Exhibit 10.24
--------------------------------------------------------------------------------
GUARANTY, INDEMNITY AND SUBORDINATION AGREEMENT
dated as of
January 27, 1998
LIBERTY GROUP PUBLISHING, INC.
and the
Subsidiary Guarantors
--------------------------------------------------------------------------------
CITICORP USA, INC.,
as Administrative Agent
TABLE OF CONTENTS
PAGE
----
ARTICLE I. DEFINITIONS.....................................................2
SECTION 1.1. CERTAIN TERMS...................................2
SECTION 1.2. TERMS DEFINED IN CREDIT AGREEMENT...............4
SECTION 1.3. TERMS GENERALLY.................................4
ARTICLE II. GUARANTY AND INDEMNITY..........................................5
SECTION 2.1. GUARANTY........................................5
SECTION 2.2. JOINT AND SEVERAL INDEMNITY.....................5
SECTION 2.3. ACCELERATION OF PAYMENT.........................5
SECTION 2.4. GUARANTY OF PAYMENT, INDEPENDENTLY ENFORCEABLE..6
SECTION 2.5. FRAUDULENT TRANSFER LIMITATION..................6
ARTICLE III. SUBORDINATION.................................................6
SECTION 3.1. SUBORDINATED LIABILITIES........................6
SECTION 3.2. PROHIBITED PAYMENTS.............................7
SECTION 3.3. PROHIBITED LIENS................................7
SECTION 3.4. PROHIBITED ACTIONS..............................7
SECTION 3.5. BANKRUPTCY AND INSOLVENCY PROCEEDINGS...........7
SECTION 3.6. HELD IN TRUST...................................8
ARTICLE IV. REIMBURSEMENT AND CONTRIBUTION RIGHTS..........................9
SECTION 4.1. REIMBURSEMENT AND CONTRIBUTION RIGHTS...........9
SECTION 4.2. RELEASE OF ALL OTHER REIMBURSEMENT,
SUBROGATION, AND CONTRIBUTION RIGHTS...........10
SECTION 4.3. NO CLAIMS......................................11
SECTION 4.4. SUBORDINATION OF SECTION 4.1 RIGHTS............11
ARTICLE V. GENERAL PROVISIONS.............................................11
SECTION 5.1. THE LIABILITY OF EACH GUARANTOR................11
SECTION 5.2. CERTAIN WAIVERS BY GUARANTORS..................13
SECTION 5.3. WAIVER OF BENEFIT OF ANTI-DEFICIENCY LAWS......14
SECTION 5.4. REINSTATEMENT..................................15
SECTION 5.5. AUTHORITY OF GUARANTORS OR BORROWER............15
SECTION 5.6. CONDITION OF THE BORROWER......................15
SECTION 5.7. ACCEPTANCE AND NOTICE..........................16
SECTION 5.8. RIGHTS CUMULATIVE..............................16
SECTION 5.9. EXPENSES.......................................16
SECTION 5.10. NOTICE OF EVENTS...............................16
SECTION 5.11. SET OFF........................................16
SECTION 5.12. REPRESENTATIONS AND WARRANTIES.................17
i
SECTION 5.13. SURVIVAL OF WARRANTIES.........................18
SECTION 5.14. NOTICES........................................18
SECTION 5.15. SEVERABILITY...................................18
SECTION 5.16. AMENDMENTS AND WAIVERS.........................18
SECTION 5.17. HEADINGS.......................................18
SECTION 5.18. APPLICABLE LAW.................................19
SECTION 5.19. SUCCESSORS AND ASSIGNS.........................19
SECTION 5.20. CONSENT TO JURISDICTION AND SERVICE
OF PROCESS.....................................19
SECTION 5.21. WAIVER OF TRAIL BY JURY........................19
SECTION 5.22. NO OTHER WRITING...............................20
SECTION 5.23. FURTHER ASSURANCES.............................20
SECTION 5.24. ADDITIONAL GUARANTORS..........................20
SECTION 5.25. COUNTERPARTS; EFFECTIVENESS....................20
ii
GUARANTY,
INDEMNITY
AND
SUBORDINATION AGREEMENT
This Guaranty, Indemnity and Subordination Agreement dated as of January
27, 1998, is entered into by LIBERTY GROUP PUBLISHING, INC., a Delaware
corporation ("Holdings"), by each of the Persons identified as Initial
Subsidiary Guarantors on the signature pages hereof (each, an "Initial
Subsidiary Guarantor") and by each other Person that at any time agrees in
writing to be bound as a Subsidiary Guarantor hereunder (the Initial Subsidiary
Guarantors and each such other Person, the "Subsidiary Guarantors" and,
together with Holdings, the "Guarantors") for the benefit of the Persons that
now are or at any time hereafter become party as a Lender to the Credit
Agreement described herein (the "Lenders"), CITICORP USA, INC., as
Administrative Agent for the Lenders (in such capacity, the "Administrative
Agent") and in its individual capacity and as Swingline Lender, CITIBANK, N.A.,
as Issuing Bank, BT ALEX. ▇▇▇▇▇ INCORPORATED, as Syndication Agent, ▇▇▇▇▇ FARGO
BANK, N.A., as Documentation Agent, BANK OF AMERICA NT & SA, as Co-Agent, and
all other present and future Holders of any of the Guaranteed Obligations
described herein (all, collectively, including the Lenders, the Administrative
Agent, the Swingline Lender, the Issuing Bank, the Documentation Agent, the
Syndication Agent and the Co-Agent, the "Beneficiaries").
RECITALS
Liberty Group Operating, Inc., a Delaware corporation (the "Borrower"), is
a Subsidiary of Holdings. Each Initial Subsidiary Guarantor is a Subsidiary of
the Borrower, and each Person that hereafter agrees to become bound hereby as a
Subsidiary Guarantor is, on the date it becomes bound hereby, a Subsidiary of
the Borrower.
The Borrower has requested that credit be extended to the Borrower on
terms and conditions set forth in the Credit Agreement.
To induce the Lenders, the Administrative Agent, the Swingline Lender, the
Issuing Bank, the Syndication Agent, the Documentation Agent and the Co-Agent
to enter into the Credit Agreement, and in consideration thereof and of any and
all credit at any time extended thereunder, (a) Holdings and the Initial
Subsidiary Guarantors have offered to issue the guaranties and indemnities and
enter into the agreements set forth herein, and (b) Holdings and the Borrower
have agreed in the Credit Agreement to cause each Person that hereafter becomes
a Subsidiary of the Borrower to become bound by the provisions hereof as a
Subsidiary Guarantor hereunder.
Accordingly, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor
hereby agrees for the direct and enforceable benefit of each and all of the
Beneficiaries as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. As used in this Agreement, the following terms
have the meanings specified below:
"BANKRUPTCY CODE" means Title 11 of the United States Code, as from time
to time amended.
"CREDIT AGREEMENT" means the Credit Agreement dated as of January 27,
1998, by and among the Borrower, Holdings, the Lenders party thereto, the
Administrative Agent, the Swingline Lender, the Issuing Bank, the Syndication
Agent, the Documentation Agent and the Co-Agent, as such agreement from time to
time may be modified, amended, restated, extended, refinanced or replaced in
any manner or in any respect (including so as to reduce or increase the amount
or cost of credit extended thereunder or to shorten or extend the time of
payment thereunder or in any other manner change the amount or terms of credit
extended to the Borrower or the identity, rights or obligations of any party
thereto).
"DISCHARGE OF THE CREDIT AGREEMENT" means that all obligations of the
Lenders to extend credit under the Credit Agreement and all letters of credit at
any time issued under the Credit Agreement have expired or been terminated and
have been absolutely, unconditionally and irrevocably discharged and all
Obligations at any time created, incurred or outstanding (except Obligations for
indemnification which are then contingent and in respect of which no claim or
demand has then been made) have been fully, finally and indefeasibly paid in
cash.
"GUARANTEED OBLIGATIONS" has the meaning set forth in Section 2.1.
"HOLDER" means, in respect of any Guaranteed Obligation, the Person
entitled to enforce payment thereof and specifically includes each Lender, the
Administrative Agent, the Swingline Lender, the Issuing Bank, the Syndication
Agent, the Documentation Agent, the Co-Agent and the Arranger.
"LOAN PARTIES" means the Borrower and the Guarantors.
"OBLIGATIONS" means all direct or indirect debts, liabilities and
obligations of the Borrower or any other Loan Party of any and every type and
description at any time arising under or in connection with the Credit
Agreement or any other Loan Document to any Lender or to the Administrative
Agent, the Swingline Lender, the Arranger, the Syndication Agent, the
Documentation Agent, the Co-Agent, the Issuing Bank, Citibank, any Person
entitled to indemnification pursuant to the Credit Agreement or any other Loan
Document or
2
to any other Person, in each case whether now outstanding or hereafter created
or incurred, whether or not the right of such Person to payment in respect of
any such debts, liabilities or obligations is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured and whether or not such claim is
discharged, stayed or otherwise affected by any bankruptcy case or insolvency,
reorganization, receivership, dissolution or liquidation proceeding, and shall
include (a) all liabilities of the Borrower for principal of and interest on
any and all loans at any time outstanding under the Credit Agreement, (b) all
liabilities of the Borrower in respect of letters of credit at any time issued
pursuant to the Credit Agreement, (c) all liabilities of the Borrower under the
Loan Documents for any fees, costs, taxes, expenses, indemnification and other
amounts payable thereunder, (d) all liabilities of any Subsidiary under any
Subsidiary Note, and (e) all other liabilities of the Borrower or any other
Loan Party under or in respect of any of the Loan Documents or any of the
transactions contemplated thereby and specifically includes any and all present
and future "Obligations" as such term is defined in the Credit Agreement.
"PERMITTED PAYMENT" means any payment on account of Subordinated
Liabilities made in cash in conformity with the Borrower's ordinary cash
management practices for the businesses conducted by the Borrower and Borrower
Subsidiaries, if no Event of Default has occurred and is continuing at the time
such payment is made or would result therefrom.
"POST-PETITION INTEREST AND EXPENSE CLAIMS" means any and all claims of any
Holder of Guaranteed Obligations (a) for interest on any Obligations determined
for any period of time occurring after the commencement of any case under the
Bankruptcy Code or any other insolvency, reorganization, receivership,
dissolution or liquidation proceeding at the contract rate (including any
applicable post-default increase therein) set forth in the Credit Agreement or
any other Loan Document or (b) for cost and expense reimbursements or
indemnification on the terms set forth in the Credit Agreement or any other
Loan Document relating to costs and expenses incurred and indemnification
rights accrued at any time after the commencement of any such case or
proceeding, in each case to the extent such claim accrues or becomes payable in
accordance with the provisions of the Credit Agreement or other Loan Documents
(or would have accrued or become payable if enforceable or allowable in such
case or proceeding), whether or not such claim is enforceable, allowable or
allowed in such case or proceeding and even if such claim is disallowed therein.
"SUBORDINATED LIABILITIES" has the meaning set forth in Section 3.1.
3
SECTION 1.2. TERMS DEFINED IN CREDIT AGREEMENT. Unless the context
otherwise requires, the following terms used in this Agreement are used as
defined in the Credit Agreement:
Affiliate
Arranger
Co-Agent
Default
Documentation Agent
Event of Default
Issuing Bank
Lenders
Lien
Loan Documents
Material Adverse Effect
Person
Related Parties
Required Lenders
Security Documents
Subsidiary
Subsidiary Note
Swingline Lender
Syndication Agent
Transfer
SECTION 1.3. TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation." The word
"will" shall be construed to have the same meaning and effect as the word
"shall." Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to include
such Person's successors, transferees and assigns, (c) the words "herein,"
"hereof" and "hereunder," and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, this Agreement and (e) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, whether real, personal or mixed
an of every type and description.
4
ARTICLE II.
GUARANTY AND INDEMNITY
SECTION 2.1. GUARANTY. Each Guarantor hereby absolutely and unconditionally
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of (a) all Obligations now outstanding or hereafter
arising under of in connection with the Credit Agreement or any other Loan
Document, whether for principal of or interest on any loan or for reimbursement
for payments made under letters of credit or the interest thereon or for the
principal of or interest on any other credit extended by any Lender or the
Swingline Lender or the Issuing Bank or any of their respective successors,
assigns or participants to the Borrower or to any other Person for the account
of the Borrower or for fees, taxes, additional compensation, expense
reimbursements, indemnification or otherwise, (b) each other debt, liability or
obligation of the Borrower or any Guarantor now outstanding or hereafter
arising under any of the Loan Documents, and (c) any and all Post-Petition
Interest and Expense Claims arising in respect of any of the foregoing (such
Obligations, other debts, liabilities and obligations, and Post-Petition
Interest and Expense Claims, collectively, are the "Guaranteed Obligations").
SECTION 2.2. JOINT AND SEVERAL INDEMNITY. Each Guarantor hereby agrees,
jointly and severally with each other Guarantor, to pay and assume all risk of,
and to defend, indemnify and hold harmless each Beneficiary and all of its
Related Parties from and against, any and all claims, damages, liabilities,
losses, costs and expenses (including all fees and disbursements of legal
counsel, whether or not suit is brought) arising from, based on or relating in
any manner to (a) any inaccuracy in or breach of any of the representations and
warranties set forth in the Credit Agreement or any other Loan Document or any
failure by any Loan Party to perform or observe, or any breach of, any of the
covenants and agreements set forth in the Credit Agreement or any other Loan
Document, in each case whether or not such inaccuracy, failure or breach was
caused by the Borrower or a Guarantor or any other Person or resulted from an
Act of God or otherwise and whether or not such inaccuracy, failure or breach
is otherwise within the control of the Borrower or such Guarantor or any other
Person, or (b) any and all Post-Petition Interest and Expense Claims, whether
or not allowed or enforceable in any bankruptcy case or insolvency,
reorganization, receivership, dissolution or liquidation proceeding and even if
disallowed or not enforceable therein.
SECTION 2.3. ACCELERATION OF PAYMENT. If (a) any Event of Default occurs
and notice of demand for payment under this Section 2.3 is given by the Required
Lenders to any Guarantor, or (b) any Guarantor becomes a debtor in any
bankruptcy case or the subject of any insolvency, reorganization, receivership,
dissolution or liquidation proceeding commenced voluntarily by such Guarantor
or (if it remains pending for more than 60 days or such Guarantor consents to
entry of an order for relief therein) commenced involuntarily against such
Guarantor, then (in each such event) all liability of such Guarantor under this
Agreement that is not then due and payable shall thereupon become and be
immediately due and payable, without notice or demand.
5
SECTION 2.4. GUARANTY OF PAYMENT, INDEPENDENTLY ENFORCEABLE. Each
Guarantor (a) guarantees that the Guaranteed Obligations will be paid in
accordance with the terms of the Credit Agreement and the other Loan Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights and claims of any Holder
of Guaranteed Obligations against the Borrower or any other Guarantor with
respect thereto and even if any such rights or claims are modified, reduced or
discharged in any bankruptcy case or insolvency or liquidation proceeding or
otherwise and (b) agrees that such guaranty is a guaranty of payment when due
and not of collectibility. The obligations of each Guarantor under this
Agreement are independent of the Guaranteed Obligations, and a separate action
or actions may be brought and prosecuted against each Guarantor to enforce this
Agreement, whether or not any action is brought against the Borrower or any
other Guarantor and whether or not the Borrower or any other Guarantor is
joined in any such action or actions.
SECTION 2.5. FRAUDULENT TRANSFER LIMITATION. Each Guarantor represents and
warrants that, on the date it becomes bound as a Guarantor hereunder and after
giving effect to the liability incurred by it under this Agreement and the
rights granted to it in Article IV, (a) the fair value of the assets of each
Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following such date. If, notwithstanding the foregoing, enforcement of the
liability of any Guarantor under this Agreement for the full amount of the
Guaranteed Obligations would be an unlawful or voidable transfer under any
applicable fraudulent conveyance or fraudulent transfer law or any comparable
law, then the liability of such Guarantor hereunder shall be reduced to the
highest amount for which such liability may then be enforced without giving
rise to an unlawful or voidable transfer under any such law.
ARTICLE III.
SUBORDINATION
SECTION 3.1. SUBORDINATED LIABILITIES. Each Guarantor hereby agrees that
any and all present and future debts, liabilities and obligations of every type
and description (whether for money borrowed, on intercompany accounts, for
provision of goods or services, under cash management arrangements or tax
sharing, management or contribution agreements, for reimbursement, contribution
or otherwise on account of this Agreement or any other agreement of such
Guarantor by which any Indebtedness or other liability is Guaranteed or on
account of any payment made under this Agreement or any such other
6
agreement, or on account of any other transaction, agreement, occurrence or
event and whether absolute or contingent, direct or indirect, matured or
unmatured, liquidated or unliquidated, created directly or acquired from
another, or sole, joint, several or joint and several) now outstanding or
hereafter incurred, arising or owed to such Guarantor by Holdings, by the
Borrower, or by any Subsidiary of the Borrower (collectively, the "Subordinated
Liabilities") shall be, and hereby are, postponed and subordinated to the prior
payment of all Guaranteed Obligations in full and in cash.
SECTION 3.2. PROHIBITED PAYMENTS. Until Discharge of the Credit Agreement,
no Guarantor will demand, ▇▇▇ for, accept or receive, or cause or permit any
other Person to make, any payment on or transfer of property on account of any
Subordinated Liabilities, except a Permitted Payment.
SECTION 3.3. PROHIBITED LIENS. Until Discharge of the Credit Agreement, no
Guarantor will demand, accept or hold any Lien upon any property of Holdings,
the Borrower or any Subsidiary of the Borrower as security for any of the
Subordinated Liabilities, and any such Lien shall be void.
SECTION 3.4. PROHIBITED ACTIONS. Until Discharge of the Credit Agreement,
no Guarantor will, without the prior written consent of the Required Lenders,
commence or join with any other Person in commencing any bankruptcy case or
insolvency, reorganization, receivership, dissolution or liquidation proceeding
of or against Holdings, the Borrower or any Subsidiary of the Borrower.
SECTION 3.5. BANKRUPTCY AND INSOLVENCY PROCEEDINGS. In any case under the
Bankruptcy Code in which Holdings or the Borrower or any Subsidiary of the
Borrower is the debtor, and in each other insolvency, reorganization,
receivership, dissolution or liquidation proceedings by, against or affecting
Holdings, the Borrower or any Subsidiary of the Borrower:
(a) PRIORITY OF PAYMENT. The Holders of Guaranteed Obligations shall be
entitled to receive payment of all amounts due or to become due on or in
respect of the Guaranteed Obligations (including all Post-Petition Interest and
Expense Claims), in full and in cash, before any Guarantor is entitled to
receive any payment or distribution of any kind or character, whether in cash,
property or securities or otherwise, on account of any of the Subordinated
Liabilities; and
(b) TURNOVER OF PAYMENTS AND DISTRIBUTIONS. The Holders of Guaranteed
Obligations (including Post-Petition Interest and Expense Claims) shall be
entitled to receive, for application to the payment thereof, all payments and
distributions of any kind or character, whether in cash, property or securities
or otherwise (including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other debt or liability of the
Borrower or any Subsidiary of the Borrower or any Guarantor being subordinated
to the payment of the Subordinated Liabilities), which may be payable or
deliverable in respect of the Subordinated Liabilities in any such case or
proceeding.
7
(c) DISALLOWED POST-PETITION INTEREST AND EXPENSE CLAIMS. Each Guarantor
expressly acknowledges and agrees that, pursuant to the provisions of Section
3.5(b), any such payment or distribution payable or deliverable in respect of
Subordinated Liabilities will be turned over to, and will become the property
of, the Holders of Guaranteed Obligations until the Holders of Guaranteed
Obligations have received payment in full and in cash of all Guaranteed
Obligations, including any and all Post-Petition Interest and Expense Claims
that are not enforceable, allowable or allowed in such case or proceeding and
as to which, as a consequence, such Guarantor will not have any subrogation
claim in such case or proceeding. Each Guarantor acknowledges and agrees that
all such Post-Petition Interest and Expense Claims shall be included in the
Guaranteed Obligations and shall be paid from any such payment or distribution
because it is the intention of the Guarantors and Beneficiaries that the
Guaranteed Obligations shall be determined and shall be guaranteed and paid by
each Guarantor without regard to any rule of law or order which may relieve
Borrower or any other obligor, or the estate in any such case or proceeding, of
liability therefor.
(d) CLAIMS IN BANKRUPTCY. Each Guarantor will file all claims against the
Borrower or any Subsidiary of the Borrower or any Guarantor in any case under
the Bankruptcy Code and in each other insolvency, reorganization, receivership,
dissolution or liquidation proceeding in which the filing of claims is required
or permitted by law upon any of the Subordinated Liabilities and will assign to
the Administrative Agent, for the benefit of the Holders of Guaranteed
Obligations, all rights of such Guarantor thereunder. If any Guarantor does not
file any such claim at lease 30 days prior to any applicable claims bar date,
each Holder of Guaranteed Obligations is hereby authorized (but shall not be
obligated), as attorney-in-fact for such Guarantor with full power of
substitution, either to file such claim or proof thereof in the name of such
Guarantor or, at the option of such Holder upon consent by the Administrative
Agent, to assign such claim to the Administrative Agent, in trust for the
benefit of the Holders of Guaranteed Obligations, or its nominee, and cause
such claim or proof thereof to be filed by such Holder's agent in the name of
the Administrative Agent or its nominee, as such trustee.
SECTION 3.6. HELD IN TRUST. If any payment, transfer or distribution is
made to any Guarantor upon any Subordinated Liabilities that is not permitted
to be made under this Article III or that the Holders of Guaranteed Obligations
are entitled to receive under this Article III, such Guarantor shall receive
and hold the same in trust, as trustee for the benefit of the Holders of
Guaranteed Obligations, and shall forthwith transfer and deliver the same to
the Administrative Agent, for account of the Holders of Guaranteed Obligations,
in precisely the form received (except for any required endorsement), for
application to the payment of Guaranteed Obligations.
8
ARTICLE IV.
REIMBURSEMENT AND CONTRIBUTION RIGHTS
SECTION 4.1. REIMBURSEMENT AND CONTRIBUTION RIGHTS. The Guarantors desire
to agree upon and allocate among themselves, in a fair and equitable manner,
their rights of reimbursement and contribution when any payment is made by one
of the Guarantors under this Agreement. Accordingly:
(a) SUBSIDIARY REIMBURSEMENT CLAIMS AGAINST THE BORROWER. Each Subsidiary
Guarantor reserves the right to claim reimbursement from the Borrower for the
entire amount of any payment made by such Subsidiary Guarantor on account of
Guaranteed Obligations pursuant to this Agreement, but each Subsidiary
Guarantor agrees that its Claim for such reimbursement shall not arise until,
and is subject in all respects to, Discharge of the Credit Agreement and the
prior payment of all Guaranteed Obligations in full and in cash. Accordingly,
each Subsidiary Guarantor agrees not to assert, ▇▇▇ upon, collect or otherwise
enforce against the Borrower (by set-off or otherwise) any Claim for
reimbursement on account of any payment made by such Subsidiary Guarantor
hereunder, until Discharge of the Credit Agreement and the prior payment of all
Guaranteed Obligations in full and in cash.
(b) PAYMENTS BY HOLDINGS ARE CAPITAL CONTRIBUTIONS. Holdings agrees that
each payment made by Holdings on account of Guaranteed Obligations pursuant to
this Agreement shall constitute a contribution by Holdings to the common equity
capital of the Borrower. Accordingly, Holdings hereby waives, releases and
discharges, absolutely, unconditionally, irrevocably and forever, all rights of
recourse, reimbursement, contribution or indemnity and all other claims that
Holdings might otherwise have or acquire against the Borrower or any Guarantor
or any other Person liable for the payment of any of the Guaranteed Obligations
(including, without limitation, the owner of any interest in collateral subject
to a Lien securing any of the Guaranteed Obligations) and all rights of
subrogation that Holdings might otherwise have or acquire against any
Beneficiary by reason of any such payment or otherwise as a result of or in
connection with this Agreement, whether such rights or claims are conferred by
agreement, implied or created by law or otherwise.
(c) CONTRIBUTION AMONG SUBSIDIARY GUARANTORS. The Subsidiary Guarantors
agree that if the Borrower at any time fails to pay any reimbursement due to
any Subsidiary Guarantor as contemplated in Section 4.1(a) and such failure
continues for a period of 60 days after Discharge of the Credit Agreement and
payment of all outstanding Guaranteed Obligations in full and in cash, then if
and to the extent any such unreimbursed payment due to such Subsidiary
Guarantor under this Agreement is such that the Aggregate Unreimbursed Payments
of such Subsidiary Guarantor are greater than its Fair Share of the Aggregate
Unreimbursed Payments of all Subsidiary Guarantors, such Subsidiary Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor in the
amount necessary to cause each Subsidiary Guarantor's Aggregate Unreimbursed
Payments to equal its Fair Share. For these purposes:
9
(i) "Fair Share" means, with respect to a Subsidiary Guarantor as of
any date of determination, an amount equal to (i) the ratio of (x) the
Adjusted Maximum Amount of such Subsidiary Guarantor to (y) the Adjusted
Maximum Amounts of all Subsidiary Guarantors, multiplied by (ii) the
Aggregate Unreimbursed Payments of all Subsidiary Guarantors.
(ii) "Adjusted Maximum Amount" means, with respect to a Subsidiary
Guarantor as of any date of determination, the maximum aggregate amount of
the liability of such Subsidiary Guarantor under this Agreement limited to
the extent required under Section 2.5 (except that, for purposes solely of
this calculation, any assets or liabilities arising by virtue of any rights
to or obligations of reimbursement or contribution under this Section 4.1
shall not be counted as assets or liabilities of such Subsidiary
Guarantor).
(iii) "Aggregate Unreimbursed Payments" means, with respect to a
Subsidiary Guarantor as of any date of determination, the aggregate net
amount of all payments made on or before such date by such Subsidiary
Guarantor under this Agreement for which reimbursement by the Borrower to
such Subsidiary Guarantor is then due and payable as contemplated in
Section 4.1(a) but has not been paid to such Subsidiary Guarantor.
The allocation and right of contribution among the Guarantors set forth in this
Section 4.1(c) shall not in any respect limit the Guarantors' liability under
this Agreement to the Holders of the Guaranteed Obligations.
(d) REIMBURSEMENT AND CONTRIBUTION RIGHTS UNSECURED. All rights of
reimbursement reserved in Section 4.1(a) shall be unsecured obligations of the
Borrower, and all contribution rights arising under Section 4.1(c) shall be
unsecured obligations of the Subsidiary Guarantors.
SECTION 4.2. RELEASE OF ALL OTHER REIMBURSEMENT, SUBROGATION, AND
CONTRIBUTION RIGHTS. Each Subsidiary Guarantor hereby waives, releases and
discharges, absolutely, unconditionally, irrevocably and forever, all rights of
recourse, reimbursement, contribution or indemnity and all other claims that
such Subsidiary Guarantor might otherwise have or acquire against Holdings, the
Borrower or any Guarantor or any other Person liable for the payment of any of
the Guaranteed Obligations (including, without limitation, the owner of any
interest in collateral subject to a Lien securing any of the Guaranteed
Obligations) and all rights of subrogation that such Subsidiary Guarantor might
otherwise have or acquire against any Beneficiary by reason of any payment made
by such Subsidiary Guarantor under this Agreement or otherwise as a result of
or in connection with this Agreement, whether such rights or claims are
conferred by agreement, implied or created by law or otherwise, except only the
reimbursement rights reserved by such Subsidiary Guarantor in Section 4.1(a)
and the contribution rights granted to such Subsidiary Guarantor under Section
4.1(c).
10
SECTION 4.3. NO CLAIMS. Neither the execution and delivery of this
Agreement by any Guarantor nor any payment by any Guarantor under this
Agreement shall give rise to any claim (as that term is defined in the
Bankruptcy Code) in favor of such Guarantor against Holdings or the Borrower or
any Subsidiary of the Borrower, except as set forth in Section 4.1.
SECTION 4.4. SUBORDINATION OF SECTION 4.1 RIGHTS. All rights and claims
reserved in or arising under Section 4.1 shall be included among the
Subordinated Liabilities. Until Discharge of the Credit Agreement, no Guarantor
will assert, exercise or enforce against any other Guarantor any right or claim
arising under Section 4.1.
ARTICLE V.
GENERAL PROVISIONS
SECTION 5.1. THE LIABILITY OF EACH GUARANTOR.
(a) LIABILITY ABSOLUTE AND UNCONDITIONAL. The liability of each Guarantor
under this Agreement shall be absolute and unconditional.
(b) LIABILITY NOT LIMITED. Subject only to Section 2.5, the liability of
each Guarantor under this Agreement shall be unlimited in amount.
(c) LIABILITY IRREVOCABLE AND CONTINUING. The liability of each Guarantor
under this Agreement shall constitute an irrevocable and continuing offer and
agreement guaranteeing payment of any and all Guaranteed Obligations and
granting indemnification and subordination as herein set forth and shall extend
to all Guaranteed Obligations and indemnified matters and Subordinated
Liabilities whether now outstanding or created or incurred at any future time,
whether or not created or incurred pursuant to any agreement presently in
effect or hereafter made, until Discharge of the Credit Agreement. To the
extent any contingent Obligation survives the expiration or termination of the
Loan Documents and the repayment of the Obligations that are then due, each
Guarantor's liability under this Agreement shall likewise survive.
(d) LIABILITY JOINT AND SEVERAL. The liability of each Guarantor under
this Agreement shall be the joint and several obligation of each Guarantor and
may be freely enforced against each Guarantor, for the full amount of the
Guaranteed Obligations and all other liabilities of such Guarantor hereunder,
without regard to whether enforcement is sought or available against any other
Guarantor.
(e) LIABILITY NOT AFFECTED OR IMPAIRED. The liability of each Guarantor
under this Agreement shall not be affected or impaired in any manner by,
(a) the failure of any Person to become or remain a Guarantor hereunder or the
failure of any Holder of Guaranteed Obligations to preserve, protect or enforce
any right to require any Person to become or remain a Guarantor hereunder, (b)
any lack of validity or enforceability of the
11
Credit Agreement or any other Loan Document or any other agreement, instrument
of document relating thereto, (c) any change in the time, manner or place of
payment of, or in any other term of, any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the terms of any
Loan Document, including any extension or renewal of the Guaranteed Obligations
(whether or not for longer than the original period) and any increase in the
Guaranteed Obligations resulting from the extension of additional credit to the
Borrower or otherwise, (d) any taking, failure to take, failure to create,
perfect or ensure the priority of, or exchange, release or termination or
lapse of any Lien securing any Guaranteed Obligations, or any taking, failure
to take, release or amendment or waiver of or consent of departure from any
other guaranty of, and of the Guaranteed Obligations, (e) any manner or order of
sale or other enforcement of any Lien securing any of the Guaranteed
Obligations or any manner or order of application of the proceeds of any such
Lien to the payment of the Guaranteed Obligations or any failure to enforce any
Lien or to apply any proceeds thereof, (f) any change, restructuring or
termination of the corporate structure or existence of the Borrower or any of
its Subsidiaries or Affiliates, any Guarantor, or any other Person, or (g) any
other circumstance which might otherwise constitute a defense (except the
defence of payment) available to, or a discharge of, a surety or guarantor.
(f) LIABILITY REMAINS VALID AND ENFORCEABLE. The liability of each
Guarantor under this Agreement shall remain valid and enforceable and shall not
be subject to any reduction, limitation, impairment, discharge or termination
for any reason (other than indefeasible payment in full of the Guaranteed
Obligations), including the occurrence of any of the following, whether or not
any Guarantor shall have had notice or knowledge of any of them: (a) any failure
or omission to asset or enforce or agreement or election not to asset or
enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand or any right,
power of remedy (whether arising under the Loan Documents, at law, in equity or
otherwise) with respect to the Guaranteed Obligations or any agreement relating
thereto, or with respect to any other guaranty of or security for the payment of
the Guaranteed Obligations; (b) any rescission, waiver, amendment or
modification of, or any consent to departure from, any of the terms or
provisions (including provisions relating to events of default) of the Credit
Agreement, any of the other Loan Documents or any agreement or instrument
executed pursuant thereto, or of any other guaranty or security for the
Guaranteed Obligations, in each case whether or not in accordance with the terms
of the Credit Agreement, such Loan Document or any agreement relating to such
other guaranty or security; (c) the Guaranteed Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect; (d) the application of payments received from any
source to the payment of any liability other than the Guaranteed Obligations,
even though any Beneficiary might have elected to apply such payment to any part
or all of the Guaranteed Obligations; (e) any Beneficiary's consent to the
change, reorganization or termination of the corporate structure or existence of
Holdings or the Borrower or any of its Subsidiaries and to any corresponding
restructuring of the Guaranteed Obligations; (f) any failure to perfect or
continue perfection of a security interest in any collateral which secures any
of the Guaranteed Obligations; (g) any defenses, set-offs or counterclaims which
the Borrower or any other Loan Party or any other Guarantor may allege or assert
against any Beneficiary in respect of the Guaranteed Obligations,
12
including, for example, failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction and usury;
and (h) any other act or thing or omission, or delay to do any other act or
thing, which may or might in any manner or to any extent vary the risk of any
Guarantor as an obligor in respect of the Guaranteed Obligations.
(g) LIABILITY RELEASED ONLY BY A SIGNED WRITING. The liability of each
Guarantor under this Agreement and each right, remedy, interest or power
granted herein or arising hereunder may be released only by a writing signed by
the Beneficiary against which enforcement of such release is sought.
(h) DISCHARGE OF LIABILITY UPON SALE OF GUARANTOR. If (i) all outstanding
Equity Interests issued by any Guarantor are at any time Transferred to any
Person not an Affiliate of the Borrower (including by merger or consolidation)
in any transaction which is either (A) not prohibited by Section 6.6 of the
Credit Agreement or (B) otherwise consented to by the Required Lenders and (ii)
at the time such transaction is consummated any and all liabilities of such
Guarantor under any and all guaranties of any other Indebtedness of any Loan
Party are discharged and released, then the liability of such Guarantor under
this Agreement shall automatically be discharged and released without any
further action by any Beneficiary or any other Person effective as of the time
such transaction is consummated.
SECTION 5.2. CERTAIN WAIVERS BY GUARANTORS. Each Guarantor hereby waives
and agrees not to assert or take advantage of:
(a) PRIOR RESORT TO ANY OTHER PERSON, PROPERTY OR RIGHT. Any right to
require any Holder of Guaranteed Obligations to proceed against or exhaust its
recourse against the Borrower, any other Guarantor or any other Person liable
for any of the Guaranteed Obligations or against any Lien securing any of the
Guaranteed Obligations or against any other Person or property, before
demanding and enforcing payment of the Guaranteed Obligations from any
Guarantor under this Agreement;
(b) CERTAIN DEFENSES. Any defense that may arise by reason of (i) the
incapacity, lack of authority, death or disability of the Borrower, any other
Guarantor or any other Person, (ii) the revocation or repudiation of any of the
Loan Documents by the Borrower, any other Guarantor or any other Person, (iii)
the unenforceability in whole or in part of the Loan Documents or any other
instrument, document or agreement, (iv) the failure of any Holder of Guaranteed
Obligations to file or enforce a claim against any Person liable for any of the
Obligations or in any bankruptcy case or insolvency, receivership, dissolution
or liquidation proceeding, (v) any election made by any Holder of Guaranteed
Obligations as to any right or remedy granted or available to it under the
Bankruptcy Code, or (vi) any other borrowing or grant of a security interest
under Section 364 of the Bankruptcy Code;
(c) NOTICES AND DEMANDS. Presentment, demand for payment, protest, notice
of discharge, notice of acceptance of this Agreement, notice of the incurrence
of, or any default in respect of, any Guaranteed Obligation, and all other
indulgences and notices of
13
every type or nature, including, to the maximum extent permitted by law, notice
of the disposition of any collateral security;
(d) ELECTION OF REMEDIES. Any defense based upon an election of remedies
(including, if available, an election to proceed by non-judicial foreclosure)
or any other act or omission of any Holder of Guaranteed Obligations or any
other Person which destroys or otherwise impairs any right that any Guarantor
might otherwise have for subrogation, recourse, reimbursement, indemnity,
exoneration, contribution or otherwise against the Borrower, any other
Guarantor or any other Person;
(e) COLLATERAL SECURITY. Any defense based upon any grant of, any failure
to demand, take, perfect, protect or enforce, or any modification or release of
any Lien securing, or guaranty of, any or all of the Guaranteed Obligations, or
any failure to create or perfect or ensure the priority or enforceability of
any security interest in any collateral for any of the Guaranteed Obligations
or any act of omission related thereto;
(f) RECOUPMENT AND SETOFF. Any right to recoup from or offset against any
of the Guaranteed Obligations any claim that may be held or asserted by or
available to (i) the Borrower or any other Guarantor or any other Person liable
for any of the Guaranteed Obligations against any Holder of Guaranteed
Obligations or (ii) any Guarantor against the Borrower, any other Guarantor,
any other Holder of Guaranteed Obligations or any other Person; and
(g) OTHER MATTERS. Any other claim, right or defense (including, by way of
illustration and without limitation, such matters as failure or insufficiency
of consideration, statute of limitations, breach of contract, tortious conduct,
accord and satisfaction, and discharge by agreement or conduct or in any
bankruptcy case or other insolvency or liquidation proceeding), except the
defense of payment, that may be held or asserted by or available to (i) the
Borrower or any other Guarantor or any other Person liable for any of the
Guaranteed Obligations against any Holder of Guaranteed Obligations or (ii) any
Guarantor against the Borrower, any other Guarantor, any other Holder of
Guaranteed Obligations or any other Person.
SECTION 5.3. WAIVER OF BENEFIT OF ANTI-DEFICIENCY LAWS. If, in the
exercise of any rights and remedies, any Holder of Guaranteed Obligations shall
forfeit any of its rights or remedies, including its right to obtain a
deficiency judgment against the Borrower or any other Guarantor or any other
Person, whether because of any applicable laws pertaining to recourse to
collateral security or election of remedies or barring claims for a deficiency
following foreclosure of any Lien or the like, each Guarantor hereby consents
to such action by such Holder and, to the maximum extent permitted by
applicable law, waives any claim or defense based upon such recourse to
collateral security, election of remedies, loss of claims for a deficiency or
the like, even if such action by such Holder shall result in a full or partial
loss of any rights of subrogation, recourse, reimbursement, contribution or
indemnification which such Guarantor might otherwise have had but for such
action by such Holder or but for the provisions of this Section 3.5.
Furthermore, each Guarantor waives all rights and
14
defenses arising out of any recourse to collateral security or election of
remedies by any Holder of Guaranteed Obligations, even though such recourse to
collateral security or election of remedies, such as a nonjudicial foreclosure
with respect to security for any Guaranteed Obligation, has destroyed such
Guarantor's rights of subrogation, recourse, reimbursement, contribution or
indemnification against the Borrower or any other Guarantor or any other Person
by the operation of applicable law or otherwise. Any election of remedies which
result in the denial or impairment of the right of any Holder of Guaranteed
Obligations to seek a deficiency judgment against the Borrower or any Guarantor
shall not, to the maximum extent permitted by applicable law, impair any other
Guarantor's obligation to pay the full amount of the Guaranteed Obligations. In
the event any Holder of Guaranteed Obligations shall bid at any foreclosure or
trustee's sale or at any private sale permitted by law or the Loan Documents,
such Holder may bid all or less than the amount of the Guaranteed Obligations
and (if expressly permitted under the Loan Documents or approved in writing by
the Administrative Agent and Required Lenders) the amount of such bid need not
be paid by such Holder but shall be credited against the Guaranteed
Obligations. To the extend permitted by applicable law, the amount of the
successful bid at any such sale, whether any Holder of Guaranteed Obligations
or any other Person is the successful bidder, shall be conclusively deemed to
be the fair market value of the property being sold and the difference between
such bid amount and the remaining balance of the Guaranteed Obligations shall
be conclusively deemed to be the amount of the Guaranteed Obligations
guaranteed under this Agreement, notwithstanding that any present or future law
or court decision or ruling may have the effect of reducing the amount of any
deficiency claim to which any Holder of Guaranteed Obligations might otherwise
be entitled if no Holder had bid at any such sale.
SECTION 5.4. REINSTATEMENT. If at any time any payment on any Guaranteed
Obligation is set aside, avoided or rescinded or must otherwise be restated or
returned, this Agreement and the liability of each Guarantor under this
Agreement and the indemnification and subordination granted hereby and all
other liabilities of each Guarantor hereunder shall remain in full force and
effect and, if previously released or terminated, shall be automatically and
fully reinstated, without any necessary for any act, consent or agreement of
any Guarantor, as fully as if such payment had never been made and as fully as
if any such release or termination had never become effective.
SECTION 5.5. AUTHORITY OF GUARANTORS OR BORROWER. It is not necessary for
any Beneficiary to inquire into the capacity or powers of any Guarantor or
Borrower of the officers, directors or any agents acting or purporting to act
on behalf of any them.
SECTION 5.6. CONDITION OF THE BORROWER. Each Guarantor is fully aware of
the financial condition of the Borrower and each other Guarantor and is
executing and delivering this Agreement based solely upon such Guarantor's own
independent investigation of all matters pertinent hereto and is not relying in
any manner upon any representation or statement by any Holder of Guaranteed
Obligations. Each Guarantor represents and warrants that it is in a position to
obtain, and each Guarantor hereby assumes full responsibility for obtaining,
any additional information concerning the financial condition of the Borrower
of any other Guarantor or their respective properties, financial condition and
prospectus and any
15
other matter pertinent hereto as such Guarantor may desire, and such Guarantor
is not relying upon or expecting any Holder of Guaranteed Obligations to
furnish to such Guarantor any information now or hereafter in the possession of
any Holder of Guaranteed Obligations concerning the same or any other matter.
By executing this Agreement, each Guarantor knowingly accepts the full range of
risks encompassed within a contract of this type, which risks each Guarantor
acknowledges. No Guarantor shall have the right to require any Holder of
Guaranteed Obligations to obtain or disclose any information with respect to
the Guaranteed Obligations, the financial condition or prospects of the
Borrower or any Subsidiary of the Borrower, the ability of the Borrower to pay
or perform the Guaranteed Obligations, the existence, perfection, priority or
enforceability of any collateral security for any or all of the Guaranteed
Obligations, the existence or enforceability of any other guaranties of all or
any part of the Guaranteed Obligations, any action or non-action on the part of
any Holder of Guaranteed Obligations, the Borrower, any Subsidiary of the
Borrower, any other Guarantor or any other Person, or any other event,
occurrence, condition or circumstance whatsoever.
SECTION 5.7. ACCEPTANCE AND NOTICE. Each Guarantor acknowledges acceptance
hereof and reliance hereon by the Lender and each other holder of Obligations
and waives, irrevocably and forever, all notice thereof.
SECTION 5.8. RIGHTS CUMULATIVE. The rights, powers and remedies given to
the Beneficiaries by this Agreement are cumulative and shall be in addition to
and independent of all rights, powers and remedies given to any Beneficiary by
virtue of any statute or rule of law or in any of the other Loan Documents or
any agreement between any Guarantor and one or more of the Beneficiaries or
between Borrower and one or more of the Beneficiaries. Any forbearance or
failure to exercise, and any delay by any Beneficiary in exercising, any right,
power or remedy hereunder shall not impair any such right, power or remedy or
be construed to be a waiver thereof, nor shall it preclude the further exercise
of any such right, power or remedy.
SECTION 5.9. EXPENSES. Each Guarantor jointly and severally agrees to pay,
or cause to be paid, on demand, and to save each Beneficiary harmless against
costs of and liability for, any and all reasonable costs and expenses (including
fees and disbursements of counsel) incurred or expended by any Beneficiary in
connection with the enforcement of or preservation of any rights under this
Agreement.
SECTION 5.10. NOTICE OF EVENTS. As soon as any Guarantor obtains knowledge
thereof, unless Borrower has given Guaranteed Party written notice thereof,
such Guarantor shall give Guaranteed Party written notice of any condition or
event which has resulted in (a) a material adverse change in the financial
condition of any Guarantor or Borrower, or (b) any Default or Event of Default.
SECTION 5.11. SET OFF. In addition to all other rights any Beneficiary may
have under law or in equity, if any amount shall at any time be due and payable
by any Guarantor to any Beneficiary under this Agreement, such Beneficiary is
authorized at any
16
time or from time to time, without notice (any such notice being hereby
expressly waived), to set off and to appropriate and to apply any and all
deposits (general or special, including but not limited to indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness of any such Beneficiary owing to such Guarantor and any
other property of such Guarantor held by any Beneficiary to or for the credit
or the account of such Guarantor against and on account of the Guaranteed
Obligations and liabilities of such Guarantor to any Beneficiary under this
Agreement.
SECTION 5.12. REPRESENTATIONS AND WARRANTIES. In order to induce
Beneficiaries to accept this Agreement and to enter into the Credit Agreement
and to make and maintain the loans and other extensions of credit thereunder,
as the case may be, each Guarantor hereby represents and warrants to the
Beneficiaries that the following statements are true and correct:
(a) CORPORATE EXISTENCE. Such Guarantor is duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
has the corporate power to own its assets and to transact the business in which
it is now engaged and is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification, except for
failures to be so qualified, authorized or licensed that in the aggregate do
not, and could not reasonable by expected to, have a Material Adverse Effect.
(b) CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Such
Guarantor has the corporate power, authority and legal right to execute,
deliver and perform this Agreement and all Security Documents and other Loan
Documents to which it is a party and to undertake and pay and perform all of
its liabilities and obligations hereunder and has taken all necessary corporate
action to authorize the execution, delivery, payment and performance hereof and
thereof on the terms and conditions set forth herein and therein. No consent of
any other Person including, without limitation, stockholders, licensors or
creditors of such Guarantor, and no license, permit, approval or authorization
of, exemption by, notice or report to or registration, filing or declaration
with, any governmental authority is required by such Guarantor in connection
herewith or therewith. This Agreement and each such Security Document and other
Loan Document has been duly executed and delivered by a duly authorized officer
of such Guarantor and constitutes the legally valid and binding obligation of
such Guarantor, enforceable against such Guarantor in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws or equitable
principles relating to or limiting creditors' rights generally.
(c) NO LEGAL BAR. The execution, delivery and performance of this
Agreement and all Security Documents and other Loan Documents to which such
Guarantor is a party, and the use of the proceeds of the borrowings and other
extensions of credit under the Credit Agreement, will not violate any provision
of any existing law or regulation binding on such Guarantor, or any order,
judgment, award or decree of any court, arbitrator or governmental authority
binding on such Guarantor, or the certificate of incorporation or
17
bylaws of such Guarantor or any securities issued by such Guarantor, or any
mortgage, indenture, debt agreement or other material agreement, instrument or
undertaking to which such Guarantor is a party or by which such Guarantor or
any of its assets may be bound and will not result in, or require, the creation
or imposition of any Lien on any of its property, assets or revenues.
(d) SENIOR INDEBTEDNESS. All liability of each Guarantor hereunder (A) is
and shall be (and is hereby designated as) "Senior Indebtedness" within the
meaning of and for the purposes of the Indenture dated as of January 27, 1998
by and among the Borrower, the Subsidiary Guarantors named therein, and Sate
Street Bank and Trust Company, as trustee, governing the Borrower's 9 3/8%
Senior Subordinated Notes due 2008, and (B) is and shall be (and is hereby made)
senior in right of payment, on the terms set forth in said Indenture, to said
Senior Subordinated Notes and all "Obligations" (as defined in said Indenture)
in respect of said Senior Subordinated Notes and all "Subsidiary Guarantees"
(as defined in said Indenture) at any time issued under or pursuant to said
Indenture.
SECTION 5.13. SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and the other Loan Documents and any increase in the amount of credit
that is or may be extended under the Credit Agreement.
SECTION 5.14. NOTICES. Any and all notices and communications to be given
to any Guarantor or Beneficiary may be given by courier service, personal
service, mailing the same, postage prepaid, or by telex, facsimile transmission
or cable to each such party at its address set forth in the Credit Agreement,
on the signature pages hereof or to such other addresses as each such party may
in writing hereafter indicate, and such communication shall be deemed to have
been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex, or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed; provided, that
notice to any Beneficiary shall not be effective until received by such
Beneficiary and by the Administrative Agent.
SECTION 5.15. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 5.16. AMENDMENTS AND WAIVERS. No amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by any Guarantor therefrom, shall in any event be effective without
the written concurrence of the Required Lenders. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 5.17. HEADINGS. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose or be given any substantive
effect.
18
SECTION 5.18. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 5.19. SUCCESSORS AND ASSIGNS. This Agreement is binding upon each
Guarantor and its successors and assigns and shall inure to the benefit of, and
be enforceable by, the Beneficiaries and their respective successors and
assigns. No Guarantor shall assign this Agreement or any of the rights or
obligations of such Guarantor hereunder without the prior written consent of all
Lenders. Any Lender may, without notice or consent, assign its interest in this
Agreement in whole or in part in connection with an assignment permitted under
Section 9.4 of the Credit Agreement. The terms and provisions of this Agreement
shall inure to the benefit of any transferee or assignee in any such assignment
and the rights and privileges herein conferred upon such Beneficiary shall
automatically extend to and be vested in any assignee therein and all other
successors, transferees and assigns of each Beneficiary, subject to the terms
and conditions hereof.
SECTION 5.20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK. BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Each
Guarantor hereby agrees that service of all process in any such proceeding in
any such court may be made by registered or certified mail, return receipt
requested, to such Guarantor at its address provided in Section 5.14, such
service being hereby acknowledged by such Guarantor to be sufficient for
personal jurisdiction in any action against such Guarantor in any such court
and to be otherwise effective and binding service in every respect. Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of any Beneficiary to bring proceedings against any
Guarantor in the courts of any other jurisdiction.
SECTION 5.21. WAIVER OF TRAIL BY JURY. EACH GUARANTOR AND, BY ITS
ACCEPTANCE OF THE BENEFITS HEREOF, EACH BENEFICIARY HEREBY AGREES TO WAIVE ITS
RIGHTS TO A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including contract claims,
tort claims, breach of duty claims and all other common law and statutory
claims. Each Guarantor and, by its acceptance of the benefits hereof, each
Beneficiary (i) acknowledges that this waiver is a material inducement for each
Guarantor and the Beneficiaries to enter into a business relationship, that the
Guarantors and Beneficiaries have
19
already relied on this waiver in entering into this Agreement or accepting the
benefits thereof, as the case may be, and that each will continue to rely on
this waiver in its related future dealings and (ii) further warrant and
represent that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 5.22. NOT OTHER WRITING. This writing is intended by the
Guarantors and Beneficiaries as the final expression of this Agreement and is
also intended as a complete and exclusive statement of the terms of their
agreement with respect to the matters covered hereby. No course of dealing,
course of performance or trade usage, and no parol evidence of any nature, shall
be used to supplement or modify any terms of this Agreement. There are no
conditions to the full effectiveness of this Agreement.
SECTION 5.23. FURTHER ASSURANCES. At any time or from time to time, upon
the request of the Required Lenders, each Guarantor shall execute and deliver
such further documents and do such other acts and things as the Required
Lenders may reasonably request in order to effect fully and purposes of this
Agreement.
SECTION 5.24. ADDITIONAL GUARANTORS.
(a) The initial Guarantors hereunder shall be Holdings and such of the
Subsidiaries of the Borrower as are signatories hereto on the date hereof. From
time to time subsequent to the date hereof, additional Subsidiaries of the
Borrower may become party hereto, as additional Guarantors (each an "Additional
Guarantor"), by executing a counterpart of this Agreement. Upon delivery of any
such counterpart to the Administrative Agent, notice of which is hereby waived
by each Guarantor, each such Additional Guarantor shall be a Guarantor and
shall be as fully a party hereto as if such Additional Guarantor were an
original signatory hereof. Each Guarantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or
release of any other Guarantor hereunder, nor by any election of any
Beneficiary not to cause any Subsidiary of Borrower to become an Additional
Guarantor hereunder. This Agreement shall be fully effective as to any
Guarantor that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Guarantor hereunder.
SECTION 5.25. COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Agreement shall become
effective as to each Guarantor upon the execution of a counterpart hereof by
such Guarantor (whether or not a counterpart hereof shall have been
20
executed by any other Guarantor) and delivery of such counterpart to the
Administrative Agent.
[Remainder of page intentionally left blank]
21
IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
LIBERTY GROUP ARIZONA HOLDINGS, INC.
LIBERTY GROUP ARKANSAS HOLDINGS, INC.
LIBERTY GROUP CALIFORNIA HOLDINGS, INC.
LIBERTY GROUP ILLINOIS HOLDINGS, INC.
LIBERTY GROUP IOWA HOLDINGS, INC.
LIBERTY GROUP KANSAS HOLDINGS, INC.
LIBERTY GROUP MICHIGAN HOLDINGS, INC.
LIBERTY GROUP MINNESOTA HOLDINGS, INC.
LIBERTY GROUP MISSOURI HOLDINGS, INC.
LIBERTY GROUP NEW YORK HOLDINGS, INC.
LIBERTY GROUP PENNSYLVANIA HOLDINGS, INC.
LIBERTY GROUP MANAGEMENT SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Acting for and on behalf of each of the entities named
above (the "Initial Subsidiary Guarantors")
LIBERTY GROUP PUBLISHING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
S-1