Exhibti 10.5
CREDIT AGREEMENT
Dated as of April 2, 1998
among
FARM JOURNAL, INC.,
as Borrower,
FARM JOURNAL HOLDINGS INC.,
as Parent,
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS.............................................. 3
1.1 Defined Terms............................................ 3
1.2 Other Definitional Provisions............................ 21
1.3 Accounting Terms......................................... 22
SECTION 2. THE LOANS; AMOUNT AND TERMS.............................. 22
2.1 Revolving Loans.......................................... 22
2.2 [Intentionally left blank]............................... 24
2.3 Conversion Options....................................... 24
2.4 Minimum Principal Amount of Tranches..................... 25
2.5 Default Rate and Payment Dates........................... 25
2.6 Reductions in Revolving Commitments and Prepayments...... 26
2.7 Commitment Fee........................................... 29
2.8 Computation of Interest and Fees......................... 29
2.9 Pro Rata Treatment and Payments.......................... 29
2.10 Non-Receipt of Funds by the Administrative Agent......... 30
2.11 Inability to Determine Interest Rate..................... 31
2.12 Illegality............................................... 31
2.13 Requirements of Law...................................... 32
2.14 Indemnity................................................ 33
2.15 Taxes.................................................... 34
2.16 Replacement of Agent..................................... 36
SECTION 3. REPRESENTATIONS AND WARRANTIES........................... 37
3.1 Financial Condition...................................... 37
3.2 No Change................................................ 37
3.3 Existence; Compliance with Law........................... 37
3.4 Power; Authorization; Enforceable Obligations............ 38
3.5 No Legal Bar, No Default................................. 38
3.6 No Material Litigation................................... 38
3.7 Investment Company Act................................... 39
3.8 Federal Regulations...................................... 39
3.9 ERISA.................................................... 39
3.10 Environmental Matters.................................... 39
3.11 Purpose of Loan.......................................... 40
3.12 Subsidiaries............................................. 40
3.13 Intellectual Property Rights............................. 41
3.14 No Burdensome Restrictions............................... 41
3.15 Taxes.................................................... 41
3.16 No Interest in Real Estate............................... 42
3.17 Printing................................................. 42
3.18 Assets................................................... 42
SECTION 4. CONDITIONS PRECEDENT...................................... 40
4.1 Conditions to Closing Date................................ 40
4.2 Conditions to Loans-Acquired Assets....................... 42
4.3 Conditions to All Loans................................... 42
SECTION 5. AFFIRMATIVE COVENANTS..................................... 43
5.1 Financial Statements...................................... 43
5.2 Certificates; Other Information........................... 44
5.3 Payment of Obligations.................................... 45
5.4 Conduct of Business and Maintenance of Existence.......... 45
5.5 Maintenance of Property................................... 45
5.6 Inspection of Property, Books and Records; Discussions.... 45
5.7 Notices................................................... 45
5.8 Environmental Laws........................................ 46
5.9 Financial Covenants....................................... 47
5.10 Covenants Regarding Patents, Trademarks and Copyrights.... 48
5.11 Fees, Etc................................................. 49
5.12 Subsidiaries.............................................. 49
5.13 Subsequently Acquired Real Property....................... 49
5.14 Landlord Waivers.......................................... 50
5.15 Bailee's Letters.......................................... 50
5.16 Year 2000 Compatibility................................... 50
5.17 Further Assurances........................................ 50
SECTION 6. NEGATIVE COVENANTS........................................ 51
6.1 Indebtedness.............................................. 51
6.2 Liens..................................................... 52
6.3 Guaranty Obligations...................................... 52
6.4 Lines of Business......................................... 52
6.5 Consolidation, Merger, sale, or Purchase of Assets, Etc... 52
6.6 Advances, Investments and Loans........................... 53
6.7 Transactions with Affiliates.............................. 54
6.8 Ownership of Subsidiaries................................. 54
6.9 Fiscal Year............................................... 54
6.10 Prepayments Indebtedness, etc............................. 54
6.11 Restricted Payments....................................... 55
6.12 Partnership ad Corporate Documents; Purchase Agreements... 55
6.13 No Printing............................................... 55
6.14 Limitations on Activities by Parent....................... 55
SECTION 7. EVENTS OF DEFAULT......................................... 56
SECTION 8. THE ADMINISTRATIVE AGENT.................................. 59
8.1 Appointment............................................... 59
ii
8.2 Delegation of Duties...................................... 40
8.3 Exculpatory Provisions.................................... 60
8.4 Reliance by Administrative Agent.......................... 60
8.5 Notice of Default......................................... 60
8.6 Non-Reliance on Administrative Agent and Other Lenders.... 61
8.7 Indemnification........................................... 61
8.8 Administrative Agent...................................... 62
8.9 Successor Administrative Agent............................ 62
SECTION 9. MISCELLANEOUS............................................. 62
9.1 Amendments, Waivers and Release of Collateral............. 62
9.2 Notices................................................... 63
9.3 No Waiver; Cumulative Remedies............................ 64
9.4 Survival of Representations and Warranties................ 64
9.5 Payment of Expenses and Taxes............................. 64
9.6 Successors and Assigns; Participations;
Purchasing Lenders...................................... 65
9.7 Adjustments; Set-off...................................... 68
9.8 Table of Contents and Section Headings.................... 69
9.9 Counterparts.............................................. 69
9.10 Severability.............................................. 69
9.11 Integration............................................... 69
9.12 Governing Law............................................. 69
9.13 Consent to Jurisdiction and Service of Process............ 69
9.14 Arbitration............................................... 70
9.15 Confidentiality........................................... 71
9.16 Acknowledgements.......................................... 72
SECTION 10. GUARANTY.................................................. 72
10.1 The Guaranty.............................................. 72
10.2 Bankruptcy................................................ 73
10.3 Nature of Liability....................................... 73
10.4 Independent Obligation.................................... 74
10.5 Authorization............................................. 74
10.6 Reliance.................................................. 74
10.7 Waiver.................................................... 74
10.8 Limitation on Enforcement................................. 75
10.9 Confirmation of Payment................................... 76
10.10 Senior Debt under Teachers Agreement...................... 76
10.11 Confession of Judgement................................... 76
iii
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of April 2,1998, among FARM JOURNAL, INC., a
Pennsylvania corporation (the "Borrower"), FARM JOURNAL HOLDINGS INC., a
Delaware corporation and the owner of all of the issued and outstanding capital
stock of the Borrower (the "Parent"), the subsidiaries of the Borrower listed on
the signature pages hereto (hereinafter the Parent and such subsidiaries shall
be referred to as the "Guarantors"), the several banks, financial institutions
and other investors from time to time parties to this Agreement (the "Lenders")
and FIRST UNION NATIONAL BANK, as administrative agent for the Lenders (in such
capacity, the "Agent" or the "Administrative Agent").
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower has requested the Lenders to make loans in an amount
up to $15,000,000 as more particularly described herein;
WHEREAS, the Lenders are willing to make such loans on the terms and
conditions contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS.
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As used in this Agreement, terms defined in the preamble to this Agreement
have the meanings therein indicated, and the following terms have the following
meanings:
"Acquired Assets": the assets and/or stock of Professional Farmers of
---------------
America, Inc. and Professional Market Management, Inc. to be acquired
pursuant to the Purchase Agreements.
"Acquisition": the acquisition by the Borrower (or one of its wholly-
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owned Subsidiaries) of the Acquired Assets pursuant to the Purchase
Agreements.
"Adjusted EBITDA": of any Person for any period, EBITDA for such
---------------
period ("Unadjusted EBITDA") plus (i) if such Person made any acquisition
----------------- ----
permitted by Section 6.5(b) during such period, EBITDA generated from such
acquisitions ("Acquired EBITDA") as if such acquisitions occurred at the
beginning of the applicable period except to the extent such Acquired
EBITDA has already been included in the calculation of Unadjusted EBITDA
for such period, minus (ii) if such Person has sold or otherwise divested
-----
any businesses permitted by Section 6.5(a) during such period, EBITDA
generated from such sold or divested businesses as if such sales or
divestitures occurred at the beginning of the applicable period.
"Affiliate": as to any Person, any other Person (excluding any
---------
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, a Person shall be deemed to be "controlled by" a Person if such
Person possesses, directly or indirectly, power either (a) to vote 10% or
more of the securities having ordinary voting power for the election of
directors of such Person or (b) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Aggregate Revolving Committed Amount": the aggregate amount of all
------------------------------------
of the Revolving Commitments in effect from time to time, as reduced from
time to time as provided in Section 2.6.
"Agreement": this Credit Agreement, as amended, supplemented or
---------
modified from time to time in accordance with its terms.
1
"Applicable Commitment Fee Percentage": for any day, the rate per
------------------------------------
annum set forth below opposite the applicable Leverage Ratio then in
effect:
Leverage
Ratio Percentage
===================================================================
4.5 0.50%
-------------------------------------------------------------------
3.5 but less then 4.5 0.375%
-------------------------------------------------------------------
less then 3.5 0.25%
===================================================================
The Applicable Commitment Fee Percentage shall, in each case, be determined
and adjusted (a) quarterly on the date five (5) Business Days after the
date of receipt by the Administrative Agent of the quarterly compliance
certificate and financial information provided in accordance with Sections
5.1(b) and 5.2(b) and (b) on each date that the Borrower makes an
acquisition pursuant to Section 6.5(b)(iii) hereof (each a "Commitment Fee
--------------
Determination Date").
------------------
Such Applicable Commitment Fee Percentage shall be effective from such
Commitment Fee Determination Date until the next such Commitment Fee
Determination Date. The initial Applicable Commitment Fee Percentage shall
be .50% until the first Commitment Fee Determination Date occurring after
June 30, 1998.
"Applicable Interest Rate Percentage": for any day, the rate per
-----------------------------------
annum set forth below opposite the applicable Leverage Ratio then in
effect, it being understood that the Applicable Interest Rate Percentage
for (i) Base Rate Loans shall be the percentage set forth under the column
"Base Rate Margin", and (ii) LIBOR Rate Loans shall be the percentage set
forth under the column "LIBOR Rate Margin":
Leverage Base Rate LIBOR
Ratio Margin Rate
============================================================
4.5 1.25% 2.50%
------------------------------------------------------------
4.0 but less then 4.5 1.00% 2.25%
------------------------------------------------------------
3.5 but less then 4.0 0.75% 2.00%
------------------------------------------------------------
less then 3.5 0.50% 1.75%
============================================================
The Applicable Interest Rate Percentage shall, in each case, be determined
and adjusted (a) quarterly on the date five (5) Business Days after the
date of receipt by the Administrative Agent of the quarterly compliance
certificate and financial information provided in accordance with Sections
5.1(b) and 5.2(b) and (b) on each date that the Borrower makes an
acquisition pursuant to Section 6.5(b)(iii) hereof (each an "Interest
--------
Determination Date").
------------------
2
Such Applicable Interest Rate Percentage shall be effective from such
Interest Determination Date until the next such Interest Determination
Date. The initial Applicable Interest Rate Percentages shall be 1.25% in
the case of the Base Rate Margin and 2.50% in the case of the LIBOR Rate
Margin until the first Interest Determination Date occurring after June 30,
1998.
"Asset Disposition": any sale, lease, transfer or other disposition
-----------------
(including any such transaction effected by way of merger, amalgamation or
consolidation) by the Borrower or any of its Subsidiaries subsequent to the
Closing Date of any asset (including stock or other equity interests in
Subsidiaries of the Borrower), including without limitation any sale
leaseback transaction (whether or not involving a Capital Lease), but
excluding Specified Sales.
"Authorized Signatory": the Chairman of the Board, the President or
--------------------
Chief Financial Officer of the Borrower and such senior personnel of the
Borrower as may be hereafter duly authorized and designated in writing to
execute documents, agreements and instruments on the Borrower's behalf.
"Bankruptcy Code": the Bankruptcy Code in Title 11 of the United
---------------
States Code, as amended, modified, succeeded or replaced from time to time.
"Base Rate": for any day, a rate per annum equal to the greater of
---------
(a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof,
"Prime Rate" shall mean, at any time, the rate of interest per annum
----------
publicly announced from time to time by First Union at its principal office
in Charlotte, North Carolina as its prime rate. Each change in the Prime
Rate shall be effective as of the opening of business on the day such
change in the Prime Rate occurs. The parties hereto acknowledge that the
rate announced publicly by First Union as its Prime Rate is an index or
base rate and shall not necessarily be its lowest or best rate charged to
its customers or other banks; and "Federal Funds Effective Rate" shall
----------------------------
mean, for any day, the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published
on the next succeeding Business Day, the average of the quotations for the
day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. If for any
reason the Administrative Agent shall have determined (which determination
shall be conclusive in the absence of manifest error) that it is unable to
ascertain the Federal Funds Effective Rate, including the inability or
failure of the Administrative Agent to obtain sufficient quotations in
accordance with the terms thereof, the Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no
longer exist. Any change in the Base Rate due to a change in the Prime
Rate or the Federal Funds Effective Rate shall be effective on the opening
of business on the date of such change.
3
"Base Rate Loans": Revolving Loans that bear interest at an interest
---------------
rate based on the Base Rate.
"Borrower": such term as defined in the first paragraph of this
--------
Agreement.
"Borrowing Date": in respect of any Loan, the date such Loan is made.
--------------
"Business": such term as defined in Section 3.10(b).
--------
"Business Day": a day other than a Saturday, Sunday or other day on
------------
which commercial banks in Charlotte, North Carolina or Philadelphia,
Pennsylvania are authorized or required by law to close; provided, however,
-------- -------
that when used in connection with a rate determination, borrowing or
payment in respect of a LIBOR Rate Loan, the term "Business Day" shall also
exclude any day on which banks in London, England are not open for dealings
in Dollar deposits in the London interbank market.
"Capital Expenditures": all expenditures which in accordance with
--------------------
GAAP would be classified as capital expenditures, including without
limitation, Capital Lease Obligations and capitalized development costs.
"Capital Lease": any lease of property, real or personal, the
-------------
obligations, with respect to which are required to be capitalized on a
balance sheet of the lessee in accordance with GAAP.
"Capital Lease Obligations": the capitalized lease obligations
-------------------------
relating to a Capital Lease determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests (including partnership and
limited liability company interests) in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"Cash Equivalents": (i) securities issued or directly and fully
----------------
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition ("Government
----------
Obligations"), (ii) U.S. dollar denominated (or foreign currency fully
-----------
hedged) time deposits, certificates of deposit, Eurodollar time deposits
and Eurodollar certificates of deposit of (y) any domestic commercial bank
of recognized standing having capital and surplus in excess of $250,000,000
or (z) any bank whose short-term commercial paper rating from S&P is at
least A- 1 or the equivalent thereof or from ▇▇▇▇▇'▇ is at least P- 1 or
the equivalent thereof (any such bank being an "Approved Bank"), in each
-------------
case with maturities of not more than 364 days from the date of
acquisition, (iii) commercial paper and variable or fixed rate notes issued
by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by any domestic corporation rated A-1
(or the equivalent thereof) or better by S&P or P-1 (or the equivalent
thereof) or better by Moody's and maturing within six months of the date of
acquisition, (iv) repurchase agreements with a bank or trust company
4
(including a Lender) or a recognized securities dealer having capital and
surplus in excess of $500,000,000 for direct obligations issued by or fully
guaranteed by the United States of America, (v) obligations of any state of
the United States or any political subdivision thereof for the payment of
the principal and redemption price of and interest on which there shall
have been irrevocably deposited Government Obligations maturing as to
principal and interest at times and in amounts sufficient to provide such
payment, (vi) auction preferred stock rated in the highest short-term
credit rating category by S&P or Moody's and (vii) U.S. dollar denominated
time and demand deposit accounts or money market accounts with those
domestic banks meeting the requirements of item (y) or (z) of clause (ii)
above and any other domestic commercial banks insured by the FDIC with an
aggregate balance not to exceed $100,000 in the aggregate at any time at
any such bank.
"Cash Tax Liabilities": the cash tax liability for income taxes paid
--------------------
by the Borrower or any of its Subsidiaries or required to be distributed to
members of the Borrower or any of its Subsidiaries.
"Closing Date": the date of this Agreement, being also the date on
------------
which each of the conditions specified in Section 4.1 are satisfied in full
or waived in accordance with this Agreement.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Commitment Fee": such term as defined in Section 2.7.
--------------
"Commitment Letter": the letter agreement dated as of March 18, 1998
-----------------
among the Borrower, First Union and First Union Capital Markets.
"Commitment Period": the period from and including the Closing Date
-----------------
to but not including the Termination Date.
"Commitment Transfer Supplement": a Commitment Transfer Supplement,
------------------------------
substantially in the form of Schedule 9.6(c).
---------------
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414(b) or (c) of the
Code, or solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as a single employer under Section 414 of the Code.
"Consolidated Adjusted EBITDA": Adjusted EBITDA of the Borrower and
----------------------------
its Subsidiaries on a consolidated basis determined in accordance with GAAP
applied on a consistent basis.
"Consolidated Capital Expenditures": Capital Expenditures of the
---------------------------------
Borrower and its Subsidiaries on a consolidated basis determined in
accordance with GAAP applied on a consistent basis.
5
"Consolidated Cash Tax Liabilities": Cash Tax Liabilities of the
---------------------------------
Borrower and its Subsidiaries on a consolidated basis determined in
accordance with GAAP applied on a consistent basis.
"Consolidated EBITDA": EBITDA of the Borrower and its Subsidiaries on
-------------------
a consolidated basis determined in accordance with GAAP applied on a
consistent basis.
"Consolidated Fixed Charges": as of the last day of any fiscal
--------------------------
quarter, the sum of (i) Consolidated Interest Expense for the four (4)
consecutive quarters then ending plus (ii) the amount, if positive, equal
----
to the aggregate principal amount of Revolving Loans outstanding on the
first day of the period of four (4) consecutive quarters then ending minus
the Aggregate Revolving Committed Amount existing as of the last day of
such fiscal quarter (exclusive, for purposes hereof, of any voluntary
reductions in the Revolving Commitments pursuant to Section 2.6(a) or any
mandatory reduction pursuant to Section 2.6(b)(ii), 2.6(b)(iii) or
2.6(b)(iv), plus (iii) payments made on all Indebtedness of the Borrower
----
and its Subsidiaries (other than payments on the Revolving Loans) during
the four (4) consecutive quarters then ending plus (iv) Consolidated
----
Capital Expenditures made or incurred during the four (4) consecutive
quarters then ending, plus (v) Consolidated Cash Tax Liabilities paid or
----
distributed during the four (4) consecutive quarters then ending, plus (vi)
----
deferred customer acquisition costs (not included in the calculation of
Consolidated EBITDA) capitalized during the four (4) consecutive fiscal
quarters then ending.
"Consolidated Interest Expense": Interest Expense of the Borrower and
-----------------------------
its Subsidiaries on a consolidated basis determined in accordance with GAAP
applied on a consistent basis.
"Consolidated Total Funded Debt": Total Funded Debt of the Borrower
------------------------------
and its Subsidiaries on a consolidated basis determined in accordance with
GAAP applied on a consistent basis.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any material agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
material property is bound.
"Copyrights": (i) all copyrights in all works, now existing or
----------
hereafter created or acquired, all registrations and recordings thereof,
and all applications in connection therewith, whether in the United States
Copyright Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof referred
to in Schedule 3.13 to the Credit Agreement, and (ii) all renewals thereof.
-------------
"Credit Documents": this Agreement, each of the Notes, the Joinder
----------------
Agreements and the Security Documents.
"Credit Parties": collectively, the Borrower and the Guarantors.
--------------
6
"Debt Issuance": the issuance of any Indebtedness for borrowed money
-------------
by the Borrower or any of its Subsidiaries.
"Default": any of the events specified in Section 7, whether or not
-------
any requirement for the giving of notice or the lapse of time, or both, or
any other condition, has been satisfied.
"Defaulting Lender": at any time, any Lender that, at such time (a)
-----------------
has failed to make a Loan required pursuant to the terms of this Agreement,
(b) has failed to pay to the Administrative Agent or any Lender an amount
owed by such Lender pursuant to the terms of this Agreement, or (c) has
been deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or to a receiver, trustee or similar official.
"Dollars" and "$": dollars in lawful currency of the United States of
------- -
America.
"Domestic Lending Office": initially, the office of each Lender
-----------------------
designated as such Lender's Domestic Lending Office shown on Schedule
--------
2.1(a); and thereafter, such other office of such Lender as such Lender may
------
from time to time specify to the Administrative Agent and the Borrower as
the office of such Lender at which Base Rate Loans of such Lender are to be
made.
"EBITDA": of any Person for any period, net income for such period,
------
plus (i) Interest Expense to the extent deducted in determining such net
----
income, plus (ii) depreciation, amortization and all other non-cash charges
----
deducted in determining such net income, all determined in accordance with
GAAP consistently applied, minus (iii) extraordinary non-cash income
-----
(including, for purposes hereof, gain from the sale of assets in the
ordinary course of business, such as obsolete equipment), plus (iv)
----
extraordinary non-cash expenses (including, for purposes hereof, loss from
the sale of the assets in the ordinary course of business, such as obsolete
equipment), plus (v) income taxes to the extent deducted to determine net
----
income, plus (vii) the adjustments and allowances set forth on Schedule
---- --------
1.1(a) attached hereto.
------
"Environmental Laws": any and all applicable foreign, Federal, state,
------------------
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Governmental Authority or other
Requirement of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning protection of human
health or the environment, as now or may at any time be in effect during
the term of this Agreement.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurodollar Reserve Percentage": for any day, the percentage
-----------------------------
(expressed as a decimal and rounded upwards, if necessary, to the next
higher 1/100th of 1%) which is in effect for such day as prescribed by the
Federal Reserve Board (or any successor) for determining the maximum
reserve requirement (including without limitation any basic, supplemental
or emergency reserves) in respect of Eurocurrency liabilities, as defined
7
in Regulation D of such Board as in effect from time to time, or any
similar category of liabilities for a member bank of the Federal Reserve
System in New York City.
"Event of Default": any of the events specified in Section 7;
----------------
provided, however, that any requirement for the giving of notice or the
-------- -------
lapse of time, or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any period (a "Determination Period"), an
---------------- --------------------
amount equal to (i) Consolidated EBITDA for the Determination Period minus
-----
(ii) Consolidated Fixed Charges for the Determination Period.
"Federal Funds Effective Rate": such term as defined in the
----------------------------
definition of "Base Rate".
"Fee Letter": the letter agreement dated as of March 18, 1998 among
----------
the Borrower, First Union and First Union Capital Markets.
"First Union": First Union National Bank, a national banking
-----------
association.
"Fixed Charge Coverage Ratio": as of the last day of any fiscal
---------------------------
quarter, the ratio of (x) Consolidated Adjusted EBITDA (for the four (4)
consecutive fiscal quarters then ending) plus cash and Cash Equivalents of
the Borrower and its Subsidiaries in excess of $500,000 (as of the first
day of the four (4) consecutive fixed quarters then ending) to (y)
Consolidated Fixed Charges for the four (4) consecutive fiscal quarters
then ending (after giving effect to the Interim Adjustments for the
calculations occurring on June 30, 1998, September 30, 1998, December 31,
1998 and March 31, 1999).
"GAAP": generally accepted accounting principles in effect in the
----
United States of America applied on a consistent basis, subject, however,
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in the case of determination of compliance with the financial covenants set
out in Section 5.9 to the provisions of Section 1.3.
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
-------------------
(the "primary obligor") in any manner, whether directly or indirectly,
---------------
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
8
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
--------
however, that the term Guarantee Obligation shall not include endorsements
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of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in
good faith.
"Guarantors": (i) the Parent and (ii) the Subsidiaries of the
----------
Borrower identified as a "Guarantor" on the signature pages hereto and any
Subsidiary acquired or formed subsequent to the Closing Date.
"Indebtedness": of any Person at any date, (a) all indebtedness of
------------
such Person for borrowed money or for the deferred purchase price of
property or services (other than trade liabilities and other normal accrued
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar instrument,
(c) all obligations of such Person under Capital Leases, (d) all
obligations of such Person in respect of bankers' acceptances issued or
created for the account of such Person, (e) all liabilities secured by any
Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof (other than
liabilities securing carriers', warehousemen's, mechanics', repairmen's or
other like nonconsensual statutory Liens arising in the ordinary course of
business), (f) all obligations of such Person under conditional sale or
other title retention agreements relating to property purchased by such
Person (other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of business),
(g) all obligations of such Person under take-or-pay or similar
arrangements or under commodities agreements (other than supply agreements
and other similar arrangements entered into in the ordinary course of
business), (h) all Guarantee Obligations of such Person, (i) all
obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or
option agreements or other interest or exchange rate or commodity price
hedging agreements, and 0) the maximum amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent not theretofore reimbursed). For purposes
of this Agreement, Indebtedness shall not include any Indebtedness owing by
the Borrower to any of its Subsidiaries or by any Subsidiary of the
Borrower to the Borrower or by any Subsidiary of the Borrower to any other
Subsidiary of the Borrower or any contingent obligation in respect thereof.
It is understood and agreed that the amount of any Indebtedness described
in clause (e) shall
9
be the lower of the amount of the obligation or the fair market value of
the collateral securing such obligation, and the amount of any obligation
described in clause (i) shall be the termination payments that would be
required to be paid to a counterparty upon early termination (in accordance
with customary industry standards) rather than any notional amount with
regard to which payments may be calculated.
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property": such term as defined in Section 3.13.
---------------------
"Interest Coverage Ratio": as of the last day of any fiscal quarter,
-----------------------
the ratio of Consolidated Adjusted EBITDA for the four (4) consecutive
quarters then ending to Consolidated Interest Expense for the four (4)
consecutive quarters then ending (after giving effect to the Interim
Adjustments for the calculations occurring on June 30, 1998, September 30,
1998, December 31, 1998 and March 31, 1999).
"Interest Expenses": for any Person for any period, the sum of all
-----------------
interest and fee expense including amortization of debt discount and
premium and the interest component under Capital Leases for such Person;
provided that there shall be added to and included in Interest Expense for
--------
purposes hereof the net amount payable (other than amounts payable in
respect of up-front or one-time fees, which shall be excluded from Interest
Expense) by such Person in respect of any Interest Protection Agreement and
Interest Expense shall be reduced by the net amount receivable by such
Person under any Interest Protection Agreement in respect of such period.
"Interest Payment Date": (a) as to any Base Rate Loan, the last
---------------------
Business Day of each March, June, September and December to occur while
such Loan is outstanding, (b) as to any LIBOR Rate Loan having an Interest
Period of three months or less, the last day of such Interest Period and
(c) as to any LIBOR Rate Loan having an Interest Period longer than three
months, each day which is three months after the first day of such Interest
Period and the last day of such Interest Period.
"Interest Period": with respect to any LIBOR Rate Loan,
---------------
(i) initially, the period commencing on the Borrowing Date or
conversion date, as the case may be, with respect to such LIBOR Rate
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in the notice of borrowing or notice of conversion
given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Rate
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
10
provided that the foregoing provisions are subject to the following:
--------
(A) if any Interest Period pertaining to a LIBOR Rate Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(B) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of the relevant calendar month;
(C) if the Borrower shall fail to give notice as provided above,
the Borrower shall be deemed to have selected a Base Rate Loan to
replace the affected LIBOR Rate Loan as provided in Section 2.3(b);
(D) any Interest Period in respect of any Revolving Loan that
would otherwise extend beyond the Termination Date shall end on the
Termination Date; and
(E) no more than 3 LIBOR Rate Loans may be in effect at any time
and the Borrower shall not be entitled to select any Interest Period
pertaining to a LIBOR Rate Loan until 3 Business Days after the
Closing Date. For purposes hereof, LIBOR Rate Loans with different
Interest Periods shall be considered as separate LIBOR Rate Loans,
even if they shall begin on the same date and have the same duration,
although borrowings, extensions and conversions may, in accordance
with the provisions hereof, be combined at the end of existing
Interest Periods to constitute a new LIBOR Rate Loan with a single
Interest Period.
"Interest Protection Agreement": any interest rate protection
-----------------------------
agreement or interest rate future, option, cap, collar or other hedging
arrangement.
"Interim Adjustments": for the first four fiscal quarters following
-------------------
the Closing Date, the Fixed Charge Coverage Ratio and the Interest Coverage
Ratio shall be calculated using the adjustments and assumptions regarding
Interest Expense set forth below:
(a) for the fiscal quarters ending June 30, 1998, September 30,
1998, December 31, 1998 and March 31, 1999, Interest Expense for the
twelve month period for which the Fixed Charged Coverage Ratio and the
Interest Coverage Ratio is being calculated shall be deemed to be the
result obtained by multiplying (i) the actual Interest Expense for the
period from the Closing Date through the last day of such fiscal
quarter times (ii) a ratio equal to (A) 365 divided by (B) the number
of days elapsed from the Closing Date until the last day of such
quarter; and
11
(b) for the fiscal quarter ending June 30, 1999 and each fiscal
quarter thereafter, Interest Expense shall be the actual Interest
Expense for the twelve month period ending on such date.
"Joinder Agreement": a Joinder Agreement substantially in the form of
-----------------
Schedule 5.12, executed and delivered by a Subsidiary in accordance with
-------------
the provisions of Section 5.12.
"Leverage Ratio": as of the last day of any fiscal quarter, the ratio
--------------
(x) of Consolidated Total Funded Debt as of the last day of such fiscal
quarter minus cash and Cash Equivalents of the Borrower and its
Subsidiaries as of the last day of such fiscal quarter then ending in
excess of $500,000 to (y) Consolidated Adjusted EBITDA for the four (4)
consecutive fiscal quarters then ending.
"LIBOR": the arithmetic mean (rounded to the nearest 1/100th of 1%)
-----
of the offered rates for deposits in Dollars for a period equal to the
Interest Period selected which appears on the Telerate Page 3750 at
approximately 11:00 A.M. London time, two (2) Business Days prior to the
commencement of the applicable Interest Period. If, for any reason, such
rate is not available, then "LIBOR" shall mean the rate per annum at which,
as determined by the Administrative Agent, Dollars in the amount of
$5,000,000 are being offered to leading banks at approximately 11:00 A.M.
London time, two (2) Business Days prior to the commencement of the
applicable Interest Period for settlement in immediately available funds by
leading banks in the London interbank market for a period equal to the
Interest Period selected.
"LIBOR Lending Office": initially, the office of each Lender
--------------------
designated as such Lender's LIBOR Lending Office shown on Schedule 2.1(a);
----------------
and thereafter, such other office of such Lender as such Lender may from
time to time specify to the Administrative Agent and the Borrower as the
office of such Lender at which the LIBOR Rate Loans of such Lender are to
be made.
"LIBOR Rate": a rate per annum (rounded upwards, if necessary, to the
----------
next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:
LIBOR Rate = LIBOR
-----------------------
1.00 - Eurodollar Reserve Percentage
"LIBOR Rate Loan": Revolving Loans or the rate of interest applicable
---------------
to which is based on the LIBOR Rate.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention
12
agreement and any Capital Lease having substantially the same economic
effect as any of the foregoing).
"Majority Lenders": Lenders holding in the aggregate more than 66
----------------
2/3% of the sum of (i) all Loans then outstanding at such time and (ii) the
aggregate unused Revolving Commitments at such time; provided, however,
-------- -------
that if any Lender shall be a Defaulting Lender at such time, then there
shall be excluded from the determination of Majority Lenders those Loans
owing to such Defaulting Lender and such Defaulting Lender's Revolving
Commitments, or after termination of the Revolving Commitments, the
principal balance of the Loans owing to such Defaulting Lender.
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, exclusive
of events or occurrences affecting the economy generally, (b) the ability
of the Borrower and its Subsidiaries to perform their Obligations, when
such Obligations are required to be performed, under this Agreement or any
of the Notes or (c) the validity or enforceability of this Agreement, any
of the Notes or any of the other Credit Documents or the rights or remedies
of the Administrative Agent or the Lenders hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc.
-------
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Net Sales Proceeds": the gross cash proceeds (including cash by way
------------------
of deferred payment pursuant to a promissory note, receivable or otherwise,
but only as and when received) received from the sale, lease, conveyance,
disposition or other transfer of assets or from a Recovery Event (if and to
the extent not used to repair or replace the property which was the subject
of the Recovery Event), net of (i) reasonable transactions costs payable to
third parties, (ii) the estimated taxes payable with respect to such
proceeds (based upon the highest marginal federal and state tax rates),
whether payable by a Borrower or its direct or indirect members (including,
without duplication, withholding taxes), (iii) Indebtedness (other than
Indebtedness of the Lenders pursuant to this Agreement and the other Credit
Documents) which is secured by, or otherwise related to, the assets which
are the subject of such event to the extent such Indebtedness is paid with
a portion of the proceeds therefrom, (iv) proceeds needed to pay
liabilities directly related to the assets which are the subject of such
event to the extent such liabilities are not assumed by a purchaser of the
assets and are paid with a portion of the proceeds received from the
disposition of such assets and (v) other costs which may occur as a result
13
of, and are reasonably associated with, discontinuing operations, shut-
downs or otherwise resulting from, the disposition of such assets.
"Notice of Account Designation": such term as defined in Section
-----------------------------
2.l(b)(iii).
"Notice of Borrowing": the written notice of borrowing as referenced
-------------------
and defined in Section 2.1(b)(i).
"Notice of Conversion": the written notice of extension or conversion
--------------------
as referenced and defined in Section 2.3.
"Obligations": without duplication, (i) all of the obligations of the
-----------
Credit Parties to the Lenders and the Agent, whenever arising, under this
Agreement, the Notes or any of the other Credit Documents (including, but
not limited to, any interest accruing after the occurrence of a filing of a
petition of bankruptcy under the Bankruptcy Code with respect to any Credit
Party, regardless of whether such interest is an allowed claim under the
Bankruptcy Code) and (ii) all liabilities and obligations, whenever
arising, owing from the Borrower or any of its Subsidiaries to any Lender,
or any affiliate of a Lender, arising under any Interest Rate Protection
Agreement.
"Participant": such term as defined in Section 9.6(b).
-----------
"Patents": (i) all letters patent of the United States or any other
-------
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions
thereof, including, without limitation, any thereof referred to in Schedule
--------
3.13 to the Credit Agreement, and (ii) all applications for letters patent
----
of the United States or any other country, now existing or hereafter
arising, and all provisionals, divisions, continuations and continuations-
in-part and substitutes thereof, including, without limitation, any thereof
referred to in Schedule 3.13 to the Credit Agreement.
-------------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA.
"Permitted Acquisition": such term as defined in Section 6.5(b)(iii).
---------------------
"Permitted Investments": (i) cash and Cash Equivalents, (ii)
---------------------
receivables owing to the Borrower or any of its Subsidiaries or any
receivables and advances to suppliers, in each case if created, acquired or
made in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms, (iii) loans and/or investments in
and to the Borrower or any of its Subsidiaries (iv) investments (including
debt obligations, stock, securities or other property) received in
connection with the bankruptcy or reorganization of suppliers and customers
and in settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business, and (v)
investments, acquisitions or transactions permitted under Section 6.5(b).
As used herein, "investment" means all investments, in cash or by delivery
----------
of property made, directly or indirectly in, to or from any Person, whether
by acquisition of shares of capital stock or partnership interest
14
or other equity interest, property, assets, indebtedness or other obligations or
securities or by loan advance, capital contribution or otherwise.
"Permitted Liens":
---------------
(i) Liens created by or otherwise existing under or in connection
with this Agreement or the other Credit Documents in favor of the
Administrative Agent for the benefit of the Lenders;
(ii) Liens in favor of the Administrative Agent for the benefit
of a Lender hereunder as the provider of interest rate protection
relating to the Loans hereunder, but only (A) to the extent such Liens
secure obligations under such Interest Rate Protection Agreements
permitted under Section 6.1, (B) to the extent such Liens are on the
same collateral as to which the Lenders also have a Lien (or shall
have been offered the opportunity to have a Lien in such collateral)
and (C) if such provider and the Lenders shall share pari passu in the
---- -----
collateral subject to such Liens;
(iii) Liens on assets securing purchase money indebtedness and
Capital Leases (and refinancings thereof) to the extent permitted
under subsection (d) of Section 6.1;
(iv) Liens for taxes, assessments, charges or other governmental
levies not yet due or as to which the period of grace (not to exceed
60 days), if any, related thereto has not expired or which are being
contested in good faith by appropriate proceedings, provided that
--------
adequate reserves with respect thereto are maintained on the books of
the Borrower or any of its Subsidiaries, as the case may be, in
conformity with GAAP (or, in the case of Subsidiaries with significant
operations outside of the United States of America, generally accepted
accounting principles in effect from time to time in their respective
jurisdictions of incorporation);
(v) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(vi) pledges or deposits in, connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements;
(vii) deposits to secure the performance of bids, trade
contracts, (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
15
(viii) Liens in connection with attachments or judgments
(including judgment or appeal bonds), provided that the judgments
secured shall, within 60 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall have
been discharged within 60 days after the expiration of any such stay;
(ix) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect,
impairing the use of the encumbered property for its intended purpose;
(x) leases or subleases of real property granted to others not
interfering in any material respect with the business of the Borrower
or any of its Subsidiaries; and
(xi) any extension, renewal or replacement (or successive
extensions, renewals or replacements) , in whole or in part, of any
Lien referred to in the foregoing clauses; provided that such
--------
extension, renewal or replacement Lien shall be limited to all or a
part of the property which secured the Lien so extended, renewed or
replaced (plus improvements on such property).
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at any particular time, any employee benefit plan which is
----
covered by Title IV of ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledge Agreement": the Pledge Agreement by the Parent, the Borrower
----------------
and their Subsidiaries, as pledgors, pledging their respective stock in
their respective Subsidiaries in favor of the Agent for the benefit of the
Lenders, as such Pledge Agreement is amended, supplemented or otherwise
modified from time to time.
"Prime Rate": such term as defined in the definition of Base Rate.
----------
"Properties": such term as defined in Section 3.10(a).
----------
"Purchase Agreements": the final purchase agreements to be executed
-------------------
in connection with the acquisition of the Acquired Assets by the Borrower.
"Purchasing Lenders": such term as defined in Section 9.6(c).
------------------
"Recovery Event": the receipt by the Borrower or any of its
--------------
Subsidiaries of any cash insurance proceeds or condemnation award payable
by reason of theft, loss, physical destruction or damage, taking or similar
event with respect to any property or assets of the Borrower or any of its
Subsidiaries.
16
"Register": such term as defined in Section 9.6(d).
--------
"Regularly Scheduled Reduction Amounts": such term as defined in
-------------------------------------
Section 2.6(b)(i).
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such Plan is in reorganization within the meaning of such
term as used in Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA, other than those events as to which the thirty-day notice period is
waived under subsections .11, .12, .13, .14, .16, .18, .19 or .20 of PBGC
Reg. (S)4043.
"Requirement of Law": as to any Person, the Certificate of
------------------
Incorporation and Bylaws, partnership agreement, operating agreement or
other organizational or governing documents of such Person, and each law,
treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its
material property is subject.
"Restricted Payment": (i) any payment by the Borrower or any of its
------------------
Subsidiaries of a payment, distribution or dividend (other than a dividend
or distribution payable solely in stock or equity interest of the Borrower)
on, or any payment on account of the purchase, redemption, defeasance or
retirement of, or any other distribution on, any partnership interest,
limited liability company interest, share of any class of stock or other
ownership interest in the Borrower or any of its Subsidiaries (including
any such payment or distribution in cash or in property or obligations of a
Borrower or any of its Subsidiaries), (ii) any loan or advance by the
Borrower or any of its Subsidiaries to any Affiliate of the Borrower or any
of its Subsidiaries other than as permitted by Sections 6.6 or 6.7, or
(iii) the payment by the Borrower or any of its Subsidiaries of any
management or administrative fee to any Affiliate of the Borrower or any of
its Subsidiaries or of any salary, bonus or other form of compensation
other than in the ordinary course of business to any Person who is a
significant partner, shareholder, member, owner or executive officer of any
such Affiliate other than as permitted by Section 6.7.
"Revolving Commitment": as to any Lender, the obligation of such
--------------------
Lender to make Revolving Loans to the Borrower hereunder in an aggregate
principal amount at any one time outstanding not to exceed the amount set
forth opposite such Lender's name on Schedule 2.1(a), as such amount may be
---------------
reduced from time to time in accordance with the provisions of this
Agreement.
"Revolving Commitment Percentage": for each Lender, a fraction
-------------------------------
(expressed as a percentage) the numerator of which is the Revolving
Commitment of such Lender at such time and the denominator of which is the
aggregate Revolving Committed Amount at such time. The initial Revolving
Commitment Percentages are set out on Schedule 2.1(a).
---------------
17
"Revolving Committed Amount": collectively, the aggregate amount of
--------------------------
all of the Revolving Commitments as referenced in Section 2.1(a) and,
individually, the amount of each Lender's Revolving Commitment as specified
in Schedule 2.1(a).
---------------
"Revolving Loans": such term as defined in Section 2.1.
---------------
"Revolving Note" or "Revolving Notes": the promissory notes of the
-------------- ---------------
Borrower in favor of each of the Lenders evidencing the Revolving Loans
provided pursuant to Section 2.1(e), individually or collectively, as
appropriate, as such promissory notes may be amended, modified,
supplemented, extended, renewed or replaced from time to time.
"S&P": Standard & Poor's Ratings Group, a division of McGraw Hill,
---
Inc.
"Security Agreement": the Security Agreement by and among the
------------------
Borrower and the Guarantors, as amended, supplemented or otherwise modified
from time to time.
"Security Documents": collectively, the Security Agreement, the
------------------
Pledge Agreement, and all other security documents hereafter delivered to
the Administrative Agent granting a Lien on any asset or assets of any
Person to secure the Obligations of the Borrower and the Guarantors
hereunder and under any of the other Credit Documents, including UCC
financing statements and other similar instruments.
"Single Employer Plan": any Plan which is not a Multi-Employer Plan.
--------------------
"Specified Sales": (i) the sale, transfer, lease or other disposition
---------------
of inventory and materials in the ordinary course of business (including
obsolete and/or unnecessary), (ii) the sale, transfer, lease or other
disposition of machinery, parts and equipment (including obsolete and/or
unnecessary equipment) in the ordinary course of business, (iii) the sale,
transfer or other disposition of articles in the ordinary course of
business or the granting of permission for reprints in the ordinary course
of business and (iv) the sale, lease or disposition of space and related
property and assets in the ordinary course of business.
"Subsidiary": as to any Person, a corporation, partnership or other
----------
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of a Borrower.
"Taxes": such term as defined in Section 2.15.
-----
"Teachers": Teachers Insurance and Annuity Association of America.
--------
18
"Teachers Agreement": the Note Purchase Agreement, dated as of April
------------------
1, 1997, as amended through and including the date hereof, among the
Borrower, the Parent and Teachers.
"Teachers Indebtedness": the indebtedness incurred by the Borrower
---------------------
and the Parent to Teachers pursuant to the terms of the Teachers Agreement.
"Termination Date": the earlier of (a) March 31, 2005 or (b) the date
----------------
on which the Revolving Commitments shall terminate in accordance with the
provisions of this Agreement.
"Total Funded Debt": of any Person at any date, (a) all indebtedness
-----------------
of such Person for borrowed money, (b) all obligations of such Person under
Capital Leases, (c) all Guarantee Obligations of such Person, and (d) the
maximum amount of all letters of credit issued or bankers' acceptances
created for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent not theretofore reimbursed).
"Trademarks": (i) all trademarks, trade names, corporate names,
----------
company names, business names, fictitious business names, service marks,
logos and other source or business identifiers, together with the goodwill
of the business symbolized by said marks, names, logos and identifiers now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, including, without limitation,
any thereof referred to in Schedule 3.13 to the Credit Agreement, and (ii)
-------------
all renewals thereof including, without limitation, any thereof referred to
in Schedule 3.13 to the Credit Agreement.
-------------
"Tranche": the collective reference to LIBOR Rate Loans whose
-------
Interest Periods begin and end on the same day. A Tranche may sometimes be
referred to as a "Eurodollar Tranche".
"Transfer Effective Date": such term as defined in each Commitment
-----------------------
Transfer Supplement.
"2.15 Certificate": such term as defined in Section 2.15.
----------------
"Type": as to any Loan, its nature as a Base Rate Loan or LIBOR Rate
----
Loan, as the case may be.
1.2 OTHER DEFINITIONAL PROVISIONS.
-----------------------------
(a) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Notes or other Credit
Documents or any certificate or other document made or delivered pursuant
hereto.
(b) The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and
not to any
19
particular provision of this Agreement, and Section, subsection, Schedule
and Exhibit references are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.
1.3 ACCOUNTING TERMS.
----------------
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent (except for changes concurred
with by the Borrower's independent public accountants) with the most recent
audited financial statements of the Borrower delivered to the Lenders; provided
--------
that, if the Borrower notifies the Administrative Agent that it wishes to amend
any covenant in Section 5.9 to eliminate the effect of any change in GAAP on the
operation of such covenant (or if the Administrative Agent notifies the Borrower
that the Majority Lenders wish to amend Section 5.9 for such purpose), then the
Borrower's compliance with such covenant shall be determined on the basis of
GAAP in effect immediately before the relevant change in GAAP became effective,
until either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower and the Majority Lenders.
The Borrower shall deliver to the Administrative Agent and each Lender at
the same time as the delivery of any annual or quarterly financial statements
given in accordance with the provisions of Section 5.1, (i) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation Of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (ii) a reasonable estimate of the effect on the financial statements
on account of such changes in application.
20
SECTION 2. THE LOANS; AMOUNT AND TERMS
2.1 REVOLVING LOANS.
---------------
(a) Revolving Commitment. During the Commitment Period, subject to the terms
--------------------
and conditions hereof, each Lender severally agrees to make revolving
credit loans ("Revolving Loans") to the Borrower from time to time for the
---------------
purposes hereinafter set forth; provided, however, that (i) with regard to
-------- -------
each Lender individually, such Lender's share of outstanding Revolving
Loans shall not exceed such Lender's Revolving Committed Amount, and (ii)
with regard to the Lenders collectively, the sum of the aggregate amount of
outstanding Revolving Loans shall not exceed FIFTEEN MILLION DOLLARS
($15,000,000) (as such aggregate maximum amount may be reduced from time to
time as provided herein, the "Revolving Committed Amount"). Revolving
--------------------------
Loans may consist of Base Rate Loans or LIBOR Rate Loans, or a combination
thereof, as the Borrower may request, and may be repaid and reborrowed in
accordance with the provisions hereof. LIBOR Rate Loans shall be made by
each Lender at its LIBOR Lending Office and Base Rate Loans at its Domestic
Lending Office.
(b) Revolving Loan Borrowings.
-------------------------
(i) Notice of Borrowing. The Borrower shall request a Revolving Loan
-------------------
borrowing by written notice (or telephone notice promptly confirmed in
writing which confirmation may be by fax) to the Administrative Agent not
later than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day
of requested borrowing in the case of Base Rate Loans, and on the third
Business Day prior to the date of the requested borrowing in the case of
LIBOR Rate Loans. Each such request for borrowing shall be irrevocable and
shall specify (A) that a Revolving Loan is requested, (B) the date of the
requested borrowing (which shall be a Business Day), (C) the aggregate
principal amount to be borrowed, and (D) whether the borrowing shall be
comprised of Base Rate Loans, LIBOR Rate Loans or a combination thereof,
and if LIBOR Rate Loans are requested, the Interest Period(s) therefor. A
form of Notice of Borrowing (a "Notice of Borrowing") is attached as
-------------------
Schedule 2.1(b)(i). If the Borrower shall fail to specify in any such
------------------
Notice of Borrowing (I) an applicable Interest Period in the case of a
LIBOR Rate Loan, then such notice shall be deemed to be a request for an
Interest Period of one month, or (II) the type of Revolving Loan requested,
then such notice shall be deemed to be a request for a Base Rate Loan
hereunder. The Administrative Agent shall give notice to each Lender
promptly upon receipt of each Notice of Borrowing, the contents thereof and
each such Lender's share thereof.
(ii) Minimum Amounts. Each Revolving Loan borrowing shall be in a
---------------
minimum aggregate amount of $500,000, in the case of Base Rate Loans, and
integral multiples of $100,000 in excess thereof, and $500,000, in the case
of LIBOR Rate Loans and integral multiples of $100,000 in excess thereof
(or the remaining amount of the Revolving Commitment, if less).
21
(iii) Advances. Each Lender will make its Revolving Commitment
--------
Percentage of each Revolving Loan borrowing available to the Administrative
Agent for the account of the Borrower at the office of the Administrative
Agent specified in Schedule 9.2, or at such other office as the
------------
Administrative Agent may designate in writing, by 1:00 P.M. (Charlotte,
North Carolina time) on the date specified in the applicable Notice of
Borrowing in Dollars and in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent by crediting the account of the
Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent. The Borrower hereby irrevocably
authorizes the Administrative Agent to disburse the proceeds of each
Borrowing requested pursuant to this Section 2.1 in immediately available
funds by crediting such proceeds to a deposit account of the Borrower
maintained with the Administrative Agent or by wire transfer to any other
account of the Borrower in each such case as may be specified by the
Borrower from time to time in a written notice in the form attached hereto
as Schedule 2.1(b)(iii) (a "Notice of Account Designation"). Unless other
--------------------
wise specified by the Borrower, the Notice of Account Designation most
recently provided to the Administrative Agent shall control.
(c) Repayment. The principal amount of all Revolving Loans shall be due and
---------
payable in full on the Termination Date.
(d) Interest. Subject to the provisions of Section 2.5, Revolving Loans shall
--------
bear interest as follows:
(i) Base Rate Loans. During such periods as Revolving Loans shall be
---------------
comprised of Base Rate Loans, each such Base Rate Loan shall bear interest
at a per annum rate equal to the sum of the Base Rate plus the Applicable
----
Interest Rate Percentage; and
(ii) LIBOR Rate Loans. During such periods as Revolving Loans shall be
----------------
comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear
interest at a per annum rate equal to the sum of the LIBOR Rate plus the
----
Applicable Interest Rate Percentage.
Interest on Revolving Loans shall be payable in arrears on each Interest
Payment Date.
(e) Revolving Notes. The Revolving Loans shall be evidenced by a duly executed
---------------
promissory note of the Borrower to each Lender in substantially the form of
Schedule 2.1(e). Each Lender is hereby authorized to record the date, Type
---------------
and amount of each Revolving Loan made by such Lender, each continuation
thereof, each conversion of all or a portion thereof to another Type, the
date and amount of each payment or prepayment of principal thereof and, in
the case of LIBOR Rate Loans, the length of each Interest Period with
respect thereto, on the schedule annexed to and constituting a part of its
Revolving Note, and any such recordation shall constitute prima facie
22
evidence of the accuracy of the information so recorded absent manifest
error; provided that neither the failure to make, nor any error in the
--------
making of, any such recordation shall limit or otherwise affect the
obligation of the Borrower hereunder or under such Revolving Note with
respect to any Revolving Loan and payments of principal or interest on such
Revolving Note. Each Revolving Note shall be dated the Closing Date and
provide for the payment of interest in accordance with subsection 2.1(d).
2.2 [Intentionally left blank]
2.3 CONVERSION OPTIONS.
------------------
(a) The Borrower may elect from time to time to convert Base Rate Loans to
LIBOR Rate Loans, by giving the Administrative Agent at least three
Business Days' prior irrevocable written notice of such election and elect
from time to time to convert LIBOR Rate Loans to Base Rate Loans, by giving
the Administrative Agent at least one Business Day's prior irrevocable
written notice of such election. A form of Notice of Conversion is
attached as Schedule 2.3. If the date upon which a Base Rate Loan is to be
------------
converted to a LIBOR Rate Loan is not a Business Day, then such conversion
shall be made on the next succeeding Business Day and during the period
from such last day of an Interest Period to such succeeding Business Day
such Revolving Loan shall bear interest as if it were a Base Rate Loan.
All or any part of outstanding LIBOR Rate Loans and Base Rate Loans may be
converted as provided herein, provided that (i) a Revolving Loan may be
--------
converted into a LIBOR Rate Loan only if no Event of Default has occurred
and is continuing, (ii) partial conversions into a LIBOR Rate Loan shall be
in an aggregate principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof and (iii) partial conversions into a Base Rate
Loan shall be in an aggregate principal amount of $500,000 or a whole
multiple of $ 100,000 in excess thereof.
(b) Any LIBOR Rate Loans may be continued as such upon the expiration of an
Interest Period with respect thereto by compliance by the Borrower with the
notice provisions contained in subsection 2.3(a); provided, that a LIBOR
--------
Rate Loan may be continued as such only if no Event of Default has occurred
and is continuing, in which case such Loan shall be automatically converted
to a Base Rate Loan at the end of the applicable Interest Period with
respect thereto. Where the Borrower shall fail to give timely notice of an
election to continue a LIBOR Rate Loan, or where continuation of LIBOR Rate
Loans is not permitted hereunder, such LIBOR Rate Loans shall be
automatically converted to Base Rate Loans at the end of the applicable
Interest Period with respect thereto.
2.4 MINIMUM PRINCIPAL AMOUNT OF TRANCHES.
------------------------------------
All borrowings, payments and prepayments in respect of Revolving Loans
shall be in such amounts and be made pursuant to such elections so that after
giving effect thereto the aggregate principal amount of the Revolving Loans
comprising any Tranche shall not be less than $500,000, in the case of Base Rate
Loans, and integral multiples in excess of $100,000 in
23
excess thereof, and $500,000, in the case of LIBOR Rate Loans, and integral
multiples of $100,000 in excess thereof
2.5 DEFAULT RATE AND PAYMENT DATES.
------------------------------
(a) If all or a portion of the principal amount of any Revolving Loan which is
a LIBOR Rate Loan shall not be paid when due or continued as a LIBOR Rate
Loan in accordance with the provisions of Section 2.3 (whether at the
stated maturity, by acceleration or otherwise), such overdue principal
amount of such Revolving Loan shall be converted to a Base Rate Loan at the
end of the Interest Period applicable thereto.
(b) If all or a portion of (i) the principal amount of any Revolving Loan, (ii)
any interest payable thereon or (iii) any fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum which is in the case of overdue principal, the rate that
would otherwise be applicable thereto plus 2% or in the case of overdue
interest, fees or other amounts, the Base Rate plus 2%, in each case from
the date of such non-payment until such amount is paid in full (as well
after as before judgment).
(c) Interest on each Revolving Loan shall be payable in arrears on each
Interest Payment Date, provided that interest accruing pursuant to
paragraph (b) of this subsection shall be payable from time to time on
demand.
2.6 REDUCTIONS IN REVOLVING COMMITMENTS AND PREPAYMENTS.
---------------------------------------------------
(a) Voluntary Reduction in Revolving, Commitments. The Borrower may from time
---------------------------------------------
to time permanently reduce the aggregate amount of the Revolving
Commitments in whole or in part without premium or penalty except as
provided in Section 2.14 upon three (3) Business Days' prior written notice
to the Administrative Agent; provided that after giving effect to any such
--------
voluntary reduction the Revolving Loans then outstanding shall not exceed
the Aggregate Revolving Committed Amount, as reduced. Partial reductions
in the aggregate Revolving Commitment shall in each case be in a minimum
aggregate amount of $500,000 and integral multiples of $100,000 in excess
thereof.
(b) Mandatory Reductions in Revolving Commitments and Mandatory Prepayments.
-----------------------------------------------------------------------
(i) Scheduled Reductions in Revolving Commitments. The aggregate amount
---------------------------------------------
of the Revolving Commitments shall be automatically and permanently reduced by
the following amounts on the following dates:
24
Reduction Date Amount of Reduction
------------------------------------------------ ----------------------------
March 31, 1999 $ 375,000
June 30, 1999 375,000
September 30, 1999 375,000
December 31, 1999 375,000
March 31, 2000 375,000
June 30, 2000 375,000
September 30, 2000 375,000
December 31, 2000 375,000
March 31, 2001 375,000
June 30, 2001 375,000
September 30, 2001 375,000
December 31, 2001 375,000
March 31, 2002 562,500
June 30, 2002 562,500
September 30, 2002 562,500
December 31, 2002 562,500
March 31, 2003 562,500
June 30, 2003 562,500
September 30, 2003 562,500
December 31, 2003 562,500
March 31, 2004 562,500
June 30, 2004 562,500
September 30, 2004 562,500
December 31, 2004 562,500
March 31, 2005 3,750,000
-----------
$15,000,00
25
The foregoing mandatory reduction amounts shall hereinafter be referred to
as the "Regularly Scheduled Reduction Amounts".
-------------------------------------
(ii) Net Sales Proceeds. The Borrower shall make a prepayment of the
------------------
Loans in an amount equal to 100% of the Net Sales Proceeds from Asset
Dispositions in excess of $1,000,000 which are not reinvested by the
Borrower in businesses permitted to be engaged in by the Borrower and its
Subsidiaries pursuant to Section 6.4 within six months after the applicable
date of disposition. Any such required prepayment of Net Sales Proceeds
shall be made on the date six months from the date of the applicable Asset
Disposition and shall be applied to the outstanding principal balance of
the Revolving Loans (with a corresponding reduction in the Revolving
Commitments). Any such reduction in the Revolving Commitments shall be
applied to, and serve to reduce, the Regularly Scheduled Reduction Amounts
which would otherwise be required under subsection (i) hereof pro rata as
to such amounts. Subject to the foregoing provisions, such prepayments
shall be applied first to Base Rate Loans, if any, and then to Eurodollar
Loans in direct order of Interest Period maturities.
(iii) Excess Cash Flow. On the date 120 days after the end of each
----------------
fiscal year beginning for fiscal year 1999, the Borrower shall make a
prepayment of the Loans in an aggregate amount equal to (A) fifty percent
(50%) of Excess Cash Flow for the immediately preceding fiscal year if the
Leverage Ratio on the last day of such fiscal year is equal to or greater
than 4.0 to 1.0 or (B) zero (0.0%) of Excess Cash Flow for the immediately
preceding fiscal year if the Leverage Ratio on the last day of such fiscal
year is less than 4.0 to 1.0. Any such payments of Excess Cash Flow shall
be applied to the outstanding principal balance of the Revolving Loans
(with a corresponding reduction in the Revolving Commitments). Any such
reduction in the Revolving Commitments shall be applied to, and serve to
reduce, the Regularly Scheduled Reduction Amounts which would otherwise be
required under subsection (i) hereof in the inverse order of reduction
dates. Subject to the foregoing provisions, such prepayments shall be
applied first to Base Rate Loans, if any, and then to Eurodollar Loans in
direct order of Interest Period maturities.
(iv) Debt Issuance. Immediately upon receipt by the Borrower of cash
-------------
proceeds from any Debt Issuance (other than any Debt Issuance relating to
Indebtedness permitted by Section 6.1), the Borrower shall make a
prepayment of the Loans in an amount equal to such proceeds. Any such
prepayments shall be applied to the outstanding principal balance of the
Revolving Loans (with a corresponding reduction in the Revolving
Commitments). Any such reduction in the Revolving Commitments shall be
applied to, and serve to reduce, the
26
Regularly Scheduled Reduction Amounts which would otherwise be required
under subsection (i) hereof in the inverse order of reduction dates.
Subject to the foregoing provisions, such prepayments shall be applied
first to Base Rate Loans, if any, and then to Eurodollar Loans in direct
order of Interest Period maturities.
(v) Mandatory Prepayment on Revolving Loan. If at any time the aggregate
--------------------------------------
amount of Revolving Loans and then outstanding shall exceed the Aggregate
Revolving Committed Amount, as reduced from time to time, the Borrower
shall immediately make payment on the Revolving Loans in an amount
sufficient to eliminate the excess. Any such payments shall be applied
first to Base Rate Loans and then to LIBOR Rate Loans in direct order of
their Interest Period maturities.
2.7 COMMITMENT FEE.
--------------
In consideration of the Revolving Commitments, the Borrower agrees to pay
to the Administrative Agent for the ratable benefit of the Lenders a commitment
fee (the "Commitment Fee") for each calendar quarter (or portion thereof) during
--------------
the Commitment Period, computed at the rate of the Applicable Commitment Fee
Percentage on the average daily amount by which the Aggregate Revolving
Committed Amount exceeds the aggregate principal amount of Revolving Loans
outstanding (for the subject calendar quarter). The Commitment Fee shall be
payable quarterly in arrears on the last Business Day of each March, June,
September and December (commencing June 30, 1998) and on the Termination Date.
2.8 COMPUTATION OF INTEREST AND FEES.
--------------------------------
(a) Interest payable hereunder with respect to LIBOR Rate Loans shall be
calculated on the basis of a year of 360 days for the actual days elapsed.
All other fees, interest and all other amounts payable hereunder shall be
calculated on the basis of a 365/6 day year for the actual days elapsed.
The Administrative Agent shall as soon as practicable notify the Borrower
and the Lenders of each determination of a LIBOR Rate on the Business Day
of the determination thereof. Any change in the interest rate on a
Revolving Loan resulting from a change in the Base Rate shall become
effective as of the opening of business on the day on which such change in
the Base Rate shall become effective. The Administrative Agent shall as
soon as practicable notify the Borrower and the Lenders of the effective
date and the amount of each such change.
(b) Each determination of an interest rate by the Administrative Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error.
2.9 PRO RATA TREATMENT AND PAYMENTS.
-------------------------------
Each borrowing of Revolving Loans and any reduction of the Revolving
Commitments shall be made pro rata according to the respective Revolving
Commitment Percentages of the Lenders. Each payment under this Agreement or any
Revolving Note shall be applied, first, in the case of a payment on the
Revolving Notes (or in respect of the Revolving Loans), to any fees then due and
27
owing by the Borrower pursuant to subsection 2.7, second, to interest then due
and owing in respect of the Revolving Notes of the Borrower and, third, to
principal then due and owing hereunder and under the Revolving Notes of the
Borrower. Except as otherwise provided herein, each payment on account of any
fees pursuant to subsection 2.7 shall be made pro rata to the Lenders in
accordance with the respective amounts due and owing. Each payment by the
Borrower on account of principal of and interest on the Revolving Loans shall be
made pro rata according to the respective amounts due and owing. Each
prepayment on account of principal of the Revolving Loans shall be applied to
such of the Revolving Loans as the Borrower may designate (to be applied pro
rata among the Lenders); provided, that prepayments made pursuant to subsection
--------
2.10(a) or 2.12 shall be applied in accordance with such subsection. All
payments (including prepayments) to be made by the Borrower on account of
principal, interest and fees shall be made without defense, set-off or
counterclaim (except as provided in subsection 2.15(b)) and shall be made to the
Administrative Agent for the account of the Lenders at the Administrative
Agent's office specified in Schedule 9.2 in Dollars and in immediately available
------------
funds. The Administrative Agent shall distribute such payments to the Lenders
entitled thereto promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the LIBOR Rate Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a LIBOR Rate Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day.
2.10 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT.
------------------------------------------------
(a) Unless the Administrative Agent shall have been notified by a Lender prior
to the date a Revolving Loan is to be made by such Lender (which notice
shall be effective upon receipt) that such Lender does not intend to make
the proceeds of such Revolving Loan available to the Administrative Agent,
the Administrative Agent may assume that such Lender has made such proceeds
available to the Administrative Agent on such date, and the Administrative
Agent may in reliance upon such assumption (but shall not be required to)
make available to the Borrower a corresponding amount. If such amount is
made available to the Administrative Agent on a date after such Borrowing
Date, such Lender shall pay to the Administrative Agent on demand an amount
equal to the product of (i) the daily average Federal Funds Effective Rate
during such period, times (ii) the amount of such Lender's Revolving
Commitment Percentage of such borrowing, times (iii) a fraction, the
numerator of which is the number of days that elapse from and including
such Borrowing Date to the date on which such Lender's Revolving Commitment
Percentage of such borrowing shall have become immediately available to the
Administrative Agent and the denominator of which is 360. If such Lender's
Revolving Commitment Percentage is not in fact made available to the
Administrative Agent by such Lender within two (2) Business Days of such
Borrowing Date, the Administrative Agent shall be entitled to recover such
amount with interest thereon at the rate per annum applicable to Base Rate
Loans hereunder, on demand, from the Borrower.
(b) Unless the Administrative Agent shall have been notified by the Borrower,
prior to the date on which any payment is due from it hereunder (which
notice shall be
28
effective upon receipt) that the Borrower does not intend to make such
payment, the Administrative Agent may assume that the Borrower has made
such payment when due, and the Administrative Agent may in reliance upon
such assumption (but shall not be required to) make available to each
Lender on such payment date an amount equal to the portion of such assumed
payment to which such Lender is entitled hereunder, and if the Borrower has
not in fact made such payment to the Administrative Agent, such Lender
shall, on demand, repay to the Administrative Agent the amount made
available to such Lender. If such amount is repaid to the Administrative
Agent on a date after the date such amount was made available to such
Lender, such Lender shall pay to the Administrative Agent on demand an
amount equal to the product of (i) the daily average Federal Funds
Effective Rate during such period, times (ii) the amount made available to
such Lender by the Administrative Agent pursuant to this paragraph (b),
times (iii) a fraction, the numerator of which is the number of days that
elapse from and including the date on which such amount was made available
to such Lender to the date on which such amount shall have been repaid to
the Administrative Agent by such Lender and become immediately available to
the Administrative Agent and the denominator of which is 360.
(c) A certificate of the Administrative Agent submitted to the Borrower or any
Lender with respect to any amount owing under this subsection shall be
conclusive in the absence of manifest error.
2.11 INABILITY TO DETERMINE INTEREST RATE.
------------------------------------
Notwithstanding any other provision of this Agreement, if (i) the
Administrative Agent shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist for
ascertaining LIBOR for such Interest Period, or (ii) the Majority Lenders shall
reasonably determine (which determination shall be conclusive and binding absent
manifest error) that the LIBOR Rate does not adequately and fairly reflect the
cost to such Lenders of funding LIBOR Rate Loans that the Borrower has requested
be outstanding as a Eurodollar Tranche during such Interest Period, the
Administrative Agent shall forthwith give telephone notice of such
determination, confirmed in writing, to the Borrower, and the Lenders at least
two Business Days prior to the first day of such Interest Period. Unless the
Borrower shall have notified the Administrative Agent upon receipt of such
telephone notice that it wishes to rescind or modify its request regarding such
LIBOR Rate Loans, any Loans that were requested to be made as LIBOR Rate Loans
shall be made as Base Rate Loans and any Revolving Loans that were requested to
be converted into or continued as LIBOR Rate Loans shall be converted into Base
Rate Loans. Until any such notice has been withdrawn by the Administrative
Agent, no further Revolving Loans shall be made as, continued as, or converted
into, LIBOR Rate Loans for the Interest Periods so affected.
2.12 ILLEGALITY.
----------
Notwithstanding any other provision of this Agreement, if the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof, in each case occurring after the Closing Date, by the relevant
Governmental Authority to any Lender shall make it unlawful for such Lender or
its LIBOR Lending Office to make or maintain LIBOR Rate Loans
29
as contemplated by this Agreement or to obtain in the interbank eurodollar
market through its LIBOR Lending Office the funds with which to make such Loans,
(a) such Lender shall promptly notify the Administrative Agent and the Borrower
thereof, (b) the commitment of such Lender hereunder to make LIBOR Rate Loans or
continue LIBOR Rate Loans as such shall forthwith be suspended until the
Administrative Agent shall give notice that the condition or situation which
gave rise to the suspension shall no longer exist, and (c) such Lender's Loans
then outstanding as LIBOR Rate Loans, if any, shall be converted on the last day
of the Interest Period for such Loans or within such earlier period as required
by law to Base Rate Loans. The Borrower hereby agrees promptly to pay any
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for actual and direct costs (but not including anticipated profits)
reasonably incurred by such Lender in making any repayment in accordance with
this subsection including, but not limited to, any interest or fees payable by
such Lender to lenders of funds obtained by it in order to make or maintain its
LIBOR Rate Loans hereunder. A certificate as to any additional amounts payable
pursuant to this subsection submitted by such Lender, through the Administrative
Agent, to the Borrower shall be conclusive in the absence of manifest error.
Each Lender agrees to use reasonable efforts (including reasonable efforts to
change its LIBOR Lending Office) to avoid or to minimize any amounts which may
otherwise be payable pursuant to this subsection; provided, however, that such
-------- -------
efforts shall not cause the imposition on such Lender of any additional costs or
legal or regulatory burdens deemed by such Lender to be material.
2.13 REQUIREMENTS OF LAW.
-------------------
(a) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority, in each case made subsequent
to the date hereof:
(i) shall subject such Lender to any tax of any kind whatsoever with
respect to any LIBOR Rate Loan made by it, or change the basis of taxation
of payments to such Lender in respect thereof (except for taxes covered by
subsection 2.15 (including any taxes imposed by reason of any failure of
such Lender to comply with its obligations under subsection 2.15(b)), or
changes in the rate of tax on the net income, or franchise tax, of such
Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the LIBOR Rate hereunder; or
(iii) shall impose on such Lender any other condition (excluding any tax
of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such
Lender of making or maintaining LIBOR Loans or to reduce any amount
receivable hereunder or under any Revolving Note, then, in any such case,
the Borrower shall promptly pay such Lender,
30
within 15 days after its demand, any additional amounts necessary to
compensate such Lender for such additional cost or reduced amount
receivable which such Lender reasonably deems to be material as determined
by such Lender with respect to its LIBOR Rate Loans. A certificate as to
any additional amounts payable pursuant to this subsection submitted by
such Lender, through the Administrative Agent, describing in reasonable
detail the nature of such event and a reasonably detailed explanation of
the calculation thereof, to the Borrower shall be conclusive in the absence
of manifest error. Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its Domestic Lending Office or LIBOR Lending
Office, as the case may be) to avoid or to minimize any amounts which might
otherwise be payable pursuant to this paragraph of this subsection;
provided, however, that such efforts shall not cause the imposition on such
Lender of any additional costs or legal or regulatory burdens deemed by
such Lender to be material.
(b) If any Lender shall have reasonably determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof as a consequence of its obligations
hereunder or compliance by such Lender or any corporation controlling such
Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any central bank or Governmental
Authority made subsequent to the date hereof as a consequence of its
obligations hereunder does or shall have the effect of reducing the rate of
return on such Lender's or such corporation's capital as a consequence of
its obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such corporation's policies
with respect to capital adequacy) by an amount reasonably deemed by such
Lender to be material, then from time to time, within 15 days after demand
by such Lender, the Borrower shall pay to such Lender such additional
amount as shall be certified by such Lender as being required to compensate
it for such reduction. Such a certificate as to any additional amounts
payable under this subsection submitted by a Lender (which certificate
shall include a description in reasonable detail of the basis for the
computation), through the Administrative Agent, to the Borrower shall be
conclusive absent manifest error.
(c) Notwithstanding anything to the contrary contained herein, the Borrower
shall not have any obligation to pay to any Lender amounts owing under this
subsection 2.13 for any period which is more than 180 days prior to the
date (but not in any event prior to the Closing Date) upon which the
request for payment therefor is delivered to the Borrower.
(d) The agreements in this subsection shall survive the termination of this
Agreement and payment of the Notes and all other amounts payable hereunder.
2.14 INDEMNITY.
---------
The Borrower hereby agrees to indemnify each Lender and to hold such Lender
harmless from any funding loss or expense which such Lender may sustain or incur
(other than as a result of such Lender's gross negligence or willful misconduct)
as a consequence of (a) default by the
31
Borrower in payment of the principal amount of or interest on any LIBOR Rate
Loan by such Lender in accordance with the terms hereof, (b) default by the
Borrower in accepting a LIBOR Rate Loan after the Borrower has given a notice in
accordance with the terms hereof, (c) default by the Borrower in making any
prepayment of a LIBOR Rate Loan after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a LIBOR Rate Loan, or the conversion thereof, on a day which is
not the last day of the Interest Period with respect thereto, in each case equal
to (i) the amount of interest which would have accrued on the amount so prepaid,
or not so paid, borrowed, converted or continued, for the period from the date
of such prepayment or of such failure to borrow, convert or continue to the last
day of such Interest Period (or, in the case of a failure to pay, borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure), in each case at the applicable rate of interest for such Loans
provided for herein (excluding the Applicable Interest Rate Percentage included
therein), over (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
eurodollar market. A certificate as to any additional amounts payable pursuant
to this subsection submitted by any Lender, through the Administrative Agent, to
the Borrower (which certificate must be delivered to the Administrative Agent
within thirty days following such default, prepayment or conversion) shall be
conclusive in the absence of manifest error. The agreements in this subsection
shall survive termination of this Agreement and payment of the Revolving Notes
and all other amounts payable hereunder.
2.15 TAXES.
-----
(a) All payments made by the Borrower hereunder or under any Revolving Note
will be, except as provided in Section 2.15(b), made free and clear of, and
without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now
or hereafter imposed by any Governmental Authority or by any political
subdivision or taxing authority thereof or therein with respect to such
payments (but excluding (i) any tax imposed on or measured by the net
income or profits of a Lender pursuant to the laws of the jurisdiction in
which it is organized or the jurisdiction in which the principal office or
applicable lending office of such Lender is located or any subdivision
thereof or therein and (ii) any franchise taxes, branch taxes, taxes on
doing business or taxes on the overall capital or net worth of any Lender
pursuant to the laws of the jurisdiction in which it is organized or the
jurisdiction in which the principal office or its applicable lending office
is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect thereto (all such non-
excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "Taxes"). If any Taxes are so levied or
-----
imposed, the Borrower agrees-to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any Note, after withholding or deduction
for or on account of any such Taxes, will not be less than the amount
provided for herein or in such Note. The Borrower will furnish to the
Administrative Agent as soon as practicable after the date the payment of
any Taxes is due pursuant to applicable law certified copies (to the extent
reasonably available and required by law) of tax receipts evidencing such
payment by the Borrower. Except as provided in this Section 2.15, the
Borrower agrees to indemnify and hold
32
harmless each Lender, and reimburse such Lender upon its written request,
for the amount of any Taxes so levied or imposed and paid by such Lender.
(b) Each Lender or Participant that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) agrees to deliver to the
Borrower and the Administrative Agent on or prior to the Closing Date, or
in the case of a Lender or Participant that is, an assignee or transferee
of an interest under this Agreement pursuant to Section 9.6 (unless the
respective Lender or Participant was already a Lender or Participant
hereunder immediately prior to such assignment or transfer), on the date of
such assignment or transfer to such Lender, (i) if the Lender or
Participant is a "bank" within the meaning of Section 881(c)(3)(A) of the
Code, two accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001 (or successor forms) certifying such Lender's or
Participant's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement
and under any Note, or (ii) if the Lender or Participant is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code, either Internal
Revenue Service Form 1001 or 4224 as set forth in clause (i) above, or (x)
a certificate substantially in the form of Schedule 2.15 (any such
-------------
certificate, a "2.15 Certificate") and (y) two accurate and complete
----------------
original signed copies of Internal Revenue Service Form W-8 (or successor
form) certifying such Lender's or Participant's entitlement to an exemption
from United States withholding tax with respect to payments of interest to
be made under this Agreement and under any Note. In addition, each Lender
and Participant agrees that it will deliver upon the Borrower's request (or
upon such Lender's or Participant's becoming aware that any version is no
longer accurate) updated versions of the foregoing, as applicable, whenever
the previous certification has become obsolete or inaccurate in any
material respect, together with such other forms as may be required in
order to confirm or establish the entitlement of such Lender or Participant
to a continued exemption from or reduction in United States withholding tax
with respect to payments under this Agreement and any Note.
Notwithstanding anything to the contrary contained in Section 2.15(a), but
subject to the immediately succeeding sentence, (x) the Borrower shall be
entitled, to the extent it is required to do so by law, to deduct or
withhold Taxes imposed by the United States (or any political subdivision
or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Lender or Participant
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent
that such Lender or Participant has not provided to the Borrower U.S.
Internal Revenue Service Forms that establish a complete exemption from
such deduction or withholding and (y) the Borrower shall not be obligated
pursuant to Section 2.15(a) hereof to gross-up payments to be made to a
Lender or Participant or otherwise indemnify such Lender or Participant in
respect of Taxes imposed by the United States if (I) such Lender or
Participant has not provided to the Borrower the Internal Revenue Service
Forms required to be provided to the Borrower pursuant to this Section
2.15(b) or (II) in the case of a payment, other than interest, to a Lender
or Participant described in clause (ii) above, to the extent that such
Forms do not establish a complete exemption from withholding of such Taxes.
Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 2.15 but subject in any event to
clause (y)(I) in the immediately preceding sentence, the Borrower agrees to
pay additional amounts and to
33
indemnify each Lender in the manner set forth in Section 2.15(a) (without
regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by them as
described in the immediately preceding sentence as a result of any changes
after the Closing Date (or, in the case of an assignee or transferee, after
the date such assignee or transferee became a Lender or Participant
hereunder) in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the
deducting or withholding of Taxes.
(c) Each Lender agrees to use reasonable efforts (including reasonable efforts
to change its Domestic Lending Office or LIBOR Lending Office, as the case
may be) to avoid or to minimize any amounts which might otherwise be
payable pursuant to this subsection; provided, however, that such efforts
-------- -------
shall not cause the imposition on such Lender of any additional costs or
legal or regulatory burdens deemed by such Lender to be material unless in
the case of costs the Borrower has agreed to reimburse such Lender for such
costs.
(d) If the Borrower pays any additional amount pursuant to this subsection 2.15
with respect to a Lender or Participant, such Lender or Participant shall
use reasonable efforts to obtain a refund of tax or credit against its tax
liabilities on account of such payment; provided that such Lender or
--------
Participant shall have no obligation to use such reasonable efforts if
either (i) it is in an excess foreign tax credit position or (ii) it
believes in good faith, in its sole discretion, that claiming a refund or
credit would cause adverse tax consequences to it. In the event that such
Lender or Participant receives such a refund or credit, such Lender or
Participant shall pay to the Borrower an amount that such Lender reasonably
determines is equal to the net tax benefit obtained by such Lender or
Participant as a result of such payment by the Borrower. In the event that
no refund or credit is obtained with respect to the Borrower's payments to
such Lender pursuant to this subsection 2.15, then such Lender or
Participant shall upon request provide a certification that such Lender or
Participant has not received a refund or credit for such payments. Nothing
contained in this subsection 2.15 shall require a Lender or Participant to
disclose or detail the basis of its calculation of the amount of any tax
benefit or any other amount or the basis of its determination referred to
in the proviso to the first sentence of this subsection 2.15 to the
Borrower or any other party.
(e) The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Revolving Notes and all other amounts
payable hereunder.
2.16 REPLACEMENT OF AGENT.
--------------------
If any Lender becomes a Defaulting Lender, if any Lender delivers a notice
pursuant to Section 2.12, 2.13 or 2.15 or if any Lender fails to consent to a
waiver or amendment which requires the consent of each of the Lenders
(hereinafter any such Lender shall be referred to as a "Replaced Lender"), then
in such case, the Borrower may, upon at least five (5) Business Days' notice to
the Administrative Agent and such Replaced Lender, designate a replacement
lender (a "Replacement Lender") acceptable to the Administrative Agent in its
reasonable discretion, to which such Replaced Lender shall, subject to its
receipt (unless a later date for the remittance
34
thereof shall be agreed upon by the Borrower and the Replaced Lender) of all
amounts owed to such Replaced Lender hereunder, assign all (but not less than
all) of its rights and obligations hereunder. Upon any assignment by any Lender
pursuant to this Section 2.16 becoming effective, the Replacement Lender shall
thereupon be deemed to be a "Lender" for all purposes of this Agreement and such
Replaced Lender shall thereupon cease to be a "Lender" for all purposes of this
Agreement and shall have no further rights or obligations hereunder (other than
pursuant to Sections 2.12, 2.13, 2.15 and 9.5 while such Replaced Lender was a
Lender).
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the Loans
herein provided for, the Borrower hereby represents and warrants to the
Administrative Agent and to each Lender that:
3.1 FINANCIAL CONDITION.
-------------------
The financial statements provided to the Administrative Agent and the
Lenders, consisting of an audited balance sheet of the Borrower dated as of
December 31, 1997, together with related statements of operations and statements
of cash flows, copies of which have heretofore been provided to each of the
Lenders, are complete and correct in all material respects and present fairly in
accordance with GAAP the financial condition and pro forma results from
operations of the entities for the periods specified, except as noted therein
and subject to normal year-end adjustments and the footnote disclosures required
by GAAP.
3.2 NO CHANGE.
---------
Since December 31, 1997, there has been no development or event which has
had a Material Adverse Effect.
3.3 EXISTENCE; COMPLIANCE WITH LAW.
------------------------------
The Borrower and each Subsidiary (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has the limited liability company, corporate or partnership power and authority
and the legal right to own and operate all its material property, to lease the
material property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign limited liability
company, corporation or partnership and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification except to the extent set forth in
3.2 of the Purchase Agreements with respect to Professional Farmers of America,
Inc. and Professional Market Management, Inc. and except to the extent that the
failure to so qualify or be in good standing would not, in the aggregate, have a
Material Adverse Effect and (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
35
3.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
---------------------------------------------
The Borrower and each Subsidiary have full power and authority and the
legal right to make, deliver and perform the Credit Documents to which it is
party and has taken all necessary company, corporate or partnership action to
authorize the execution, delivery and performance by it of the Credit Documents
to which it is party. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery or performance of any Credit Document by the Borrower or any Subsidiary
(other than those which have been obtained) or with the validity or
enforceability of any Credit Document against the Borrower or any Subsidiary
(except such filings as are necessary in connection with the perfection of the
Liens created by such Credit Documents) except to the extent that the failure to
obtain any such consent or authorization or to affect any filing or notice would
not in the aggregate, reasonably expected to have a Material Adverse Effect.
Each Credit Document to which the Borrower or any Subsidiary is a party has been
duly executed and delivered on behalf of the Borrower or such Subsidiary. Each
Credit Document to which it is a party constitutes a legal, valid and binding
obligation of the Borrower or such Subsidiary enforceable against the Borrower
or such Subsidiary in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law).
3.5 NO LEGAL BAR, NO DEFAULT.
------------------------
The execution, delivery and performance of the Credit Documents, the
borrowings thereunder and the use of the proceeds of the Loans will not violate
any Requirement of Law or any Contractual Obligation of the Borrower or any
Subsidiary (except those as to which waivers or consents have been obtained and
except for any such violation which will not have a Material Adverse Effect),
and will not result in, or require, the creation or imposition of any Lien on
any of their respective properties or revenues pursuant to any Requirement of
Law or Contractual Obligation other than the Liens arising under or contemplated
in connection with the Credit Documents. Neither the Borrower nor any
Subsidiary is in default under or with respect to any of its Contractual
Obligations in any respect which would reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
3.6 NO MATERIAL LITIGATION.
----------------------
Except as set forth in Schedule 3.6, no litigation, investigation or
------------
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of the Borrower, threatened by or against the Borrower or
any Subsidiary or against any of its or their respective properties or revenues
(a) with respect to the Credit Documents or any Loan or any of the transactions
contemplated hereby, or (b) which could reasonably be expected to have a
Material Adverse Effect.
3.7 INVESTMENT COMPANY ACT.
----------------------
Neither the Borrower nor any Subsidiary is an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
36
3.8 FEDERAL REGULATIONS.
-------------------
No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect.
Neither the Borrower nor any Subsidiary owns "margin stock" except as identified
in the financial statements referred to in Section 3.1 and the aggregate value
of all "margin stock" owned by the Borrower and the Subsidiaries taken as a
group does not exceed 25% of the value of their assets.
3.9 ERISA.
-----
Neither a Reportable Event nor an "accumulated funding deficiency" (within
the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred
during the five-year period prior to the date on which this representation is
made or deemed made with respect to any Plan, and each Plan has complied in all
material respects with the applicable provisions of ERISA and the Code, except
to the extent that any such occurrence or failure to comply would not reasonably
be expected to have a Material Adverse Effect. No termination of a Single
Employer Plan has occurred resulting in any liability that has remained
underfunded, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period which would reasonably be expected to have a Material Adverse
Effect. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by an amount which, as determined in accordance with GAAP,
would reasonably be expected to have a Material Adverse Effect. Neither the
Borrower, any Subsidiary nor any Commonly Controlled Entity is currently subject
to any liability for a complete or partial withdrawal from a Multiemployer Plan
which would reasonably be expected to have a Material Adverse Effect.
3.10 ENVIRONMENTAL MATTERS.
---------------------
Except to the extent that all of the following, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect:
(a) To the best knowledge of the Borrower, the facilities and properties owned,
leased or operated by the Borrower and its Subsidiaries (the "Properties")
----------
do not use, store, generate, dispose of or handle any Materials of
Environmental Concern in amounts or concentrations which (i) constitute a
violation of or (ii) could give rise to liability under, any Environmental
Law.
(b) To the best knowledge of the Borrower, the Properties and all operations at
the Properties are in compliance, and have in the last five years been in
compliance, in all material respects with all applicable Environmental
Laws, and there has been no violation of any Environmental Law with respect
to the Properties or the business operated by the Borrower (the
"Business").
--------
(c) Neither the Borrower nor any Subsidiary has received any notice of
violation, alleged violation, non-compliance, liability or potential
liability regarding
37
environmental matters or compliance with Environmental Laws with regard to
any of the Properties or the Business, nor does the Borrower have knowledge
that any such notice is being threatened.
(d) To the best knowledge of the Borrower, all Materials of Environmental
Concern have been generated, treated, stored or disposed of at, on or under
any of the Properties in accordance with applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is pending
or, to the best of the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be
named as a party with respect to the Properties or the Business or any
facility that has received materials of environmental concern generated by
the Borrower, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect
to the Properties or the Business.
(f) To the best knowledge of the Borrower, there has been no release or threat
of release of Materials of Environmental Concern at or from the Properties
arising from or related to the operations of the Borrower or any Subsidiary
in connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could give rise
to liability under Environmental Laws.
3.11 PURPOSE OF LOAN.
---------------
The proceeds of the Loans will be used to finance the acquisition of the
Acquired Assets and closing costs incurred in connection therewith, to repay
existing Indebtedness, to pay closing costs incurred in connection herewith and
to provide senior debt capacity to make acquisitions and investments permitted
hereby and to provide general working capital.
3.12 SUBSIDIARIES.
------------
Set forth on Schedule 3.12 is a complete and accurate list of all
-------------
Subsidiaries of the Borrower as of the Closing Date. As of the Closing Date,
information on the attached Schedule includes state of organization; the number
of shares of each class of capital stock or partnership or other equity
interests (identified by type) outstanding; the number and percentage of
outstanding shares of each class of stock or percentage of ownership interest;
and the number and effect, if exercised, of all outstanding options, warrants,
rights of conversion or purchase and similar rights. The outstanding capital
stock and partnership and other equity interests of all such Subsidiaries are
validly issued, fully paid and non-assessable and are owned, free and clear of
all Liens (other than those arising under or contemplated in connection with the
Credit Documents). As of the Closing Date, except as set forth on Schedule
--------
3.12, there are no outstanding options or other rights pertaining to the
partnership or other equity interests of the Borrower, and no voting trusts,
shareholders' or partners' agreements (other than the partnership agreements
relating to the formation, organization, operation and governance of the
partnerships, copies of which have been provided to the Administrative Agent and
the Lenders) or similar agreement affecting either ownership of or the right to
vote such partnership interests.
38
3.13 INTELLECTUAL PROPERTY RIGHTS.
----------------------------
The Borrower and its Subsidiaries own or have the right to use, subject to
any of its obligations under any valid and binding license agreement, the
Intellectual Property (as defined below) disclosed in Schedule 3.13 hereto,
-------------
which, to the best of their knowledge, represents all Intellectual Property
individually or in the aggregate material to the conduct of the businesses of
the Borrower and its Subsidiaries taken as a whole on the date hereof. Except
as disclosed in Schedule 3.13 hereto or where the failure shall not have a
-------------
Material Adverse Effect, (i) the Borrower or a Subsidiary has the right to use
the Intellectual Property disclosed in Schedule 3.13 hereto in perpetuity and
--------------
without payment of royalties, (ii) all registrations with and applications to
Governmental or Regulatory Authorities in respect of such Intellectual Property
are valid and in full force and effect and are not subject to the payment of any
taxes or maintenance fees or the taking of any other actions by the Borrower or
a Subsidiary to maintain their validity or effectiveness, and (iii) there are no
restrictions on the direct or indirect transfer of any Contractual Obligation,
or any interest therein, held by the Borrower or any Subsidiary in respect of
such Intellectual Property. Neither the Borrower nor any Subsidiary of the
Borrower is in default (or with the giving of notice or lapse of time or both,
would be in default) under any license to use such Intellectual Property the
loss of which would reasonably be expected to have a Material Adverse Effect, to
the best of the Borrower and its Subsidiaries' knowledge such Intellectual
Property is not being infringed by any third party the loss of which may have a
Material Adverse Effect, and to the best of the Borrower and its Subsidiaries'
knowledge neither the Borrower nor any Subsidiary of the Borrower is infringing
any Intellectual Property of any third party the infringement of which would
reasonably be expected to have a Material Adverse Effect. For purposes of this
Section 3.13, "Intellectual Property" means patents and patent rights,
----------------------
trademarks and trademark rights, trade names and trade name rights, service
marks and service ▇▇▇▇ rights, copyrights and copyright rights, including the
right to ▇▇▇ for past infringement, licenses, proprietary information, designs,
processes, inventions, software and related intellectual property rights and all
pending applications for and registrations of any of the foregoing.
3.14 NO BURDENSOME RESTRICTIONS.
--------------------------
No Requirement of Law or Contractual Obligation of the Borrower could
reasonably be expected to have a Material Adverse Effect.
3.15 TAXES.
-----
The Borrower and the Subsidiaries have filed, or caused to be filed, all
material tax returns (Federal, state, local and foreign) required to be filed on
or prior to the Closing Date and paid all taxes shown thereon to be due
(including interest and penalties) and have paid all other taxes, fees,
assessments and other governmental charges (including mortgage recording taxes,
documentary stamp taxes and intangibles taxes) owing (or necessary to preserve
any Liens in favor of the Lenders) with respect to taxable periods ending on or
before the Closing Date by them, except for such taxes (i) which are not yet
delinquent, (ii) as are being contested in good faith and by proper proceedings,
and against which adequate reserves are being maintained in accordance with GAAP
or (iii) the nonpayment of which would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Borrower is not aware of any
proposed material tax assessments against it or any of its Subsidiaries.
39
3.16 NO INTEREST IN REAL ESTATE.
--------------------------
Other than the leasehold interests reflected on Schedule 3.16, neither the
-------------
Borrower nor any of its Subsidiaries has any interest in any real property.
3.17 PRINTING.
--------
Neither the premises leased by the Borrower or any of its Subsidiaries or
any other real estate owned or leased by the Borrower or any of its Subsidiaries
has been used by the Borrower or any of its Subsidiaries (or any of their
respective predecessors in interest) for printing including without limitation,
printing of any publications, including newspapers, magazines, circulars,
pamphlets, books or similar items, but excluding printing of office
correspondence and ordinary printing for customary office purposes.
3.18 ASSETS.
------
The assets of the Borrower and its Subsidiaries located outside of the
States of Iowa and Minnesota and the Commonwealth of Pennsylvania constitute
less than 10% of all assets of the Borrower and its Subsidiaries located in the
United States.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO CLOSING DATE.
--------------------------
This Agreement shall become effective upon the satisfaction of the
following conditions precedent:
(a) Execution of Agreement. The Administrative Agent shall have received (i)
----------------------
multiple counterparts of this Agreement for each Lender, executed by a duly
authorized officer of each party hereto, (ii) for the account of each
Lender a Revolving Note, and (iii) multiple counterparts of the Security
Agreement to be executed by the Borrower and its Subsidiaries in existence
as of the Closing Date, the Pledge Agreement, and other Security Documents
for each Lender and UCC financing statements relating thereto executed by a
duly authorized officer of each party thereto, in each case conforming to
the requirements of this Agreement and executed by a duly authorized
officer of the Borrower and the parties to the Pledge Agreement, as
applicable.
(b) Liability and Casualty Insurance. The Administrative Agent shall have
--------------------------------
received copies of insurance policies or certificates of insurance
evidencing liability and casualty insurance meeting the requirements set
forth herein or in the Security Agreement to be executed by the Borrower
and its Subsidiaries in existence as of the Closing Date.
(c) Corporate Documents. The Administrative Agent shall have received the
-------------------
following:
40
(i) Articles of Incorporation. Copies of the certificate of formation,
-------------------------
articles of organization, articles of incorporation or charter documents of
the Borrower and the Guarantors certified to be true and complete as of a
recent date by the appropriate governmental authority of the state of its
organization or incorporation.
(ii) Resolutions. Copies of the resolutions taken by the directors of
-----------
the Borrower and the Guarantors approving and adopting the Credit
Documents, the transactions contemplated therein and authorizing execution
and delivery thereof, certified by a secretary or assistant secretary as of
the Closing Date to be true and correct and in full force and effect as of
such date.
(iii) Bylaws. A copy of the bylaws of the Borrower and the Guarantors
------
certified by a secretary or assistant secretary as of the Closing Date to
be true and correct and in full force and effect as of such date.
(iv) Good Standing. Copies of (A) certificates of good standing,
-------------
existence or its equivalent with respect to the Borrower and the Guarantors
certified as of a recent date by the appropriate governmental authorities
of the state of incorporation and each other state in which the failure to
so qualify and be in good standing would have a material adverse effect on
the business or operations of the Borrower or the Guarantors in such state
and (B) a certificate indicating payment of all corporate franchise taxes
certified as of a recent date by the appropriate governmental taxing
authorities.
(d) Officer's Certificate. The Administrative Agent shall have received a
---------------------
certificate of a duly authorized secretary or assistant secretary of each
of the Borrower and the Guarantors dated the Closing Date, substantially in
the form of Schedule 4.1(d) with appropriate insertions and attachments.
----------------
(e) Legal Opinion of Counsel. The Administrative Agent shall have received,
------------------------
with a copy for each Lender, opinions of various counsel for the Borrower
and the Guarantors, dated the Closing Date and addressed to the
Administrative Agent and the Lenders, in form and substance satisfactory to
Administrative Agent and the Lenders.
(f) Compliance and Solvency Certificates. The Administrative Agent shall have
------------------------------------
received from an Authorized Signatory (i) a certificate regarding the
accuracy of representations and warranties and the absence of Defaults, in
form reasonably acceptable to the Administrative Agent, and (ii) a solvency
certificate substantially in the form of Schedule 4.1(f)(ii), demonstrating
-------------------
the solvency of the Borrower and each of the Guarantors.
(g) Fees. The Agent shall have received all fees owing to each of them
----
pursuant to the Fee Letter.
(h) Litigation. There shall not exist any (i) order, decree, judgment, ruling
----------
or injunction which restrains the consummation of the acquisition of the
Acquired Assets in the manner contemplated by the Purchase Agreement or
(ii) any pending or threatened
41
action, suit, investigation or proceeding against the Borrower or any
Guarantor that would have or would reasonably be expected to have a
Material Adverse Effect.
(i) Section 4.3 Conditions. The conditions specified in Sections 4.3 (a)
----------------------
and (b) shall be satisfied on the Closing Date as if Loans were to be made
on such date.
(j) Notice of Account Designation. The Borrower shall have executed and
-----------------------------
delivered to the Administrative Agent a Notice of Account Designation.
(k) Additional Matters. All other documents and legal matters in connection
------------------
with the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Administrative Agent and its
counsel.
4.2 CONDITIONS TO LOANS-ACQUIRED ASSETS.
-----------------------------------
The obligation of each Lender to make any Loan hereunder which will be used
to finance the purchase of any of the Acquired Assets is subject to the
satisfaction on the date of the making of such Loan of the conditions set forth
in Sections 4.1 and 4.3 hereunder and is further subject to the consent by the
Agent of all terms, conditions and documentation regarding such purchase
(including the Purchase Agreement relating thereto), such consent not to be
unreasonably withheld.
4.3 CONDITIONS TO ALL LOANS.
-----------------------
The obligation of each Lender to make any Loan hereunder (including the
initial Loans to be made hereunder) is subject to the satisfaction of the
following conditions precedent on the date of making such Loan:
(a) Representations and Warranties. The representations and warranties made by
------------------------------
the Borrower and the Subsidiaries herein, in the Security Documents or
which are contained in any certificate furnished at any time under or in
connection herewith shall be true and correct in all material respects on
and as of the date of such Loan as if made on and as of such date (except
to the extent such representations and warranties expressly relate to an
earlier date).
(b) No Default or Event of Default. No Default or Event of Default shall have
------------------------------
occurred and be continuing on such date or after giving effect to the Loan
to be made on such date unless such Default or Event of Default shall have
been waived in accordance with this Agreement.
Each request for a Loan and each acceptance by the Borrower of a Loan shall
be deemed to constitute a representation and warranty by the Borrower as of the
date of such Loan that the applicable conditions in paragraphs (a) and (b) have
been satisfied.
42
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid, and the Loans, together
with interest, fees and all other amounts owing to the Administrative Agent or
any Lender hereunder, are paid in full, the Borrower shall, and in the case of
Sections 5.3, 5.4, 5.5, 5.6, 5.7 and 5.8 shall cause each of its Subsidiaries,
to:
5.1 FINANCIAL STATEMENTS.
--------------------
Furnish to the Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, but in any event within
---------------------------
90 days after the end of each fiscal year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows of the
Borrower and its consolidated Subsidiaries for such year, audited by
Deloitte & Touche LLP or any other firm of independent certified public
accountants of nationally recognized standing reasonably acceptable to the
Majority Lenders, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going concern" or
like qualification or exception, or qualification indicating that the scope
of the audit was inadequate to permit such independent certified public
accountants to certify such financial statements without such
qualification; and
(b) Quarterly Financial Statements. As soon as available and in any event
------------------------------
within 45 days after the end of each of the first three fiscal quarters of
the Borrower, a company-prepared consolidating balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such period and
related company-prepared statements of income and retained earnings and of
cash flows for the Borrower and its consolidated Subsidiaries for such
quarterly period and for the portion of the fiscal year ending with such
period, in each case setting forth in comparative form consolidating
figures for the corresponding period or periods of (i) the preceding fiscal
year and (ii) the annual budget plan (subject in each case to normal
recurring year-end audit adjustments);
(c) Monthly Financial Statements. As soon as available and in any event within
----------------------------
45 days after the end of each month, a company-prepared consolidating
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such month and related company-prepared statements of income and
retained earnings and of cash flows for the Borrower and its consolidated
Subsidiaries for such monthly period and for the portion of the fiscal year
ending with such period, in each case setting forth in comparative form
consolidating figures for the corresponding period or periods of (i) the
preceding fiscal year and (ii) the annual budget plan (subject in each case
to normal recurring year-end audit adjustments);
(d) Annual Budget Plan. As soon as available, but in any event no more than 90
------------------
days after the date hereof, a copy of the detailed annual budget or plan
for fiscal year 1998 set out by month, in form and detail reasonably
acceptable to the Administrative Agent and the Majority Lenders, together
with a summary of the material assumptions made in the preparation of the
budget or plan. As soon as available, but in any event no
43
more than 60 days after the end of fiscal year 1998 and each fiscal year
thereafter, a copy of the detailed annual budget or plan for the next
fiscal year set out by month, in form and detail reasonably acceptable to
the Administrative Agent and the Majority Lenders, together with a summary
of the material assumptions made in the preparation of the budget or plan;
all such financial statements to include a breakdown by titles and other lines
of business to fairly present in all material respects the financial condition
and results from operations of the entities and for the periods specified
(subject, in the case of interim statements, to normal recurring year-end audit
adjustments) and to be prepared in reasonable detail and, in the case of the
annual and quarterly financial statements provided in accordance with
subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein (except as approved by such accountants
or Authorized Signatory, as the case may be, and disclosed therein) and were
accompanied by a description of, and an estimation of the effect on the
financial statements on account of, a change in the application of accounting
principles as provided in Section 1.3.
5.2 CERTIFICATES; OTHER INFORMATION.
-------------------------------
Furnish to the Administrative Agent and each of the Lenders:
(a) Accountants Certificate. Concurrently with the delivery of the financial
-----------------------
statements referred to in Section 5.1(a) above, a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;
(b) Compliance Certificate. Concurrently with the delivery of the financial
----------------------
statements referred to in Sections 5.1(a) and 5.1(b) above, a certificate
of an Authorized Signatory stating that, to the best of such Authorized
Signatory's knowledge, the Borrower and the Subsidiaries during such period
observed or performed in all material respects all of their covenants and
other agreements, and satisfied in all material respects every material
condition, contained in this Agreement to be observed, performed or
satisfied by them, and that such Authorized Signatory has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate and such certificate shall include the calculations required to
indicate compliance with Section 5.9 and information as to Restricted
Payments made in the applicable period in accordance with Section 6.11;
(c) Other Information. Promptly, such additional financial and other
-----------------
information as the Administrative Agent, on behalf of any Lender, may from
time to time reasonably request.
5.3 PAYMENT OF OBLIGATIONS.
----------------------
Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, in accordance with industry practice
(subject, where applicable, to specified grace periods) all obligations in
excess of $1,000,000 of whatever nature and any
44
additional costs that are imposed as a result of any failure to so pay,
discharge or otherwise satisfy such obligations, except when the amount or
validity of such obligations and costs is currently being contested in good
faith by appropriate proceedings and reserves, if applicable, in conformity with
GAAP with respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be.
5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
------------------------------------------------
Preserve, renew and keep in full force and effect its company, corporate or
partnership existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business; comply with all Contractual Obligations and Requirements of Law
applicable to it except to the extent that failure to comply therewith would
not, in the aggregate, have a Material Adverse Effect.
5.5 MAINTENANCE OF PROPERTY INSURANCE.
---------------------------------
Keep all material property useful and necessary in its business in
reasonably good working order and condition (ordinary wear and tear excepted);
maintain with financially sound and reputable insurance companies insurance on
all its material property in at least such amounts and against at least such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to the Administrative
Agent, upon written request, full information as to the insurance carried.
5.6 INSPECTION OF PROPERTY, BOOKS AND RECORDS; DISCUSSIONS.
------------------------------------------------------
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its businesses and activities; and
permit, during regular business hours and upon reasonable notice by the
Administrative Agent or any Lender (any such inspection by the Administrative
Agent to be at the Borrower's expense and any such inspection by any Lender to
be at such Lenders expense), to visit and inspect any of its properties and
examine and make abstracts from any of its books and records (other than
materials protected by the attorney-client privilege and materials which the
Borrower may not disclose without violation of a confidentiality obligation
binding upon it) at any reasonable time and as often as may reasonably be
desired, and to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries with officers and employees
of the Borrower and its Subsidiaries and with its independent certified public
accountants.
5.7 NOTICES.
-------
Give notice to the Administrative Agent (which shall promptly transmit such
notice to each Lender) of:
(a) within five Business Days after the Borrower knows of the occurrence of any
material Default or Event of Default;
45
(b) promptly, any default or event of default under any Contractual Obligation
of the Borrower or any Subsidiary which would reasonably be expected to
have a Material Adverse Effect;
(c) promptly, any litigation, or any investigation or proceeding known to the
Borrower, affecting the Borrower or any Subsidiary which, if adversely
determined, would reasonably be expected to have a Material Adverse Effect;
(d) as soon as possible and in any event within 30 days after the Borrower
knows: (i) the occurrence of any Reportable Event with respect to any Plan,
a failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower, any Subsidiary or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan, provided that in
each case in clause (i) and (ii) above, such event or condition could have
a Material Adverse Effect; and
(e) promptly, any other development or event which would reasonably be expected
to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Authorized Signatory setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
5.8 ENVIRONMENTAL LAWS.
---------------------
(a) Comply in all material respects with, and take reasonable actions to ensure
compliance in all material respects by all tenants and subtenants, if any,
with, all applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and take reasonable actions to ensure
that all tenants and subtenants obtain and comply in all material respects
with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws except
to the extent that failure to do so would not reasonably be expected to
have a Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws
and promptly comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws
except to the extent that the same are being contested in good faith by
appropriate proceedings and the failure to do or the pendency of such
proceedings would not reasonably be expected to have a Material Adverse
Effect; and
(c) Defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective employees, agents, officers and directors,
from and against any and all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising
46
out of, or in any way relating to the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of the
Borrower, its Subsidiaries or the Properties, or any orders, requirements
or demands of Governmental Authorities related thereto, including, without
limitation, reasonable attorney's and consultants fees, investigation and
laboratory fees, response costs, court costs and litigation expenses,
except to the extent that any of the foregoing arise out of the gross
negligence or willful misconduct of the party seeking indemnification
therefor. The agreements in this paragraph shall survive repayment of the
Notes and all other amounts payable hereunder.
5.9 FINANCIAL COVENANTS.
----------------------
(a) Leverage Ratio. The Borrower will maintain, as of the end of each fiscal
--------------
quarter to occur during the periods shown, a Leverage Ratio of not greater
than:
Period Ratio
------------------------------------------- -------------------------------
Closing Date through June 30, 1999 5.00:1.0
July 1, 1999 to December 31, 1999 4.50:1.0
January 1, 2000 to June 30, 2000 4.00:1:0
July 1, 2000 and thereafter 3.50:1.0
(b) Interest Coverage Ratio. The Borrower will maintain, as of the end of each
-----------------------
fiscal quarter to occur during the periods shown, an Interest Coverage
Ratio of at least:
Period Ratio
------------------------------------------- -------------------------------
Closing Date through December 31, 1998 1.75:1.0
January 1, 1999 to December 31, 1999 2.00:1.0
January 1, 2000 and thereafter 2.25:1.0
(c) Fixed Charge Coverage Ratio. The Borrower will maintain, as of the end of
---------------------------
each fiscal quarter a Fixed Charge Coverage Ratio of at least 1.05:1.0.
5.10 COVENANTS REGARDING PATENTS, TRADEMARKS AND COPYRIGHTS.
---------------------------------------------------------
(a) The Borrower shall notify the Administrative Agent promptly if it knows or
has reason to know that any application, letters patent or registration
relating to any Patent or Trademark which is material to the business of
the Borrower and its Subsidiaries taken as a whole may become abandoned, or
of any material adverse determination or development (including, without
limitation, the institution of, or any
47
such determination or development in, any proceeding in the United States
Patent and Trademark Office or any court) regarding the Borrower's or such
other Subsidiary's ownership of any Patent or Trademark which is material
to the business of the Borrower and its Subsidiaries taken as a whole, its
right to patent or register the same, or to enforce, keep and maintain the
same.
(b) The Borrower shall notify the Administrative Agent promptly after it knows
or has reason to know of any material adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any proceeding in any court) regarding any
Copyright which is material to the business of the Borrower and its
Subsidiaries taken as a whole, whether (i) such Copyright may become
invalid or unenforceable prior to its expiration or termination, or (ii)
the Borrower's or such other Subsidiary ownership of such Copyright, its
right to register the same or to enforce, keep and maintain the same may
become affected.
(c) (i) The Borrower shall promptly notify the Administrative Agent of any
filing by the Borrower or any other Subsidiary, either itself or through
any agent, employee, licensee or designee (but in no event later than the
fifteenth day following such filing), of any application for the
registration of any Copyright, Trademark or Patent with the United States
Copyright Office or United States Patent and Trademark Office or any
similar office or agency in any other country or any political subdivision
thereof.
(ii) Concurrently with the delivery of quarterly and annual financial
statements of the Borrower pursuant to Section 5.1 hereof, the Borrower
shall provide the Administrative Agent and its counsel a complete and
correct list of all new Copyrights, Patents and Trademarks owned by the
Borrower or any of its Subsidiaries that have not been previously set forth
as annexes of such documents and instruments showing all filings and
recordings for the protection of the security interest of the
Administration Agent therein pursuant to the agreements of the United
States Patent and Trademark Office or the United States Copyright Office.
(iii) Upon request of the Administrative Agent, the Borrower shall
execute and deliver any and all agreements, instruments, documents, and
papers as the Administrative Agent may reasonably request to evidence the
Administrative Agent's security interest in the Copyrights, Patents,
Trademarks and the General Intangibles referred to in clauses (i) and (ii),
including, without limitation, the goodwill of the Borrower or such other
Subsidiary, relating thereto or represented thereby (or such other
Copyrights, Trademarks, Patents or the General Intangibles relating thereto
or represented thereby as the Administrative Agent may reasonably request).
(d) The Borrower will take all necessary actions, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office or the United States Copyright Office, to maintain each letters
patent for the Patents or registration of the Trademarks and Copyrights
which are material to the business of the Borrower and its Subsidiaries
taken as a whole, including, without limitation, payment of maintenance
48
fees, filing of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings.
(e) In the event that any Trademark, Copyright or Patent is infringed,
misappropriated or diluted by a third party, the Borrower shall notify the
Administrative Agent promptly after it learns thereof and shall, unless the
Borrower or the relevant Subsidiary, as the case may be, shall reasonably
determine that such Trademark, Copyright or Patent is not material to the
business of the Borrower and its Subsidiaries taken as a whole, promptly
▇▇▇ for infringement, misappropriation or dilution and to recover any and
all damages for such infringement, misappropriation or dilution, and take
such other actions as the Borrower or such Subsidiary, as the case may be,
shall reasonably deem appropriate under the circumstances to protect such
Trademark , Copyright or Patent.
5.11 FEES, ETC.
---------
Pay to the Agent the fees and comply with the other agreements provided for
in the Fee Letter and the Commitment Letter.
5.12 SUBSIDIARIES.
------------
In the event the Borrower shall acquire or otherwise obtain any Subsidiary
on or after the Closing Date, the Borrower shall promptly notify the
Administrative Agent of the existence of such Subsidiary, shall provide the
Administrative Agent with the information required by Section 3.12 with respect
thereto and shall cause such Subsidiary to enter into and deliver to the
Administrative Agent on behalf of the Lenders (i) a Joinder Agreement in the
form of Schedule 5.12 attached hereto and (ii) an amendment to the applicable
-------------
Pledge Agreement pledging the stock of such Subsidiary. In connection
therewith, the Borrower shall cause the Subsidiary to deliver to the
Administrative Agent on behalf of the Lenders certified organizational
documents, evidences of authority and opinion letters customary and usual for
transactions of the type contemplated by this Agreement and to take such other
action in connection therewith, including without limitation the filing of
appropriate financing statements, as the Administrative Agent may reasonably
require.
5.13 SUBSEQUENTLY ACQUIRED REAL PROPERTY.
-----------------------------------
In the event the Borrower or any Subsidiary shall acquire any interest in
real property on or after the Closing Date (other than the leasehold interests
set forth on Schedule 3.16 as of the Closing Date), the Borrower or such
-------------
Subsidiary, as the case may be, shall enter into and deliver to the
Administrative Agent on behalf of the Lenders a deed of trust or mortgage,
together with evidences of authority and opinion letters customary and usual for
transactions of the type contemplated by this Agreement, in form and substance
reasonably acceptable to the Administrative Agent pursuant to which the Borrower
or such Subsidiary grants a deed of trust or mortgage to the Administrative
Agent (or its trustee) on behalf of the Lenders in such real property interest
free and clear of all Liens other than Permitted Liens. In connection
49
therewith, the Borrower or such Subsidiary shall deliver to the Administrative
Agent such surveys, environmental reports and title insurance policies and take
such other action in connection therewith, including without limitation the
filing of appropriate fixture filings, as shall be reasonably required by the
Administrative Agent.
5.14 LANDLORD WAIVERS.
----------------
The Borrower will use commercially reasonable efforts to obtain executed
landlord waiver forms in form reasonably satisfactory to the Agent (a) within 90
days after the Closing Date from the landlords of the leased locations of the
Borrower and its Subsidiaries listed on Schedule 3.16 hereto and (b) following
the Closing Date, within 45 days after the Borrower or any Subsidiary has
entered into any lease of a location, from the landlord of such leased location.
5.15 BAILEE'S LETTERS.
----------------
The Borrower will use commercially reasonable efforts to obtain within
ninety (90) days after the Closing Date, a bailee's letter in form and substance
reasonably acceptable to the Administrative Agent (i) from the Borrowers or the
Subsidiaries' significant printer, if any, and (ii) from the Borrower's
fulfillment house.
5.16 YEAR 2000 COMPATIBILITY.
-----------------------
The Borrower will take as soon as reasonably practicable all actions
reasonably necessary to assure that the Credit Parties' computer based systems
are able to operate with respect to and effectively process data which includes
dates on and after January 1, 2000. At the request of the Administrative Agent,
the Credit Parties shall provide reasonable assurances satisfactory to the
Administrative Agent of the Credit Parties' Year 2000 compatibility.
5.17 FURTHER ASSURANCES.
------------------
(a) Promptly upon request by the Agent, or any Lender through the Agent, the
Borrower shall correct any material defect or error that may be discovered
in any credit document or in the execution, acknowledgment, filing or
recordation hereof, and
(b) Promptly upon request by the Agent or any Lender through the Agent, the
Borrower shall due, execute, acknowledge, deliver, record, rerecord, file,
refile, register and reregister any and all such further acts, deeds,
conveyances, pledge agreements, mortgages, deeds of trust, trust deeds,
assignments, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and
other instruments
50
as the Agent, or any Lender through the agent, may reasonably require from
time to time in order to (i) carryout more effectively the purposes of this
Agreement, the Notes or any other Credit Document (ii) to the fullest
extent permitted by applicable law, subject to any credit party's
properties, assets, rights or interest to the Liens now or hereafter
intended to be covered by any of the security documents, (iii) perfect and
maintain the validity, effectiveness priority of any of the Security
Documents and any of the Liens intended to be created thereunder and (iv)
assure, convey, grant, assign, transfer, preserve, protect and confirm more
effectively unto the Agent and the Lenders the rights granted or now or
hereafter granted to the Agent and the Lender under any Credit Document or
under any other instrument executed in connection with any Credit Document
to which any Credit Party is or is to be a party.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Loans, together
with interest, Commitment Fees and all other amounts owing to the Administrative
Agent or any Lender hereunder, are paid in full.
6.1 INDEBTEDNESS.
------------
The Borrower will not, nor will it permit any Subsidiary to, contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising or existing under this Agreement and the other Credit
Documents;
(b) the Teachers Indebtedness provided that any payments made in connection
therewith are made in compliance with the subordination provisions
contained in the Teachers Agreement;
(c) other Indebtedness existing as of the Closing Date as set forth in Schedule
--------
6.1(c)) and renewals, refinancings or extensions thereof in a principal
-------
amount not in excess of that outstanding as of the date of such renewal,
refinancing or extension;
(d) unsecured intercompany Indebtedness among the Borrower and the Guarantors;
(e) Capital Leases and purchase money indebtedness for the financing of
equipment which, in the aggregate principal amount at any time, do not
exceed $1,000,000; and
(f) other Indebtedness which does not exceed $1,000,000 in the aggregate at any
time outstanding.
6.2 LIENS.
-----
The Borrower will not, nor will it permit any Subsidiary to, contract,
create, incur, assume or permit to exist any Lien with respect to any of their
respective property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or hereafter acquired, except for Permitted
Liens.
6.3 GUARANTY OBLIGATIONS.
--------------------
The Borrower will not, nor will it permit any Subsidiary to, enter into or
otherwise become or be liable in respect of any Guaranty Obligations (excluding
specifically therefrom
51
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) other than (i) those in favor of the Lenders in
connection herewith, (ii) Guaranty Obligations by the Borrower or its
Subsidiaries of other Indebtedness permitted under Section 6.1 (except, as
regards Indebtedness under subsection (b) thereof, only if and to the extent
such Indebtedness was guaranteed on the Closing Date), and (iii) other Guaranty
Obligations which do not exceed $1,000,000 at any time outstanding.
6.4 LINES OF BUSINESS.
-----------------
The Borrower will not, nor will it permit any of its Subsidiaries to, alter
its line or lines of business activity if as a result thereof the Borrower and
its Subsidiaries would not be predominantly engaged in the business of (a) the
publishing of Farm Journal magazine and other agricultural magazines, (b) the
------------
dissemination of market research and data service, (c) the provision of
satellite and/or electronically distributed subscription information services,
(d) the publication of ProFarmer and LandOwner newsletters, (e) the provision of
--------- ---------
electronic newsletter content services (f) the provision of the Cash Master
Managed Marketing Program, and (g) the providing of all updated, functional
extensions and additional lines of business reasonably compatible with (a) - (f)
above.
6.5 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC.
-------------------------------------------------------
The Borrower will not, nor will it permit any Subsidiary to,
(a) dissolve, liquidate or wind up its affairs, sell, transfer, lease or
otherwise dispose of all or any substantial part of its property or assets
outside of the ordinary course of business or agree to do so at a future
time except the following, without duplication, shall be expressly
permitted:
(i) Specified Sales;
(ii) the sale, transfer, lease or other disposition of property or
assets not in the ordinary course of business (other than Specified Sales),
where and to the extent that they are the result of a Recovery Event or
otherwise and the net proceeds therefrom are used to repair or replace
damaged property or to purchase or otherwise acquire new assets or property
provided that such purchase or acquisition is committed to within 90 days
of receipt of the net proceeds and such purchase or acquisition is
consummated within 180 days of such receipt; and
(iii) the sale, transfer, lease or other disposition of property or
assets to the Borrower or any Guarantor.
Provided no Default or Event of Default then exists, the Administrative Agent
shall, without obtaining the consent of any Lender, release its lien on any
collateral sold or otherwise transferred in accordance with this Section upon
the consummation of such sale or transfer and upon the performance by the
Borrower of all of its Obligations hereunder on account of such sale or
transfer.
As used herein, "substantial part" shall mean business, property or assets which
----------------
have contributed
52
(x) 10% or more, in any instance, or
(y) 15% or more, when aggregated with all other such sales or
dispositions which have occurred within a period of one year,
of Consolidated Adjusted EBITDA for the four (4) consecutive fiscal quarters
most recently ending prior to the date thereof; or
(b) purchase, lease or otherwise acquire (in a single transaction or a series
of related transactions) all or any substantial part of the property or
assets of any Person (other than purchases or other acquisitions of
inventory, leases, materials, property and equipment in the ordinary course
of business, except as otherwise limited or prohibited herein), or enter
into any merger or consolidation, except for (i) investments or
acquisitions permitted pursuant to Section 6.6, (ii) the acquisition of the
Acquired Assets, (iii) acquisitions of types of businesses permitted to be
engaged in by the Borrower and its Subsidiaries pursuant to Section 6.4
(the "Permitted Acquisitions") so long as with respect to the acquisition
of each such business, (A) no Default or Event of Default then exists or
would exist after giving effect thereto and (B) the Borrower demonstrates
to the reasonable satisfaction of the Administrative Agent that the
Borrower will be in pro forma compliance with all of the terms and
provisions of this Agreement after giving effect thereto, (iv) the merger
or consolidation of any Subsidiary into the Borrower or any Subsidiary, or
a sale, transfer or lease of all or a substantial part of the properties of
any Subsidiary (at fair value) to the Borrower or any Subsidiary and (v)
the merger of any Person into the Borrower or any Subsidiary, provided that
---------
the Borrower or any Subsidiary shall be the surviving corporation, and in
any such case no Default or Event of Default would exist after giving
effect thereto.
6.6 ADVANCES, INVESTMENTS AND LOANS.
-------------------------------
The Borrower will not, nor will it permit any Subsidiary to, lend money or
extend credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any Person except for Permitted Investments.
6.7 TRANSACTIONS WITH AFFILIATES.
----------------------------
Except (a) as permitted in subsection (iv) of the definition of Permitted
Investments, (b) for the payments and issuances permitted by Section 6.8 and (c)
for the payments permitted by Section 6.11, the Borrower will not, nor will it
permit any Subsidiary to, enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer, director,
shareholder or Affiliate other than on terms and conditions substantially as
favorable as would be obtainable in a comparable arm's-length transaction with a
Person other than an officer,. director, shareholder or Affiliate.
6.8 OWNERSHIP OF SUBSIDIARIES.
-------------------------
The Borrower will not, nor will it permit any Subsidiary to, create, form
or acquire a Subsidiary other than any Subsidiary acquired or formed to acquire
assets in connection with any
53
Permitted Acquisition, provided such Subsidiary guarantees all of the
Obligations of the Borrower hereunder, pledges substantially all of its assets
to secure such guarantee and has its stock or other equity interests pledged to
the Administrative Agent, all on terms reasonably satisfactory to the
Administrative Agent. Further, the Borrower will not, nor will it permit any of
its Subsidiaries to, issue, sell, transfer, pledge or otherwise dispose of any
partnership interests, limited liability company interest, shares of capital
stock or other equity or ownership interests ("Equity Interests") in themselves
----------------
or in any of their Subsidiaries, except (a) Equity Interests that are issued,
sold or transferred to the Borrower or a wholly-owned Subsidiary of the Borrower
and (b) in connection with a transaction permitted under Section 6.5.
6.9 FISCAL YEAR.
-----------
The Borrower will not, nor will it permit any Subsidiary to, change its
fiscal year other than a change in fiscal year by any Subsidiary to match the
fiscal year of the Borrower.
6.10 PREPAYMENTS OF INDEBTEDNESS, ETC.
---------------------------------
Neither the Borrower nor any of its Subsidiaries will (a) after the
issuance thereof, amend or modify (or permit the amendment or modification of),
if materially adverse to the interests of the Lenders (including, without
limitation, any acceleration or shortening of amortization of principal thereof,
or modification of the terms of subordination relating thereto), any of the
terms of any Consolidated Total Funded Debt (other than any Indebtedness
permitted by Section 6.1 (e)), (b) make any payment on the Teachers Indebtedness
in violation of the subordination provisions contained in the Teachers Agreement
or (c) make (or give any notice with respect thereto) any voluntary or optional
payment or prepayment or redemption or acquisition for value of (including
without limitation, by way of depositing money or securities with the trustee
with respect thereto before due for the purpose of paying when due) or exchange
of any Consolidated Total Funded Debt (other than any Indebtedness permitted by
Section 6.1 (e)), except for any voluntary prepayment of the Teachers
Indebtedness made pursuant to Section 3.2(c)(i) or (ii) of the Teachers
Agreement so long as no Event of Default then exists or would result from any
such voluntary prepayment.
54
6.11 RESTRICTED PAYMENTS.
-------------------
The Borrower will not, nor will it permit any of its Subsidiaries which are
not whollyowned to, make any Restricted Payment; provided, however, (a) any
-------- -------
Subsidiary of the Borrower may make Restricted Payments to the Borrower, (b) the
Borrower may pay customary and reasonable fees to Affiliates of the Borrower for
investment banking, management, consulting and other financial and advisory
services provided by such Affiliates, (c) the Borrower may pay dividends to the
Parent to enable the Parent to redeem its Series A Convertible Redeemable
Preferred Stock as may be required pursuant to Section 2.2 of the Purchase
Agreement relating to Professional Farmers of America, Inc. so long as no
Default or Event of Default hereunder exists immediately prior to or after the
payment of any such dividend or (d) the Borrower may pay dividends to the Parent
to enable the Parent to pay taxes and administrative fees necessary for
compliance with Section 6.14 hereof and to pay transaction costs incurred in
connection with the initial public offering of the Parent's stock.
6.12 PARTNERSHIP AND CORPORATE DOCUMENTS; PURCHASE AGREEMENTS.
--------------------------------------------------------
The Borrower will not, nor will it permit any of its Subsidiaries to, amend
or otherwise modify their articles of limited partnership, limited liability
limited partnership, incorporation, limited liability company or other similar
organizational or charter document, or their limited partnership agreement,
limited liability limited partnership agreement, limited liability company
agreement, bylaws, operating agreement or other similar governing document or
the Purchase Agreement in a manner which is adverse to the interest of the
Lenders, without the prior written consent of the Administrative Agent and the
Majority Lenders, which consent will not be unreasonably withheld.
6.13 NO PRINTING.
-----------
No portion of any premises leased by the Borrower or any real property
owned or leased by Borrower will be used for the printing of any publications,
including without limitation, newspapers, magazines, circulars, pamphlets, books
or similar items, but excluding printing of office correspondence and ordinary
printing for customary office purposes.
6.14 LIMITATIONS ON ACTIVITIES BY PARENT.
-----------------------------------
The Parent shall not, directly or indirectly, (a) enter into or permit to
exist any transaction or agreement (including any agreement for incurrence or
assumption of Indebtedness, any purchase, sale, lease or exchange of any
property or the rendering of any service), between itself and any other Person,
other than (x) the Credit Documents to which it is a party (the "Parent
Documents"), or (y) the guarantee obligations under the Teachers Agreement, (b)
engage in any business or conduct any activity (including the making of any
investment or payment) or transfer any of its assets, other than the making of
investments in the Borrower, the performance of the Parent Documents in
accordance with the terms thereof, the performance of ministerial activities and
payment of taxes and administrative fees necessary for compliance with the next
succeeding sentence, the application of the Restricted Payments it receives
pursuant to Section 6.11 hereof in accordance with the Parent Documents and as
provided in Section 2.2 of the Purchase Agreement relating to Professional
Farmers of America, Inc. and the initial public offering of its
55
stock, or (c) consolidate or merge with or into any other Person. The Parent
shall preserve, renew and keep in full force and effect its corporate existence
and any rights, privileges and franchises necessary or desirable in the conduct
of its business, and shall comply in all material respects with all material
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities, provided that the Parent may terminate any such right,
--------
privilege or franchise (other than its existence) if its senior management in
good faith determines that such termination is in the best interests of the
Parent and not materially disadvantageous to the Lenders.
SECTION 7. EVENTS OF DEFAULT
Upon the occurrence of any of the following events:
(a) (i) The Borrower shall fail to pay any principal on any Note when due in
accordance with the terms thereof or hereof; or (ii) the Borrower shall
fail to pay any interest on any Note or any fee or other amount payable
hereunder when due in accordance with the terms thereof or hereof and such
failure shall continue unremedied for five (5) Business Days; or
(b) Any representation or warranty made by the Parent, the Borrower or any
Subsidiary of the Borrower herein, in any Security Agreement or in any of
the other Credit Documents or which is contained in any certificate,
document or financial or other statement prepared and furnished by the
Parent, the Borrower or any of the Borrower's Subsidiaries at any time
under or in connection with this Agreement shall prove to have been
incorrect, false or misleading in any material respect on or as of the date
made or deemed made; or
(c) The Borrower shall
(i) default in the due performance or observance of Sections 5.7(a) or
Section 5.9, or
(ii) default in any material respect in the observance or performance of
any other term, covenant or agreement contained in this Agreement (other
than as described in Sections 7(a) or 7(c)(i) above) or any of the other
Credit Documents, and such default shall continue unremedied for a period
of t0 days or more after the earlier of any officer of the Borrower
becoming aware of such default or the receipt by the Borrower of written
notice from the Administrative Agent thereof; or
(d) The Parent, the Borrower or any of the Borrower's Subsidiaries shall (i)
default in any payment of principal of or interest on the Teachers
Indebtedness or any other Indebtedness (other than the Notes) in a
principal amount outstanding of at least $1,000,000 in the aggregate for
the Parent, the Borrower and the Borrower's Subsidiaries or in the payment
of any matured Guarantee Obligation in a principal amount outstanding of at
least $l,000,000 in the aggregate for the Parent, the Borrower and the
Borrower's Subsidiaries beyond the period of grace (not to exceed 30 days),
if any, provided in the
56
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or performance of
any other agreement or condition relating to the Teachers Indebtedness or
any such other Indebtedness in a principal amount outstanding of at least
$1,000,000 in the aggregate for the Parent; the Borrower and the Borrower's
Subsidiaries or Guarantee Obligation in a principal amount outstanding of
at least $1,000,000 in the aggregate for the Parent, the Borrower and the
Borrower's Subsidiaries or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries)
to cause, with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or such Guarantee Obligation to
become payable; or
(e) (i) The Parent, the Borrower or any of the Borrower's Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or the Parent, the
Borrower or any of the Borrower's Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Parent, the Borrower or any of the Borrower's
Subsidiaries any case, proceeding or other action of a nature referred to
in clause (i) above which (A) results in the entry of an order for relief
or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 90 days; or (iii) there shall be
commenced against the Parent, the Borrower or any of the Borrower's
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 90 days from the entry thereof; or
(iv) the Parent, the Borrower or any of the Borrower's Subsidiaries shall
take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Parent, the Borrower or any of the Borrower's
Subsidiaries shall admit in writing its inability to, pay its debts as they
become due; or
(f) One or more judgments or decrees shall be entered against the Parent, the
Borrower or any of the Borrower's Subsidiaries involving in the aggregate a
liability (to the extent not paid when due or covered by insurance) of
$1,000,000 or more and all such judgments or decrees shall not have been
paid and satisfied, vacated, discharged, stayed or bonded pending appeal
within 45 days from the entry thereof; or
(g) (i) The Parent, the Borrower, any Subsidiary of the Borrower or any
Commonly Controlled Entity shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, other than
57
a transaction for which a statutory exemption is available or an
administrative exemption has been obtained, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any Single-Employer Plan or any Lien in favor
of the PBGC or a Single-Employer Plan shall arise on the assets of the
Parent, the Borrower or any of the Borrower's Subsidiaries or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
Trustee is, in the reasonable opinion of the Majority Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, or (v) the Parent, the Borrower or any of the Borrower's
Subsidiaries or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Majority Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
any Multiemployer Plan; and in each case in clauses (i) through (v) above,
such event or condition, together with all other such events or conditions,
if any, could have a Material Adverse Effect; or
(h) either:
(i) prior to the initial public offering of the stock of the Parent, (A)
the Parent shall fail to own 100% of the issued and outstanding capital
stock of the Borrower, (B) MS Farm International Limited Partnership shall
fail to own at least 51% of the combined voting power of all securities of
the Parent entitled to vote in the election of directors thereof, (C) MS
Farm Journal Corporation shall cease to be general partner of MS Farm
International Limited Partnership, (D) ▇▇▇▇▇▇ Ean ▇▇▇▇▇ (or his estate)
shall fail to own, directly or indirectly, at least 51% of the combined
voting power of all securities of MS Farm Journal Corporation entitled to
vote in the election of directors thereof or (E) the occurrence of a
"Change of Control" under and as defined in the Teachers Agreement; or
(ii) after the initial public offering of the stock of the Parent, (a)
the Parent shall fail to own 100% of the issued and outstanding capital
stock of the Borrower, (b) ▇▇▇▇▇▇ Ean ▇▇▇▇▇ (or his estate) shall fail to
own, directly or indirectly, at least 51% of the combined voting power of
all securities of the Parent entitled to vote in the election of directors
thereof or (c) the occurrence of a "Change of Control" under and as defined
in the Teachers Agreement; or
(i) Any other Credit Document shall fail to be in full force and effect or to
give the Administrative Agent and/or the Lenders the security interests,
liens, rights, powers and privileges purported to be created thereby and
such failure shall have a material adverse effect on the rights and
remedies of the Administrative Agent or the Lenders thereunder (except to
------
the extent any such failure is caused by the Administrative Agent and
except as such documents may be terminated or no longer in force and effect
------
in accordance with the terms thereof, other than those indemnities and
provisions which by their terms shall survive);
58
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (e) above, automatically the Commitments shall immediately
terminate and the Loans (with accrued interest thereon), and all other amounts
under the Credit Documents shall immediately become due and payable, and (B) if
such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the written consent of the Majority Lenders, the
Administrative Agent may, or upon the written request of the Majority Lenders,
the Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the written consent of the Majority
Lenders, the Administrative Agent may, or upon the written request of the
Majority Lenders, the Administrative Agent shall, by notice of default to the
Borrower, declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes to be due and payable forthwith
whereupon the same shall immediately become due and payable. Except as
expressly provided above in this Section 7, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1 APPOINTMENT.
-----------
Each Lender hereby irrevocably designates and appoints First Union National
Bank as the Administrative Agent of such Lender under this Agreement, and each
such Lender irrevocably authorizes First Union National Bank, as the
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and to exercise such powers and perform such
duties as are expressly delegated to the Administrative Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein and in the other
Credit Documents, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
8.2 DELEGATION OF DUTIES.
--------------------
The Administrative Agent may execute any of its duties under this Agreement
by or through agents or attorneys-in-fact and shall be entitled to rely on
advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care. Without
limiting the foregoing, the Administrative Agent may appoint an affiliate as its
agent to perform the functions of the Administrative Agent hereunder relating to
the advancing of funds to the Borrower and distribution of funds to the Lenders
and to perform such other related functions of the Administrative Agent
hereunder as are reasonably incidental to such functions. No such appointment
shall relieve the Administrative Agent of its responsibilities hereunder.
8.3 EXCULPATORY PROVISIONS.
----------------------
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (a) liable for any
action lawfully taken or omitted to be
59
taken by it or such Person under or in connection with this Agreement (except
for its or such Person's own gross negligence or willful misconduct) or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof
contained in this Agreement or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Agreement or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any of the Credit
Documents or for any failure of the Borrower to perform its Obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance by the Borrower of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower.
8.4 RELIANCE BY ADMINISTRATIVE AGENT.
--------------------------------
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation reasonably believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless (a) a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Administrative Agent and (b)
the Administrative Agent shall have received the written agreement of such
assignee to be bound hereby as fully and to the same extent as if such assignee
were an original Lender party hereto, in each case in form satisfactory to the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Majority Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred it by reason of
taking or continuing to take any such action. The Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, under any
of the Credit Documents in accordance with a request of the Majority Lenders,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Notes.
8.5 NOTICE OF DEFAULT.
-----------------
The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative
Agent receives such a notice, the Administrative Agent shall give prompt notice
thereof to each of the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be directed by the
Majority Lenders, including, without limitation, exercise of remedies and
initiation of litigation; provided, however, that unless and until the
-------- -------
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
60
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
8.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.
------------------------------------------------------
Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representation or warranty to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Administrative 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 analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
8.7 INDEMNIFICATION.
---------------
The Lenders agree to indemnify the Administrative Agent in its capacity
hereunder (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitment Percentages in effect on the date on which indemnification is sought
under this subsection, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of any Credit Document or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided, however, that no Lender shall be
-------- -------
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the Administrative Agent's gross negligence or
willful misconduct. The agreements in this subsection shall survive the
termination of this Agreement and payment of the Notes and all other amounts
payable hereunder.
61
8.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.
-----------------------------------------------
The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower as
though the Administrative Agent were not the Administrative Agent hereunder.
With respect to its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
8.9 SUCCESSOR ADMINISTRATIVE AGENT.
------------------------------
The Administrative Agent may resign or be removed as Administrative Agent
upon 30 days' prior notice to the Borrower and the Lenders. The Administrative
Agent may be removed by the written consent of the Majority Lenders. If the
Administrative Agent shall resign or be removed as Administrative Agent under
this Agreement and the Notes, then the Majority Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
approved by the Borrower, or if the Majority Lenders cannot agree on a successor
within 30 days from the notice of resignation by the Administrative Agent, the
Administrative Agent, with the approval of the Borrower, may appoint a bank or
trust company with capital and surplus of at least $500,000,000 as successor
Administrative Agent within 30 days thereafter, whereupon such successor agent
shall succeed to the rights, powers and duties of the Administrative Agent, and
the term "Administrative Agent" shall mean such successor agent effective upon
such appointment and approval, and the former Administrative Agent's rights,
powers and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Notes. After any retiring
Administrative Agent's resignation or renewal as Administrative Agent, the
provisions of this subsection shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement. Resignation by the Administrative Agent shall become effective upon
appointment of, and acceptance by, a successor Administrative Agent, or the
passage of the applicable periods without appointment of a successor.
SECTION 9. MISCELLANEOUS
9.1 AMENDMENTS, WAIVERS AND RELEASE OF COLLATERAL.
---------------------------------------------
Neither this Agreement, nor any of the Notes, nor any of the other Credit
Documents, nor any terms hereof or thereof may be amended, supplemented, waived
or modified except in accordance with the provisions of this subsection nor may
Collateral be released except as specifically provided herein or in the Security
Documents or in accordance with the provisions of this subsection. The Majority
Lenders affected thereby may, or, with the written consent of the Majority
Lenders affected thereby, the Administrative Agent may, from time to time, (a)
enter into with the Borrower written amendments, supplements or modifications
hereto and to the other Credit Documents for the purpose of adding any
provisions to this Agreement or the other Credit Documents or (b) waive, on such
terms and conditions as the Majority Lenders may specify in such instrument, any
of the requirements of this Agreement or the other Credit Documents or any
Default or Event of Default and its consequences; provided, however, that no
-------- -------
62
such waiver and no such amendment, waiver, supplement, modification or release
shall (i) reduce the amount or extend the scheduled final date of maturity of
any Loan or Note or any installment thereon, or reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any payment
thereof or increase the amount or extend the expiration date of any Lender's
Commitment, in each case without the written consent of each Lender directly
affected thereby, or (ii) amend, modify or waive any provision of this
subsection or reduce the percentage specified in the definition of Majority
Lenders, or consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement, in each case without the written
consent of all the Lenders, or (iii) amend, modify or waive any provision of
Section 8 without the written consent of the then Administrative Agent, or (iv)
release all or substantially of the collateral without the written consent of
all of the Lenders except to the extent such releases are provided for in this
Agreement or the other Credit Documents. Any such waiver, any such amendment,
supplement or modification and any such release shall apply equally to each of
the Lenders and shall be binding upon the Borrower, the Lenders, the
Administrative Agent and all future holders of the Notes. In the case of any
waiver, the Borrower, the Lenders and the Administrative Agent shall be restored
to their former position and rights hereunder and under the outstanding Loans
and Notes and other Credit Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
9.2 NOTICES.
-------
Except as otherwise provided in Section 2, all notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made (a) when delivered by
hand, (b) when transmitted via telecopy (or other facsimile device) on a
Business Day between the hours of 10:00 A.M. and 7:00 P.M. (EST or EDT, as
appropriate) (or on the following Business Day if sent after 7:00 P.M.) to the
number set out herein, (c) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (d)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case, addressed as follows in the
case of the Borrower and the Administrative Agent, and as set forth on Schedule
--------
2.1(a) in the case of the Lenders, or to such other address as may be hereafter
------
notified by the respective parties hereto and any future holders of the Notes:
The Borrower: Farm Journal, Inc.
Centre Square West
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman and CEO
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
The Administrative
Agent: First Union Capital Markets Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
63
9.3 NO WAIVER; CUMULATIVE REMEDIES.
------------------------------
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans, provided that all such representations and warranties shall
--------
terminate on the date upon which the Commitments have been terminated and all
amounts owing hereunder and under any Notes have been paid in full.
9.5 PAYMENT OF EXPENSES AND TAXES.
-----------------------------
The Borrower agrees (a) to pay or reimburse the Administrative Agent for
all its reasonable out-of-pocket costs and expenses incurred in connection with
the preparation and execution of, and any amendment, supplement or modification
to, the Credit Documents and any other documents prepared in connection herewith
or therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, together with the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or reimburse
each Lender and the Administrative Agent for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the Notes and any such other documents, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent and to the Lenders (including reasonable allocated costs of
in-house legal counsel), and (c) on demand, to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, the Credit Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their affiliates harmless from and against, any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of the Credit Documents and any such other Documents and the use, or proposed
64
use, of proceeds of the Loans (all the foregoing, collectively the "indemnified
-----------
liabilities"); provided, however, that the Borrower shall not have any
----------- -------- -------
obligation hereunder to the Administrative Agent or any Lender with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Administrative Agent or any such Lender, (ii) legal
proceedings commenced against the Administrative Agent or any such Lender by any
security holder or creditor thereof arising out of and based upon rights
afforded such security holder or creditor solely in its capacity as such, (iii)
legal proceedings commenced against the Administrative Agent or any Lender by
any other Lender or the Administrative Agent or its participants or (iv) a
breach of any of the Credit Documents by the Lenders. The agreements in this
subsection shall survive repayment of the Loans, Notes and all other amounts
payable hereunder.
9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING LENDERS.
----------------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the
Notes and their respective successors and assigns, except that the Borrower
may not assign or transfer any of its rights or obligations under this
Agreement or the other Credit Documents without the prior written consent
of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking business
and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any
------------
Loan owing to such Lender, any Note held by such Lender, any Commitment of
such Lender, or any other interest of such Lender hereunder. In the event
of any such sale by a Lender of participating interests to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the
holder of any such Note for all purposes under this Agreement, and the
Borrower and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. No Lender shall transfer or grant any
participation under which the Participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document
except to the extent such amendment or waiver would (i) extend the final
maturity of any Loan or Note in which such Participant is participating, or
reduce the stated rate or extend the time of payment of interest or Fees
thereon (except in connection with a waiver of interest at the increased
post-default rate) or reduce the principal amount thereof, or increase the
amount of the Participant's participation over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of
Default shall not constitute a change in the terms of such participation,
and that an increase in any Commitment or Loan shall be permitted without
consent of any Participant if the Participant's participation is not
increased as a result thereof), (ii) except as otherwise expressly provided
in a Credit Document, release all or substantially all of the collateral,
or (iii) consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement. In the case of any such
participation, the Participant shall not have any rights under this
Agreement or any of the other Credit Documents (the Participant's rights
against such Lender in respect of such participation to be those set forth
in the agreement executed by such Lender in favor of the Participant
relating thereto) and all amounts payable by the Borrower hereunder shall
65
be determined as if such Lender had not sold such participation, provided
--------
that each Participant shall be entitled to the benefits of Sections 2.14,
2.15, 2.16 and 9.5 with respect to its participation in the Commitments and
the Loans outstanding from time to time; provided, that no Participant
--------
shall be entitled to receive any greater amount pursuant to such
subsections than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such
transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking business
and in accordance with applicable law, at any time sell or assign to any
Lender or any affiliate thereof and, with the consent of the Administrative
Agent, and, so long as no Event of Default has occurred and is continuing,
with the consent of the Borrower (in each case, which consent shall not be
unreasonably withheld), to one or more additional banks or financial
institutions ("Purchasing Lenders"), all or any part of its rights and
------------------
obligations under this Agreement and the Notes in minimum amounts of
$5,000,000 (or, if less, the entire amount of such Lender's obligations) if
the Purchasing Lender is not a Lender hereunder, or with no minimum amount
if the Purchasing Lender is a Lender hereunder, pursuant to a Commitment
Transfer Supplement, executed by such Purchasing Lender, such transferor
Lender (and, in the case of a Purchasing Lender that is not then a Lender
or an affiliate thereof, by the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, by the Borrower), and
delivered to the Administrative Agent for its acceptance and recording in
the Register. Each such assignment must be of a constant, not varying,
percentage of all of such Lender's rights and obligations hereunder. Upon
such execution, delivery, acceptance and recording, from and after the
Transfer Effective Date specified in such Commitment Transfer Supplement,
(x) the Purchasing Lender thereunder shall be a party hereto and, to the
extent provided in such Commitment Transfer Supplement, have the rights and
obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the transferor Lender thereunder shall, to the extent provided in
such Commitment Transfer Supplement, be released from its obligations under
this Agreement (and, in the case of a Commitment Transfer Supplement
covering all or the remaining portion of a transferor Lender's rights and
obligations under this Agreement, such transferor Lender shall cease to be
a party hereto). Such Commitment Transfer Supplement shall be deemed to
amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment
of Commitment Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Notes. On or prior to the Transfer
Effective Date specified in such Commitment Transfer Supplement, the
Borrower shall execute and deliver to the Administrative Agent in exchange
for the Note delivered to the Administrative Agent pursuant to such
Commitment Transfer Supplement a new Note to the order of such Purchasing
Lender in an amount equal to the Commitment assumed by it pursuant to such
Commitment Transfer Supplement and, unless the transferor Lender has not
retained a Commitment hereunder, a new Note to the order of the transferor
Lender in an amount equal to the Commitment retained by it hereunder. Such
new Note shall be dated the Closing Date and shall otherwise be in the form
of the Note replaced thereby. The Note surrendered by the transferor Lender
shall be returned by the Administrative Agent to the Borrower marked
"canceled".
66
(d) The Administrative Agent shall maintain at its address referred to in
Section 9.2 a copy of each Commitment Transfer Supplement delivered to it
and a register (the "Register") for the recordation of the names and
--------
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower,
the Administrative Agent and the Lenders may treat each Person whose name
is recorded in the Register as the owner of the Loan recorded therein for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by a
transferor Lender and a Purchasing Lender (and, in the case of a Purchasing
Lender that is not then a Lender or an affiliate thereof, by the
Administrative Agent and. so long as no Event of Default has occurred and
is continuing, by the Borrower) together with payment to the Administrative
Agent (by the transferor Lender or the Purchasing Lender, as agreed between
them) of a registration and processing fee of $3,000 for each Purchasing
Lender listed in such Commitment Transfer Supplement, and the Notes subject
to such Commitment Transfer Supplement, the Administrative Agent shall (i)
accept such Commitment Transfer Supplement, (ii) record the information
contained therein in the Register and (iii) give prompt notice of such
acceptance and recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant or
Purchasing Lender (each, a "Transferee") and any prospective Transferee any
and all financial information in such Lender's possession concerning the
Borrower and its Affiliates which has been delivered to such Lender by or
on behalf of the Borrower pursuant to this Agreement or which has been
delivered to such Lender by or on behalf of the Borrower in connection with
such Lender's credit evaluation of the Borrower and its Affiliates prior to
becoming a party to this Agreement; in each case subject to Section 9.15.
(g) At the time of each assignment pursuant to this Section 9.6 to a Person
which is not already a Lender hereunder and which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) for
Federal income tax purposes, the respective assignee Lender shall provide
to the Borrower and the Administrative Agent the appropriate Internal
Revenue Service Forms (and, if applicable, a 2.16 Certificate) described in
Section 2. 16.
(h) Nothing herein shall prohibit any Lender from pledging or assigning any of
its rights under this Agreement (including, without limitation, any right
to payment of principal and interest under any Note) to any Federal Reserve
Bank in accordance with applicable laws.
67
9.7 ADJUSTMENTS; SET-OFF.
---------------------
(a) Each Lender agrees that if any Lender (a "benefitted Lender") shall at any
-----------------
time receive any payment of all or part of its Loans, or interest thereon,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in clause (e) of Section 7, or otherwise) in a greater
proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans, or interest
thereon, such benefitted Lender shall purchase for cash from the other
Lenders a participating interest in such portion of each such other
Lender's Loan, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause
such benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however,
-------- -------
that if all or any portion of such excess payment or benefits is thereafter
recovered from such benefitted Lender, such purchase shall be rescinded,
and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Loans may exercise all rights of
payment (including, without limitation rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such
portion.
(b) In addition to any rights and remedies of the Lenders provided by law
(including, without limitation, other rights of set-off), each Lender shall
have the right. without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by applicable law,
upon the occurrence of any Event of Default, to set-off and appropriate and
apply any and all deposits (general or special time or demand, provisional
or final), in any currency, and any other credits, indebtedness or claims,
in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender
or any branch or agency thereof to or for the credit or the account of the
Borrower, or any part thereof in such amounts as such Lender may elect,
against and on account of the obligations and liabilities of the Borrower
to such Lender hereunder and claims of every nature and description of such
Lender against the Borrower, in any currency, whether arising hereunder,
under the Notes or under any documents contemplated by or referred to
herein or therein, as such Lender may elect, whether or not such Lender has
made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. The aforesaid right of set-off may
be exercised by such Lender against the Borrower or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver or execution, judgment or attachment creditor of the Borrower, or
against anyone else claiming through or against the Borrower or any such
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the occurrence of any Event of Default.
Each Lender agrees promptly to notify the Borrower and the Administrative
Agent after any such set-off and application made by such Lender; provided,
--------
however, that the failure to give such notice shall not affect the validity
-------
of such set-off and application.
68
9.8 TABLE OF CONTENTS AND SECTION HEADINGS.
--------------------------------------
The table of contents and the Section and subsection headings herein are
intended for convenience only and shall be ignored in construing this Agreement.
9.9 COUNTERPARTS.
-------------
This Agreement may be executed by one or more of the parties to this Agreement
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent.
9.10 SEVERABILITY.
------------
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.11 INTEGRATION.
-----------
This Agreement, the Notes and the other Credit Documents represent the
agreement of the Borrower, the Administrative Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent, the Borrower or any
Lender relative to the subject matter hereof not expressly set forth or referred
to herein or in the Notes. Upon execution and delivery of this Agreement, the
Commitment Letter shall cease to be of any further force and effect.
9.12 GOVERNING LAW.
-------------
This Agreement and the Notes and the rights and obligations of the parties
under this Agreement and the Notes shall be governed by, and construed and
interpreted in accordance with, the law of the Commonwealth of Pennsylvania.
9.13 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
----------------------------------------------
All judicial proceedings brought against the Borrower and/or any other Credit
Party with respect to this Agreement, any Note or any of the other Credit
Documents may be brought in the courts of the State of North Carolina in
Mecklenburg County or of the United States for the Western District of North
Carolina or the courts of the Commonwealth of Pennsylvania in Philadelphia
County or of the United States for the Eastern District of Pennsylvania, and. by
execution and delivery of this Agreement, each of the Borrower and the other
Credit Parties accepts, for itself and in connection with its properties,
generally and unconditionally, the nonexclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any final judgment rendered thereby
in connection with this Agreement from which no appeal has been taken or is
available. Each of the Borrower and the other Credit Parties irrevocably agrees
that all service of process in any such proceedings in any such court may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to it at its address set
forth in Section 9.2 or at such other address of which the Agent shall have been
69
notified pursuant thereto, such service being hereby acknowledged by the each of
the Borrower and the other Credit Parties to be effective and binding service in
every respect. Each of the Borrower, the other Credit Parties, the Agent and the
Lenders irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non conveniens
which it may now or hereafter have to the bringing of any such action or
proceeding in any such jurisdiction. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
any Lender or the Agent to bring proceedings against the Borrower or the other
Credit Parties in the court of any other jurisdiction.
9.14 ARBITRATION.
-----------
(a) Notwithstanding the provisions of Section 9.13 to the contrary, upon demand
of any party hereto, whether made before or after institution of any
judicial proceeding, any dispute, claim or controversy arising out of,
connected with or relating to this Agreement and other Credit Documents
("Disputes") between or among parties to this Agreement shall be resolved
by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort
claims, counterclaims, disputes as to whether a matter is subject to
arbitration, claims brought as class actions, claims arising from Credit
Documents executed in the future, or claims arising out of or connected
with the transaction reflected by this Agreement.
Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and Title 9 of the U.S. Code.
All arbitration hearings shall be conducted in Philadelphia, Pennsylvania
or Charlotte, North Carolina. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall be concluded within 120 days
of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then no more than a total
extension of 60 days. The expedited procedures set forth in Rule 51 seq.
of the Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any
Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys selected from the Commercial Financial
Dispute Arbitration Panel of the AAA. The single arbitrator selected for
expedited procedure shall be a retired judge from the highest court of
general jurisdiction, state or federal, of the state where the hearing will
be conducted or if such person is not available to serve, the single
arbitrator may be a licensed attorney. The parties hereto do not waive
applicable Federal or state substantive law except as provided herein.
Notwithstanding the foregoing, this arbitration provision does not apply to
disputes under or related to Interest Rate Protection Agreements.
(b) Notwithstanding the preceding binding arbitration provisions, the Agent,
the Lenders, the Borrower and the other Credit Parties agree to preserve,
without diminution, certain remedies that the Agent on behalf of the
Lenders may employ or exercise freely, independently or in connection with
an arbitration proceeding or after an
70
arbitration action is brought. The Agent on behalf of the Lenders shall
have the right to proceed in any court of proper jurisdiction or by self-
help to exercise or prosecute the following remedies, as applicable (i) all
rights to foreclose against any real or personal property or other security
by exercising a power of sale granted under Credit Documents or under
applicable law or by judicial foreclosure and sale, including a proceeding
to confirm the sale; (ii) all rights of self-help including peaceful
occupation of real property and collection of rents, set-off, and peaceful
possession of personal property; (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration. garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
(c) The parties hereto agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any
right or claim to punitive or exemplary damages they have now or which may
arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
(d) By execution and delivery of this Agreement, each of the parties hereto
accepts, for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction relating to any arbitration
proceedings conducted under the Arbitration Rules in Philadelphia,
Pennsylvania or Charlotte, North Carolina, as the case may be, and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Agreement from which no appeal has been taken or is
available.
9.15 CONFIDENTIALITY.
---------------
The Administrative Agent and each of the Lenders agrees that it will use
reasonable and customary efforts not to disclose without the prior consent of
the Borrower (other than to its employees, Subsidiaries, Affiliates, auditors or
counsel or to another Lender) any information with respect to the Borrower and
its Subsidiaries which is furnished pursuant to this Agreement, any other Credit
Document or any documents contemplated by or referred to herein or therein and
which is designated by the Borrower to the Lenders in writing as confidential or
as to which it is otherwise reasonably clear such information is not public,
except that any Lender may disclose any such information (a) as has become
generally available to the public other than by a breach of this Section 9. l 5,
(b) as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state or federal regulatory body having or claiming
to have jurisdiction over such Lender or to the Federal Reserve Board or the
Federal Deposit Insurance Corporation or the OCC or similar organizations
(whether in the United States or elsewhere) or their successors or the National
Association of Insurance Commissioners, (c) as may be required or appropriate in
response to any summons or subpoena or any law, order, regulation or ruling
applicable to such Lender, provided that such Lender, to the extent permitted by
---------
law, has used its reasonable best efforts to give notice thereof to the Borrower
prior to making such disclosure or (d) to any prospective Participant or
assignee in connection with any contemplated transfer pursuant to Section 9.6,
provided that such prospective transferee shall have been made aware of this
---------
Section 9.15 and shall have agreed to be bound by its provisions as if it were a
party to this Agreement.
71
9.16 ACKNOWLEDGMENTS.
---------------
The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery
of each Credit Document;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement and the relationship between Administrative Agent and
Lenders, on one hand. and the Borrower, on the other hand, in connection
herewith is solely that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the Borrower and the
Lenders.
SECTION 10. GUARANTY
10.1 THE GUARANTY.
------------
In order to induce the Lenders to enter into this Agreement and to extend
credit hereunder and in recognition of the direct benefits to be received by the
Guarantors from the Loans hereunder, each of the Guarantors hereby agrees with
the Administrative Agent and the Lenders as follows: each Guarantor hereby
unconditionally and irrevocably jointly and severally guarantees as primary
obligor and not merely as surety the full and prompt payment when due, whether
upon maturity, by acceleration or otherwise, of any and all indebtedness of the
Borrower to the Administrative Agent and the Lenders and all other Obligations
of the Borrower and the other Credit Parties hereunder. If any or all of the
indebtedness of the Borrower to the Administrative Agent and the Lenders becomes
due and payable hereunder, each Guarantor unconditionally promises to pay such
indebtedness to the Administrative Agent and the Lenders, or order, on demand,
together with any and all reasonable expenses which may be incurred by the
Administrative Agent or the Lenders in collecting any of the indebtedness. The
word "indebtedness" is used in this Section 10 in its most comprehensive sense
and includes any and all advances, debts, obligations and liabilities of the
Borrower arising in connection with this Agreement, in each case, heretofore,
now, or hereafter made, incurred or created, whether voluntarily or
involuntarily, absolute or contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to time reduced, or
extinguished and thereafter increased or incurred, whether the Borrower may be
liable individually or jointly with others, whether or not recovery upon such
indebtedness may be or hereafter become barred by any statute of limitations,
and whether or not such indebtedness may be or hereafter become otherwise
unenforceable.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, to the extent the obligations of a Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each such
72
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the Bankruptcy Code).
10.2 BANKRUPTCY.
----------
Additionally, each of the Guarantors unconditionally and irrevocably
guarantees jointly and severally the payment of any and all indebtedness of the
Borrower to the Lenders whether or not due or payable by the Borrower upon the
occurrence of any of the events specified in Section 7(a), and unconditionally
promises to pay such indebtedness to the Administrative Agent for the account of
the Lenders, or order, on demand, in lawful money of the United States. Each of
the Guarantors further agrees that to the extent that the Borrower or a
Guarantor shall make a payment or a transfer of an interest in any property to
the Administrative Agent or any Lender, which payment or transfer or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
or otherwise is avoided, and/or required to be repaid to the Borrower or a
Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such avoidance or repayment, the
obligation or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if said payment had not been made.
10.3 NATURE OF LIABILITY.
-------------------
The liability of each Guarantor hereunder is exclusive and independent of
any security for or other guaranty of the indebtedness of the Borrower whether
executed by any such Guarantor, any other guarantor or by any other party, and
no Guarantor's liability hereunder shall be affected or impaired by (a) any
direction as to application of payment by the Borrower or by any other party, or
(b) any other continuing or other guaranty, undertaking or maximum liability of
a guarantor or of any other party as to the indebtedness of the Borrower, or (c)
any payment on or in reduction of any such other guaranty or undertaking, or (d)
any dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to the Administrative Agent or the Lenders on
the indebtedness which the Administrative Agent or such Lenders repay the
Borrower pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each of the Guarantors waives
any right to the deferral or modification of its obligations hereunder by reason
of any such proceeding.
10.4 INDEPENDENT OBLIGATION.
----------------------
The obligations of each Guarantor hereunder are independent of the obligations
of any other guarantor or the Borrower, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other guarantor or the Borrower and whether or not any other
Guarantor or the Borrower is joined in any such action or actions.
10.5 AUTHORIZATION.
-------------
Each of the Guarantors authorizes the Administrative Agent and each Lender
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time to time to (a) renew,
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compromise, extend, increase, accelerate or otherwise change the time for
payment of, or . otherwise change the terms of the indebtedness or any part
thereof in accordance with this Agreement, including any increase or decrease of
the rate of interest thereon, (b) take and hold security from any guarantor or
any other party for the payment of this Guaranty or the indebtedness and
exchange, enforce waive and release any such security, (c) apply such security
and direct the order or manner of sale thereof as the Administrative Agent and
the Lenders in their discretion may determine and (d) release or substitute any
one or more endorsers, guarantors, the Borrower or other obligors.
10.6 RELIANCE.
--------
It is not necessary for the Administrative Agent or the Lenders to inquire
into the capacity or powers of the Borrower or the officers, directors, partners
or Administrative Agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
10.7 WAIVER.
------
(a) Each of the Guarantors waives any right (except as shall be required by
applicable statute and cannot be waived) to require the Administrative
Agent or any Lender to (i) proceed against the Borrower, any other
guarantor or any other party, (ii) proceed against or exhaust any security
held from the Borrower, any other guarantor or any other party, or (iii)
pursue any other remedy in the Administrative Agent's or any Lender's power
whatsoever. Each of the Guarantors waives any defense based on or arising
out of any defense of the Borrower, any other guarantor or any other party
other than payment in full of the indebtedness, including without
limitation any defense based on or arising out of the disability of the
Borrower, any other guarantor or any other party, or the unenforceability
of the indebtedness or any part thereof from any cause, or the cessation
from any cause of the liability of the Borrower other than payment in full
of the indebtedness. The Administrative Agent or any of the Lenders may, at
their election, foreclose on any security held by the Administrative Agent
or a Lender by one or more judicial or nonjudicial sales, whether or not
every aspect of any such sale is commercially reasonable (to the extent
such sale is permitted by applicable law), or exercise any other right or
remedy the Administrative Agent and any Lender may have against the
Borrower or any other party, or any security, without affecting or
impairing in any way the liability of any Guarantor hereunder except to the
extent the indebtedness has been paid. Each of the Guarantors waives any
defense arising out of any such election by the Administrative Agent and
each of the Lenders, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of the Guarantors against the Borrower or any other party or any
security.
(b) Each of the Guarantors waives all presentments, demands for performance,
protests and notices, including without limitation notices of
nonperformance, notice of protest, notices of dishonor, notices of
acceptance of this Guaranty, and notices of the existence, creation or
incurring of new or additional indebtedness. Each Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's
financial condition and assets, and of all other circumstances
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bearing upon the risk of nonpayment of the indebtedness and the nature,
scope and extent of the risks which such Guarantor assumes and incurs
hereunder, and agrees that neither the Administrative Agent nor any Lender
shall have any duty to advise such Guarantor of information known to it
regarding such circumstances or risks.
(c) Each of the Guarantors hereby agrees it will not exercise any rights of
subrogation which it may at any time otherwise have as a result of this
Guaranty (whether contractual, under Section 509 of the U.S. Bankruptcy
Code, or otherwise) to the claims of the Lenders against the Borrower or
any other guarantor of the indebtedness of the Borrower owing to the
Lenders (collectively, the "Other Parties") and all contractual, statutory
-------------
or common law rights of reimbursement, contribution or indemnity from any
Other Party which it may at any time otherwise have as a result of this
Guaranty until such time as the Loans hereunder shall have been paid and
the Commitments have been terminated. Each of the Guarantors hereby further
agrees not to exercise any right to enforce any other remedy which the
Administrative Agent and the Lenders now have or may hereafter have against
any Other Party, any endorser or any other guarantor of all or any part of
the indebtedness of the Borrower and any benefit of, and any right to
participate in, any security or collateral given to or for the benefit of
the Lenders to secure payment of the indebtedness of the Borrower until
such time as the Loans hereunder shall have been paid and the Commitments
have been terminated.
10.8 LIMITATION ON ENFORCEMENT.
-------------------------
The Lenders agree that this Guaranty may be enforced only by the action of
the Administrative Agent acting upon the instructions of the Required Lenders
and that no Lender shall have any right individually to seek to enforce or to
enforce this Guaranty, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent for the benefit of the
Lenders upon the terms of this Agreement. The Lenders further agree that this
Guaranty may not be enforced against any director, officer, employee or
stockholder of the Guarantors.
10.9 CONFIRMATION OF PAYMENT.
-----------------------
The Administrative Agent and the Lenders will, upon request after payment
of the indebtedness and obligations which are the subject of this Guaranty and
termination of the commitments relating thereto, confirm to the Borrower, the
Guarantors or any other Person that the such indebtedness and obligations have
been paid and the commitments relating thereto terminated, subject to the
provisions of Section 10.2.
10.10 SENIOR DEBT UNDER TEACHERS AGREEMENT.
------------------------------------
The Obligations shall constitute "Senior Debt" under the Teachers
Agreement.
10.11 CONFESSION OF JUDGMENT.
----------------------
Each Credit Party authorizes and empowers any attorney or attorneys or the
Prothonotary or Clerk of any Court of Record in the Commonwealth of
Pennsylvania, upon the occurrence of an Event of Default hereunder, to appear
for such Credit Party in any such court, with or without
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declaration filed, as of any term or time there or elsewhere to be held and
therein to confess or enter judgment against such Credit Party in favor of the
Lender for all sums due or to become due by such Credit Party to Lender under
this Agreement, with costs of suit and release of errors and with the greater of
five percent (5%) of such sums or $15,000.00 added as a reasonable attorney's
fee; and for doing so this Agreement or a copy verified by affidavit shall be
sufficient warrant; such authority and power shall not be exhausted by any
exercise thereof, and judgment may be confessed as aforesaid from time to time
as often as there is occasion therefor.
Each Credit Party acknowledges that it has had the assistance of counsel in
the review and execution of this Agreement and further acknowledges that the
meaning and effect of the confession of judgment have been fully explained to it
by such counsel.
Each Credit Party, being fully aware of the right to notice and a hearing
concerning the validity of any and all claims that may be asserted against such
Credit Party by Lender before a judgment can be entered hereunder or before
execution may be levied on such judgment against any and all property of such
Credit Party, hereby waives these rights and agrees and consents to judgment,
being entered by confession in accordance with the terms hereof and execution
being levied on such judgment against any and all property of such Credit Party,
in each case without first giving notice and the opportunity to be heard on the
validity of the claim or claims upon which such judgment is entered.
Any provision in a confession of judgment clause in any of the Credit
Documents for an attorneys' collection commission shall in no way limit any of
the Borrower's or Surety's liability to reimburse bank for all legal fees and
costs incurred by Lenders even if such fees and costs are in excess of the
attorneys' collection commission provided for in such confession of judgment.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by its proper and duly authorized officers as of the
day and year first above written.
BORROWER: FARM JOURNAL, INC.
--------
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Chairman/CEO
---------------------------
GUARANTORS: FARM JOURNAL HOLDINGS INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Vice President
---------------------------
PROFESSIONAL FARMERS OF
AMERICA, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: President
---------------------------
PROFESSIONAL MARKET
MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: President
---------------------------
AGENTS AND LENDERS: FIRST UNION NATIONAL BANK,
------------------
AS ADMINISTRATIVE AGENT AND AS A
LENDER
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
TITLE: SENIOR VICE PRESIDENT
77