EXHIBIT 10(c)
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 7, 2003,
Among
SOTHEBY'S HOLDINGS, INC.,
SOTHEBY'S, INC.,
OATSHARE LIMITED,
SOTHEBY'S,
SOTHEBY'S GLOBAL TRADING GmbH,
THE LENDERS NAMED HEREIN
and
JPMORGAN CHASE BANK
as Administrative Agent, Collateral Agent and Issuing Bank
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS ..............................................2
SECTION 1.02. TERMS GENERALLY.............................................19
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS.................................................19
SECTION 2.02. LOANS.......................................................20
SECTION 2.03. LETTERS OF CREDIT...........................................21
SECTION 2.04. BORROWING PROCEDURE.........................................25
SECTION 2.05. INTEREST ELECTIONS..........................................25
SECTION 2.06. FEES........................................................27
SECTION 2.07. REPAYMENT OF LOANS..........................................28
SECTION 2.08. INTEREST ON LOANS...........................................28
SECTION 2.09. DEFAULT INTEREST............................................28
SECTION 2.10. ALTERNATE RATE OF INTEREST..................................29
SECTION 2.11. TERMINATION AND REDUCTION OF COMMITMENTS....................29
SECTION 2.12. PREPAYMENT..................................................29
SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES...............30
SECTION 2.14. CHANGE IN LEGALITY..........................................31
SECTION 2.15. INDEMNITY...................................................32
SECTION 2.16. PRO RATA TREATMENT..........................................33
SECTION 2.17. SHARING OF SETOFFS..........................................33
SECTION 2.18. PAYMENTS....................................................34
SECTION 2.19. TAXES.......................................................34
SECTION 2.20. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES.......36
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. CORPORATE EXISTENCE AND GOOD STANDING.......................37
SECTION 3.02. CORPORATE POWER, AUTHORIZATION AND COMPLIANCE WITH THE LAW..37
SECTION 3.03. FINANCIAL INFORMATION; ABSENCE OF MATERIAL ADVERSE CHANGE...38
SECTION 3.04. EMPLOYEE BENEFIT PLANS......................................38
SECTION 3.05. ENVIRONMENTAL MATTERS.......................................38
SECTION 3.06. LITIGATION..................................................38
SECTION 3.07. TAXES.......................................................39
SECTION 3.08. SUBSIDIARIES................................................39
SECTION 3.09. INVESTMENT COMPANY ACT......................................39
SECTION 3.10. NO MATERIAL MISSTATEMENTS...................................39
SECTION 3.11. FEDERAL RESERVE REGULATIONS.................................39
SECTION 3.12. TITLE TO PROPERTIES.........................................39
SECTION 3.13. USE OF PROCEEDS.............................................40
SECTION 3.14. SECURITY DOCUMENTS..........................................40
ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE..............................................40
SECTION 4.02. EACH BORROWING DATE.........................................42
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. FINANCIAL STATEMENTS........................................42
SECTION 5.02. PAYMENT OF OBLIGATIONS......................................43
SECTION 5.03. MAINTAIN PROPERTY AND INSURANCE.............................43
SECTION 5.04. MAINTAIN EXISTENCE..........................................44
SECTION 5.05. COMPLIANCE WITH LAWS........................................44
SECTION 5.06. INSPECTION..................................................44
SECTION 5.07. ERISA.......................................................44
SECTION 5.08. COLLATERAL AND BORROWING BASE EVALUATIONS...................44
SECTION 5.09. FURTHER ASSURANCES..........................................45
SECTION 5.10. ART LOANS...................................................45
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. LIENs.......................................................45
SECTION 6.02. SUBSIDIARY INDEBTEDNESS.....................................47
SECTION 6.03. CONSOLIDATIONS, MERGERS, AND SALES OF ASSETS................47
SECTION 6.04. LINES OF BUSINESS...........................................47
SECTION 6.05. TRANSACTIONS WITH AFFILIATES................................48
SECTION 6.06. RESTRICTIONS ON DIVIDENDS...................................48
SECTION 6.07. CONSOLIDATED LEVERAGE RATIO.................................48
SECTION 6.08. ADJUSTED CONSOLIDATED NET WORTH.............................48
SECTION 6.09. CONSOLIDATED COVERAGE RATIO.................................48
SECTION 6.10. RESTRICTED PAYMENTS; CERTAIN PAYMENTS IN RESPECT OF
INDEBTEDNESS................................................48
SECTION 6.11. ART LOANS...................................................49
ARTICLE VII
EVENTS OF DEFAULT..........................................................54
ARTICLE VIII
THE AGENTS.................................................................57
ARTICLE IX
GUARANTEE
SECTION 9.01. GUARANTEE...................................................54
SECTION 9.02. OBLIGATIONS UNCONDITIONAL...................................54
SECTION 9.03. REINSTATEMENT...............................................55
SECTION 9.04. SUBROGATION.................................................55
SECTION 9.05. REMEDIES....................................................55
SECTION 9.06. CONTINUING GUARANTEE........................................55
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES....................................................55
SECTION 10.02. SURVIVAL OF AGREEMENT......................................56
SECTION 10.03. BINDING EFFECT.............................................56
SECTION 10.04. SUCCESSORS AND ASSIGNS.....................................57
SECTION 10.05. EXPENSES; INDEMNITY........................................60
SECTION 10.06. RIGHT OF SETOFF............................................61
SECTION 10.07. APPLICABLE LAW.............................................62
SECTION 10.08. WAIVERS; AMENDMENT.........................................62
SECTION 10.09. INTEREST RATE LIMITATION...................................62
SECTION 10.10. ENTIRE AGREEMENT...........................................62
SECTION 10.11. WAIVER OF JURY TRIAL.......................................63
SECTION 10.12. SEVERABILITY...............................................63
SECTION 10.13. JUDGMENT CURRENCY..........................................63
SECTION 10.14. COUNTERPARTS...............................................64
SECTION 10.15. HEADINGS...................................................64
SECTION 10.16. JURISDICTION; CONSENT TO SERVICE OF PROCESS................64
SECTION 10.17. CONFIDENTIALITY............................................64
SECTION 10.18. RELEASE OF LIENS AND GUARANTEES............................65
Exhibit A Form of Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Assumption
Exhibit D-1 Form of Opinion of General Counsel of Sotheby's
Holdings, Inc.
Exhibit D-2 Form of Opinion of Weil, Gotshal & ▇▇▇▇▇▇ LLP
Exhibit D-3 Form of Opinion of Miro, Weiner & ▇▇▇▇▇▇
Exhibit D-4 Form of Opinion of ▇▇▇▇▇▇▇▇ and Wedge
Exhibit D-5 Form of Opinion of Freshfields
Exhibit D-6 Form of Opinion of Pestalozzi Lachenal ▇▇▇▇▇
Exhibit E Form of Perfection Certificate
Exhibit F Indemnity, Subrogation and Contribution Agreement
Exhibit G Composite Conformed Amended and Restated Pledge
Agreement
Exhibit H Composite Conformed Amended and Restated Security
Agreement
Exhibit I Composite Conformed Amended and Restated
Subsidiary Guarantee Agreement
Exhibit J Composite Conformed Amended and Restated Trademark
SecurityAgreement
Schedule 1.01A Other Obligations
Schedule 1.01B Specified Assets
Schedule 1.01C Excluded Subsidiaries
Schedule 1.01D Existing Letters of Credit
Schedule 2.01 Commitments
Schedule 3.06B Litigation Liabilities
Schedule 3.08 Subsidiaries
Schedule 6.01 Liens
AMENDED AND RESTATED
CREDIT AGREEMENT (this "AGREEMENT")
dated as of February 7, 2003, among SOTHEBY'S HOLDINGS, INC., a
Michigan corporation ("HOLDINGS"), SOTHEBY'S, INC., a
New York
corporation (together with Holdings, the "US BORROWERS"),
OATSHARE LIMITED, a company registered in England ("OATSHARE"),
and SOTHEBY'S, a company registered in England (together with
Oatshare, the "UK BORROWERS"); SOTHEBY'S GLOBAL TRADING GmbH, a
company organized in Switzerland (the "SWISS BORROWER" and,
together with the UK Borrowers and the US Borrowers, the
"BORROWERS"); the lenders listed in Schedule 2.01 hereto or
subsequently becoming parties hereto as provided herein (the
"LENDERS"); and JPMORGAN CHASE BANK, a
New York banking
corporation ("JPMCB"), as administrative agent (in such capacity,
the "ADMINISTRATIVE AGENT") and as collateral agent (in such
capacity, the "COLLATERAL AGENT") for the Lenders and as the
issuing bank (in such capacity, the "ISSUING BANK").
WHEREAS the parties hereto have agreed to amend, restate and continue
the Amended and Restated
Credit Agreement dated as of July 10, 2001, among the
Borrowers, certain lenders and JPMCB, as Administrative Agent, Collateral Agent
and Issuing Bank, as heretofore amended by an Amendment No. 1 dated as of July
8, 2002, and an Amendment No. 2 dated as of July 30, 2002 (as so amended, the
"EXISTING
CREDIT AGREEMENT");
WHEREAS the Borrowers have requested the Lenders, the Administrative
Agent, the Collateral Agent and the Issuing Bank to continue to extend credit
under the Existing
Credit Agreement, as amended and restated hereby, in the form
of (a) Term Loans in an initial aggregate amount of $20,000,000, (b) Revolving
Loans at any time and from time to time during the Revolving Availability Period
in an aggregate principal amount at any time outstanding not in excess of
$55,000,000 or an equivalent amount in Sterling minus the LC Exposure at such
time and (c) Letters of Credit in an aggregate stated amount at any time
outstanding that will not result in the Revolving Exposure exceeding $55,000,000
or the LC Exposure exceeding $15,000,000. The proceeds of the Loans have been
and are to be used for general corporate purposes including, without limitation,
the payments of amounts due under the Existing
Credit Agreement, the payment of
amounts due in respect of Litigation Liabilities, refinancing commercial paper
or other borrowings and providing funds for capital expenditures and working
capital. The Letters of Credit have been and are to be used for general
corporate purposes. The Administrative Agent, the Collateral Agent, the Issuing
Bank and the Lenders are willing to amend and restate the Existing
Credit
Agreement, the Lenders are willing to extend and continue such credit to the
Borrowers and the Issuing Bank is willing to issue and continue Letters of
Credit for the accounts of the Borrowers, in each case on the terms and subject
to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
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ARTICLE I. DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR BORROWING" shall mean a Borrowing comprised of ABR Loans.
"ABR LOAN" shall mean any Loan bearing interest at a rate determined
by reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"ABR REVOLVING LOAN" shall mean a Revolving Loan that is an ABR Loan.
"ABR TERM LOAN" shall mean a Term Loan that is an ABR Loan.
"ADJUSTED CONSOLIDATED INTEREST EXPENSE" shall mean, with respect to
Holdings and its consolidated subsidiaries for any period, (a) Consolidated
Interest Expense for such period, MINUS (b) interest income of Holdings and its
consolidated subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP, MINUS (c) any amounts included in Consolidated Interest
Expense for such period in respect of amortization of (i) discounts on the
payment of settlements with the Department of Justice, (ii) discounts on the
existing Senior Notes and (iii) closing fees incurred in conjunction with
amendments and restatements of the Existing
Credit Agreement and this Agreement,
MINUS (d) to the extent included in Consolidated Interest Expense, interest
accrued on amounts payable on the Benefit Equalization Plan, an unfunded senior
management benefit plan.
"ADJUSTED CONSOLIDATED NET WORTH" shall mean at any date Consolidated
Net Worth at such date MINUS, to the extent not reflected in Consolidated Net
Worth and without duplication, the aggregate amount of (a) all payments made by
Holdings and the Subsidiaries in respect of Litigation Liabilities, (b) all
accounting reserves established by Holdings and the Subsidiaries in respect of
anticipated Litigation Liabilities, (c) all amounts escrowed or otherwise
segregated from the general assets of Holdings and the Subsidiaries to provide
for Litigation Liabilities and (d) all amounts that Holdings and the
Subsidiaries have agreed to or become obligated to pay, but have not yet paid,
pursuant to fines, judgments, settlements or agreements entered into in respect
of Litigation Liabilities, PLUS the sum of (i) restructuring and other
non-recurring charges incurred in any period ending on or before September 30,
2002, (ii) payments and reserves in respect of obligations under the Settlement
Agreements and European Claims incurred in any period ending on or before
December 31, 2002, (iii) up to $25,000,000 in payments made by Holdings and the
Subsidiaries to settle and defend antitrust claims brought by parties that opted
out of the Antitrust Settlement Agreement and antitrust and other claims related
to auctions outside the United States of America, (iv) restructuring charges of
up to $4,500,000 attributable to the fiscal quarter ended December 31, 2002, and
up to an additional $10,000,000 in the aggregate attributable to subsequent
fiscal quarters, and (v) accruals in respect of incentive compensation to the
extent deducted in determining Consolidated Net Income but not then paid in cash
(but subtracting cash payments in respect of such incentive compensation when
paid to the extent not then deducted in determining Consolidated Net Income).
"ADMINISTRATIVE FEES" shall have the meaning assigned to such term in
Section 2.06(c).
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"ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.
"AFFILIATE" shall mean, as to any person, another person (other than a
subsidiary of such first person) that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with such first person.
"AGENTS" shall mean the Administrative Agent and the Collateral Agent.
"ALTERNATE BASE RATE" shall mean, 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%. For purposes hereof, "PRIME RATE"
shall mean the rate of interest per annum publicly announced from time to time
by the Administrative Agent as its prime rate in effect at its principal office
in
New York City; each change in the Prime Rate shall be effective on the date
such change is publicly announced as effective. "FEDERAL FUNDS EFFECTIVE RATE"
shall mean, for any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published 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 which is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist.
"ANTITRUST SETTLEMENT AGREEMENT" shall mean the Sotheby's Settlement
Agreement dated October 27, 2000, entered into by Holdings and Sotheby's, Inc.
in the matter of IN RE AUCTION HOUSES ANTITRUST LITIGATION.
"ART LOANS" shall mean loans made by the Lending Subsidiaries to
customers of Holdings and the Subsidiaries, to finance the purchase or carrying
of, or in anticipation of the potential sale of, or secured by, works of art.
"ASSIGNED DOLLAR VALUE" shall mean, in respect of any Borrowing,
Letter of Credit or LC Disbursement denominated in Sterling or Euros, the Dollar
Equivalent thereof determined based upon the applicable Spot Exchange Rate as of
the Denomination Date for such Borrowing, Letter of Credit or LC Disbursement.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
assumption agreement entered into by a Lender and an assignee, and accepted by
the Administrative Agent and/or Holdings, as required, in the form of Exhibit C
or such other form as shall be approved by the Administrative Agent.
"AVAILABLE ART LOANS" shall mean the aggregate outstanding principal
amount of all Art Loans, excluding (a) Art Loans that are unsecured, (b) Art
Loans on which interest is no longer accrued, (c) the excess above 70% of the
loan-to-value percentages of Art Loans that are secured or consignor loans, in
each case with loan-to-value percentages greater than 70%, (d) the
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excess above 90% of the loan-to-value percentages of Venture Loans with
loan-to-value percentages greater than 90%, (e) to the extent not otherwise
deducted, any Art Loan subject to litigation challenging the validity or
enforceability of such loan or any related documentation or the rights of the
borrower or the lender in the works of art securing such loan, except for any
such Art Loan in respect of which the Required Lenders shall have delivered to
the Administrative Agent a notice stating that such Art Loan shall not be
deducted, (f) any Art Loans for which collateral is not in the possession of a
Lending Subsidiary or a UCC financing statement is not filed, (g) if Venture
Loans constitute more than 20% of Art Loans after deducting (a)-(f) above, the
excess above 20% and (h) an unallocated general reserve of 1% of the average
outstanding amount of Art Loans for the four quarters most recently ended.
"BOARD" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"BORROWERS" shall mean Sotheby's Holdings, Inc., Sotheby's, Inc.,
Oatshare Limited, Sotheby's and Sotheby's Global Trading GmbH.
"BORROWING" shall mean a group of Loans of a single Type made by the
Lenders.
"BORROWING BASE" shall mean, at any time, an amount equal to the sum
of (a) 85% of Available Art Loans that are (i) owned by Lending Subsidiaries
that are Domestic Subsidiaries (and are not Excluded Subsidiaries) and (ii)
subject to perfected, first priority pledges or security interests in favor of
the Collateral Agent created under the Security Documents to secure the
Obligations, as contemplated by the definition of "Collateral and Guarantee
Requirement", (b) the lesser of (i) the aggregate outstanding principal amount
of Borrowings of the UK Borrowers and (ii) 85% of Available Art Loans that are
(A) owned by Sotheby's Financial Services Ltd. and (B) subject to perfected,
first priority pledges or security interests in favor of the Collateral Agent
created under the Security Documents to secure the Obligations of the UK
Borrowers, as contemplated by the definition of "Collateral and Guarantee
Requirement", (c) the lesser of (i) the aggregate outstanding amount of
borrowings of the Swiss Borrower and (ii) 85% of Available Art Loans that are
(A) owned by the Swiss Borrower and (B) subject to perfected, first priority
pledges or security interests in favor of the Collateral Agent to secure the
Obligations of the Swiss Borrower, as contemplated by the definition of
"Collateral and Guarantee Requirement" and (d) an amount equal to the lesser of
(i) 15% of Consolidated Net Tangible Assets for the previous fiscal quarter and
(ii) US$20,000,000.
"BORROWING BASE CERTIFICATE" shall mean a certificate in a form
approved by the Administrative Agent, together with all attachments contemplated
thereby.
"BORROWING REQUEST" shall mean a request made pursuant to Section 2.04
in the form of Exhibit A.
"BUSINESS DAY" shall mean any day (other than a day which is 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 Eurocurrency Loan, the term "BUSINESS DAY" shall also exclude
any day on which banks are not open for dealings in deposits in Dollars or
Sterling, as the case may be, in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations
of such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right
5
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, for the purposes of this Agreement, the
amount of such obligations at any time shall be the capitalized amount thereof
at such time determined in accordance with GAAP.
A "CHANGE IN CONTROL" shall be deemed to have occurred if (a) A.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall sell, transfer or otherwise dispose of shares of capital
stock of Holdings and, following such sale, transfer or other disposition shall
not beneficially own, directly or indirectly, shares of capital stock of
Holdings representing more than 50% of the aggregate ordinary voting power
represented by all the issued and outstanding capital stock of Holdings, unless
the Lenders shall have been notified, at least 20 days prior to such sale,
transfer or other disposition, of the identity of the intended transferee and
all the Lenders have delivered to Holdings a notice of their approval of such
transferee; or (b) a majority of the seats (other than vacant seats) on the
Board of Directors of Holdings shall be occupied by persons other than
Continuing Directors.
"CLOSING DATE" shall mean the date of this Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
"COLLATERAL" shall mean any and all "Collateral", as defined in any
applicable Security Document.
"COLLATERAL AND GUARANTEE REQUIREMENT" shall mean, at any time, that
the following requirements shall be satisfied at and as of such time:
(a) a Subsidiary Guarantee Agreement (or a supplement thereto)
shall have been executed by each Domestic Subsidiary existing at such
time, other than any Borrower, shall have been delivered to the
Collateral Agent and shall be in full force and effect;
(b) one or more Pledge Agreements (or supplements thereto) shall
have been duly executed and delivered by Holdings, each Domestic
Subsidiary existing at such time and Sotheby's Financial Services
Ltd., and there shall have been duly and validly pledged to the
Collateral Agent thereunder, for the ratable benefit of the holders of
the Obligations (and the holders of the Senior Notes, to the extent
required under the Senior Note Indenture after giving effect to
baskets and exceptions provided for therein in a manner satisfactory
to the Collateral Agent) (A) all the outstanding Equity Interests
(other than Equity Interests in any Foreign Subsidiary) owned directly
by Holdings or any Domestic Subsidiary, (B) 65% of the outstanding
voting Equity Interests, and 100% of the outstanding non-voting Equity
Interests (or, in each case, such lesser percentages as shall be owned
by Holdings and the Domestic Subsidiaries) in each Foreign Subsidiary
owned in whole or in part directly by Holdings or any Domestic
Subsidiary, (C) all Art Loans and other Indebtedness owed to Holdings
or any Domestic Subsidiary and (D) solely as security for the
Obligations of the UK Borrowers, all Art Loans and other Indebtedness
owed to Sotheby's Financial Services Ltd., and all steps required
under applicable law or reasonably requested by the Collateral Agent
to ensure that the Pledge Agreements create valid, first priority,
perfected Liens on all the Collateral subject thereto shall have been
taken to the
6
satisfaction of the Collateral Agent, it being understood that to the
extent effective under applicable law, perfection on the Art Loans
will be accomplished by means of filings under the Uniform Commercial
Code or other applicable statutes, PROVIDED that if the Collateral
Agent shall deliver to Holdings a notice stating that the Collateral
Agent believes (x) that the financial condition of Holdings and the
Subsidiaries has deteriorated and (y) that the interests of the
Lenders would be more effectively protected if the Collateral Agent
possessed the instruments evidencing the Art Loans, Holdings will
cause each Lending Subsidiary promptly to deliver such instruments to
the Collateral Agent, accompanied by undated instruments of transfer
satisfactory to the Collateral Agent and executed in blank by the
appropriate Lending Subsidiary;
(c) at any time when Sotheby's Global Trading GmbH shall have
outstanding Art Loans that are or are to be taken into account in
determining the Borrowing Base, (A) the form of the documentation
therefor shall have been approved by the Collateral Agent, (B) a
Pledge Agreement in form and substance reasonably satisfactory to the
Collateral Agent shall have been duly executed by Sotheby's Global
Trading GmbH and there shall be duly and validly pledged to the
Collateral Agent thereunder, for the ratable benefit of the holders of
the Obligations of the Swiss Borrower, all Art Loans owed to the Swiss
Borrower and (C) all steps required under applicable law or reasonably
requested by the Collateral Agent to ensure that such Pledge Agreement
creates valid, first priority, perfected Liens on all the Collateral
subject thereto shall have been taken to the satisfaction of the
Collateral Agent;
(d) the Security Agreement (or supplements thereto) (and, with
respect to any trademark, the Trademark Security Agreement) shall have
been duly executed and delivered by Holdings and each Domestic
Subsidiary existing at such time and there shall have been subjected
to security interests in favor of the Collateral Agent thereunder, for
the ratable benefit of the holders of the Obligations (and the holders
of the Senior Notes, to the extent required under the Senior Note
Indenture after giving effect to baskets and exceptions provided for
therein in a manner satisfactory to the Collateral Agent), all the
tangible and intangible assets of Holdings and each Domestic
Subsidiary (including all Art Loans and other Indebtedness owed to
Holdings or any Domestic Subsidiary) in which security interests can
be created under the Uniform Commercial Code as in effect in the State
of
New York or other applicable law, and all documents and
instruments, including UCC financing statements, required by law or
reasonably requested by the Collateral Agent to be filed, registered
or recorded to create and perfect the Liens intended to be created by
the Security Agreement and the Trademark Security Agreement shall have
been filed, registered or recorded (or arrangements satisfactory to
the Collateral Agent for such filing, registration or recording shall
have been made);
(e) the Collateral Agent shall have received (A) counterparts of
a Mortgage with respect to each Mortgaged Property, duly executed and
delivered by the record owner of such Mortgaged Property, (B) at the
reasonable request of the Collateral Agent or the Required Lenders, in
the case of each Mortgaged Property with a book or fair market value
in excess of $1,000,000, a policy or policies of title insurance
issued by a nationally recognized title insurance
7
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 6.01, together with
endorsements, coinsurance and reinsurance and (C) such surveys,
abstracts, legal opinions and other documents as the Collateral Agent
or the Required Lenders may reasonably request with respect to any
such Mortgage or Mortgaged Property;
(f) the Indemnity, Subrogation and Contribution Agreement (or a
supplement thereto) shall have been executed by Holdings and each
Domestic Subsidiary party to the Guarantee Agreement or any Security
Document, shall have been delivered to the Collateral Agent and shall
be in full force and effect; and
(g) each Borrower shall have obtained all consents and approvals
required to be obtained by it in connection with the execution and
delivery of all Security Documents to which it is a party, the
performance of its obligations thereunder and the creation by it of
the Liens provided for therein.
The foregoing definition shall not require the creation or perfection of pledges
of or security interests in (a) the Specified Assets or (b) particular assets of
Holdings and the Subsidiaries if and for so long as, in the judgment of the
Administrative Agent with respect to this clause (b), the cost or effort to
create or perfect such pledges or security interests in such assets, or the
effort required to do so, shall be excessive in view of the benefits to be
obtained by the Lenders therefrom. The Administrative Agent may grant extensions
of time for the perfection of security interests in or the obtaining of title
insurance with respect to particular assets (including extensions beyond the
Closing Date for the perfection of security interests in assets of Holdings 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.
"COMMITMENT" shall mean a Revolving Commitment or a Term Commitment,
as applicable.
"COMMITMENT FEE" shall have the meaning assigned to such term in
Section 2.06(a).
"CONSOLIDATED COVERAGE RATIO" shall mean, with respect to Holdings and
its consolidated subsidiaries for any period, the ratio of (a) Consolidated
EBITDA for such period to (b) Adjusted Consolidated Interest Expense for such
period.
"CONSOLIDATED EBITDA" shall mean, with respect to Holdings and its
consolidated subsidiaries for any period, (a) the sum, without duplication, of
(i) Consolidated Net Income for such period, (ii) Consolidated Interest Expense
for such period, (iii) all Federal, state, local and foreign income taxes
deducted in determining such Consolidated Net Income, (iv) depreciation and
amortization deducted in determining such Consolidated Net Income, (v) for the
period ending December 31, 2002, (A) payments and reserves in respect of
obligations under the Settlement Agreements and European Claims and (B)
restructuring and other non-recurring charges, both to the extent deducted in
determining Consolidated Net Income, (vi) up to $25,000,000 in payments made by
the Holdings and its consolidated subsidiaries to settle or defend antitrust
claims brought by parties that opted out of the Antitrust Settlement Agreement
8
and antitrust and other claims related to auctions outside the United States to
the extent deducted in determining Consolidated Net Income, (vii) restructuring
and other charges of up to $4,500,000 attributable to the fiscal quarter ended
December 31, 2002, and up to an additional $10,000,000 in the aggregate
attributable to subsequent fiscal quarters, (viii) accruals in respect of
retention bonuses paid or to be paid during the fiscal years ending December 31,
2002 and 2003 and (ix) accruals in respect of incentive compensation to the
extent deducted in determining Consolidated Net Income but not then paid in cash
MINUS (b) any tax benefits reflected in such Consolidated Net Income MINUS (c)
cash payments in respect of incentive compensation when paid to the extent not
then deducted in determining Consolidated Net Income.
"CONSOLIDATED INTEREST EXPENSE" shall mean, with respect to Holdings
and its consolidated subsidiaries for any period, the consolidated gross
interest expense of Holdings and its consolidated subsidiaries for such period
determined on a consolidated basis in accordance with GAAP consistently applied.
"CONSOLIDATED LEVERAGE RATIO" shall mean, as to Holdings and its
consolidated subsidiaries, the ratio of (a) the consolidated Indebtedness of
Holdings and its consolidated subsidiaries to (b) the sum of the consolidated
Indebtedness of Holdings and its consolidated subsidiaries and Adjusted
Consolidated Net Worth.
"CONSOLIDATED NET INCOME" shall mean, for Holdings and its
consolidated subsidiaries for any period, the aggregate net income (or net
deficit) of such persons determined on a consolidated basis for such period in
accordance with GAAP on a basis consistent with that used in preparing the
Financial Statements referred to in Section 3.03; PROVIDED, HOWEVER, that in
computing "Consolidated Net Income", any extraordinary gains and losses and any
non-recurring losses relating to the Litigation Liabilities shall be excluded.
"CONSOLIDATED NET TANGIBLE ASSETS" shall mean the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities other than the current portion
of the capital lease obligation associated with the York Avenue Property, (b)
all goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, (c) the aggregate outstanding principal
amount of all Art Loans, (d) the book value of the capital lease asset related
to the York Avenue Property and (e) Net Post-2002 Investment.
"CONSOLIDATED NET WORTH" shall mean at any date shareholders' equity,
as shown on a consolidated balance sheet of Holdings and its Subsidiaries
prepared in accordance with GAAP at such date.
"CONTINUING DIRECTOR" shall mean any Director of Holdings that shall
have been a Director on the Closing Date or shall have been nominated or
appointed by a majority of the then Continuing Directors.
"CONTROL" shall mean 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 ownership of voting securities, by contract or
otherwise, and the terms "CONTROLLING" and "CONTROLLED" shall have meanings
correlative thereto.
"DEFAULT" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
9
"DENOMINATION DATE" shall mean (a) in relation to any Sterling
Borrowing, the date that is three Business Days before the date such Borrowing
is made, (b) in relation to any Letter of Credit denominated in Sterling or
Euro, the most recent date that is (i) the date three Business Days before the
date of issuance or renewal of such Letter of Credit (the "INITIAL VALUATION
DATE") or (ii) a date corresponding to the Initial Valuation Date in the third,
sixth or ninth month following the month in which the Initial Valuation Date
shall have occurred and (c) in relation to any LC Disbursement, the Denomination
Date applicable to the Letter of Credit under which such LC Disbursement shall
have been made.
"DOLLAR EQUIVALENT" shall mean (a) with respect to any amount in US
Dollars, such amount, and (b) with respect to an amount of Sterling or Euro on
any date, (i) for any Loan, the amount of Dollars that may be purchased with
such amount of such Sterling at the Spot Exchange Rate with respect to Sterling
on such date and (ii) for any Letter of Credit, the Dollar equivalent of the
face amount of such Letter of Credit determined at the most recent of (x) the
exchange rate at the date such Letter of Credit was issued and (y) the exchange
rate at the three month anniversary of such date.
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
"DOMESTIC SUBSIDIARIES" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia, except for Excluded Subsidiaries.
"EFFECTIVE DATE" shall mean the date on which all the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
10.08).
"EQUITY INTERESTS" shall mean any 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, options or other rights to acquire any such equity ownership
interests.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that together with the Borrowers is treated as a single employer
under Section 414 of the Code.
"EURO" or "EURO " means the single currency of the European Union as
constituted by the treaty establishing the European Community being the Treaty
of Rome, as amended from time to time and as referred to in the legislative
measures of the European Union for the introduction of, changeover to or
operation of the Euro in one or more member states.
"EURO EQUIVALENT" shall mean, with respect to an amount of Dollars on
any date, the amount of Euros that may be purchased with such amount of Dollars
at the Spot Exchange Rate on such date.
"EUROCURRENCY BORROWING" shall mean a Borrowing comprised of
Eurocurrency Loans.
10
"EUROCURRENCY LOAN" shall mean any Loan bearing interest at a rate
determined by reference to the LIBO Rate in accordance with the provisions of
Article II.
"EUROCURRENCY REVOLVING BORROWING" shall mean a Revolving Borrowing
comprised of Eurocurrency Revolving Loans.
"EUROCURRENCY REVOLVING LOAN" shall mean any Revolving Loan that is a
Eurocurrency Loan.
"EUROCURRENCY TERM BORROWING" shall mean a Term Borrowing comprised of
Eurocurrency Term Loans.
"EUROCURRENCY TERM LOAN" shall mean any Term Loan that is a
Eurocurrency Loan.
"EUROPEAN CLAIMS" shall mean (a) the fine imposed by the European
Commission pursuant to a decision dated October 30, 2002, relating to breaches
of the competition provisions of the EC Treaty and (b) claims asserted in
antitrust lawsuits alleging violations of Federal or state antitrust laws in
connection with auctions outside the United States.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VII.
"EXCLUDED SUBSIDIARIES" shall mean those subsidiaries listed on
Schedule 1.01C that do not have assets greater than $200,000 or earnings greater
than $50,000 for the period of four fiscal quarters most recently ended.
"FEES" shall mean the Commitment Fee, the Administrative Fees, the LC
Participation Fees and the Issuing Bank Fees.
"FINANCIAL OFFICER" of any corporation shall mean the Chief Financial
Officer, principal accounting officer, Treasurer or Controller of such
corporation.
"FOREIGN SUBSIDIARIES" shall mean all Subsidiaries other than Domestic
Subsidiaries or Excluded Subsidiaries.
"GAAP" shall mean United States generally accepted accounting
principles, applied on a basis consistent with the financial statements referred
to in Section 3.03.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"GUARANTEE" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so
11
as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER,
that the term Guarantee shall not include endorsements for collection or
deposit, or guarantees in the ordinary course of business including, without
limitation, guarantees by the Borrowers to consignors of minimum prices in
connection with sales of property.
"GUARANTOR" shall mean the Borrowers (other than Sotheby's Global
Trading GmbH) in their capacity as guarantors under Section 9.01, except that
Oatshare Limited and Sotheby's will not be Guarantors in respect of any
Obligations of Holdings, Sotheby's, Inc. and Sotheby's Global Trading GmbH.
"INDEBTEDNESS" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (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) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person, (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services, (f)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness 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
obligations secured thereby have been assumed, (g) all Guarantees by such person
of Indebtedness of others, (h) all Capital Lease Obligations of such person, (i)
all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements and (j) all obligations of such person as an account
party in respect of letters of credit and bankers' acceptances; PROVIDED,
HOWEVER, that Indebtedness shall not include trade accounts payable in the
ordinary course of business (whether or not any such trade accounts have terms
providing a discount if paid within a certain time or an interest factor if not
paid within a certain time), and for purposes of determining compliance with the
covenants contained in Sections 6.02, 6.07 and 6.09, Indebtedness will not
include the items referred to in (i) and (j) above. The Indebtedness of any
person shall include the Indebtedness of any partnership in which such person is
a general partner to the extent that the Indebtedness of such partnership is
attributed to such person in accordance with GAAP.
"INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" shall mean the
Indemnity, Subrogation and Contribution Agreement dated March 10, 2000 among
Holdings, the Subsidiary Guarantors (as defined therein) and JPMCB.
"INTEREST ELECTION REQUEST" shall mean a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.05.
"INTEREST PAYMENT DATE" shall mean, with respect to any Loan, the last
day of each Interest Period applicable thereto and, in the case of a
Eurocurrency Loan with an Interest Period of more than three months' 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 and, in addition, the date of any
conversion of such Loan to a Loan of a different Type.
"INTEREST PERIOD" shall mean (a) as to any Eurocurrency Borrowing, the
period commencing on the date of such Borrowing 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
applicable Borrower may elect and (b) as to any ABR
12
Borrowing, a period commencing on the date of such Loan and ending on the
earlier of the next succeeding March 31, June 30, September 30 and December 31
or the date on which such Loan is repaid or prepaid; PROVIDED, HOWEVER, that (i)
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 Eurocurrency 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 and (ii) no Interest Period shall end later than
the Maturity Date. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
"ISSUING BANK" means JPMCB, in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity as provided in Section
2.03(i). The Issuing Bank may, in its discretion, arrange for one or more
Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case
the term "Issuing Bank" shall include any such Affiliate with respect to Letters
of Credit issued by such Affiliate.
"ISSUING BANK FEES" shall have the meaning assigned to such term in
Section 2.06(b).
"LC DISBURSEMENT" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"LC EXPOSURE" shall mean, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit denominated in Dollars at
such time plus (b) the aggregate amount of all LC Disbursements denominated in
Dollars that have not yet been reimbursed by or on behalf of the applicable
Borrowers at such time plus (c) the sum of the Assigned Dollar Values of the
undrawn amounts of all outstanding Letters of Credit denominated in Sterling or
Euro at such time plus (d) the sum of the Assigned Dollar Values of all LC
Disbursements denominated in Sterling or Euro that have not yet been reimbursed
by or on behalf of the applicable Borrowers at such time. The LC Exposure of any
Lender at any time shall be its Revolving Percentage of the total LC Exposure at
such time.
"LC PARTICIPATION FEE" shall have the meaning assigned to such term in
Section 2.06(b).
"LENDING SUBSIDIARIES" shall mean Sotheby's Financial Services, Inc.,
Sotheby's Financial Services California, Inc., Oberon Inc., Theta Inc.,
Sotheby's Ventures LLC, Sotheby's Financial Services Limited, Sotheby's
Aktiengesellschaft and Sotheby's Global Trading GmbH.
"LETTER OF CREDIT" means (i) any letter of credit issued pursuant to
this Agreement and (ii) the existing letters of credit listed on Schedule 1.01D.
"LIBO RATE" shall mean, with respect to any Eurocurrency Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the rate at which deposits in the currency in
which such Borrowing is denominated approximately equal in principal amount to
the Loan of the Administrative Agent, in its capacity as a Lender (or, if the
Administrative Agent is not a Lender in respect of such Borrowing, then the Loan
of the Lender in respect of such Borrowing with the greatest Loan amount),
included in such Eurocurrency 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
13
London interbank market at approximately 11:00 a.m., London time, on the date
that is two Business Days prior to the commencement of such Interest Period.
"LIEN" shall mean with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"LITIGATION LIABILITIES" shall mean (a) liabilities (whether actual or
asserted), claims, judgments, settlements and expenses resulting from (a) the
antitrust investigation by the United States Department of Justice or related
antitrust investigations by other Governmental Authorities, (b) antitrust
litigation, whether commenced by Governmental Authorities or other persons,
arising out of the matters that are or were the subject of any such
investigation, (c) related shareholder derivative lawsuits and claims and (d)
related securities lawsuits and claims.
"LOAN" shall mean a Revolving Loan or a Term Loan, whether made as a
Eurocurrency Loan or an ABR Loan, as permitted hereby.
"LOAN DOCUMENTS" shall mean this Agreement, including all Exhibits and
Schedules, and the Security Documents.
"LONDON PROPERTIES" shall mean the land, buildings and improvements
constituting Sotheby's sales rooms and offices owned or leased by Sotheby's and
located on or near ▇▇-▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"MARGIN STOCK" shall have the meaning given such term under Regulation
U.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" shall mean a
materially adverse change in, or a materially adverse effect on, the business,
assets, operations or financial condition of Holdings and its Subsidiaries taken
as a whole (other than any such change or effect resulting from the Litigation
Liabilities to the extent no Default shall have resulted therefrom under Section
6.08 or any other provision of this Agreement).
"MATERIAL SUBSIDIARY" shall mean at any time (a) each Subsidiary that
is a Borrower and (b) any other Subsidiary that either (i) has a Subsidiary Net
Worth at such time in excess of 2.5% of Consolidated Net Worth at such time or
(ii) has consolidated assets in excess of 5% of the consolidated assets of
Holdings and its consolidated subsidiaries at such time.
"MATURITY DATE" shall mean February 6, 2004.
"MORTGAGE" shall mean one or more mortgages or deeds of trust in form
and substance satisfactory to Holdings and the Collateral Agent.
"MORTGAGED PROPERTY" shall mean each parcel of real property owned by
Holdings or any Domestic Subsidiary on the date hereof or at any time hereafter
and the improvements thereto.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Borrowers or any ERISA Affiliate (other
than one considered
14
an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414)
is making or accruing an obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions.
"NET POST-2002 INVESTMENT" means, as to all Foreign Subsidiaries, the
sum of (i) all investments in and loans and advances to Foreign Subsidiaries by
Holdings or any Domestic Subsidiary, PLUS (ii) all repayments of loans and
advances and all dividends, returns of capital and other distributions by
Holdings or any Domestic Subsidiary to Foreign Subsidiaries, MINUS (iii) all
investments in and loans and advances to Holdings or any Domestic Subsidiary by
Foreign Subsidiaries, MINUS (iv) all repayments of loans or advances and all
dividends, returns of capital and other distributions by Foreign Subsidiaries to
Holdings or any Domestic Subsidiary, in each case after December 31, 2002;
PROVIDED that the Net Post-2002 Investment in all Foreign Subsidiaries shall in
no event be less than zero.
"OBLIGATIONS" shall mean (a) the due and punctual payment by the
Borrowers of 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, (b) each payment required to be made
by the Borrowers under this Agreement in respect of any Letter of Credit, when
and as due, including payments in respect of reimbursement of disbursements and
obligations to provide cash collateral, (c) all other monetary obligations,
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), of
Holdings and the Subsidiaries to the Lenders under this Agreement and the other
Loan Documents, (d) the due and punctual payment and performance of all
covenants, agreements, obligations and liabilities of the Borrowers, monetary or
otherwise, under or pursuant to this Agreement and the other Loan Documents and
(e) the due and punctual payment of all monetary obligations of Holdings and the
Subsidiaries referred to in Schedule 1.01A hereto.
"OBLIGATION CURRENCY" shall have the meaning assigned to such term in
Section 10.13.
"OTHER TAXES" shall have the meaning assigned to such term in Section
2.19(b).
"PARTICIPANT" has the meaning set forth in Section 10.04.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"PERFECTION CERTIFICATE" shall mean a perfection certificate in form
and substance satisfactory to Holdings and the Collateral Agent, substantially
in the form of Exhibit E hereto.
"PERSON" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, government (or any agency or
political subdivision thereof) or other entity.
"PLAN" shall mean 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
15
which is maintained for current or former employees, or any beneficiary thereof,
of the Borrowers or any ERISA Affiliate.
"PLEDGE AGREEMENTS" shall mean (i) the Amended and Restated Pledge
Agreement dated as of July 10, 2001, as amended by the Third Amendment, among
Holdings, the Subsidiary Pledgors (as defined therein) and the Collateral Agent,
a composite conformed copy of which is included as Exhibit G hereto, (ii) the UK
Securities Mortgage, (iii) the UK Debenture, (iv) the Swiss Securities Mortgage
and (v) any future pledge agreement among Holdings, Sotheby's Global Trading
GmbH and the Collateral Agent.
"PURCHASE AND SALE AGREEMENT" shall mean the Purchase and Sale
Agreement dated as of December 16, 2002, between SIBS, LLC and RFR Holding Corp.
in the form heretofore delivered to the Administrative Agent and the Lenders.
"REGISTER" shall have the meaning given such term in Section 10.04(d).
"REGULATION D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"REGULATION X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"RELATED FUND" shall mean, with respect to any Lender which is a fund
that invests in loans, any other fund that invests in loans that is managed by
the same investment advisor as such Lender or by an Affiliate of such Lender or
such investment advisor.
"REPORTABLE EVENT" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).
"REQUIRED LENDERS" shall mean, at any time, Lenders having Revolving
Exposures, outstanding Term Loans and unused Commitments representing more than
66 K% of the Total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time or, after the Commitments shall have been terminated or
for purposes of acceleration pursuant to paragraph (a) of Article VII, Lenders
holding Loans and LC Exposures representing more than 66 K% of the aggregate
principal amount of the Loans and LC Exposures outstanding. For purposes of
determining the Required Lenders, any Loans or Letters of Credit denominated in
Sterling or Euros, as applicable, shall be translated into Dollars at the Spot
Exchange Rate in effect on the applicable Denomination Date.
"RESPONSIBLE OFFICER" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"RESTRICTED PAYMENT" shall mean any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in Holdings or any
16
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, cancellation or termination of any Equity
Interests in Holdings or any Subsidiary.
"REVOLVING AVAILABILITY PERIOD" shall mean the period from and
including the Effective Date to but excluding the earlier of the Maturity Date
and the date of termination of the Revolving Commitments.
"REVOLVING BORROWING" shall mean a Borrowing comprised of Revolving
Loans.
"REVOLVING COMMITMENT" shall mean, with respect to any Lender at any
time, the commitment (if any) of such Lender set forth on Schedule 2.01 (or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Revolving Commitment) to make Revolving Loans pursuant to Section 2.01(b),
as such commitment may be reduced from time to time pursuant to Section 2.11(c)
or pursuant to assignments by or to such Lender pursuant to Section 10.04.
"REVOLVING EXPOSURE" shall mean, with respect to any Lender at any
time, the sum of (a) the aggregate principal amount at such time of all
outstanding Revolving Loans of such Lender denominated in Dollars, (b) the
Assigned Dollar Value at such time of the aggregate principal amount at such
time of all outstanding Revolving Loans of such Lender that are Sterling Loans
and (c) such Lender's LC Exposure at such time.
"REVOLVING LENDER" shall mean a Lender with a Revolving Commitment or,
if the Revolving Commitments have terminated or expired, a Lender with a
Revolving Exposure.
"REVOLVING LOAN" shall mean a Loan made by a Revolving Lender pursuant
to Section 2.04. Each Revolving Loan denominated in Dollars shall be a
Eurocurrency Revolving Loan or an ABR Revolving Loan, and each Revolving Loan
denominated in Sterling shall be a Eurocurrency Revolving Loan.
"REVOLVING PERCENTAGE" shall mean, with respect to any Revolving
Lender, the percentage of the total Revolving Commitment represented by such
Lender's Revolving Commitment. If the Revolving Commitments have terminated or
expired, the Revolving Percentages shall be determined based upon the Revolving
Exposure of such Lender.
"SALE AND LEASEBACK" means the sale of the York Avenue Property by
SIBS, LLC, a wholly owned subsidiary of Holdings, to RFR Holding Corp. or an
affiliate of RFR Holding Corp. for gross proceeds (including the assumption of
Term Loans under and as defined in the Existing
Credit Agreement) of not less
than $170,000,000, and the substantially simultaneous lease of the York Avenue
Property by RFR Holding Corp. or an affiliate of RFR Holding Corp. to Sotheby's,
Inc., all pursuant to and on substantially the terms set forth in the Purchase
and Sale Agreement.
"SECURITY AGREEMENT" shall mean the Amended and Restated Security
Agreement, dated as of July 10, 2001, as amended by the Third Amendment, among
Holdings, the Subsidiary Guarantors (as defined therein) and JPMCB, a composite
conformed copy of which is included as Exhibit H hereto.
17
"SECURITY DOCUMENTS" shall mean the Security Agreement, the Pledge
Agreements, the Trademark Security Agreement, the Mortgages and each other
security agreement or other instrument or document executed and delivered
pursuant to Section 5.09.
"SENIOR NOTES" shall mean Holdings' 6 O% Notes due 2009 in an
aggregate principal amount outstanding on the date hereof of $100,000,000.
"SENIOR NOTE INDENTURE" shall mean the Indenture dated as of February
5, 1999, governing the Senior Notes, as amended, supplemented or otherwise
modified from time to time.
"SETTLEMENT AGREEMENTS" shall mean (a) the Antitrust Settlement
Agreement (b) the Stipulation and Agreement of Settlement dated November 7,
2000, entered into by Holdings and Sotheby's, Inc. in IN RE SOTHEBY'S HOLDINGS,
INC. SECURITIES LITIGATION and (c) the Plea Agreement dated October 5, ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America.
"SPECIFIED ASSETS" shall mean those assets listed on Schedule 1.01B.
"SPOT EXCHANGE RATE" shall mean, on any day, (a) with respect to
Sterling or Euro in relation to Dollars, the spot rate at which Dollars are
offered on such day by JPMorgan Europe Limited in London for Sterling or Euro,
as applicable, at approximately 11:00 a.m. (London time), and (b) with respect
to Dollars in relation to Sterling or Euro, the spot rate at which Sterling or
Euro, as applicable, is offered on such day by JPMorgan Europe Limited in London
for Dollars at approximately 11:00 a.m. (London time). For purposes of
determining the Spot Exchange Rate in connection with a Sterling Borrowing, such
Spot Exchange Rate shall be determined as of the Denomination Date for such
Borrowing with respect to transactions in Sterling that will settle on the date
of such Borrowing. Each determination of a Spot Exchange Rate will be made by
the Administrative Agent and will be conclusive absent manifest error.
"STATUTORY RESERVE RATE" shall mean, with respect to any currency, 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, liquid asset or similar percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by any
Governmental Authority of the United States or of the jurisdiction of such
currency to which banks in such jurisdiction are subject for any category of
deposits or liabilities customarily used to fund loans in such currency or by
reference to which interest rates applicable to Loans in such currency are
determined. Eurocurrency Loans shall be deemed 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 Regulation D or any
other applicable law, rule or regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"STERLING" shall mean lawful money of the United Kingdom.
"STERLING BORROWING" shall mean a Borrowing comprised of Sterling
Loans.
"STERLING EQUIVALENT" shall mean, with respect to an amount of Dollars
on any date, the amount of Sterling that may be purchased with such amount of
Dollars at the Spot Exchange Rate on such date.
"STERLING LOAN" shall mean any Loan denominated in Sterling.
18
"SUBSIDIARY" shall mean, with respect to any person (herein referred
to as the "PARENT"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, Controlled or held, or (b) which is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"SUBSIDIARY" shall mean any subsidiary of Holdings.
"SUBSIDIARY GUARANTEE AGREEMENT" shall mean the Amended and Restated
Guarantee Agreement dated as of July 10, 2001, as amended by the Third
Amendment, among Holdings, the Subsidiary Guarantors (as defined therein) and
JPMCB, a composite conformed copy of which is included as Exhibit I hereto.
"SUBSIDIARY NET WORTH" shall mean, as to any Subsidiary at any date,
the shareholder's equity of such Subsidiary and its consolidated subsidiaries at
such date determined in accordance with GAAP.
"SWISS BORROWER" shall mean Sotheby's Global Trading GmbH.
"SWISS SECURITIES MORTGAGE" shall mean the Public Deed dated August
10, 2001 between Holdings and JPMCB.
"TAXES" shall have the meaning assigned to such term in Section
2.19(a).
"TERM BORROWING" shall mean a Borrowing comprised of Term Loans.
"TERM COMMITMENT" shall mean, with respect to any Lender at any time,
the commitment (if any) of such Lender set forth on Schedule 2.01 to make a Term
Loan pursuant to Section 2.01(a).
"TERM LENDER" shall mean a Lender with a Term Commitment or an
outstanding Term Loan.
"TERM LOAN" shall mean a Loan made pursuant to Section 2.01(a).
"THIRD AMENDMENT" shall mean Amendment No. 3 dated as of the date
hereof to the Existing
Credit Agreement.
"TRADEMARK SECURITY AGREEMENT" shall mean the Amended and Restated
Trademark Security Agreement dated as of July 10, 2001, as amended by the Third
Amendment, among the Grantors (as defined therein) and JPMCB, a composite
conformed copy of which is included as Exhibit J hereto.
"TRANSFEREE" shall have the meaning assigned to such term in Section
2.19(a).
"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 and the currency in which such Loan or the Loans
comprising such Borrowings are
19
denominated. For purposes hereof, the term "RATE" shall include the LIBO Rate
and the Alternate Base Rate, and the term "CURRENCY" shall include Dollars and
Sterling.
"UK DEBENTURE" shall mean the Debenture dated July 11, 2001 between
Sotheby's Financial Services Limited and JPMCB.
"UK SECURITIES MORTGAGE" shall mean the Mortgage Over Securities dated
July 11, 2001 between Sotheby's, Inc. and JPMCB.
"VENTURE LOANS" shall mean Art Loans made to finance the purchase of a
work of art in conjunction with a dealer, which art is being purchased for
resale pursuant to a profit and loss sharing arrangement with the dealer.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"YORK AVENUE PROPERTY" shall mean the land, building and improvements
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both 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".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; PROVIDED,
HOWEVER, that if the Borrowers notify the Administrative Agent that the
Borrowers wish to amend any covenant in Article VI or any related definition to
eliminate the effect of any change in GAAP occurring after the date of this
Agreement on the operation of such covenant (or if the Administrative Agent
notifies the Borrowers that the Required Lenders wish to amend Article VI or any
related definition for such purpose), then the Borrowers' compliance with such
covenant 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 covenant is amended in a manner satisfactory to the Borrowers
and the Required Lenders. The phrase "the date of this Agreement" or "the date
hereof", or words of similar effect, when used herein, shall mean the date of
this Amended and Restated Credit Agreement.
ARTICLE II. THE CREDITS
SECTION 2.01. COMMITMENTS. (a) Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each Term
Lender agrees, severally and not jointly, to make on the Effective Date a Term
Loan in Dollars to Sotheby's, Inc. in a principal amount not exceeding its Term
Commitment. Amounts repaid in respect of Term Loans may not be reborrowed.
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(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Revolving Lender agrees,
severally and not jointly, to make Revolving Loans to the Borrowers at any time
and from time to time during the Revolving Availability Period in Dollars or
Sterling (as specified in the Borrowing Requests with respect thereto), in an
aggregate principal amount at any time outstanding that will not result in such
Lender's Revolving Exposure exceeding such Lender's Commitment, subject,
however, to the conditions that (i) at no time shall the aggregate Revolving
Exposures of all Lenders exceed the aggregate Revolving Commitments, (ii) at no
time shall the aggregate Term Loans and Revolving Exposures of all the Lenders
exceed the Borrowing Base then in effect and (iii) at all times the outstanding
aggregate principal amount of all Revolving Loans made by each Revolving Lender
shall equal such Revolving Lender's Revolving Percentage of the outstanding
aggregate principal amount of all Revolving Loans. Within the foregoing limits,
the Borrowers may borrow, pay or prepay and reborrow hereunder, on and after the
date hereof and prior to the Maturity Date, subject to the terms, conditions and
limitations set forth herein.
(c) For purposes of paragraph (b) above, if the Dollar Equivalent of
an outstanding Revolving Borrowing denominated in Sterling, determined by the
Administrative Agent based upon the applicable Spot Exchange Rate as of the date
that is three Business Days before the end of the Interest Period with respect
to such Revolving Borrowing, does not exceed by more than 5% the Assigned Dollar
Value of such Revolving Borrowing, and if the entire amount of such Revolving
Borrowing is to be continued as a new Revolving Borrowing of equivalent amount
in the same currency and by the same Revolving Borrower, then such Revolving
Borrowing shall continue to have the same Assigned Dollar Value as in effect
prior to such continuation. The Administrative Agent shall determine the
applicable Spot Exchange Rate as of the date three Business Days before the end
of an Interest Period with respect to a Revolving Borrowing denominated in
Sterling and shall promptly notify the Borrower and the Revolving Lenders
whether the Dollar Equivalent of such Borrowing exceeds by more than 5% the
Assigned Dollar Value thereof.
SECTION 2.02. LOANS. (a) Each Term Loan and each Revolving Loan shall
be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their respective Term Commitments or Revolving Commitments as
the case may be; PROVIDED, HOWEVER, that the failure of any Lender to make any
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). The Loans comprising any Borrowing shall be in (i) an aggregate
principal amount which is (or the Assigned Dollar Value of which is) not less
than $1,000,000 and, except in the case of a Sterling Borrowing, an integral
multiple of $1,000,000 or (ii) an aggregate principal amount equal to the
remaining balance of the available Commitments (or the Sterling Equivalent
thereof in the case of an Sterling Borrowing).
(b) Each Term Borrowing and each Revolving Borrowing denominated in
Dollars shall be comprised entirely of Eurocurrency Loans or ABR Loans, as the
Borrowers may request pursuant to Section 2.03 or 2.04, as applicable. Each
Revolving Borrowing denominated in Sterling shall be comprised entirely of
Eurocurrency Loans. Each Lender may at its option make any Eurocurrency
Revolving Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; PROVIDED 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,
21
HOWEVER, that none of the Borrowers shall be entitled to request any Borrowing
which, if made, would result in an aggregate of more than twelve separate
Borrowings being outstanding hereunder at any one time. For purposes of the
foregoing, Borrowings having different Interest Periods or denominated in
different currencies, regardless of whether they commence on the same date,
shall be considered separate Borrowings.
(c) Subject to Section 2.05, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer to such
account as the Administrative Agent may designate in federal funds (in the case
of any Loan denominated in Dollars) or such other immediately available funds as
may then be customary for the settlement of international transactions in
Sterling not later than 12:00 (noon),
New York City time, in the case of
fundings to an account in
New York City, or 11:00 a.m., local time, in the case
of fundings to an account in another jurisdiction, and the Administrative Agent
shall by 1:00 p.m.,
New York City time, in the case of fundings to an account in
New York City, or 12:00 (noon), local time, in the case of fundings to an
account in another jurisdiction, credit the amounts so received to an account
designated by the applicable Borrower in the applicable Borrowing Request, which
account must be in the country of the currency of the Loan (it being understood
that the funding may be for the credit of an account outside such country) 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. Loans shall be made by the Lenders pro rata in accordance
with Section 2.16. 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 in the required currency. If the Administrative Agent shall
have so made funds available then 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 in
such currency, for each day from the date such amount is made available to the
applicable 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 in the relevant currency (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.
(d) Notwithstanding any other provision of this Agreement, no
Borrower shall be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
SECTION 2.03. LETTERS OF CREDIT. (a) GENERAL. Subject to the terms
and conditions set forth herein, any Borrower may request the issuance of
Letters of Credit denominated in Dollars or in Sterling for its own account, in
a form reasonably acceptable to the Administrative Agent and the Issuing Bank,
at any time and from time to time after the date hereof and until the earlier of
the Maturity Date and the termination of the Commitments in accordance with the
terms hereof. In the event of any inconsistency between the terms and conditions
of this Agreement and the terms and conditions of any form of letter of credit
22
application or other agreement submitted by the applicable Borrower to, or
entered into by the applicable Borrower with, the Issuing Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control.
Letters of Credit will be issued solely to support obligations owed to persons
that are Lenders as of the respective date of issuance of such Letters of
Credit.
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the applicable
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, the applicable Borrower also shall submit a letter of credit
application on the Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $15,000,000; (ii) the aggregate Revolving Exposures
shall not exceed the aggregate amount of the Revolving Commitments; and (iii)
the sum of the aggregate principal amount of the outstanding Term Loans and the
aggregate Revolving Exposures shall not exceed the Borrowing Base then in
effect.
(c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
(d) PARTICIPATIONS. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Revolving Lenders, the
Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender
hereby acquires from the Issuing Bank, a participation in such Letter of Credit
equal to such Revolving Lender's Revolving Percentage of the aggregate amount
available to be drawn under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
the Issuing Bank, such Revolving Lender's Revolving Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the applicable
Borrower on the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the applicable Borrower for any
reason. Each Revolving Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever.
23
(e) REIMBURSEMENT. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the applicable Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the applicable Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the applicable Borrower
receives such notice, if such notice is not received prior to such time on the
day of receipt. If the applicable Borrower fails to make such payment when due,
the Administrative Agent shall notify each Revolving Lender of the applicable LC
Disbursement, the payment then due from the applicable Borrower in respect
thereof and such Lender's Revolving Percentage thereof. Promptly following
receipt of such notice, each Revolving Lender shall pay to the Administrative
Agent its Revolving Percentage of the payment then due from the applicable
Borrower, in the same manner as provided in Section 2.02(c) with respect to
Revolving Loans made by such Revolving Lender (and Section 2.02(c) shall apply,
MUTATIS MUTANDIS, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the applicable Borrower pursuant to
this paragraph, the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Revolving Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Revolving
Lenders and the Issuing Bank as their interests may appear. Any payment made by
a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for
any LC Disbursement shall not constitute a Revolving Loan and shall not relieve
the applicable Borrower of its obligation to reimburse such LC Disbursement.
(f) OBLIGATIONS ABSOLUTE. The applicable Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. None of
the Administrative Agent, the Lenders or the Issuing Bank, nor any of their
Affiliates, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; PROVIDED that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the applicable Borrower to the extent of any
direct damages (as opposed to consequential damages,
24
claims in respect of which are hereby waived by such Borrower to the extent
permitted by applicable law) suffered by such Borrower that are caused by the
Issuing Bank's failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the applicable Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing Bank
has made or will make an LC Disbursement thereunder; PROVIDED that any failure
to give or delay in giving such notice shall not relieve the applicable Borrower
of its obligation to reimburse the Issuing Bank and the Revolving Lenders with
respect to any such LC Disbursement.
(h) INTERIM INTEREST. If the Issuing Bank shall make any LC
Disbursement, then, unless the applicable Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid amount
thereof shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the applicable Borrower
reimburses such LC Disbursement, at the rate per annum then applicable to ABR
Loans; PROVIDED that, if the applicable Borrower fails to reimburse such LC
Disbursement when due pursuant to paragraph (e) of this Section, then Section
2.09 shall apply. Interest accrued pursuant to this paragraph shall be for the
account of the Issuing Bank, except that interest accrued on and after the date
of payment by any Revolving Lender pursuant to paragraph (e) of this Section to
reimburse the Issuing Bank shall be for the account of such Revolving Lender to
the extent of such payment.
(i) REPLACEMENT OF THE ISSUING BANK. The Issuing Bank may be replaced
at any time by written agreement among Holdings, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Revolving Lenders of any such replacement of the Issuing Bank.
At the time any such replacement shall become effective, the applicable Borrower
shall pay all unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to Section 2.06. From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the replacement of an Issuing Bank hereunder, the replaced
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.
25
(j) CASH COLLATERALIZATION. If any Event of Default shall occur and
be continuing, on the Business Day that the applicable Borrower receives notice
from the Administrative Agent or the Revolving Lenders with LC Exposures
representing a majority in amount of the total LC Exposure demanding the deposit
of cash collateral pursuant to this paragraph, the applicable Borrower shall
deposit in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Revolving Lenders, an amount in
cash equal to the total LC Exposure as of such date plus any accrued and unpaid
interest thereon; PROVIDED that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in clause (l) or
(m) of Article VII. Each such deposit shall be held by the Administrative Agent
as collateral for the payment and performance of the obligations of the
Borrowers under this Agreement. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest earned on the investment of such deposits,
which investments shall be made at the option and sole discretion of the
Administrative Agent and at the applicable Borrower's risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the applicable Borrower for the LC Exposure at such time or, if the maturity of
the Loans has been accelerated (but subject to the consent of Revolving Lenders
with LC Exposure representing a majority in amount of the total LC Exposure), be
applied to satisfy other obligations of the Borrower under this Agreement. If
any Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to such Borrower within three Business
Days after all Events of Default have been cured or waived.
SECTION 2.04. BORROWING PROCEDURE. (a) In order to request a
Borrowing, the applicable Borrower shall give telephonic notice to the
Administrative Agent (confirmed by hand delivery or telecopy of a duly completed
Borrowing Request in the form of Exhibit A), (a) in the case of a Eurocurrency
Borrowing, not later than 12:00 noon, London time, three Business Days before a
proposed borrowing and (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, on the Business Day of a proposed borrowing. Such
notice shall be irrevocable and shall in each case specify (i) in the case of a
Borrowing on the Effective Date, whether the requested Borrowing is to be a Term
Borrowing or a Revolving Borrowing, (ii) whether the Borrowing then being
requested is to be a Eurocurrency Borrowing or an ABR Borrowing, (iii) the date
of such Borrowing (which shall be a Business Day), (iv) the aggregate principal
amount of such Borrowing, (v) the currency of such Borrowing (which, in the case
of an ABR Revolving Borrowing, shall be Dollars) and (v) if such Borrowing is to
be a Eurocurrency Borrowing, the Interest Period with respect thereto. If no
election as to the currency of a Eurocurrency Revolving Borrowing is specified
in any Borrowing Request, then the applicable Borrower shall be deemed to have
requested a Revolving Borrowing in Dollars. If no election as to the Type of
Revolving Borrowing is specified, then the requested Revolving Borrowing shall
be an ABR Revolving Borrowing if denominated in Dollars or a Eurocurrency
Revolving Borrowing if denominated in Sterling. If no Interest Period with
respect to any Eurocurrency Revolving Borrowing is specified, then the
applicable Borrower shall be deemed to have selected an Interest Period of one
month's duration.
26
SECTION 2.05. INTEREST ELECTIONS. (a) Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurocurrency Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurocurrency Borrowing, may elect Interest Periods therefor, all as provided
in this Section. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.04 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery of
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurocurrency Borrowing; and
(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of
the term "Interest Period".
If any such Interest Election Request requests a Eurocurrency Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurocurrency Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be (i)
in the case of a Borrowing denominated in Dollars, converted to an ABR
27
Borrowing and (ii) in the case of a Borrowing denominated in Sterling, converted
to a Eurocurrency Borrowing with an Interest Period of one month.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Administrative Agent, at the request of the
Required Lenders, so notifies the Borrower, then, so long as an Event of Default
is continuing (i) no outstanding Borrowing denominated in Dollars may be
converted to or continued as a Eurocurrency Borrowing and (ii) unless repaid,
each Eurocurrency Borrowing denominated in Dollars shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.06. FEES. (a) Holdings agrees to pay to each Lender,
through the Administrative Agent, on each March 31, June 30, September 30 and
December 31 and on the Maturity Date, a commitment fee (a "COMMITMENT Fee")
equal to 0.75% per annum on the daily average unused amount of the Revolving
Commitment of such Lender (whether or not the conditions set forth in Section
4.02 shall have been satisfied), during the preceding quarter (or shorter period
commencing with the date hereof or ending with the Maturity Date or any date on
which the Revolving Commitment of such Lender shall be terminated). All
Commitment Fees shall be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Commitment Fee due to each Lender shall
commence to accrue on the date of this Agreement and shall cease to accrue on
the earlier of the Maturity Date and the date on which the Revolving Commitment
of such Lender shall have been terminated and the Loans of such Lender shall
have been repaid.
(b) Holdings agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit (an "LC PARTICIPATION FEE"), which shall accrue at the rate of
3.50% per annum, on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date hereof to but excluding the later
of the date on which such Lender's Commitment terminates and the date on which
such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate or rates per annum separately
agreed upon between Holdings and the Issuing Bank on the average daily amount of
the LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the date hereof to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder (together with such
fronting fee, the "ISSUING BANK FEES"). Participation fees and fronting fees
accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
PROVIDED that all such fees shall be payable on the date on which the
Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(c) Holdings agrees to pay the Administrative Agent, for its own
account, such fees, and at such times, as have been separately agreed upon (the
"ADMINISTRATIVE FEES").
28
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as applicable, among
the Lenders (and, if applicable, to the Issuing Bank with respect to Fees owed
to it). Once paid, none of the Fees shall be refundable except in the case of
errors.
SECTION 2.07. REPAYMENT OF LOANS. (a) The outstanding principal
balance of each Loan shall be payable on the Maturity Date. Each Loan shall bear
interest from the date of the Borrowing of which such Loan is a part on the
outstanding principal balance thereof as set forth in Section 2.08.
(b) Each Lender shall, and is hereby authorized by the Borrowers to,
maintain, in accordance with its usual practice, records evidencing the
indebtedness of each Borrower to such Lender hereunder from time to time,
including the date, amount, currency and Type of and the Interest Period
applicable to each Loan made by such Lender from time to time and the amounts of
principal and interest paid to such Lender from time to time in respect of each
such Loan.
(c) The entries made in the records maintained pursuant to paragraph
(b) of this Section 2.07 and in the Register maintained by the Administrative
Agent pursuant to Section 10.04(d) shall be prima facie evidence of the
existence and amounts of the obligations of each Borrower to which such entries
relate; PROVIDED, HOWEVER, that the failure of any Lender or the Administrative
Agent to maintain or to make any entry in such records or the Register, as
applicable, or any error therein shall not in any manner affect the obligation
of any Borrower to repay any Loans in accordance with the terms of this
Agreement.
SECTION 2.08. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.09, the Eurocurrency Loans comprising each Eurocurrency 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 the LIBO Rate for the
Interest Period in effect for the Borrowing of which such Loan is part
multiplied by the Statutory Reserve Rate plus 3.50% per annum.
(b) Subject to the provisions of Section 2.09, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as applicable, when
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate plus 2.50% per
annum.
(c) Interest on each Loan shall be payable in arrears on each
Interest Payment Date applicable to such Loan except as otherwise provided in
this Agreement. The applicable 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.
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, 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 on the basis of the
actual number of days
29
elapsed over a year of 360 days) equal to the Alternate Base Rate plus 2% per
annum (or, in the case of the principal of any Loan, if higher, the rate of
interest otherwise applicable, or most recently applicable, to such Loan
hereunder 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 Eurocurrency Borrowing of any Type the Administrative
Agent shall have determined that Dollar deposits or deposits in Sterling in
which such Borrowing is to be denominated in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market, or that the rates at which such deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurocurrency Loan during such Interest Period, or that reasonable means do
not exist for ascertaining the LIBO Rate, the Administrative Agent shall, as
soon as practicable thereafter, give written or telecopy notice of such
determination to the applicable Borrower and the Lenders. In the event of any
such determination, until the Administrative Agent shall have advised the
applicable Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, any request by a Borrower for a Eurocurrency Borrowing
of the affected Type or in the affected currency shall be deemed to be a request
for an ABR Borrowing denominated in Dollars. Each determination by the
Administrative Agent hereunder shall be conclusive absent manifest error.
SECTION 2.11. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated under this Agreement, (i) the Term Commitments shall be
automatically and permanently terminated at 5:00 p.m., New York City time, on
the Effective Date and (ii) the Revolving Commitments shall be automatically
terminated at the Administrative Agent's close of business in New York City on
the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, Holdings (on behalf of all the
Borrowers) may at any time in whole permanently terminate, or from time to time
in part permanently reduce, the Revolving Commitments; PROVIDED, HOWEVER, that
(i) each partial reduction of a Revolving Commitment shall be in an integral
multiple of $1,000,000 and in a minimum principal amount of $5,000,000 or if
less, the remaining Revolving Commitment and (ii) no such termination or
reduction shall be made which would reduce the aggregate Revolving Commitments
to an amount less than the aggregate Revolving Exposures.
(c) On the date of any prepayment of Term Loans pursuant to Section
2.12(e), the Revolving Commitments will be automatically reduced by an amount
equal to the aggregate principal amount of the Term Loans prepaid multiplied by
a fraction of which the numerator is equal to the Revolving Commitments and the
denominator is equal to the outstanding Term Loans, in each case immediately
prior to such prepayment.
(d) Each reduction in the Revolving Commitments hereunder shall be
made ratably among the Revolving Lenders in accordance with their respective
Revolving Commitments. Holdings shall pay to the Administrative Agent for the
account of the Revolving Lenders, on the date of each termination or reduction,
the Commitment Fees on the amount of the Revolving Commitments so terminated or
reduced accrued to but not including the date of such termination or reduction.
30
SECTION 2.12. PREPAYMENT. (a) Each Borrower shall have the right at
any time and from time to time to prepay any Borrowing, in whole or in part,
upon giving written or telecopy notice (or telephone notice promptly confirmed
by written or telecopy notice) to the Administrative Agent: (i) in the case of
Eurocurrency Loans no later than 12:00 noon, New York City time, three Business
Days prior to prepayment and (ii) in the case of ABR Loans, no later than 11:00
a.m., New York City time, on the Business Day of the prepayment; PROVIDED,
HOWEVER, that each partial prepayment shall be in an amount which is (or the
Assigned Dollar Value of which is) not less than $5,000,000 and, except in the
case of Sterling Borrowing, an integral multiple of $1,000,000.
(b) On the date of any termination or reduction of the Revolving
Commitments pursuant to Section 2.11, the Borrowers shall pay or prepay so much
of the Revolving Borrowings as shall be necessary in order that the aggregate
Revolving Exposures will not exceed the aggregate Revolving Commitments after
giving effect to such termination or reduction.
(c) In the event and on each occasion that the sum of the aggregate
principal amount of the outstanding Term Loans and the aggregate Revolving
Exposures exceeds the Borrowing Base, the Borrowers shall prepay Borrowings in
an aggregate amount equal to such excess.
(d) Each notice of prepayment under this Section 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) by the amount stated therein on the
date stated therein. All prepayments under this Section shall be subject to
Section 2.15 but otherwise without premium or penalty.
(e) Each prepayment under this Section shall be applied first against
the Lenders' Revolving Loans to the extent of the amount of such Revolving Loans
that shall be outstanding at the time of such prepayment and then against
outstanding Term Loans.
SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender (or any
lending office of any Lender) or the Issuing Bank of the principal of or
interest on any Eurocurrency Loan made by such Lender or any Letter of Credit or
participation therein, or any Fees or other amounts payable hereunder (other
than changes in respect of taxes imposed on the overall net income or capital
stock of such Lender by the jurisdiction in which such Lender has its principal
office or by any political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by such Lender (or any lending office of such Lender) or the Issuing
Bank, or shall impose on such Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or any Eurocurrency Loan
made by such Lender or any Letter of Credit or participation therein, and the
result of any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any Eurocurrency Loan or to increase the cost to such
Lender or the Issuing Bank of participating in, issuing or maintaining any
Letter of Credit 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
31
Lender to be material, then Holdings shall (or shall cause the Borrowers to) pay
to such Lender or the Issuing Bank upon demand such additional amount or amounts
as will compensate such Lender or the Issuing Bank for such additional costs
incurred or reduction suffered.
(b) If any Lender or the Issuing Bank shall have determined that any
change after the date hereof in the applicability of any law, rule, regulation
or guideline adopted pursuant to or arising out of the July 1988 report of the
Basel Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption after the date hereof of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any lending office of
such Lender) or any Lender's or the Issuing Bank's holding company with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's or the Issuing
Bank's capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans or Letters of
Credit or participations therein made by such Lender or the Issuing Bank
pursuant hereto to a level below that which such Lender, the Issuing Bank or
such Lender's or the Issuing Bank's holding company could have achieved but for
such applicability, adoption, change or compliance (taking into consideration
such Lender's and the Issuing Bank's policies and the policies of such Lender's
and the Issuing Bank's holding company with respect to capital adequacy) by an
amount deemed by such Lender or the Issuing Bank to be material, then from time
to time Holdings shall (or shall cause the responsible Borrower to) pay to such
Lender or the Issuing Bank such additional amount or amounts as will compensate
such Lender, the Issuing Bank or such Lender's or the Issuing Bank's holding
company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth such
amount or amounts as shall be necessary to compensate such Lender or the Issuing
Bank as specified in paragraph (a) or (b) above, as the case may be, shall be
delivered to Holdings and shall be conclusive absent manifest error. Holdings
shall (or shall cause the responsible Borrower to) pay each Lender or the
Issuing Bank the amount shown as due on any such certificate delivered by it
within 10 days after the receipt of the same.
(d) Except as provided below in this paragraph (d), failure on the
part of any Lender or the Issuing Bank to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any period shall not constitute a waiver of such
Lender's or the Issuing Bank's right to demand compensation with respect to such
period or any other period. The protection of this Section shall be available to
each Lender and the Issuing Bank regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, guideline or other
change or condition which shall have occurred or been imposed. Neither the
Issuing Bank nor any Lender shall be entitled to compensation under this Section
2.13 for any costs incurred or reductions suffered with respect to any date
unless it shall have notified Holdings that it will demand compensation for such
costs or reductions not more than 90 days after the later of (i) such date and
(ii) the date on which it shall have become aware of such costs or reductions.
SECTION 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision herein, if, after the date hereof, (i) any change in any law or
regulation or in the interpretation
32
thereof by any Governmental Authority charged with the administration or
interpretation thereof shall make it unlawful for any Lender to make or maintain
any Eurocurrency Loan or Sterling Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurocurrency Loan or Sterling Loan or
(ii) there shall have occurred any change in national or international
financial, political or economic conditions (including the imposition of or any
change in exchange controls) or currency exchange rates which would make it
impracticable for any Lender to make Loans denominated in Sterling or to any
Borrower, then, by written notice to the Borrowers and to the Administrative
Agent, such Lender may:
(i) declare that Eurocurrency Loans or Sterling Loans (in the
affected currency or to the affected Borrower), as the case may be,
will not thereafter (for the duration of such unlawfulness or
impracticability) be made by such Lender hereunder, whereupon any
request by a Borrower for a Eurocurrency Borrowing or Sterling
Borrowing (in the affected currency or to the affected Borrower), as
the case may be, shall, as to such Lender only, be deemed a request
for an ABR Loan or a Loan denominated in Dollars, as the case may be,
unless such declaration shall be subsequently withdrawn (or, if a Loan
to the requesting Borrower cannot be made for the reasons specified
above, such request shall be deemed to have been withdrawn); and
(ii) require that all outstanding Eurocurrency Loans or Sterling
Loans (in the affected currency or to the affected Borrower), as the
case may be, made by it be converted to ABR Loans or Loans denominated
in Dollars, as the case may be, in which event all such Eurocurrency
Loans or Sterling Loans (in the affected currency or to the affected
Borrower) shall be automatically converted to ABR Loans or Loans
denominated in Dollars, as the case may be, as of the effective date
of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurocurrency Loans or Sterling Loans, as the case may be, that would
have been made by such Lender or the converted Eurocurrency Loans or Sterling
Loans, as the case may be, of such Lender shall instead be applied to repay the
ABR Loans or Loans denominated in Dollars, as the case may be, made by such
Lender in lieu of, or resulting from the conversion of, such Eurocurrency Loans
or Loans denominated in Dollars, as the case may be.
(b) For purposes of this Section 2.14, a notice to the Borrowers by
any Lender shall be effective as to each Loan, if lawful, on the last day of the
Interest Period currently applicable to such Loan; in all other cases such
notice shall be effective on the date of receipt by the Borrowers.
SECTION 2.15. INDEMNITY. The Borrowers agree to indemnify each Lender
against any actual loss or expense which such Lender may sustain or incur as a
consequence of (a) any failure by such Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article IV, (b) any
failure by such Borrower to borrow or to convert or continue any Loan hereunder
after irrevocable notice of such borrowing, conversion or continuation has been
given or deemed given pursuant to Section 2.04 or 2.05, (c) any payment,
prepayment, conversion or transfer of a Eurocurrency Loan required by any other
provision of this Agreement or otherwise made or deemed made on a date other
than the last day of the Interest Period applicable thereto, (d) any default in
payment or prepayment of the principal
33
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) or (e) the
occurrence of any other Event of Default, including, in each such case, any
actual 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 as a Eurocurrency Loan. 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, converted, transferred or not borrowed
(assumed to be the LIBO Rate) for the period from the date of such payment,
prepayment, conversion, transfer or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, 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, converted, transferred or not borrowed 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
shall be delivered to the Borrowers and shall be conclusive absent manifest
error.
SECTION 2.16. PRO RATA TREATMENT. (a) Except as required under
Section 2.14, each Revolving Borrowing, each payment or prepayment of principal
of any Revolving Borrowing, each payment of interest on the Revolving Loans,
each payment of the Commitment Fees, each payment constituting reimbursement of
an LC Disbursement, each reduction of the Revolving Commitments and each
conversion or continuation of any Revolving Borrowing with a Revolving Borrowing
of any Type, shall be allocated pro rata among the Revolving Lenders in
accordance with the respective principal amounts of their outstanding Revolving
Loans. Each Revolving Lender agrees that in computing such Revolving Lender's
portion of any Revolving Borrowing to be made hereunder, the Administrative
Agent may, in its discretion, round each Revolving Lender's percentage of such
Revolving Borrowing to the next higher or lower whole Dollar (or comparable unit
of Sterling) amount.
(b) Except as required under Section 2.14, each Term Borrowing, each
payment or prepayment of principal of any Term Borrowing, each payment of
interest on the Term Loans, and each conversion or continuation of any Term
Borrowing with a Term Borrowing of any Type, shall be allocated pro rata among
the Term Lenders in accordance with their respective Term Commitments or, if
such Term Commitments shall have expired or been terminated, in accordance with
the respective principal amounts of their outstanding Term Loans.
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
against any Borrower, 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,
obtain payment (voluntary or involuntary) in respect of any Loan or Loans or
reimbursement obligations in respect of any LC Disbursement (other than pursuant
to and in accordance with the provisions of this Agreement) as a result of which
the unpaid principal portion of its Loans or LC Disbursements shall be
proportionately less than the unpaid principal portion of the Loans or LC
Disbursements of any other Revolving Lender or Term Lender, as applicable, 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 Loans and LC Disbursements of such other Lender, so that
the aggregate unpaid principal amount of the Loans and LC
34
Disbursements and participations in the Loans and LC Disbursements held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of all Loans and LC Disbursements then outstanding as the principal amount of
its Loans and LC Disbursements prior to such exercise of banker's lien, setoff
or counterclaim or other event was to the principal amount of all Loans and LC
Disbursements 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 2.17 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. The
Borrowers expressly consent to the foregoing arrangements and agree that any
Lender holding a participation in a Loan or LC Disbursement 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 by such Borrower to such
Lender by reason thereof as fully as if such Lender had made a Loan or LC
Disbursement directly to such Borrower in the amount of such participation.
SECTION 2.18. PAYMENTS. (a) Each Borrower shall make each payment
(including principal of or interest on any Borrowing, reimbursements of LC
Disbursements or any Fees or other amounts) hereunder and under each other Loan
Document, without setoff or counterclaim, not later than 12:00 noon, local time
at the place of payment, on the date when due in immediately available funds.
Each such payment shall be made to the Administrative Agent at its offices at
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Each such payment (other than
principal of and interest on Sterling Loans, which shall be made in Sterling)
shall be made in Dollars and each Sterling payment should be made at the offices
of the Administrative Agent at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or any
other account that the Administrative Agent may designate.
(b) Whenever any payment (including principal of or interest on any
Borrowing, reimbursements of LC Disbursements or any Fees or other amounts)
hereunder or under any other Loan Document 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) Each Borrower covenants and agrees that,
whether or not any Loans are made by the Lenders or Letters of Credit are issued
by the Issuing Bank hereunder:
(i) all payments on account of the principal of and interest on
the Loans, and all other amounts payable by each Borrower hereunder,
to or for the account of the Lenders including, without limitation,
amounts payable under clause (ii) of this Section 2.19(a), shall be
made without any setoff or counterclaim and free and clear of, and
without reduction by reason of, all present and future income, stamp,
documentary, registration, excise, property and other taxes and
levies, deductions, charges, compulsory loans and withholdings
whatsoever (other than income or franchise taxes imposed on the
overall net income or capital stock of the Administrative Agent, the
Issuing Bank or any Lender, including any transferee or assignee
thereof ("TRANSFEREE"), by the taxing authority of the jurisdiction in
which the Administrative Agent or such Lender, as applicable, has its
principal lending office or under the laws of which the Administrative
Agent, the Issuing Bank or such Lender, as applicable, is organized)
and all interest,
35
penalties or similar amounts with respect thereto, now or hereafter
imposed, assessed, levied or collected by any country or any political
subdivision or taxing authority thereof or therein or by any
federation or association of or with which any country may be a member
or associated or by any jurisdiction from which any payment hereunder
is made or any taxing authority thereof or therein, on or in respect
of this Agreement, the recording, registration, notarization or other
formalization of any thereof, the enforcement thereof or the
introduction thereof in any judicial proceedings, or on or in respect
of any payments of principal, interest, premiums, charges, fees or
other amounts made on, under or in respect of any thereof (hereinafter
called "Taxes"), all of which will be paid by the appropriate
Borrower, for its own account, prior to the date on which penalties
attach thereto;
(ii) the Borrowers shall indemnify the Administrative Agent, the
Issuing Bank and Lenders against, and reimburse the Administrative
Agent, the Issuing Bank and Lenders (or Transferees) on demand for,
any Taxes and any loss, liability, claim or expense arising therefrom
or with respect thereto, including interest, penalties and reasonable
legal fees and disbursements, which the Administrative Agent or the
Issuing Bank may incur, whether or not such Taxes were correctly or
legally asserted by the relevant taxing authority. A certificate as to
the amount of such Tax, loss, liability, claim or expense prepared by
the Administrative Agent or the Issuing Bank, absent manifest error,
shall be final, conclusive and binding for all purposes. Such
indemnification shall be made within 30 days after the date the
Administrative Agent or the Issuing Bank makes a written demand
therefor;
(iii) in the event that a Borrower is required by applicable law,
decree or regulation to deduct or withhold Taxes from any amounts
payable on, under or in respect to this Agreement, such Borrower shall
pay to the Administrative Agent, the Issuing Bank or the applicable
Lenders, as the case may be, such additional amount(s) as may be
required, after the deduction or withholding of Taxes (including any
deduction or withholding of Taxes with respect to such additional
amounts), to enable the Administrative Agent, the Issuing Bank or such
Lender to receive from such Borrower an amount equal to the amount
stated to be payable by such Borrower to the Administrative Agent, the
Issuing Bank or such Lender under this Agreement;
(iv) each Borrower shall furnish to the Administrative Agent the
official tax receipts in respect of each payment of Taxes required
under this Section 2.19(a) within 30 days after the date such payment
is due pursuant to applicable law, and each Borrower shall promptly
furnish to the Bank, at the Administrative Agent's request, any other
information, documents and receipts that the Administrative Agent may,
from time to time, reasonably require to establish to its reasonable
satisfaction that full and timely payment has been made of all Taxes
required to be paid under this Section 2.19(a);
(v) in the event that the payments by a Borrower become exempt
from or not subject to Taxes, such Borrower will, upon the reasonable
request of the Administrative Agent, furnish to the Administrative
Agent either a certificate
36
from each appropriate taxing authority or an opinion of counsel
reasonably acceptable to the Administrative Agent, in either case
stating that payments hereunder are exempt from or not subject to
taxes; and
(vi) if a Lender (or Transferee), the Issuing Bank or the
Administrative Agent shall become aware that it is entitled to receive
a refund in respect of 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 2.19, it shall promptly notify the
Borrower of the availability of such refund and shall, within 30 days
after receipt of a request by the Borrower, make a claim to the
relevant taxing authority or other Governmental Authority for such
refund at the Borrower's expense. If any Lender (or Transferee), the
Issuing Bank or the Administrative Agent receives a refund (including
pursuant to a claim for refund made pursuant to the preceding
sentence) in respect of any 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 2.19, it shall promptly repay such
refund (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.19 with
respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Lender (or Transferee), the Issuing
Bank or the Administrative Agent, to the Borrower; each Borrower, upon
the request of such Lender (or Transferee) or the Administrative
Agent, agrees to return any such refund (plus penalties, interest or
other charges) to such Lender (or Transferee), the Issuing Bank or the
Administrative Agent in the event such Lender (or Transferee), the
Issuing Bank or the Administrative Agent is required to repay such
refund to the relevant taxing authority or other Governmental
Authority.
(vii) Any 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 Holdings (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 Holdings as will permit such payments to be made without
withholding or at a reduced rate, provided that such Lender has
received written notice from the Borrower advising it of the
availability of such exemption or reduction and supplying all
applicable documentation.
(b) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations of each Borrower pursuant to
this Section 2.19 shall survive the payment in full of the principal of and
interest on the Loans.
SECTION 2.20. ASSIGNMENT OF COMMITMENTS UNDER CERTAIN CIRCUMSTANCES.
(a) Any Lender (or Transferee) claiming any additional amounts payable pursuant
to Section 2.13 or Section 2.19 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document requested
by a Borrower or to change the jurisdiction of its applicable lending office 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 and would not,
in
37
the judgment of such Lender (or Transferee), be otherwise disadvantageous to
such Lender (or Transferee).
(b) In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.13 or 2.14, or a Borrower shall be required to
make additional payments to any Lender under Section 2.19, Holdings 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 (in
accordance with and subject to the restrictions contained in Section 10.04) all
its interests, rights and obligations under this Agreement to another financial
institution approved by the Administrative Agent (which approval shall not be
unreasonably withheld) which shall assume such obligations; PROVIDED that (i) no
such assignment shall conflict with any law, rule or regulation or order of any
Governmental Authority and (ii) the assignee shall pay to the affected Lender in
immediately available funds on the date of such assignment the principal of and
interest accrued to the date of payment on the Loans made by it hereunder and a
Borrower shall pay to the affected Lender in immediately available funds on such
date all other amounts accrued for its account or owed to it hereunder.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Holdings and each Borrower represents and warrants that:
SECTION 3.01. CORPORATE EXISTENCE AND GOOD STANDING. Holdings and
each of its Material Subsidiaries: (a) is a corporation, partnership or other
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization; (b) has all requisite corporate or other
power, and has all material governmental licenses, authorizations, consents and
approvals, necessary to own its assets and carry on its business as now being or
as proposed to be conducted; and (c) is qualified to do business and is in good
standing in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure so to qualify or to be
in good standing could reasonably be expected to (either individually or in the
aggregate) result in a Material Adverse Effect.
SECTION 3.02. CORPORATE POWER, AUTHORIZATION AND COMPLIANCE WITH THE
LAW. (a) The execution, delivery and performance by the Borrowers of this
Agreement and by Holdings and the Subsidiaries of the other Loan Documents to
which they are to be party are within their respective corporate powers, have
been duly authorized by all necessary corporate action and will not violate any
provision of law of or their articles of incorporation, by-laws or memoranda or
articles of association, or result in the breach of or constitute a default
under or require any consent under any indenture or other material agreement or
instrument to which Holdings or any Subsidiary is a party or by which Holdings
or any Subsidiary or its respective properties may be bound or affected, or
cause any of its properties to become subject to any Lien; this Agreement
constitutes the legal, valid and binding obligation of each Borrower; and each
other Loan Document constitutes the legal, valid and binding obligation of
Holdings and each Subsidiary (to the extent Holdings or such Subsidiary is party
thereto) enforceable against such person in accordance with its terms.
(b) The conduct by Holdings and its Subsidiaries of their respective
businesses as they are presently operated does not violate any material
provision of law or material rule or regulation of any Governmental Authority in
a manner which, when taken together with all other
38
such violations, could reasonably be expected to result in a Materially Adverse
Effect; and Holdings and its Subsidiaries have obtained all material consents
and approvals of Governmental Authorities required to conduct their respective
businesses as they are presently operated, except to the extent that failure to
obtain any such consents or approvals could not reasonably be expected to result
in a Material Adverse Effect.
SECTION 3.03. FINANCIAL INFORMATION; ABSENCE OF MATERIAL ADVERSE
CHANGE. (a) The audited consolidated financial statements of Holdings and its
Subsidiaries for the fiscal year ended December 31, 2001, certified by
independent public accountants selected by Holdings, fairly present the
financial condition of Holdings and its Subsidiaries at the date of such
statements and the results of their respective operations for the fiscal year
ended on said date, all in conformity with GAAP.
(b) The consolidating balance sheets by geographic region of Holdings
and its Subsidiaries as of December 31, 2001, were prepared by the management of
Holdings in good faith.
(c) The unaudited consolidated financial statements of Holdings and
its Subsidiaries for the fiscal quarters ended March 31, June 30 and September
30, 2002, heretofore delivered to the Administrative Agent fairly present the
financial condition of Holdings and its Subsidiaries at the dates of such
statements and the results of their respective operations for the fiscal
quarters ended on such dates, all in conformity with GAAP.
(d) Since December 31, 2001, there has occurred no Material Adverse
Change.
SECTION 3.04. EMPLOYEE BENEFIT PLANS. Each of the Borrowers and its
ERISA Affiliates are in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No Reportable Event has occurred in respect of any
Plan of any Borrower or any ERISA Affiliate. The present value of all benefit
liabilities of all underfunded Plans (based on those assumptions used to fund
each such Plan) did not, as of the last annual valuation dates applicable
thereto, exceed by more than $5,000,000 the value of the assets of all such
underfunded Plans. Neither the Borrowers nor any ERISA Affiliate have incurred
any Withdrawal Liability that materially adversely affects the financial
condition of any Borrower and its ERISA Affiliates taken as a whole. Neither the
Borrowers nor any ERISA Affiliate have received any notification that any
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably expected
to be in reorganization or to be terminated, where such reorganization or
termination has resulted or can reasonably be expected to result in an increase
in the contributions required to be made to such Plan that would materially and
adversely affect the financial condition of any Borrower and its ERISA
Affiliates taken as a whole.
SECTION 3.05. ENVIRONMENTAL MATTERS. The Borrowers are aware of no
events, conditions or circumstances involving environmental pollution or
contamination or employee health or safety that could reasonably be expected to
result in a Material Adverse Change.
SECTION 3.06. LITIGATION. (a) There are no suits, investigations or
proceedings pending or, to the best of its knowledge, threatened, against or
affecting Holdings or the Subsidiaries which call into question the validity of
this Agreement or could reasonably be
39
expected to result in a Material Adverse Effect (other than suits,
investigations or proceedings referred to in the definition of "Litigation
Liabilities" to the extent no Default shall have resulted therefrom under
Section 6.08 or any other provision of this Agreement).
(b) Except as described in Schedule 3.06(b) hereto, (i) all suits,
investigations or proceedings that have resulted or are expected to result in
Litigation Liabilities have been settled pursuant to the Settlement Agreements,
all of which have been approved by the applicable courts pursuant to
non-appealable orders, and (ii) all amounts due or to become due under the
Settlement Agreements have been accrued for or paid in full.
SECTION 3.07. TAXES. Holdings and its Subsidiaries have filed all
Federal and other material tax returns required to be filed and paid all Federal
and other material taxes due or assessed indicated thereon, including interest
and penalties, except for taxes which are being contested in good faith and by
applicable proceedings, and for which Holdings and its Subsidiaries have made
adequate reserves on the books of Holdings and its Subsidiaries.
SECTION 3.08. SUBSIDIARIES. Schedule 3.08, as the same shall be
updated by Holdings from time to time by means of one or more notices delivered
to the Administrative Agent, correctly sets forth the name of each Subsidiary of
Holdings, its jurisdiction of incorporation and the percentage of each class of
issued and outstanding capital stock owned by Holdings and any Subsidiary,
respectively, if any; the corporations listed on Schedule 3.08 are the only
Subsidiaries of Holdings as of the date of this Agreement.
SECTION 3.09. INVESTMENT COMPANY ACT. Neither Holdings nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3.10. NO MATERIAL MISSTATEMENTS. No information, report,
financial statement, exhibit or schedule furnished by or on behalf of any
Borrower to the Administrative Agent or any Lender in connection with this
Agreement or included herein or delivered pursuant hereto contained or contains
any material misstatement of fact or omitted or omits any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, or are made, not misleading.
SECTION 3.11. FEDERAL RESERVE REGULATIONS. (a) Neither Holdings nor
any of its Subsidiaries is engaged principally, or as one if its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or X.
SECTION 3.12. TITLE TO PROPERTIES. Holdings and its Subsidiaries have
good title in fee simple to, or valid and subsisting leasehold interests in, all
their respective material real properties, and good title to all their
respective material other properties, reflected on the financial statements of
Holdings and its Subsidiaries referred to in Section 3.03 above, except
40
property disposed of in the ordinary course of business and except that SIBS's
ownership interest in the York Avenue Property has been replaced by a leasehold
interest in favor of Sotheby's, Inc. pursuant to the Sale and Leaseback, and
none of such properties or documents of title relating to such properties are
subject to any Liens except Liens permitted by Section 6.01.
SECTION 3.13. USE OF PROCEEDS. The Borrowers will use the proceeds of
the Loans only for the purposes specified in the preamble to this Agreement.
SECTION 3.14. SECURITY DOCUMENTS. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent a legal, valid and
enforceable security interest in the Collateral (as defined therein), and
constitutes a perfected first priority Lien on and security interest in all
right, title and interest of each pledgor thereunder in and to the Collateral
(as defined therein).
(b) The Security Agreement is effective to create in favor of the
Collateral Agent a legal, valid and enforceable security interest in the
Collateral (as defined therein), and constitutes a perfected first priority Lien
on and security interest in all right, title and interest of each grantor
thereunder in and to such Collateral to the extent it can be perfected by
filings or other actions under the Uniform Commercial Code, subject only to
Liens existing on the date hereof and expressly permitted by Section 6.01.
(c) The Trademark Security Agreement has been filed in the United
States Patent and Trademark Office and the United States Copyright Office, and
constitutes a perfected Lien on and security interest in all right, title and
interest of the grantors thereunder in the Intellectual Property (as defined in
the Security Agreement) that is registered in the United States.
(d) The Collateral and Guarantee Requirement has been satisfied.
(e) The UK Securities Mortgage is effective to create in favor of the
Collateral Agent a legal, valid and enforceable security interest in the pledged
equity interests of the UK Borrowers, and constitutes a perfected first priority
Lien on and security interest in all right, title and interest of each pledgor
thereunder.
(f) The Swiss Securities Mortgage is effective to create in favor of
the Collateral Agent a legal, valid and enforceable security interest in the
pledged equity interests of the Swiss Borrower, and constitutes a perfected
first priority Lien on and security interest in all right, title and interest of
each pledgor thereunder.
ARTICLE IV. CONDITIONS
SECTION 4.01. EFFECTIVE DATE. This Agreement shall become effective
on the date on which each of the following conditions shall have been satisfied
(or waived in accordance with Section 10.08):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent
41
(which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this
Agreement.
(b) The Administrative Agent shall have received the favorable
written opinions of Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel for the
Borrowers, ▇▇. ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Counsel of Sotheby's
Holdings, Inc., Miro, Weiner & ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and Wedge,
Freshfields, and Pestalozzi Lachenal ▇▇▇▇▇, dated the Effective Date
and addressed to the Lenders, the Administrative Agent and the Issuing
Bank to the effect set forth in Exhibits ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇ and
D-6, respectively; the Borrowers hereby instruct such counsel to
deliver such opinions to the Administrative Agent.
(c) All legal matters incidental to this Agreement and the
borrowings hereunder shall be satisfactory to the Lenders and their
counsel and to Cravath, Swaine & ▇▇▇▇▇, counsel for the Administrative
Agent.
(d) The Administrative Agent shall have received such evidence
as it shall reasonably have requested as to the power and authority of
Holdings and each Subsidiary to enter into and perform its obligations
under each Loan Document to which it is party and as to the due
execution and delivery of each such Loan Document.
(e) The Administrative Agent shall have received a certificate
of Holdings, dated the Effective Date and signed by a Financial
Officer of Holdings, confirming compliance with the conditions
precedent set forth in paragraph (j) of this Section and paragraphs
(b), (c) and (d) of Section 4.02.
(f) The Sale and Leaseback shall have been completed or shall
simultaneously be completed; the net proceeds therefrom shall have
been applied or shall simultaneously be applied to prepay all the
Loans outstanding under the Existing Credit Agreement.
(g) The Administrative Agent shall have received or shall
simultaneously with the initial borrowings under this Agreement
receive all Fees and interest accrued under the Existing Credit
Agreement through the date immediately preceding the Effective Date
(whether or not then due) and all other amounts due and payable under
the Existing Credit Agreement on or prior to the Effective Date.
(h) The Administrative Agent shall have received a completed
Borrowing Base Certificate dated as of a recent date and signed by a
Financial Officer on behalf of Holdings.
(i) The Collateral Agent shall have received an updated
Perfection Certificate dated the Effective Date and duly executed by a
Financial Officer of Holdings.
(j) The Collateral and Guarantee Requirement shall be satisfied.
42
The Administrative Agent shall notify the Borrowers and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, this Agreement shall not become effective unless each of the
foregoing conditions shall have been satisfied (or waived pursuant to Section
10.08) at or prior to 3:00 p.m., New York City time, on February 7, 2003.
SECTION 4.02. EACH BORROWING DATE. On the date of each Borrowing and
on the date of issuance of any Letter of Credit:
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.04.
(b) The representations and warranties set forth in Article III
hereof shall be true and correct in all material respects on and as of
the date of such Borrowing with the same effect as though made on and
as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(c) Each Borrower shall be in compliance with all the terms and
provisions set forth herein and at the time of and immediately after
such Borrowing no Event of Default or Default shall have occurred and
be continuing.
(d) After giving effect to such Borrowing or the issuance of
such Letter of Credit, the aggregate principal amount of the
outstanding Term Loans and the aggregate Revolving Exposures shall not
exceed the Borrowing Base.
Each Borrowing shall be deemed to constitute a representation and warranty by
each Borrower on the date of such Borrowing (a) as to the matters specified in
paragraphs (b), (c) and (d) of this Section 4.02 and (b) that no material event
has occurred since the previous fiscal quarter end that would require the
recording of a liability under FASB Statement No. 5 with respect to Litigation
Liabilities, which leads Holdings to believe that a Default will occur under
Section 6.08 or Section 6.09 as of the next fiscal quarter end.
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrowers covenant and agree with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under any Loan Document
shall be unpaid, or any Letter of Credit shall remain outstanding, unless the
Required Lenders shall otherwise consent in writing, Holdings will, and will
cause each of the Subsidiaries to:
SECTION 5.01. FINANCIAL STATEMENTS. In the case of Holdings, furnish
to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, (i) a
consolidated balance sheet at the end of such fiscal year and the
related statements of income and operations and changes in financial
position and of shareholder's equity for such year, all prepared in
accordance with GAAP and audited by and accompanied by the opinion of
Deloitte & Touche or other independent public accountants reasonably
satisfactory to the Required Lenders and (ii) a
43
consolidating balance sheet by geographic region;
(b) within 60 days after the end of the first, second and third
quarter of each fiscal year, a consolidated balance sheet (and a
consolidating balance sheet by geographic region) at the end of such
quarter and the related statement of income for such period, all
prepared in accordance with GAAP and certified by the Financial
Officer of Holdings;
(c) (i) at the time of each delivery of financial statements
pursuant to (a) or (b) above, a certificate signed by a Responsible
Officer of Holdings stating whether or not Holdings and its
Subsidiaries are in compliance with Article VI and setting forth in
detail satisfactory to the Administrative Agent calculations of the
amounts, ratios and baskets referred to in Sections 6.07, 6.08, 6.09
and 6.10, and (ii) within 45 days after the end of each calendar
quarter, a completed Borrowing Base Certificate setting forth the
calculation of and certifying the Borrowing Base as of the last day of
such calendar quarter, certified as complete and correct and signed on
behalf of Holdings by a Financial Officer, together with such other
supporting documentation and additional reports with respect to the
Borrowing Base as the Administrative Agent shall reasonably request;
(d) promptly after the filing thereof, copies of all forms and
reports filed by it with the Securities and Exchange Commission and,
promptly after knowledge thereof shall have come to the attention of
any Responsible Officer, written notice of (i) any threatened or
pending litigation or arbitral or governmental or administrative
proceeding against Holdings or any of its Subsidiaries which could
reasonably be expected to result in a Material Adverse Effect and (ii)
any Event of Default (or event which with notice or the passage of
time or both would constitute an Event of Default) together with a
statement by a Responsible Officer describing the action, if any,
which Holdings proposes to take with respect thereto; and
(e) promptly, such further information regarding the business
affairs, legal affairs, financial condition and contingent liabilities
(including Litigation Liabilities) of Holdings and its Subsidiaries as
the Administrative Agent may reasonably request.
SECTION 5.02. PAYMENT OF OBLIGATIONS. (a) Pay and discharge or cause
to be paid and discharged promptly when due all material and lawful taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become in
default, as well as all material and lawful claims which, if unpaid, might
become a lien or charge upon such properties or any part thereof; PROVIDED,
HOWEVER, that neither Holdings nor any of the Subsidiaries shall be required to
pay and discharge or to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the validity, applicability or
amount thereof shall be contested in good faith by applicable proceedings and
Holdings or such Subsidiary, as the case may be, shall have set aside on its
books reserves reasonably deemed adequate by it with respect thereto.
SECTION 5.03. MAINTAIN PROPERTY AND INSURANCE. (a) Maintain and
preserve all properties which are used in the conduct of the business of
Holdings and the Material
44
Subsidiaries in good working order and condition, ordinary wear and tear
excepted, and (b) maintain in respect of the assets of Holdings and the Material
Subsidiaries, insurance in such amounts and against such risks as is generally
maintained by companies operating similar businesses in the same general area.
All insurance policies hereunder shall be maintained with sound and reputable
insurance carriers of recognized standing.
SECTION 5.04. MAINTAIN EXISTENCE. Preserve (a) the corporate
existence and good standing of Holdings and the Material Subsidiaries and (b)
all the material rights, privileges and franchises necessary and desirable in
the normal conduct of the business of Holdings and the Material Subsidiaries.
SECTION 5.05. COMPLIANCE WITH LAWS. Comply with the requirements of
all applicable laws (including ERISA), regulations and orders of any
Governmental Authority, a violation of which would materially affect the
business or financial condition of Holdings and its Subsidiaries taken as a
whole, except any such law, regulation or order which is being contested by
Holdings or any Subsidiary in good faith by applicable proceedings.
SECTION 5.06. INSPECTION. Give, upon the request of any Lender upon
reasonable advance notice, any representative of such Lender access during
normal business hours to inspect, and permit such representative to inspect, all
properties belonging to it and permit such representative to examine, copy and
make extracts from, financial records relating to its affairs, as such
representative may reasonably require.
SECTION 5.07. ERISA. (a) Comply in all material respects with the
applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent and each Lender (i) as soon as possible, and in any event
within 30 days after any Responsible Officer of Holdings or any ERISA Affiliate
either knows or has reason to know that any Reportable Event has occurred that
alone or together with any other Reportable Event could reasonably be expected
to result in liability of Holdings to the PBGC in an aggregate amount exceeding
$5,000,000, a statement of a Financial Officer setting forth details as to such
Reportable Event and the action proposed to be taken with respect thereto,
together with a copy of the notice, if any, of such Reportable Event given to
the PBGC, (ii) promptly after receipt thereof, a copy of any notice Holdings or
any ERISA Affiliate may receive from the PBGC relating to the intention of the
PBGC to terminate any Plan or Plans (other than a Plan maintained by an ERISA
Affiliate which is considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Code) or to appoint a trustee to administer any
Plan or Plans, (iii) within 10 days after the due date for filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of failure to make a required
installment or other payment with respect to a Plan, a statement of a Financial
Officer setting forth details as to such failure and the action proposed to be
taken with respect thereto, together with a copy of such notice given to the
PBGC and (iv) promptly and in any event within 30 days after receipt thereof by
any Borrower or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a
copy of each notice received by such Borrower or any ERISA Affiliate concerning
(A) the imposition of Withdrawal Liability or (B) a determination that a
Multiemployer Plan is, or is expected to be, terminated or in reorganization,
both within the meaning of Title IV of ERISA.
SECTION 5.08. COLLATERAL AND BORROWING BASE EVALUATIONS. Permit any
representatives designated by the Administrative Agent (including consultants or
other advisors retained by the Administrative Agent) to conduct evaluations of
its computation of the Borrowing
45
Base and the assets included in the Borrowing Base, all at such reasonable times
and as often as reasonably requested; PROVIDED that, if no Default shall have
occurred and be continuing, no more than one such evaluation will be requested
by the Administrative Agent during any fiscal year; and PROVIDED FURTHER that
any consultants or other advisors retained by the Administrative Agent (i) shall
not be employed by a competing auction house and (ii) shall be subject to the
confidentiality provisions of Section 10.17. Holdings shall pay the reasonable
fees and expenses of any such evaluation.
SECTION 5.09. FURTHER ASSURANCES. Execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents), which may be
required under any applicable law, or which the Collateral Agent or the Required
Lenders may reasonably request, to cause the Collateral and Guarantee
Requirement to be and remain satisfied at all times, all at the expense of
Holdings. Holdings also agrees to provide to the Administrative 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 Security Documents.
SECTION 5.10. ART LOANS. Cause each Lending Subsidiary, in connection
with each Art Loan made or to be made by it, to apply credit standards and loan
to collateral value requirements, and to follow practices with respect to
documentation and the perfection of security interests, not less strict than
those generally applied and followed in the Lending Subsidiaries' art lending
business prior to the Closing Date.
ARTICLE VI. NEGATIVE COVENANTS
The Borrowers covenant and agree with each Lender that, so long as
this Agreement shall remain outstanding or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under any Loan Document
shall be unpaid, or any Letter of Credit shall remain in effect, unless the
Required Lenders shall otherwise consent in writing, Holdings will not, either
directly or indirectly, and will not cause or permit any of the Subsidiaries to:
SECTION 6.01. LIENS. Incur, create, assume or permit to exist any
mortgage, pledge, security interest, lien, charge or other encumbrance of any
nature whatsoever (including conditional sales or other title retention
agreement) on any of its property or assets, whether owned at the date hereof or
hereafter acquired, other than:
(a) liens incurred or pledges and deposits made in connection
with workmen's compensation, unemployment insurance, old-age pensions,
social security and public liability and similar legislation;
(b) liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety and appeal bonds and other obligations of like
nature, incurred incident to and in the ordinary course of business;
(c) statutory liens of landlords and other liens imposed by law,
such as
46
carriers', warehousemen's, mechanics', materialmen's and vendors'
liens, incurred in good faith in the ordinary course of business;
(d) liens securing the payment of taxes, assessments and
governmental charges or levies, either (i) not delinquent or (ii)
being contested in good faith by appropriate proceedings with adequate
reserves;
(e) zoning restrictions, easements, licenses, reservations,
restrictions on the use of real property or minor irregularities
incident thereto which do not in the aggregate materially detract from
the value of the property or assets of Holdings and the Subsidiaries
taken as a whole or materially impair the operation of the business of
Holdings and the Subsidiaries taken as a whole;
(f) liens incurred in the ordinary course of business (other
than consensual liens on assets constituting Collateral) provided that
such liens are not given as security for Indebtedness;
(g) liens on property or assets of any Subsidiary securing
Indebtedness of such Subsidiary to Holdings or to a wholly owned
Subsidiary of Holdings;
(h) liens for judgments or awards, so long as the finality of
such judgment or award is being contested in good faith and execution
thereof is stayed; PROVIDED that the aggregate amount of liens
permitted by this clause may not exceed $10,000,000;
(i) liens in connection with the Sale and Leaseback;
(j) any lien existing on any property or assets of any
corporation at the time it becomes a Subsidiary of Holdings, or
existing prior to the time of acquisition upon any property or assets
acquired by Holdings or any of its Subsidiaries through purchase,
merger or consolidation or otherwise, whether or not assumed by
Holdings or such Subsidiary;
(k) any lien placed upon property or assets within 90 days of
the time of acquisition of such property or assets by Holdings or any
of its Subsidiaries to secure all or a portion of (or to secure
Indebtedness incurred to pay all or a portion of) the purchase price
thereof, provided that any such lien shall not encumber any other
property or assets of Holdings or any Subsidiary;
(l) liens, other than the liens permitted by clauses (a) through
(k) above (including any such liens in existence as of the date
hereof), existing as of the date hereof and set forth on Schedule
6.01; PROVIDED, HOWEVER, that no such lien shall be permitted under
this clause (l) if it extends to property other than the property
subject to such lien on the date hereof;
(m) any lien renewing, extending or refunding any lien permitted
by clause (j), (k) or (l) above, provided that the principal amount
secured is not increased, and the lien is not extended to other
property;
47
(n) liens, in addition to the liens permitted by clauses (a)
through (m) above, on assets not constituting Collateral securing
obligations in an aggregate amount not greater than 10% of
Consolidated Net Worth; and
(o) liens created under the Security Documents.
SECTION 6.02. SUBSIDIARY INDEBTEDNESS. Permit any Subsidiary to
create, incur, assume or permit to exist any Indebtedness except:
(a) Indebtedness in connection with the Sale and Leaseback;
(b) in the case of any Subsidiary that is a Borrower, Indebtedness
not prohibited under any other Section of this Agreement;
(c) Indebtedness of any Subsidiary the proceeds of which are used by
such Subsidiary to make secured loans to consignors, dealers or clients in the
ordinary course of business of the Borrowers and their subsidiaries and in a
manner that is consistent with established practices pursuant to the auction
finance business of the Borrowers and their subsidiaries;
(d) Indebtedness of any Subsidiary to another Subsidiary or any
Borrower;
(e) Indebtedness of any Subsidiary outstanding on the date hereof or
available to any Subsidiary under credit facilities existing on the date hereof,
not in excess of $20,000,000 in the aggregate with respect to all Subsidiaries;
and
(f) other Indebtedness, provided that the aggregate principal amount
of all such other Indebtedness of all Subsidiaries outstanding at any time
(excluding amounts permitted under clauses (a) through (e) above) does not
exceed 10% of Consolidated Net Worth at such time.
SECTION 6.03. CONSOLIDATIONS, MERGERS, AND SALES OF ASSETS. (a) Merge
or consolidate with any other corporation, except that (i) any Borrower may
merge or consolidate with a Subsidiary so long as the Borrower is the surviving
entity in such merger or consolidation, (ii) any Subsidiary other than a
Borrower may merge or consolidate with a Subsidiary so long as the surviving
entity in such merger or consolidation is a Subsidiary (and, if either
constituent corporation is a Domestic Subsidiary, a Domestic Subsidiary) or
(iii) any Borrower may merge or consolidate with any other Person so long as the
Borrower is the surviving entity in such merger or consolidation and, after
giving effect to such merger or consolidation, no Event of Default exists.
(b) Sell, lease, transfer or otherwise dispose of all or a
substantial part of its assets, other than assets no longer used or useful in
the conduct of its business or leases for space used in the ordinary course of
business which are near the end of their term, except (i) dispositions in the
ordinary course of business for a full and adequate consideration and (ii) the
sale of the York Avenue Property pursuant to the Sale and Leaseback.
(c) Sell, lease, transfer or otherwise dispose of any Art Loan.
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(d) Sell, transfer or otherwise dispose of any of the London
Properties.
SECTION 6.04. LINES OF BUSINESS. Engage to any substantial extent in
any line or lines of business activity fundamentally different from the business
engaged in on the date hereof.
SECTION 6.05. TRANSACTIONS WITH AFFILIATES. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
that as long as no Default or Event of Default shall have occurred and be
continuing, Holdings or any of its Subsidiaries may engage in any of the
foregoing transactions in the ordinary course of business at prices and on terms
and conditions not less favorable to Holdings or any Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties.
SECTION 6.06. RESTRICTIONS ON DIVIDENDS. Enter into any agreement,
contract or arrangement which expressly limits the right of any Subsidiary to
pay dividends to its parent corporation.
SECTION 6.07. CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated
Leverage Ratio at any time during any of the periods set forth below to exceed
the ratio set forth opposite such period:
Period Ratio
10/1/02-12/31/02 .60 to 1.0
Thereafter .70 to 1.0
SECTION 6.08. ADJUSTED CONSOLIDATED NET WORTH. Permit Adjusted
Consolidated Net Worth at any of the dates set forth below to be less than the
amount set forth opposite such date:
Date Amount
---- ------
12/31/02 $ 160,000,000
3/31/03 145,000,000
6/30/03 170,000,000
9/30/03 145,000,000
12/31/03 170,000,000
Each fiscal quarter end thereafter 145,000,000
SECTION 6.09. CONSOLIDATED COVERAGE RATIO. Permit the Consolidated
Coverage Ratio for any period of four consecutive financial quarters ending on
any of the dates set forth below to be less than the ratio set forth opposite
such date:
Date Ratio
12/31/02 3.00 to 1.00
3/31/03 2.00 to 1.00
6/30/03 2.00 to 1.00
49
9/30/03 1.50 to 1.00
Each fiscal quarter end thereafter 2.25 to 1.00
SECTION 6.10. RESTRICTED PAYMENTS; CERTAIN PAYMENTS IN RESPECT OF
INDEBTEDNESS. (a) Declare or make, or agree to make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that (i) Subsidiaries may declare and pay dividends ratably with respect
to their capital stock, (ii) Holdings and Subsidiaries may, as part of their
incentive compensation programs for employees, repurchase Equity Interests in
Holdings or any Domestic Subsidiary in an aggregate amount not greater than
$3,000,000 for any fiscal year and (iii) if no Default or Event of Default has
occurred and is continuing or would occur as a result thereof, Holdings may make
any Restricted Payment that, taken together with all other Restricted Payments
made after July 10, 2001, would not exceed 40% of Consolidated Net Income of
Holdings, adjusted to exclude nonrecurring or extraordinary reserves and charges
relating to the Litigation Liabilities, for the period (treated as one
accounting period) commencing January 1, 2000, and ending at the most recent
fiscal quarter end for which financial statements shall have been delivered
under Section 5.01(a) or (b).
(b) Make any payment on account of the purchase, redemption,
prepayment, retirement or defeasance of the Senior Notes.
SECTION 6.11. ART LOANS. Permit any of the Pledged Art Loans (as such
term is defined in the Pledge Agreement) to be represented or evidenced by an
instrument or a certificate, or permit any agreement relating to any Pledged Art
Loan to provide that any of the documentation evidencing such Pledged Art Loan
is a security governed by Article 8 of the Uniform Commercial Code as in effect
in any applicable jurisdiction.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):
(a) default shall be made in the payment of any principal of any Loan
or any amount due in respect of the reimbursement of any LC Disbursement 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 by acceleration thereof or otherwise;
(b) default shall be made in the payment of any interest on any Loan
or LC Disbursement or any Fee or any other amount due under any Loan Document,
when and as the same shall become due and payable, and such default shall
continue unremedied for a period of five days;
(c) default shall be made in the due observance or performance by a
Borrower or any Subsidiary of any other covenant, condition or agreement
contained in Section 5.04(a) or 5.10 or in Article VI;
(d) default shall be made in the due observance or performance by a
Borrower or any Subsidiary of any other covenant, condition or agreement
contained in any Loan Document and such default shall continue unremedied for a
period of 30 days after notice thereof
50
from the Administrative Agent or any Lender to Holdings, or default shall be
made in the due observance or performance by a Borrower or any Subsidiary of any
other covenant, condition or agreement contained in any Security Document and
such default shall continue unremedied for a period of 5 Business Days after
notice thereof from the Administrative Agent or any Lender to Holdings;
(e) Holdings or any Subsidiary shall fail to pay any Indebtedness
greater than $1,000,000, or fail during any 30-day period to pay Indebtedness
aggregating more than $1,000,000, owing by Holdings or such Subsidiary, or any
interest or premium thereon aggregating $1,000,000 or more, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Indebtedness;
(f) any event or condition shall occur or exist under any agreement
or instrument of Holdings or any Subsidiary evidencing or securing or relating
to any Indebtedness exceeding $10,000,000, if the effect of such event or
condition is to accelerate, or to permit the holder or holders of such
Indebtedness or the trustee or trustees under any such agreement or instrument
to accelerate, the maturity of such Indebtedness;
(g) any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings hereunder, or any
representation, warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished in connection
with or pursuant to any Loan Document, shall prove to have been false or
misleading in any material respect when so made, deemed made or furnished;
(h) (i) a Reportable Event or Reportable Events, or a failure to make
a required installment or other payment (within the meaning of Section 412(n)(1)
of the Code), shall have occurred with respect to any Plan or Plans that
reasonably could be expected to result in liability of Holdings to the PBGC or
to a Plan in an aggregate amount exceeding $5,000,000 and, within 30 days after
the reporting of any such Reportable Event to the Administrative Agent or after
the receipt by the Administrative Agent of a statement required pursuant to
Section 5.07(b)(iii) hereof, the Administrative Agent shall have notified the
Borrower in writing that (A) the Required Lenders have made a determination
that, on the basis of such Reportable Event or Reportable Events or the failure
to make a required payment, there are reasonable grounds for the termination of
such Plan or Plans by the PBGC, the appointment by the appropriate United States
district court of a trustee to administer such Plan or Plans or the imposition
of a lien in favor of a Plan and (B) as a result thereof an Event of Default
exists hereunder; (ii) a trustee shall be appointed by a United States district
court to administer any such Plan or Plans; or (iii) the PBGC shall institute
proceedings (including giving notice of intent thereof) to terminate any such
Plan or Plans;
(i) (i) the Borrowers or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability
to such Multiemployer Plan, (ii) such Borrower or such ERISA Affiliate does not
have reasonable grounds for contesting such Withdrawal Liability or is not
contesting such Withdrawal Liability in a timely and appropriate manner and
(iii) the amount of such Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date or dates of
such notification), either (A) exceeds $5,000,000 or requires payments exceeding
$1,000,000 in any year or (B) is less than
51
$5,000,000 but any Withdrawal Liability payment remains unpaid 30 days after
such payment is due;
(j) the Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if solely as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or have been or are being terminated have
been or will be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an amount
exceeding $1,000,000;
(k) a judgment or judgments for the payment of money in excess of
$5,000,000 in the aggregate shall have been rendered against Holdings or any
Subsidiary and the same shall have remained unsatisfied and in effect, without
stay of execution, for any period of 60 days;
(l) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of Holdings or any Material Subsidiary, or of a substantial part of
the property or assets of Holdings or any Material Subsidiary, under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law (or similar
statute or law in any other jurisdiction), (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for Holdings
or any Material Subsidiary or for a substantial part of the property or assets
of Holdings or a Material Subsidiary or (iii) the winding-up or liquidation of
Holdings or any Material Subsidiary; and such proceeding or petition shall
continue undismissed for 30 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(m) Holdings or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law (or similar
statute or law in any other jurisdiction), (ii) consent to the institution of,
or fail to contest in a timely and applicable manner, any proceeding or the
filing of any petition described in (g) above, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings or any Material Subsidiary or for a substantial
part of the property or assets of Holdings or any Material Subsidiary, (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,
(vi) become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing;
(n) a Change in Control shall occur;
(o) any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted in writing by any Borrower or any
Subsidiary party to a Security Document not to be, a valid and perfected Lien on
any Collateral, with the priority required by the applicable Security Document,
except (i) as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents or (ii) as a
result of the Administrative Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under the
Pledge Agreement or to make or continue UCC
52
filings; provided that no such cessation shall give rise to an Event of Default
unless such cessation (x) affects Collateral that is or should be subject to a
Lien in favor of the Collateral Agent having an aggregate value in excess of
$1,000,000 or (y) is not corrected upon request by the Collateral Agent upon
reasonable notice; or
(p) Holdings shall breach or fail to perform any of its material
obligations under any of the Settlement Agreements.
then, and in every such event (other than an event with respect to any Borrower
described in paragraph (l) or (m) above), and at any time thereafter during the
continuance of such event, the Administrative Agent shall, at the request of the
Required Lenders, by notice to the Borrowers, take either or both of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments and (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrowers accrued hereunder, shall
become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein to the contrary notwithstanding; and, in
any event with respect to a Borrower described in paragraph (l) or (m) above,
the Commitments shall automatically terminate and the principal of the Loans
then outstanding, together with accrued interest thereon and any unpaid accrued
Fees and all other liabilities of the Borrowers accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein to the contrary notwithstanding.
ARTICLE VIII. THE AGENTS
In order to expedite the transactions contemplated by this Agreement,
JPMCB is hereby appointed to act as Administrative Agent and Collateral Agent on
behalf of the Lenders. Each of the Lenders hereby irrevocably authorizes the
Agents to take such actions on behalf of such Lender and to exercise such powers
as are specifically delegated to the Agents by the terms and provisions hereof
and of the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders, without hereby limiting any implied authority, (a) to
receive on behalf of the Lenders all payments of principal of and interest on
the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received; (b) as
provided in Article VII, to give notice on behalf of each of the Lenders to the
Borrowers of any Event of Default specified in this Agreement of which the
Administrative Agent has actual knowledge acquired in connection with its agency
hereunder; and (c) to distribute to each Lender copies of all notices, financial
statements and other materials delivered by any Borrower pursuant to this
Agreement as received by the Administrative Agent.
Neither the Agents nor any of their directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his own gross negligence or wilful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrowers of
any of the terms, conditions, covenants or agreements contained in any Loan
Document. The
53
Agents shall not be responsible to the Lenders for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement, or any
other Loan Documents or other instruments or agreements. The Agents shall in all
cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders. The Agents shall,
in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by them in good faith to be genuine and correct
and to have been signed or sent by the proper person or persons. Neither the
Agents nor any of their directors, officers, employees or agents shall have any
responsibility to the Borrowers on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by any
other Lender or a Borrower of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or therewith. The Agents
may execute any and all duties hereunder and under the other Loan Documents by
or through agents or employees and shall be entitled to rely upon the advice of
legal counsel selected by them with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by them in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Agents shall be under no duty
to take any discretionary action permitted to be taken by them pursuant to the
provisions of this Agreement or any other Loan Document unless they shall be
requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by notifying the Lenders, the Issuing Bank and the Borrowers. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
having a combined capital and surplus of at least $500,000,000 or an Affiliate
of any such bank. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor bank, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 10.05 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 Administrative Agent.
With respect to the Loans made by it hereunder, the Agents in their
individual capacity and not as Agents shall have the same rights and powers as
any other Lender and may exercise the same as though they were not the Agents,
and the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings or any Subsidiary or
other Affiliate thereof as if they were not the Agents.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its outstanding Term Loans, Revolving
Exposures and unused Commitments at the time of such demand) of any expenses
incurred for the benefit of the Lenders by the Agents, including counsel fees
and compensation of agents and employees paid for services rendered on behalf of
the Lenders, which shall not have been reimbursed by one of the
54
Borrowers and (b) to indemnify and hold harmless the Agents and any of their
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against them in their capacity as Agents or any of them in any
way relating to or arising out of this Agreement or any other Loan Document or
any action taken or omitted by any of them under this Agreement or any other
Loan Document, to the extent the same shall not have been reimbursed by the
Borrowers; PROVIDED that no Lender shall be liable to the Agents for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or wilful misconduct of the Agents or any of their directors,
officers, employees or agents.
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 applicable, 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
applicable, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX. GUARANTEE
SECTION 9.01. GUARANTEE. Subject to the last sentence of this Section
9.01(a), each Guarantor hereby guarantees to each Lender and the Administrative
Agent and their respective successors and assigns the prompt payment in full
when due (whether at stated maturity, by acceleration, by optional prepayment or
otherwise) of the Obligations, strictly in accordance with the terms thereof.
Each Guarantor hereby further agrees that if any Borrower shall fail to pay in
full when due (whether at stated maturity, by acceleration, by optional
prepayment or otherwise) any of the Obligations, the Guarantor will promptly pay
the same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Obligations, the same will
be promptly paid in full when due (whether at extended maturity, by acceleration
or otherwise) in accordance with the terms of such extension or renewal.
Notwithstanding anything in this Article IX to the contrary, Oatshare Limited
and Sotheby's will not be liable as Guarantors for the Obligations of Holdings,
Sotheby's, Inc. and Sotheby's Global Trading GmbH.
SECTION 9.02. OBLIGATIONS UNCONDITIONAL. The obligations of each
Guarantor under Section 9.01 hereof are absolute and unconditional irrespective
of the value, genuineness, validity, regularity or enforceability of the
obligations of any Borrower under this Agreement or any other agreement or
instrument referred to herein or therein, or any substitution, release or
exchange of any other guarantee of or security for any of the Obligations, and,
to the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 9.02 that the obligations of each Guarantor hereunder shall be absolute
and unconditional under any and all circumstances. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or more
of the following shall not affect the liability of any Guarantor hereunder:
55
(a) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Obligations shall be extended, or such performance or compliance shall be
waived;
(b) any of the acts mentioned in any of the provisions of this
Agreement or any other agreement or instrument referred to herein or therein
shall be done or omitted; or
(c) the maturity of any of the Obligations shall be accelerated, or
any of the Obligations shall be modified, supplemented or amended in any
respect, or any right under this Agreement or any other agreement or instrument
referred to herein or therein shall be waived or any other guarantee of any of
the Obligations or any security therefor shall be released or exchanged in whole
or in part or otherwise dealt with.
Each Guarantor hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that the
Administrative Agent or any Lender exhaust any right, power or remedy or proceed
against any Borrower under this Agreement or any other agreement or instrument
referred to herein or therein, or against any other person under any other
guarantee of, or security for, any of the Obligations.
SECTION 9.03. REINSTATEMENT. The obligations of each Guarantor under
this Article IX shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of any Borrower in respect of the
Obligations is rescinded or must be otherwise restored by any holder of any of
the Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by the
Administrative Agent or such Lender in connection with such rescission or
restoration.
SECTION 9.04. SUBROGATION. Each Guarantor hereby irrevocably waives
all rights of subrogation or contribution, whether arising by operation of law
(including, without limitation, any such right arising under Title 11 of the
United States Code) or otherwise, by reason of any payment by it pursuant to the
provisions of this Article IX and further agrees for the benefit of each of its
creditors (including, without limitation, each Lender and the Administrative
Agent) that any such payment by it of the Obligations of any Borrower shall
constitute a contribution of capital or a dividend, as the case may be, by such
Guarantor to such Borrower.
SECTION 9.05. REMEDIES. Each Guarantor agrees that, as between the
Guarantors and the Lenders, the obligations of any Borrower under this Agreement
may be declared to be forthwith due and payable as provided in Article VII
hereof (and shall be deemed to have become automatically due and payable in the
circumstances provided in said Article VII) for purposes of Section 9.01 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such obligations from becoming automatically due and
payable) as against any Borrower and that, in the event of such declaration (or
such obligations being deemed to have become automatically due and payable),
such obligations (whether or not due and payable by such Borrower) shall
forthwith become due and payable by each Guarantor for purposes of such Section
9.01.
SECTION 9.06. CONTINUING GUARANTEE. The guarantee in this Article IX
is a continuing guarantee, and shall apply to all Obligations whenever arising.
56
ARTICLE X. MISCELLANEOUS
SECTION 10.01. NOTICES. 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 any Borrower, to it in care of Sotheby's, Inc. at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of the Chief Financial Officer
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Administrative Agent, to JPMorgan Chase Bank, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attention of ▇▇▇▇▇▇▇▇ Anyigho (Telecopy
No. 713-750-2762), with copies to JPMorgan Chase Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Telecopy No. 212-270-5646);
(c) if to the Issuing Bank, to JPMorgan Chase Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Telecopy No.
212-270-5646);
(d) if to the Collateral Agent, to JPMorgan Chase Bank, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Telecopy No.
212-270-5646); and
(e) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01 or in the Assignment and Assumption Agreement pursuant to
which such Lender shall have become a party hereto.
Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; PROVIDED that the foregoing shall not apply to notices
pursuant to Article II unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or a Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; PROVIDED that
approval of such procedures may be limited to particular notices or
communications. 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 if delivered by hand or overnight courier service
or sent by telecopy, or on the date five Business Days after dispatch by
certified or registered mail, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 10.01.
SECTION 10.02. SURVIVAL OF AGREEMENT. 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 or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans and the issuance of the Letters of Credit by the Issuing Bank,
regardless of any investigation made by the Lenders or on their behalf, 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 or any other Loan Document is outstanding and unpaid and so long as
the Commitments have not been terminated.
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SECTION 10.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrowers and the Administrative Agent
and when the Administrative Agent shall have received copies hereof which, when
taken together, bear the signatures of the Required Lenders, and thereafter
shall be binding upon and inure to the benefit of the Borrowers, the
Administrative Agent and each Lender and their respective successors and
assigns, except that the Borrowers shall not have the right to assign rights
hereunder or any interest herein without the prior consent of all the Lenders.
SECTION 10.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i)
no Borrower may assign or otherwise transfer any of its rights or obligations
hereunder, except pursuant to a merger permitted by Section 6.03, without the
prior written consent of each Lender (and any attempted assignment or transfer
by a Borrower without such consent shall be null and void) and (ii) no Lender
may assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section; and all covenants, promises and agreements by or
on behalf of the Borrowers, the Administrative Agent, the Issuing Bank or the
Lenders that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns (including any Affiliate of the
Issuing Bank that issues any Letter of Credit). Nothing in the Agreement,
expressed or implied, shall be construed to confer upon an Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, Related Funds) 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
Commitment or outstanding Loans or Letters of Credit at the time owing to it)
with the prior written consent (such consent not to be unreasonably withheld)
of:
(A) Holdings; PROVIDED that no consent of Holdings shall be
required for an assignment to a Lender or an Affiliate or a
Related Fund of a Lender or, if an Event of Default under (a),
(b), (l) or (m) of Article VII has occurred and is continuing;
and
(B) the Administrative Agent (and, in the case of an
assignment of all or a portion of any Lender's LC Exposure, the
Issuing Bank); PROVIDED that no consent of the Administrative
Agent (or the Issuing Bank) shall be required for an assignment
to an Affiliate or Related Fund of a Lender or of a Commitment
(or an LC Exposure) to an assignee that is a Lender with a
Commitment (or an LC Exposure) immediately prior to giving effect
to such assignment.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or an
Affiliate or Related Fund of a Lender or an assignment of the
entire
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remaining amount of the assigning Lender's Commitment, (x) 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 and (y)
the amount of the Commitment of such Lender remaining after such
assignment shall not be less than $1,000,000; PROVIDED that no
such consent of Holdings shall be required if an Event of Default
under (a), (b), (l) or (m) of Article VII 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;
(C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption
Agreement, together with, except in the case of an assignment to
a Lender or an Affiliate or a Related Fund of a Lender, a
processing and recordation fee of $4,000; and
(D) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative
Questionnaire.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(v) of this Section, from and after the effective date
specified in each Assignment and Assumption Agreement, which effective
date shall be at least five Business Days after the execution thereof,
the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption Agreement,
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 Agreement, be released from
its obligations under this Agreement (and in the case of an Assignment
and Assumption Agreement 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 2.13, 2.15, 2.19 and 10.05, as well as to any Fees accrued
for its account hereunder and not yet paid). 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 the
Section.
(iv) By executing and delivering an Assignment and Assumption
Agreement, 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: (A) 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 Commitment,
if any, and the outstanding balances of its Loans, if any, in each
case without giving effect to assignments thereof which have not
become effective, are as set forth in such Assignment and Assumption
59
Agreement, (B) except as set forth in (A) 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 the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished
pursuant hereto or the financial condition of the Borrowers or any
Subsidiary or the performance or observance by any Borrower of any of
its obligations under this Agreement, any other Loan Document or any
other instrument or document furnished pursuant hereto; (C) such
assignee represents and warrants that it is legally authorized to
enter into such Assignment and Assumption Agreement; (D) such assignee
confirms that it has received a copy of this Agreement, together with
copies of the most recent financial statements delivered pursuant to
Section 5.01 and such other documents and information as it has deemed
applicable to make its own credit analysis and decision to enter into
such Assignment and Assumption Agreement; (E) such assignee will
independently and without reliance upon the Administrative Agent, 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; (F) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (G) such assignee agrees that
it will perform in accordance with their terms all the obligations
which by the terms of this Agreement are required to be performed by
it as a Lender.
(v) 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 Agreement 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 and
LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the "REGISTER"). The entries in the Register shall
be conclusive in the absence of manifest error and the Borrowers, the
Administrative Agent, the Issuing Bank 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 Borrowers, the Issuing Bank and any
Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(vi) Upon its receipt of a duly completed Assignment and
Assumption Agreement executed by an assigning Lender and an assignee,
an Administrative Questionnaire completed in respect of the assignee
(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 (i)
accept such Assignment and Assumption Agreement, (ii) record the
information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register
as provided in this paragraph.
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(c) (i) Each Lender may, without the consent of Holdings, the Issuing
Bank or the Administrative Agent, sell participations to one or more banks or
other entities (a "PARTICIPANT") in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment,
if any, and the Loans or LC Disbursements owing to it); PROVIDED, HOWEVER, 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, the Issuing Bank and the other 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 provision to Section 10.08(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 2.13, 2.15
and 2.19 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 10.06
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.17 as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2.13, 2.15 and 2.19 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 is made with the prior written
consent of Holdings. A Participant shall not be entitled to the benefits of
Section 2.19 unless Holdings is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrowers, to
comply with Section 2.19(a)(vii) as though it were a Lender.
(d) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; PROVIDED that, prior to any such disclosure of
information, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree on terms substantially similar to those set forth in Section 10.17
to preserve the confidentiality of such confidential information.
(e) Any Lender 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 without limitation (i) any pledge or assignment to
secure obligations to a Federal Reserve Bank and (ii) in the case of any Lender
that is a fund that invests in loans, any pledge or assignment to any holders of
obligations owed, or securities issued, by such Lender, including to any trustee
for, or any other representative of, such holders, and this Section 10.04 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. In order to facilitate such a pledge or
assignment, the applicable Borrower shall, at the request of the assigning
Lender, duly execute and deliver to the
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assigning Lender a promissory note or notes evidencing the Loans made to such
Borrower by the assigning Lender hereunder.
SECTION 10.05. EXPENSES; INDEMNITY. (a) Each Borrower agrees to pay
all reasonable out-of-pocket expenses incurred by the Administrative Agent in
connection with the preparation of this Agreement and the other Loan Documents
or in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Administrative Agent or any Lender in connection
with the enforcement or protection of their rights in connection with this
Agreement and the other Loan Documents or in connection with the Loans made
hereunder, including the reasonable fees, charges and disbursements of Cravath,
Swaine & ▇▇▇▇▇, counsel for the Administrative Agent, and, in connection with
any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel for the Administrative Agent or any Lender
and all reasonable out-of-pocket expenses incurred by the Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder. Each Borrower further agrees that
it shall indemnify the Lenders from and hold them harmless against any
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement or any of the other Loan
Documents.
(b) Each Borrower agrees to indemnify the Administrative Agent, the
Issuing Bank, each Lender and each of their respective directors, officers,
employees and agents (each such person being called an "INDEMNITEE") against,
and to hold each Indemnitee harmless from, any and all actual losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document (as defined in this
Agreement as in effect at any time prior to, on or after the date hereof; and as
any such Loan Document shall have been in effect at any time prior to, on or
after the date hereof) or any agreement or instrument contemplated thereby, the
performance by the parties thereto of their respective obligations thereunder or
the consummation of the transactions contemplated thereby, (ii) the actual or
proposed use of the proceeds of the Loans (including Loans made prior to the
date hereof) or (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, 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 by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) The provisions of this Section 10.05 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Letters of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Issuing Bank or any Lender. All amounts due under this
Section 10.05 shall be payable on written demand therefor.
SECTION 10.06. RIGHT OF SETOFF. 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
62
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 any Borrower
against any of and all the obligations of such Borrower now or hereafter
existing under this Agreement, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document 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.
SECTION 10.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 10.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Administrative Agent or any Lender in exercising any power or right 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, the Issuing Bank and the Lenders hereunder are cumulative
and are not exclusive of any rights or remedies which 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. No
notice or demand on any Borrower in any case shall entitle such Borrower to any
other or further notice or demand in similar or other circumstances.
(b) Neither 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; PROVIDED, however, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan, without the prior written
consent of each Lender affected thereby, (ii) change or extend the Commitment or
decrease the Commitment Fees of any Lender or extend any payment date therefor
without the prior written consent of such Lender or (iii) amend or modify the
provisions of Section 2.16, the provisions of Article IX, the provisions of this
Section or the definitions of the terms "Required Lenders", "Borrowing Base",
"Available Art Loans", "Consolidated Net Tangible Assets" or "Net Post-2002
Investment" without the prior 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 10.09. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the applicable interest rate, together
with all fees and charges which are treated as interest under applicable law
(collectively the "CHARGES"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender, shall exceed the maximum lawful rate (the
"MAXIMUM RATE") which may be contracted for, charged, taken, received or
reserved by such Lender in accordance with applicable law, the rate of interest
payable on the Loans of such Lender, together with all Charges payable to such
Lender, shall be limited to the Maximum Rate.
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SECTION 10.10. ENTIRE AGREEMENT. This Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect to
the subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Agreement or the other Loan Documents.
SECTION 10.11. 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 respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement or any of the other Loan
Documents. 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 and the other Loan Documents, as
applicable, by, among other things, the mutual waivers and certifications in
this Section 10.11.
SECTION 10.12. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 10.13. JUDGMENT CURRENCY. (a) The Borrowers' obligations
hereunder and under the other Loan Documents to make payments in Dollars,
Sterling or Euros (the "OBLIGATION CURRENCY") shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any currency other than the Obligation Currency, except to the
extent that such tender or recovery results in the effective receipt by the
Administrative Agent or a Lender of the full amount of the Obligation Currency
expressed to be payable to the Administrative Agent or such Lender under this
Agreement or the other Loan Documents. If, for the purpose of obtaining or
enforcing judgment against any Borrower or in any court or in any jurisdiction,
it becomes necessary to convert into or from any currency other than the
Obligation Currency (such other currency being hereinafter referred to as the
"JUDGMENT CURRENCY") an amount due in the Obligation Currency, the conversion
shall be made at the Sterling Equivalent, Euro Equivalent or Dollar Equivalent,
in the case of any Sterling, Euros or Dollars, and, in the case of other
currencies, the rate of exchange (as quoted by the Administrative Agent or if
the Administrative Agent does not quote a rate of exchange on such currency, by
a known dealer in such currency designated by the Administrative Agent)
determined, in each case, as of the date immediately preceding the day on which
the judgment is given (such Business Day being hereinafter referred to as the
"JUDGMENT CURRENCY CONVERSION DATE").
(b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrower covenants and agrees to pay, or cause to be paid, as a
separate obligation and notwithstanding any judgment, such additional amounts,
if any (but in any event not a lesser amount), as may be
64
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.
(c) For purposes of determining the Sterling Equivalent, Euro
Equivalent or Dollar Equivalent or rate of exchange for this Section, such
amounts shall include any premium and costs payable in connection with the
purchase of the Obligation Currency.
SECTION 10.14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 10.03.
SECTION 10.15. 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 are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 10.16. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, 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 any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against any Borrower or its properties in
the courts of any jurisdiction.
(a) 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 or the other Loan
Documents in any New York State or Federal court. 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.
(b) 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 10.17. CONFIDENTIALITY. Except as otherwise provided in
Section 10.04(c), the Administrative Agent, the Issuing Bank, the Collateral
Agent and each of the Lenders agrees to keep confidential (and (i) to cause its
respective officers, directors and employees to keep confidential and (ii) to
use its best efforts to cause its respective agents and representatives to keep
confidential) the Information (as defined below) and all copies thereof,
65
extracts therefrom and analyses or other materials based thereon, except that
the Administrative Agent, the Issuing Bank, the Collateral Agent or any Lender
shall be permitted to disclose Information (a) to such of its respective
affiliates, officers, directors employees, agents and representatives as need to
know such Information, (b) to the extent requested by any bank regulatory
authority, (c)(i) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process or (ii) in connection
with the enforcement of this Agreement, (d) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Agreement
or (ii) becomes available to the Administrative Agent, the Issuing Bank, the
Collateral Agent or any Lender on a nonconfidential basis from a source other
than the Borrowers or (e) to the extent Holdings shall have consented to such
disclosure in writing. Notwithstanding anything to the contrary set forth
herein, each party hereto agrees that the obligations of confidentiality
contained herein or otherwise undertaken in connection with the transactions
contemplated hereby (the "CONFIDENTIALITY OBLIGATIONS") shall not apply to the
"structure or the tax aspects," as that phrase is used In Section
1.6011-4T(a)(3) (or any successor provision) of the Treasury Regulations (the
"CONFIDENTIALITY REGULATION") promulgated under Section 6011 of the Internal
Revenue Code of 1986, as amended, of such transactions; PROVIDED, HOWEVER, that
the Confidentiality Obligations nevertheless shall apply to any and all items of
information not required to be freely disclosable in order for the transaction
or transactions not to be treated as "offered under conditions of
confidentiality" within the meaning of the Confidentiality Regulation. For the
purposes of this Section, "INFORMATION" shall mean all information that is
received from and relates to Holdings or any of its Subsidiaries other than any
such information available to the Administrative Agent, the Issuing Bank, the
Collateral Agent or any Lender on a nonconfidential basis prior to its
disclosure thereto by Holdings or any such Subsidiary. The provisions of this
Section 10.17 shall remain operative and in full force and effect regardless of
the expiration of this Agreement.
SECTION 10.18. RELEASE OF LIENS AND GUARANTEES. (a) Except as provided
in paragraph (b) below, no amendment to the Loan Documents that has the effect
of releasing all or substantially all the Collateral or any of the guarantees
under the Subsidiary Guarantee Agreements or hereunder shall be effective except
pursuant to an agreement or agreements in writing entered into by the Borrowers
and all the Lenders. It is expressly understood that an amendment providing that
additional obligations will be secured under the Security Documents will not
constitute a release of Collateral for purposes of this paragraph.
(b) In the event that Holdings or any Subsidiary sells, transfers or
otherwise disposes of all or any portion of any of the Equity Interests, assets
or property owned by Holdings or such Subsidiary in a transaction not prohibited
by this Agreement, the Administrative Agent and the Collateral Agent shall
promptly (and the Lenders hereby authorize and instruct the Administrative Agent
and the Collateral Agent to) take such action and execute any such documents as
may be reasonably requested by the Borrower to release any Liens created by any
Loan Document in respect of such Equity Interests, assets or property, including
the release and satisfaction of record of any mortgage or deed of trust granted
in connection herewith, and, in the case of a disposition of all or
substantially all the Equity Interests or assets of any Subsidiary, to terminate
such Subsidiary's obligations under the Subsidiary Guarantee Agreement and each
other Loan Document. In addition, the parties hereto acknowledge and agree that
the Liens and security interests created by the Security Documents will
automatically terminate when all the Obligations have been paid in full and the
Commitments have been terminated, and the Administrative Agent and the
Collateral Agent will take such actions as are reasonably requested by the
Borrower to evidence such termination. Holdings agrees to pay all out-of-pocket
expenses
66
of the Administrative Agent and the Collateral Agent in connection with releases
of Liens and obligations under the Subsidiary Guarantee Agreement provided for
in this Section.
67
IN WITNESS WHEREOF, the Borrowers (in their capacity as Borrowers and
Guarantors), the Administrative Agent and the Lenders have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
SOTHEBY'S HOLDINGS, INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
SOTHEBY'S, INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
OATSHARE LIMITED,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SOTHEBY'S,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SOTHEBY'S GLOBAL TRADING GmbH,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
68
COMERICA BANK,
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Account Officer
69
HSBC BANK PLC,
by /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Corporate
Relationship Manager
70
JPMORGAN CHASE BANK, individually
and as Administrative Agent,
Collateral Agent, and Issuing Bank,
by /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
SCHEDULE 1.01A
OTHER OBLIGATIONS OF THE LENDERS
1. All obligations of Holdings and any Subsidiary owed to any Lender in
connection with cash management services provided by such Lender or
commitments to provide such services.
2. All guarantee obligations of Holdings and any Subsidiary owed to JPMCB or
any affiliate of JPMCB in connection with loans and other extensions of
credit made by JPMCB for officers and employees of Holdings and its
Subsidiaries.
3. All obligations of Holdings and any Subsidiary in connection with interest
rate and foreign exchange rate hedging agreements with persons that are
Lenders on the date hereof or were Lenders at the time such agreements were
entered into.
4. All obligations of Holdings and any Subsidiary owed to The Bank of New York
or any affiliate of The Bank of New York in connection with cash management
services, including ACH lines, in an aggregate amount not to exceed $
5,500,000 (which amount shall include interest, fees and reasonable fees
and expenses of attorneys).
SCHEDULE 1.01B
SPECIFIED ASSETS
1. Property now or hereafter in or on the York Avenue Property other than (i)
all art work located at or in the York Avenue Property, which art work is owned,
leased or otherwise held, including on consignment, by any Grantor, (ii) all
instruments, documentation or records owned, leased or otherwise held by any
Grantor, including all instruments, documentation or records relating to any Art
Loans, (iii) all accounts receivable or other general intangibles that may be
deemed to be located at the York Avenue Property and are owned or otherwise held
by any Grantor, (iv) all inventory owned, leased or otherwise held by any
Grantor and (v) all fixtures, furniture, furnishings, equipment, supplies,
tools, machinery, security systems (solely relating to the business of any
Grantor as opposed to base building security systems, if any), computer software
or other personal property (such as trade fixtures in, on, around or affixed to
the York Avenue Property) owned or leased by any Grantor.
2. 50% membership interest in a wine joint venture (in formation) to be held
by Sotheby's, Inc.
3. 50% partnership interest in Acquavella Modern Art held by Sotheby's Nevada,
Inc.
4. 49.99% membership interest in a joint venture to be formed by Sotheby's
International Realty, Inc. with a major investment bank for a residential
mortgage program.
5. The rights under any other real property lease or software license
agreement to which any of the Borrowers or any Subsidiary is a party that would
require the consent of the counter-party thereto in connection with the grant of
security interests contemplated hereunder.
6. Issued and outstanding shares (and assets, if any) of Excluded
Subsidiaries.
SCHEDULE 1.01B
EXCLUDED SUBSIDIARIES
1. Sotheby's ▇▇▇▇▇ ▇▇▇▇▇▇ Stamp Auction Company, Inc.
2. Sotheby's Art Sales Corporation
3. Sotheby's International Realty of Colorado, Inc.
4. York Storage, Inc.
5. Sotheby's - ▇▇▇▇▇▇ Holdings, Inc.
6. Sotheby's Insurance Brokerage Services, Inc.
SCHEDULE 1.01D
EXISTING LETTERS OF CREDIT
Number Account Party Beneficiary Amount Maturity Date
------ ------------- ----------- ------ -------------
P202150 Sotheby's, Inc. Barclays Bank, PLC US $ 3,811,225 6/14/03
P011095 Sotheby's, Inc. Pickwick Plaza Associates US $ 75,000 9/30/03
P202069 Sotheby's Holdings, Inc. ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, LLC US $ 1,600,000 6/15/03