure of any Guaranteed Obligations to be the
legal, valid and binding obligations of any Relevant Credit Party enforceable
against such Relevant Credit Party in accordance with their terms.
Section 13. Continuing Guaranty; Assignments under the Credit
-------------------------------------------------
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
---------
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and
(ii) Maturity Date, (b) be binding upon the Guarantor, its successors and
assigns and (c) inure to the benefit of and be enforceable by the Administrative
Agent and the other Guaranteed Creditors and their successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any
Guaranteed Creditor may assign or otherwise transfer all or any portion of its
rights under the Credit Agreement (including, without limitation, all or any
portion of its Commitments, the Loans owing to it and the Note or Notes held by
it) to any other Person, and such other Person shall thereupon become vested
with all the obligations and benefits in respect thereof granted to such
Guaranteed Creditor herein or otherwise, in each case as and to the extent
provided in Section 12.04(b) of the Credit Agreement. The Guarantor shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Guaranteed Creditors.
Section 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.
-------------------------------------------------------
(a) This Guaranty shall be governed by, and construed in accordance with, the
laws of the State of New York.
(b) Any legal action or proceeding with respect to this Guaranty may
be brought in the courts of the State of New York or of the United States for
the Southern District of New York, and, by execution and delivery of this
Agreement, the Guarantor hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Guarantor hereby further irrevocably waives any claim that any such
courts lack jurisdiction over the Guarantor, and agrees not to plead or claim,
in any legal action or proceeding with respect to this Guaranty brought in any
of the
aforesaid courts, that any such court lacks jurisdiction over such Guarantor.
The Guarantor agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Solely for the purposes of this
Guaranty, to the full extent permitted by law the Guarantor and its property
service of copies of the summons and complaint and any other process which may
be served in any such action or proceeding. The Guarantor irrevocably consents
to the service of process in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Process
Agent, such service to become effective 30 days after such mailing. The
Guarantor hereby irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any action or
proceeding commenced hereunder that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any Guaranteed Creditor to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Guarantor in any other
jurisdiction.
(c) The Guarantor hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Guaranty brought in the
courts referred to in clause (b) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
(d) To the extent that such Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
Guarantor to the extent permitted by law hereby irrevocably waives such immunity
in respect of its obligations under this Guaranty and, without limiting the
generality of the foregoing, agrees that the waivers set forth in this
subsection (d) shall have the fullest scope permitted under the United States
Foreign Sovereign Immunities Act of 1976, as amended, and are intended to be
irrevocable for purposes of such Act.
(e) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in any currency (the "Original
Currency") into another currency (the "Other Currency") the parties hereto
agree, to the fullest extent that they may effectively
do so, that the rate of exchange used shall be that at which in accordance with
normal banking procedures the Administrative Agent could purchase the Original
Currency with the Other Currency at 11:00 A.M. on the second Business Day
preceding that on which final judgment is given.
(f) The obligation of the Guarantor in respect to any sum due in the
Original Currency from it to any Guaranteed Creditor hereunder or held by such
Guaranteed Creditor shall, notwithstanding any judgment in any Other Currency,
be discharged only to the extent that, on the Business Day following receipt by
such Guaranteed Creditor of any sum adjudged to be so due in such Other Currency
such Guaranteed Creditor may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency; if the amount of the
Original Currency so purchased is less than the sum originally due to such
Guaranteed Creditor in the Original Currency, the Guarantor agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify such
Guaranteed Creditor against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to any Guaranteed Creditor
in the Original Currency, such Guaranteed Creditor agrees to remit to the
Guarantor such excess.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
(g) The Guarantor hereby irrevocably waives all right to trial by jury
in any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of this Guaranty, the transactions
contemplated hereby or the actions of the Collateral Agent or any other
Guaranteed Creditor in the negotiation, administration, performance or
enforcement hereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Address: CORPORATE SOFTWARE & TECHNOLOGY
HOLDINGS, INC.
________________
________________
By
Attention: Name:
Title:
Acknowledged and Agreed:
NATIONSBANK OF TEXAS, N.A.
as Administrative Agent
By_____________________________
Name:
Title:
EXHIBIT M - FORM OF
CREDIT AGREEMENT
SUPPLEMENT
[DATE]
To each of the Banks under the Credit
Agreement referred to below
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of December ___,
1997 (as amended or modified from time to time, the "Credit Agreement") among
----------------
Modus Media International, Inc., a Delaware company and Modus Media
International Kabushiki Kaisha, a Japanese company, and the other Borrowers (as
defined in the Credit Agreement) party thereto, Modus Media International
Holdings, Inc., a Delaware company, the Banks (as defined in the Credit
Agreement), NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc., as Arranger and Syndication
Agent, Citicorp USA, Inc., as Documentation Agent, Collateral Agent and Multi-
Currency Agent, and NationsBank of Texas N.A., Inc., as Administrative Agent
(the "Administrative Agent"). Terms defined in the Credit Agreement are used
--------------------
herein with the same meaning.
[NAME AND JURISDICTION OF INCORPORATION OF ADDITIONAL BORROWER] (the
"Additional Borrower"), in consideration of the agreement of each Bank to extend
--------------------
credit to it from time to time under, and on the terms and conditions set forth
in, the Credit Agreement does hereby assume each of the obligations imposed upon
a Borrower under the Credit Agreement and agrees to be bound by all of the terms
and conditions of the Credit Agreement.
The Additional Borrower hereby agrees as follows:
1. The Additional Borrower hereby agrees, as of the date first above
written, to be bound as a Borrower by all of the terms and conditions of
the Credit Agreement to the same extent as each of the other Borrowers as
if it had been a party thereto as a Borrower. The Additional Borrower
further agrees, as of the date first above written, that each reference in
the Credit Agreement to a "Borrower" shall, as and where the context
--------
requires also mean and be a reference to the Additional Borrower, and each
reference in any other Credit Document to a "Borrower" or a "Credit Party"
-------- ------------
shall also mean, as and where the context requires and be a reference to
the Additional Borrower.
2. The Additional Borrower hereby represents and warrants to the
Administrative Agent and each of the Banks that the representations and
warranties
2
contained in each Credit Document are correct on and as of the date hereof
as though made on and as of such date other than any such representations
and warranties that, by their terms, refer to a date other than the date
hereof, in which case as of such specific date (provided that the
--------
representations and warranties referred to therein may be qualified, to the
reasonable satisfaction of the Administrative Agent, to take into account
requirements of the local laws of the foreign jurisdiction in which the
Additional Borrower is incorporated or conducts its business).
3. Pursuant to the terms of the Credit Agreement, the Administrative
Agent hereby indicates its approval of the Additional Borrower.
4. (a) THIS CREDIT AGREEMENT SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any
legal action or proceeding with respect to this Credit Agreement Supplement
or any other Credit Document may be brought in the courts of the State of
New York or of the United States for the Southern District of New York,
and, by execution and delivery of this Credit Agreement Supplement, the
Additional Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Additional Borrower hereby further irrevocably
waives any claim that any such courts lack jurisdiction over such
Additional Borrower, and agrees not to plead or claim, in any legal action
or proceeding with respect to this Credit Agreement Supplement or any other
Credit Document brought in any of the aforesaid courts, that any such court
lacks jurisdiction over the Additional Borrower. The Additional Borrower
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. The Additional Borrower
hereby irrevocably appoints CT Corporation System with an office on the
date hereof at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Process
Agent"), as its agent to receive on behalf of the Additional Borrower and
its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. The
Additional Borrower irrevocably consents to the service of process in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Additional Borrower at its address
set forth on the signature pages hereof, such service to become effective
30 days after such mailing. The Additional Borrower hereby irrevocably
waives any objection to such service of process and further irrevocably
waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document that service of
process was in any way invalid or ineffective. Nothing herein shall affect
the right of the Administrative Agent, the Collateral Agent, any Bank or
the holder of any Note to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against the
Additional Borrower in any other jurisdiction.
3
(b) The Additional Borrower hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement Supplement or any other Credit Document brought in the
courts referred to in clause (a) above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) To the extent that the Additional Borrower has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to
itself or its property, the Additional Borrower to the extent permitted by
law hereby irrevocably waives such immunity in respect of its obligations
under this Credit Agreement Supplement or any other Credit Document and,
without limiting the generality of the foregoing, agrees that the waivers
set forth in this subsection (c) shall have the fullest scope permitted
under the United States Foreign Sovereign Immunities Act of 1976, as
amended, or any other similarly applicable foreign law and are intended to
be irrevocable for purposes of such Act or any other similarly applicable
foreign law.
5. The Additional Borrower hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Credit
Agreement Supplement or any of the other Credit Documents to which it is a
party, or the actions of the Administrative Agent or any Bank in the
negotiation, administration, performance or enforcement thereof.
Very truly yours,
[NAME OF ADDITIONAL BORROWER]
By _______________________________
Name:
Title:
Address:
4
Accepted and Agreed:
NATIONSBANK OF TEXAS N.A., INC.
as Administrative Agent
By______________________________________
Title:
CITICORP USA, INC.,
as Documentation Agent and Collateral Agent
Agent
By_____________________________________
Title:
SHEARMAN & STERLING
November 10, 1999
Memorandum to: All Persons on the Attached Distribution List
Financing for Modus Media International, Inc. ("MMI")
Ninth Amendment to Credit Agreement and Waiver
-----------------------------------------------------
I refer to the letter dated November 1, 1999 from Modus Media
International forwarded to you by Bank of America, N.A. on November 8, 1999 in
connection with the above captioned transaction.
Attached please find one execution copy of the Ninth Amendment to
Credit Agreement and Waiver dated as of November 12, 1999, to be executed by
each of the parties thereto,
Please note that the fee referred to in Section 5 is in blank. MMI
will be writing to you separately to confirm the amount to be included there.
Please make a copy of the relevant signature page of the attached
document and arrange for an authorized officer of your institution to execute
the attached amendment and waiver on behalf of your institution in duplicate and
send me a copy of such executed pages by fax at (▇▇▇) ▇▇▇-▇▇▇▇ to reach me no
later than 3:00 PM. (New York time), Friday, November 12, 1999, with two
original executed hard copies to follow by courier delivery at Shearman &
Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, marked for my
attention. Thank you.
If you have any questions of a business nature relating to the
attached please telephone ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at Bank of America at (▇▇▇) ▇▇▇-▇▇▇▇ or
if you have any other questions please do not hesitate to contact me at (212)
▇▇▇-▇▇▇▇. Kind regards.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attachments
DISTRIBUTION LIST
MODUS MEDIA INTERNATIONAL, INC.
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BANK OF AMERICA
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BANKBOSTON, N.A.
Marwan Isbaih
CITIBANK, N.A.
Miles ▇▇▇▇▇▇▇
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FIRST NATIONAL BANK OF CHICAGO
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FIRST UNION NATIONAL BANK
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FLEET BANK
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FLEET CAPITAL CORPORATION
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▇▇▇▇▇▇ FINANCIAL, INC.
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IBJ WHITEHALL BUSINESS CREDIT CORP.
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NATIONAL CITY COMMERCIAL FINANCE, INC.
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PNC BUSINESS CREDIT
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TRANSAMERICA BUSINESS CREDIT
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▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ AND ▇▇▇▇▇
▇▇▇▇▇ Rudeiger
SHEARMAN & STERLING
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EXECUTION COPY
NINTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER
NINTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this "Amendment and
-------------
Waiver") dated as of November 12, 1999 by and among MODUS MEDIA INTERNATIONAL,
------
INC., a Delaware corporation ("MMI"), MODUS MEDIA INTERNATIONAL LIMITED, an
---
English company, MODUS MEDIA INTERNATIONAL PTE. LTD., a Singaporean company
("MMI-Singapore"), MODUS MEDIA INTERNATIONAL IRELAND (HOLDINGS), an Irish
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company ("Ireland Holdings"), MODUS MEDIA INTERNATIONAL PTY. LTD, an Australian
----------------
company, MODUS MEDIA INTERNATIONAL B.V., a Netherlands company (collectively the
"Borrowers"), MODUS MEDIA INTERNATIONAL HOLDINGS, INC., a Delaware corporation
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("MMI Holdings"), the lenders from time to time party hereto, BANK OF AMERICA
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SECURITIES LLC, successor in interest by merger with NationsBank, ▇▇▇▇▇▇▇▇▇▇
Securities, Inc., as Arranger and Syndication Agent, CITICORP USA, INC.
("Citicorp"), as Multi-Currency Agent, Documentation Agent and Collateral Agent,
--------
and BANK OF AMERICA, N.A., formerly known as NationsBank, N.A., successor in
interest by merger with NationsBank of Texas, N.A., as Administrative Agent (in
such capacity, the "Administrative Agent").
--------------------
PRELIMINARY STATEMENTS:
(1) The Borrowers entered into a Credit Agreement dated as of December 15,
1997 (as amended by the First Amendment to Credit Agreement dated as of February
18, 1998, the Second Amendment to Credit Agreement dated as of February 27,
1998, the Third Amendment to Credit Agreement dated as of August 10, 1998, the
Fourth Amendment to Credit Agreement and Waiver dated as of November 6, 1998,
the Fifth Amendment to Credit Agreement dated as of December 31, 1998, the Sixth
Amendment to Credit Agreement and Waiver dated as of May 10, 1999, the Seventh
Amendment to Credit Agreement and Waiver dated as of June 25, 1999 and the
Eighth Amendment to Credit Agreement and Waiver dated as of September 30, 1999,
in each case among the parties thereto, and as otherwise supplemented from time
to time, the "Credit Agreement"; terms defined therein being used herein as
----------------
therein defined unless otherwise defined herein) with MMI Holdings, the Banks,
the Syndication Agent, Citicorp and the Administrative Agent.
(2) In accordance with the letter dated November 1, 1999, from MMI to
the Administrative Agent MMI Holdings intends to make a tender offer to
purchase, retire or redeem up to 4.1 million of its common shares at a price of
$10.35 per share and any options to purchase any capital stock of MMI, issued to
and held by certain current and former employees and members of management, of
Stream International Inc. ("Stream International"), Corporate Software &
--------------------
Technologies, Inc. ("CST") and MMI, respectively, pursuant to employee stock
---
option plans (the "Employee Stock Option Redemption"). In order to consummate
--------------------------------
the Employee Stock Option Redemption, MMI Holdings may be unable to comply with
certain of its obligations set forth in the Credit Agreement.
(3) The parties hereto have agreed to amend the Credit Agreement as
hereinafter set forth.
2
SECTION 1. Amendments to Credit Agreement. Amendment to Section 8.10
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of Credit Agreement. Section 8.10 of the Credit Agreement is hereby amended by
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deleting it in its entirety and replacing therefor a new Section to read as
follows:
"8.10 Minimum Tangible Net Worth. MMI Holdings will not permit its
--------------------------
Tangible Net Worth at the end of each fiscal quarter to be less than an
amount equal to the sum of (i) 85% of the Tangible Net Worth of MMI as of
December 31, 1999 plus (ii) 75% of cumulative Consolidated Net Income of
MMI Holdings without deduction for losses for all fiscal quarters ending
after December 31, 1999 plus (iii) 100% of the Net Cash Proceeds from the
issuance or sale by MMI Holdings or any of its Subsidiaries to any Person
other than MMI Holdings or any of its Subsidiaries of any capital stock or
other ownership or profit interest, any securities convertible into or
exchangeable for capital stock or other ownership or profit interest or any
warrants, rights or options to acquire capital stock or other ownership or
profit interest (other than equity issued in connection with the exercise
by employees of any Credit Party or any of its Subsidiaries of employee
stock option); provided, however, that in no event shall MMI Holdings
-----------------
permit its Tangible Net Worth at any time to be less than $5,500,000."
SECTION 2. Waivers. Sections of Credit Agreement. The Borrowers hereby
-------------------------------------
request that the Required Banks and the Administrative Agent waive, and each of
the Required Banks and the Administrative Agent hereby agrees to waive, the
provisions of (a) Section 8.02 of the Credit Agreement with respect to the
purchase or acquisition of any part of the property or assets of any Person
solely to permit the Employee Stock Option Redemption, (b) Section 8.06 of the
Credit Agreement with respect to the purchase or acquisition of any capital
stock solely to permit the Employee Stock Option Redemption, and (c) Section
8.07 of the Credit Agreement with respect to the purchase, redemption,
defeasance or retirement of shares of MMI and of any options to purchase any
capital stock of MMI issued and held by employees of MMI, Stream International
and CST solely to permit the Employee Stock Option Redemption, provided,
however, that in the case of each of clauses (a), (b) and (c) the aggregate
purchase, retirement or redemption price of all the shares of MMI and all the
stock options held by employees does not exceed $41,845,868 or a pro rata share
thereof calculated on the basis of a redemption price of $10.35 per share with a
maximum number of shares which may be so purchased, retired or redeemed of
4,043,079.
With respect to the waiver provided for hereunder, the Banks hereby waive
any Event of Default arising under the Credit Agreement resulting from the
failure of any Credit Party to comply with the obligations set forth in Sections
8.02, 8.06 and 8.07 of the Credit Agreement referred to above solely with
respect to and to permit the Employee Stock Option Redemption and subject to the
limitations set forth in this Section 2.
3
SECTION 3. Representations and Warranties. The Borrowers represent and
------------------------------
warrant that the representations and warranties contained in each of the Credit
Documents are true and correct on and as of the date hereof with the same effect
as though made on and as of the date hereof, unless stated to relate to a
specific earlier date, in which case such representations and warranties were
true and correct as of such earlier date.
SECTION 4. Reference to and Effect on the Credit Agreement. (a) Upon
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the effectiveness of this Amendment and Waiver, on and after the date hereof,
each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof" or words of like import referring to the Credit Agreement shall mean
and be a reference to the Credit Agreement, as amended hereby. The Credit
Agreement, as amended by this Amendment and Waiver, is and shall continue to be
in full force and effect and is hereby ratified and confirmed.
(b) The Credit Agreement, the Notes and each other Credit Document are and
shall continue to be in full force and effect and are hereby in all respects
ratified and confirmed. Without limiting the generality of the foregoing, the
Security Documents and all of the Collateral described therein do and shall
continue to secure the payment of all Obligations of the Credit Parties under
the Credit Documents, in each case as amended by this Amendment and Waiver.
(c) The execution, delivery and effectiveness of this Amendment and Waiver
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Bank or the Agents under any of the Credit
Documents, nor constitute a waiver of any provision of any of the Credit
Documents.
SECTION 5. Effectiveness of this Amendment and Waiver. This Amendment
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and Waiver shall become effective as of the date first above written when and if
the Administrative Agent shall have received counterparts of this Amendment and
Waiver executed by the Borrowers and the Required Banks and the consent attached
hereto executed by each of the Guarantors parties thereto and the Borrower shall
have paid to the Administrative Agent a fee equal to ___ bps. on the Total
Revolving Loan Commitment arising in connection with this Amendment and Waiver.
SUCH FEE SHALL BE PAID ON A PRO RATA BASIS TO EACH OF THE BANKS THAT SHALL HAVE
EXECUTED AND DELIVERED THIS AMENDMENT AND WAIVER TO THE ADMINISTRATIVE AGENT'S
LEGAL COUNSEL AT OR BEFORE 3:00 P.M. (EASTERN TIME) ON FRIDAY, NOVEMBER 12,
1999. This Amendment and Waiver is subject to the provisions of Section 12.12 of
the Credit Agreement.
SECTION 6. Execution in Counterparts. This Amendment and Waiver may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
4
SECTION 7. Governing Law. This Amendment and Waiver and the rights and
-------------
obligations of the parties hereunder shall be governed by and construed and
interpreted in accordance with the laws of the State of New York.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be executed by their respective officers thereunto duly authorized, as
of the date first written above.
MODUS MEDIA
INTERNATIONAL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO and EVP
MODUS MEDIA INTERNATIONAL
LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Director
MODUS MEDIA INTERNATIONAL PTE. LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
MODUS MEDIA INTERNATIONAL
IRELAND (HOLDINGS)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
MODUS MEDIA INTERNATIONAL PTY. LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
6
MODUS MEDIA INTERNATIONAL B.V.
By: /s/ Hewk ▇▇▇▇▇▇▇
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Name: Hewk ▇▇▇▇▇▇▇
Title: Director
MODUS MEDIA INTERNATIONAL
HOLDINGS INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO and EVP
BANK OF AMERICA, N.A.,
individually and as
Administrative Agent
By:
--------------------------------
Title:
CITICORP USA, INC.,
individually and as Collateral Agent,
Documentation Agent and Multi-Currency
Agent
By:
--------------------------------
Title:
BANKBOSTON, N.A.
By:
--------------------------------
Title:
7
FIRST UNION NATIONAL BANK
By:_____________________________
Title:
THE FIRST NATIONAL BANK OF
CHICAGO
By:_____________________________
Title:
▇▇▇▇▇▇ FINANCIAL, INC.
By:_____________________________
Title:
FLEET NATIONAL BANK
By:_____________________________
Title:
IBJ WHITEHALL BUSINESS
CREDIT CORPORATION
By:_____________________________
Title:
8
NATIONAL CITY
COMMERCIAL FINANCE
By:_____________________________
Title:
PNC BANK NATIONAL ASSOCIATION
By:_____________________________
Title:
TRANSAMERICA BUSINESS
CREDIT CORPORATION
By:_____________________________
Title:
FLEET CAPITAL CORPORATION
By:_____________________________
Title:
CONSENT
Dated as of November 12, 1999
Each of the undersigned, Modus Media International Documentation Services
(Ireland) Limited, Modus Media International (Ireland) Limited and Modus Media
International (Australia) Limited, each as a Guarantor (the "US Guarantors"),
under the U.S. Subsidiary Guaranty dated December 15, 1997 (the "US Guaranty")
by each of the US Guarantors in favor of the Guaranteed Creditors (as defined in
the Credit Agreement dated as of December 15, 1997 (as heretofore amended by the
First Amendment to Credit Agreement dated as of February 18, 1998, the Second
Amendment to Credit Agreement dated as of February 27, 1998, the Third Amendment
to Credit Agreement dated as of August 10, 1998, the Fourth Amendment to Credit
Agreement and Waiver dated as of November 6, 1998, the Fifth Amendment to
Credit Agreement dated as of December 31, 1998, the Sixth Amendment to Credit
Agreement and Waiver dated as of May 10, 1999, the Seventh Amendment to Credit
Agreement and Waiver dated as of June 25, 1999 and the Eighth Amendment to
Credit Agreement and Waiver dated as of September 30, 1999 in each case among
the parties thereto, as further amended by the foregoing Ninth Amendment to
Credit Agreement and Waiver dated as of November 12, 1999, and as otherwise
supplemented from time to time, the "Credit Agreement"; terms defined therein
being used herein as therein defined unless otherwise defined herein) among
Modus Media International Inc., and the other borrowers party thereto (the
"Borrowers"), Modus Media International Holdings Inc., the lenders from time to
time party thereto (the "Banks"), NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC, as
Arranger and Syndication Agent, Citicorp USA, Inc. ("Citicorp"), as Multi-
Currency Agent, Documentation Agent and Collateral Agent, and Bank of America,
N.A., formerly known as NationsBank, N.A., successor in interest by merger with
NationsBank of Texas, N.A., as Administrative Agent (in such capacity, the
"Administrative Agent")), and Modus Media International (Ireland) Holdings,
Modus Media International Fulfillment Services Europe, Modus Media International
Dublin and Modus Media International Kildare, each as a Guarantor (the "Irish
Guarantors"), under the Foreign Subsidiary Guaranty dated January 30, 1998 (the
"Irish Guaranty") by each of the Irish Guarantors in favor of the Guaranteed
Creditors (as defined in the Credit Agreement) hereby consents to the foregoing
Eighth Amendment to Credit Agreement and Waiver and hereby confirms and agrees
that (a) notwithstanding the effectiveness of the foregoing Amendment, each of
the US Guaranty and the Irish Guaranty and each other Credit Document to which
the undersigned is a party is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, except that, on and
after the effectiveness of the foregoing Amendment, each reference in the US
Guaranty and the Irish Guaranty and each other Credit Document to the "Credit
Agreement", "thereunder", "thereof" or words of like import shall mean and be a
reference to the Credit Agreement, as amended by the foregoing Amendment or
otherwise supplemented from time to time, and (b) the Security Documents to
which such Guarantor is a party and all of the Collateral and the Security
Agreement Collateral, as the case may be, described therein do, and shall
continue to, secure the payment of all of the Secured Obligations (in each case,
as defined therein).
MODUS MEDIA INTERNATIONAL
DOCUMENTATION SERVICES
(IRELAND) LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO and EVP
MODUS MEDIA INTERNATIONAL
(IRELAND) LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO and EVP
MODUS MEDIA INTERNATIONAL
HOLDINGS (AUSTRALIA) LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO and EVP
MODUS MEDIA INTERNATIONAL
IRELAND (HOLDINGS)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
MODUS MEDIA INTERNATIONAL
KILDARE
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Director
MODUS MEDIA INTERNATIONAL
DUBLIN
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Director
MODUS MEDIA INTERNATIONAL
FULFILLMENT SERVICES EUROPE
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Director