EXHIBIT 10.2
EXECUTION COPY
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$192,500,000
AMENDED AND RESTATED
FIVE-YEAR REVOLVING CREDIT AND COMPETITIVE
ADVANCE FACILITY AGREEMENT
dated as of
May 20, 2002
among
THE READER'S DIGEST ASSOCIATION, INC.,
as Borrower and Guarantor,
The Borrowing Subsidiaries Party Hereto
The Lenders Party Hereto
and
JPMORGAN CHASE BANK
(formerly known as THE CHASE MANHATTAN BANK),
as Administrative Agent
and Collateral Agent
ABN AMRO BANK N.V.,
COMMERZBANK AG,
MIZUHO CORPORATE BANK, LTD.
(formerly known as MIZUHO FINANCIAL GROUP)
and
WACHOVIA BANK, N.A.,
as Arrangers and Co-Syndication Agents
-------------------------
▇. ▇. ▇▇▇▇▇▇ SECURITIES INC.,
as Lead Arranger and Sole Bookrunner
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TABLE OF CONTENTS
Article I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein,
have the following meanings:...........................1
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS...................26
SECTION 1.03. TERMS GENERALLY..........................................26
SECTION 1.04. ACCOUNTING TERMS AND DETERMINATIONS......................26
Article II
THE LOANS
SECTION 2.01. COMMITMENTS..............................................26
SECTION 2.02. LOANS....................................................27
SECTION 2.03. COMPETITIVE BID PROCEDURE................................28
SECTION 2.04. STANDBY BORROWING PROCEDURE..............................30
SECTION 2.05. CONVERSION AND CONTINUATION OF STANDBY LOANS.............32
SECTION 2.06. FEES.....................................................33
SECTION 2.07. REPAYMENT OF LOANS; EVIDENCE OF DEBT.....................33
SECTION 2.08. INTEREST ON LOANS........................................34
SECTION 2.09. DEFAULT INTEREST.........................................35
SECTION 2.10. ALTERNATE RATE OF INTEREST...............................35
SECTION 2.11. TERMINATION AND REDUCTION OF COMMITMENTS.................35
SECTION 2.12. PREPAYMENT...............................................36
SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES............37
SECTION 2.14. CHANGE IN LEGALITY.......................................39
SECTION 2.15. INDEMNITY................................................39
SECTION 2.16. PRO RATA TREATMENT.......................................40
SECTION 2.17. SHARING OF SETOFFS.......................................40
SECTION 2.18. PAYMENTS.................................................41
SECTION 2.19. TAXES....................................................41
SECTION 2.20. DUTY TO MITIGATE; ASSIGNMENT OF COMMITMENTS UNDER
CERTAIN CIRCUMSTANCES..................................42
SECTION 2.21. BORROWING SUBSIDIARIES...................................43
i
Article III
CONDITIONS
SECTION 3.01. EFFECTIVENESS OF AMENDED AND RESTATED FIVE-YEAR CREDIT
AGREEMENT..............................................43
SECTION 3.02. BORROWINGS...............................................46
SECTION 3.03. INITIAL BORROWING BY EACH BORROWING SUBSIDIARY...........46
Article IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. ORGANIZATION; POWERS.....................................47
SECTION 4.02. AUTHORIZATION; ENFORCEABILITY............................47
SECTION 4.03. GOVERNMENTAL APPROVALS; NO CONFLICTS.....................47
SECTION 4.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE..........48
SECTION 4.05. PROPERTIES...............................................48
SECTION 4.06. LITIGATION AND ENVIRONMENTAL MATTERS.....................48
SECTION 4.07. COMPLIANCE WITH LAWS AND AGREEMENTS......................49
SECTION 4.08. NOT AN INVESTMENT COMPANY OR HOLDING COMPANY.............49
SECTION 4.09. TAXES....................................................49
SECTION 4.10. ERISA....................................................49
SECTION 4.11. DISCLOSURE...............................................49
SECTION 4.12. FEDERAL RESERVE REGULATIONS..............................50
SECTION 4.13. SUBSIDIARIES.............................................50
SECTION 4.14. SECURITY DOCUMENTS.......................................50
Article V
AFFIRMATIVE COVENANTS
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION...............51
SECTION 5.02. NOTICES OF MATERIAL EVENTS...............................52
SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS...........................52
SECTION 5.04. PAYMENT OF OBLIGATIONS...................................53
SECTION 5.05. MAINTENANCE OF PROPERTIES; INSURANCE.....................53
SECTION 5.06. BOOKS AND RECORDS; INSPECTION RIGHTS.....................53
SECTION 5.07. COMPLIANCE WITH LAWS.....................................53
SECTION 5.08. USE OF PROCEEDS..........................................53
SECTION 5.09. INFORMATION REGARDING COLLATERAL.........................53
SECTION 5.10. CASUALTY AND CONDEMNATION................................54
SECTION 5.11. ADDITIONAL SUBSIDIARIES..................................54
SECTION 5.12. FURTHER ASSURANCES.......................................55
SECTION 5.13. INTEREST RATE PROTECTION.................................55
SECTION 5.14. FILING OF CREDIT AGREEMENT, AMENDMENTS AND WAIVERS.......55
SECTION 5.15. COMPLIANCE WITH FEDERAL RESERVE REGULATIONS..............55
ii
Article VI
NEGATIVE COVENANTS
SECTION 6.01. DEBT AND PREFERRED STOCK OF SUBSIDIARIES.................55
SECTION 6.02. LIENS....................................................56
SECTION 6.03. SALE AND LEASEBACK TRANSACTIONS..........................58
SECTION 6.04. FUNDAMENTAL CHANGES......................................58
SECTION 6.05. ASSET SALES..............................................59
SECTION 6.06. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS...........................................59
SECTION 6.07. TRANSACTIONS WITH AFFILIATES.............................61
SECTION 6.08. RESTRICTIVE AGREEMENTS...................................61
SECTION 6.09. SWAP AGREEMENTS..........................................62
SECTION 6.10. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS....62
SECTION 6.11. AMENDMENT OF MATERIAL DOCUMENTS..........................63
SECTION 6.12. CONSOLIDATED INTEREST COVERAGE RATIO.....................63
SECTION 6.13. CONSOLIDATED LEVERAGE RATIO..............................63
SECTION 6.14. CONSOLIDATED FIXED CHARGE COVERAGE RATIO.................63
SECTION 6.15. CAPITAL EXPENDITURES.....................................64
Article VII
EVENTS OF DEFAULT
Article VIII
THE AGENTS
Article IX
JOINT AND SEVERAL LIABILITY OF BORROWERS; GUARANTEE
SECTION 9.01. JOINT AND SEVERAL LIABILITY OF BORROWERS.................68
SECTION 9.02. GUARANTEE................................................68
Article X
MISCELLANEOUS
SECTION 10.01. NOTICES.................................................70
SECTION 10.02. WAIVERS; AMENDMENTS.....................................71
iii
SECTION 10.02A WAIVERS; AMENDMENTS REGARDING COLLATERAL................71
SECTION 10.03. EXPENSES; INDEMNITY; DAMAGE WAIVER......................72
SECTION 10.04. SUCCESSORS AND ASSIGNS..................................73
SECTION 10.05. SURVIVAL................................................77
SECTION 10.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS................77
SECTION 10.07. SEVERABILITY............................................78
SECTION 10.08. RIGHT OF SETOFF.........................................78
SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS................................................78
SECTION 10.10. WAIVER OF JURY TRIAL....................................79
SECTION 10.11. HEADINGS................................................79
SECTION 10.12. CONFIDENTIALITY.........................................79
SECTION 10.13. CONVERSION OF CURRENCIES................................80
SECTION 10.14. RELEASE OF GRANTORS AND COLLATERAL......................81
SECTION 10.15. INCORPORATION OF AMENDMENTS TO TERM LOAN AGREEMENT......81
SECTION 10.16. SECURITY DOCUMENTS......................................81
SECTION 10.17. POWER OF ATTORNEY.......................................82
SECTION 10.18. APPOINTMENT.............................................82
EXHIBITS
Exhibit A - Administrative Questionnaire
Exhibit B - Form of Assignment and Assumption
Exhibit C - Form of Guarantee and Collateral Agreement
Exhibit D - Form of Perfection Certificate
Exhibit E-1 - Form of New York Mortgage
Exhibit E-2 - Form of Wisconsin Mortgage
Exhibit E-3 - Form of Iowa Mortgage
Exhibit F-1 - Form of Opinion of Associate General Counsel for the Borrowers
Exhibit F-2 - Form of Opinion of Counsel for the Borrowers
Exhibit F-3 - Form of Local Counsel Opinion
Exhibit F-4 - Form of Foreign Counsel Opinion
Exhibit F-5 - Form of Opinion of Counsel for Borrowing Subsidiary
Exhibit G - Borrowing Subsidiary Agreement
Exhibit H - Borrowing Subsidiary Termination
Exhibit I-1 - Competitive Bid Request
Exhibit I-2 - Notice of Competitive Bid Request
Exhibit I-3 - Competitive Bid
Exhibit I-4 - Competitive Bid Accept/Reject Letter
Exhibit I-5 - Standby Borrowing Request
SCHEDULES
Schedule 1.01(a) Cash Restructuring Charges
Schedule 1.01(b) Property Subject to Sales Contract Located in or near
Sydney, New South Wales, Australia
Schedule 2.01 Commitments
Schedule 4.02 Required Authorizations
iv
Schedule 4.03 Required Approvals
Schedule 4.05 Real Properties
Schedule 4.06 Disclosed Matters
Schedule 4.13 Subsidiaries and Loan Parties
Schedule 4.14 Filing Offices
Schedule 6.01 Debt
Schedule 6.02 Liens
v
AMENDED AND RESTATED FIVE-YEAR REVOLVING CREDIT AND
COMPETITIVE ADVANCE FACILITY AGREEMENT dated as of July 27, 2001
as amended and restated as of May 20, 2002 (this "Agreement"),
among THE READER'S DIGEST ASSOCIATION, INC., as a Borrower and
as the Guarantor (each as defined herein), the BORROWING
SUBSIDIARIES (as defined herein), the LENDERS (as defined
herein), and JPMORGAN CHASE BANK (formerly known as THE CHASE
MANHATTAN BANK), as administrative agent and collateral agent.
The Borrowers (such term and each other capitalized term used but not
otherwise defined herein having the meaning assigned to it in Article I) have
requested that the Lenders (i) extend credit in order to enable them to borrow
on a standby revolving credit basis on and after the date hereof and at any time
and from time to time prior to the Maturity Date a principal amount not to
exceed $192,500,000, and (ii) make available Swingline Loans in a principal
amount not to exceed $20,000,000 at any one time. The proceeds of such
Borrowings are to be used for general corporate purposes, including
acquisitions, share repurchases and commercial paper backup. The Borrowers have
also requested the Lenders to provide a procedure pursuant to which the Lenders
may be invited to bid on an uncommitted basis on short-term Borrowings by the
Borrower. The Lenders are willing to extend such credit to the Borrowers on the
terms and subject to the conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein, have
the following meanings:
"ABR BORROWING" means a Borrowing comprised of ABR Loans.
"ABR LOAN" means any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"ACQUISITION" means the purchase of substantially all the assets and
rights, and assumption of certain liabilities, of ▇▇▇▇▇▇ Holding Company, LLC;
▇▇▇▇▇▇ Publications, LLC; ▇▇▇▇▇▇ Management Company; ▇▇▇▇▇▇ Advertising and
Promotion, LLC; World Wide Country Tours, LLC and Homemaker Schools, LLC
pursuant to the Asset Purchase Agreement.
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
2
"ADMINISTRATIVE AGENT" means JPMCB in its capacity as administrative
agent for the Lenders hereunder, and its successors in such capacity.
"ADMINISTRATIVE FEES" shall have the meaning assigned to such term in
Section 2.07(b).
"ADMINISTRATIVE QUESTIONNAIRE" means an administrative questionnaire
in the form of Exhibit A hereto.
"AFFILIATE" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"AGENTS" means the Administrative Agent and the Collateral Agent.
"AGREEMENT CURRENCY" has the meaning set forth in Section 10.13(b).
"ALTERNATE BASE RATE" means, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.
"AMENDMENT FEES" has the meaning set forth in Section 3.01(r).
"APPLICABLE CREDITOR" has the meaning set forth in Section 10.13(b).
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of an ABR Loan or a Fixed Rate
Loan, or such Lender's Eurodollar Lending Office in the case of a Eurodollar
Loan.
"APPLICABLE RATE" means on any date, with respect to any Eurodollar
Standby Loan or ABR Loan, or with respect to the Facility Fees payable hereunder
the applicable rate per annum set forth below in the applicable table under the
caption "Eurodollar Spread" (in the case of a Eurodollar Standby Loan), "ABR
Spread" (in the case of an ABR Loan) or "Facility Fee" (in the case of Facility
Fees), as the case may be, based upon the Ratings; PROVIDED that the Applicable
Rates used to determine the interest accruing on Eurodollar Standby Loans or ABR
Loans shall in no event be less than those corresponding to Level 3 in the
pricing table below until the date corresponding to the six month anniversary of
the Effective Date shall have occurred:
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Ratings Eurodollar ABR Facility
(S&P/▇▇▇▇▇'▇) Spread Spread Fee
---------------------------------------------------------------
▇▇▇▇▇ ▇ 1.250% 0.250% 0.250%
higher than BBB-/Baa3
3
---------------------------------------------------------------
Ratings Eurodollar ABR Facility
(S&P/▇▇▇▇▇'▇) Spread Spread Fee
---------------------------------------------------------------
▇▇▇▇▇ ▇ 1.625% 0.625% 0.375%
BBB-/Baa3
---------------------------------------------------------------
▇▇▇▇▇ ▇ 2.00% 1.000% 0.500%
BB+/Ba1
---------------------------------------------------------------
▇▇▇▇▇ ▇ 2.250% 1.250% 0.500%
BB/Ba2
---------------------------------------------------------------
▇▇▇▇▇ ▇ 2.500% 1.500% 0.500%
lower than BB and Ba2
or unrated
---------------------------------------------------------------
For purposes of the foregoing, (i) if the Ratings in effect or deemed to be in
effect on any date fall in different Levels and the Ratings are at least BBB-
and Baa3, respectively, the Applicable Rate shall be determined on such date by
reference to the Level corresponding to the higher Rating, (ii) if such ratings
fall in different Levels and one or both ratings shall be below BBB- or Baa3,
respectively, the Applicable Rate shall be determined on such date by reference
to the Level corresponding to the lower Rating unless such ratings differ by
more than one Level, in which case the applicable Level shall be the Level next
above that corresponding to the lower Rating; (iii) if either ▇▇▇▇▇'▇ or S&P
shall not have, or shall be deemed not to have, a Rating in effect (other than
because such rating agency shall no longer be in the business of rating
corporate debt obligations or corporate credit), then such rating agency will be
deemed to have in effect a Rating in ▇▇▇▇▇ ▇ ; and (iv) if any Rating
established or deemed to have been established by ▇▇▇▇▇'▇ or S&P shall be
changed (other than as a result of a change in the rating system of either
▇▇▇▇▇'▇ or S&P), such change shall be effective as of the day after the date on
which such change is first announced by the rating agency making such change.
Each change in the Applicable Rate shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change. If the rating system of either
▇▇▇▇▇'▇ or S&P shall change, or if either such rating agency shall cease to be
in the business of rating corporate debt obligations or corporate credit, the
Company and the Lenders shall negotiate in good faith to amend the references to
specific ratings in this definition to reflect such changed rating system or the
non-availability of ratings from such rating agency, and pending any such
amendment the Applicable Rate shall be determined by reference to the ratings
provided immediately prior to such change or cessation.
"APPROVED FUND" has the meaning set forth in Section 10.04.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement dated
as of March 21, 2002, among The Reader's Digest Association, Inc., ▇▇▇▇▇▇
Holding Company, LLC and certain other parties.
"ASSIGNEE" means a Person to whom any Lender has assigned all or a
portion of its rights and obligations under this Agreement (including if the
Commitments remain in effect, all or a portion of its Commitments and the Loans
at the time owing to it) pursuant to Section 10.04.
4
"ASSIGNMENT AND ASSUMPTION" means an agreement substantially in the
form of Exhibit B hereto.
"AVAILABLE COMMITMENT" means, as to any Lender at any time, an amount
equal to such Lender's Commitment at such time minus such Lender's Standby
Credit Exposure.
"AVAILABILITY PERIOD" means the period from and including the
Effective Date to and excluding the earlier of the Maturity Date and the date of
the termination of the Commitments.
"BOARD" means the Board of Governors of the Federal Reserve System
of the United States.
"BORROWER" means the Company or any Borrowing Subsidiary.
"BORROWING" means (a) a group of Standby Loans of the same Type made
by the Lenders and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect, (b) a Competitive Loan or group of Competitive
Loans of the same Type made on the same date as to which the same Interest
Period is in effect or (c) a Swingline Loan.
"BORROWING SUBSIDIARY" means any Subsidiary of the Company named as
such on the signature pages hereto or designated as a Borrowing Subsidiary by
the Company pursuant to Section 2.22.
"BORROWING SUBSIDIARY AGREEMENT" means a Borrowing Subsidiary
Agreement substantially in the form of Exhibit G.
"BORROWING SUBSIDIARY TERMINATION" means a Borrowing Subsidiary
Termination substantially in the form of Exhibit H.
"BUSINESS DAY" means any day (other than a Saturday, Sunday or legal
holiday in the State of New York) on which banks are open for business in New
York City; PROVIDED, HOWEVER, that when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
A "CHANGE IN CONTROL" shall be deemed to have occurred (a) if the
equity capital structure of the Reader's Digest Association, Inc. consists of
Class A Non-Voting Common Stock and Class B Voting Common Stock, then if (i) The
▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Reader's Digest Fund, Inc., the ▇▇▇▇ ▇▇▇▇▇▇▇-Reader's Digest
Fund, Inc., The Employee Ownership Plan and 401(k)
5
Partnership of the Reader's Digest Association, Inc. and any other employee
benefit plans of the Company or any Subsidiary, taken together (the "CURRENT
CONTROL GROUP"), shall cease to be the "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as in effect as of the date
hereof) of shares representing 30% or more of the voting power represented by
the issued and outstanding capital stock of the Company; (ii) any person or
group (other than the Current Control Group) shall acquire "beneficial
ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as in effect as of the date hereof) of shares representing a greater percentage
of the voting power represented by the issued and outstanding capital stock of
the Company than the percentage of such voting power represented by the shares
beneficially owned by the Current Control Group; or (iii) during any period of
12 consecutive calendar months, (A) the directors (the "preceding directors")
constituting the Company's board of directors at the beginning of such period
and (B) any new directors (x) whose election by the Company's directors or whose
nomination for election by the Company's stockholders was, in each case,
approved by a majority of the Company's directors then still in office who were
either preceding directors or whose election or nomination for election was
previously so approved or (y) whose election or nomination for election was
voted for or approved, as the case may be, by the Current Control Group, when
all such directors are taken together, shall cease for any reason to constitute
a majority of the Company's board of directors, and (b) if the equity capital
structure of the Company is different from that described in clause (a) above,
then if (i) any person or group shall acquire "beneficial ownership" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as in effect as of the
date hereof) of Equity Interests representing 35% or more of the voting power
represented by the issued and outstanding Equity Interests of the Company; or
(ii) during any period of 12 consecutive calendar months, (A) the directors (the
"preceding directors") constituting the Company's board of directors at the
beginning of such period and (B) any new directors whose election by the
Company's directors or whose nomination for election by the Company's
stockholders was, in each case, approved by a majority of the Company's
directors then in office who were either preceding directors or whose election
or nomination for election was previously so approved, when all such directors
are taken together, shall cease for any reason to constitute a majority of the
Company's board of directors. As used in this definition, "group" shall have the
meaning given to such term in Rule 13d-5 of the Securities Exchange Act of 1934
as in effect on the date hereof. Notwithstanding anything to the contrary in
clause (a) above, no Change of Control shall be deemed to have occurred as a
result of the Recapitalization.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof after the date of this Agreement
or (c) compliance by any Lender with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"CLASS", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Standby Loans,
Competitive Loans or Swingline Loans.
6
"CLASS B REPURCHASE" means the purchase by the Company of shares of
its Class B Voting Common Stock for consideration not to exceed $100,000,000
pursuant to and on the terms set forth in the Recapitalization Agreement.
"CLO" has the meaning set forth in Section 10.04.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL" means "Collateral" as defined in the Guarantee and
Collateral Agreement and any other property or assets in which Liens are created
to secure the Obligations under any other Security Document.
"COLLATERAL AGENT" means JPMCB, in its capacity as collateral agent
for the Lenders.
"COLLATERAL AND GUARANTEE REQUIREMENT" means, at any time, the
requirement that:
(a) the Administrative Agent shall have received from the Company and
each Domestic Subsidiary (other than (i) the Excluded Subsidiaries and (ii)
▇▇▇▇▇.▇▇▇, Inc. for so long as efforts to sell or wind down such Subsidiary
shall not have been terminated) existing at such time either a counterpart
of the Guarantee and Collateral Agreement duly executed and delivered on
behalf of the Company or such Subsidiary or, in the case of any Person
(other than an Excluded Subsidiary) that becomes a Domestic Subsidiary
after the Effective Date, a supplement to the Guarantee and Collateral
Agreement, in the form specified therein, duly executed and delivered on
behalf of such Domestic Subsidiary;
(b) the Administrative Agent shall have received any Foreign Pledge
Agreements that it determines, based on the advice of counsel, to be
necessary or advisable in connection with the pledge of 65% of the
outstanding voting Equity Interests of The Reader's Digest Association
Limited, Verlag das Beste GmbH and Selection du Reader's Digest S.A., or
any other first-tier Foreign Subsidiary that has accounted for 5% or more
of Consolidated Revenue for any period of four fiscal quarters;
(c) all outstanding Equity Interests of any Subsidiary or any other
Person directly owned by any Grantor at such time shall have been pledged
pursuant to the Guarantee and Collateral Agreement (except that the
Grantors shall not be required to pledge more than 65% of outstanding
voting Equity Interests of any Foreign Subsidiary) and the Collateral Agent
shall have received certificates representing all such Equity Interests
(other than (i) uncertificated Equity Interests, (ii) Equity Interests in
▇▇▇▇▇.▇▇▇, Inc. for so long as efforts to sell or wind down such Subsidiary
shall not have been terminated, and (iii) Equity Interests in LookSmart,
Ltd. and WebMD Corporation), together with undated stock powers or other
instruments of transfer with respect thereto endorsed in blank;
(d) all Debt of any Person that is owed to any Grantor at such time
(other than obligations that individually do not exceed $1,000,000) shall
have been pledged pursuant
7
to the Guarantee and Collateral Agreement, and the Collateral Agent shall
have received all promissory notes or other instruments evidencing any such
Debt, together with undated instruments of transfer with respect thereto
endorsed in blank;
(e) all documents and instruments, including all Uniform Commercial
Code financing statements and filings with the United States Copyright
Office and the United States Patent and Trademark Office, required by law
or reasonably requested by the Collateral Agent to be filed, registered or
recorded to perfect the Liens intended to be created by the Guarantee and
Collateral Agreement shall have been filed, registered or recorded or
delivered to the Collateral Agent for filing, registration or recording;
provided that Liens on Intellectual Property, as defined in the Guarantee
and Collateral Agreement, will be perfected by filings in the United States
Copyright Office and the United States Patent and Trademark Office only
insofar as they relate to items of Intellectual Property deemed by the
Collateral Agent, after consultation with the Company, to be material to
the Company and the Subsidiaries, taken as a whole, and will not be
perfected by filings in any jurisdiction outside the United States;
(f) the Collateral Agent shall have received (i) counterparts of a
Mortgage with respect to each Mortgaged Property existing at such time,
duly executed and delivered by the record owner of such Mortgaged Property,
(ii) a policy or policies of title insurance issued by a nationally
recognized title insurance company insuring the Lien of each such Mortgage
as a valid first Lien on the Mortgaged Property described therein, free of
any other Liens except as expressly permitted by Section 6.02, together
with such endorsements, coinsurance and reinsurance as the Collateral Agent
or the Required Lenders may reasonably request, and (iii) such appraisals,
surveys, legal opinions and other documents as may be required by
applicable law or regulation or as the Collateral Agent or the Required
Lenders may reasonably request with respect to any such Mortgage or
Mortgaged Property; and
(g) each Grantor shall have obtained all consents and approvals
required to be obtained by it in connection with the execution and delivery
of the Guarantee and Collateral Agreement and each other Security Document
to which it is a party, the performance of its obligations thereunder and
the granting by it of the Liens thereunder;
PROVIDED, that the foregoing definition shall not require the creation or
perfection of pledges of or security interests in, or the obtaining of title
insurance or legal opinions with respect to, particular assets of the Grantors
if and for so long as, the Collateral Agent, in consultation with the Company,
determines that the cost of creating or perfecting such pledges or security
interests in such assets or obtaining title insurance or legal opinions in
respect of such assets shall be excessive in view of the benefits to be obtained
by the Lenders therefrom. The Collateral Agent may grant extensions of time for
the perfection of security interests in or the obtaining of title insurance or
legal opinions with respect to particular assets (including extensions beyond
the Effective Date for the perfection of security interests in the assets of the
Company and the Subsidiaries on such date) where it determines that perfection
cannot be accomplished without undue effort or expense by the time or times at
which it would otherwise be required by this Agreement or the Security
Documents.
8
"COMMITMENT" means, with respect to each Lender, the commitment of
such Lender to make Standby Loans and to acquire participations in Swingline
Loans hereunder as set forth in Schedule 2.01 or in an Assignment and Acceptance
delivered by such Lender under Section 10.04, as such Lender's Commitment may be
permanently terminated or reduced from time to time pursuant to Section 2.12 or
pursuant to one or more assignments under Section 10.04. The Commitment of each
Lender shall automatically and permanently terminate on the Maturity Date if not
terminated earlier pursuant to the terms hereof.
"COMPANY" means The Reader's Digest Association, Inc., a Delaware
corporation.
"COMPETITIVE BID" means an offer by a Lender to make a Competitive
Loan pursuant to Section 2.03.
"COMPETITIVE BID ACCEPT/REJECT LETTER" means a notification made by
the applicable Borrower pursuant to Section 2.03(d) in the form of Exhibit I-4.
"COMPETITIVE BID RATE" means, as to any Competitive Bid made by a
Lender pursuant to Section 2.03(b), (i) in the case of a Eurodollar Loan, the
Margin and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest
offered by the Lender making such Competitive Bid.
"COMPETITIVE BID REQUEST" means a request made pursuant to Section
2.03 in the form of Exhibit I-1.
"COMPETITIVE BORROWING" means a Borrowing consisting of a Competitive
Loan or concurrent Competitive Loans from the Lender or Lenders whose
Competitive Bids for such Borrowing have been accepted by the applicable
Borrower under the bidding procedure described in Section 2.03.
"COMPETITIVE LOAN" means a loan made pursuant to the bidding
procedure described in Section 2.03. Each Competitive Loan shall be a Eurodollar
Competitive Loan or a Fixed Rate Loan.
"COMPETITIVE LOAN EXPOSURE" means, with respect to any Lender at any
time, the aggregate principal amount of all outstanding Competitive Loans made
by such Lender.
"CONSOLIDATED ASSETS" means, at any time, all assets of the Company
and its consolidated Subsidiaries at such date, as determined on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, (a) the
additions to property, plant and equipment and other capital expenditures of the
Company and its consolidated Subsidiaries that are (or would be) set forth in a
consolidated statement of cash flows of the Company for such period prepared in
accordance with GAAP and (b) Capital Lease Obligations incurred by the Company
and its consolidated Subsidiaries during such period.
9
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net Income
for such period PLUS, to the extent not otherwise included in such Consolidated
Net Income, the sum (without duplication) of (a) income tax expense, (b)
Interest Expense, (c) depreciation and amortization, (d) non-recurring, non-cash
restructuring charges and cash restructuring charges identified in Schedule
1.01(a), (e) losses on the contemplated sale of the Company's subsidiary
▇▇▇▇▇.▇▇▇, Inc., and extraordinary losses, and (f) the cumulative effect of
changes in accounting principles, MINUS, to the extent added in computing such
Consolidated Net Income, the sum (without duplication) of (x) consolidated
interest income, (y) extraordinary gains and (z) the cumulative effect of
changes in accounting principles.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means the ratio of (a)
Consolidated EBITDA minus the sum of (i) Consolidated Capital Expenditures, (ii)
taxes actually paid in cash, (iii) permitted dividends actually paid in cash,
(iv) amounts paid in cash or other consideration other than Equity Interests in
connection with share repurchases (other than the Class B Repurchase and
payments to holders of not more than $5,000,000 in stated value of preferred
stock of the Company that are required to be made as a result of the exercise of
appraisal rights to which they may be entitled in connection with the
Recapitalization), and (v) scheduled amortization payments in respect of Debt,
to (b) Consolidated Net Interest Expense.
"CONSOLIDATED INTEREST COVERAGE RATIO" means the ratio of (a)
Consolidated EBITDA to (b) Consolidated Net Interest Expense.
"CONSOLIDATED LEVERAGE RATIO" means, at any time, the ratio of (a)
Consolidated Total Debt at such time to (b) Consolidated EBITDA for the period
of four fiscal quarters ended at or most recently prior to such time.
"CONSOLIDATED NET INCOME" means, for the Company and the consolidated
Subsidiaries for any period, the aggregate net income (or net deficit) of such
persons, determined on a consolidated basis in accordance with GAAP consistently
applied.
"CONSOLIDATED NET INTEREST EXPENSE" means, with respect to the
Company and the consolidated Subsidiaries for any period, Interest Expense (net
of any interest income for such period determined on a consolidated basis in
accordance with GAAP).
"CONSOLIDATED REVENUE" means, for the Company and the consolidated
Subsidiaries for any period, the aggregate revenues of such persons, determined
on a consolidated basis in accordance with GAAP consistently applied.
"CONSOLIDATED TOTAL DEBT" means, for the Company and the consolidated
Subsidiaries at any date, the aggregate Debt of such persons, determined on a
consolidated basis in accordance with GAAP consistently applied.
"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto.
10
"CURRENT CONTROL GROUP" has the meaning set forth in the definition
of "Change in Control".
"DEBT" of any Person means, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) the principal
amounts (as defined in the definition of "Swap" herein) of the obligations of
such Person under Swap Agreements, (e) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (f) all obligations of such Person in respect of the
deferred purchase price of property or services, (g) all Debt of others secured
by (or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Debt secured thereby has been assumed, (h) all
Guarantees by such Person of Debt of others, (i) all Capital Lease Obligations
of such Person, (j) all Securitization Transactions of such Person and (k) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit, letters of guaranty and banker's acceptances;
PROVIDED, HOWEVER, that Debt of any Person shall not include (i) trade payables,
(ii) any obligations of such Person incurred in connection with letters of
credit, letters of guaranty, banker's acceptances, bills of exchange and similar
instruments obtained or created in the ordinary course of business to support or
evidence obligations of such Person that do not constitute Debt, (iii)
endorsements of checks, bills of exchange and other instruments for deposit or
collection in the ordinary course of business, (iv) customer deposits and
advances and interest payable thereon in the ordinary course of business in
accordance with customary trade terms and other obligations incurred in the
ordinary course of business through credit on an open account basis customarily
extended to such Person, (v) any Debt secured on a non-recourse basis by any
assets of such Person to the extent that the outstanding balance thereof exceeds
the fair market value of such assets, (vi) statutory or other legal requirements
to make deposits in connection with sweepstakes or similar contests, or surety
bonds posted pursuant to such requirements and (vii) obligations under overdraft
arrangements with banks outside the United States incurred in the ordinary
course of business to cover working capital needs, but only to the extent that
such overdrafts remain outstanding for not more than three Business Days and do
not in the aggregate at any time exceed $5,000,000.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DISCLOSED MATTERS" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 4.06.
"DOLLARS" or "$" means lawful currency of the United States.
"DOMESTIC BORROWING SUBSIDIARY" means any Borrowing Subsidiary
organized under the laws of the United States or any of its territories or
possessions or any political subdivision thereof.
11
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" on Schedule
2.01 or, as to any person who becomes a Lender after the date hereof, on the
Assignment and Assumption executed by such person or such other office of such
Lender as such Lender may hereafter designate from time to time as its "Domestic
Lending Office" by notice to the Company and the Administrative Agent.
"DOMESTIC SUBSIDIARY" means any Subsidiary organized under the laws
of the United States, any State thereof, the District of Columbia or any of its
territories or possessions or any political subdivision thereof.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 3.01 are satisfied (or waived in accordance with Section 10.02).
"ENVIRONMENTAL LAWS" means any and all federal, state and local
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities),of the Company or any Subsidiary
directly or indirectly resulting from or based upon (a) violation or alleged
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"EQUITY INTEREST" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants or options or other rights to acquire any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder (other than an event for
which the 30-day notice period is waived), with respect to a Plan; (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of
12
ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by the Company or
any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by the Company or any
ERISA Affiliate from the PBGC or a plan administrator of any notice of
termination, or the intention to terminate, any Plan or Plans or to appoint a
trustee to administer any Plan where the Administrative Agent or the Required
Lenders shall have determined in good faith that such termination or appointment
is reasonably likely to result; (f) the incurrence by the Company or any of its
ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the
Company or any ERISA Affiliate of any notice of the imposition of, or an
intention to impose, Withdrawal Liability, where the Administrative Agent or the
Required Lenders shall have determined in good faith that such imposition is
reasonably likely to result or a determination that a Multiemployer Plan is, or
is expected to be, insolvent or in reorganization, within the meaning of Title
IV of ERISA.
"EURODOLLAR BORROWING" means a Borrowing comprised of Eurodollar
Loans.
"EURODOLLAR COMPETITIVE LOAN" means any Competitive Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"EURODOLLAR LENDING OFFICE" means, with respect to each Lender, the
branch or Affiliate of such Lender which such Lender has designated as its
"Eurodollar Lending Office" on Schedule 2.01 or, as to any person who becomes a
Lender after the date hereof, on the Assignment and Assumption executed by such
person or such other office of such Lender as such Lender may hereafter
designate from time to time as its "Eurodollar Lending Office" by notice to the
Company and the Administrative Agent.
"EURODOLLAR LOAN" means any Eurodollar Competitive Loan or
Eurodollar Standby Loan.
"EURODOLLAR STANDBY BORROWING" means a Borrowing comprised of
Eurodollar Standby Loans.
"EURODOLLAR STANDBY LOAN" means any Standby Loan bearing interest at
a rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"EVENT OF DEFAULT" has the meaning set forth in Article VII.
"EXCESS CASH FLOW" has the meaning set forth in the Term Loan
Agreement.
"EXCLUDED SUBSIDIARIES" means, at any time, Domestic Subsidiaries
that do not represent more than 1% for any such Subsidiary, or more than 5% in
the aggregate for all such Subsidiaries, of either (a) Consolidated Assets or
(b) the consolidated revenues of the Company and the Subsidiaries for the period
of four fiscal quarters most recently ended, and that (i) do not
13
own Equity Interests or Debt (other than de minimis Debt) of any Material
Subsidiary, (ii) do not own material intellectual property and (iii) do not have
any Debt that is guaranteed by the Company or any Material Subsidiary; PROVIDED
that no Subsidiary that is a Borrowing Subsidiary under this Agreement or the
Term Loan Agreement shall be an Excluded Subsidiary.
"EXCLUDED TAXES" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of any Borrower hereunder, (a) income, franchise or other taxes
imposed on (or measured by) its net income by the United States, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
Applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
such Borrower is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.20(b)), any
withholding tax that is imposed by the United States or by any other
jurisdiction in which such Lender is organized, has its principal office or its
Applicable Lending Office on amounts payable to such Foreign Lender at the time
such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender's failure to comply
with Section 2.20(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from any Borrower with
respect to such withholding tax pursuant to Section 2.20(a).
"EXISTING FIVE-YEAR CREDIT AGREEMENT" means the Five-Year Revolving
Credit and Competitive Advance Facility Agreement dated as of July 27, 2001,
among the Company, certain borrowing subsidiaries, certain lenders and JPMorgan
Chase Bank (formerly known as The Chase Manhattan Bank), as administrative
agent.
"EXISTING FIVE-YEAR CREDIT AGREEMENT EFFECTIVE DATE" means July 27,
2001.
"EXISTING 364-DAY CREDIT AGREEMENT" means the 364-Day Revolving
Credit and Competitive Advance Facility Agreement dated as of July 27, 2001,
among the Company, certain borrowing subsidiaries, certain lenders and JPMorgan
Chase Bank (formerly known as The Chase Manhattan Bank), as administrative
agent.
"FACILITY FEE" shall have the meaning assigned to such term in
Section 2.07(a).
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FEES" means the Facility Fee and the Administrative Fees.
14
"FINANCIAL OFFICER" of any Person shall means the chief financial
officer, principal accounting officer, treasurer or comptroller of such Person.
"FIXED RATE" shall mean the fixed rate of interest applicable to a
Fixed Rate Loan.
"FIXED RATE BORROWING" means a Borrowing comprised of Fixed Rate
Loans.
"FIXED RATE LOAN" means any Competitive Loan bearing interest at a
fixed percentage rate per annum (expressed in the form of a decimal to no more
than four decimal places) specified by the Lender making such Loan in its
Competitive Bid.
"FOREIGN BORROWER" means each Borrower that is a Foreign Subsidiary.
"FOREIGN LENDER", with respect to any Loan, means any Lender making
such Loan that is organized under the laws of a jurisdiction other than the
United States.
"FOREIGN PLEDGE AGREEMENT" means a pledge agreement governed by the
law of a jurisdiction other than the United States and satisfactory in form and
substance to the Administrative Agent and the Company.
"FOREIGN SUBSIDIARY" means any Subsidiary organized under the laws of
a jurisdiction outside the United States or any of its territories or
possessions or any political subdivision thereof.
"GAAP" means United States generally accepted accounting principles,
applied on a consistent basis.
"GOVERNMENTAL AUTHORITY" means the government of the United States,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.
"GRANTING LENDER" shall have the meaning assigned to such term in
Section 10.04(h).
"GRANTORS" means the Company and each Domestic Subsidiary that is, or
is required to be, a party to the Guarantee and Collateral Agreement or any
other Security Document.
"GUARANTEE" means any agreement by which the Company or any
Subsidiary assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes liable upon, the Debt of
another Person, or agrees to maintain the net worth or working capital or other
financial condition of such Person so as to enable such Person to pay such Debt
or otherwise assure any creditor of such Person against loss with respect to
such Debt, but shall not include (i) customary indemnifications, representations
and warranties made in connection with purchases, sales or leasing of property
or assets or issuances of
15
securities, (ii) assurances given in the ordinary course of business of the
payment of obligations of customers or suppliers of the Company or any
Subsidiary, (iii) retained liability in connection with sales of accounts
receivable or chattel paper in the ordinary course of business (but only to the
extent customary in connection with sales accounted for as true sales) or (iv)
guarantees of loans or advances made to present or former officers and directors
of the Company or any Subsidiary (x) to enable them to acquire Equity Interests
of the Company or any Subsidiary or (y) so long as the aggregate amount thereof
does not exceed $3,000,000, for any other purpose.
"GUARANTEE AND COLLATERAL AGREEMENT" means the Guarantee and
Collateral Agreement among the Company, the Collateral Agent and the Subsidiary
Guarantors substantially in the form of Exhibit C.
"GUARANTOR" means the Company, in its capacity as guarantor of the
Obligations hereunder.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature which in each case are
regulated pursuant to any Environmental Law.
"INCREASED INTEREST" has the meaning set forth in Section 2.09.
"INDEMNIFIED TAXES" means Taxes, including Other Taxes, but
excluding Excluded Taxes.
"INDEMNITEE" shall have the meaning assigned to such term in Section
10.03(b).
"INFORMATION" shall have the meaning assigned to such term in Section
10.12.
"INFORMATION MEMORANDUM" means the Confidential Information
Memorandum dated April 2002 relating to the Company and the Transactions.
"INTELLECTUAL PROPERTY" shall have the meaning assigned to such term
in the Guarantee and Collateral Agreement.
"INTEREST EXPENSE" means, for any period, the interest expense of the
Company and the consolidated Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP (and giving effect to any Swap
Agreements that have the effect of increasing or decreasing such interest
expense), including (i) the amortization of debt discounts to the extent
included in interest expense in accordance with GAAP, (ii) the amortization of
all fees (including fees with respect to interest rate protection agreements or
other interest rate hedging agreements) payable in connection with the
incurrence of indebtedness to the extent included in interest expense in
accordance with GAAP, (iii) the portion of any rents payable under capital
leases allocable to interest expense in accordance with GAAP and (iv) the amount
16
of commitment fees incurred prior to the Effective Date under the Fee Letter
dated as of March 21, 2002 as amended as of April 19, 2002, among the Company,
JPMCB and GSCP.
"INTEREST PAYMENT DATE" means (a) with respect to any Loan, the last
day of each Interest Period applicable to the Borrowing of which such Loan is a
part and, in addition, the date of any prepayment of such Loan or conversion of
such Loan to a Loan of a different Type and (b) in the case of a Eurodollar Loan
with an Interest Period of more than three months' duration or a Fixed Rate Loan
with an Interest Period of more than 90 days' duration, each day that would have
been an Interest Payment Date for such Loan had successive Interest Periods of
three months' duration or 90 days' duration, as the case may be, been applicable
to such Loan.
"INTEREST PERIOD" means (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months thereafter, as the Borrower may elect, (b) as to any ABR
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the earliest of (i) the next succeeding March
31, June 30, September 30 or December 31, (ii) the Maturity Date and (iii) the
date such Borrowing is converted to a Borrowing of a different Type in
accordance with Section 2.06 or repaid or prepaid in accordance with Section
2.08 or Section 2.13, (c) as to any Fixed Rate Borrowing, the period commencing
on the date of such Borrowing and ending on the date specified in the
Competitive Bids in which the offers to make the Fixed Rate Loans comprising
such Borrowing were extended, which shall not be earlier than seven days after
the date of such Borrowing or later than 360 days after the date of such
Borrowing and (d) as to any Swingline Borrowing, the period commencing on the
date of such Borrowing and ending on the earliest of (i) the Maturity Date and
(ii) the date such Borrowing is repaid in accordance with Section 2.08 or 2.13;
PROVIDED, HOWEVER, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of Eurodollar Loans only, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day. Interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"JPMCB" means JPMorgan Chase Bank, and its successors.
"JUDGMENT CURRENCY" shall have the meaning assigned to such term
in Section 10.13(b).
"LENDER" means each financial institution listed on the signature
pages hereof, each Assignee which becomes a Lender pursuant to Section 10.04,
and their respective successors. Unless context otherwise requires, the term
"Lenders" includes Swingline Lenders.
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal
17
to the arithmetic average of the rates that appear on the Reuters Screen LIBO
Page as of 11:00 a.m. (London time) on the date two Business Days prior to the
commencement of such Interest Period for deposits in Dollars with a maturity
comparable to such Interest Period or, in the event no such rates appear on the
Reuters Screen LIBO Page, the rate at which deposits in Dollars approximately
equal in principal amount to such Borrowing and for a maturity comparable to
such Interest Period are offered to the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Company or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"LOAN" means a Competitive Loan, a Standby Loan or a Swingline Loan.
"LOAN DOCUMENTS" means this Agreement, the Guarantee and Collateral
Agreement, each Mortgage and the notes and each amendment, supplement,
modification, consent or waiver of, to or in respect of any of the foregoing.
"LOAN PARTIES" means the Company, the Borrowing Subsidiaries and
the Grantors.
"LONG-TERM DEBT" means any Debt that, in accordance with GAAP,
constitutes (or, when incurred, constituted) a long-term liability.
"MARGIN" means, as to any Eurodollar Competitive Loan, the margin
(expressed as a percentage rate per annum in the form of a decimal to no more
than four decimal places) to be added to or subtracted from the LIBO Rate in
order to determine the interest rate applicable to such Loan, as specified in
the Competitive Bid relating to such Loan.
"MATERIAL ADVERSE EFFECT" means (a) a materially adverse effect on
the business, assets, operations or financial condition of the Company and its
Subsidiaries, taken as a whole, (b) material impairment of the ability of the
Company and its Subsidiaries, taken as a whole, to perform the Obligations or
(c) material impairment of the rights available to the Lenders or the Agents
under any Loan Document.
"MATERIAL DEBT" means Debt (other than the Loans), or obligations in
respect of one or more Swap Agreements, of any one or more of the Company and
its Subsidiaries in an aggregate principal amount exceeding $20,000,000 (or the
equivalent thereof in one or more other currencies).
"MATERIAL SUBSIDIARY" means, at any time, each Subsidiary other than
(a) Excluded Subsidiaries and (b) Foreign Subsidiaries that do not represent
more than 1% for any such Foreign Subsidiary, or more than 5% in the aggregate
for all such Foreign Subsidiaries, of
18
either (a) Consolidated Assets or (b) the Consolidated Revenues of the Company
and the Subsidiaries for the period of four fiscal quarters most recently ended,
and that (i) do not own Equity Interests or Debt (other than de minimis Debt) of
any Material Subsidiary, (ii) do not own material intellectual property and
(iii) do not have any Debt that is guaranteed by the Company or any Material
Subsidiary; PROVIDED that each Subsidiary that is a Borrowing Subsidiary under
this Agreement or the Term Loan Agreement or that is a Grantor shall be a
Material Subsidiary.
"MATURITY DATE" means July 27, 2006.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGE" means a mortgage or deed of trust, assignment of leases
and rents, or other security documents reasonably satisfactory in form and
substance to the Collateral Agent granting a Lien on any Mortgaged Property to
secure the Obligations.
"MORTGAGED PROPERTY" means, at any time, each parcel of real property
and the improvements thereto owned by any Grantor, including each such parcel
identified on Schedule 4.05 and each other parcel with respect to which a
Mortgage is required to be granted pursuant to Section 5.11 or 5.12; PROVIDED
that any parcel of real property and improvements thereto with a fair market
value of less than $1,000,000 shall not be a Mortgaged Property.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NET PROCEEDS" means, with respect to any Prepayment Event, (a) the
cash proceeds received by the Company or any Subsidiary in respect of such
Prepayment Event, including (i) any cash received in respect of any non-cash
proceeds, but only as and when received, (ii) in the case of a casualty,
insurance proceeds in excess of $500,000, and (iii) in the case of a
condemnation or similar event, condemnation awards and similar payments in
excess of $500,000, net of (b) the sum of (i) all fees, discounts, commissions
and out-of-pocket expenses paid by the Company and the Subsidiaries to third
parties (other than Affiliates) in connection with such Prepayment Event, (ii)
in the case of a sale, transfer or other disposition of an asset (including
pursuant to a sale and leaseback transaction or a casualty or a condemnation or
similar proceeding), the amount of all payments required to be made by the
Company and the Subsidiaries as a result of such Prepayment Event to repay Debt
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event, and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) by the Company and the Subsidiaries, and the
amount of any reserves established by the Company and the Subsidiaries to fund
contingent liabilities reasonably estimated to be payable, to the extent such
taxes and reserves are directly attributable to such Prepayment Event (as
determined reasonably and in good faith by the chief financial officer of the
Company).
"NET WORKING CAPITAL" means, at any date, (a) the consolidated
current assets of the Company and its consolidated Subsidiaries as of such date
(excluding cash and Permitted Investments or other cash equivalents) minus (b)
the consolidated current liabilities of the Company and its consolidated
Subsidiaries as of such date (excluding current liabilities in
19
respect of Debt and excluding unearned revenue). Net Working Capital at any date
may be a positive or negative number. Net Working Capital increases when it
becomes more positive or less negative and decreases when it becomes less
positive or more negative.
"NOTICE OF COMPETITIVE BID REQUEST" means a notification made
pursuant to Section 2.03 in the form of Exhibit I-2.
"OBLIGATIONS" means (a) the due and punctual payment of (i) the
principal of and interest (including interest accruing during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding) on the Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and (ii) all other monetary obligations of the Loan
Parties to any of the Secured Parties under this Agreement and each of the other
Loan Documents, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), (b) the due and punctual performance of all other
obligations of the Loan Parties under this Agreement and the other Loan
Documents and (c) the due and punctual payment and performance of all
obligations of the Company or any Subsidiary under each Swap Agreement that (i)
shall have been in effect on the Effective Date with a counterparty that shall
have been a Lender or an Affiliate of a Lender as of the Effective Date or (ii)
shall have been entered into after the Effective Date with any counterparty that
shall have been a Lender or an Affiliate of a Lender at the time such Swap
Agreement was entered into.
"OTHER TAXES" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution or delivery
of, or otherwise with respect to, this Agreement.
"PARTICIPANT" has the meaning set forth in Section 10.04.
"PARTICIPATION PERCENTAGE" means, with respect to any Lender, the
percentage of the aggregate Commitments represented by such Lender's Commitment
(or, after the Commitments have terminated, the percentage of the aggregate
outstanding Loans represented by such Lender's outstanding Loans).
"PAYMENT LOCATION" shall mean an office, branch or other place of
business of any Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERFECTION CERTIFICATE" means a certificate in the form of Exhibit D
or any other form approved by the Collateral Agent.
"PERMITTED ENCUMBRANCES" means:
20
(a) Liens imposed by law for Taxes, fees, assessments or other
governmental charges or levies that are not yet due and payable or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
vendors' or lessors' Liens (and deposits to obtain the release of such
Liens), set-off rights and other like Liens imposed by law (or contract, to
the extent that such contractual Liens are similar in nature and scope to
Liens imposed by law), in each case arising in the ordinary course of
business and securing obligations that either (i) are not overdue by more
than 60 days or (ii) are being contested in compliance with Section 5.04;
(c) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation, disability or
unemployment insurance, old-age pensions, retiree health benefits and other
similar plans or programs and other social security laws or regulations;
(d) deposits (including deposits made to satisfy statutory or other
legal obligations in connection with sweepstakes or similar contests) to
secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of
business;
(e) (i) easements, covenants, conditions, restrictions, zoning
restrictions, building codes, land use laws, leases, subleases, licenses,
rights of way, minor irregularities in, or lack of, title and similar
encumbrances affecting real property, (ii) with respect to any lessee's or
licensee's interest in real or personal property, mortgages, liens, rights
and obligations and other encumbrances arising by, through or under any
owner, lessor or licensor thereof, with or without the lessee's or
licensee's consent, and (iii) leases, licenses, rights and obligations in
connection with patents, copyrights, trademarks, tradenames and other
intellectual property, in each case that do not secure the payment of
borrowed money (other than, with respect to any lessee's or licensee's
interest in real or personal property, mortgages, liens, rights and
obligations and other encumbrances arising by, through or under any owner,
lessor or licensor thereof) to the extent, in the case of each of (i), (ii)
and (iii), that the Liens referred to therein do not, in the aggregate,
materially detract from the value of the affected property as used by the
Company or any Subsidiary in the ordinary course of business or materially
interfere with the ordinary conduct of the business of the Company and its
Subsidiaries, taken as a whole;
(f) Liens in favor of customs and revenue authorities to secure
payment of customs duties in connection with the importation of goods;
PROVIDED that "Permitted Encumbrances" shall not include any Lien securing
Debt.
"PERMITTED INVESTMENTS" shall mean:
21
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States (or
by any agency thereof to the extent such obligations are backed by the full
faith and credit of the United States), in each case maturing within one
year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States or any State thereof which has a short
term deposit rating of A1 from S&P and P1 from Moody's and has a combined
capital and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(c) above; and
(e) money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company
Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody's and (iii) have
portfolio assets of at least $5,000,000,000.
"PERSON" means an individual, a corporation, a partnership, a limited
liability company, a limited liability partnership, an association, a trust or
any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PREPAYMENT EVENT" has the meaning set forth in the Term Loan
Agreement.
"PRIME RATE" means the rate of interest per annum publicly announced
from time to time by JPMCB as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.
"RATINGS" shall mean (a) the published ratings by Moody's and S&P of
the Company's corporate credit, or (b) if either such rating agency shall not
have such a published rating, any confidential or private rating by such rating
agency of the Company's corporate credit. In the event either rating agency
shall have in effect a confidential or private rating of the sort referred to in
clause (b) of the preceding sentence, the Company shall cause such rating to be
22
reissued by such rating agency at least once during each 12 month period and at
such other times as the Administrative Agent, acting in good faith, shall
reasonably request, and shall provide a copy of such ratings to the
Administrative Agent and the Lenders. At any time when such rating shall not
have been so renewed and provided, such rating agency shall be deemed not to
have a Rating in effect.
"RECAPITALIZATION" means the recapitalization transaction provided
for in the Recapitalization Agreement including the Class B Repurchase.
"RECAPITALIZATION AGREEMENT" means the Recapitalization Agreement
dated as of April 12, 2002, by and among the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Reader's Digest
Fund, Inc., a New York not-for-profit corporation, the ▇▇▇▇ ▇▇▇▇▇▇▇-Reader's
Digest Fund, Inc., a New York not-for-profit corporation, and the Company.
"REGISTER" shall have the meaning assigned to such term in Section
10.04(b).
"REGISTERED NOTE" shall have the meaning assigned to such term in
Section 2.08(e).
"REGULATION U" means Regulation U of the Board, as in effect from
time to time.
"REGULATION X" means Regulation X of the Board, as in effect from
time to time.
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Holding Company, LLC; ▇▇▇▇▇▇ Publications, LLC;
▇▇▇▇▇▇ Management Company; ▇▇▇▇▇▇ Advertising and Promotion, LLC; World Wide
Country Tours, LLC and Homemaker Schools, LLC.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"REQUIRED LENDERS" means, at any time, Lenders having Commitments
representing a majority of the Total Commitment; provided that, after the
Commitments have been terminated for purposes of acceleration pursuant to clause
(ii) of Article VII, "Required Lenders" means Lenders holding Loans representing
a majority of the principal amount of all Loans outstanding.
"RESTRICTED PAYMENT" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in the Company or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancelation or
termination of any Equity Interests in the Company or any Subsidiary or any
option, warrant or other right to acquire any such Equity Interests in the
Company or any Subsidiary.
23
"REUTERS SCREEN LIBO PAGE" means the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).
"S&P" means Standard and Poor's Ratings Group, a division of
▇▇▇▇▇▇-▇▇▇▇.
"SECURED PARTIES" means (a) the Agents, (b) the Lenders, (c) the
Agents and Lenders under and as defined in the credit agreement establishing the
Term Loan Agreement, (d) each counterparty to any Swap Agreement with the
Company or any Subsidiary that either (i) is in effect on the Effective Date if
such counterparty is a Lender or an Affiliate of a Lender (or a Lender or an
Affiliate of a Lender under the Term Loan Agreement) as of the Effective Date or
(ii) is entered into after the Effective Date if such counterparty is a Lender
or an Affiliate of a Lender (or a Lender or an Affiliate of a Lender under the
Term Loan Agreement) at the time such Swap Agreement is entered into, (e) the
beneficiaries of each indemnification obligation undertaken by any Loan Party
under this Agreement or the Term Loan Agreement or any other Loan Document, (f)
each holder from time to time of Designated Letter of Credit Obligations (as
defined in the Guarantee and Collateral Agreement) and (g) the successors and
assigns of each of the foregoing.
"SECURITIZATION TRANSACTION" means any transfer by the Company or any
Subsidiary of accounts receivable or interests therein (a) to a trust,
partnership, corporation or other entity, which transfer is funded in whole or
in part, directly or indirectly, by the incurrence or issuance by the transferee
or any successor transferee of debt or other securities that are to receive
payments from, or that represent interests in, the cash flow derived from such
accounts receivable or interests, or (b) directly to one or more investors or
other purchasers. The amount of any Securitization Transaction shall be deemed
at any time to be the aggregate principal or stated amount of the Debt or other
securities referred to in the preceding sentence or, if there shall be no such
principal or stated amount, the uncollected amount of the accounts receivable
transferred pursuant to such Securitization Transaction net of any such accounts
receivable that have been written off as uncollectible.
"SECURITY DOCUMENTS" means the Guarantee and Collateral Agreement,
the Mortgages and the Foreign Pledge Agreements.
"STANDBY BORROWING" means a Borrowing consisting of simultaneous
Standby Loans from each of the Lenders then having an Available Commitment.
"STANDBY BORROWING REQUEST" means a request made pursuant to Section
2.04 in the form of Exhibit I-5.
"STANDBY CREDIT EXPOSURE" means, with respect to any Lender at any
time, the sum of (a) the aggregate principal amount at such time of all
outstanding Standby Loans of such Lender and (b) such Lender's Swingline
Exposure.
"STANDBY LOANS" means the revolving loans made pursuant to Section
2.01. Each Standby Loan shall be a Eurodollar Standby Loan or an ABR Loan.
24
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned by the parent or one or more subsidiaries of the parent or by
the parent and one or more subsidiaries of the parent.
"SUBSIDIARY" means any subsidiary of the Company.
"SUBSIDIARY GUARANTOR" has the meaning set forth in the Guarantee and
Collateral Agreement.
"SWAP AGREEMENT" means any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Company or the Subsidiaries shall be a Swap Agreement. The
"principal amount" of the obligations of the Company or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Company or such Subsidiary
would be required to pay if such Swap Agreement were terminated at such time.
"SWINGLINE BORROWING" means a Borrowing consisting of Swingline
Loans.
"SWINGLINE EXPOSURE" means, at any time, the aggregate principal
amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Participation Percentage of the total
Swingline Exposure at such time.
25
"SWINGLINE LENDER" means Chase, in its capacity as lender of
Swingline Loans hereunder.
"SWINGLINE LOAN" means a Loan made pursuant to Section 2.05.
"SYNTHETIC PURCHASE AGREEMENT" means any agreement pursuant to which
the Company or a Subsidiary is or may become obligated to make (i) any payment
in connection with the purchase by any third party from a person other than the
Company or a Subsidiary of any Equity Interest or Debt or (ii) any payment
(other than on account of a permitted purchase by it of any Equity Interest or
Debt) the amount of which is determined by reference to the price or value at
any time of any Equity Interest or Debt of the Company or a Subsidiary; PROVIDED
that no phantom stock or similar plan providing for payments only to current or
former directors, officers or employees of the Company or the Subsidiaries (or
to their heirs or estates) shall be deemed to be a Synthetic Purchase Agreement.
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority, and all liabilities with respect thereto (including without
limitation any interest, penalties or other additions to tax).
"TERM LOAN AGREEMENT" means the Term Loan Agreement dated as of May
20, 2002, among the Company, certain borrowing subsidiaries, certain lenders,
JPMorgan Chase Bank, as administrative agent and collateral agent and ▇▇▇▇▇▇▇
▇▇▇▇▇ Credit Partners as syndication agent.
"TOTAL COMMITMENT" means, at any time, the aggregate Commitments of
all the Lenders, as in effect at such time.
"TRANSACTIONS" means the execution, delivery and performance by the
Loan Parties of the Loan Documents, the borrowing of Loans hereunder, the use of
the proceeds of such Loans, the creation of the Guarantees and Liens provided
for in the Security Documents, the completion of the Acquisition, the Class B
Repurchase and the Recapitalization and the other transactions contemplated
hereby.
"TYPE", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, "RATE" shall include the LIBO
Rate, the Alternate Base Rate and the Fixed Rate.
"UNITED STATES" and "U.S." each means the United States of America.
"U.S. PERSON" means any Person that is (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any State thereof or (iii) any
estate or trust that is subject to U.S. Federal income taxation regardless of
the source of its income.
26
"UTILIZATION FEE" has the meaning set forth in Section 2.07(c) of the
Existing Five-Year Credit Agreement.
"WORKING CAPITAL" means, at any date, (a) the consolidated current
assets of the Company and its consolidated Subsidiaries as of such date minus
(b) the consolidated current liabilities of the Company and its consolidated
Subsidiaries as of such date.
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Swingline Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Swingline Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Swingline Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Swingline
Borrowing").
SECTION 1.03. 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 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,
including cash, securities, accounts and contract rights.
SECTION 1.04. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP as
in effect from time to time; PROVIDED that, if the Company notifies the
Administrative Agent that the Company wishes to amend any provision hereof,
including, without limitation, any covenant in Article VI, to eliminate the
effect of any change in generally accepted accounting principles adopted after
the Effective Date on the operation of such provision (or if the Administrative
Agent notifies the Company that the Required Lenders wish to amend any such
provision for such purpose), then the Company's compliance with such provision
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such provision is amended in a manner satisfactory to the Company and the
Required Lenders.
27
ARTICLE II
THE LOANS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Standby Loans, denominated in
Dollars, to any Borrower, at any time and from time to time on and after the
Effective Date and until the earlier of the Maturity Date and the termination of
the Commitment of such Lender; PROVIDED that after giving effect to any such
Standby Loan (and to any concurrent repayment or prepayment of Loans), (i) the
sum of the aggregate Standby Credit Exposures and the aggregate Competitive Loan
Exposures shall not exceed the Total Commitment then in effect and (ii) the
Standby Credit Exposure of any Lender shall not exceed such Lender's Commitment.
Within the foregoing limits, the Borrowers may borrow, pay or prepay and
reborrow Standby Loans hereunder, on and after the Effective Date and prior to
the Maturity Date, subject to the terms, conditions and limitations set forth
herein.
SECTION 2.02. LOANS. (a) Each Standby Loan shall be made as part of a
Borrowing consisting of Standby Loans made by the Lenders ratably in accordance
with their Available Commitments; PROVIDED, HOWEVER, that the failure of any
Lender to make any Standby Loan shall not in itself relieve any other Lender of
its obligation to lend hereunder (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to make any Loan
required to be made by such other Lender). Each Competitive Loan shall be made
in accordance with the procedures set forth in Section 2.03. The Loans
comprising any Borrowing shall be (i) in the case of Competitive Loans, in an
aggregate principal amount that is an integral multiple of $1,000,000 and not
less than $5,000,000 and (ii) in the case of Standby Loans, in an aggregate
principal amount that is an integral multiple of $1,000,000 and not less than
$5,000,000 (or an aggregate principal amount equal to the remaining balance of
the Available Commitments). All Loans shall be made in Dollars.
(a) Each Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans and each Standby Borrowing
shall be comprised entirely of Eurodollar Standby Loans or ABR Loans. Each
Lender may at its option make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; PROVIDED,,
HOWEVER, that any exercise of such option shall not affect the obligation of the
applicable Borrower to repay such Loan in accordance with the terms of this
Agreement. Borrowings of more than one Type may be outstanding at the same time;
PROVIDED, HOWEVER, that no Borrower shall be entitled to request any Borrowing
which, if made, would result in an aggregate of more than 15 separate Eurodollar
Standby Loans of any Lender being outstanding at any one time or to elect to
convert or continue any Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date. For purposes of the foregoing, Loans
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Loans.
(b) Subject to Section 2.06, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Administrative Agent in New York, New York,
not later than 12:00 noon, New York City time,
28
and the Administrative Agent shall by 2:00 p.m., New York City time, credit the
amounts so received to the account or accounts specified from time to time in
one or more notices delivered by the Company to the Administrative Agent or, if
a Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Lenders. Competitive Loans shall be made by the Lender or Lenders
whose Competitive Bids therefor are accepted pursuant to Section 2.03 in the
amounts so accepted. Standby Loans shall be made by the Lenders pro rata in
accordance with Section 2.17. Unless the Administrative Agent shall have
received notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's portion
of such Borrowing, the Administrative Agent may assume that such Lender has made
such portion available to the Administrative Agent on the date of such Borrowing
in accordance with this paragraph (c) and the Administrative Agent may, in
reliance upon such assumption, make available to the applicable Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have made such portion available to the Administrative Agent, such Lender and
the applicable Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent at (i) in the case of
the Borrower, the interest rate applicable at the time to the Loans comprising
such Borrowing and (ii) in the case of such Lender, a rate determined by the
Administrative Agent to represent its cost of overnight or short-term funds
(which determination shall be conclusive absent manifest error). If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
shall constitute such Lender's Loan as part of such Borrowing for purposes of
this Agreement.
SECTION 2.03. COMPETITIVE BID PROCEDURE. (a) Subject to the terms and
conditions set forth herein, from time to time on or after the Effective Date
and until the earlier of the Maturity Date and the termination of the
Commitments, any Borrower may request Competitive Bids and may (but shall not
have any obligation to) accept Competitive Bids and borrow Competitive Loans;
PROVIDED that the sum of the total Standby Credit Exposures plus the aggregate
amount of the Competitive Loan Exposures at any time shall not exceed the Total
Commitment. In order to request Competitive Bids, a Borrower shall hand deliver
or telecopy to the Administrative Agent a duly completed Competitive Bid Request
in the form of Exhibit I-1 hereto, to be received by the Administrative Agent
(i) in the case of a Eurodollar Competitive Borrowing, not later than 10:00
a.m., New York City time, four Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:00
a.m., New York City time, one Business Day before a proposed Competitive
Borrowing. No ABR Loan shall be requested in, or made pursuant to, a Competitive
Bid Request. A Competitive Bid Request that does not conform substantially to
the format of Exhibit I-1 may be rejected in the Administrative Agent's sole
discretion, and the Administrative Agent shall promptly notify the Borrower of
such rejection by telecopy. Each Competitive Bid Request shall refer to this
Agreement and specify (v) the Borrower submitting such Competitive Bid Request,
(w) whether the Borrowing then being requested is to be a Eurodollar Borrowing
or a Fixed Rate Borrowing, (x) the date of such Borrowing (which shall be a
Business Day) and the aggregate principal amount thereof, which shall be in a
minimum principal amount of $15,000,000 and in an integral multiple of
$1,000,000, (y) the maturity date of such Borrowing (which may not be after the
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Maturity Date) and (z) the Interest Period with respect thereto (which may not
end after the Maturity Date). Promptly after its receipt of a Competitive Bid
Request that is not rejected as aforesaid, the Administrative Agent shall
telecopy to each Lender a Notice of Competitive Bid Request inviting the Lender
to bid, on the terms and conditions of this Agreement, to make Competitive
Loans.
(a) Subject to paragraph (g) hereof, each Lender invited to bid may,
in its sole discretion, make one or more Competitive Bids responsive to the
Borrower's Competitive Bid Request. Each Competitive Bid by a Lender must be
received by the Administrative Agent by telecopy, in the form of Exhibit I-3
hereto, (i) in the case of a Eurodollar Competitive Borrowing, not later than
9:30 a.m., New York City time, three Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30
a.m., New York City time, on the day of a proposed Competitive Borrowing.
Multiple bids will be accepted by the Administrative Agent. Competitive Bids
that do not conform substantially to the format of Exhibit I-3 may be rejected
by the Administrative Agent, and the Administrative Agent shall notify the
Lender making such nonconforming bid of such rejection as soon as practicable.
Each Competitive Bid shall refer to this Agreement and specify (x) the principal
amount (which shall be in a minimum principal amount of $5,000,000 and in an
integral multiple of $1,000,000 and which may equal the entire principal amount
of the Competitive Borrowing requested) of the Competitive Loan or Loans that
the Lender is willing to make, (y) the Competitive Bid Rate or Rates at which
the Lender is prepared to make the Competitive Loan or Loans and (z) the
Interest Period and the last day thereof. Any Competitive Bid for a principal
amount in excess of that requested in the Competitive Bid Request shall be
deemed to be a Competitive Bid for the principal amount requested. If any Lender
invited to bid shall elect not to make a Competitive Bid, such Lender shall so
notify the Administrative Agent by telecopy (I) in the case of Eurodollar
Competitive Loans, not later than 9:30 a.m., New York City time, three Business
Days before a proposed Competitive Borrowing, and (II) in the case of Fixed Rate
Loans, not later than 9:30 a.m., New York City time, on the day of a proposed
Competitive Borrowing; PROVIDED, HOWEVER, that failure by any Lender to give
such notice shall not cause such Lender to be obligated to make any Competitive
Loan as part of such Competitive Borrowing. A Competitive Bid submitted by a
Lender pursuant to this paragraph (b) shall be irrevocable.
(b) The Administrative Agent shall promptly notify the Borrower, by
telecopy, of all the Competitive Bids made, the Competitive Bid Rate and the
principal amount of each Competitive Loan in respect of which a Competitive Bid
was made and the identity of the Lender that made each bid. The Administrative
Agent shall send a copy of all Competitive Bids to the Borrower for its records
as soon as practicable after completion of the bidding process set forth in this
Section 2.03.
(c) The Borrower may in its sole and absolute discretion, subject
only to the provisions of this paragraph (d), accept or reject any Competitive
Bid referred to in paragraph (c) above. The Borrower shall notify the
Administrative Agent by telephone, confirmed by telecopy in the form of a
Competitive Bid Accept/Reject Letter, whether and to what extent it has decided
to accept or reject any of or all the bids referred to in paragraph (c) above
not more than one hour after it shall have been notified of such bids by the
Administrative Agent pursuant to such
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paragraph (c); PROVIDED, HOWEVER, that (i) the failure of the Borrower to give
such notice shall be deemed to be a rejection of all the bids referred to in
paragraph (c) above, (ii) the Borrower shall not accept a bid made at a
particular Competitive Bid Rate if it has decided to reject a bid made at a
lower Competitive Bid Rate with respect to such Competitive Bid Request, (iii)
the aggregate amount of the Competitive Bids accepted by the Borrower shall not
exceed the principal amount specified in such Competitive Bid Request, (iv) if
the Borrower shall accept a bid or bids made at a particular Competitive Bid
Rate but the amount of such bid or bids shall cause the total amount of bids to
be accepted to exceed the amount specified in such Competitive Bid Request, then
the Borrower shall accept a portion of such bid or bids in an amount equal to
the amount specified in such Competitive Bid Request less the amount of all
other Competitive Bids at lower Competitive Bid Rates accepted with respect to
such Competitive Bid Request, which acceptance, in the case of multiple bids at
a particular Competitive Bid Rate, shall be made pro rata in accordance with the
amount of each such bid at such particular Competitive Bid Rate, and (v) except
pursuant to clause (iv) above, no bid shall be accepted for a Competitive Loan
unless such Competitive Loan is in a minimum principal amount of $5,000,000 and
an integral multiple of $1,000,000; PROVIDED FURTHER, HOWEVER, that if a
Competitive Loan must be in an amount less than $5,000,000 because of the
provisions of clause (iv) above, such Competitive Loan may be for an integral
multiple of $1,000,000, and in calculating the pro rata allocation of
acceptances of portions of multiple bids at a particular Competitive Bid Rate
pursuant to clause (iv) the amounts shall be rounded to integral multiples of
$1,000,000 in a manner which shall be in the discretion of the Borrower. A
notice given pursuant to this paragraph (d) shall be irrevocable.
(d) The Administrative Agent shall promptly notify each bidding
Lender whether or not its Competitive Bid has been accepted (and if so, in what
amount and at what Competitive Bid Rate) by telecopy, and each successful bidder
will thereupon become bound, subject to the other applicable conditions hereof,
to make the Competitive Loan in respect of which its bid has been accepted.
(e) No Competitive Borrowing shall be requested or made hereunder if
after giving effect thereto any of the conditions set forth in clause (i) of
Section 2.01 would not be met.
(f) If the Administrative Agent shall elect to submit a Competitive
Bid in its capacity as a Lender, it shall submit such bid directly to the
Borrower one quarter of an hour earlier than the latest time at which the other
Lenders are required to submit their bids to the Administrative Agent pursuant
to paragraph (b) above.
SECTION 2.04. STANDBY BORROWING PROCEDURE. In order to request a
Standby Borrowing, a Borrower shall hand deliver or telecopy (or give telephone
notice promptly confirmed in writing or by telecopy) to the Administrative Agent
a duly completed Standby Borrowing Request in the form of Exhibit I-5 (a) in the
case of a Eurodollar Standby Borrowing, not later than 10:30 a.m., New York City
time, three Business Days before such Borrowing, and (b) in the case of an ABR
Borrowing, not later than 10:30 a.m., New York City time, on the day of such
Borrowing. No Fixed Rate Loan shall be requested or made pursuant to a Standby
Borrowing Request. Such notice shall be irrevocable and shall in each case
specify (i) the
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Borrower requesting such Standby Borrowing, (ii) whether the Borrowing then
being requested is to be a Eurodollar Standby Borrowing or an ABR Borrowing;
(iii) the date of such Borrowing (which shall be a Business Day) and the amount
thereof; and (iv) if such Borrowing is to be a Eurodollar Standby Borrowing, the
duration of each Interest Period with respect thereto, the last of which shall
not end after the Maturity Date. If no election as to the Type of Standby
Borrowing is specified in any such notice with respect to a Standby Borrowing,
then the requested Standby Borrowing shall be an ABR Borrowing. If no Interest
Period with respect to any Eurodollar Standby Borrowing is specified in any such
notice, then the Borrower shall be deemed to have selected an Interest Period of
one month's duration. The Administrative Agent shall promptly advise the Lenders
of any notice given pursuant to this Section 2.04 and of each Lender's portion
of the requested Borrowing.
SECTION 2.05 SWINGLINE LOANS. (a) Subject to the terms and conditions
set forth herein, the Swingline Lender agrees to make Swingline Loans to any
Borrower from time to time during the Availability Period, in an aggregate
principal amount at any time outstanding that will not result in (i) the
aggregate principal amount of outstanding Swingline Loans exceeding $20,000,000
or (ii) the sum of the total Standby Credit Exposures plus the aggregate
principal amount of Competitive Loans exceeding the Total Commitments; PROVIDED
that the Swingline Lender shall not be required to make a Swingline Loan to
refinance an outstanding Swingline Loan. Within the foregoing limits and subject
to terms and conditions set forth herein, the Borrowers may borrow, prepay and
reborrow Swingline Loans. Each Swingline Loan shall be an ABR Loan.
(a) In order to request a Swingline Loan, the applicable Borrower
shall notify the Administrative Agent of such request by telephone (confirmed by
telecopy), not later than 12:00 noon, New York City time, on the day of a
proposed Swingline Loan. Each such notice shall be irrevocable and shall specify
the requested date (which shall be a Business Day) and amount of the requested
Swingline Loan. The Administrative Agent will promptly advise the Swingline
Lender of any such notice received from a Borrower. The Swingline Lender shall
make each Swingline Loan available to the applicable Borrower by means of a
credit to the general deposit account of such Borrower with the Swingline Lender
by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.
(b) The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Lenders to acquire participations on such Business Day
in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent
shall give notice thereof to each Lender, specifying in such notice such
Lender's Participation Percentage of such Swingline Loan or Loans. In
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees, upon receipt of notice as provided above, to pay the Administrative
Agent, for the account of the Swingline Lender, such Lender's Participation
Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the
32
occurrence and continuance of a Default or reduction or termination of the
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. Each Lender shall comply with
its obligation under this paragraph by wire transfer of immediately available
funds, in the same manner as provided in Section 2.02(c) with respect to Loans
made by such Lender (and Section 2.02(c) shall apply, MUTATIS MUTANDIS, to the
payment obligations of the Lenders), and the Administrative Agent shall promptly
pay the Swingline Lender the amounts received by it from the Lenders. The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to the Swingline Lender. Any amounts received by the Swingline Lender from the
Borrower (or other party on behalf of the Borrower) in respect of a Swingline
Loan after receipt by the Swingline Lender of the proceeds of the sale of
participations therein shall promptly be remitted to the Administrative Agent;
any such amounts received by the Administrative Agent shall promptly be remitted
to the Lenders that shall have made payments pursuant to this paragraph and to
the Swingline Lender, as their interests may appear. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in payment thereof.
SECTION 2.05. CONVERSION AND CONTINUATION OF STANDBY LOANS. A
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (i) not later than 10:30 a.m., New York City time, on the
day of the conversion, to convert all or any part of any Eurodollar Standby
Borrowing into an ABR Borrowing, and (ii) not later than 10:30 a.m., New York
City time, three Business Days prior to conversion or continuation, to convert
any ABR Borrowing into a Eurodollar Standby Borrowing or to continue any
Eurodollar Standby Borrowing for an additional Interest Period, subject in each
case to the following:
(a) if less than all the outstanding principal amount of any Standby
Borrowing shall be converted or continued, the aggregate principal amount of the
Standby Borrowing being converted or continued shall be an integral multiple of
$1,000,000 and not less than $5,000,000;
(b) accrued interest on a Standby Borrowing (or portion thereof)
being converted shall be paid by the Borrower at the time of conversion;
(c) if any Eurodollar Standby Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower shall pay,
upon demand, any amounts due to the Lenders pursuant to Section 2.16;
(d) any portion of a Standby Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as a
Eurodollar Standby Borrowing and shall, unless clause (e) applies to such
Borrowing, be repaid at the end of the Interest Period applicable thereto;
(e) any portion of a Eurodollar Standby Borrowing which cannot be
continued as a Eurodollar Standby Borrowing by reason of clause (d) above shall,
if not repaid at the end of the applicable Interest Period, be automatically
converted at the end of the Interest Period in effect for such Eurodollar
Standby Borrowing into an ABR Borrowing; and
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(f) no Interest Period may be selected for any Eurodollar Standby
Borrowing that would end later than the Maturity Date.
Each notice pursuant to this Section 2.06 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Standby Borrowing to be converted or continued, (ii) whether such Standby
Borrowing is to be converted to or continued as a Eurodollar Standby Borrowing
or an ABR Borrowing, (iii) if such notice requests a conversion, the date of
such conversion (which shall be a Business Day) and (iv) if such Standby
Borrowing is to be converted to or continued as a Eurodollar Standby Borrowing,
the Interest Period with respect thereto. If no Interest Period is specified in
any such notice with respect to any conversion to or continuation as a
Eurodollar Standby Borrowing, the Borrower shall be deemed to have selected an
Interest Period of one month's duration. If no notice shall have been given in
accordance with this Section 2.06 to convert or continue any Standby Borrowing,
such Standby Borrowing shall, at the end of the Interest Period applicable
thereto (unless repaid pursuant to the terms hereof), automatically be continued
into a new Interest Period as an ABR Borrowing.
SECTION 2.06. FEES. (a) The Company agrees to pay to each Lender,
through the Administrative Agent, on each March 31, June 30, September 30 and
December 31 (with the first payment being due on September 30, 2001) and on the
date on which the Commitment of such Lender shall have been terminated, a
facility fee (a "FACILITY FEE"), equal to the Applicable Rate on the amount of
the Commitment of such Lender, whether used or unused, during the preceding
quarter (or other period commencing on the date hereof or ending with the date
on which the Commitment of such Lender shall be terminated); PROVIDED that, if
such Lender continues to have any Standby Credit Exposure after its Commitment
terminates, then the Facility Fee shall continue to accrue on the daily amount
of such Lender's Standby Credit Exposure from and including the date on which
its Commitment terminates to but excluding the date on which such Lender ceases
to have any Standby Credit Exposure. All Facility Fees shall be computed on the
basis of the actual number of days elapsed in a year of 360 days. The Facility
Fee due to each Lender shall be payable in arrears and shall commence to accrue
on the date hereof and cease to accrue on the date on which the Commitment of
such Lender shall have terminated and such Lender shall have no further Standby
Credit Exposure.
(a) The Company agrees to pay to the Administrative Agent, for its
own account, the administrative, auction and other fees separately agreed to by
the Company and the Administrative Agent (collectively, the "ADMINISTRATIVE
FEES").
(b) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders. Once paid, none of the Fees shall be refundable under any
circumstances other than to correct errors in payment.
SECTION 2.07. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) Each of the
Borrowers hereby agrees that (i) the outstanding principal balance of each
Standby Loan shall be payable on the Maturity Date, (ii) the outstanding
principal balance of each Competitive Loan shall be payable on the last day of
the Interest Period applicable thereto and (iii) the outstanding
34
principal balance of each Swingline Loan shall be payable on the tenth Business
Day following the making thereof.
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness to such Lender resulting from
each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.
(b) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Borrower of each Loan,
the Type of each Loan and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from each Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder from each Borrower and each
Lender's share thereof.
(c) The entries made in the accounts maintained pursuant to paragraph
(b) and (c) of this Section 2.08 shall be prima facie evidence of the existence
and amounts of the obligations therein recorded; PROVIDED, HOWEVER, that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligations of the
Borrowers to repay the Loans in accordance with their terms.
(d) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note or notes payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns (in
each such case, a "REGISTERED NOTE")) and in a form reasonably approved by the
Administrative Agent. Thereafter, the Loans evidenced by such promissory note
and interest thereon shall at all times (including after assignment pursuant to
Section 10.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a Registered Note, to such payee and its registered assigns).
SECTION 2.08. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.10, the Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to (i) in the case of each Eurodollar Standby
Loan, (A) the LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate from time to time in effect and (ii) in the case of
each Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in
effect for such Borrowing plus (or minus) the Margin offered by the Lender
making such Loan and accepted by the applicable Borrower pursuant to Section
2.03.
(a) Subject to the provisions of Section 2.10, the Loans comprising
each ABR Borrowing (including each Swingline Loan) shall bear interest (computed
on the basis of the actual number of days elapsed over a year of 365 or 366
days, as the case may be, for periods during which the Alternate Base Rate is
determined by reference to the Prime Rate and 360 days for other periods) at a
rate per annum equal to the Alternate Base Rate plus the Applicable Rate from
time to time in effect.
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(b) Subject to the provisions of Section 2.10, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the applicable
Borrower pursuant to Section 2.03.
(c) Interest on each Loan shall be payable on each Interest Payment
Date applicable to such Loan except as otherwise provided in this Agreement. The
applicable Adjusted LIBO Rate or Alternate Base Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error. At any time when a Utilization Fee would have accrued under the Existing
Five-Year Credit Agreement, a portion of the Increased Interest accruing under
this Section equal to such Utilization Fee will be deemed to have accrued in
lieu of such Utilization Fee. For purposes of the preceding sentence, "INCREASED
INTEREST" shall mean, as to any Borrowing, the excess of (i) the amount of
interest accruing on such Borrowing over (ii) the amount of interest that would
have accrued thereon under the Existing Five-Year Credit Agreement.
SECTION 2.09. DEFAULT INTEREST. If any Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, such Borrower shall on demand from time to time from the
Administrative Agent pay interest from and including the date of such default,
to the extent permitted by law, on such defaulted amount up to (but not
including) the date of actual payment (after as well as before judgment) at a
rate per annum (computed as provided in Section 2.09) equal to the higher of (a)
the rate, if any, otherwise applicable to such amount hereunder plus 2% per
annum and (b) the Alternate Base Rate plus the Applicable Rate from time to time
in effect plus 2% per annum.
SECTION 2.10. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined (i) that deposits in Dollars in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market or any other market in which the Lenders shall be funding such Loans,
(ii) that the rates at which such deposits are being offered will not adequately
and fairly reflect the cost to Lenders having Commitments representing at least
50% of the Total Commitment at such time of making or maintaining their
Eurodollar Loans during such Interest Period or (iii) that reasonable means do
not exist for ascertaining the LIBO Rate, the Administrative Agent shall, as
soon as practicable thereafter, give telecopy notice of such determination to
the Company and the Lenders. In the event of any such determination, until the
Administrative Agent shall have advised the Company and the Lenders that the
circumstances giving rise to such notice no longer exist, any request by a
Borrower for a Eurodollar Competitive Borrowing pursuant to Section 2.03
affected by such circumstances shall be of no force and effect and shall be
denied by the Administrative Agent, and any request by a Borrower for a
Eurodollar Standby Borrowing pursuant to Section 2.04 shall, to the extent
affected by such circumstances, be deemed to be a request for an ABR Borrowing.
Each determination by the Administrative Agent hereunder shall be conclusive
absent manifest error.
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SECTION 2.11. TERMINATION AND REDUCTION OF COMMITMENTS. (a) The
Commitments shall be automatically and permanently terminated on the Maturity
Date.
(b) Upon at least three Business Days' prior irrevocable telecopy
notice to the Administrative Agent, the Company may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Total Commitment; PROVIDED, HOWEVER, that (i) each partial reduction of the
Total Commitment shall be in an integral multiple of $1,000,000 and in a minimum
principal amount of $10,000,000 and (ii) no such termination or reduction shall
be made (A) which would reduce the Total Commitment to an amount less than the
sum of the aggregate Standby Credit Exposures and the aggregate Competitive Loan
Exposures or (B) which would reduce any Lender's Commitment to an amount that is
less than such Lender's Standby Credit Exposure.
(c) Each reduction in the Total Commitment hereunder shall be made
ratably among the Lenders in accordance with their respective Commitments. The
Company shall pay to the Administrative Agent for the account of the Lenders, on
the date of each termination or reduction of the Total Commitment, the Facility
Fees on the amount of the Commitments so terminated accrued through the date of
such termination or reduction.
SECTION 2.12. PREPAYMENT. (a) The Borrowers shall have the right at
any time and from time to time to prepay any Standby Borrowing, in whole or in
part, upon giving telecopy notice (or telephone notice promptly confirmed by
telecopy) to the Administrative Agent (which shall give prompt notice thereof to
each Lender): (i) before 10:00 a.m., New York City time, three Business Days
prior to prepayment, in the case of a Eurodollar Standby Borrowing and (ii)
before 10:00 a.m., New York City time, one Business Day prior to prepayment, in
the case of an ABR Borrowing; PROVIDED, HOWEVER, that (i) each partial
prepayment of any Standby Borrowing shall be in an amount which is an integral
multiple of $1,000,000 and not less than $10,000,000 or such smaller amount as
necessary to repay any such Borrowing in full. No prepayment may be made in
respect of any Competitive Borrowing.
(a) On the date of any termination or reduction of the Commitments
pursuant to Section 2.13, the Borrowers shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the sum of the aggregate
Standby Credit Exposures and the aggregate Competitive Loan Exposures will not
exceed the Total Commitment, after giving effect to such termination or
reduction.
(b) If, at any time, the sum of the aggregate Standby Credit
Exposures and the aggregate Competitive Loan Exposures exceeds the Total
Commitment, the applicable Borrower shall, on such day, prepay such Borrowing in
an amount equal to the lesser of (i) such excess and (ii) the amount of such
Borrowing.
(c) If, at any time, the Standby Credit Exposure of any Lender of a
Loan included in such Borrowing exceeds such Lender's Commitment, the applicable
Borrower shall, on such day, prepay such Borrowing in an amount equal to the
lesser of (i) the amount necessary to eliminate such excess and (ii) the amount
of such Borrowing.
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(d) Each notice of prepayment given pursuant to paragraph (a) above
shall specify the prepayment date and the principal amount of each Borrowing (or
portion thereof) to be prepaid, shall be irrevocable and shall commit the
applicable Borrower to prepay such Borrowing (or portion thereof) in the amount
stated therein on the date stated therein. All prepayments under this Section
2.13 shall be subject to Section 2.16 but otherwise without premium or penalty.
All prepayments under this Section 2.13 shall be accompanied by accrued interest
on the principal amount being prepaid to the date of payment.
(e) In satisfaction of any prepayment obligation under paragraph (b),
(c), or (d) of this Section 2.13 when due with respect to any Eurodollar Loan,
the Company may deposit in the Prepayment Account (as defined below) cash in an
aggregate amount sufficient to satisfy such prepayment obligation. The
Administrative Agent shall deposit such amount in the Prepayment Account and
shall apply such amount to prepay each Loan against which such cash is being
held, on the last day of the applicable Interest Period (or, at the direction of
the Company, on any earlier date). For purposes of this Agreement, the term
"PREPAYMENT ACCOUNT" shall mean an account or accounts established by the
Company with the Administrative Agent and over which the Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal for application in accordance with this paragraph (f). The
Administrative Agent will, at the request of the Company from time to time,
invest the cash in the Prepayment Account in Permitted Investments that mature
on or prior to the last day of the applicable Interest Periods of the Loans
against which such cash is being held; PROVIDED, HOWEVER, that the
Administrative Agent shall not be required to make any investment (i) that, in
its sole judgment, would cause it to be in, or would result in any, violation of
any law, statute, rule or regulation or (ii) if a Default or Event of Default
shall have occurred and be continuing. The Company shall indemnify the
Administrative Agent for any losses relating to the investments so that the cash
in the Prepayment Account will be sufficient to prepay each Loan against which
such cash is being held, on the last day of the applicable Interest Period. The
Prepayment Account shall not bear interest other than any interest or profits on
such investments, which shall be deposited in the Prepayment Account and
reinvested and disbursed as specified above. If the maturity of the Loans has
been accelerated pursuant to Article VII, the Administrative Agent may, in its
sole discretion, apply all amounts on deposit in the Prepayment Account to
satisfy any of the Obligations. The Company hereby grants to the Administrative
Agent, for its benefit and the benefit of the Lenders, a security interest in
the Prepayment Account to secure the Obligations. At any time that no Event of
Default has occurred and is continuing and there is no outstanding Loan against
which cash in the Prepayment Account is required to be held, the Administrative
Agent shall release all cash in the Prepayment Account to the Company.
SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein but subject to paragraph (d) below
and to Section 2.21, if any Change in Law shall result in the imposition,
modification or applicability of any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender, or shall result in the imposition on any Lender or the
London interbank market or any other market in which the funding operations of
any Lender shall be conducted of any other condition, in any such case,
affecting this Agreement, such Lender's Commitment or any Eurodollar Loan or
Fixed Rate Loan made by such Lender, and the
38
result of any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any Eurodollar Loan or Fixed Rate Loan or to reduce the
amount of any sum received or receivable by such Lender hereunder (whether of
principal, interest or otherwise) by an amount deemed by such Lender to be
material, then the Company and the applicable Borrower agree severally (and not
jointly) to pay such additional amount or amounts as will compensate such Lender
for such additional costs or reduction. Notwithstanding the foregoing, no Lender
shall be entitled to request compensation under this paragraph with respect to
any Competitive Loan (i) relating to any reserve requirements in effect at the
time the Competitive Bid with respect thereto is submitted by such Lender or
(ii) if the Change in Law giving rise to such request was known by such Lender
to be applicable to it at the time of submission of the Competitive Bid pursuant
to which such Competitive Loan was made.
(a) If any Lender shall have determined that any Change in Law
regarding capital adequacy has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement, such Lender's Commitment or
the Loans made by such Lender pursuant hereto to a level below that which such
Lender or such Lender's holding company could have achieved but for such Change
in Law (taking into consideration such Lender's policies and the policies of
such Lender's holding company with respect to capital adequacy) by an amount
deemed by such Lender to be material, then the Company and the applicable
Borrower agree to pay to such Lender from time to time such additional amount or
amounts as will compensate such Lender for such reduction; PROVIDED, HOWEVER,
that each Foreign Borrower shall pay only such amounts that relate to its own
Obligations.
(b) A certificate of each Lender setting forth such amount or amounts
as shall be necessary to compensate such Lender or its holding company as
specified in paragraph (a) or (b) above, as the case may be, and setting forth
in reasonable detail the manner in which such amount or amounts shall have been
determined, shall be delivered to the Company with a copy to the Administrative
Agent and shall be conclusive absent manifest error. The Company or the
applicable Borrower, as the case may be, shall pay each Lender the amount shown
as due on any such certificate delivered by it within 10 Business Days after its
receipt of the same.
(c) Failure or delay on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital shall not constitute a waiver of such Lender's
right to demand such compensation with respect to such period or any other
period, except that no Lender shall be entitled to any compensation under this
Section 2.14 for any costs incurred or reduction suffered with respect to any
date unless such Lender shall have notified the Company that it will demand
compensation for such costs or reductions under paragraph (c) above not more
than 60 days after the later of (i) such date and (ii) the date on which such
Lender shall have become aware of such costs or reductions. The protection of
this Section shall be available to each Lender regardless of any possible
contention of the invalidity or inapplicability of any law, rule, regulation or
guideline or any Change in Law. Notwithstanding any other provision in this
Section 2.14, no Lender shall demand compensation for any increased cost or
reduction referred to above if it shall not at the time be the general policy or
practice of such Lender to demand such compensation in similar
39
circumstances under comparable provisions of other credit agreements, if any. If
any Lender shall receive as a refund any moneys from any source in respect of
any increased cost or reduction that it has identified on any certificate
provided pursuant to paragraph (c) above, to the extent that the Company or any
Borrower has previously paid the Lender any compensation in respect thereof, the
Lender shall promptly forward such refund to the Company or such Borrower, as
the case may be, without interest.
SECTION 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision herein, if any Change in Law shall make it unlawful for any Lender or
its Applicable Lending Office to make or maintain any Eurodollar Loan or to give
effect to its obligations as contemplated hereby with respect to any Eurodollar
Loan, then, such Lender shall give written notice thereof to the Company and to
the Administrative Agent and as long as such illegality, limitation or
impracticality continues to exist, such Lender:
(i) may declare that Eurodollar Loans will not thereafter be made by
such Lender hereunder, whereupon such Lender shall not submit a Competitive
Bid in response to a request for Eurodollar Competitive Loans, any request
by any Borrower for Eurodollar Loans shall, as to such Lender only, be
deemed a request for an ABR Loan unless such declaration shall be
subsequently withdrawn; and
(ii) shall promptly enter into negotiations with the Company and
negotiate in good faith to agree to a solution to such illegality,
limitation or impracticability; PROVIDED, HOWEVER, that if such an
agreement has not been reached by the date at which the applicable notice
becomes effective as provided in paragraph (b) below, the affected
Eurodollar Loans shall be automatically converted on such date into ABR
Loans.
(b) For purposes of this Section 2.15, a notice by any Lender shall
be effective as to each Eurodollar Loan, if lawful, on the last day of the
Interest Period currently applicable to such Eurodollar Loan; in all other cases
such notice shall be effective on the date of receipt.
(c) Each Lender that has delivered a notice pursuant to paragraph (a)
above, if the circumstances giving rise to such notice cease to exist, shall
notify each applicable Borrower thereof as soon as practicable.
SECTION 2.15. INDEMNITY. (a) Subject to Section 2.16(b), each
Borrower agrees to indemnify each Lender making any Loan to it against any loss
or expense which such Lender may sustain or incur as a consequence of (a) any
failure by any Borrower to borrow or to refinance, convert or continue any Loan
hereunder after irrevocable notice of such borrowing, refinancing, conversion or
continuation has been given pursuant to Section 2.03, 2.04, 2.05 or 2.06 and (b)
any payment, prepayment or conversion of a Loan to such Borrower required by any
other provision of this Agreement or otherwise made or deemed made, or any
purchase required pursuant to the provisions of Section 2.21(b) (except pursuant
to Sections 2.21 (b)(iii) or (iv)), on a date other than the last day of the
Interest Period, if any, applicable thereto or (c) any default by such Borrower
in payment or prepayment of the principal amount of any Loan or any part thereof
or interest accrued thereon, as and when due and payable (at the due date
thereof, whether by scheduled maturity, acceleration, irrevocable notice of
prepayment or otherwise),
40
including, in each such case, any loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Loan or any part thereof.
Such loss or reasonable expense shall include an amount equal to the excess, if
any, as reasonably determined by such Lender, of (i) its cost of obtaining the
funds for the Loan being paid, prepaid, refinanced or not borrowed (which in the
case of a Eurodollar Loan will be assumed to be the LIBO Rate applicable
thereto) for the period from the date of such payment, prepayment, refinancing
or failure to borrow or refinance to the last day of the Interest Period for
such Loan (or, in the case of a failure to borrow or refinance the Interest
Period for such Loan which would have commenced on the date of such failure)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would be realized by such Lender in reemploying the funds so paid, prepaid or
not borrowed or refinanced for such period or Interest Period, as the case may
be. A certificate of any Lender setting forth any amount or amounts which such
Lender is entitled to receive pursuant to this Section and setting forth in
reasonable detail the manner in which such amount or amounts shall have been
determined shall be delivered to such Borrower with a copy to the Administrative
Agent and shall be conclusive absent manifest error.
(b) Notwithstanding any other provision hereof, each Foreign Borrower
shall be subject to the indemnification obligations created by this Section 2.16
only with respect to its own Obligations.
SECTION 2.16. PRO RATA TREATMENT. Each payment of the Facility Fees
and each reduction of the Commitments shall be allocated pro rata among the
Lenders in accordance with their respective Commitments. Except as required
under Section 2.15, each continuation, payment or prepayment of principal of any
Standby Borrowing and each refinancing or conversion of any Standby Borrowing
shall be allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective principal amounts of their outstanding Standby
Loans comprising such Borrowing. Each payment of interest on any Standby
Borrowing shall be allocated pro rata among the Lenders participating in such
Borrowing in accordance with the respective amounts of accrued and unpaid
interest on their outstanding Standby Loans comprising such Borrowing. Each
payment of principal of any Competitive Borrowing shall be allocated pro rata
among the Lenders participating in such Borrowing in accordance with the
respective principal amounts of their outstanding Competitive Loans comprising
such Borrowing. Each payment of interest on any Competitive Borrowing shall be
allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective amounts of accrued and unpaid interest on their
outstanding Competitive Loans comprising such Borrowing. Each Lender agrees that
in computing such Lender's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Lender's percentage of
such Borrowing to the next higher or lower whole unit amount.
SECTION 2.17. SHARING OF SETOFFS. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim,
or pursuant to a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means (other than
as provided in
41
Section 2.15 or pursuant to an assignment under Section 2.21 or Section 10.04),
obtain payment (voluntary or involuntary) in respect of any Standby Loan or
Standby Loans as a result of which the unpaid principal portion of its Standby
Loans shall be proportionately less than the unpaid principal portion of the
Standby Loans of any other Lender, it shall be deemed simultaneously to have
purchased from such other Lender at face value, and shall promptly pay to such
other Lender the purchase price for, a participation in the Standby Loans of
such other Lender, so that the aggregate unpaid principal amount of the Standby
Loans and participations in the Standby Loans held by each Lender shall be in
the same proportion to the aggregate unpaid principal amount of all Standby
Loans then outstanding as the principal amount of its Standby Loans prior to
such exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Standby Loans outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; PROVIDED, HOWEVER, that,
if any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.18 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. Any Lender holding a participation in a Standby Loan deemed to have
been so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing to such Lender by reason
thereof as fully as if such Lender had made a Standby Loan in the amount of such
participation.
SECTION 2.18. PAYMENTS. (a) Each Borrower shall make each payment
(including the principal of or interest on any Borrowing made by it or any Fees
or other amounts payable by it) hereunder from a Payment Location in the United
States not later than 12:00 noon, New York City time, on the date when due in
Dollars to the Administrative Agent at its offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, in immediately available funds. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof.
(b) Whenever any payment (including the principal of or interest on
any Borrowing or any Fees or other amount) hereunder shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.19. TAXES. (a) Any and all payments by or on account of any
obligation of the Borrowers hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; PROVIDED that if any Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as determined in good faith by the Administrative Agent or the
applicable Lender to be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, or Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
such Borrower shall make such deductions and (iii) such Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.
42
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Administrative Agent and each
Lender within 20 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrowers hereunder or under any other Loan Document
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Company by a Lender, or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by a Borrower to a Governmental Authority, the Company shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which a
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Company (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Company as will permit such payments to be
made without withholding or at a reduced rate.
(f) If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by a Borrower or with respect to which a Borrower
has paid additional amounts pursuant to this Section 2.20, it shall pay over
such refund to the Company (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrowers under this Section 2.20 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); PROVIDED, that the Borrowers, upon the request of
the Administrative Agent or such Lender, agree to repay the amount paid over to
such Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This section shall not be construed to
require the Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes which it deems confidential) to
any Borrower or any other Person.
43
SECTION 2.20. DUTY TO MITIGATE; ASSIGNMENT OF COMMITMENTS UNDER
CERTAIN CIRCUMSTANCES. (a) Any Lender claiming any additional amounts payable
pursuant to Section 2.14, or 2.20, or exercising its rights under Section 2.15,
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to file any certificate or document requested by the Company or to change the
jurisdiction of its Applicable Lending Office or to take such other actions as
may reasonably be requested by the Company if the making of such a filing or
change would avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue or avoid the circumstances giving rise to
such exercise and would not, in the reasonable determination of such Lender, be
otherwise disadvantageous to such Lender.
(b) In the event that (i) any Lender shall have delivered a notice or
certificate pursuant to Section 2.14 or 2.15, (ii) any Borrower shall be
required or reasonably believes it will be required, to make additional payments
to any Lender under Section 2.20, (iii) any Lender shall become, or a
substantial part of the property of any Lender shall become, the subject of any
receivership or similar proceeding or (iv) any Lender shall default on its
commitment to lend hereunder, the Company shall have the right, at its own
expense, upon notice to such Lender and the Administrative Agent, to require
such Lender to transfer and assign without recourse, free and clear of all
deductions and withholding (in accordance with, upon the terms of and subject to
the restrictions contained in Section 10.04), all interests, rights and
obligations contained hereunder to another financial institution or to another
Lender which shall assume such obligations; provided that (A) no such assignment
shall conflict with any law, rule or regulation or order of any Governmental
Authority and (B) the assignee or the Company, as the case may be, shall pay to
the affected Lender in immediately available funds on the date of such
assignment the principal of and the interest accrued to the date of payment on
the Loans made by it hereunder and all other amounts accrued for its account or
owed to it hereunder.
SECTION 2.21. BORROWING SUBSIDIARIES. The Company may designate any
Subsidiary as a Borrowing Subsidiary. Upon the receipt by the Administrative
Agent of a Borrowing Subsidiary Agreement in the form of Exhibit G executed by
such Subsidiary and the Company, such Subsidiary shall be a Borrowing Subsidiary
and a party to this Agreement. Any Subsidiary shall cease to be a Borrowing
Subsidiary hereunder at such time as no Loans shall be outstanding to such
Subsidiary and such Subsidiary and the Company shall have executed and delivered
to the Administrative Agent a Borrowing Subsidiary Termination in the form of
Exhibit H.
ARTICLE III
CONDITIONS
SECTION 3.01. EFFECTIVENESS OF AMENDED AND RESTATED FIVE-YEAR CREDIT
AGREEMENT. This Amended and Restated Five-Year Credit Agreement shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 10.02):
(a) The Administrative Agent shall have received counterparts hereof
signed by each of the parties hereto.
44
(b) The representations and warranties set forth in Article IV shall
be true and correct in all material respects on the Effective Date.
(c) The Borrowers shall be in compliance with all the terms and
provisions set forth herein on their part to be observed or performed, and at
the time of and immediately after the Effective Date, no Event of Default or
Default shall have occurred and be continuing.
(d) The Collateral and Guarantee Requirement shall be satisfied.
(e) The Agents shall have received a certificate, signed by a
Financial Officer of the Company, confirming the satisfaction of the conditions
set forth in paragraphs (b), (c) and (d) above on and as of the Effective Date,
after giving effect to the Transactions occurring on or prior to such date;
(f) The Agents shall have received written opinions of (i) ▇▇▇▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇, Associate General Counsel of the Company; (ii) Wachtell, Lipton,
▇▇▇▇▇ & ▇▇▇▇, counsel to the Borrowers; (iii) opinions of local counsel in
jurisdictions (other than New York) in which Mortgaged Properties are located
and (iv) opinions of foreign counsel in Canada, France, Germany and the United
Kingdom, each addressing such matters relating to the pledge of Equity Interests
of Subsidiaries organized in the applicable jurisdiction as the Agents shall
reasonably have requested and in form and substance reasonably acceptable to the
Agents.
(g) The Agents shall have received completed Perfection Certificates
dated the Effective Date and (i) with regard to the Company and the Grantors,
signed by a Financial Officer of the Company and (ii) with regard to ▇▇▇▇▇▇ and
its subsidiaries, signed by a Financial Officer of ▇▇▇▇▇▇, in each case,
together with all attachments contemplated thereby, including the results of a
search of the UCC (or equivalent) filings made with respect to the Loan Parties
in the jurisdictions contemplated by the Perfection Certificate and copies of
the financing statements (or similar documents) disclosed by such search and
evidence reasonably satisfactory to the Administrative Agent that the Liens
indicated by such financing statements (or similar documents) are permitted by
Section 6.02 or have been released.
(h) The Agents shall have received, on behalf of the Lenders (i) a
copy of the certificate or articles of incorporation or other organizational
documents, including all amendments thereto, of each of the Loan Parties,
certified as of a recent date by the Secretary of State (or other appropriate
governmental authority) of the state of its organization; (ii) a certificate as
to the good standing or subsistence, to the extent available, of each of the
Loan Parties as of a recent date, from the appropriate Secretary of State (or
other appropriate governmental authority) or other evidence reasonably
satisfactory to the Agents as to the good standing of such Loan Party; (iii) a
certificate of the Secretary or Assistant Secretary of each Loan Party dated the
Effective Date and certifying (A) that attached thereto is a true and complete
copy of the by-laws or other organizational documents of such Loan Party as in
effect on the Effective Date and at all times since a date prior to the date of
the resolutions described in clause (B) below, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by the Board of Directors (or
other analogous governing body) and, where applicable, the Executive Committee
of such Board of Directors) of such Loan Party (and, if necessary,
45
resolutions duly adopted by the shareholders or other equity owners of such Loan
Party) authorizing the execution, delivery and performance of the Loan Documents
to which such Loan Party is or is to be a party and the Transactions, and that
such resolutions have not been modified, rescinded or amended and are in full
force and effect, (C) that the certificate or articles of incorporation or other
organizational documents of such Loan Party have not been amended since the date
of the last amendment thereto shown on the certificate furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen signature of each
officer executing any Loan Document or any other document delivered in
connection herewith on behalf of such Loan Party; (iv) a certificate of another
officer as to the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to clause (iii) above;
and (v) such other documents as the Lenders or Cravath, Swaine & ▇▇▇▇▇, counsel
for the Agents, may reasonably request related to the foregoing.
(i) The Lenders shall have received a pro forma consolidated balance
sheet of the Company as of March 31, 2002, reflecting all pro forma adjustments
as if the Transactions had been consummated on such date, and such pro forma
consolidated balance sheet shall be consistent in all material respects with the
forecasts and other information previously provided to the Lenders.
(j) The Acquisition shall have been, or shall substantially
simultaneously with the initial borrowing under the Facilities be, consummated
in accordance with applicable law and the terms of the Asset Purchase Agreement
in substantially the form furnished to the Lenders prior to the date of this
Agreement, without any modification or waiver of a material term or condition
thereof unless such modification or waiver shall have been approved by the
Agents (such approval not to be unreasonably withheld or delayed).
(k) After giving effect to the Transactions occurring on or prior to
the Effective Date, the Company and the Subsidiaries shall have outstanding no
Debt other than (i) the Loans hereunder, (ii) loans under the Term Loan
Agreement, (iii) other Debt owed to Persons other than the Company or any
Subsidiary listed or described on Schedule 6.01 and (iv) Debt owed to the
Company or any Subsidiary.
(l) All requisite Governmental Authorities and material third parties
shall have approved or consented to the Acquisition that have occurred or are to
occur prior to or on the Effective Date to the extent such approvals or consents
are required under applicable laws or agreements or otherwise, and all
applicable appeal periods shall have expired and there shall be no pending
governmental or judicial action that could reasonably be expected to restrain,
prevent or impose materially burdensome conditions on the Acquisition. There
shall be no litigation or administrative action that could reasonably be
expected to have a material adverse effect on the business, operations,
properties, assets, liabilities or condition (financial or otherwise) of the
Company and its subsidiaries taken as a whole (after giving effect to the
Acquisition).
(m) The Term Loan Agreement shall have become effective.
(n) The commitments of the lenders under the Existing 364-Day Credit
Agreement shall have been terminated and the principal of and interest accrued
on the loans
46
outstanding thereunder, all fees and other amounts accrued or otherwise due
thereunder, shall have been paid in full and all Commitments thereunder shall
have been cancelled.
(o) The Company shall have Ratings (after giving effect to the
Transactions occurring on or prior to the Effective Date) by S&P and ▇▇▇▇▇'▇ of
at least BB and Ba2, respectively.
(p) The Administrative Agent shall have received from the Company,
for the account of each Lender that shall have executed and delivered a copy of
this Agreement to the Administrative Agent (or its counsel) on or prior to 12:00
noon, New York City time on May 20, 2002, an amendment fee equal to 0.50% (the
"AMENDMENT FEES") of such Lender's Commitment (whether used or unused) as of the
date hereof. The Amendment Fees will be payable in immediately available funds
on May 20, 2002.
(q) All fees and other amounts due and payable hereunder on or prior
to the Effective Date, including, to the extent invoiced, all out-of-pocket
expenses required to be reimbursed or paid by any Borrower hereunder, shall have
been paid.
SECTION 3.02. BORROWINGS. The obligation of each Lender to make a
Loan on the occasion of any Borrowing (other than a Borrowing that does not
increase the aggregate principal amount of Loans of any Lender outstanding)
hereunder, is subject to the satisfaction of the following conditions:
(a) The Administrative Agent shall have received a notice of
borrowing as required by Section 2.03 or 2.04 (or, in the case of a Swingline
Loan, Section 2.05).
(b) Immediately prior to and after such Borrowing, no Default shall
have occurred and be continuing.
(c) The representations and warranties of the Company and the
applicable Borrower contained in Article IV of this Agreement shall be true on
and as of the date of such Borrowing. For purposes of this Section 3.02(c) only,
the term "Transactions" as used in Section 4.06(a) shall be deemed to mean the
execution, delivery and performance by the Loan Parties of the Loan Documents,
the borrowing of Loans hereunder, the use of the proceeds of such Loans and the
creation of the Guarantees and Liens provided for in the Security Documents.
Each Borrowing hereunder (other than a Borrowing that does not increase the
aggregate principal amount of Loans of any Lender outstanding) shall be deemed
to be a representation and warranty by the Company and the applicable Borrower
on the date of such Borrowing as to the matters specified in clauses (b) and (c)
of this Section.
SECTION 3.03. INITIAL BORROWING BY EACH BORROWING SUBSIDIARY. The
obligation of each Lender to make a Loan on the occasion of the first Borrowing
by each Borrowing Subsidiary is subject to the satisfaction of the following
conditions:
(a) The Administrative Agent shall have received a Borrowing
Subsidiary Agreement executed by such Borrowing Subsidiary and the Company.
47
(b) The Administrative Agent shall have received an opinion of
counsel for the Borrowing Subsidiary dated the date of such Borrowing
substantially in the form of Exhibit F-5 hereto and covering such additional
matters relating to such Borrowing Subsidiary as the Administrative Agent may
reasonably request;
(c) The Administrative Agent shall have received all documents it may
reasonably request relating to the existence of such Borrowing Subsidiary, the
power and authority of such Borrowing Subsidiary to enter into and the validity
with respect to such Borrowing Subsidiary of this Agreement and the other Loan
Documents and any other matters relevant hereto, all in form and substance
reasonably satisfactory to the Administrative Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company, as to itself and each of its Subsidiaries, represents
and warrants to the Agents and each of the Lenders as follows:
SECTION 4.01. ORGANIZATION; POWERS. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization (except, in the case of
Subsidiaries that are not Material Subsidiaries, where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect), has all requisite power and authority to carry on
its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 4.02. AUTHORIZATION; ENFORCEABILITY. Except as set forth in
Schedule 4.02, the Transactions are within the corporate powers of each Borrower
and each Subsidiary Guarantor and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Agreement has been duly
executed and delivered by the Company and each Borrowing Subsidiary and
constitutes (assuming due execution by the Lenders and the Agents), and each
other Loan Document to which any Loan Party is a party, when executed and
delivered by such Loan Party, will constitute (assuming due execution by the
Lenders and the Agents), a legal, valid and binding obligation of such Loan
Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
SECTION 4.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. Except as set
forth in Schedule 4.03, the Transactions (a) do not require any consent or
approval of, registration or filing with or other action by any Governmental
Authority, (b) will not violate any applicable material law or regulation or the
charter, by-laws or other organizational documents of the Company or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture or other material agreement or
instrument
48
binding upon the Company or any of its Subsidiaries or any assets of any of
them, or give rise to a right thereunder to require any payment to be made by
the Company or any of its Subsidiaries, and (d) will not result in the creation
or imposition of any Lien (other than the Liens created by the Security
Documents) on any asset of the Company or any of its Subsidiaries.
SECTION 4.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a)
The Company has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended June 30, 2001, reported on by KPMG LLP, independent
public accountants and (ii) as of and for the fiscal quarter and the portion of
the fiscal year ended March 31, 2002, certified by its chief financial officer.
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Company and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP.
(b) Since June 30, 2001, there has been no change that would
constitute a material adverse change in the business, assets, operations or
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole; provided that for purposes of the representation and warranty contained
in this paragraph, the term the "Company and its Subsidiaries" shall be deemed
to include the business of ▇▇▇▇▇▇ and its subsidiaries since December 31, 2001.
SECTION 4.05. PROPERTIES. (a) Each of the Company and its
Subsidiaries has good title to all its real and personal property purportedly
owned by it and material to its business, except for defects or lack of title
that could not reasonably be expected to result in a Material Adverse Effect.
All such real and personal property is free and clear of all Liens other than
Liens permitted under Section 6.02.
(b) Each of the Company and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, except where lack of ownership or of any
license could not reasonably be expected to result in a Material Adverse Effect,
and the use thereof by the Company and its Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. All such owned trademarks, tradenames, copyrights,
patents and other intellectual property are free and clear of all Liens other
than Liens permitted under Section 6.02.
(c) Schedule 4.05 sets forth the address and county of each real
property with a fair market value of $1,000,000 or greater that is owned by the
Company or any of its Domestic Subsidiaries as of the Effective Date after
giving effect to the Transactions.
SECTION 4.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) Except for
the Disclosed Matters, there are no actions, suits or proceedings by or before
any arbitrator or Governmental Authority pending against or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be
49
expected, individually or in the aggregate, to have a Material Adverse Effect or
(ii) that assert the invalidity or unenforceability of or otherwise challenge
this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, neither the Company nor any of its
Subsidiaries (i) is in material violation of any Environmental Law or has failed
to obtain, maintain or comply with any material permit, license or other
approval required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received written notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis reasonably
likely to result in any Environmental Liability.
SECTION 4.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Neither the
Company nor any of its Subsidiaries is in violation of any law, regulation or
order of any Governmental Authority applicable to it or its property or any
indenture, agreement or other instrument binding upon it or its property, where
such violation, individually or in the aggregate with other violations, could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.08. NOT AN INVESTMENT COMPANY OR HOLDING COMPANY. Neither
the Company nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 4.09. TAXES. Each of the Company and its Subsidiaries has
timely filed or caused to be timely filed all returns and reports required to
have been filed and has paid or caused to be paid all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Company or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 4.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.
SECTION 4.11. DISCLOSURE. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Company to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished), taken as a whole, contains any material misstatement
of fact or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; PROVIDED that, with respect to projected financial information, the
Company represents only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time (it being understood that
various of such assumptions by the Company's management concerning anticipated
results of the Company are based in part on statements, estimates and
projections of ▇▇▇▇▇▇ that have been reviewed by the Company and that the
Company has no
50
reason to believe should not be relied on, but that themselves reflect various
assumptions by ▇▇▇▇▇▇'▇ management concerning such anticipated results).
SECTION 4.12. FEDERAL RESERVE REGULATIONS. (a) Neither the Company
nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying margin stock (as defined in Regulation U).
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, for
any purpose that entails a violation of the provisions of the Regulations of the
Board, including Regulation U or X. Not more than 25% of the assets of the
Company or the Company and the Subsidiaries taken as a whole that are subject to
the restrictions of Sections 6.02, 6.04 and 6.05 will at any time constitute
margin stock.
SECTION 4.13. SUBSIDIARIES. At the Effective Date, except as set
forth in Schedule 4.13, all the issued and outstanding Equity Interests of each
of the Subsidiaries have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by it free and clear of all
Liens, and there are no options, warrants, calls, conversions or exchange
rights, commitments or agreements of any character obligating any of the
Subsidiaries to issue, deliver or sell additional shares of capital stock of any
class or any securities convertible into or exchangeable for any such capital
stock or any additional partnership or other Equity Interests. Schedule 4.13
sets forth the name of, and the ownership interest of the Company in, each
Subsidiary of the Company and identifies each Subsidiary that is a Loan Party,
in each case as of the Effective Date.
SECTION 4.14. SECURITY DOCUMENTS. (a) The Guarantee and Collateral
Agreement, upon execution and delivery thereof by the parties thereto, will
create in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Collateral (as
defined in the Guarantee and Collateral Agreement), subject to Liens permitted
under Section 6.02. When the Pledged Securities (as defined in the Guarantee and
Collateral Agreement) have been delivered to the Collateral Agent and financing
statements in appropriate form have been filed in the offices specified on
Schedule 4.14, the Guarantee and Collateral Agreement will constitute a fully
perfected Lien on all right, title and interest of the Loan Parties in the
Collateral (other than Intellectual Property, as defined in the Guarantee and
Collateral Agreement) prior and superior to the rights of any other Person,
subject only to Liens permitted under Section 6.02.
(b) Each Mortgage, upon execution and delivery by the parties
thereto, will create in favor of the Collateral Agent, for the ratable benefit
of the Secured Parties, a legal, valid and enforceable Lien on all the
applicable mortgagor's right, title and interest in and to the Mortgaged
Properties subject thereto and the proceeds thereof, and when the Mortgages have
been filed in the counties specified on Schedule 4.05, the Mortgages will
constitute a fully perfected Lien on all right, title and interest of the
mortgagors in the Mortgaged Properties and the proceeds thereof, prior and
superior in right to any other Person (but subject to Liens or other
encumbrances for which exceptions are taken in the policies of title insurance
delivered in respect of the Mortgaged Properties and subject to Liens permitted
under Section 6.02).
51
(c) Upon the recordation of the Guarantee and Collateral Agreement or
a memorandum of such Agreement with the United States Patent and Trademark
Office and the United States Copyright Office, the Lien created under the
Guarantee and Collateral Agreement will constitute a fully perfected Lien on all
right, title and interest of the Loan Parties in the material Intellectual
Property (as defined in the Guarantee and Collateral Agreement) in which a
security interest may be perfected by filing in the United States and its
territories and possessions, in each case prior and superior in right to any
other Person, subject to Liens permitted under Section 6.02 and other than Liens
that may exist on immaterial Intellectual Property (it being understood that
subsequent recordings in the United States Patent and Trademark Office or the
United States Copyright Office may be necessary to perfect a Lien on registered
trademarks and trademark applications or copyrights, respectively, acquired by
the Grantors after the Effective Date).
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, the Company covenants and agrees with the Lenders that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company
will furnish to the Agents and each Lender:
(a) within 90 days after the end of each fiscal year of the Company,
its audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by KPMG LLP or other independent public accountants of
recognized national standing (without a "going concern" or like qualification or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Company and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, its consolidated balance sheet and
related statements of operations, stockholders' equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period of the previous fiscal year, or such other financial
statements required to be included in Securities and Exchange Commission Form
10-Q, all certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of the
Company and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;
52
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Company (i)
certifying as to whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be taken with
respect thereto, (ii) setting forth calculations demonstrating that the Company
is in compliance with Sections 6.12, 6.13, 6.14 and 6.15 and (iii) if any change
in GAAP has occurred since the last date of delivery of financial statements and
has had a material effect on the financial statements of the Company, specifying
such effect, unless such effect is noted in such financial statements;
(d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Company or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Company to its shareholders generally, as the case may be; and
(e) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Company or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. Upon becoming aware of any
of the following, the Company will furnish to the Agents and each Lender
prompt written notice thereof:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting the
Company or any Affiliate thereof that could reasonably be expected to result in
a Material Adverse Effect;
(c) the occurrence of any ERISA Event or event that would be an ERISA
Event if the Administrative Agent or the Required Lenders made the determination
referred to in the definition of ERISA Event, in each case, that, alone or
together with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Company and its Subsidiaries in an
aggregate amount exceeding $5,000,000; and
(d) any other development that results in, or, in the judgment of the
Company, could reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Company setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS. The Company will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges,
53
patents, copyrights, trademarks, tradenames and franchises material to the
conduct of its business except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect; PROVIDED that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 6.04.
SECTION 5.04. PAYMENT OF OBLIGATIONS. The Company will, and will
cause each of its Subsidiaries to, pay its Debt (and other obligations,
including Tax liabilities) before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings and the Company or such Subsidiary has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP or (b) the failure to make payment could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 5.05. MAINTENANCE OF PROPERTIES; INSURANCE. The Company will,
and will cause each of its Subsidiaries to, (a) keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect and (b) maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by similar companies
engaged in the same or similar businesses operating in the same or similar
locations; PROVIDED that the Company and its Subsidiaries may (i) self-insure
against such risks and in such amounts as are usually self-insured by similar
companies engaged in the same or similar businesses operating in the same or
similar locations and (ii) elect not to carry publisher's liability insurance or
terrorism insurance.
SECTION 5.06. BOOKS AND RECORDS; INSPECTION RIGHTS. The Company will,
and will cause each of its Subsidiaries to, keep proper books of record and
account in which true and correct entries are made of all material dealings and
transactions in relation to its business and activities. The Company will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times during normal business
hours as reasonably requested.
SECTION 5.07. COMPLIANCE WITH LAWS. The Company will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.08. USE OF PROCEEDS. The proceeds of the Loans will be used
only for the purposes set forth in the preamble to this Agreement. No part of
the proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.
54
SECTION 5.09. INFORMATION REGARDING COLLATERAL. (a) The Company will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, principal place of business
or jurisdiction of organization (including any such change resulting from any
merger or consolidation involving such Loan Party), (iii) in any Loan Party's
identity or corporate structure, (iv) in any Loan Party's Federal Taxpayer
Identification Number or organizational identification number and (v) in the
ownership of any Equity Interests pledged under the Guarantee and Collateral
Agreement. The Company agrees not to effect or permit any change referred to in
the preceding sentence until the Company has notified the Collateral Agent in
writing of such change, and that prior to or promptly after any such change the
Company will take all such actions as may be required in order that the
Collateral Agent shall continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral. The Company
also agrees promptly to notify the Collateral Agent if any material portion of
the Collateral is damaged or destroyed.
(b) Each year (commencing with the fiscal year ending June 30, 2003),
at the time of delivery of annual financial statements pursuant to clause (a) of
Section 5.01, the Company shall deliver to the Administrative Agent, for
distribution to the Lenders a certificate of a Financial Officer and the chief
legal officer of the Company dated as of a recent date and (i) setting forth
information of the type set forth in the Perfection Certificate but as of the
date of such certificate (or confirming that there has been no change in such
information since the date of the Perfection Certificate delivered on the
Effective Date or the date of the most recent certificate delivered pursuant to
this Section), (ii) certifying that all Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent necessary to
protect and perfect the security interests under the Guarantee and Collateral
Agreement for a period of not less than 18 months after the date of such
certificate (except as noted therein with respect to any continuation statements
to be filed within such period) and (iii) certifying that the Collateral and
Guarantee Requirement continues to be satisfied.
SECTION 5.10. CASUALTY AND CONDEMNATION. The Company (a) will furnish
to the Collateral Agent and the Lenders prompt written notice of any casualty or
other insured damage to any material Collateral or the commencement of any
action or proceeding for the taking of any material Collateral or any material
part thereof or material interest therein under power of eminent domain or by
condemnation or similar proceeding and (b) will ensure that the Net Proceeds of
any such event (whether in the form of insurance proceeds, condemnation awards
or otherwise) are collected and applied in accordance with the applicable
provisions of the Guarantee and Collateral Agreement and this Agreement.
SECTION 5.11. ADDITIONAL SUBSIDIARIES. If any additional Domestic
Subsidiary, or Foreign Subsidiary owned in whole or in part by any Domestic
Subsidiary, is formed or acquired after the Effective Date, the Company will,
within ten Business Days after such
55
Subsidiary is formed or acquired, notify the Administrative Agent and the
Lenders thereof and cause the Collateral and Guarantee Requirement to be
satisfied insofar as they apply to such Subsidiary and its assets.
SECTION 5.12. FURTHER ASSURANCES. The Company will, and will cause
each Grantor to, execute any and all further documents, financing statements,
agreements and instruments, and take all further reasonable actions (including
the filing and recording of financing statements, fixture filings, mortgages,
deeds of trust and other documents), that may be required under any applicable
law, or that the Collateral Agent or the Required Lenders may reasonably
request, to cause the Collateral and Guarantee Requirement to be and remain
satisfied, all at the expense of the Grantors. The Company also agrees to
provide to the Collateral Agent, from time to time upon request, evidence
reasonably satisfactory to the Collateral Agent as to the perfection and
priority of the Liens created or intended to be created by the Guarantee and
Collateral Agreement.
SECTION 5.13. INTEREST RATE PROTECTION. As promptly as practicable,
and in any event within 90 days after the Effective Date, the Borrower will
enter into, and thereafter for a period of not less than three years will
maintain in effect, one or more interest rate protection agreements on such
terms and with such parties as shall be reasonably satisfactory to the Agents,
the effect of which shall be to fix or limit the interest cost to the Borrower
with respect to at least 33.33% of the aggregate principal amount of the
outstanding Loans under the Term Loan Agreement.
SECTION 5.14. FILING OF CREDIT AGREEMENT, AMENDMENTS AND WAIVERS. The
Company will cause this Agreement and any material amendment hereto or material
waiver of any term or condition hereof (but not exhibits or schedules hereto or
thereto) to be filed with the Securities and Exchange Commission within 20 days
after the Effective Date or the effective date of the amendment or waiver, as
the case may be.
SECTION 5.15. COMPLIANCE WITH FEDERAL RESERVE REGULATIONS. The
Company and its Subsidiaries will comply with all rules, regulations and
restrictions of the Regulations of the Board, including Regulation U and X.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full,
the Company covenants and agrees with the Lenders that:
SECTION 6.01. DEBT AND PREFERRED STOCK OF SUBSIDIARIES. (a) The
Company will not permit any Subsidiary to create, incur, assume or permit to
exist any Debt, except:
(i) Debt outstanding on the date hereof and set forth on Schedule
6.01;
56
(ii) Debt created under the Loan Documents;
(iii) Debt created under the Term Loan Agreement or the "Loan
Documents" referred to therein;
(iv) Debt of any Subsidiary to the Company or any other Subsidiary
that in either case shall not have been transferred or pledged to any third
party (other than under the Security Documents);
(v) Debt of any Subsidiary incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including
Capital Lease Obligations, and any Debt assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements
of any such Debt that do not increase the outstanding principal amount
thereof; PROVIDED that (A) such Debt is incurred prior to or within 180
days after such acquisition or the completion of such construction
or improvement and (B) the aggregate principal amount of Debt permitted by
this clause (v) shall not exceed $10,000,000 at any time outstanding;
(vi) Debt of any Person that becomes a Subsidiary after the date
hereof; PROVIDED that (A) such Debt exists at the time such Person becomes
a Subsidiary and is not created in contemplation of or in connection with
such Person becoming a Subsidiary and (B) the aggregate principal amount of
Debt permitted by this clause (vi) shall not exceed $10,000,000 at any time
outstanding;
(vii) Debt refinancing or replacing any of the Debt referred to in the
preceding clauses (i) through (vi); provided that (A) the principal amount
of such refinancing or replacement Debt shall not exceed that of the Debt
refinanced or replaced, (B) the maturity and weighted average life to
maturity of such refinancing or replacement Debt shall not be less than
that of the Debt refinanced or replaced and (C) the obligors on such
refinancing or replacement Debt shall not include Subsidiaries that were
not obligors in respect of the Debt refinanced or replaced;
(viii) Debt of any Subsidiary as an account party in respect of trade
letters of credit employed in the ordinary course of business; and
(ix) other Debt that, when aggregated with the aggregate outstanding
Debt of the Company secured by Liens permitted pursuant to Section 6.02(o)
and the aggregate sale price of the assets sold in sale and leaseback
transactions permitted pursuant to Section 6.03, shall at no time exceed
5.0% of Consolidated Assets.
(b) The Company will not permit any Subsidiary to issue any preferred
stock or other preferred Equity Interest, other than any preferred stock or
other preferred Equity Interest held by the Company or another Subsidiary.
57
SECTION 6.02. LIENS. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Company or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02; PROVIDED
that (i) such Lien shall not apply to any other property or asset of the Company
or any Subsidiary and (ii) such Lien shall secure only those obligations which
it secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof as of the date
hereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary or existing on any property
or asset of any Person that becomes a Subsidiary after the date hereof prior to
the time such Person becomes a Subsidiary; PROVIDED that (i) such Lien is not
created in contemplation of or in connection with such acquisition or such
Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply
to any other property or assets of the Company or any Subsidiary and (iii) such
Lien shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case may be,
and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof as of such date;
(d) any Lien on fixed or capital assets acquired, constructed or
improved by the Company or any Subsidiary, and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof; PROVIDED that (i) such Lien and the Debt secured thereby are incurred
prior to or within 180 days after such acquisition or the completion of such
construction or improvement, (ii) the Debt secured thereby does not exceed the
cost of acquiring, constructing or improving such fixed or capital assets and
(iii) such Lien shall not apply to any other property or assets of the Company
or any Subsidiary;
(e) any Lien on the property or assets of any Subsidiary of the
Company in favor of the Company or any wholly owned Subsidiary;
(f) any Lien on equipment (including printing presses and
data-processing equipment) owned by the Company or any Subsidiary and located on
the premises of any supplier and used in the ordinary course of the Company's or
such Subsidiary's business;
(g) any judgment or judicial attachment Lien with respect to any
judgment that does not constitute an Event of Default;
(h) any Lien securing any reimbursement, indemnification or similar
obligation or liability incurred in connection with any letter of credit, letter
of guaranty, banker's acceptance, ▇▇▇▇ of exchange or similar instrument to
backstop trade obligations (but not Debt) of the Company or a Subsidiary;
58
(i) any Lien imposed by law where (x) the validity or amount thereof
is being contested in good faith by appropriate proceedings and the Company or
any Subsidiary has set aside on its books adequate reserves with respect thereto
in accordance with GAAP or (y) the failure to remove such Lien could not
reasonably be expected to result in a Material Adverse Effect;
(j) any Lien deemed to exist by virtue of any Capital Lease
Obligation not otherwise prohibited hereunder;
(k) any Lien arising under any Loan Document;
(l) any Lien on assets of a Subsidiary that is not a Material
Subsidiary securing obligations that do not constitute Debt;
(m) Liens or other encumbrances for which exceptions are taken in the
policies of title insurance delivered in respect of the Mortgaged Properties;
(n) other Liens arising in the ordinary course of business that do
not secure Debt and do not interfere with the material operations of the Company
and the Subsidiaries and do not individually or in the aggregate materially
impair the value of the assets of the Company and the Subsidiaries; and
(o) other Liens securing Debt that, when aggregated with the Debt of
Subsidiaries permitted under Section 6.01(a)(ix) and the aggregate sale price of
the assets sold in sale and leaseback transactions permitted under Section 6.03,
does not exceed 5.0% of Consolidated Assets at any time.
SECTION 6.03. SALE AND LEASEBACK TRANSACTIONS. The Company will not,
and will not permit any Subsidiary to, enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any property, real
or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease property which it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred; PROVIDED, HOWEVER, that, notwithstanding the above, the Company or
any Subsidiary may engage in any sale and leaseback transactions if the
aggregate sale price of the assets sold in such transactions, when aggregated
with the Debt of Subsidiaries permitted under Section 6.01(a)(ix) and the Debt
secured by Liens permitted pursuant to Section 6.02(o), does not exceed 5.0% of
Consolidated Assets at any time.
SECTION 6.04. FUNDAMENTAL CHANGES. (a) The Company will not, and will
not permit any Material Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) assets (including capital stock of Subsidiaries) constituting
all or substantially all the assets of the Company and the Subsidiaries on a
consolidated basis (whether now owned or hereafter acquired), or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) the Company
or any Subsidiary may merge or consolidate
59
with any Person; PROVIDED that (A) in the case of any merger or consolidation
involving the Company, the Company shall be the continuing or surviving
corporation and (B) in the case of any merger or consolidation involving a
Subsidiary (other than a merger or consolidation with the Company), the
surviving entity shall be a Subsidiary, (ii) any Subsidiary may sell, transfer,
lease or otherwise dispose of its assets to the Company or to another
Subsidiary, (iii) any Subsidiary may liquidate or dissolve if the Company
determines in good faith that such liquidation or dissolution is in the best
interests of the Company and is not materially disadvantageous to the Lenders,
(iv) the Company may effect the Recapitalization and (v) the Company may effect
asset transfers permitted under Section 6.05 by causing Subsidiaries (other than
Borrowing Subsidiaries) to be merged with or into other Persons.
(b) The Company will not, and will not permit any Subsidiary to,
engage to any material extent in any business other than businesses of the type,
or involving similar themes, content and customer orientation, as the business
conducted by the Company and its Subsidiaries and by ▇▇▇▇▇▇ on the date hereof,
businesses reasonably related thereto and extensions thereof consisting of the
licensing of Intellectual Property.
SECTION 6.05. ASSET SALES. The Company will not, and will not permit
any Subsidiary to, sell, transfer, lease or otherwise dispose of (including
pursuant to any merger or consolidation) any asset, including any Equity
Interest owned by it, nor will the Company permit any of the Subsidiaries to
issue any additional Equity Interests in such Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Company or a Subsidiary;
PROVIDED that any such sales, transfers or dispositions involving a Subsidiary
that is not a Subsidiary Guarantor shall be made in compliance with Section
6.07;
(c) sales of Equity Interests in LookSmart, Ltd. and WebMD
Corporation;
(d) sales, transfers and dispositions of assets for consideration not
greater than $5,000,000 for any such transaction or series of related
transactions;
(e) other sales, transfers and dispositions of assets for
consideration in an aggregate amount not greater than $50,000,000 during any
fiscal year of the Company (or, if the Ratings are at least BBB- and Baa3, in
each case with stable outlook, $100,000,000);
(f) issuances by Subsidiaries of directors', officers' or nominees'
qualifying shares; and
(g) issuances of Equity Interests by Subsidiaries to the Company or
other Subsidiaries.
SECTION 6.06. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Company will not, and will not permit any Subsidiary to,
purchase, hold or acquire any
60
Equity Interests in or evidences of indebtedness or other securities (including
any option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person that are substantial in relation to the Company
and the Subsidiaries taken as a whole (other than inventory acquired in the
ordinary course of business) or that constitute a business unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof;
(c) investments made with consideration consisting solely of common
stock of Company, PROVIDED that, if the value of such common stock exceeds
$25,000,000 during the period from the Effective Date through June 30, 2003, or
$50,000,000 during any fiscal year of the Company thereafter, such investments
may be made so long as (i) no Default shall have occurred and be continuing at
the time of any such investment, (ii) the Company shall have delivered to the
Agents a certificate of a Financial Officer demonstrating pro forma compliance
with the covenant set forth in Section 6.13 and (iii) the Ratings shall be at
least BBB- and Baa3, in each case with stable outlook;
(d) investments by the Company and its Subsidiaries in Equity
Interests of, and, to the extent permitted by Section 6.01, Guarantees by the
Company and its Subsidiaries of Debt of, persons that are direct or indirect
Subsidiaries of Company prior to the making of such investments; PROVIDED that
(i) any such Equity Interests held by a Loan Party shall be pledged pursuant to
the Collateral and Guarantee Agreement to the extent required by this Agreement
and (ii) the aggregate amount of investments by Loan Parties in, loans and
advances by Loan Parties to, and Guarantees by Loan Parties of Debt of,
Subsidiaries that are not Subsidiary Guarantors (other than any such
investments, loans, advances and Guarantees existing on the Effective Date)
shall not exceed $15,000,000 at any time outstanding;
(e) loans or advances made by the Company to any Subsidiary or made
by any Subsidiary to the Company or any other Subsidiary; PROVIDED that (i) any
such loans and advances made by a Grantor shall be pledged pursuant to the
Collateral and Guarantee Agreement to the extent required by this Agreement and
(ii) the amount of such loans and advances made by Subsidiary Guarantors to
Subsidiaries that are not Subsidiary Guarantors shall be subject to the
limitation set forth in clause (d) above;
(f) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business; and
(g) the Acquisition and the Recapitalization;
(h) Restricted Payments permitted by Section 6.10(a)(iii), (vi) or
(vii);
61
(i) acquisitions of Equity Interests or assets for consideration with
a value not greater than (i) $25,000,000 during the period from the Effective
Date through June 30, 2003, or (ii) $50,000,000 during any fiscal year of the
Company thereafter; PROVIDED that after June 30, 2004, any acquisition of Equity
Interests or assets may be completed without regard to such limitation so long
as (i) no Default shall have occurred and be continuing at the time of such
acquisition, (ii) the Company shall have delivered to the Agents a certificate
of a Financial Officer demonstrating pro forma compliance with the covenant set
forth in Section 6.13 (but with each applicable ratio reduced by 0.25) and (iii)
the Company shall have Ratings of at least BBB- and Baa3, in each case with
stable outlook;
(j) other investments, which would not be permitted but for this
clause (j), in an aggregate amount not to exceed $10,000,000 at any time
outstanding.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. The Company will not, and
will not permit any Subsidiary to, sell, lease or otherwise transfer any
material property or assets to, or purchase, lease or otherwise acquire any
material property or assets from, or otherwise engage in any other material
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to the Company
or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties, (b) transactions between or among any wholly owned
Subsidiary and the Company or any other wholly owned Subsidiary not involving
any Affiliate that is not a wholly owned Subsidiary, (c) the Class B Repurchase,
the Recapitalization and the other transactions provided for in the
Recapitalization Agreement, and any Restricted Payment permitted by Section
6.10, (d) payments made and other transactions entered into in the ordinary
course of business with officers and directors of the Company or any Subsidiary,
and consulting fees and expenses incurred in the ordinary course of business
payable to former officers or directors of the Company or any Subsidiary, (e)
reclassifications or changes in the terms of or other transactions relating to
Equity Interests in the Company held by Affiliates that do not involve the
payment of any consideration (other than Equity Interests of the Company) or any
other transfer of value by the Company or any Subsidiary to any such Affiliate,
(f) other transactions involving the purchase or redemption, or other
monetization of, Equity Interests of the Company held by members of the Current
Control Group, to the extent such transactions are not otherwise prohibited
under Section 6.10 or any other provision of this Agreement, and (g) any
payments by the Company or any Subsidiary to or on behalf of any Affiliate of
the Company or any Subsidiary in connection with out-of-pocket expenses incurred
in connection with any public or private offering, other issuance or sale of
stock by the Company or an Affiliate of the Company or other transaction for the
benefit of the Company or any Subsidiary; PROVIDED, HOWEVER, that this Section
shall not limit the operation or effect of, or any payments under, (i) any
license, lease, service contract, purchasing agreement, disposition agreement or
similar arrangement entered into in the ordinary course of business between any
Subsidiary and the Company or any other Subsidiary or (ii) any joint venture to
which the Company or any Subsidiary is a party entered into in connection with,
or reasonably related to, its lines of business.
SECTION 6.08. RESTRICTIVE AGREEMENTS. The Company will not, and will
not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement
62
or other arrangement that prohibits, restricts or imposes any condition upon the
ability of any Subsidiary to pay dividends or other distributions with respect
to its Equity Interests or to make or repay loans or advances to the Company or
any other Subsidiary or to guarantee Debt of the Company or any other
Subsidiary; PROVIDED that the foregoing shall not apply to (a) restrictions and
conditions imposed by law or by this Agreement, (b) restrictions and conditions
with respect to a Person that is not a Subsidiary on the date hereof, which
restrictions and conditions are in existence at the time such Person becomes a
Subsidiary and are not incurred in connection with, or in contemplation of, such
Person becoming a Subsidiary and (c) provisions limiting Restricted Payments by
Subsidiaries that are not more restrictive than the provisions related to
Restricted Payments by Subsidiaries set forth in Section 6.10(a).
SECTION 6.09. SWAP AGREEMENTS. The Company will not, and will not
permit any of its Subsidiaries to, enter into any Swap Agreement, other than (a)
Swap Agreements required by Section 5.13 and (b) Swap Agreements entered into in
the ordinary course of business to hedge or mitigate risks to which the Company
or any Subsidiary is exposed in the conduct of its business or the management of
its liabilities or to take advantage of reduced interest rates by converting
fixed rate obligations to floating rate obligations.
SECTION 6.10. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS.
(a) The Company will not, nor will it permit any Subsidiary to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except (i) the Company
may declare and pay dividends with respect to its capital stock payable solely
in Equity Interests, (ii) Subsidiaries may declare and pay dividends ratably
with respect to their capital stock, (iii) the Company may make payments to
holders of not more than $5,000,000 in stated value of preferred stock of the
Company that are required to be made as a result of the exercise of appraisal
rights to which they may be entitled in connection with the Recapitalization,
(iv) the Company or its Subsidiaries may make Restricted Payments, not exceeding
$5,000,000 during any fiscal year, pursuant to and in accordance with stock
option plans or other benefit plans for management or employees of the Company
and its Subsidiaries, (v) the Company may pay dividends in an amount not
exceeding $25,000,000 during any fiscal year so long as no Default shall have
occurred and be continuing, (vi) the Company may carry out the Class B
Repurchase and the Recapitalization; PROVIDED that such transactions are
completed on or prior to December 31, 2002 and (vii) the Company may repurchase
stock and make other Restricted Payments during any fiscal year with that
portion of Excess Cash Flow for the preceding fiscal year not required to be
applied to prepay Borrowings under the Term Loan Agreement (but in no event in
an amount greater than 50% of Consolidated Net Income for such preceding fiscal
year) so long as (A) no Default shall have occurred and be continuing, (B) the
Company shall demonstrate pro forma compliance with the covenant set forth in
Section 6.13 (but with the applicable ratio reduced by 0.25) and (C) the Company
shall have Ratings of at least BBB- and Baa3, in each case with stable outlook.
(b) The Company will not, nor will it permit any Subsidiary to, make
or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) of or in respect of
principal of or interest on any Debt, or any payment or other distribution
(whether in cash, securities or other property), including any sinking fund or
similar
63
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any Debt, except:
(i) payments in respect of Debt created under the Loan Documents, the
Term Loan Agreement or the Existing 364-Day Credit Agreement;
(ii) payments in respect of Debt owed to the Company or any
Subsidiary;
(iii) required interest and principal payments as and when due in
respect of other Debt, other than payments in respect of any Debt
subordinated to the Obligations that is prohibited by the applicable
subordination provisions; and
(iv) prepayments of Debt with the net proceeds of new Debt permitted
hereunder to the extent such net proceeds are not required to be applied to
prepay Borrowings under the Term Loan Agreement; PROVIDED that (A) the
obligors in respect of such new Debt do not include Subsidiaries that are
not obligors in respect of the Debt so prepaid, (B) the maturity of such
new Debt shall not be earlier, and the weighted average life of such new
Debt shall not be shorter, than that of the Debt so prepaid and (C) if the
Debt so prepaid shall have been subordinated to the Obligations, then such
new Debt shall likewise be so subordinated on terms not less favorable to
the Lenders.
(c) Neither the Company nor any Subsidiary shall enter into or be
party to, or make any payment under, any Synthetic Purchase Agreement, except
that the Company may enter into any Synthetic Purchase Agreement related to any
Equity Interest of the Company so long as the payments required to be made
thereunder, if they constituted payments in respect of the purchase of Equity
Interests of the Company, would be permitted under clause (vii) of paragraph (a)
above.
SECTION 6.11. AMENDMENT OF MATERIAL DOCUMENTS. The Company will not,
nor will it permit any Subsidiary to, amend, modify or waive any of its rights
under any instrument or agreement evidencing or governing Material Debt or any
other material instrument or agreement if such amendment, modification or waiver
would shorten the maturity or reduce the weighted average life of any Material
Debt or be adverse in any material respect to the rights or interests of the
Lenders.
SECTION 6.12. CONSOLIDATED INTEREST COVERAGE RATIO. The Company will
not permit the Consolidated Interest Coverage Ratio for any period of four
consecutive fiscal quarters ending after the date hereof to be less than 4.00 to
1.00.
SECTION 6.13. CONSOLIDATED LEVERAGE RATIO. The Company will not
permit the Consolidated Leverage Ratio as of any date during any period set
forth below to be greater than the ratio set forth opposite such period:
PERIOD RATIO
------ -----
Effective Date through 9/30/02 3.90:1:00
10/1/02 through 3/31/03 3.75:1:00
64
4/1/03 through 3/31/04 3.25:1.00
4/1/04 and thereafter 2.50:1.00
SECTION 6.14. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Company
will not permit the Consolidated Fixed Charge Coverage Ratio for any period of
four consecutive fiscal quarters ending after the Effective Date to be less than
1.75 to 1.00.
SECTION 6.15. CAPITAL EXPENDITURES. The Company will not permit
Consolidated Capital Expenditures to exceed $40,000,000 during any fiscal year
of the Company ending on or prior to June 30, 2005, or $50,000,000 during any
fiscal year of the Company thereafter; PROVIDED that, notwithstanding the
foregoing, an amount not greater than 50% of the scheduled amount available for
capital expenditures in any given year but not used in such year may be used for
capital expenditures in the next subsequent year only (it being agreed that the
scheduled amount for any year will be deemed used before any amount carried over
from a prior year).
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("EVENTS OF DEFAULT") shall occur:
(a) any representation or warranty made or deemed made by or on behalf
of the Company or any Subsidiary in or in connection with any Loan
Document, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document,
shall prove to have been incorrect in any material respect when made or
deemed made;
(b) any Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof
or at a date fixed for prepayment thereof or otherwise;
(c) any Borrower shall fail to pay any interest on any Loan or any Fee
or any other amount (other than an amount referred to in clause (b) above)
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days;
(d) the Company or any Subsidiary shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, Section 5.03
(with respect to any Borrower's existence) or Section 5.08 or in Article
VI;
(e) the Company or any Subsidiary shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other than
those specified in clause (b), (c) or (d) above), and such failure shall
continue unremedied for a
65
period of 30 days after notice thereof from the Administrative Agent or any
Lender to the Company;
(f) (i) the Company or any Material Subsidiary shall fail to make any
payment of principal, interest or other amounts in respect of any Material
Debt, when and as the same shall become due and payable (or, in the case of
payments other than principal payments, within any applicable grace
period), or (ii) any other event or condition occurs that results in any
Material Debt becoming due prior to its scheduled maturity or that enables
or permits the holder or holders of any Material Debt or any trustee or
agent on its or their behalf to cause any Material Debt to become due, or
to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; PROVIDED that this clause (ii) shall not
apply to secured Debt that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Debt, or (iii) there shall
occur any Event of Default under and as defined in the Term Loan Agreement;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Company or any Material Subsidiary or its debts,
or of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company or any
Material Subsidiary or for a substantial part of its assets; and, in each
case, such proceeding or petition shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall be
entered;
(h) the Company or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in clause
(h)(i) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or any Material Subsidiary or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting
any of the foregoing;
(i) the Company or any Material Subsidiary shall become unable, admit
in writing or fail generally to pay its debts as they become due;
(j) one or more judgments (other than pursuant to the exercise of
appraisal rights in connection with the Recapitalization) for the payment
of money in an aggregate amount (to the extent not covered by insurance) in
excess of $20,000,000 shall be rendered against the Company, any Material
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which
66
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to attach or levy upon any assets of the
Company or any Material Subsidiary to enforce any such judgment;
(k) an ERISA Event shall have occurred that, when taken together with
all other ERISA Events that have occurred, could reasonably be expected to
result in any liability of the Company and its Subsidiaries in an aggregate
amount not exceeding $10,000,000 or could reasonably be expected to result
in a Material Adverse Effect;
(l) a Change in Control shall occur;
(m) any material provision of the Guarantee or Guarantee and
Collateral Agreement, or of any other Security Document relating to any
material portion of the Collateral, shall, for any reason, not be, or shall
be asserted in writing by the Company or any Subsidiary not to be, in full
force and effect, or otherwise valid, binding and enforceable against any
person purported to be bound by it; or
(n) any Lien purported to be created under the Guarantee and
Collateral Agreement or any other Security Document, in each case, with
respect to any material portion of the Collateral shall cease to be, or
shall be asserted by any Loan Party not to be, a valid, perfected first
priority Lien (subject only to Liens permitted under Section 6.02) on such
Collateral, except as a result of the release of such Collateral pursuant
to the provisions of this Agreement or the Security Documents then, and in
every such event (other than an event with respect to any Borrower
described in clause (g), (h) or (i) above), and at any time thereafter
during the continuance of such event, the Administrative Agent may with the
consent of the Required Lenders, and at the request of the Required Lenders
shall, by notice to the Company, take either or both of the following
actions, at the same or different times: (i) terminate the Commitments, and
thereupon the Commitments shall terminate immediately, and (ii) declare the
Loans then outstanding to be due and payable in whole (or in part, in which
case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans
so declared to be due and payable, together with accrued interest thereon
and all fees and other liabilities of the Borrowers accrued hereunder,
shall become due and payable immediately, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrowers; and in case of any event with respect to any Borrower described
in clause (g), (h) or (i) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with
accrued interest thereon and all fees and other liabilities of the
Borrowers accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrowers.
Upon the occurrence and during the continuance of any Event of
Default the Administrative Agent may, with the consent of the Required Lenders,
and shall, at the request of the Required Lenders, instruct the Collateral Agent
to exercise any remedies available to it under any Security Document.
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ARTICLE VIII
THE AGENTS
Each of the Lenders hereby irrevocably appoints the Agents as its
agents and authorizes the Agents to take such actions on its behalf and to
exercise such powers as are delegated to the Agents by the terms hereof and of
the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto.
The bank or banks serving as the Agents hereunder shall have the same
rights and powers in their capacity as Lenders as any other Lender and may
exercise the same as though they were not Agents, and such bank or banks and
their Affiliates may accept deposits from, lend money to and generally engage in
any kind of business with the Company or any Subsidiary or other Affiliate
thereof as if they were not Agents hereunder.
The Agents shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing (a)
the Agents shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (b) the Agents
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Agents are required to exercise in writing by the
Required Lenders, and (c) except as expressly set forth herein, the Agents shall
not have any duty to disclose, and shall not be liable for the failure to
disclose, any information communicated to the Agents by or relating to the
Company or any of its Subsidiaries. The Agents shall not be liable for any
action taken or not taken by them with the consent or at the request of the
Required Lenders or the Lenders, as the case may be, or in the absence of their
own gross negligence or wilful misconduct. In addition, the Agents shall be
deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Agents by the Company or a Lender, and the Agents shall
not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article III or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to the
Agents.
The Agents shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by them to be genuine
and to have been signed or sent by the proper Person. The Agents also may rely
upon any statement made to them orally or by telephone and believed by them to
be made by the proper Person, and shall not incur any liability for relying
thereon. The Agents may consult with legal counsel (who may be counsel for the
Company), independent accountants and other experts selected by them, and shall
not be liable for any action taken or not taken by them in accordance with the
advice of any such counsel, accountants or experts.
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The Agents may perform any and all their duties and exercise their
rights and powers by or through any one or more sub-agents appointed by the
Agents. The Agents and any such sub-agent may perform any and all their duties
and exercise their rights and powers through their respective Affiliates. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Affiliates of the Agents and any such sub-agent.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Company. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor with the Company's written consent (which shall not
be unreasonably withheld or delayed and shall not be required from the Company
if an Event of Default has occurred and is continuing). If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, with the
Company's written consent (which shall not be unreasonably withheld or delayed
and shall not be required if an Event of Default has occurred and is
continuing), appoint a successor Agent which shall be a bank or an Affiliate
thereof, in each case with a net worth of at least $1,000,000,000 and an office
in New York, New York. Upon the acceptance of its appointment as Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Company to a successor Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Company and such
successor. After an Agent's resignation hereunder, the provisions of this
Article and Section 10.03 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
None of the Arrangers, Co-Syndication Agents or Co-Agents, in its
capacity as an arranger, co-syndication agent or co-agent, shall have any duties
or responsibilities under this Agreement.
ARTICLE IX
JOINT AND SEVERAL LIABILITY OF BORROWERS; GUARANTEE
SECTION 9.01. JOINT AND SEVERAL LIABILITY OF BORROWERS.
Notwithstanding any other provision of this Agreement, it is agreed that each
Borrower shall be fully liable, both severally and jointly with the other
Borrowers, for the full amount of the Obligations, whether
69
incurred by such Borrower or by any other Borrower. Notwithstanding the above,
no Borrower that is a Foreign Subsidiary shall be liable for the Obligations of
the Company or any other Borrower.
SECTION 9.02. GUARANTEE. In order to induce the Lenders to extend
credit hereunder, the Guarantor hereby unconditionally and irrevocably
guarantees, as a primary obligor and not merely as a surety, the Obligations.
The Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice to or further assent from it, and that it will
remain bound upon its Guarantee hereunder notwithstanding any such extension or
renewal of any Obligation.
The Guarantor waives presentment to, demand of payment from and
protest to any Borrower of any of the Obligations, and also waives notice of
acceptance of its obligations and notice of protest for nonpayment. The
obligations of the Guarantor hereunder shall not be affected by the failure of
any Lender or the Agents to assert any claim or demand or to enforce any right
or remedy against any Borrower under the provisions of this Agreement or any of
the other Loan Documents or otherwise, or, except as specifically provided
therein, by any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement, any of the other Loan Documents or any
other agreement.
The Guarantor further agrees that its Guarantee hereunder constitutes
a promise of payment when due and not merely of collection, and waives any right
to require that any resort be had by any Lender to any balance of any deposit
account or credit on the books of any Lender in favor of any Borrowing
Subsidiary or any other person.
The obligations of the Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, and shall
not be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations of the Borrowing Subsidiaries, any impossibility in the performance
of such Obligations or otherwise and regardless of any law, regulation or order
of any jurisdiction, or any other event, affecting any term of any such
Obligation or any Lender's rights with respect thereto, including, without
limitation, (a) any law, rule or policy that is now or hereafter promulgated by
any Governmental Authority (including, without limitation, any central bank) or
regulatory body that may adversely affect any Borrower's ability or obligation
to make, or any Lender's right to receive, such payments, (b) any
nationalization, expropriation, war, riot, civil commotion or other similar
event, (c) any inability to convert any currency into the currency of payment of
such Obligation or (d) any inability to transfer funds in the currency of
payment of such Obligation to the place of payment therefor. Without limiting
the generality of the foregoing, the obligations of the Guarantor hereunder
shall not be discharged or impaired or otherwise affected by the failure of the
Agents or any Lender to assert any claim or demand or to enforce any remedy
under this Agreement or under any other Loan Document or any other agreement, by
any waiver or modification in respect of any thereof, by any default, failure or
delay, wilful or otherwise, except as specifically provided therein, in the
performance of the Obligations of the Borrowing Subsidiaries, by any release of
any other guarantor, or by any other act or omission which may or might in any
manner or to any extent vary the risk of the Guarantor or otherwise operate as a
discharge of the Guarantor as a matter of law or equity.
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The Guarantor further agrees that its obligations hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation of
the Borrowing Subsidiaries is rescinded or must otherwise be restored by the
Agents or any Lender upon the bankruptcy or reorganization of any Borrower or
otherwise.
In furtherance of the foregoing and not in limitation of any other
right which the Agents or any Lender may have at law or in equity against the
Guarantor by virtue hereof, upon the failure of any Borrowing Subsidiary to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, the Guarantor hereby
promises to and will, upon receipt of written demand by the Agents, forthwith
pay, or cause to be paid, in cash the amount of such unpaid Obligation.
Upon payment by the Guarantor of any Obligations of the Borrowing
Subsidiaries, each Lender shall, in a reasonable manner, assign the amount of
the Obligations owed to it and so paid to the Guarantor, such assignment to be
PRO TANTO to the extent to which the Obligations in question were discharged by
the Guarantor, or make such disposition thereof as the Guarantor shall direct
(all without recourse to and without any representation or warranty by any
Lender).
Upon payment by the Guarantor of any sums as provided above, all
rights of the Guarantor against any Borrowing Subsidiary arising as a result
thereof by way of right of subrogation or otherwise shall in all respects be
subordinated and junior in right of payment to the prior indefeasible payment in
full of all the Obligations, the Guarantor hereby agreeing that it will not
assert any claim in respect of such rights until all the Obligations shall have
been indefeasibly paid in full.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Company, to it at Reader's ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention of Treasurer (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Administrative Agent or Collateral Agent, to JPMorgan
Chase Bank, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to JPMorgan Chase
Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇). Each notice required to be given by the
Administrative Agent or by the Required Lenders under this
71
Agreement, other than any notice under Article 2 or Section 10.04, shall
simultaneously be given to the Collateral Agent;
(c) if to the Syndication Agent, to ▇▇▇▇▇▇▇, Sachs & Co., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇); and
(d) if to a Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire;
PROVIDED, HOWEVER, that any notice or other communication provided
for herein to be given to or by the Company or any Borrowing Subsidiary shall be
deemed effective as to the Company and as to all Borrowing Subsidiaries when
given to or by the Company, as the case may be.
Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
SECTION 10.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by any Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given.
(a) None of this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or by the Borrowers and
the Administrative Agent with the consent of the Required Lenders; PROVIDED that
no such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any Fees or other amounts payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment or prepayment of the principal amount of
any Loan, or any interest payable hereunder, or any Fees or other amounts
payable hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.17 in a manner
that would alter the pro rata sharing of any payment without the written consent
of each Lender affected thereby, (v) reduce or terminate the obligations of the
Guarantor under Article IX or (vi) change any of the provisions of this Section
or the definition of "Required Lenders" or any other provision hereof specifying
the number or percentage of
72
Lenders required in order to waive, amend or modify any rights hereunder or make
any determination or grant any consent hereunder, without the written consent of
each Lender; PROVIDED FURTHER that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder
without the prior written consent of the Administrative Agent.
SECTION 10.02A WAIVERS; AMENDMENTS REGARDING COLLATERAL. No other
Loan Document or any provision thereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Loan
Parties party thereto and the Administrative Agent or Collateral Agent, as the
case may be, with the consent of the Required Lenders; provided that no such
amendment, modification or waiver, and no amendment, modification or waiver of
this Agreement, shall (a) increase or extend the expiration date of the
Commitment of any Lender without the written consent of such Lender, (b) release
all or substantially all the Subsidiary Guarantors from their Guarantees under
the Guarantee and Collateral Agreement, or release all or substantially all the
Collateral from the Liens of the Security Documents, without the written consent
of each Lender, (c) change any provision of the Guarantee and Collateral
Agreement or any other Security Document to alter the pro rata distribution of
amounts payable to the Secured Parties without the consent of each adversely
affected Lender, (d) reduce or terminate the obligations of the Guarantor or any
Borrower under Article IX, without the written consent of each Lender, (e)
change the provisions of this Section without the written consent of each Lender
or (f) amend, modify or otherwise affect the rights or duties of any Agent
hereunder without the prior written consent of such Agent.
SECTION 10.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Company
agrees to pay (i) all reasonable out-of-pocket expenses incurred by each Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
Cravath, Swaine & ▇▇▇▇▇, counsel for the Agents, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and
evaluations of the Collateral (limited, in the absence of a continuing Default,
to one such evaluation in any fiscal year) or other due diligence conducted by
the Agents and (ii) all reasonable out-of-pocket expenses incurred by either
Agent or any Lender, including the reasonable fees, charges and disbursements of
any counsel for such Agent or Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement or the Loans made
hereunder. The Lenders shall endeavor in good faith to limit the number of
counsel retained by them to avoid duplication of expenses.
(b) The Company agrees to indemnify each Agent and each Lender, each
Affiliate of any of the foregoing Persons and each of their respective
directors, officers, employees, trustee, advisors and agents (each such Person
being called an "INDEMNITEE") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee relating to the execution or
delivery of this Agreement or any agreement or instrument contemplated thereby,
the performance of its
73
obligations thereunder, the Borrowings hereunder, the consummation of the
Transactions or any other transactions contemplated hereby, the enforcement of
its rights under any Loan Document or any actual or alleged presence or release
of Hazardous Materials on or from any property currently or formerly owned,
operated or leased by the Company or any of its Subsidiaries or Environmental
Liability related in any way to the Company or any of its Subsidiaries,
including any of the foregoing arising out of, in connection with, or as a
result of any claim, litigation, investigation or proceeding (whether or not any
Indemnitee is a party thereto); PROVIDED that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction to have resulted from the gross negligence, wilful misconduct or
bad faith of such Indemnitee. The Lenders shall endeavor in good faith to limit
the number of counsel retained by them to avoid duplication of expenses.
(c) To the extent that the Company, any Borrower or the Company in
its capacity as Guarantor fails to pay any amount required to be paid by it to
either Agent under paragraph (a) or (b) of this Section, each Lender severally
agrees to pay to such Agent such Lender's Participation Percentage (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; PROVIDED that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against such Agent in its capacity as such and
are not determined by a court of competent jurisdiction to have resulted from
the gross negligence, wilful misconduct or bad faith of such Agent.
(d) All amounts due under this Section shall be payable promptly
after written demand therefor.
(e) To the extent permitted by applicable law, the Company, any
Borrower or the Company as Guarantor shall not assert, and hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, any Loan or the use of the proceeds
thereof or the Transactions.
(f) Notwithstanding anything above to the contrary, no indemnified
person shall be liable for any damages arising from the use by others of
information or other materials obtained through electronic telecommunications or
other information transmission systems.
(g) Notwithstanding any other provision of this Section 10.03, a
Foreign Borrower shall be liable for indemnification only with respect to its
own Obligations.
SECTION 10.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that (i) no
Borrower may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by any Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
74
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitments and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld or delayed) of:
(A) the Company; provided that no consent of the Company
shall be required for an assignment to a Lender, an Affiliate of a
Lender, an Approved Fund (as defined below) or, if an Event of
Default has occurred and is continuing, any other assignee; and
(B) the Administrative Agent, provided that no consent of
the Administrative Agent shall be required for an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or an
Affiliate of a Lender, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than
$1,000,000 or, if smaller, the entire remaining amount of the
assigning Lender's Commitment, unless the Company and the
Administrative Agent shall otherwise consent, PROVIDED that (i) in
the event of concurrent assignments to two or more assignees
that are Affiliates of one another, or to two or more Approved Funds
managed by the same investment advisor or by affiliated investment
advisors, all such concurrent assignments shall be aggregated in
determining compliance with this subsection and (ii) no such consent
of the Company shall be required if an Event of Default has occurred
and is continuing;
(B) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement. Notwithstanding anything above to
the contrary, Section 10.04(b)(ii)(B) shall not be construed to
prohibit assignment of a proportionate part of all the assigning
Lender's rights and obligations in respect of one Class of Loans.
(C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500; provided
that in the event of concurrent assignments to two or more assignees
that are Affiliates of one another, or to two
75
or more Approved Funds managed by the same investment advisor or by
affiliated investment advisors, only one such fee shall be payable;
(D) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire;
and
(E) in the case of an assignment by a Lender to a CLO (as
defined below) managed by such Lender or by an Affiliate of such
Lender, unless such assignment (or an assignment to a CLO managed by
the same manager or an Affiliate of such manager) shall have been
approved by the Company (the Company hereby agreeing that such
approval, if requested, will not be unreasonably withheld or
delayed), the assigning Lender shall retain the sole right to approve
any amendment, modification or waiver of any provision of this
Agreement, except that the Assignment and Assumption between such
Lender and such CLO may provide that such Lender will not, without
the consent of such CLO, agree to any amendment, modification or
waiver described in the first proviso to Section 10.02(b) that
affects such CLO.
For the purposes of this Section 10.04(b), the terms "Approved Fund"
and "CLO" have the following meanings:
"Approved Fund" means (a) with respect to any Lender, a CLO managed
by such Lender or by an Affiliate of such Lender, and (b) with respect to any
Lender that is a fund which invests in bank loans and similar extensions of
credit, any other fund that invests in bank loans and similar extensions of
credit and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"CLO" means any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.16, 2.20 and 10.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this Section 10.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.
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(iv) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"REGISTER"). The entries in the Register shall be conclusive, and the Borrowers,
the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Company and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(c) (i) Any Lender may, without notice to or the consent of the
Company, the Administrative Agent or the Swingline Lender, sell participations
to one or more banks or other entities (a "PARTICIPANT") in all or a portion of
such Lender's rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided that (A) such
Lender's obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrowers, the Administrative Agent
and the Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrowers agree that each Participant shall be entitled to the
benefits of Sections 2.14, 2.16 and 2.20 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.18 as though it were a
Lender.
(ii) A Participant shall not be entitled to receive any
greater payment under Section 2.14 or 2.20 than the applicable Lender
would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to
such Participant is made with the Company's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of
77
Section 2.20 unless the Company is notified of the participation sold
to such Participant and such Participant agrees, for the benefit of
the Borrowers, to comply with Section 2.20(e) as though it were a
Lender.
(d) Any Lender, without notice to or the consent of any Borrower or
the Administrative Agent, may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
(e) By executing and delivering an Assignment and Assumption, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitments and the outstanding balances of its Term Loans, in each case
without giving effect to assignments thereof that have not become effective, are
as set forth in such Assignment and Assumption; (ii) except as set forth in
clause (i) above, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other Loan
Document or any other instrument or document furnished pursuant hereto or
thereto, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any of the foregoing, or the financial condition of the
Loan Parties or the performance or observance by the Loan Parties of any of
their obligations under this Agreement or under any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (iii) each of
the assignee and the assignor represents and warrants that it is legally
authorized to enter into such Assignment and Assumption; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
any amendments or consents entered into prior to the date of such Assignment and
Assumption and copies of the most recent financial statements delivered pursuant
to Section 5.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Assumption; (v) such assignee will independently and without
reliance upon the Agents, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Agents to take
such action as agents on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to them by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all the obligations that by the terms of this Agreement are required
to be performed by it as a Lender.
SECTION 10.05. SURVIVAL. All covenants, agreements, representations
and warranties made by the Borrowers herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been
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relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement is outstanding and unpaid and so long as the
Commitments have not expired or terminated. The provisions of Sections 2.14,
2.16, 2.20 and 10.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans and the Commitments or the termination of this
Agreement or any other provision hereof.
SECTION 10.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 3.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
SECTION 10.07. SEVERABILITY. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. RIGHT OF SETOFF. (a) If an Event of Default shall have
occurred and be continuing, each Lender 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 Lender to or
for the credit or the account of the Company or any Borrower against any of and
all the Obligations held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
Obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
(b) Each Lender agrees promptly to notify the Administrative Agent
and the Company or the applicable Borrower after any such setoff and
application; PROVIDED, HOWEVER, that the failure to give any such notice shall
not affect the validity of such setoff and application.
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(c) Notwithstanding the foregoing provisions of this Section 10.08,
any amounts received by a Lender by exercising such set-off rights against any
Foreign Borrower may be applied only against such Borrower's Obligations.
SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(b) Each Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto 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. Nothing in this Agreement shall
affect any right that the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to this Agreement against any
Borrower or its properties in the courts of any jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
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SECTION 10.11. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. CONFIDENTIALITY. Each of the Administrative Agent and
the Lenders agrees to maintain and cause its Affiliates to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors or to any
other Lender or Participant (it being understood that such disclosure will be
made only to such Persons who have, and only to the extent of, the need to know
such Information and only if the Persons to whom such disclosure is made are
informed of the confidential nature of such Information and instructed to keep
such Information confidential and use such information only as necessary in
connection with (i) their evaluation of the ability of the Company or any
Borrowing Subsidiary to repay the Loans and perform their other obligations
under the Loan Documents, (ii) administering the Obligations under this
Agreement, (iii) servicing the Borrowings hereunder, (iv) protecting their
interests under this Agreement or (v) performing any similar function in
connection with any other extension of credit by the Lenders to the Company or a
Subsidiary), (b) to the extent requested by any regulatory authority to which
the Lender is subject or in connection with an examination of the Lender by any
such authority, (c) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process, (d) in connection with
the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder, (e) subject
to an agreement containing provisions substantially the same as those of this
Section, to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, or, in
the case of any Approved Fund, to any rating agency, commercial paper dealer or
provider of a surety, guarantee or credit or liquidity enhancement to such
Approved Fund, (f) with the prior written consent of the Company, (g) to any
direct or indirect contractual counterparty in any swap, hedge or similar
agreement (or to any professional advisor of such contractual counterparty), so
long as such contractual counterparty (or such professional advisor) agrees in
writing to be bound by the provisions of this Section, or (h) to the extent such
Information (i) becomes publicly available other than as a result of a
disclosure by an Agent or Lender or (ii) becomes available to the Administrative
Agent or any Lender on a nonconfidential basis from a source other than any
Borrower that is not known to the Administrative Agent or such Lender to be
bound by any duty of confidentiality with respect thereto. For the purposes of
this Section, "INFORMATION" means all information received from the Borrowers
relating to any Borrower, ▇▇▇▇▇▇, and Subsidiaries of the Company or ▇▇▇▇▇▇ or
their respective businesses, other than any such information that is available
to the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any Borrower; PROVIDED that, in the case of information received
from the Borrowers after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
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SECTION 10.13. CONVERSION OF CURRENCIES. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.
(b) The obligations of each Borrower in respect of any sum due to any
party hereto or any holder of the obligations owing hereunder (the "APPLICABLE
CREDITOR") shall, notwithstanding any judgment in a currency (the "JUDGMENT
CURRENCY") other than the currency in which such sum is stated to be due
hereunder (the "AGREEMENT CURRENCY"), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 10.13 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
SECTION 10.14. RELEASE OF GRANTORS AND COLLATERAL. (a)
Notwithstanding any contrary provision herein or in any other Loan Document, if
the Company shall request the release under the Guarantee and Collateral
Agreement or any other Security Document of any Subsidiary or any Collateral to
be sold or otherwise disposed of (including through the sale or disposition of
any Subsidiary owning any such Subsidiary or Collateral) to a Person other than
the Company or a Subsidiary in a transaction permitted under the terms of this
Agreement and shall deliver to the Collateral Agent a certificate to the effect
that such sale or other disposition and the application of the proceeds thereof
will comply with the terms of this Agreement, the Collateral Agent, if satisfied
that the applicable certificate is correct, shall, without the consent of any
Lender, execute and deliver all such instruments, releases, financing statements
or other agreements, and take all such further actions, as shall be necessary to
effectuate the release of such Subsidiary or such Collateral substantially
simultaneously with or at any time after the completion of such sale or other
disposition. Any such release shall be without recourse to, or representation or
warranty by, the Collateral Agent and shall not require the consent of any
Lender. Notwithstanding the foregoing, in the event the Company or any
Subsidiary shall dispose of Equity Interests in ▇▇▇▇▇.▇▇▇, Inc., LookSmart, Ltd.
or WebMD Corporation in a transaction permitted under the terms of this
Agreement, such Equity Interests shall be automatically released from the
Guarantee and Collateral Agreement without any action on the part of the
Collateral Agent or any other Person.
(b) Without limiting the provisions of Section 10.03, the Company
shall reimburse the Collateral Agent for all costs and expenses, including
attorneys' fees and disbursements, incurred by it in connection with any action
contemplated by this Section.
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SECTION 10.15. INCORPORATION OF AMENDMENTS TO TERM LOAN AGREEMENT.
Notwithstanding any other provision contained herein, in the event that the Term
Loan Agreement shall be amended to add thereto any affirmative or negative
covenant or event of default that is either more restrictive than the
corresponding provision contained herein or not comparable to any provision
contained herein, this Agreement shall be deemed to have been amended to
incorporate such affirmative or negative covenant or event of default, MUTATIS
MUTANDIS, into the appropriate Article herein. The Company covenants and agrees
that it will (a) provide the Lenders with complete and accurate copies of each
amendment to the Term Loan Agreement of the sort referred to in this Section
promptly after the execution thereof, and (b) execute any and all further
documents and agreements, including amendments hereto, and take all such further
actions, as shall be reasonably requested by the Agents to give effect to this
Section.
SECTION 10.16. SECURITY DOCUMENTS. Each Agent and Lender hereby
authorizes and directs the Collateral Agent to execute and deliver the Guarantee
and Collateral Agreement and each other Security Document. Each Agent and
Lender, by executing and delivering this Agreement, acknowledges and approves,
and agrees to be bound by and act in accordance with the terms and conditions of
the Guarantee and Collateral Agreement and each other Security Document (to the
extent, in the case of each other Security Document, that either (a) such
Security Document shall have been made available to the Lenders prior to the
effectiveness of this Agreement or (b) such terms and conditions are comparable
to those contained in the Guarantee and Collateral Agreement), specifically
including the provisions of Articles VII, VIII, IX and X of the Guarantee and
Collateral Agreement governing the exercise of remedies under such Agreement and
limiting the responsibilities of, and providing for the indemnification of and
the reimbursement of expenses incurred by, the Collateral Agent. Each party
hereto further agrees that the provisions of Articles VII, VIII, IX and X of the
Guarantee and Collateral Agreement shall be deemed to be incorporated by
reference into each other Security Document, MUTATIS MUTANDIS, and as so
incorporated shall govern the exercise of remedies under each such Security
Document and limit the responsibilities of, and provide for the indemnification
of and the reimbursement of expenses incurred by, the Collateral Agent
thereunder.
SECTION 10.17. POWER OF ATTORNEY. Each Lender hereby (i) authorizes
the Collateral Agent to execute and deliver, on behalf of and in the name of
such Lender, the Share Pledge Agreement with Reader's Digest Association, Inc.
in connection with the pledge to the Lenders of shares in Verlag DAS BESTE GmbH,
a company organized under the laws of Germany and registered in the Commercial
Register of the Lower District Court of Stuttgart under no. HR B 1453, (ii)
authorizes the Collateral Agent to appoint any further agents or attorneys to
execute and deliver, or otherwise to act, on behalf of and in the name of the
Collateral Agent for any such purpose, (iii) authorizes the Collateral Agent to
do any and all acts and to make all declarations which are deemed necessary or
appropriate to the Collateral Agent and (iii) approves, pursuant to Section 185
of the German Civil Code, the acts performed and declarations made by the
Collateral or its representatives or attorneys-in-fact before Notary ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ in Dusseldorf, Germany in connection with the pledge to the Lenders of
shares
83
in Verlag Das Beste GmbH. The Lenders hereby relieve the Collateral Agent from
the self-dealing restrictions imposed by Section 181 of the German Civil Code.
SECTION 10.18. APPOINTMENT. Each Agent and Lender hereby appoints the
Collateral Agent to act as its agent and trustee under and in connection with
the Charge over Shares to the Agents and Lenders of shares in The Reader's
Digest Association Limited, a company incorporated under the laws of England and
Wales (registered number 340452) and to hold the assets charged under the Charge
over Shares as trustee for the Agents and Lenders on the trusts and other terms
contained herein and in the Charge over Shares and each Agent and Lender
irrevocably authorizes the Collateral Agent to exercise such rights, powers,
authorities and discretions as are specifically delegated to the Collateral
Agent by the terms of the Charge over Shares together with all such rights,
powers, authorities and discretion as are reasonably incidental thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.