EXHIBIT 4.1
COPY AS EXECUTED, WITH EXHIBIT D
AND SHEARMAN & STERLING OPINION
AS SEPARATELY EXECUTED
U.S. $170,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 11, 1999
Among
SCHOLASTIC CORPORATION
and
▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
as Borrowers
and
THE INITIAL LENDERS NAMED HEREIN
as Initial Lenders
and
CITIBANK, N.A.
as Administrative Agent
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
as Arranger
and
THE CHASE MANHATTAN BANK
and
FLEET BANK, N.A.
as Syndication Agents
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms 1
SECTION 1.02. Computation of Time Periods 16
SECTION 1.03. Accounting Terms 16
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Credit Advances 16
SECTION 2.02. Making the Revolving Credit Advances 16
SECTION 2.03. The Competitive Bid Advances 18
SECTION 2.04. Fees 21
SECTION 2.05. Optional Termination or Reduction of the Commitments 21
SECTION 2.06. Repayment of Revolving Credit Advances
and Letter or Credit Advances 21
SECTION 2.07. Interest on Revolving Credit Advances and
Letter of Credit Advances 22
SECTION 2.08. Interest Rate Determination 22
SECTION 2.09. Optional Conversion of Revolving Credit Advances 23
SECTION 2.10. Prepayments of Revolving Credit Advances 24
SECTION 2.11. Increased Costs 24
SECTION 2.12. Illegality 25
SECTION 2.13. Payments and Computations 26
SECTION 2.14. Taxes 27
SECTION 2.15. Sharing of Payments, Etc. 28
SECTION 2.16. Letters of Credit 29
SECTION 2.17. Use of Proceeds 32
SECTION 2.18. Increase in the Aggregate Commitments 32
SECTION 2.19. Obligations and Communications of the Borrowers 34
SECTION 2.20. Subrogation and Contribution 34
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of
Sections 2.01, 2.03 and 2.16 35
SECTION 3.02. Conditions Precedent to Each Revolving Credit
Borrowing, each Issuance and Renewal of
Letters of Credit and each Increase Date 36
SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing 37
SECTION 3.04. Determinations Under Section 3.01 37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrowers 38
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ARTICLE V
COVENANTS OF THE BORROWERS
SECTION 5.01. Affirmative Covenants 40
SECTION 5.02. Negative Covenants 43
SECTION 5.03. Financial Covenants 45
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default 45
SECTION 6.02. Actions in Respect of the Letters of
Credit upon Event of Default 48
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action 48
SECTION 7.02. Agent's Reliance, Etc. 49
SECTION 7.03. Citibank and Affiliates 49
SECTION 7.04. Lender Credit Decision 49
SECTION 7.05. Indemnification 49
SECTION 7.06. Successor Agent 50
SECTION 7.07. Other Agents 51
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. 51
SECTION 8.02. Notices, Etc. 51
SECTION 8.03. No Waiver; Remedies 52
SECTION 8.04. Costs and Expenses 52
SECTION 8.05. Right of Set-off 53
SECTION 8.06. Binding Effect 53
SECTION 8.07. Assignments and Participations 53
SECTION 8.08. Confidentiality 56
SECTION 8.09. No Liability of the Issuing Banks 56
SECTION 8.10. Governing Law 56
SECTION 8.11. Execution in Counterparts 57
SECTION 8.12. Waiver of Jury Trial 57
ii
Schedules
Schedule I - List of Applicable Lending Offices
Schedule 4.01(i) - Subsidiaries
Schedule 5.02(a) - Existing Liens
Exhibits
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Competitive Bid Note
Exhibit B-1 - Form of Notice of Revolving Credit Borrowing
Exhibit B-2 - Form of Notice of Competitive Bid Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Opinion of Counsel for the Borrowers
Exhibit E - Form of Financial Covenants Compliance Certificate
iii
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 11, 1999
This AMENDED AND RESTATED CREDIT AGREEMENT is by and among
SCHOLASTIC CORPORATION, a Delaware corporation (the "Holding Company"), and
▇▇▇▇▇▇▇▇▇▇ ▇▇▇., a New York corporation (the "Operating Company"; the Holding
Company and the Operating Company are, collectively, the "Borrowers" and,
individually, each a "Borrower"), the banks, financial institutions and other
institutional lenders (the "Initial Lenders") listed on the signature pages
hereof, ▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC., as arranger, THE CHASE MANHATTAN BANK and
FLEET BANK, N.A., as syndication agents, and CITIBANK, N.A. ("Citibank"), as
administrative agent (the "Agent") for the Lenders (as hereinafter defined):
PRELIMINARY STATEMENTS:
(1) The Borrowers entered into an Amended and Restated Loan
Agreement dated as of April 11, 1995 (as amended to date, the "Original Loan
Agreement"), with the banks referred to therein and their respective assignees
(the "Original Banks") and the Agent. The Borrowers have requested that the
Original Banks enter into this Agreement to amend and restate the Original Loan
Agreement. The Original Banks have indicated their willingness to amend and
restate the Original Loan Agreement on the terms and conditions set forth in
this Agreement.
(2) The Borrowers have requested that the Lenders (as hereinafter
defined) make advances to them from time to time on the terms and conditions set
forth in this Agreement in an aggregate principal amount outstanding at any one
time not to exceed $170,000,000 (subject to increase pursuant to Section 2.18
hereof), the proceeds of which may be used for the general corporate purposes of
the Borrowers and to backstop letters of credit and commercial paper of the
Borrowers. The obligations of the Borrowers under the facility are to be joint
and several.
(3) Accordingly, the Borrowers, the Lenders and the Agent have
entered into this Agreement in order to provide for (among other things) the
making and repayment of the Advances and the documentation of the various
representations of and agreements with the Borrowers, all upon the terms and
provisions and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree to
amend and restate the Original Loan Agreement as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
1
"Advance" means a Revolving Credit Advance, a Competitive Bid
Advance or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.
"Agent's Account" means the account of the Agent maintained by the
Agent at Citibank at its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Account No. ▇▇▇▇▇▇▇▇, Attention: Bank Loan Syndications.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance and, in the case of a Competitive Bid Advance, the office of such
Lender notified by such Lender to the Agent as its Applicable Lending
Office with respect to such Competitive Bid Advance.
"Applicable Margin" means (a) for Base Rate Advances, 0% per annum
and (b) for Eurodollar Rate Advances, a percentage per annum determined by
reference to the Public Debt Rating in effect on such date as set forth
below:
=========================================================================
Public Debt Rating Applicable Margin for
S&P/▇▇▇▇▇'▇ Eurodollar Rate Advances
=========================================================================
▇▇▇▇▇ ▇
▇-/▇▇ or above 0.325%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ but at least BBB+/Baa1 0.375%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ but at least BBB/Baa2 0.475%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ but at least BBB-/Baa3 0.675%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ 0.900%
=========================================================================
"Applicable Percentage" means, as of any date a percentage per annum
determined by reference to the Public Debt Rating in effect on such date
as set forth below:
2
=========================================================================
Public Debt Rating Applicable
S&P/▇▇▇▇▇'▇ Percentage
=========================================================================
▇▇▇▇▇ ▇
▇-/▇▇ or above 0.100%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ but at least BBB+/Baa1 0.125%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ but at least BBB/Baa2 0.150%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ but at least BBB-/Baa3 0.200%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ 0.300%
=========================================================================
"Applicable Utilization Fee" means, as of any date on which the
aggregate principal amount of the Advances exceeds 33% of the Revolving
Credit Facility, a percentage per annum determined by reference to the
Public Debt Rating in effect on such date as set forth below:
=========================================================================
Public Debt Rating Applicable
S&P/▇▇▇▇▇'▇ Utilization Fee
=========================================================================
▇▇▇▇▇ ▇
▇-/▇▇ or above 0.050%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ but at least BBB+/Baa1 0.075%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ but at least BBB/Baa2 0.075%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ but at least BBB-/Baa3 0.125%
=========================================================================
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ 0.150%
=========================================================================
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Agent, in substantially the form of Exhibit C hereto.
"Assuming Lender" has the meaning specified in Section 2.18(d).
"Assumption Agreement" has the meaning specified in Section
2.18(d)(ii).
"Available Amount" of any Letter of Credit means, at any time, the
maximum amount available to be drawn under such Letter of Credit at such
time (assuming compliance at such time with all conditions to drawing).
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is
no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1%
per annum, plus (ii) the rate obtained by dividing (A) the latest
three-week moving average of secondary market morning offering rates
in the United States for three-month certificates of deposit of
major United States money market banks, such three-week moving
average (adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a Business
Day, on the next succeeding Business Day) for the three-week period
ending on the previous Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of quotations for such rates
received by Citibank from three New York certificate of deposit
dealers of recognized standing selected by Citibank, by (B) a
percentage equal to 100% minus the average of the daily percentages
specified during such three-week period by the Board of Governors of
the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for
Citibank with respect to liabilities consisting of or including
(among other liabilities) three-month U.S. dollar non-personal time
deposits in the United States, plus (iii) the average during such
three-week period of the annual assessment rates estimated by
Citibank for determining the then current annual assessment payable
by Citibank to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. dollar deposits of Citibank in the
United States; and
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means a Revolving Credit Advance that bears
interest as provided in Section 2.07(a)(i).
"Borrowing" means a Revolving Credit Borrowing or a Competitive Bid
Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances or LIBO
Rate Advances, on which dealings are carried on in the London interbank
market.
"Commitment" means a Revolving Credit Commitment or a Letter of
Credit Commitment.
3
"Commitment Date" has the meaning specified in Section 2.18(b).
"Commitment Increase" has the meaning specified in Section 2.18(a).
"Competitive Bid Advance" means an advance by a Lender to a Borrower
as part of a Competitive Bid Borrowing resulting from the competitive
bidding procedure described in Section 2.03 and refers to a Fixed Rate
Advance or a LIBO Rate Advance.
"Competitive Bid Borrowing" means a borrowing consisting of
simultaneous Competitive Bid Advances from each of the Lenders whose offer
to make one or more Competitive Bid Advances as part of such borrowing has
been accepted under the competitive bidding procedure described in Section
2.03.
"Competitive Bid Note" means a promissory note of a Borrower payable
to the order of any Lender, in substantially the form of Exhibit A-2
hereto, evidencing the indebtedness of such Borrower to such Lender
resulting from a Competitive Bid Advance made by such Lender.
"Confidential Information" means information that the Borrowers
furnish to the Agent or any Lender in a writing or orally designated as
confidential, but does not include any such information that is or becomes
generally available to the public or that is or becomes available to the
Agent or such Lender from a source other than a Borrower not known to such
Lender to be bound by a confidentiality obligation.
"Consolidated" refers to the consolidation of accounts in accordance
with GAAP.
"Consolidated Debt Ratio" shall mean, at any time, the ratio of (a)
Total Consolidated Debt to (b) the sum of: (i) consolidated short-term
debt for borrowed money of the Borrowers, (ii) consolidated long-term debt
of the Borrowers, (iii) the aggregate value of stockholders' equity (as
set forth in the most current consolidated balance sheet of the Holding
Company), and (iv) the aggregate value of all preferred stock (as set
forth in the most current consolidated balance sheet of the Holding
Company).
"Consolidated Interest Coverage Ratio" shall mean, for any period of
the most recent four consecutive fiscal quarters of the Borrowers and
their Subsidiaries ending on or before any date of determination, the
ratio of (a) the sum of (i) net income (or net loss), (ii) any
extraordinary non-cash losses, (iii) income tax expense, (iv) depreciation
expense, (v) amortization expense (but excluding any amortization of
prepublication costs and expenses) and (vi) gross interest expense, less
(vii) any extraordinary non-cash gains, to (b) gross interest expense, all
as recorded for such period.
"Convert", "Conversion" and "Converted" each refers to a conversion
of Revolving Credit Advances of one Type into Revolving Credit Advances of
the other Type pursuant to Section 2.08 or 2.09.
"Debt" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other
than trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all obligations of such
Person as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases, (e) all obligations, contingent or
otherwise, of such Person in respect of acceptances, letters of credit or
similar extensions of credit (other than
4
obligations in respect of letters of credit issued to provide for the
payment of goods or services, to backstop worker's compensation
obligations or as rental security deposits, in each case incurred in the
ordinary course of business), (f) all Debt of others referred to in
clauses (a) through (e) above or clause (g) below guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly
or indirectly by such Person through an agreement (1) to pay or purchase
such Debt or to advance or supply funds for the payment or purchase of
such Debt, (2) to purchase, sell or lease (as lessee or lessor) property,
or to purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such Debt or to assure the holder of such Debt
against loss, (3) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered) or (4) otherwise to assure a creditor against loss, and (h) all
Debt referred to in clauses (a) through (f) above secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to
be secured by) any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Debt.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Default Termination Notice" has the meaning specified in Section
2.16(a).
"Documentary Letter of Credit" means any Letter of Credit that is
issued under the Letter of Credit Facility for the benefit of a supplier
of inventory to any Borrower or any of its Subsidiaries to effect payment
for such inventory, the conditions to drawing under which include the
presentation to the Issuing Bank that issued such Letter of Credit of
negotiable bills of lading, invoices and related documents sufficient, in
the judgment of such Issuing Bank, to create a valid and perfected lien on
or security interest in such inventory, bills of lading, invoices and
related documents in favor of such Issuing Bank.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assumption Agreement or the
Assignment and Acceptance pursuant to which it became a Lender, or such
other office of such Lender as such Lender may from time to time specify
to the Borrowers and the Agent.
"Effective Date" has the meaning specified in Section 3.01.
"Eligible Assignee" means (a) with respect to the Revolving Credit
Facility, (i) a Lender; (ii) a United States Affiliate of a Lender; (iii)
a commercial bank organized under the laws of the United States, or any
State thereof, and having total assets in excess of $1,000,000,000; (iv) a
savings and loan association or savings bank organized under the laws of
the United States, or any State thereof, and having total assets in excess
of $1,000,000,000; (v) a commercial bank organized under the laws of any
other country that is a member of the Organization for Economic
Cooperation and Development or has concluded special lending arrangements
with the International Monetary Fund associated with its General
Arrangements to Borrow or of the Cayman Islands, or a political
subdivision of any such country, and having total assets in excess of
$1,000,000,000, so long as such bank is acting through a branch or agency
located in the United States, in the country in which it is organized or
another country that is described in this clause (v); (vi) the central
bank of any country that is a member of the Organization for Economic
Cooperation and Development; and (vii) a finance company, insurance
company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing
or otherwise investing in commercial loans in the ordinary course of its
business and having total assets in excess of $500,000,000; and (b) with
respect to the
5
Letter of Credit Facility, any Person approved by the Agent and the
Borrowers, such approval not to be unreasonably withheld or delayed;
provided, however, that neither Borrower nor an Affiliate of a Borrower
shall qualify as an Eligible Assignee.
"Environmental Claim" means (a) any unfulfilled responsibility or
liability or unlawful act or omission under any Environmental Law; (b) any
tortious act or omission or breach of contract pertaining to any
Environmental Substance; or (c) any other violation or claim under any
Environmental Law or in respect of any Environmental Substance.
"Environmental Law" and "Environmental Laws" respectively mean any
one or more of the applicable laws pertaining to: (a) any emission,
discharge, release, runoff, disposal or presence in the environment of any
Environmental Substance; (b) any cleanup, containment, manufacturing,
treatment, handling, transportation, storage or sale of or other activity
pertaining to any Environmental Substance; or (c) any other peril to
public or occupational health or safety or to the environment that may be
posed by an Environmental Substance.
"Environmental Substance" means any toxic substance, hazardous
material, contaminant, waste, pollutant or other similar product or
substance that may pose a threat to public or occupational health or
safety or to the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the Borrowers' controlled group, or under common
control with the Borrowers, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been
waived by the PBGC, or (ii) the requirements of subsection (1) of Section
4043(b) of ERISA (without regard to subsection (2) of such Section) are
met with a contributing sponsor, as defined in Section 4001(a)(13) of
ERISA, of a Plan, and an event described in paragraph (9), (10), (11),
(12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur
with respect to such Plan within the following 30 days; (b) the
application for a minimum funding waiver with respect to a Plan; (c) the
provision by the administrator of any Plan of a notice of intent to
terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section
4041(e) of ERISA); (d) the cessation of operations at a facility of either
Borrower or any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA; (e) the withdrawal by either or either Borrower or any
ERISA Affiliate from a Multiple Employer Plan during a plan year for which
it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(f) the conditions for the imposition of a lien under Section 302(f) of
ERISA shall have been met with respect to any Plan; (g) the adoption of an
amendment to a Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of
proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA
that constitutes grounds for the termination of, or the appointment of a
trustee to administer, a Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
6
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assumption Agreement or
the Assignment and Acceptance pursuant to which it became a Lender (or, if
no such office is specified, its Domestic Lending Office), or such other
office of such Lender as such Lender may from time to time specify to the
Borrowers and the Agent.
"Eurodollar Rate" means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same Revolving Credit Borrowing, an
interest rate per annum equal to the rate per annum obtained by dividing
(a) the rate per annum (rounded upward to the nearest whole multiple of
1/100 of 1% per annum) appearing on Dow ▇▇▇▇▇ Markets Telerate Page 3750
(or any successor page) as the London interbank offered rate for deposits
in U.S. dollars at approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable
to such Interest Period or, if for any reason such rate is not available,
the rate per annum at which deposits in U.S. dollars are offered by the
principal office of Citibank in London, England to prime banks in the
London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially
equal to Citibank's Eurodollar Rate Advance comprising part of such
Revolving Credit Borrowing to be outstanding during such Interest Period
and for a period equal to such Interest Period by (b) a percentage equal
to 100% minus the Eurodollar Rate Reserve Percentage for such Interest
Period. If the Dow ▇▇▇▇▇ Markets Page 3750 (or any successor page) is
unavailable, the Eurodollar Rate for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Revolving Credit
Borrowing shall be determined by the Agent on the basis of the applicable
rate furnished to and received by the Agent from Citibank two Business
Days before the first day of such Interest Period, subject, however, to
the provisions of Section 2.08.
"Eurodollar Rate Advance" means a Revolving Credit Advance that
bears interest as provided in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for all
Eurodollar Rate Advances or LIBO Rate Advances comprising part of the same
Borrowing means the reserve percentage applicable two Business Days before
the first day of such Interest Period under regulations issued from time
to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate
on Eurodollar Rate Advances or LIBO Rate Advances is determined) having a
term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Facility" means the Revolving Credit Facility or the Letter of
Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by
the Agent from three Federal funds brokers of recognized standing selected
by it.
"Fixed Rate Advances" has the meaning specified in Section
2.03(a)(i).
7
"GAAP" has the meaning specified in Section 1.03.
"Increase Date" has the meaning specified in Section 2.18(a).
"Increasing Lender" has the meaning specified in Section 2.18(b).
"Information Memorandum" means the information memorandum dated July
16, 1999 used by the Agent in connection with the syndication of the
Commitments.
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Revolving Credit Borrowing and each LIBO Rate Advance
comprising part of the same Competitive Bid Borrowing, the period
commencing on the date of such Eurodollar Rate Advance or LIBO Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance and ending on the last day of the period selected
by the applicable Borrower pursuant to the provisions below and,
thereafter, with respect to Eurodollar Rate Advances, each subsequent
period commencing on the last day of the immediately preceding Interest
Period and ending on the last day of the period selected by such Borrower
pursuant to the provisions below. The duration of each such Interest
Period shall be one, two, three or six months, as the applicable Borrower
may, upon notice received by the Agent not later than 11:00 A.M. (New York
City time) on the second Business Day prior to the first day of such
Interest Period, select; provided, however, that:
(i) the Borrowers may not select any Interest Period that ends
after the Termination Date;
(ii) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Revolving
Credit Borrowing or for LIBO Rate Advances comprising part of the
same Competitive Bid Borrowing shall be of the same duration;
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next
succeeding Business Day, provided, however, that, if such extension
would cause the last day of such Interest Period to occur in the
next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day; and
(iv) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Issuing Bank" means any Lender that has a Letter of Credit
Commitment set forth opposite its name on Schedule I hereto, any other
Lender approved as an Issuing Bank by the Agent and the Borrowers (such
approval not to be unreasonably withheld or delayed) and each Eligible
Assignee to which a Letter of Credit Commitment hereunder has been
assigned pursuant to Section 8.07 so long as each such Lender or Eligible
Assignee expressly agrees to perform in
8
accordance with their terms all of the obligations that by the terms of
this Agreement are required to be performed by it as an Issuing Bank and
notifies the Agent of its Applicable Lending Office and the amount of its
Letter of Credit Commitment (which information shall be recorded by the
Agent in the Register).
"L/C Related Documents" has the meaning specified in Section
2.16(e).
"Lenders" means the Initial Lenders, each Assuming Lender that shall
become a party hereto pursuant to Section 2.18 and each Person that shall
become a party hereto pursuant to Section 8.07.
"Letter of Credit" has the meaning specified in Section 2.16(a).
"Letter of Credit Advance" means an advance made by any Issuing Bank
or any Lender pursuant to Section 2.16(c).
"Letter of Credit Agreement" has the meaning specified in Section
2.16(b)(i).
"Letter of Credit Collateral" has the meaning specified in Section
6.02(b).
"Letter of Credit Collateral Account" means a non-interest bearing
cash collateral account to be established and maintained by the Agent,
over which the Agent shall have sole dominion and control, upon terms as
may be satisfactory to the Agent.
"Letter of Credit Commitment" means, with respect to any Issuing
Bank at any time, the amount set forth opposite such Issuing Bank's name
on Schedule I hereto under the caption "Letter of Credit Commitment" or,
if such Issuing Bank has entered into one or more Assignments and
Acceptances or if a Lender has otherwise become an Issuing Bank, set forth
for such Issuing Bank in the Register maintained by the Agent pursuant to
Section 8.07(f) as such Issuing Bank's "Letter of Credit Commitment", as
such amount may be reduced at or prior to such time pursuant to Section
2.05.
"Letter of Credit Facility" means, at any time, an amount equal to
the lesser of (a) the aggregate amount of the Issuing Banks' Letter of
Credit Commitments and (b) $10,000,000, as such amount may be reduced at
or prior to such time pursuant to Section 2.05.
"Letter of Credit Obligations" means, at any time, the sum of (a)
the maximum aggregate amount then available to be drawn under the Letters
of Credit outstanding at such time (the determination of such maximum
amount to assume the occurrence of, and compliance with, all conditions
for drawing referred to therein) plus (b) the aggregate amount of the
Borrowers' Obligations then outstanding under the Loan Documents in
respect of the Letters of Credit, including all Advances resulting from
drawings under Letters of Credit and all fees and expenses in respect of
the Letters of Credit payable pursuant to Section 2.16(f).
"LIBO Rate" means, for any Interest Period for all LIBO Rate
Advances comprising part of the same Competitive Bid Borrowing, an
interest rate per annum equal to the rate per annum obtained by dividing
(a) the rate per annum (rounded upward to the nearest whole multiple of
1/100 of 1% per annum) appearing on Dow ▇▇▇▇▇ Markets Telerate Page 3750
(or any successor page) as the London interbank offered rate for deposits
in U.S. dollars at approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable
to such Interest Period or, if for any reason such rate is not available,
the rate per
9
annum at which deposits in U.S. dollars offered by the principal office of
Citibank in London, England to prime banks in the London interbank market
at 11:00 A.M. (London time) two Business Days before the first day of such
Interest Period in an amount substantially equal to the amount that would
be Citibank's ratable share of such Borrowing if such Borrowing were to be
a Revolving Credit Borrowing to be outstanding during such Interest Period
and for a period equal to such Interest Period by (b) a percentage equal
to 100% minus the Eurodollar Rate Reserve Percentage for such Interest
Period. If the Dow ▇▇▇▇▇ Markets Telerate Page 3750 (or any successor
page) is unavailable, the LIBO Rate for any Interest Period for each LIBO
Rate Advance comprising part of the same Competitive Bid Borrowing shall
be determined by the Agent on the basis of the applicable rate furnished
to and received by the Agent from Citibank two Business Days before the
first day of such Interest Period, subject, however, to the provisions of
Section 2.08.
"LIBO Rate Advances" means a Competitive Bid Advance bearing
interest based on the LIBO Rate.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"Loan Documents" means this Agreement, the Notes and each Letter of
Credit Agreement, as each may be amended, supplemented or otherwise
modified from time to time.
"Material Adverse Change" means any material adverse change in the
assets, business, operations, property or condition (financial or
otherwise) of the Borrowers and their Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
assets, business, operations, property or condition (financial or
otherwise) of the Borrowers and their Subsidiaries taken as a whole or (b)
the ability of the Borrowers to perform their obligations under the Loan
Documents.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which a Borrower or any ERISA Affiliate 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.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of a
Borrower or any ERISA Affiliate and at least one Person other than such
Borrower and the ERISA Affiliates or (b) was so maintained and in respect
of which such Borrower or any ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to
be terminated.
"Note" means a Revolving Credit Note or a Competitive Bid Note.
"Notice of Competitive Bid Borrowing" has the meaning specified in
Section 2.03(a).
"Notice of Revolving Credit Borrowing" has the meaning specified in
Section 2.02(a).
"Notice of Issuance" has the meaning specified in Section
2.16(b)(i).
10
"Notice of Renewal" has the meaning specified in Section 2.16(a).
"Notice of Termination" has the meaning specified in Section
2.16(a).
"Original Banks" has the meaning specified in the Preliminary
Statements.
"Original Loan Agreement" has the meaning specified in the
Preliminary Statements.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Liens" means each of the following: (a) Liens for taxes,
assessments and governmental charges or levies to the extent not required
to be paid under Section 5.01(e) hereof; (b) Liens imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's Liens and
other similar Liens arising in the ordinary course of business securing
obligations that are not overdue for a period of more than 30 days or are
being contested by good faith by appropriate proceedings and as to which
appropriate reserves are being maintained; (c) pledges or deposits to
secure obligations under workers' compensation laws or similar legislation
or to secure public or statutory obligations; and (d) easements, rights of
way and other encumbrances on title to real property that do not render
title to the property encumbered thereby unmarketable or materially
adversely affect the use of such property for its present purposes.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pro Rata Share" of any amount means, with respect to any Lender at
any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender's Revolving Credit Commitment at such
time and the denominator of which is the Revolving Credit Facility at such
time.
"Public Debt Rating" means, as of any date, the lowest rating that
has been most recently announced by either S&P or Moody's, as the case may
be, for any class of non-credit enhanced long-term senior unsecured debt
issued by the Holding Company. For purposes of the foregoing, (a) if only
one of S&P and Moody's shall have in effect a Public Debt Rating, the
Applicable Margin, the Applicable Percentage and Applicable Utilization
Fee shall be determined by reference to the available rating; (b) if
neither S&P nor Moody's shall have in effect a Public Debt Rating, the
Applicable Margin, the Applicable Percentage and Applicable Utilization
Fee will be set in accordance with Level 5 under the definition of
"Applicable Margin", "Applicable Percentage" or "Applicable Utilization
Fee", as the case may be; (c) if the ratings established by S&P and
Moody's shall fall within different levels, the Applicable Margin, the
Applicable Percentage and Applicable Utilization Fee shall be based upon
the higher rating, unless the lower of such ratings is more than one level
below the higher of such ratings, in which case the applicable level shall
be one level higher than the lower of such ratings; (d) if any rating
established by S&P or Moody's shall be changed, such change shall be
effective as of the date on which such change is first announced publicly
by the rating agency making such change; and (e) if S&P or Moody's shall
change the basis on which ratings are established, each reference to the
Public Debt Rating announced by S&P or Moody's, as the case may be, shall
refer to the then equivalent rating by S&P or Moody's, as the case may be.
11
"Register" has the meaning specified in Section 8.07(f).
"Required Lenders" means at any time Lenders owed or holding at
least a majority in interest of the sum of (a) the then aggregate unpaid
principal amount of the Revolving Credit Advances and Letter of Credit
Advances owing to Lenders at such time, (b) the aggregate Available Amount
of all Letters of Credit outstanding at such time and (c) the aggregate
Unused Revolving Credit Commitments at such time.
"Revolving Credit Advance" means an advance by a Lender to a
Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate
Advance or a Eurodollar Rate Advance (each of which shall be a "Type" of
Revolving Credit Advance).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by each of
the Lenders pursuant to Section 2.01.
"Revolving Credit Commitment" means, with respect to any Lender at
any time (a) the amount set forth opposite such Lender's name on Schedule
I hereto under the caption "Revolving Credit Commitment" (b) if such
Lender has become a Lender hereunder pursuant to an Assumption Agreement,
the amount set forth in such Assumption Agreement or (c) if such Lender
has entered into any Assignment and Acceptance, the amount set forth for
such Lender in the Register maintained by the Agent pursuant to Section
8.07(f), as such amount may be reduced pursuant to Section 2.05 or
increased pursuant to Section 2.18.
"Revolving Credit Facility" means, at any time, the aggregate amount
of the Lenders' Revolving Credit Commitments at such time.
"Revolving Credit Note" means a promissory note of a Borrower
payable to the order of any Lender, delivered pursuant to a request made
under Section 2.19 in substantially the form of Exhibit A-1 hereto,
evidencing the aggregate indebtedness of such Borrower to such Lender
resulting from the Revolving Credit Advances made by such Lender.
"▇▇▇▇▇▇▇▇ Family" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ R ▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the
spouses and descendants of any of them, and any trust or estate whose
legal representatives (or in the case of a Person with more than one legal
representative, at least half of whose legal representatives) consist of
one or more of the foregoing individuals, spouses and descendants; and the
trusts respectively created under the will of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the
will of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ so long as at least half of their respective
trustees continue to consist of one or more of the foregoing individuals,
spouses and descendants.
"S&P" means Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.
"Significant Subsidiary" shall mean any Subsidiary that owns 10% or
more of the total consolidated assets of the Holding Company and its
subsidiaries or contributes 10% or more of their total consolidated
revenue from operations; and in any event shall include Scholastic Canada
Ltd. and Scholastic Australia Pty. Ltd. Each direct and indirect parent
(other than the Holding Company or the Operating Company) of a Significant
Subsidiary also shall be deemed a Significant Subsidiary.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of a
Borrower or any ERISA Affiliate and no Person other than the Borrowers and
the ERISA Affiliates or (b) was so maintained and in respect
12
of which a Borrower or any ERISA Affiliate could have liability under
Section 4069 of ERISA in the event such plan has been or were to be
terminated.
"Standby Letter of Credit" means any Letter of Credit issued under
the Letter of Credit Facility, other than a Documentary Letter of Credit.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of
such corporation (irrespective of whether at the time capital stock of any
other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency), (b) the interest in the
capital or profits of such limited liability company, partnership or joint
venture or (c) the beneficial interest in such trust or estate is at the
time directly or indirectly owned or controlled by such Person, by such
Person and one or more of its other Subsidiaries or by one or more of such
Person's other Subsidiaries.
"Termination Date" means the earlier of August 11, 2004 and the date
of termination in whole of the Revolving Credit Commitments and the Letter
of Credit Commitments pursuant to Section 2.05 or 6.01.
"Total Consolidated Debt" shall mean the consolidated Debt of the
Borrowers and their Subsidiaries.
"Unused Revolving Credit Commitment" means, with respect to any
Lender at any time, (a) such Lender's Revolving Credit Commitment at such
time minus (b) the sum of (i) the aggregate principal amount of all
Revolving Credit Advances and Letter of Credit Advances made by such
Lender, in each case in its capacity as a Lender, and outstanding at such
time, and (ii) such Lender's Pro Rata Share of (A) the aggregate Available
Amount of all Letters of Credit outstanding at such time, (B) the
aggregate amount of the Competitive Bid Advances outstanding at such time,
and (C) to the extent not included in clause (b)(i) of this definition,
the aggregate principal amount of all Letter of Credit Advances made by
the Issuing Banks pursuant to Section 2.16(c) and outstanding at such
time.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or persons performing similar
functions) of such Person, even if the right so to vote has been suspended
by the happening of such a contingency.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(f) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
13
SECTION 2.01. The Revolving Credit Advances. Each Lender severally
agrees, on the terms and conditions hereinafter set forth, to make Revolving
Credit Advances to any Borrower from time to time on any Business Day during the
period from the Effective Date until the Termination Date in an amount for each
such Advance not to exceed such Lender's Unused Revolving Credit Commitment at
such time. Each Revolving Credit Borrowing shall be in an aggregate amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof in the case of
Base Rate Advances, or shall be in an aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof in the case of Eurodollar Rate
Advances, and shall consist of Revolving Credit Advances of the same Type made
on the same day by the Lenders ratably according to their respective
Commitments. Within the limits of each Lender's Commitment, the Borrowers may
borrow under this Section 2.01, prepay pursuant to Section 2.10 and reborrow
under this Section 2.01.
SECTION 2.02. Making the Revolving Credit Advances. (a) Each
Revolving Credit Borrowing shall be made on notice, given not later than (x)
11:00 A.M. (New York City time) on the second Business Day prior to the date of
the proposed Revolving Credit Borrowing in the case of a Revolving Credit
Borrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M. (New York
City time) on the date of the proposed Revolving Credit Borrowing in the case of
a Revolving Credit Borrowing consisting of Base Rate Advances, by the applicable
Borrower to the Agent, which shall give to each Lender prompt notice thereof by
telecopier or telex. Each such notice of a Revolving Credit Borrowing (a "Notice
of Revolving Credit Borrowing") shall be by telephone, confirmed immediately in
writing, or telecopier or telex in substantially the form of Exhibit B-1 hereto,
specifying therein the requested (i) date of such Revolving Credit Borrowing,
(ii) Type of Advances comprising such Revolving Credit Borrowing, (iii)
aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a
Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Revolving Credit Advance. Each Lender shall,
before 2:00 P.M. (New York City time) on the date of such Revolving Credit
Borrowing make available for the account of its Applicable Lending Office to the
Agent at the Agent's Account, in same day funds, such Lender's ratable portion
of such Revolving Credit Borrowing. After the Agent's receipt of such funds and
upon fulfillment of the applicable conditions set forth in Article III, the
Agent will make such funds available to the applicable Borrower at the Agent's
address referred to in Section 8.02; provided, however, that, in the case of any
such Borrowing, the Agent shall first make a portion of such funds equal to the
aggregate principal amount of any Letter of Credit Advances made by any Issuing
Bank and by any other Lender and outstanding on the date of such Revolving
Credit Borrowing, plus interest accrued and unpaid thereon to and as of such
date, available to such Issuing Bank and such other Lenders for repayment of
such Letter of Credit Advances.
(b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrowers may not select Eurodollar Rate Advances for
any Revolving Credit Borrowing if the aggregate amount of such Revolving Credit
Borrowing is less than $5,000,000 or if the obligation of the Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.08 or
2.12 and (ii) the Eurodollar Rate Advances may not be outstanding as part of
more than twelve separate Revolving Credit Borrowings.
(c) Each Notice of Revolving Credit Borrowing shall be irrevocable
and binding on the applicable Borrower. In the case of any Revolving Credit
Borrowing that the related Notice of Revolving Credit Borrowing specifies is to
be comprised of Eurodollar Rate Advances, the applicable Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such Lender
as a result of any failure to fulfill on or before the date specified in such
Notice of Revolving Credit Borrowing for such Revolving Credit Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss (including loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Revolving Credit Advance to be made by such Lender as
part of such Revolving Credit Borrowing when such Revolving Credit Advance, as a
result of such failure, is not made on such date.
14
(d) Unless the Agent shall have received notice from a Lender prior
to the date of any Revolving Credit Borrowing that such Lender will not make
available to the Agent such Lender's ratable portion of such Revolving Credit
Borrowing, the Agent may assume that such Lender has made such portion available
to the Agent on the date of such Revolving Credit Borrowing in accordance with
subsection (a) of this Section 2.02 and the Agent may, in reliance upon such
assumption, make available to the applicable Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Agent, such Lender and the applicable
Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to such Borrower until the date such amount is
repaid to the Agent, at (i) in the case of such Borrower, the interest rate
applicable at the time to Revolving Credit Advances comprising such Revolving
Credit Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If
such Lender shall repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Lender's Revolving Credit Advance as part of such
Revolving Credit Borrowing for purposes of this Agreement.
(e) The failure of any Lender to make the Revolving Credit Advance
to be made by it as part of any Revolving Credit Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Revolving Credit
Advance on the date of such Revolving Credit Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Revolving Credit
Advance to be made by such other Lender on the date of any Revolving Credit
Borrowing.
SECTION 2.03. The Competitive Bid Advances. (a) Each Lender
severally agrees that either Borrower may make Competitive Bid Borrowings under
this Section 2.03 from time to time on any Business Day during the period from
the date hereof until the date occurring 30 days prior to the Termination Date
in the manner set forth below; provided that such Competitive Bid Borrowing
shall not exceed the aggregate Unused Revolving Credit Commitments of the
Lenders in effect immediately prior to giving effect to such Competitive Bid
Borrowing.
(i) Either Borrower may request a Competitive Bid Borrowing under
this Section 2.03 by delivering to the Agent, by telecopier or telex, a
notice of a Competitive Bid Borrowing (a "Notice of Competitive Bid
Borrowing"), in substantially the form of Exhibit B-2 hereto, specifying
therein the requested (v) date of such proposed Competitive Bid Borrowing,
(w) aggregate amount of such proposed Competitive Bid Borrowing, (x) in
the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances,
Interest Period, or in the case of a Competitive Bid Borrowing consisting
of Fixed Rate Advances, maturity date for repayment of each Fixed Rate
Advance to be made as part of such Competitive Bid Borrowing (which
maturity date may not be earlier than the date occurring 7 days after the
date of such Competitive Bid Borrowing or later than Termination Date),
(y) interest payment date or dates relating thereto, and (z) other terms
(if any) to be applicable to such Competitive Bid Borrowing, not later
than 10:00 A.M. (New York City time) (A) at least one Business Day prior
to the date of the proposed Competitive Bid Borrowing, if such Borrower
shall specify in the Notice of Competitive Bid Borrowing that the rates of
interest to be offered by the Lenders shall be fixed rates per annum (the
Advances comprising any such Competitive Bid Borrowing being referred to
herein as "Fixed Rate Advances") and (B) at least four Business Days prior
to the date of the proposed Competitive Bid Borrowing, if such Borrower
shall instead specify in the Notice of Competitive Bid Borrowing that the
Advances comprising such Competitive Bid Borrowing shall be LIBO Rate
Advances. Each Notice of Competitive Bid Borrowing shall be irrevocable
and binding on such Borrower. The Agent shall in turn promptly notify each
Lender of each request for a Competitive Bid Borrowing received by it from
such Borrower by sending such Lender a copy of the related Notice of
Competitive Bid Borrowing.
15
(ii) Each Lender may, if, in its sole discretion, it elects to do
so, irrevocably offer to make one or more Competitive Bid Advances to such
Borrower as part of such proposed Competitive Bid Borrowing at a rate or
rates of interest specified by such Lender in its sole discretion, by
notifying the Agent (which shall give prompt notice thereof to such
Borrower), (A) before 9:30 A.M. (New York City time) on the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of Fixed Rate Advances and (B) before 10:00 A.M. (New
York City time) three Business Days before the date of such proposed
Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing
consisting of LIBO Rate Advances of the minimum amount and maximum amount
of each Competitive Bid Advance which such Lender would be willing to make
as part of such proposed Competitive Bid Borrowing (which amounts of such
proposed Competitive Bid may, subject to the proviso to the first sentence
of this Section 2.03(a), exceed such Lender's Commitment, if any), the
rate or rates of interest therefor and such Lender's Applicable Lending
Office with respect to such Competitive Bid Advance; provided that if the
Agent in its capacity as a Lender shall, in its sole discretion, elect to
make any such offer, it shall notify such Borrower of such offer at least
30 minutes before the time and on the date on which notice of such
election is to be given to the Agent, by the other Lenders. If any Lender
shall elect not to make such an offer, such Lender shall so notify the
Agent before 10:00 A.M. (New York City time), and such Lender shall not be
obligated to, and shall not, make any Competitive Bid Advance as part of
such Competitive Bid Borrowing; provided that the failure by any Lender to
give such notice shall not cause such Lender to be obligated to make any
Competitive Bid Advance as part of such proposed Competitive Bid
Borrowing.
(iii) Such Borrower shall, in turn, (A) before 10:30 A.M. (New York
City time) on the date of such proposed Competitive Bid Borrowing, in the
case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and
(B) before 11:00 A.M. (New York City time) three Business Days before the
date of such proposed Competitive Bid Borrowing, in the case of a
Competitive Bid Borrowing consisting of LIBO Rate Advances, either:
(x) cancel such Competitive Bid Borrowing by giving the Agent
notice to that effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion, by
giving notice to the Agent of the amount of each Competitive Bid
Advance (which amount shall be equal to or greater than the minimum
amount, and equal to or less than the maximum amount, notified to
such Borrower by the Agent on behalf of such Lender for such
Competitive Bid Advance pursuant to paragraph (ii) above) to be made
by each Lender as part of such Competitive Bid Borrowing, and reject
any remaining offers made by Lenders pursuant to paragraph (ii)
above by giving the Agent notice to that effect. Such Borrower shall
accept the offers made by any Lender or Lenders to make Competitive
Bid Advances in order of the lowest to the highest rates of interest
offered by such Lenders. If two or more Lenders have offered the
same interest rate, the amount to be borrowed at such interest rate
will be allocated among such Lenders in proportion to the amount
that each such Lender offered at such interest rate.
(iv) If such Borrower notifies the Agent that such Competitive Bid
Borrowing is cancelled pursuant to paragraph (iii)(x) above, the Agent
shall give prompt notice thereof to the Lenders and such Competitive Bid
Borrowing shall not be made.
(v) If such Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall in
turn promptly notify (A) each
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Lender that has made an offer as described in paragraph (ii) above, of the
date and aggregate amount of such Competitive Bid Borrowing and whether or
not any offer or offers made by such Lender pursuant to paragraph (ii)
above have been accepted by such Borrower, (B) each Lender that is to make
a Competitive Bid Advance as part of such Competitive Bid Borrowing, of
the amount of each Competitive Bid Advance to be made by such Lender as
part of such Competitive Bid Borrowing, and (C) each Lender that is to
make a Competitive Bid Advance as part of such Competitive Bid Borrowing,
upon receipt, that the Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article III. Each Lender
that is to make a Competitive Bid Advance as part of such Competitive Bid
Borrowing shall, before 11:00 A.M. (New York City time) on the date of
such Competitive Bid Borrowing specified in the notice received from the
Agent pursuant to clause (A) of the preceding sentence or any later time
when such Lender shall have received notice from the Agent pursuant to
clause (C) of the preceding sentence, make available for the account of
its Applicable Lending Office to the Agent at its address referred to in
Section 8.02, in same day funds, such Lender's portion of such Competitive
Bid Borrowing. Upon fulfillment of the applicable conditions set forth in
Article III and after receipt by the Agent of such funds, the Agent will
make such funds available to such Borrower at the location specified by
such Borrower in its Notice of Competitive Bid Borrowing. Promptly after
each Competitive Bid Borrowing the Agent will notify each Lender of the
amount of the Competitive Bid Borrowing and the dates upon which such
Competitive Bid Borrowing commenced and will terminate.
(vi) If such Borrower notifies the Agent that it accepts one or more
of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y)
above, such notice of acceptance shall be irrevocable and binding on such
Borrower. Such Borrower shall indemnify each Lender against any loss, cost
or expense incurred by such Lender as a result of any failure to fulfill
on or before the date specified in the related Notice of Competitive Bid
Borrowing for such Competitive Bid Borrowing the applicable conditions set
forth in Article III, including, without limitation, any loss (including
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Competitive Bid Advance to be made by such Lender as
part of such Competitive Bid Borrowing when such Competitive Bid Advance,
as a result of such failure, is not made on such date.
(b) Each Competitive Bid Borrowing shall be in an aggregate amount
of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of each Competitive Bid Borrowing, the Borrower making such
Competitive Bid Borrowing shall be in compliance with the limitation set forth
in the proviso to the first sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this
Section 2.03, any Borrower may from time to time borrow under this Section 2.03,
repay or prepay pursuant to subsection (d) below, and reborrow under this
Section 2.03, provided that a Competitive Bid Borrowing shall not be made on
more than one day within any period of three Business Days.
(d) Any Borrower making a Competitive Bid Borrowing shall repay to
the Agent for the account of each Lender that has made a Competitive Bid
Advance, on the maturity date of each Competitive Bid Advance (such maturity
date being that specified by such Borrower for repayment of such Competitive Bid
Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to
subsection (a)(i) above and provided in the Competitive Bid Note evidencing such
Competitive Bid Advance), the then unpaid principal amount of such Competitive
Bid Advance. No Borrower shall have any right to prepay any principal amount of
any Competitive Bid Advance unless, and then only on the terms, specified by
such Borrower for such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and set
forth in the Competitive Bid Note evidencing such Competitive Bid Advance.
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(e) Each Borrower making a Competitive Bid Borrowing shall pay
interest on the unpaid principal amount of each Competitive Bid Advance from the
date of such Competitive Bid Advance to the date the principal amount of such
Competitive Bid Advance is repaid in full, at the rate of interest for such
Competitive Bid Advance specified by the Lender making such Competitive Bid
Advance in its notice with respect thereto delivered pursuant to subsection
(a)(ii) above, payable on the interest payment date or dates specified by such
Borrower for such Competitive Bid Advance in the related Notice of Competitive
Bid Borrowing delivered pursuant to subsection (a)(i) above, as provided in the
Competitive Bid Note evidencing such Competitive Bid Advance. Upon the
occurrence and during the continuance of an Event of Default, such Borrower
shall pay interest on the amount of unpaid principal of each Competitive Bid
Advance owing to a Lender, payable in arrears on the date or dates interest is
payable thereon, at a rate per annum equal at all times to 2% per annum above
the rate per annum required to be paid on such Competitive Bid Advance under the
terms of the Competitive Bid Note evidencing such Competitive Bid Advance unless
otherwise agreed in such Competitive Bid Note.
(f) The indebtedness of any Borrower resulting from each Competitive
Bid Advance made to such Borrower as part of a Competitive Bid Borrowing shall
be evidenced by a separate Competitive Bid Note of such Borrower payable to the
order of the Lender making such Competitive Bid Advance.
SECTION 2.04. Fees. (a) Facility Fee. The Borrowers, jointly and
severally, agree to pay to the Agent for the account of each Lender a facility
fee on the aggregate amount of such Lender's Commitment from the date hereof in
the case of each Initial Lender and from the effective date specified in the
Assumption Agreement or in the Assignment and Acceptance pursuant to which it
became a Lender in the case of each other Lender until the Termination Date at a
rate per annum equal to the Applicable Percentage in effect from time to time,
payable in arrears quarterly on the last day of each February, May, August and
November, commencing August 31, 1999, and on the Termination Date.
(b) Agent's Fees. The Borrowers, jointly and severally, shall pay to
the Agent for its own account such fees as may from time to time be agreed
between the Borrowers and the Agent.
SECTION 2.05. Optional Termination or Reduction of the Commitments.
The Borrowers shall have the right, upon at least five Business Days' notice to
the Agent, to terminate in whole or reduce ratably in part the unused portions
of the Letter of Credit Facility and the Unused Revolving Credit Commitments,
provided that each partial reduction shall be in the aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof. The Letter
of Credit Facility shall be permanently reduced from time to time on the date of
each reduction in the Revolving Credit Facility by the amount, if any, by which
the Letter of Credit Facility exceeds the Revolving Credit Facility after giving
effect to such reduction of the Revolving Credit Facility.
SECTION 2.06. Repayment of Revolving Credit Advances and Letter or
Credit Advances. (a) Revolving Credit Advances. The Borrowers shall repay to the
Agent for the ratable account of the Lenders on the Termination Date the
aggregate principal amount of the Revolving Credit Advances then outstanding.
(b) Letter of Credit Advances. The Borrowers shall repay to the
Agent for the account of each Issuing Bank and each other Lender that has made a
Letter of Credit Advance the outstanding principal amount of each Letter of
Credit Advance made by each of them on demand.
SECTION 2.07. Interest on Revolving Credit Advances and Letter of
Credit Advances. (a) Scheduled Interest. The Borrowers shall pay interest on the
unpaid principal amount of each
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Revolving Credit Advance and each Letter of Credit Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum of (x)
the Base Rate in effect from time to time plus (y) the Applicable Margin
in effect from time to time plus (z) the Applicable Utilization Fee in
effect from time to time, payable in arrears quarterly on the last day of
each February, May, August and November during such periods and on the
date all Base Rate Advances shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such Advance
is a Eurodollar Rate Advance, a rate per annum equal at all times during
each Interest Period for such Advance to the sum of (x) the Eurodollar
Rate for such Interest Period for such Advance plus (y) the Applicable
Margin in effect from time to time plus (z) the Applicable Utilization Fee
in effect from time to time, payable in arrears on the last day of such
Interest Period and, if such Interest Period has a duration of more than
three months, on each day that occurs during such Interest Period every
three months from the first day of such Interest Period and on the date
such Eurodollar Rate Advance shall be Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the continuance
of an Event of Default and after notice from the Agent, the Borrowers shall pay
interest on the unpaid principal amount of each Revolving Credit Advance and
each Letter of Credit Advance owing to each Lender, payable in arrears on the
dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal
at all times to 2% per annum above the rate per annum required to be paid on
such Advance pursuant to clause (a)(i) or (a)(ii) above.
SECTION 2.08. Interest Rate Determination. (a) The Agent shall give
prompt notice to the Borrowers and the Lenders of the applicable interest rate
determined by the Agent for purposes of Section 2.07(a)(i) or (ii).
(b) If, with respect to any Eurodollar Rate Advances, the Required
Lenders reasonably determine and notify the Agent that the Eurodollar Rate for
any Interest Period for such Advances will not adequately reflect the cost to
such Required Lenders of making, funding or maintaining their respective
Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so
notify the Borrowers and the Lenders, whereupon (i) each Eurodollar Rate Advance
will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance, and (ii) the obligation of the
Lenders to make, or to Convert Revolving Credit Advances into, Eurodollar Rate
Advances shall be suspended until the Agent shall notify the Borrowers and the
Lenders that the circumstances causing such suspension no longer exist. Each
Lender that provides a notice as described in this Section 2.08(b) agrees to
provide to the Borrowers a certificate in reasonable detail summarizing the
basis for such notice.
(c) If the Borrowers shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith so notify the Borrowers and the Lenders and such Advances
will automatically, on the last day of the then existing Interest Period
therefor, be Converted into Base Rate Advances.
(d) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.
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(e) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.
(f) If Dow ▇▇▇▇▇ Markets Telerate Page 3750 is unavailable and
Citibank is unable to furnish timely information to the Agent for determining
the Eurodollar Rate or LIBO Rate for any Eurodollar Rate Advances or LIBO Rate
Advances, as the case may be,
(i) the Agent shall forthwith notify the Borrowers and the Lenders
that the interest rate cannot be determined for such Eurodollar Rate
Advances or LIBO Rate Advances, as the case may be,
(ii) with respect to Eurodollar Rate Advances, each such Advance
will automatically, on the last day of the then existing Interest Period
therefor, be prepaid by the Borrowers or be automatically Converted into a
Base Rate Advance (or if such Advance is then a Base Rate Advance, will
continue as a Base Rate Advance), and
(iii) the obligation of the Lenders to make Eurodollar Rate Advances
or LIBO Rate Advances or to Convert Revolving Credit Advances into
Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrowers and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 2.09. Optional Conversion of Revolving Credit Advances. Each
Borrower may on any Business Day, upon notice given to the Agent not later than
11:00 A.M. (New York City time) on the second Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12,
Convert Revolving Credit Advances of one Type comprising the same Borrowing made
to such Borrower into Revolving Credit Advances of the other Type; provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances
shall be made only on the last day of an Interest Period for such Eurodollar
Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result
in more separate Revolving Credit Borrowings than permitted under Section
2.02(b). Each such notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Revolving
Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar
Rate Advances, the duration of the initial Interest Period for each such
Advance. Each notice of Conversion shall be irrevocable and binding on the
applicable Borrower.
SECTION 2.10. Prepayments of Revolving Credit Advances. (a)
Optional. Each Borrower may, upon notice at least one Business Day prior to the
date of such prepayment to the Agent stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given such Borrower
shall, prepay the outstanding principal amount of the Revolving Credit Advances
comprising part of the same Revolving Credit Borrowing made to such Borrower in
whole or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid; provided, however, that (x) each
partial prepayment shall be in an aggregate principal amount of $1,000,000 or an
integral multiple of $500,000 in excess thereof in the case of Base Rate
Advances and in an aggregate principal amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof in the case of Eurodollar Rate Advances
and (y) in the event of any such prepayment of a Eurodollar Rate Advance, such
Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant
to Section 8.04(c).
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(b) Mandatory. (i) (A) The Borrowers shall, on each Business Day,
prepay an aggregate principal amount of the Revolving Credit Advances comprising
part of the same Borrowings or the Letter of Credit Advances equal to the amount
by which (1) the sum of the aggregate principal amount of (x) the Revolving
Credit Advances, (y) the Letter of Credit Advances and (z) the Competitive Bid
Advances then outstanding plus the aggregate Available Amount of all Letters of
Credit then outstanding exceeds (2) the Revolving Credit Facility on such
Business Day. Such prepayments of the Revolving Credit Facility shall be first
applied to prepay Letter of Credit Advances then outstanding until such Advances
are paid in full, and second applied to prepay Revolving Credit Advances then
outstanding comprising part of the same Borrowings until such Advances are paid
in full.
(B) The Borrowers shall, on each Business Day and on the Termination
Date, pay to the Agent for deposit in the Letter of Credit Collateral Account an
amount sufficient to cause the aggregate amount on deposit in such account to
equal the amount by which the aggregate Available Amount of all Letters of
Credit then outstanding exceeds the Letter of Credit Facility on such Business
Day or the Termination Date, as the case may be.
(ii) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid.
SECTION 2.11. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof or (ii) the compliance with any guideline or
request from any central bank or other governmental authority made after the
date hereof (whether or not having the force of law), there shall be any
increase in the cost to any Lender of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances or LIBO Rate Advances or of agreeing to
issue or of issuing or maintaining Letters of Credit (excluding for purposes of
this Section 2.11 any such increased costs resulting from (i) Taxes or Other
Taxes (as to which Section 2.14 shall govern) and (ii) changes in the basis of
taxation of overall net income or overall gross income by the United States or
by the foreign jurisdiction or state under the laws of which such Lender is
organized or has its Applicable Lending Office or any political subdivision
thereof), then the Borrowers shall from time to time, upon demand by such Lender
(with a copy of such demand to the Agent), pay to the Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
increased cost; provided, however, that before making any such demand, each
Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to designate a different Applicable Lending
Office if the making of such a designation would avoid the need for, or reduce
the amount of, such increased cost and would not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to such Lender. A certificate in
reasonable detail summarizing the basis for and calculating the amount of such
increased cost, submitted to the Borrowers and the Agent by such Lender shall be
prima facie evidence of the amount claimed so long as any underlying
determinations and allocations are made on a reasonable basis; provided,
however, that no Lender shall be required to disclose in any such certificate
any confidential proprietary information.
(b) If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend or to issued Letters of Credit hereunder and other commitments of this
type or the issuance or maintenance of the Letters of Credit, then, upon demand
by such Lender (with a copy of such demand to the Agent), the Borrowers shall
pay to the Agent for the account of such Lender, from time to time as specified
by such Lender, additional amounts sufficient to compensate such Lender or such
corporation in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's commitment to lend or to issue Letters of Credit hereunder or
the issuance or maintenance of the
21
Letters of Credit (or other similar contingent obligations). A certificate in
reasonable detail summarizing the basis for and calculating such amounts
submitted to the Borrowers and the Agent by such Lender shall be prima facie
evidence of the amount claimed so long as any underlying determinations and
allocations are made on a reasonable basis; provided, however, that no Lender
shall be required to disclose in any such certificate any confidential
proprietary information.
SECTION 2.12. Illegality. Notwithstanding any other provision of
this Agreement, if any Lender shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that it is
unlawful, for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or to fund or maintain
Eurodollar Rate Advances hereunder, (a) each Eurodollar Rate Advance will
automatically, upon such demand, Convert into a Base Rate Advance and (b) the
obligation of the Lenders to make Eurodollar Rate Advances or LIBO Rate Advances
or to Convert Revolving Credit Advances into Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist; provided, however, that
before making any such demand, each Lender agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different Eurodollar Lending Office if the making of such a
designation would allow such Lender or its Eurodollar Lending Office to continue
to perform its obligations to make Eurodollar Rate Advances or to continue to
fund or maintain Eurodollar Rate Advances and would not, in the judgment of such
Lender, be otherwise disadvantageous to such Lender.
SECTION 2.13. Payments and Computations. (a) The Borrowers shall
make each payment hereunder not later than 11:00 A.M. (New York City time) on
the day when due to the Agent at the Agent's Account in same day funds. The
Agent will promptly thereafter cause to be distributed like funds relating to
the payment of principal or interest or facility fees ratably (other than
amounts payable pursuant to Section 2.03, 2.11, 2.14 or 8.04(c)) to the Lenders
for the account of their respective Applicable Lending Offices, and like funds
relating to the payment of any other amount payable to any Lender to such Lender
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon any Assuming Lender becoming a
Lender hereunder as a result of a Commitment Increase pursuant to Section 2.18,
and upon the Agent's receipt of such Lender's Assumption Agreement and recording
of the information contained therein in the Register, from and after the
applicable Increase Date, the Agent shall make all payments hereunder and under
any Notes issued in connection therewith in respect of the interest assumed
thereby to the Assuming Lender. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 8.07(c), from and after the effective date specified in such
Assignment and Acceptance, the Agent shall make all payments hereunder and under
the Notes in respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) Each Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder or under the
Note held by such Lender, to charge from time to time against any or all of such
Borrower's accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate or in
respect of Fixed Rate Advances , facility fees and Letter of Credit commissions
shall be made by the Agent on the basis of a year of 365 or 366 days, as the
case may be, and all computations of interest based on the Eurodollar Rate, the
LIBO Rate or the Federal Funds Rate shall be made by the Agent on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest, fees or commissions are payable. Each determination by
22
the Agent of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or facility fee, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(e) Unless the Agent shall have received notice from the applicable
Borrower prior to the date on which any payment is due to the Lenders hereunder
that such Borrower will not make such payment in full, the Agent may assume that
such Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the applicable Borrower shall not have so made such payment in
full to the Agent, each Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds Rate.
SECTION 2.14. Taxes. (a) Any and all payments by the Borrowers
hereunder or under the Notes shall be made, in accordance with Section 2.13,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, taxes
imposed on its net income, and franchise taxes imposed on it in lieu of net
income taxes, by the jurisdiction under the laws of which such Lender or the
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender, taxes imposed on its net income, and franchise
taxes imposed on it in lieu of net income taxes, by the jurisdiction of such
Lender's Applicable Lending Office or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder or under the Notes being
hereinafter referred to as "Taxes"). If the Borrowers shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender or the Agent, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14) such Lender or
the Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrowers shall make such
deductions and (iii) the Borrowers shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Borrowers shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) The Borrowers shall indemnify each Lender and the Agent for and
hold it harmless against the full amount of Taxes or Other Taxes (including,
without limitation, taxes of any kind imposed by any jurisdiction on amounts
payable under this Section 2.14) imposed on or paid by such Lender or the Agent
(as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date such Lender or the Agent (as the case may
be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrowers shall furnish to the Agent, at its address referred to in Section
8.02, the original or a certified copy of a receipt
23
evidencing such payment. In the case of any payment hereunder or under the Notes
by or on behalf of the Borrowers through an account or branch outside the United
States or by or on behalf of the Borrowers by a payor that is not a United
States person, if the Borrowers determine that no Taxes are payable in respect
thereof, the Borrowers shall furnish, or shall cause such payor to furnish, to
the Agent, at such address, an opinion of counsel acceptable to the Agent
stating that such payment is exempt from Taxes. For purposes of this subsection
(d) and subsection (e), the terms "United States" and "United States person"
shall have the meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender and on the date of the Assumption
Agreement or the Assignment and Acceptance pursuant to which it becomes a Lender
in the case of each other Lender, and from time to time thereafter as requested
in writing by the Borrowers (but only so long as such Lender remains lawfully
able to do so), shall provide each of the Agent and the Borrowers with two
original Internal Revenue Service forms 1001 or 4224, as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that such Lender is exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to this Agreement or the Notes. Each Lender
organized under the laws of a jurisdiction outside the United States, on or
prior to the date of execution and delivery of this Agreement, or at the time
such Lender first becomes a party to this Agreement, represents and warrants
that it is lawfully able to provide the Borrowers with a valid form 1001 or 4224
resulting in exemption form United States withholding tax on payments of
interest pursuant to this Agreement or the Notes. If any form or document
referred to in this subsection (e) requires the disclosure of information, other
than information necessary to compute the tax payable and information required
on the date hereof by Internal Revenue Service form 1001 or 4224, that the
Lender reasonably considers to be confidential, the Lender shall give notice
thereof to the Borrowers and shall not be obligated to include in such form or
document such confidential information.
(f) For any period with respect to which a Lender has failed to
provide the Borrowers with the appropriate form described in Section 2.14(e)
(other than if such failure is due to a change in law occurring subsequent to
the date on which a form originally was required to be provided, or if such form
otherwise is not required under subsection (e) above), such Lender shall not be
entitled to indemnification under Section 2.14(a) or (c) with respect to Taxes
imposed by the United States by reason of such failure; provided, however, that
should a Lender become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrowers shall take such steps as the Lender shall
reasonably request to assist the Lender to recover such Taxes.
(g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.14 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurodollar Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
SECTION 2.15. Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Revolving Credit Advances owing to
it (other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its
ratable share of payments on account of the Revolving Credit Advances obtained
by all the Lenders, such Lender shall forthwith purchase from the other Lenders
such participations in the Revolving Credit Advances owing to them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (i) the
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amount of such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrowers
agree that any Lender so purchasing a participation from another Lender pursuant
to this Section 2.15 may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
respective Borrowers in the amount of such participation.
SECTION 2.16. Letters of Credit. (a) The Letter of Credit Facility.
Each Issuing Bank severally agrees, on the terms and conditions hereinafter set
forth, to issue letters of credit (together with the Existing Letters of Credit,
the "Letters of Credit") for the account of any Borrower from time to time on
any Business Day during the period from the date hereof until 10 days before the
Termination Date (i) in an aggregate Available Amount for all Letters of Credit
issued by such Issuing Bank not to exceed at any time the lesser of (x) the
Letter of Credit Facility at such time and (y) such Issuing Bank's Letter of
Credit Commitment and (ii) in an Available Amount for each such Letter of Credit
not to exceed an amount equal to an amount equal to the Unused Revolving Credit
Commitments of the Lenders at such time. No Letter of Credit shall have an
expiration date (including all rights of the applicable Borrower or the
beneficiary to require renewal) later than the earlier of (A) 10 days before the
Termination Date and (B) (1) in the case of a Standby Letter of Credit, one year
after the date of issuance thereof (but such Standby Letter of Credit may by its
terms be automatically renewable annually upon notice (a "Notice of Renewal")
given to the Issuing Bank that issued such Standby Letter of Credit and the
Agent on or prior to any date for notice of renewal set forth in such Letter of
Credit but in any event at least three Business Days prior to the date of the
proposed renewal of such Standby Letter of Credit and upon fulfillment of the
applicable conditions set forth in Article III unless such Issuing Bank has
notified the Borrowers (with a copy to the Agent) on or prior to the date for
notice of termination set forth in such Letter of Credit but in any event at
least 30 Business Days prior to the date of automatic renewal of its election
not to renew such Standby Letter of Credit (a "Notice of Termination")) and (2)
in the case of a Documentary Letter of Credit, one year after the date of
issuance thereof; provided that the terms of each Standby Letter of Credit that
is automatically renewable annually shall (x) require the Issuing Bank that
issued such Standby Letter of Credit to give the beneficiary named in such
Standby Letter of Credit notice of any Notice of Termination, (y) permit such
beneficiary, upon receipt of such notice, to draw under such Standby Letter of
Credit prior to the date such Standby Letter of Credit otherwise would have been
automatically renewed and (z) not permit the expiration date (after giving
effect to any renewal) of such Standby Letter of Credit in any event to be
extended to a date after the dates referred to in clause (A) above. If either a
Notice of Renewal is not given by the applicable Borrower or a Notice of
Termination is given by the relevant Issuing Bank pursuant to the immediately
preceding sentence, such Standby Letter of Credit shall expire on the date on
which it otherwise would have been automatically renewed; provided, however,
that even in the absence of receipt of a Notice of Renewal the relevant Issuing
Bank may in its discretion, unless instructed to the contrary by the Agent or
the applicable Borrower, deem that a Notice of Renewal had been timely delivered
and in such case, a Notice of Renewal shall be deemed to have been so delivered
for all purposes under this Agreement. Each Standby Letter of Credit shall
contain a provision authorizing the Issuing Bank that issued such Letter of
Credit to deliver to the beneficiary of such Letter of Credit, upon the
occurrence and during the continuance of an Event of Default, a notice (a
"Default Termination Notice") terminating such Letter of Credit and giving such
beneficiary 15 days to draw such Letter of Credit. Within the limits of the
Letter of Credit Facility, and subject to the limits referred to above, the
Borrowers may request the issuance of Letters of Credit under this Section
2.16(a), repay any Letter of Credit Advances resulting from drawings thereunder
pursuant to Section 2.16(c) and request the issuance of additional Letters of
Credit under this Section 2.16(a).
(b) Request for Issuance. (i) Each Letter of Credit shall be issued
upon notice, given not later than 11:00 A.M. (New York City time) on the second
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by any Borrower to any Issuing Bank, which shall give to the Agent and
each Lender prompt notice thereof by telex or telecopier). Each such notice of
issuance of a
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Letter of Credit (a "Notice of Issuance") shall be by telephone, confirmed
immediately in writing, or telex or telecopier, specifying therein the requested
(A) date of such issuance (which shall be a Business Day), (B) Available Amount
of such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name
and address of the beneficiary of such Letter of Credit and (E) form of such
Letter of Credit, and shall be accompanied by such application and agreement for
letter of credit as such Issuing Bank may specify to such Borrower for use in
connection with such requested Letter of Credit (in each case, a "Letter of
Credit Agreement"). If (x) the requested form of such Letter of Credit is
reasonably acceptable to such Issuing Bank in its sole discretion and (y) it has
not received notice of objection to such issuance from the Required Lenders,
such Issuing Bank will, upon fulfillment of the applicable conditions set forth
in Article III, make such Letter of Credit available to the applicable Borrower
at its office referred to in Section 8.02 or as otherwise agreed with such
Borrower in connection with such issuance. In the event and to the extent that
the provisions of any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern.
(ii) Each Issuing Bank shall furnish (A) to the Agent on the first
Business Day of each week a written report summarizing issuance and expiration
dates of Letters of Credit issued by such Issuing Bank during the previous week
and drawings during such week under all Letters of Credit issued by such Issuing
Bank, (B) to each Lender on the first Business Day of each month a written
report summarizing issuance and expiration dates of Letters of Credit issued by
such Issuing Bank during the preceding month and drawings during such month
under all Letters of Credit issued by such Issuing Bank and (C) to the Agent and
each Lender on the first Business Day of each calendar quarter a written report
setting forth the average daily aggregate Available Amount during the preceding
calendar quarter of all Letters of Credit issued by such Issuing Bank.
(c) Drawing and Reimbursement. The payment by any Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by such Issuing Bank of a Letter of Credit Advance, which
shall be a Base Rate Advance, in the amount of such draft. Upon written demand
by any Issuing Bank with an outstanding Letter of Credit Advance, with a copy of
such demand to the Agent, each Lender shall purchase from such Issuing Bank, and
such Issuing Bank shall sell and assign to each such Lender, such Lender's Pro
Rata Share of such outstanding Letter of Credit Advance as of the date of such
purchase, by making available for the account of its Applicable Lending Office
to the Agent for the account of such Issuing Bank, by deposit to the Agent's
Account, in same day funds, an amount equal to the portion of the outstanding
principal amount of such Letter of Credit Advance to be purchased by such
Lender. Promptly after receipt thereof, the Agent shall transfer such funds to
such Issuing Bank. Each Borrower hereby agrees to each such sale and assignment.
Each Lender agrees to purchase its Pro Rata Share of an outstanding Letter of
Credit Advance on (i) the Business Day on which demand therefor is made by the
Issuing Bank which made such Advance, provided notice of such demand is given
not later than 11:00 A.M. (New York City time) on such Business Day or (ii) the
first Business Day next succeeding such demand if notice of such demand is given
after such time. Upon any such assignment by an Issuing Bank to any Lender of a
portion of a Letter of Credit Advance, such Issuing Bank represents and warrants
to such Lender that such Issuing Bank is the legal and beneficial owner of such
interest being assigned by it, free and clear of any liens, but makes no other
representation or warranty and assumes no responsibility with respect to such
Letter of Credit Advance, the Loan Documents or any Borrower. If and to the
extent that any Lender shall not have so made the amount of such Letter of
Credit Advance available to the Agent, such Lender agrees to pay to the Agent
forthwith on demand such amount together with interest thereon, for each day
from the date of demand by such Issuing Bank until the date such amount is paid
to the Agent, at the Federal Funds Rate for its account or the account of such
Issuing Bank, as applicable. If such Lender shall pay to the Agent such amount
for the account of such Issuing Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Letter of Credit Advance made by such
Lender on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Letter of Credit Advance made by such Issuing Bank shall
be reduced by such amount on such Business Day.
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(d) Failure to Make Letter of Credit Advances. The failure of any
Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.16(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
(e) Obligations Absolute. The obligations of the Borrowers under
this Agreement, any Letter of Credit Agreement and any other agreement or
instrument relating to any Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this Agreement, any
Note, any Letter of Credit Agreement, any Letter of Credit or any other
agreement or instrument relating thereto (all of the foregoing being,
collectively, the "L/C Related Documents");
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of any Borrower in
respect of any L/C Related Document or any other amendment or waiver of or
any consent to departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that any Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), any Issuing Bank or any
other Person, whether in connection with the transactions contemplated by
the L/C Related Documents or any unrelated transaction;
(iv) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit, unless such draft or certificate is
substantially different from the applicable form specified by such Letter
of Credit;
(vi) any exchange, release or non-perfection of any Letter of Credit
Collateral or other collateral, or any release or amendment or waiver of
or consent to departure from any guarantee, for all or any of the
obligations of the applicable Borrower in respect of the L/C Related
Documents; or
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the applicable Borrower or a guarantor.
(f) Compensation. (i) The Borrowers shall pay to the Agent for the
account of each Lender a commission on such Lender's Pro Rata Share of the
average daily aggregate Available Amount of (A) all Standby Letters of Credit
outstanding from time to time at a rate equal to 0.475% per annum equal and (B)
all Documentary Letters of Credit outstanding from time to time at a rate equal
to 0.250% per annum, in each case, calculated and payable for the quarterly
period ending on the last Business Day of each February, May, August and
November, and on the Termination Date.
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(ii) The Borrower shall pay to each Issuing Bank, for its own
account, such commissions, issuance fees, fronting fees, transfer fees and
other fees and charges in connection with the issuance or administration
of each Letter of Credit as the Borrowers and such Issuing Bank shall
agree.
(g) Existing Letters of Credit. Effective as of the Effective Date
(i) the letters of credit issued for the account of the Borrowers prior to such
date under the Original Loan Agreement and set forth on Schedule 2.16(g) hereto
(such letters of credit being the "Existing Letters of Credit") in an aggregate
face amount not exceeding the total amount set forth on such Schedule will be
deemed to have been issued as, and be, Letters of Credit hereunder and (ii) the
Existing Letters of Credit and the reimbursement obligations in respect thereof
shall be obligations of the Borrowers hereunder.
SECTION 2.17. Use of Proceeds. The proceeds of the Advances shall be
available (and the Borrowers agree that they shall use such proceeds) for
general corporate purposes of the Borrowers and their Subsidiaries, excluding
nonconsensual acquisitions.
SECTION 2.18. Increase in the Aggregate Commitments. (a) The
Borrowers may, at any time but in any event not more than once in any calendar
year prior to the Termination Date, by notice to the Agent, request that the
aggregate amount of the Commitment be increased by an amount of $10,000,000 or
an integral multiple of $10,000,000 in excess thereof (each a "Commitment
Increase") to be effective as of a date that is at least 90 days prior to the
scheduled Termination Date then in effect (the "Increase Date") as specified in
the related notice to the Agent; provided, however that (i) in no event shall
the aggregate amount of the Commitments at any time exceed $200,000,000, (ii) on
the date of any request by the Borrowers for a Commitment Increase and on the
related Increase Date, the Public Debt Rating from ▇▇▇▇▇'▇ and S&P shall be
better than or equal to Baa3 and BBB-, respectively, and (iii) on the date of
any request by the Borrowers for a Commitment Increase and on the related
Increase Date, no Default shall have occurred and be continuing.
(b) The Agent shall promptly notify the Lenders of a request by the
Borrowers for a Commitment Increase, which notice shall include (i) the proposed
amount of such requested Commitment Increase, (ii) the proposed Increase Date
and (iii) the date by which Lenders wishing to participate in the Commitment
Increase must commit to an increase in the amount of their respective
Commitments (the "Commitment Date"). Each Lender that is willing to participate
in such requested Commitment Increase (each an "Increasing Lender") shall, in
its sole discretion, give written notice to the Agent on or prior to the
Commitment Date of the amount by which it is willing to increase its Commitment.
If the Lenders notify the Agent that they are willing to increase the amount of
their respective Commitments by an aggregate amount that exceeds the amount of
the requested Commitment Increase, the requested Commitment Increase shall be
allocated among the Lenders willing to participate therein in such amounts as
are agreed between the Borrowers and the Agent.
(c) Promptly following each Commitment Date, the Agent shall notify
the Borrowers as to the amount, if any, by which the Lenders are willing to
participate in the requested Commitment Increase. If the aggregate amount by
which the Lenders are willing to participate in any requested Commitment
Increase on any such Commitment Date is less than the requested Commitment
Increase, then the Borrowers may extend offers to one or more Eligible Assignees
to participate in any portion of the requested Commitment Increase that has not
been committed to by the Lenders as of the applicable Commitment Date; provided,
however, that the Commitment of each such Eligible Assignee shall be in an
amount of $1,000,000 or an integral multiple thereof.
(d) On each Increase Date, each Eligible Assignee that accepts an
offer to participate in a requested Commitment Increase in accordance with
Section 2.18(c) (each such Eligible Assignee and each Eligible Assignee that
agrees to an extension of the Termination Date in accordance with Section
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2.18(c), an "Assuming Lender") shall become a Lender party to this Agreement as
of such Increase Date and the Commitment of each Increasing Lender for such
requested Commitment Increase shall be so increased by such amount (or by the
amount allocated to such Lender pursuant to the last sentence of Section
2.18(b)) as of such Increase Date; provided, however, that the Agent shall have
received on or before such Increase Date the following, each dated such date:
(i) (A) certified copies of resolutions of the Board of Directors of
each Borrower or the Executive Committee of such Board approving the
Commitment Increase and the corresponding modifications to this Agreement
and (B) an opinion of counsel for the Borrowers (which may be in-house
counsel), in substantially the form of Exhibit D hereto;
(ii) an assumption agreement from each Assuming Lender, if any, in
form and substance satisfactory to the Borrowers and the Agent (each an
"Assumption Agreement"), duly executed by such Eligible Assignee, the
Agent and the Borrowers; and
(iii) confirmation from each Increasing Lender of the increase in
the amount of its Commitment in a writing satisfactory to the Borrowers
and the Agent.
On each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.18(d), the Agent shall notify
the Lenders (including, without limitation, each Assuming Lender) and the
Borrowers, on or before 1:00 P.M. (New York City time), by telecopier or telex,
of the occurrence of the Commitment Increase to be effected on such Increase
Date and shall record in the Register the relevant information with respect to
each Increasing Lender and each Assuming Lender on such date.
SECTION 2.19. Obligations and Communications of the Borrowers. All
obligations, representations, warranties, covenants and other agreements of
either or both of the Borrowers under this Agreement, the Notes and the other
Loan Documents shall be joint and several liabilities of both of the Borrowers;
provided, however, that anything herein or in the other Loan Documents to the
contrary notwithstanding, the liability of the Operating Company with respect to
the obligations of the Holding Company shall in no event exceed the maximum
permissible amount for which the Operating Company may be obligated under ss.
548 of the United States Bankruptcy Code or applicable state fraudulent
conveyance law. Any notice given to, any knowledge held by or any knowledge
imputed to either Borrower shall be deemed to be within the knowledge of both of
the Borrowers. Any certificate, notice, request, statement or other document or
communication signed or made on behalf or in the name of either or both of the
Borrowers shall be deemed to have been signed or made by both of the Borrowers
unless expressly disclaimed in a particular document or communication. Reference
to a single specific Borrower, whether by name, officer's title, letterhead or
otherwise, shall not constitute an express disclaimer of any of the foregoing.
Any telephone notice permitted to be given by the Borrowers under this Article
II shall be sufficient if given by an appropriate officer of either Borrower,
and shall be deemed to have been given by both Borrowers.
SECTION 2.20. Subrogation and Contribution. Each Borrower covenants
and agrees that, until the obligations of the Borrowers under this Agreement and
the other Loan Documents have been fully paid and satisfied, any and all
subrogation, contribution and other similar rights of such Borrower against or
in respect of (A) the other Borrower, (B) any of the assets and properties of
the other Borrower, or (C) any other co-obligor or indemnitor of any of the
other Borrower's payments or obligations under any of the Loan Documents,
whether now existing or hereafter acquired or created, and whether resulting
from any payment made by such Borrower or otherwise, shall be subordinate and
inferior in dignity and deferred as to payment to the full payment and
satisfaction of all of such obligations. (However, such subordination of
subrogation, contribution and similar rights is not intended to include, and
this Section is not intended to affect, the intercompany advances and dividends
permitted
29
under this Agreement.) Neither Borrower shall seek any payment or exercise or
enforce any right, power, privilege, remedy or interest that it may have with
respect to any such subrogation, contribution or other similar right except with
the prior written consent of the Agent (with the consent of the Required
Lenders, as and if required) and for the benefit of all of the Lenders. Any
payment, asset or property delivered to or for the benefit of any Borrower in
respect of any such subrogation, contribution or other similar right shall be
accepted in trust for the benefit of all of the Lenders and shall be promptly
paid or delivered to the Agent (for the benefit of all of the Lenders) to be
credited and applied to the payment and satisfaction of the obligations of the
Borrowers under this Agreement and the other Loan Documents, whether contingent,
matured or unmatured, or to be held by the Agent (for the benefit of all of the
Lenders) as additional collateral, as the Agent (with the consent of the
Required Lenders, as and if required) may elect in its sole and absolute
discretion.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of Sections
2.01, 2.03 and 2.16. Sections 2.01, 2.03 and 2.16 of this Agreement shall become
effective on and as of the first date (the "Effective Date") on which the
following conditions precedent have been satisfied:
(a) There shall have occurred no Material Adverse Change since May
31, 1998.
(b) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Holding Company or any of its Subsidiaries
pending or threatened before any court, governmental agency or arbitrator
that (i) would be reasonably likely to have a Material Adverse Effect or
(ii) purports to affect the legality, validity or enforceability of this
Agreement or any Note or the consummation of the transactions contemplated
hereby.
(c) Nothing shall have come to the attention of the Lenders during
the course of their due diligence investigation to lead them to believe
that the Information Memorandum was or has become misleading, incorrect or
incomplete in any material respect; without limiting the generality of the
foregoing, the Lenders shall have been given such access to the
management, records, books of account, contracts and properties of the
Borrowers and their Subsidiaries as they shall have requested.
(d) All governmental and third party consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained (without the imposition of any conditions that are not
acceptable to the Lenders) and shall remain in effect, and no law or
regulation shall be applicable in the reasonable judgment of the Lenders
that restrains, prevents or imposes materially adverse conditions upon the
transactions contemplated hereby.
(e) The Borrowers shall have notified each Lender and the Agent in
writing as to the proposed Effective Date.
(f) The Borrowers shall have paid all accrued fees and expenses of
the Agent and the Lenders (including the accrued fees and expenses of
counsel to the Agent).
(g) On the Effective Date, the following statements shall be true
and the Agent shall have received for the account of each Lender a
certificate signed by a duly authorized officer of the Holding Company,
dated the Effective Date, stating that:
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(i) The representations and warranties contained in Section
4.01 are correct on and as of the Effective Date, and
(ii) No event has occurred and is continuing that constitutes
a Default.
(h) The Agent shall have received on or before the Effective Date
the following, each dated such day, in form and substance satisfactory to
the Agent and (except for the Revolving Credit Notes) in sufficient copies
for each Lender:
(i) The Revolving Credit Notes to the order of the Lenders.
(ii) a copy of the certificate of incorporation of each
Borrower, and all modifications, amendments and restatements
thereof, certified as of a recent date by the Secretary of State of
its state of incorporation;
(iii) a copy of the by-laws of each Borrower, together with
all modifications, amendments and restatements thereof, certified as
of a recent date by its Secretary;
(iv) a certificate of the Secretary of State of the state of
incorporation of each Borrower, dated as of a recent date, as to its
existence and good standing;
(v) Certified copies of the resolutions of the Board of
Directors of each Borrower approving this Agreement and the Notes,
and of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement and
the Notes.
(vi) A certificate of the Secretary or an Assistant Secretary
of each Borrower certifying the names and true signatures of the
officers of such Borrower authorized to sign this Agreement and the
Notes and the other documents to be delivered hereunder.
(vii) A favorable opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice
President, Legal and Business Affairs of the Borrowers,
substantially in the form of Exhibit D hereto and as to such other
matters as any Lender through the Agent may reasonably request.
(viii) A favorable opinion of Shearman & Sterling, counsel for
the Agent, in form and substance satisfactory to the Agent.
(i) The termination of the commitments of the Original Banks and the
payment in full of all Debt outstanding under the Original Loan Agreement.
SECTION 3.02. Conditions Precedent to Each Revolving Credit
Borrowing, each Issuance and Renewal of Letters of Credit and each Increase
Date. The obligation of each Lender to make a Revolving Credit Advance (other
than a Letter of Credit Advance made by an Issuing Bank or a Lender pursuant to
Section 2.16(c)) on the occasion of each Revolving Credit Borrowing (including
the initial Borrowing) the obligation of each Issuing Bank to issue Letters of
Credit (including the initial issuance) or renew a Standby Letter of Credit from
time to time and each Commitment Increase shall be subject to the conditions
precedent that the Effective Date shall have occurred and on the date of such
Borrowing, issuance or renewal or the applicable Increase Date (a) the following
statements shall be true (and each of the giving of the applicable Notice of
Revolving Credit Borrowing, Notice of Issuance,
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Notice of Renewal or request for Commitment Increase and the acceptance by the
Borrowers of the proceeds of such Borrowing or such Letter of Credit issuance or
the renewal of such Standby Letter of Credit shall constitute a representation
and warranty by the Borrowers that on the date of such Borrowing, issuance,
renewal or Increase Date such statements are true):
(i) the representations and warranties contained in Section 4.01 are
correct on and as of such date before and after giving effect to such
Borrowing, issuance or renewal or such Increase Date and to the
application of the proceeds therefrom, as though made on and as of such
date; and
(ii) no event has occurred and is continuing, or would result from
such Borrowing, issuance or renewal or Increase Date or from the
application of the proceeds therefrom, that constitutes a Default;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
SECTION 3.03. Conditions Precedent to Each Competitive Bid
Borrowing. The obligation of each Lender that is to make a Competitive Bid
Advance on the occasion of a Competitive Bid Borrowing to make such Competitive
Bid Advance as part of such Competitive Bid Borrowing is subject to the
conditions precedent that (i) the Agent shall have received the written
confirmatory Notice of Competitive Bid Borrowing with respect thereto, (ii) on
or before the date of such Competitive Bid Borrowing, but prior to such
Competitive Bid Borrowing, the Agent shall have received a Competitive Bid Note
payable to the order of such Lender for each of the one or more Competitive Bid
Advances to be made by such Lender as part of such Competitive Bid Borrowing, in
a principal amount equal to the principal amount of the Competitive Bid Advance
to be evidenced thereby and otherwise on such terms as were agreed to for such
Competitive Bid Advance in accordance with Section 2.03, and (iii) on the date
of such Competitive Bid Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Competitive Bid Borrowing and the
acceptance by the applicable Borrower of the proceeds of such Competitive Bid
Borrowing shall constitute a representation and warranty by the Borrowers that
on the date of such Competitive Bid Borrowing such statements are true):
(a) the representations and warranties contained in Section 4.01 are
correct on and as of the date of such Competitive Bid Borrowing, before
and after giving effect to such Competitive Bid Borrowing and to the
application of the proceeds therefrom, as though made on and as of such
date, and
(b) no event has occurred and is continuing, or would result from
such Competitive Bid Borrowing or from the application of the proceeds
therefrom, that constitutes a Default.
SECTION 3.04. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by the Loan Documents
shall have received notice from such Lender prior to the date that the
Borrowers, by notice to the Lenders, designate as the proposed Effective Date,
specifying its objection thereto. The Agent shall promptly notify the Lenders of
the occurrence of the Effective Date.
ARTICLE IV
32
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrowers. The
Borrowers represent and warrant as follows:
(a) Each Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of its incorporation.
(b) The execution, delivery and performance by each Borrower of this
Agreement and the other Loan Documents to be delivered by it, and the
consummation of the transactions contemplated hereby, are within such
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) such Borrower's charter or
by-laws or (ii) law or any contractual restriction binding on or affecting
such Borrower.
(c) This Agreement has been, and each of the other Loan Documents to
be delivered by it when delivered hereunder will have been, duly executed
and delivered by each Borrower. This Agreement is, and each of the other
Loan Documents when delivered hereunder will be, the legal, valid and
binding obligation of each Borrower party thereto enforceable against such
Borrower in accordance with their respective terms.
(d) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any
other third party is required for the due execution, delivery and
performance by any Borrower of this Agreement or the other Loan Documents
to be delivered by it.
(e) There is no pending or threatened action, suit, investigation,
litigation or proceeding, including, without limitation, any Environmental
Claim, affecting the Holding Company or any of its Subsidiaries before any
court, governmental agency or arbitrator that (i) would be reasonably
likely to have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of this Agreement or any Note or the
consummation of the transactions contemplated hereby.
(f) The Consolidated balance sheet of the Holding Company and its
Subsidiaries as at May 31, 1998, and the related Consolidated statements
of income and cash flows of the Holding Company and its Subsidiaries for
the fiscal year then ended, accompanied by an opinion of Ernst & Young
LLP, independent public accountants, the consolidating balance sheet of
the Holding Company and its Subsidiaries as at May 31, 1998, and the
related consolidating statements of income and cash flows of the Holding
Company and its Subsidiaries for the fiscal year then ended, duly
certified by the chief financial officer of the Holding Company, and the
Consolidated and consolidating balance sheet of the Holding Company and
its Subsidiaries as at February 28, 1999, and the related Consolidated and
consolidating statements of income and cash flows of the Holding Company
and its Subsidiaries for the nine months then ended, duly certified by the
chief financial officer of the Holding Company, copies of which have been
furnished to each Lender, fairly present, subject, in the case of said
balance sheet as at February 28, 1999, and said statements of income and
cash flows for the nine months then ended, to year-end audit adjustments,
the Consolidated financial condition of the Holding Company and its
Subsidiaries as at such dates and the Consolidated results of the
operations of the Holding Company and its Subsidiaries for the periods
ended on such dates, all in accordance with generally accepted accounting
principles consistently applied. Since May 31, 1998, there has been no
Material Adverse Change.
33
(g) Each of the Borrowers and their Subsidiaries has good,
marketable fee or leasehold title (as applicable) or ownership interest to
all of the material assets and properties of the Borrowers and their
Subsidiaries, free and clear of all Liens, other than Liens permitted by
the Loan Documents.
(h) The operations and properties of each Borrower and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws, all past non-compliance with such Environmental Laws
has been resolved without material ongoing obligations or costs, and no
circumstances exist that could reasonably be likely to (i) form the basis
of an Environmental Claim against either Borrower or any of its
Subsidiaries or any of their properties that could have a Material Adverse
Effect or (ii) cause any such property to be subject to any restrictions
on ownership, occupancy, use or transferability under any Environmental
Law that could have a Material Adverse Effect.
(i) Set forth on Schedule 4.01(i) hereto is a complete and accurate
list of all Subsidiaries of each Borrower as of the date hereof, showing
(as to each such Subsidiary) the jurisdiction of its incorporation. All of
the outstanding capital stock and other ownership interests (other than
directors qualifying shares) in each Borrower's Subsidiaries has been
validly issued, are fully paid and non-assessable and are owned by such
Borrower or one or more of its Subsidiaries free and clear of all Liens
and, as of the date hereof, free of any outstanding options, warrants,
rights of conversion or purchase or similar rights.
(j) Each of the outstanding securities issued by the Holding Company
was duly authorized and validly issued, is fully paid and non-assessable,
and is not and will not be subject to any preemptive or similar right or
restriction. Each of those outstanding securities was acquired from the
issuer in a transaction in compliance with the Securities Act of 1933, as
amended, and other applicable laws.
(k) No Borrower is engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve
System), and no proceeds of any Advance will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
(l) No Borrower is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(m) As of the date hereof and as of any date on or prior to December
31, 1999, the Borrowers have (i) initiated a review and assessment of
their respective and each of their Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that could
be adversely affected by the risk that computer applications used by the
Borrowers or any of their Subsidiaries (or suppliers, vendors and
customers) may be unable to recognize and perform properly date sensitive
functions involving certain dates prior to and any date after December 31,
1999 (the "Year 2000 Problem"), (ii) developed a plan and timetable for
addressing the Year 2000 Problem on a timely basis and (iii) to date,
implemented that plan materially in accordance with such timetable (as
adjusted from time to time). Based on the foregoing, the Borrowers believe
that all computer applications (including those of their suppliers,
vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a timely
basis to be able to perform properly date-sensitive functions for all
dates before, on and after January 1, 2000, except to the extent that a
failure to do so could not reasonably be expected to have a Material
Adverse Effect.
34
ARTICLE V
COVENANTS OF THE BORROWERS
SECTION 5.01. Affirmative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, each of the
Borrowers will:
(a) Reporting Requirements. Provide to the Lenders the following:
(i) promptly after the commencement thereof, notice of all
actions and proceedings before any court, governmental agency or
arbitrator affecting either Borrower or any of its Subsidiaries of
the type described in Section 4.01(e);
(ii) as soon as possible and in any event within five days
after the occurrence of each Default continuing on the date of such
statement, a statement of the chief financial officer of the Holding
Company setting forth details of such Default and the action that
the Borrowers have taken and proposes to take with respect thereto
and any other event that would be reasonably likely to have or has
had a Material Adverse Effect.
(iii) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal
year of the Holding Company, the Consolidated balance sheet of the
Holding Company and its Subsidiaries as of the end of such quarter
and Consolidated statements of income and cash flows of the Holding
Company and its Subsidiaries for the period commencing at the end of
the previous fiscal year and ending with the end of such quarter,
duly certified (subject to year-end audit adjustments) by the chief
executive officer, the chief financial officer, the vice-president
finance and investor relations or the vice-president controller of
the Holding Company as having been prepared in accordance with
generally accepted accounting principles and certificates of the
chief executive officer, the chief financial officer, the
vice-president finance and investor relations or the vice-president
controller of the Holding Company in substantially the form of
Exhibit E as to compliance with the terms of this Agreement and
setting forth in reasonable detail the calculations necessary to
demonstrate compliance with Sections 5.02(e) and 5.03, provided that
in the event of any change in GAAP used in the preparation of such
financial statements, the Holding Company shall also provide, if
necessary for the determination of compliance with Section 5.03, a
statement of reconciliation conforming such financial statements to
GAAP;
(iv) as soon as available and in any event within 90 days
after the end of each fiscal year of the Holding Company, (A) a copy
of the annual audit report for such year for the Holding Company and
its Subsidiaries, containing the Consolidated balance sheet of the
Holding Company and its Subsidiaries as of the end of such fiscal
year and Consolidated statements of income and cash flows of the
Holding Company and its Subsidiaries for such fiscal year, in each
case accompanied by an opinion by Ernst & Young LLP or other
independent public accountants of recognized standing regularly
retained by the Borrowers to audit their books and reasonably
acceptable to the Required Lenders, (B) the consolidating balance
sheet of the Holding Company and its Subsidiaries as of the end of
such fiscal year and consolidating statements of income and cash
flows of the Holding Company and its Subsidiaries for such fiscal
year and (C) certificates of the chief executive officer, the chief
financial
35
officer, the vice-president finance and investor relations or the
vice-president controller of the Holding Company in substantially
the form of Exhibit E as to compliance with the terms of this
Agreement and setting forth in reasonable detail the calculations
necessary to demonstrate compliance with Sections 5.02(e) and 5.03,
provided that in the event of any change in GAAP used in the
preparation of such financial statements, the Holding Company shall
also provide, if necessary for the determination of compliance with
Section 5.03, a statement of reconciliation conforming such
financial statements to GAAP;
(v) promptly after the sending or filing thereof, copies of
all quarterly and annual reports and proxy solicitations that the
Holding Company sends to its public securityholders generally, and
copies of all reports on Form 8-K and registration statements for
the public offering of securities that the Holding Company or any
Subsidiary files with the Securities and Exchange Commission or any
national securities exchange; and
(vi) such other information respecting the Borrowers or any of
their Subsidiaries as any Lender through the Agent may from time to
time reasonably request.
(b) Visitation Rights. At any reasonable time and from time to time,
permit the Agent or any of the Lenders or any agents or representatives
thereof, to examine and make copies of and abstracts from the records and
books of account of, and visit the properties of, such Borrower and any of
its Subsidiaries, and to discuss the affairs, finances and accounts of
such Borrower and any of its Subsidiaries with any of their officers or
directors and with their independent certified public accountants.
(c) Preservation of Corporate Existence, Etc. Preserve and maintain,
and cause each of its Significant Subsidiaries to preserve and maintain,
its corporate existence, rights (charter and statutory) and franchises;
provided, however, that such Borrower and its Subsidiaries may consummate
any merger or consolidation permitted under Section 5.02(c) and provided
further that neither such Borrower nor any of its Significant Subsidiaries
shall be required to preserve any right or franchise if (x) the Board of
Directors of such Borrower or such Significant Subsidiary shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of such Borrower or such Significant Subsidiary, as the case may
be, and that the loss thereof is not disadvantageous in any material
respect to such Borrower or the Lenders or (y) in any jurisdiction the
failure to do so would not be reasonably likely to have a Material Adverse
Effect.
(d) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA and Environmental Laws other than to the
extent the noncompliance therewith or violation thereof would not be
reasonably likely to have a Material Adverse Effect.
(e) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property unless such failure to pay or
discharge would not be reasonably likely to have a significant adverse
effect on the business of the Borrowers and the Subsidiaries taken as a
whole and (ii) all lawful claims that, if unpaid, might by law become a
Lien upon its property unless such failure to pay or discharge would not
be reasonably likely to have a Material Adverse Effect; provided, however,
that neither such
36
Borrowers nor any of its Subsidiaries shall be required to pay or
discharge any such tax, assessment, charge or claim that is being
contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable
against its other creditors.
(f) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks (excluding publisher's liability insurance) as is usually carried by
companies engaged in similar businesses and owning similar properties in
the same general areas in which such Borrower or such Subsidiary operates.
(g) Keeping of Books. Maintain, and cause each of its Subsidiaries
to maintain, a standard system of accounting in accordance with generally
accepted accounting principles consistently applied.
(h) Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its properties
that are used or useful in the conduct of its business in good working
order and condition, ordinary wear and tear excepted, other than to the
extent any such failure to maintain and preserve would not be reasonably
likely to have a Material Adverse Effect.
37
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, neither
Borrower will:
(a) Liens, Etc. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien on or with respect to
any of its properties, whether now owned or hereafter acquired, or assign,
or permit any of its Subsidiaries to assign, any right to receive income,
other than:
(i) Permitted Liens,
(ii) purchase money Liens (including leases treated as
security interests) upon or in any real property or equipment
acquired or held by any Borrower or any Subsidiary in the ordinary
course of business to secure the purchase price of such property or
equipment or to secure Debt incurred solely for the purpose of
financing the acquisition of such property or equipment, or Liens
existing on such property or equipment at the time of its
acquisition (other than any such Liens created in contemplation of
such acquisition that were not incurred to finance the acquisition
of such property) or extensions, renewals or replacements of any of
the foregoing for the same or a lesser amount, provided, however,
that no such Lien shall extend to or cover any properties of any
character other than the real property or equipment being acquired,
and no such extension, renewal or replacement shall extend to or
cover any properties not theretofore subject to the Lien being
extended, renewed or replaced,
(iii) the Liens existing on the Effective Date and described
on Schedule 5.02(a) hereto,
(iv) Liens on property of a Person existing at the time such
Person is merged into or consolidated with any Borrower or any
Subsidiary of such Borrower or becomes a Subsidiary of such
Borrower; provided that such Liens were not created in contemplation
of such merger, consolidation or acquisition and do not extend to
any assets other than those of the Person so merged into or
consolidated with such Borrower or such Subsidiary or acquired by
such Borrower or such Subsidiary,
(v) other Liens securing Debt in an aggregate principal amount
not to exceed $10,000,000 at any time outstanding;
(vi) Liens incurred in respect of judgments and awards
discharged within 30 days from the making thereof or under review in
an appropriate forum so long as enforcement thereof is effectively
stayed;
(vii) Liens incurred in respect of rental or security
deposits; and
(viii) the replacement, extension or renewal of any Lien
permitted by clause (iii) or (iv) above upon or in the same property
theretofore subject thereto or the replacement, extension or renewal
(without increase in the amount or change in any direct or
contingent obligor) of the Debt secured thereby.
(b) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease, transfer or
otherwise dispose of, any assets, or grant any option or other right to
purchase, lease or otherwise acquire any assets, except (i) sales of
inventory and equipment in the ordinary course of its business, (ii) in a
transaction authorized by subsection (b) of this Section, (iii) sales of
assets for fair value in an aggregate amount not to exceed $35,000,000 and
(iv) the sale of either (x) the real property located at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇,
▇▇
▇▇▇ ▇▇▇▇ or(y) the real property comprising the distribution center
located in Jefferson City, Missouri, in each case, for fair value in
connection with any sale-leaseback transaction.
(c) Mergers, Etc. Merge or consolidate with or into any Person, or
permit any of its Subsidiaries to do so, except that (i) any Subsidiary of
either Borrower may merge or consolidate with or into any other Subsidiary
of such Borrower, (ii) any Subsidiary of either Borrower may merge into
such Borrower and (iii) either Borrower may merge with any other Person so
long as such Borrower is the surviving corporation, provided, in each
case, that no Default shall have occurred and be continuing at the time of
such proposed transaction or would result therefrom.
(d) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of the business of
the Borrowers and their Subsidiaries, taken as a whole, as carried on at
the date hereof.
(e) Dividends, Etc. Declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of capital stock of the
Holding Company, or purchase, redeem or otherwise acquire for value (other
than any redemption or repurchase of the Holding Company's outstanding 5%
convertible subordinated debentures due August 15, 2005, as in effect on
the date hereof, pursuant to the application of the change of control
provision contained therein, or any substantially identical provision
contained in any subsequent issuance of convertible Debt) (or permit any
of its Subsidiaries to do so) any shares of any class of capital stock of
the Holding Company or any warrants, rights or options to acquire any such
shares, now or hereafter outstanding, except that, so long as no Default
shall have occurred and be continuing at the time of any action described
below or would result therefrom, the Holding Company may (i) declare and
make any dividend payment or other distribution payable in common stock of
the Holding Company and (ii) declare or pay cash dividends to its
stockholders and purchase, redeem or otherwise acquire shares of its
common stock or warrants, rights or options to acquire any such shares in
an amount equal to the sum of (A) the cash proceeds received from the
substantially concurrent issue of new shares of its common stock, (B) the
aggregate amount of cash received and net tax benefit received from the
exercise by employees of the Borrowers and their Subsidiaries of stock
options or the purchase of shares of stock under the employee stock
purchase plan after May 31, 1998, (C) 25% of the reduction in Debt from
the conversion to equity of the Holding Company's outstanding 5%
convertible subordinated debentures due August 15, 2005 and (D) the lesser
of (x) 50% of net income of the Holding Company and its Subsidiaries
arising after May 31, 1998 and computed on a cumulative Consolidated basis
and (y) $75,000,000.
(f) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, any transactions otherwise permitted under this
Agreement with any of their unconsolidated Affiliates other than on terms
that are fair and reasonable and no less favorable to such Borrower or
such Subsidiary than it would obtain in a comparable arm's-length
transaction with a Person not an Affiliate.
(g) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required or permitted by generally accepted
accounting principles.
SECTION 5.03. Financial Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrowers
will:
39
(a) Consolidated Debt Ratio. Maintain at all times a Consolidated
Debt Ratio of not more than 0.60:1; provided that during the fiscal
quarters ending August 31, 2000 and November 30, 2000, the Borrowers shall
maintain a consolidated Debt Ratio of not more than 0.625:1.
(b) Consolidated Interest Coverage Ratio. Maintain as at the last
day of each of their fiscal quarters a Consolidated Interest Coverage
Ratio of not less than 3.50:1.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) any representation or warranty made in this Agreement or any
other Loan Document shall prove to have been false or misleading in any
material respect when made (or deemed made); or
(b) any report, statement, certificate, schedule or other document
or information furnished (whether prior to, on or after the Effective
Date) in connection with this Agreement or any of the other Loan Documents
shall prove to have been false or misleading in any material respect when
furnished (or deemed furnished); or
(c) any default, whether in whole or in part, shall occur in the
payment of the principal of the Revolving Credit Advances, or shall occur
and continue for more than three Business Days in the payment of any
interest on or any other amount respecting the Advances or any of the
other obligations of the Borrowers under the Loan Documents; or
(d) any default, whether in whole or in part, shall occur in the due
observance or performance of any covenant, term or provision to be
performed (i) under Sections 5.01(a)(ii), 5.02(e) or 5.03 of this
Agreement or (ii) under Sections 5.01(b) or 5.02 of this Agreement (other
than under Section 5.02(f) hereof) and such default described in this
clause (ii) shall continue for a period of five Business Days after the
earlier of notice thereof to or knowledge thereof by either Borrower; or
(e) any default, whether in whole or in part, shall occur in the due
observance or performance of any other covenant, term or provision to be
performed under this Agreement and the other Loan Documents by either
Borrower or any other party thereto (other than any Lender), which default
is not described in any other subsection of this Section, and such default
shall continue for a period of ten days after the earlier of notice
thereof to or knowledge thereof by either Borrower; provided, however,
that if such default is capable of being cured and if the Borrowers shall
have commenced to cure such default within such period and shall proceed
continuously in good faith and with due diligence to cure such default,
then such period instead shall be thirty days; or
(f) (i) any payment default of $1,000,000 or more shall occur under
any instrument or agreement (other than a Loan Document) respecting any
Debt of either Borrower or any of their Subsidiaries, unless payment shall
be made or action shall be taken within three Business Days after such
default in an amount or manner sufficient to cure it, provided that such
payment or action will not result in a breach of any term or provision of
this Agreement and the other Loan Documents, with the various financial
measurements and covenants set forth in Section 5.03 of
40
this Agreement being recalculated on a pro forma basis (from the then most
recent quarterly or subsequent pro forma calculations) to include the
effect of any such payment or (ii) any Debt of either Borrower or of any
of their Subsidiaries of $5,000,000 or more in principal or notional
amount shall be accelerated or otherwise become due or be required to be
prepaid, repurchased or redeemed (other than pursuant to a regularly
scheduled mandatory prepayment, repurchase or redemption or the
application of the change of control provision contained in the Holding
Company's outstanding 5% convertible subordinated debentures due August
15, 2005, as in effect on the date hereof, or any substantially identical
provision contained in any subsequent issuance of debt) prior to its
scheduled maturity; or
(g) either Borrower or any of their Subsidiaries shall (i) fail or
be unable to pay its debts generally as they become due, (ii) make a
general assignment for the benefit of its creditors, (iii) apply for or
consent to the appointment of a receiver, trustee, assignee, custodian,
sequestrator, liquidator or similar official for itself or any of its
assets and properties, (iv) commence a voluntary case for relief as a
debtor under the United States Bankruptcy Code, (v) file with or otherwise
submit to any governmental authority any petition, answer or other
document seeking (A) reorganization, (B) an arrangement with creditors or
(C) to take advantage of any other present or future applicable law
respecting bankruptcy, reorganization, insolvency, readjustment of debts,
relief of debtors, dissolution or liquidation, (vi) file or otherwise
submit any answer or other document admitting or failing to contest the
material allegations of a petition or other document filed or otherwise
submitted against it in any proceeding under any such applicable law,
(vii) be adjudicated a bankrupt or insolvent, or (viii) take any action
for the purpose of effecting any of the foregoing; or
(h) any case, proceeding or other action shall be commenced against
either Borrower or any of their Subsidiaries for the purpose of effecting,
or an order, judgment or decree shall be entered by any court of competent
jurisdiction approving (in whole or in part), anything specified in
subsection (g) of this Section, or any receiver, trustee, assignee,
custodian, sequestrator, liquidator or other official shall be appointed
with respect to either Borrower or any of their Subsidiaries, or shall be
appointed to take or shall otherwise acquire possession or control of all
or a substantial part of the assets and properties of either Borrower or
any of their Subsidiaries, and any of the foregoing shall continue
unstayed and in effect for any period of sixty days; or
(i) one or more final judgments for the payment of money in excess
of an aggregate of $5,000,000 shall be rendered against either Borrower or
any of their Subsidiaries and the same shall remain undischarged for a
period of thirty days during which levy and execution shall not be
effectively stayed or contested in good faith; or
(j) either Borrower or any ERISA Affiliate shall, or shall be
reasonably expected to, incur liability as a result of one or more of the
following: (i) the occurrence of any ERISA Event; (ii) the partial or
complete withdrawal of either Borrower or any ERISA Affiliate from a
Multiemployer Plan; or (iii) the reorganization or termination of a
Multiemployer Plan; provided that any such event(s) (individually or in
the aggregate with any other such event(s)) would be reasonably likely to
have or has had (in the reasonable judgment of the Required Lenders) a
Material Adverse Effect; or
(k) the Holding Company shall own less than all of the outstanding
securities issued by the Operating Company, or any other Person shall
acquire any option, warrant or other right to acquire any of those
securities; or
(l) the ▇▇▇▇▇▇▇▇ Family shall cease to own (in the aggregate) at
least fifty-one percent (51.00%) of the issued and outstanding shares of
Class A Stock of the Holding Company;
41
or any other Person shall acquire any option, warrant or other right to
acquire (from the ▇▇▇▇▇▇▇▇ Family, the Holding Company or otherwise) any
securities issued by the Holding Company that, if exercised, would result
in the ▇▇▇▇▇▇▇▇ Family holding less than 51% of such stock; or
(m) the Board of Directors of the Holding Company shall submit to
its shareholders for adoption, or the shareholders of the Holding Company
shall adopt, any supplement, modification or amendment to or restatement
of the certificate of incorporation or the by-laws of the Holding Company
that would in any way directly or indirectly (i) alter the relative voting
rights or powers of the classes of the capital stock of the Holding
Company, (ii) add any additional classes of capital stock with any voting
rights, or (iii) adversely affect the rights, powers, privileges, remedies
or interests of the Agent or the Lenders under this Agreement or any other
Loan Document, in any such case without the prior written consent of the
Required Lenders;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrowers, declare the
obligation of each Lender to make Advances (other than Letter of Credit Advances
by an Issuing Bank or a Lender pursuant to Section 2.16(c)) and of each Issuing
Bank to issue Letters of Credit to be terminated, whereupon the same shall
forthwith terminate, and (ii) shall at the request, or may with the consent, of
the Required Lenders, (A) by notice to the Borrowers, declare the Notes, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrowers , (B) by notice to each party required under the terms
of any agreement in support of which a Standby Letter of Credit is issued,
request that all obligations under such agreement be declared to be due and
payable and (C) by notice to each Issuing Bank, direct such Issuing Bank to
deliver a Default Termination Notice to the beneficiary of each Standby Letter
of Credit issued by it, and each Issuing Bank shall deliver such Default
Termination Notices; provided, however, that in the event of an actual or deemed
entry of an order for relief with respect to either Borrower under the United
States Bankruptcy Code, (1) the obligation of each Lender to make Advances
(other than Letter of Credit Advances by an Issuing Bank or a Lender pursuant to
Section 2.16(c)) and of each Issuing Bank to issue Letters of Credit shall
automatically be terminated and (2) the Notes, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by each Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon Event
of Default. If any Event of Default shall have occurred and be continuing, the
Agent may, or shall at the request of the Required Lenders, irrespective of
whether it is taking any of the actions described in Section 6.01 or otherwise,
make demand upon the Borrowers to, and forthwith upon such demand the Borrowers
will, pay to the Agent on behalf of the Lenders in same day funds at the Agent's
office designated in such demand, for deposit in the Letter of Credit Collateral
Account, an amount equal to the aggregate Available Amount of all Letters of
Credit then outstanding. If at any time the Agent determines that any funds held
in the Letter of Credit Collateral Account are subject to any right or claim of
any Person other than the Agent and the Lenders or that the total amount of such
funds is less than the aggregate Available Amount of all Letters of Credit, the
Borrowers will, forthwith upon demand by the Agent, pay to the Collateral Agent,
as additional funds to be deposited and held in the Letter of Credit Collateral
Account, an amount equal to the excess of (a) such aggregate Available Amount
over (b) the total amount of funds, if any, then held in the Letter of Credit
Collateral Account that the Agent determines to be free and clear of any such
right and claim. Upon the drawing of any Letter of Credit for which funds are on
deposit in the Letter of Credit Collateral Account, such funds shall be applied
to reimburse the relevant Issuing Bank or Lenders, as applicable, to the extent
permitted by applicable law. If the Borrowers have not delivered the cash
collateral as specified above within five Business Days after it was due, at any
time and
42
from time to time thereafter, the Lenders in their sole and absolute discretion
may (but shall not be obligated to) advance to the Borrowers all or any portion
of the required cash collateral, by credit to the Letter of Credit Collateral
Account or otherwise; and amounts advanced by the Lenders pursuant to this
option and outstanding from time to time shall be due and payable, together with
interest and additional interest thereon at the rates provided in Section 2.07
of this Agreement, on demand, and shall otherwise constitute "Letter of Credit
Advances" for all purposes under this Agreement and the other Loan Documents.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof, together with such
powers and discretion as are reasonably incidental thereto. As to any matters
not expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to this Agreement or
applicable law. The Agent agrees to give to each Lender prompt notice of each
notice given to it by any Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the Lender that made any Advance as the holder of the Debt resulting therefrom
until the Agent receives and accepts an Assumption Agreement entered into by an
Assuming Lender as provided in Section 2.18 or an Assignment and Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section 8.07; (ii) may consult with legal counsel (including
counsel for the Borrowers), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with the Loan
Documents; (iv) shall not have any duty (fiduciary or otherwise) to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of the Loan Documents on the part of any Borrower or to inspect the
property (including the books and records) of the Borrowers; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant hereto; (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram or telex) believed by it to be genuine and signed or sent by the proper
party or parties; and (vii) shall be deemed not to have knowledge of any Default
unless and until written notice (including facsimile notice) thereof is given to
the Agent by either Borrower or a Lender.
SECTION 7.03. Citibank and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Citibank shall
have the same rights and powers under the Loan Documents as any other Lender and
may exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Citibank in its
individual
43
capacity. Citibank and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, accept investment banking engagements from
and generally engage in any kind of business with, any Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of any
such Borrower or any such Subsidiary, all as if Citibank were not the Agent and
without any duty to account therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent 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.
SECTION 7.05. Indemnification. (a) The Lenders agree to indemnify
the Agent (to the extent not reimbursed by the Borrowers), from and against such
Lender Party's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Agent in any way relating to or
arising out of the Loan Documents or any action taken or omitted by the Agent
under the Loan Documents (collectively, the "Indemnified Costs"), provided that
no Lender shall be liable for any portion of the Indemnified Costs resulting
from the Agent's gross negligence or willful misconduct. Without limitation of
the foregoing, each Lender agrees to reimburse the Agent promptly upon demand
for its ratable share of any out-of-pocket expenses (including reasonable
counsel fees) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, to the
extent that the Agent is not reimbursed for such expenses by the Borrowers. In
the case of any investigation, litigation or proceeding giving rise to any
Indemnified Costs, this Section 7.05 applies whether any such investigation,
litigation or proceeding is brought by the Agent, any Lender or a third party.
(b) Each Lender severally agrees to indemnify each Issuing Bank (to
the extent not promptly reimbursed by the Borrowers) from and against such
Lender's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against such Issuing Bank in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by such Issuing Bank under the Loan Documents; provided, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Issuing Bank's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse such Issuing Bank
promptly upon demand for its ratable share of any costs and expenses (including,
without limitation, fees and expenses of counsel) payable by the Borrowers under
Section 8.04, to the extent that such Issuing Bank is not promptly reimbursed
for such costs and expenses by the Borrowers.
(c) For purposes of this Section 7.05, the Lenders' respective
ratable shares of any amount shall be determined, at any time, according to the
sum of (i) the aggregate principal amount of the Revolving Credit Advances and
Letter of Credit Advances outstanding at such time and owing to the respective
Lender, (ii) their respective Pro Rata Shares of the aggregate Available Amount
of all Letters of Credit outstanding at such time and (iii) their respective
Unused Revolving Credit Commitments at such time; provided that the aggregate
principal amount of Letter of Credit Advances owing to any Issuing Bank shall be
considered to be owed to the Lenders ratably in accordance with their respective
Revolving Credit Commitments. The failure of any Lender to reimburse any Agent
or any Issuing Bank,
44
as the case may be, promptly upon demand for its ratable share of any amount
required to be paid by the Lenders to such Agent or such Issuing Bank, as the
case may be, as provided herein shall not relieve any other Lender of its
obligation hereunder to reimburse such Agent or such Issuing Bank, as the case
may be, for its ratable share of such amount, but no Lender shall be responsible
for the failure of any other Lender to reimburse such Agent or such Issuing
Bank, as the case may be, for such other Lender's ratable share of such amount.
Without prejudice to the survival of any other agreement of any Lender Party
hereunder, the agreement and obligations of each Lender Party contained in this
Section 7.05 shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrowers and may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation
45
or the Required Lenders' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
SECTION 7.07. Other Agents. Each Lender hereby acknowledges that
neither syndication agent nor any other Lender designated as any "Agent" on the
signature pages hereof has any responsibility or liability hereunder other than
in its capacity as a Lender.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Revolving Credit Notes, nor consent to any
departure by any Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all the Lenders, do any of the
following: (a) waive any of the conditions specified in Section 3.01, (b)
increase the Commitments of the Lenders or subject the Lenders to any additional
obligations, (c) reduce the principal of, or interest on, the Revolving Credit
Advances or any fees or other amounts payable hereunder, (d) postpone any date
fixed for any payment of principal of, or interest on, the Revolving Credit
Advances or any fees or other amounts payable hereunder, (e) change the
percentage of the Commitments, the aggregate Available Amount of outstanding
Letters of Creditor of the aggregate unpaid principal amount of the Revolving
Credit Advances, or the number of Lenders, that shall be required for the
Lenders or any of them to take any action hereunder or (f) amend this Section
8.01; and provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under this Agreement
or any Note.
SECTION 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and mailed, telecopied, telegraphed, telexed or delivered,
if to the Holding Company or to the Operating Company, at its address at ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial
Officer, and ▇▇▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President Legal and Business Affairs; if
to any Initial Lender, at its Domestic Lending Office specified opposite its
name on Schedule I hereto; if to any other Lender, at its Domestic Lending
Office specified in the Assumption Agreement or the Assignment and Acceptance
pursuant to which it became a Lender; and if to the Agent, at its address at ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Bank Loan Syndications
Department; or, as to any Borrower or the Agent, at such other address as shall
be designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrowers and the Agent. All such notices and
communications shall, when mailed, telecopied, telegraphed or telexed, be
effective when
46
deposited in the mails, telecopied, delivered to the telegraph company or
confirmed by telex answerback, respectively, except that notices and
communications to the Agent pursuant to Article II, III or VII shall not be
effective until received by the Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrowers jointly and
severally agree to pay on demand all reasonable costs and expenses of the Agent
in connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of counsel for
the Agent with respect thereto and with respect to advising the Agent as to its
rights and responsibilities under the Loan Documents. The Borrowers further
jointly and severally agree to pay on demand all reasonable costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes and
the other Loan Documents to be delivered hereunder, including, without
limitation, reasonable fees and expenses of counsel for the Agent and each
Lender in connection with the enforcement of rights under this Section 8.04(a).
(b) The Borrowers jointly and severally agree to indemnify and hold
harmless the Agent and each Lender and each of their Affiliates and their
officers, directors, employees, agents and advisors (each, an "Indemnified
Party") from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason of (including,
without limitation, in connection with any investigation, litigation or
proceeding or preparation of a defense in connection therewith) (i) the Loan
Documents, any of the transactions contemplated herein or the actual or proposed
use of the proceeds of the Advances or (ii) the actual or alleged presence of
Environmental Substances on any property of any Borrower or any of its
Subsidiaries or any Environmental Claim relating in any way to any Borrower or
any of its Subsidiaries, except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 8.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by a Borrower, its directors, shareholders or creditors or
an Indemnified Party or any other Person or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated. The Borrowers also agree that no Indemnified Party shall have any
liability (whether direct or indirect, in contract, tort or otherwise) to the
Borrowers or any of their shareholders or creditors for or in connection with
the transactions contemplated hereby, except to the extent such liability is
found in a final nonappealable judgment by a court of competent jurisdiction to
have resulted from such Indemnified Party's gross negligence or willful
misconduct.
47
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance, LIBO Rate Advance is made by any Borrower to or for the account of
a Lender other than on the last day of the Interest Period for such Advance, as
a result of a payment or Conversion pursuant to Section 2.08(d) or (e), 2.10 or
2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or for
any other reason, or by an Eligible Assignee to a Lender other than on the last
day of the Interest Period for such Advance upon an assignment of rights and
obligations under this Agreement pursuant to Section 8.07 as a result of a
demand by the Borrowers pursuant to Section 8.07(a), such Borrower shall, upon
demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment or Conversion, including, without limitation, any
loss (including loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance.
(d) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the other Loan
Documents.
SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender or such
Affiliate to or for the credit or the account of any Borrower against any and
all of the obligations of such Borrower now or hereafter existing under this
Agreement and the Note held by such Lender, whether or not such Lender shall
have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Lender agrees promptly to notify such
Borrower after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Lender and its Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender and its Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective
(other than Sections 2.01 and 2.03, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrowers and the Agent and when the Agent shall
have been notified by each Initial Lender that such Initial Lender has executed
it and thereafter shall be binding upon and inure to the benefit of the
Borrowers, the Agent and each Lender and their respective successors and
assigns, except that no Borrower shall have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lenders.
SECTION 8.07. Assignments and Participations. (a) Each Lender may
and, if demanded by the Borrowers (following a demand by such Lender pursuant to
Section 2.11 or 2.14) upon at least five Business Days' notice to such Lender
and the Agent, will assign to one or more Persons all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Revolving Credit Advances owing to it and the
Revolving Credit Note or Notes held by it) with the consent of the Borrowers,
which consent shall not be unreasonably withheld or delayed; provided,
48
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Agreement (other
than any right to make Competitive Bid Advances, Competitive Bid Advances owing
to it and Competitive Bid Notes), (ii) except in the case of an assignment to a
Person that, immediately prior to such assignment, was a Lender or an assignment
of all of a Lender's rights and obligations under this Agreement, the amount of
the Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000, (iii)
each such assignment shall be to an Eligible Assignee, (iv) each such assignment
made as a result of a demand by the Borrowers pursuant to this Section 8.07(a)
shall be arranged by the Borrowers after consultation with the Agent and shall
be either an assignment of all of the rights and obligations of the assigning
Lender under this Agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other such
assignments that together cover all of the rights and obligations of the
assigning Lender under this Agreement, (v) no Lender shall be obligated to make
any such assignment as a result of a demand by the Borrowers pursuant to this
Section 8.07(a) unless and until such Lender shall have received one or more
payments from either the Borrowers or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal amount of
the Advances owing to such Lender, together with accrued interest thereon to the
date of payment of such principal amount and all other amounts payable to such
Lender under this Agreement, and (vi) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Revolving Credit Note
subject to such assignment and a processing and recordation fee of $3,000.
(b) Each Issuing Bank may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under the undrawn portion of its
Letter of Credit Commitment at any time; provided, however, that (i) except in
the case of an assignment to a Person that immediately prior to such assignment
was an Issuing Bank or an assignment of all of an Issuing Bank's rights and
obligations under this Agreement, the amount of the Letter of Credit Commitment
of the assigning Issuing Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000 and shall be in an
integral multiple of $1,000,000 in excess thereof, (ii) each such assignment
shall be to an Eligible Assignee, and (iii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with a processing and
recordation fee (unless paid pursuant to Section 8.07(a)) of $2,000 for each
Assignment and Acceptance between an Issuing Bank and its Affiliate or another
Issuing Bank or $3,000 for each other Assignment and Acceptance.
(c) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, (x)
the assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender or an Issuing Bank,
as the case may be, hereunder and (y) the Lender or Issuing Bank assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as
49
follows: (i) other than as provided in such Assignment and Acceptance, 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 the Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any other instrument or document furnished pursuant hereto; (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or the
performance or observance by any Borrower of any of its obligations under the
Loan Documents or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the 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; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers and discretion as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Revolving Credit Note or Notes subject to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrowers.
(f) The Agent shall maintain at its address referred to in Section
8.02 a copy of each Assumption Agreement and each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal amount of the
Advances owing to, each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(g) Each Lender may sell participations to one or more banks or
other entities (other than a Borrower or any of its Affiliates) in or to all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and any
Note or Notes held by it); provided, however, that (i) such Lender's obligations
under this Agreement (including, without limitation, its Commitment to the
Borrowers hereunder) shall remain unchanged and such Lender agrees that it will
not raise (and hereby expressly waives) any defense relating to any such
participation, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender shall
remain the holder of any such Note for all purposes of this Agreement, (iv) the
Borrowers, the Agent 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, (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of this Agreement or any Note, or any consent to any departure by any
Borrower therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Notes
50
or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation, or postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation and (vi)
such Lender shall not permit its direct or indirect participants to further
assign or participate its interest.
(h) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, 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,
the assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any Confidential Information relating to the
Borrowers received by it from such Lender.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and any Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
SECTION 8.08. Confidentiality. Neither the Agent nor any Lender
shall disclose any Confidential Information to any other Person without the
consent of the Borrowers, other than (a) to the Agent's or such Lender's
Affiliates and their officers, directors, employees, agents and advisors and, as
contemplated by Section 8.07(h), to actual or prospective assignees and
participants, and then only on a confidential basis, (b) as required by any law,
rule or regulation or judicial process and (c) as requested or required by any
state, federal or foreign authority or examiner regulating banks or banking.
SECTION 8.09. No Liability of the Issuing Banks. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
any Issuing Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit, unless such documents are substantially
different from the applicable form specified by such Letter of Credit; or (d)
any other circumstances whatsoever in making or failing to make payment under
any Letter of Credit, except that the applicable Borrower shall have a claim
against such Issuing Bank, and such Issuing Bank shall be liable to such
Borrower, to the extent of any direct, but not consequential, damages suffered
by such Borrower that such Borrower proves were caused by (i) such Issuing
Bank's willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) such Issuing Bank's willful failure to make lawful payment under
a Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, such Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
SECTION 8.10. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.11. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
51
same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.12. Waiver of Jury Trial. Each of the Borrowers, the Agent
and the Lenders hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Notes or the
actions of the Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SCHOLASTIC CORPORATION
By /s/ ▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Title: VP Finance & Investor Relations
▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
By /s/ ▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Title: VP Finance & Investor Relations
CITIBANK, N.A.,
as Agent
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title: Managing Director & Vice President
Initial Lenders
CITIBANK, N.A.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title: Vice President
THE CHASE MANHATTAN BANK
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Title: Vice President
FLEET BANK, N.A.
52
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Title: Assistant Vice President
SUMMIT BANK
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Title: Vice President
UMB BANK, N.A.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Title: Executive Vice President
HSBC BANK USA
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Title: Vice President
53
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
----------------------------------------------------------------------------------------------------------------------
Name of Initial Revolving Letter of Domestic Lending Office Eurodollar Lending Office
Lender Credit Credit
Commitment Commitment
----------------------------------------------------------------------------------------------------------------------
Citibank, N.A. $35,000,000 $10,000,000 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
T: (▇▇▇) ▇▇▇-▇▇▇▇ T: (▇▇▇) ▇▇▇-▇▇▇▇
F: (▇▇▇) ▇▇▇-▇▇▇▇ F: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
The Chase Manhattan $35,000,000 E. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
T: (▇▇▇) ▇▇▇-▇▇▇▇ T: (▇▇▇) ▇▇▇-▇▇▇▇
F: (▇▇▇) ▇▇▇-▇▇▇▇ F: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
Fleet Bank, N.A. $35,000,000 1185 Avenue of the Americas ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
T: (▇▇▇) ▇▇▇-▇▇▇▇ T: (▇▇▇) ▇▇▇-▇▇▇▇
F: (▇▇▇) ▇▇▇-▇▇▇▇ F: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
Summit Bank $35,000,000 ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
T: (▇▇▇) ▇▇▇-▇▇▇▇ T: (▇▇▇) ▇▇▇-▇▇▇▇
F: (▇▇▇) ▇▇▇-▇▇▇▇ F: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
UMB Bank, n.a. $20,000,000 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ 64141-6226
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
T: (▇▇▇) ▇▇▇-▇▇▇▇ T: (▇▇▇) ▇▇▇-▇▇▇▇
F: (▇▇▇) ▇▇▇-▇▇▇▇ F: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
HSBC Bank USA $10,000,000 ▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇
T: (▇▇▇) ▇▇▇-▇▇▇▇ T: (▇▇▇) ▇▇▇-▇▇▇▇
F: (▇▇▇) ▇▇▇-▇▇▇▇ F: (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
SCHEDULE 4.01(i)
SCHOLASTIC CORPORATION
LIST OF SUBSIDIARIES
DOMESTIC SUBSIDIARIES STATE OF INCORPORATION
--------------------- ----------------------
▇▇▇▇▇▇▇▇▇▇ ▇▇▇. New York
Scholastic Entertainment Inc. New York
(formerly Scholastic Productions Inc.)
Children's Music Library, Inc. New York
(a subsidiary of ▇▇▇▇▇▇ ▇▇▇▇▇ Studios, Inc.)
Lectorum Publications, Inc. New York
Scholastic Book Services, Inc. Delaware
SE Distribution Inc. Delaware
(a subsidiary of Scholastic Entertainment Inc.)
Scholastic UK Group Ltd. Delaware
(formerly Scholastic Publications (Magazines), Ltd.)
▇▇▇▇▇▇ ▇▇▇▇▇ Studios, Inc. Delaware
Georgetown Studios, Inc. Connecticut
(a subsidiary of ▇▇▇▇▇▇ ▇▇▇▇▇ Studios, Inc.)
The Electronic Bookshelf, Inc. Indiana
Scholastic Book Clubs, Inc. Missouri
FOREIGN SUBSIDIARIES JURISDICTION
-------------------- ------------
Scholastic Australia Pty. Ltd. Australia
Bookshelf Publishing Australia Pty. Ltd. Australia
Troll School Book Clubs and Fairs Australia Pty. Ltd. Australia
Scholastic Australia Superannuation Pty. Ltd. Australia
Scholastic Executive Superannuation Pty. Ltd. Australia
Oldmeadow Booksellers (Aust.) Pty. Ltd. Australia
Scholastic (Barbados), Inc. Barbados
Scholastic Canada Ltd. Canada
Scholastic Productions Canada Ltd. Canada
Scholastic Book Fairs Canada Inc. Canada
Scholastic Ltd. England
School Book Fairs Ltd. England
Scholastic Book Clubs Ltd. England
Red House Books Ltd. England
Scholastic Publication Ltd. England
Scholastic Educational Magazines Ltd. England
Red House Book Clubs Ltd. England
Scholastic Hong Kong Limited Hong Kong
Scholastic Book Fairs Ltd. Ireland
Scholastic India Private Limited India
Scholastic Mexico, S.A. de C.V. Mexico
Scholastic New Zealand Ltd. New Zealand
(formerly known as Ashton Scholastic Ltd.)
SCHEDULE 5.02(a)
EXISTING LIENS AND ENCUMBRANCES
1) An Operating Overdraft Agreement was entered into on September 12, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Ltd. ("SCL") and Canadian Imperial Bank of
Commerce has a negative pledge that SCL cannot give security over any of
its assets to any other lender.
2) In 1983, the City of Jefferson, Missouri provided financing to ▇▇▇▇▇▇▇▇▇▇
▇▇▇. through the issuance of Industrial Revenue bonds to complete a
substantial addition to its national distribution center in Jefferson
City, Missouri. These Bonds were renegotiated in March 1992. Scholastic
has issued to the Bond Trustee an unconditional guarantee of principal and
interest. Land acquired in Jefferson City, Missouri, during f/y 1982, a
building at Scholastic's national distribution center and certain
equipment are pledged as security.
3) In December 1993, Scholastic entered into an agreement pursuant to which
the ▇▇▇ provides Scholastic with financial assistance through the issuance
of ▇▇▇ ▇▇▇▇▇ in connection with the purchase of furniture, fixtures and
equipment for use at Scholastic's headquarters at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇. In connection with such financial assistance, Scholastic has
granted the ▇▇▇ a security interest in such furniture, fixtures and
equipment.
EXHIBIT A-1 - FORM OF
REVOLVING CREDIT
PROMISSORY NOTE
Dated: _______________, 199_
FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
_________________________ corporation (the "Borrower"), HEREBY PROMISES TO PAY
to the order of _________________________ (the "Lender") for the account of its
Applicable Lending Office on the Termination Date (each as defined in the Credit
Agreement referred to below) the aggregate principal amount of the Revolving
Credit Advances made by the Lender to the Borrower pursuant to the Credit
Agreement dated as of August 11, 1999 among the Borrower, [Scholastic
Corporation][▇▇▇▇▇▇▇▇▇▇ ▇▇▇.], the Lender and certain other lenders parties
thereto, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., as arranger, The Chase Manhattan Bank and
Fleet Bank, N.A., as syndication agents, and Citibank, N.A. as Agent for the
Lender and such other lenders (as amended or modified from time to time, the
"Credit Agreement"; the terms defined therein being used herein as therein
defined) outstanding on the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount
of each Revolving Credit Advance from the date of such Revolving Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to Citibank, as Agent, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in same day funds. Each Revolving Credit Advance owing to the
Lender by the Borrower pursuant to the Credit Agreement, and all payments made
on account of principal thereof, shall be recorded by the Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.
This Promissory Note is one of the Revolving Credit Notes referred
to in, and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i) provides for the making of Revolving Credit
Advances by the Lender to the Borrower from time to time, the indebtedness of
the Borrower resulting from each such Revolving Credit Advance being evidenced
by this Promissory Note and (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
The Borrower hereby waives presentment, demand, protest and notice
of any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
[NAME OF BORROWER]
By____________________________
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
================================================================================
Amount of
Amount of Principal Paid Unpaid Principal Notation
Date Advance or Prepaid Balance Made By
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EXHIBIT A-2 - FORM OF
COMPETITIVE BID
PROMISSORY NOTE
U.S.$_______________ Dated: _______________, 199_
FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
_________________________ corporation (the "Borrower"), HEREBY PROMISES TO PAY
to the order of _________________________ (the "Lender") for the account of its
Applicable Lending Office (as defined in the Credit Agreement dated as of August
11, 1999 among the Borrower, [Scholastic Corporation] [▇▇▇▇▇▇▇▇▇▇ ▇▇▇.], the
Lender and certain other lenders parties thereto, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., as
arranger, The Chase Manhattan Bank and Fleet Bank, N.A., as syndication agents,
and Citibank, N.A., as Agent for the Lender and such other lenders (as amended
or modified from time to time, the "Credit Agreement"; the terms defined therein
being used herein as therein defined)), on _______________, 199_, the principal
amount of U.S.$_______________].
The Borrower promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:
Interest Rate: _____% per annum (calculated on the basis of a year of
_____ days for the actual number of days elapsed).
Both principal and interest are payable in lawful money of
________________ to Citibank, as agent, for the account of the Lender at the
office of _________________________, at _________________________ in same day
funds.
This Promissory Note is one of the Competitive Bid Notes referred to
in, and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events.
The Borrower hereby waives presentment, demand, protest and notice
of any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
[NAME OF BORROWER]
By_______________________________
Title:
EXHIBIT B-1 - FORM OF NOTICE OF
REVOLVING CREDIT BORROWING
Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
[Date]
Attention: Bank Loan Syndications Department
Ladies and Gentlemen:
The undersigned, [Name of Borrower], refers to the Credit Agreement,
dated as of August 11, 1999 (as amended or modified from time to time, the
"Credit Agreement", the terms defined therein being used herein as therein
defined), among the undersigned,[Scholastic Corporation][▇▇▇▇▇▇▇▇▇▇ ▇▇▇.],
certain Lenders parties thereto, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., as arranger, The
Chase Manhattan Bank and Fleet Bank, N.A., as syndication agents, and Citibank,
N.A., as Agent for said Lenders, and hereby gives you notice, irrevocably,
pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby
requests a Revolving Credit Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Revolving Credit
Borrowing (the "Proposed Revolving Credit Borrowing") as required by Section
2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Revolving Credit Borrowing is
_______________, 199_.
(ii) The Type of Advances comprising the Proposed Revolving Credit
Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Revolving Credit
Borrowing is $_______________.
[(iv) The initial Interest Period for each Eurodollar Rate Advance
made as part of the Proposed Revolving Credit Borrowing is _____
month[s].]
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Revolving
Credit Borrowing:
(A) the representations and warranties contained in Section 4.01 of
the Credit Agreement are correct, before and after giving effect to the
Proposed Revolving Credit Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date; and
(B) no event has occurred and is continuing, or would result from
such Proposed Revolving Credit Borrowing or from the application of the
proceeds therefrom, that constitutes a Default.
Very truly yours,
[NAME OF BORROWER]
By________________________________
Title:
EXHIBIT B-2 - FORM OF NOTICE OF
COMPETITIVE BID BORROWING
Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
[Date]
Attention: Bank Loan Syndications Department
Ladies and Gentlemen:
The undersigned, [Name of Borrower], refers to the Credit Agreement,
dated as of August 11, 1999 (as amended or modified from time to time, the
"Credit Agreement", the terms defined therein being used herein as therein
defined), among the undersigned,[Scholastic Corporation][▇▇▇▇▇▇▇▇▇▇ ▇▇▇.],
certain Lenders parties thereto, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., as arranger, The
Chase Manhattan Bank and Fleet Bank, N.A., as syndication agents, and Citibank,
N.A., as Agent for said Lenders, and hereby gives you notice, irrevocably,
pursuant to Section 2.03 of the Credit Agreement that the undersigned hereby
requests a Competitive Bid Borrowing under the Credit Agreement, and in that
connection sets forth the terms on which such Competitive Bid Borrowing (the
"Proposed Competitive Bid Borrowing") is requested to be made:
(A) Date of Competitive Bid Borrowing ________________________
(B) Amount of Competitive Bid Borrowing ________________________
(C) [Maturity Date] [Interest Period] ________________________
(D) Interest Rate Basis ________________________
(E) Interest Payment Date(s) ________________________
(F) ___________________ ________________________
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed
Competitive Bid Borrowing:
(a) the representations and warranties contained in Section 4.01 are
correct, before and after giving effect to the Proposed Competitive Bid
Borrowing and to the application of the proceeds therefrom, as though made
on and as of such date;
(b) no event has occurred and is continuing, or would result from
the Proposed Competitive Bid Borrowing or from the application of the
proceeds therefrom, that constitutes a Default; and
(c) the aggregate amount of the Proposed Competitive Bid Borrowing
and all other Borrowings to be made on the same day under the Credit
Agreement is within the aggregate amount of the unused Commitments of the
Lenders.
The undersigned hereby confirms that the Proposed Competitive Bid
Borrowing is to be made available to it in accordance with Section 2.03(a)(v) of
the Credit Agreement.
Very truly yours,
[NAME OF BORROWER]
By______________________________
Title:
EXHIBIT C - FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of August 11,
1999 (as amended or modified from time to time, the "Credit Agreement") among
Scholastic Corporation, a Delaware corporation, and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.,, a New York
corporation (the "Borrowers"), the Lenders (as defined in the Credit Agreement),
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., as arranger, The Chase Manhattan Bank and Fleet Bank,
N.A., as syndication agents, and Citibank, N.A., as administrative agent for the
Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein
with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule I hereto
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof (other than in respect of Competitive Bid Advances and Competitive Bid
Notes) equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement (other than in
respect of Competitive Bid Advances and Competitive Bid Notes). After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
the Revolving Credit Advances owing to the Assignee will be as set forth on
Schedule 1 hereto.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or the
performance or observance by any Borrower of any of its obligations under any
Loan Document or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Revolving Credit Note, if any held by the Assignor [and
requests that the Agent exchange such Revolving Credit Note for a new Revolving
Credit Note payable to the order of [the Assignee in an amount equal to the
Commitment assumed by the Assignee pursuant hereto or new Revolving Credit Notes
payable to the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto and] the Assignor in an amount equal to
the Commitment retained by the Assignor under the Credit Agreement,
[respectively,] as specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor 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
the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under the Loan Documents as are delegated
to the Agent by the terms thereof, together with such powers and discretion as
are reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) attaches any
U.S. Internal Revenue Service forms required under Section 2.14 of the Credit
Agreement.
4. Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1 hereto.
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after
the Effective Date, the Agent shall make all payments under the Credit Agreement
and the Revolving Credit Notes in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and facility
fees with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Credit Agreement and the
Revolving Credit Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.
Schedule 1
to
Assignment and Acceptance
Percentage interest assigned: _____%
Assignee's Commitment: __________
Aggregate outstanding principal amount of Revolving
Credit Advances assigned: $__________
Principal amount of Revolving Credit Note payable
to Assignee: $__________
Principal amount of Revolving Credit Note payable
to Assignor: $__________
Effective Date*: _______________, 199_
[NAME OF ASSIGNOR], as Assignory
By__________________________________________
Title:
Dated: _______________, 199_
[NAME OF ASSIGNEE], as Assignee
By__________________________________________
Title:
Dated: _______________, 199_
Domestic Lending Office:
[Address]
Eurodollar Lending Office:
[Address]
----------
* This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance to the Agent
Accepted this
____ day of _______________, 199_
CITIBANK, N.A., as Agent
By__________________________________________
Title:
Approved this ___ day
of _______________, 199_
SCHOLASTIC CORPORATION
By__________________________________________
Title:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
By__________________________________________
Title:
[Letterhead of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
of Scholastic, Inc.]
August 11, 1999
To each of the Lenders parties
to the Credit Agreement dated
as of August 11, 1999
among Scholastic Corporation, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.,
said Lenders and Citibank, N.A.,
as Agent for said Lenders, and
to Citibank, N.A., as Agent
Scholastic Corporation and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(h)(iv) of
the Credit Agreement, dated as of August 11, 1999 (the "Credit Agreement"),
among Scholastic Corporation and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.(the "Borrowers"), the Lenders
parties thereto, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., as arranger, The Chase Manhattan
Bank and Fleet Bank, N.A., as syndication agents, and Citibank, N.A., as Agent
for said Lenders. Terms defined in the Credit Agreement are used herein as
therein defined.
I have acted as counsel for the Borrowers in connection with the
preparation, execution and delivery of the Credit Agreement.
In that connection, I have examined:
(1) The Credit Agreement.
(2) The documents furnished by the Borrowers pursuant to Article III
of the Credit Agreement.
(3) The Certificate of Incorporation of each Borrower and all
amendments thereto (the "Charter").
(4) The by-laws of each Borrower and all amendments thereto (the
"By-laws").
(5) A certificate of the Secretary of State of Delaware, dated
August , 1999, attesting to the continued corporate existence and
good standing of the Holding Company in that State.
(5) A certificate of the Secretary of State of New York, dated
August , 1999 attesting to the continued corporate existence and
good standing of the Operating Company in that State.
I have also examined the originals, or copies certified to our satisfaction, of
the documents listed in certificates of the chief financial officers of the
Borrowers, dated the date hereof (the "Certificates"), certifying that the
documents listed in such certificate are all of the indentures, loan or credit
agreements, leases, guarantees, mortgages, security agreements, bonds, notes and
other agreements or instruments, and all of the orders, writs, judgments,
awards, injunctions and decrees, that affect or purport to affect such
Borrower's right to borrow money or such Borrower's obligations under the Credit
Agreement or the Notes. In addition, I have examined the originals, or copies
certified to our satisfaction, of such other corporate records of the Borrowers,
certificates of public officials and of officers of the Borrowers, and
agreements, instruments and other documents, as I have deemed necessary as a
basis for the opinions expressed below. As to questions of fact material to such
opinions, I have, when relevant facts were not independently established by us,
relied upon certificates of the Borrowers or their officers or of public
officials. I have assumed the due execution and delivery, pursuant to due
authorization, of the Credit Agreement by the Initial Lenders and the Agent.
My opinions expressed below are limited to the law of the State of
New York, the General Corporation Law of the State of Delaware and the Federal
law of the United States.
Based upon the foregoing and upon such investigation as I have
deemed necessary, I am of the following opinion:
1. Each Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of its incorporation.
2. The execution, delivery and performance by each Borrower of the
Credit Agreement and the Notes to which it is a party, and the
consummation of the transactions contemplated thereby, are within such
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Charter or the By-laws of
such Borrower or (ii) any law, rule or regulation applicable to such
Borrower (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System) or (iii) any contractual or legal
restriction contained in any indentures, loan or credit agreements,
leases, guarantees, mortgages, security agreements, bonds, notes and other
agreements or instruments, or any orders, writs, judgments, awards,
injunctions and decrees, that affect or purport to affect such Borrower's
right to borrow money or such Borrower's obligations under the Credit
Agreement or the Notes. The Credit Agreement and the Notes have been duly
executed and delivered on behalf of each Borrower.
3. No authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for the due execution, delivery and performance by
any Borrower of the Credit Agreement and the Notes to which it is a party.
4. The Credit Agreement is, and after giving effect to the initial
Borrowing, the Notes to which it is a party will be, legal, valid and
binding obligations of each Borrower enforceable against such Borrower in
accordance with their respective terms.
5. To the best of my knowledge, there are no pending or overtly
threatened actions or proceedings against any Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator that
purport to affect the legality, validity, binding effect or enforceability
of the Credit Agreement or any of the Notes or the consummation of the
transactions contemplated thereby or that are likely to have a Material
Adverse Effect.
The opinions set forth above are subject to the following
qualifications:
(a) My opinion in paragraph 4 above as to enforceability is subject
to the effect of any applicable bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar law affecting creditors' rights generally.
(b) My opinion in paragraph 4 above as to enforceability is subject
to the effect of general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether considered in a proceeding in equity or at
law).
(c) I express no opinion as to (i) Section 2.14 of the Credit
Agreement insofar as it provides that any Lender purchasing a
participation from another Lender pursuant thereto may exercise set-off or
similar rights with respect to such participation and (ii) the effect of
the law of any jurisdiction other than the State of New York wherein any
Lender may be located or wherein enforcement of the Credit Agreement or
the Notes may be sought that limits the rates of interest legally
chargeable or collectible.
Very truly yours,
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT E - FORM OF FINANCIAL
COVENANTS COMPLIANCE CERTIFICATE
FINANCIAL COVENANTS COMPLIANCE CERTIFICATE
respecting
SCHOLASTIC CORPORATION
and
▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
[MONTH and DATE], 19
Pursuant to the Amended and Restated Credit Agreement dated as of
August 11, 1999 (as the same may be supplemented, modified, amended or restated
from time to time in the manner provided therein, the "Credit Agreement"), the
undersigned, being respectively, the [PRINT TITLE] of Scholastic Corporation and
the [PRINT TITLE] of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇. (individually, a "Borrower" and,
collectively, the "Borrowers"), hereby certify to Citibank, N.A., as Agent (the
"Agent"), and to each of the Lenders, as of the date hereof that:
(a) the representations and warranties contained in Section 4.01 are
correct as though made on and as of the date hereof;
(b) no event has occurred and is continuing that constitutes a
Default; and
(c) attached hereto are the calculations of, and the confirmations
of the Borrowers' compliance with, the financial covenants set forth in
Sections 5.02(e) and 5.03 of the Credit Agreement.
Capitalized terms and non-capitalized words and phrases used and not
otherwise defined in this Certificate shall have the meanings respectively
assigned to them in the Lender and by counsel to the Agent in giving any opinion
or advice requested of such counsel.
____________________________________________
(SIGNATURE)
DATE SIGNED: ___________ ___, 19
____________________________________________
(SIGNATURE)
DATE SIGNED: ___________ ___, 19
[SHEARMAN & STERLING LETTERHEAD]
August 11, 1999
To the Initial Lenders party to the
Credit Agreement referred
to below and to Citibank, N.A.,
as Agent
Ladies and Gentlemen:
We have acted as special New York counsel to Citibank, N.A., as
Agent, in connection with the preparation, execution and delivery of the Amended
and Restated Credit Agreement dated as of August 11, 1999 (the "Credit
Agreement") among Scholastic Corporation, a Delaware corporation (the "Holding
Company"), ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., a New York corporation (the "Operating Company" and,
together with the Holding Company, the "Borrowers") and each of you. Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein
as therein defined.
In that connection, we have examined a counterpart of the Credit
Agreement executed by the Borrowers, the Notes executed by the respective
Borrowers and delivered on the date hereof (for purposes of this opinion letter,
the "Notes") and, to the extent relevant to our opinion expressed below, the
other documents delivered by the Borrowers pursuant to Section 3.01 of the
Credit Agreement.
In our examination of the Credit Agreement, the Notes and such other
documents, we have assumed, without independent investigation (a) the due
execution and delivery of the Credit Agreement by all parties thereto and of the
Notes by the respective Borrowers, (b) the genuineness of all signatures and (c)
the authenticity of the originals of the documents submitted to us.
In addition, we have assumed, without independent investigation,
that (i) each Borrower is duly organized and validly existing under the laws of
the jurisdiction of its organization and has full power and authority (corporate
and otherwise) to execute, deliver and perform the Credit Agreement and the
Notes to which it is a party and (ii) the execution, delivery and performance by
each Borrower of the Credit Agreement and the Notes to which it
2
is a party have been duly authorized by all necessary action (corporate or
otherwise) and do not (A) contravene the certificate of incorporation, bylaws or
other constituent documents of any Borrower, (B) conflict with or result in the
breach of any document or instrument binding on any Borrower or (C) violate or
require any governmental or regulatory authorization or other action under any
law, rule or regulation applicable to any Borrower other than New York law or
United Sates Federal law applicable to borrowers generally or, assuming the
correctness of the Borrowers' statements made as representations and warranties
in Section 4.01(d) of the Credit Agreement, applicable to any Borrower. We have
also assumed that the Credit Agreement is the legal, valid and binding
obligation of each Lender, enforceable against such Lender in accordance with
its terms.
Based upon the foregoing examination and assumptions and upon such
other investigation as we have deemed necessary and subject to the
qualifications set forth below, we are of the opinion that the Credit Agreement
and each of the Notes are the legal, valid and binding obligations of each
Borrower party thereto, enforceable against such Borrower in accordance with
their respective terms.
Our opinion above is subject to the following qualifications:
(i) Our opinion above is subject to the effect of any
applicable bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization,
moratorium or similar law affecting creditors' rights generally.
(ii) Our opinion above is also subject to the effect of
general principles of equity, including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at
law).
(iii) We express no opinion as to the enforceability of the
indemnification provisions set forth in Section 8.04 of the Credit
Agreement to the extent enforcement thereof is contrary to public
policy regarding the exculpation of criminal violations, intentional
harm and acts of gross negligence or recklessness.
(iv) Our opinion above is limited to the law of the State of
New York and the federal law of the Unites States of America and we
do not express any opinion herein concerning any other law. Without
limiting the generality of the foregoing, we express no opinion as
to the effect of the law of a jurisdiction other than the State of
New York wherein any Lender may be located or
3
wherein enforcement of the Credit Agreement or any of the Notes may
be sought that limits the rates of interest legally chargeable or
collectible.
A copy of this opinion letter may be delivered by any of you to any
Person that becomes a Lender in accordance with the provisions of the Credit
Agreement. Any such Lender may rely on the opinion expressed above as if this
opinion letter were addressed and delivered to such Lender on the date hereof.
This opinion letter speaks only as of the date hereof. We expressly
disclaim any responsibility to advise you or any other Lender who is permitted
to rely on the opinion expressed herein as specified in the next preceding
paragraph of any development or circumstance of any kind including any change of
law or fact that may occur after the date of this opinion letter even though
such development, circumstance or change may affect the legal analysis, a legal
conclusion or any other matter set forth in or relating to this opinion letter.
Accordingly, any Lender relying on this opinion letter at any time should seek
advice of its counsel as to the proper application of this opinion letter at
such time.
Very truly yours,
/s/ Shearman & Sterling
WEH:SLH