EXHIBIT 10.1
EXECUTION COPY
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$950,000,000
TERM LOAN AGREEMENT
dated as of
May 20, 2002
among
THE READER'S DIGEST ASSOCIATION, INC.,
as Borrower and Guarantor,
BOOKS ARE FUN, LTD.,
QSP, INC.,
and
READER'S DIGEST MEDIA GROUP, INC.
(expected to be renamed as ▇▇▇▇▇▇ MEDIA GROUP, INC.),
as Borrowing Subsidiaries,
The Lenders Party Hereto,
JPMORGAN CHASE BANK,
as Administrative Agent
and Collateral Agent
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.
as Syndication Agent
ABN AMRO BANK N.V.,
THE ROYAL BANK OF SCOTLAND PLC
and
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Co-Documentation Agents
-------------------------
ABN AMRO BANK N.V.,
THE ROYAL BANK OF SCOTLAND PLC,
WACHOVIA BANK, NATIONAL ASSOCIATION
and
COMMERZBANK AG,
as Co-Arrangers
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.,
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.
as Joint Lead Arrangers and Joint Bookrunners
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.........................................1
SECTION 1.02. Classification of Loans and Borrowings.............22
SECTION 1.03. Terms Generally....................................22
SECTION 1.04. Accounting Terms and Determinations................23
ARTICLE II
THE LOANS
SECTION 2.01. Commitments........................................23
SECTION 2.02. Term Loans.........................................23
SECTION 2.03. Requests for Borrowings............................24
SECTION 2.04. Funding of Borrowings..............................24
SECTION 2.05. Evidence of Debt...................................25
SECTION 2.06. Interest Elections.................................25
SECTION 2.07. Interest on Loans..................................26
SECTION 2.08. Default Interest...................................27
SECTION 2.09. Alternate Rate of Interest.........................27
SECTION 2.10. Termination of Commitments.........................27
SECTION 2.11. Amortization of Term Loans.........................27
SECTION 2.12. Prepayment.........................................29
SECTION 2.13. Reserve Requirements; Change in Circumstances......30
SECTION 2.14. Change in Legality.................................31
SECTION 2.15. Indemnity..........................................32
SECTION 2.16. Pro Rata Treatment.................................32
SECTION 2.17. Sharing of Setoffs.................................32
SECTION 2.18. Payments...........................................33
SECTION 2.19. Taxes..............................................33
SECTION 2.20. Duty to Mitigate; Assignment of Commitments
Under Certain Circumstances........................34
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness......................................35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Organization; Powers...............................37
SECTION 4.02. Authorization; Enforceability......................37
SECTION 4.03. Governmental Approvals; No Conflicts...............37
SECTION 4.04. Financial Condition; No Material Adverse Change....38
SECTION 4.05. Properties.........................................38
SECTION 4.06. Litigation and Environmental Matters...............38
SECTION 4.07. Compliance with Laws and Agreements................38
SECTION 4.08. Not an Investment Company or Holding Company.......39
SECTION 4.09. Taxes..............................................39
SECTION 4.10. ERISA..............................................39
SECTION 4.11. Disclosure.........................................39
SECTION 4.12. Federal Reserve Regulations........................39
SECTION 4.13. Subsidiaries.......................................39
SECTION 4.14. Security Documents.................................40
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information.........40
SECTION 5.02. Notices of Material Events.........................41
SECTION 5.03. Existence; Conduct of Business.....................42
SECTION 5.04. Payment of Obligations.............................42
SECTION 5.05. Maintenance of Properties; Insurance...............42
SECTION 5.06. Books and Records; Inspection Rights...............42
SECTION 5.07. Compliance with Laws...............................42
SECTION 5.08. Use of Proceeds....................................43
SECTION 5.09. Information Regarding Collateral...................43
SECTION 5.10. Casualty and Condemnation..........................43
SECTION 5.11. Additional Subsidiaries............................43
SECTION 5.12. Further Assurances.................................44
SECTION 5.13. Interest Rate Protection...........................44
SECTION 5.14. Filing of Credit Agreement, Amendments and
Waivers.........................................44
SECTION 5.15. Compliance with Federal Reserve Regulations........44
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Debt and Preferred Stock of Subsidiaries...........44
SECTION 6.02. Liens..............................................45
SECTION 6.03. Sale and Leaseback Transactions....................47
SECTION 6.04. Fundamental Changes................................47
SECTION 6.05. Asset Sales........................................47
SECTION 6.06. Investments, Loans, Advances, Guarantees and
Acquisitions....................................48
SECTION 6.07. Transactions with Affiliates.......................49
ii
SECTION 6.08. Restrictive Agreements.............................49
SECTION 6.09. Swap Agreements....................................50
SECTION 6.10. Restricted Payments; Certain Payments of
Indebtedness....................................50
SECTION 6.11. Amendment of Material Documents....................51
SECTION 6.12. Consolidated Interest Coverage Ratio...............51
SECTION 6.13. Consolidated Leverage Ratio........................51
SECTION 6.14. Consolidated Fixed Charge Coverage Ratio...........51
SECTION 6.15. Capital Expenditures...............................51
ARTICLE VII
EVENTS OF DEFAULT
ARTICLE VIII
THE AGENTS
ARTICLE IX
JOINT AND SEVERAL LIABILITY OF BORROWERS; GUARANTEE
SECTION 9.01. Joint and Several Liability of Borrowers...........55
SECTION 9.02. Guarantee..........................................56
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices...........................................57
SECTION 10.02. Waivers; Amendments...............................57
SECTION 10.03. Expenses; Indemnity; Damage Waiver................58
SECTION 10.04. Successors and Assigns............................59
SECTION 10.05. Survival..........................................63
SECTION 10.06. Counterparts; Integration; Effectiveness..........63
SECTION 10.07. Severability......................................63
SECTION 10.08. Right of Setoff...................................63
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service
of Process.....................................63
SECTION 10.10. WAIVER OF JURY TRIAL..............................64
SECTION 10.11. Headings..........................................64
SECTION 10.12. Confidentiality...................................64
SECTION 10.13. Conversion of Currencies..........................65
SECTION 10.14. Release of Grantors and Collateral................65
SECTION 10.15. Incorporation of Amendments to Amended and
Restated Five-Year Credit Agreement............66
SECTION 10.16. Security Documents................................66
SECTION 10.17. Power of Attorney.................................66
SECTION 10.18. Appointment.......................................67
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EXHIBITS
Exhibit A - Administrative Questionnaire
Exhibit B - Form of Assignment and Assumption
Exhibit C - Form of Guarantee and Collateral Agreement
Exhibit D - Form of Perfection Certificate
Exhibit E-1 - Form of New York Mortgage
Exhibit E-2 - Form of Wisconsin Mortgage
Exhibit E-3 - Form of Iowa Mortgage
Exhibit F-1 - Form of Opinion of Associate General Counsel for
the Borrowers
Exhibit F-2 - Form of Opinion of Counsel for the Borrowers
Exhibit F-3 - Form of Local Counsel Opinion
Exhibit F-4 - Form of Foreign Counsel Opinion
SCHEDULES
Schedule 1.01(a) Cash Restructuring Charges
Schedule 1.01(b) Property Subject to Sales Contract Located in or near
Sydney, New South Wales, Australia
Schedule 2.01 Commitments
Schedule 4.02 Required Authorizations
Schedule 4.03 Required Approvals
Schedule 4.05 Real Properties
Schedule 4.06 Disclosed Matters
Schedule 4.13 Subsidiaries and Loan Parties
Schedule 4.14 Filing Offices
Schedule 6.01 Debt
Schedule 6.02 Liens
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TERM LOAN AGREEMENT dated as of May 20, 2002 (this
"Agreement"), among THE READER'S DIGEST ASSOCIATION, INC.,
as a Borrower and as the Guarantor (each as defined herein),
BOOKS ARE FUN, LTD., QSP, INC., and READER'S DIGEST MEDIA
GROUP, INC. (expected to be renamed as ▇▇▇▇▇▇ MEDIA GROUP,
INC.), as Borrowing Subsidiaries (as defined herein), the
LENDERS (as defined herein), JPMORGAN CHASE BANK, as
administrative agent and as collateral agent, and ▇▇▇▇▇▇▇
SACHS CREDIT PARTNERS L.P., as syndication agent.
The Borrowers (such term and each other capitalized term used but not
otherwise defined herein having the meaning assigned to it in Article I) have
requested that the Lenders extend credit in order to enable them to borrow on a
term basis (i) the Tranche A Term Loans in an aggregate principal amount not to
exceed $250,000,000 and (ii) the Tranche B Term Loans in an aggregate principal
amount not to exceed $700,000,000. The proceeds of such Borrowings are to be
used to pay the cash consideration payable in connection with the Acquisition
and related transaction costs, to repay certain loans outstanding under the
Existing Five-Year Credit Agreement and all loans outstanding under the Existing
364-Day Credit Agreement and, in an amount not to exceed $100,000,000, to effect
the Class B Repurchase. The Lenders are willing to extend such credit to the
Borrowers on the terms and subject to the conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein,
have the following meanings:
"ABR BORROWING" means a Borrowing comprised of ABR Loans.
"ABR LOAN" means any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"ACQUISITION" means the purchase of substantially all the assets and
rights, and assumption of certain liabilities, of ▇▇▇▇▇▇ Holding Company, LLC;
▇▇▇▇▇▇ Publications, LLC; ▇▇▇▇▇▇ Management Company; ▇▇▇▇▇▇ Advertising and
Promotion, LLC; World Wide Country Tours, LLC and Homemaker Schools, LLC
pursuant to the Asset Purchase Agreement.
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"ADMINISTRATIVE AGENT" means JPMCB in its capacity as administrative
agent for the Lenders hereunder, and its successors in such capacity.
"ADMINISTRATIVE QUESTIONNAIRE" means an administrative questionnaire
in the form of Exhibit A hereto.
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"AFFILIATE" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"AGENTS" means the Administrative Agent, the Collateral
Agent and the Syndication Agent.
"AGREEMENT CURRENCY" has the meaning set forth in Section 10.13(b).
"ALTERNATE BASE RATE" means, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.
"AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT" means the Existing
Five-Year Credit Agreement, as amended and restated by the Five Year Amendment
and Restatement, and as further amended from time to time hereafter.
"APPLICABLE CREDITOR" has the meaning set forth in Section 10.13(b).
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of an ABR Loan, or such Lender's
Eurodollar Lending Office in the case of a Eurodollar Loan.
"APPLICABLE RATE" means on any date, with respect to any Tranche A
Term Loan or Tranche B Term Loan, the applicable rate per annum set forth below
in the applicable table under the caption "Eurodollar Spread" (in the case of a
Eurodollar Loan) or "ABR Spread" (in the case of an ABR Loan), as the case may
be, based upon the Ratings; PROVIDED that the Applicable Rates used to determine
the interest accruing on Tranche A Term Loans shall in no event be less than
those corresponding to Level 3 in the Tranche A Pricing Table below until the
date corresponding to the six month anniversary of the Effective Date shall have
occurred:
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Tranche A Pricing Table
---------------------------------------------------------------
RATINGS EURODOLLAR SPREAD ABR SPREAD
(S&P/Moody's)
---------------------------------------------------------------
▇▇▇▇▇ ▇ 1.50% 0.50%
higher than BBB-/Baa3
---------------------------------------------------------------
▇▇▇▇▇ ▇ 2.00% 1.00%
BBB-/Baa3
---------------------------------------------------------------
▇▇▇▇▇ ▇ 2.50% 1.500%
BB+/Ba1
---------------------------------------------------------------
▇▇▇▇▇ ▇ 2.75% 1.75%
BB/Ba2
---------------------------------------------------------------
▇▇▇▇▇ ▇ 3.00% 2.00%
lower than BB and Ba2 or
unrated
---------------------------------------------------------------
Tranche B Pricing Table
---------------------------------------------------------------
RATINGS EURODOLLAR SPREAD ABR SPREAD
(S&P/Moody's)
---------------------------------------------------------------
▇▇▇▇▇ ▇ 2.25% 1.25%
BB+/Ba1 or higher
---------------------------------------------------------------
▇▇▇▇▇ ▇
2.75% 1.75%
BB/Ba2
---------------------------------------------------------------
▇▇▇▇▇ ▇ 3.00% 2.00%
lower than BB and Ba2 or
unrated
---------------------------------------------------------------
For purposes of the foregoing tables, (i) if the Ratings in effect or deemed to
be in effect on any date fall in different Levels and the Ratings are at least
BBB- and Baa3, respectively, the Applicable Rate shall be determined on such
date by reference to the Level corresponding to the higher Rating, (ii) if such
ratings fall in different Levels and one or both ratings shall be below BBB- or
Baa3, respectively, the Applicable Rate shall be determined on such date by
reference to the Level corresponding to the lower Rating unless such ratings
differ by more than one Level, in which case the applicable Level shall be the
Level next above that corresponding to the lower Rating; (iii) if either Moody's
or S&P shall not have, or shall be deemed not to have, a Rating in effect (other
than because such rating agency shall no longer be in the business of rating
corporate debt obligations or corporate credit), then such rating agency will be
deemed to have in effect a Rating in Level 5 for purposes of the Tranche A
Pricing Table and Level 3 for purposes of the Tranche B Pricing Table; and (iv)
if any Rating established or deemed to have been established by Moody's or S&P
shall be changed (other than as a result of a change in the rating system of
either Moody's or S&P), such change shall be effective as of the day after the
date on which such change is first announced by the rating agency making such
change. Each change in the Applicable Rate shall apply during the period
commencing on the effective date of such change and ending on the date
immediately
4
preceding the effective date of the next such change. If the rating system of
either Moody's or S&P shall change, or if either such rating agency shall cease
to be in the business of rating corporate debt obligations or corporate credit,
the Company and the Lenders shall negotiate in good faith to amend the
references to specific ratings in this definition to reflect such changed rating
system or the non-availability of ratings from such rating agency, and pending
any such amendment the Applicable Rate shall be determined by reference to the
ratings provided immediately prior to such change or cessation.
"APPROVED FUND" has the meaning set forth in Section 10.04.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement dated
as of March 21, 2002, among The Reader's Digest Association, Inc., ▇▇▇▇▇▇
Holding Company, LLC and certain other parties.
"ASSIGNEE" means a Person to whom any Lender has assigned all or a
portion of its rights and obligations under this Agreement (including, if the
Commitments remain in effect, all or a portion of its Commitments and the Loans
at the time owing to it) pursuant to Section 10.04.
"ASSIGNMENT AND ASSUMPTION" means an agreement substantially in the
form of Exhibit B hereto.
"BOARD" means the Board of Governors of the Federal
Reserve System of the United States.
"BORROWER" means the Company or any Borrowing Subsidiary.
"BORROWING" means Loans of the same Class and, in the case of
Eurodollar Loans, as to which a single Interest Period is in effect.
"BORROWING SUBSIDIARY" means any Subsidiary named as such in the
heading of this Agreement.
"BORROWING REQUEST" means a request for a Borrowing in accordance
with Section 2.03.
"BUSINESS DAY" means any day (other than a Saturday, Sunday or legal
holiday in the State of New York) on which banks are open for business in New
York City; PROVIDED, HOWEVER, that when used in connection with a Eurodollar
Loan, the term "BUSINESS DAY" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
A "CHANGE IN CONTROL" shall be deemed to have occurred (a) if the
equity capital structure of the Reader's Digest Association, Inc. consists of
Class A Non-Voting Common Stock and Class B Voting Common Stock, then if (i) The
▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Reader's Digest Fund, Inc., the ▇▇▇▇ ▇▇▇▇▇▇▇-Reader's Digest
Fund, Inc., The Employee Ownership Plan and 401(k) Partnership of the Reader's
Digest Association, Inc. and any other employee benefit plans of the Company or
any Subsidiary, taken together (the "CURRENT CONTROL GROUP"), shall cease to be
the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as in effect as of the date hereof) of shares representing 30% or
5
more of the voting power represented by the issued and outstanding capital stock
of the Company; (ii) any person or group (other than the Current Control Group)
shall acquire "beneficial ownership" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as in effect as of the date hereof) of shares
representing a greater percentage of the voting power represented by the issued
and outstanding capital stock of the Company than the percentage of such voting
power represented by the shares beneficially owned by the Current Control Group;
or (iii) during any period of 12 consecutive calendar months, (A) the directors
(the "preceding directors") constituting the Company's board of directors at the
beginning of such period and (B) any new directors (x) whose election by the
Company's directors or whose nomination for election by the Company's
stockholders was, in each case, approved by a majority of the Company's
directors then still in office who were either preceding directors or whose
election or nomination for election was previously so approved or (y) whose
election or nomination for election was voted for or approved, as the case may
be, by the Current Control Group, when all such directors are taken together,
shall cease for any reason to constitute a majority of the Company's board of
directors, and (b) if the equity capital structure of the Company is different
from that described in clause (a) above, then if (i) any person or group shall
acquire "beneficial ownership" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as in effect as of the date hereof) of Equity Interests
representing 35% or more of the voting power represented by the issued and
outstanding Equity Interests of the Company; or (ii) during any period of 12
consecutive calendar months, (A) the directors (the "preceding directors")
constituting the Company's board of directors at the beginning of such period
and (B) any new directors whose election by the Company's directors or whose
nomination for election by the Company's stockholders was, in each case,
approved by a majority of the Company's directors then in office who were either
preceding directors or whose election or nomination for election was previously
so approved, when all such directors are taken together, shall cease for any
reason to constitute a majority of the Company's board of directors. As used in
this definition, "group" shall have the meaning given to such term in Rule 13d-5
of the Securities Exchange Act of 1934 as in effect on the date hereof.
Notwithstanding anything to the contrary in clause (a) above, no Change of
Control shall be deemed to have occurred as a result of the Recapitalization.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof after the date of this Agreement
or (c) compliance by any Lender with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"CLASS", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Tranche A Term
Loans or Tranche B Term Loans and, when used in reference to any Commitment,
refers to whether such Commitment is a Tranche A Commitment or a Tranche B
Commitment.
"CLASS B REPURCHASE" means the purchase by the Company of shares of
its Class B Voting Common Stock for consideration not to exceed $100,000,000
pursuant to and on the terms set forth in the Recapitalization Agreement.
"CLO" has the meaning set forth in Section 10.04.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL" means "Collateral" as defined in the Guarantee and
Collateral Agreement and any other property or assets in which Liens are created
to secure the Obligations under any other Security Document.
6
"COLLATERAL AGENT" means JPMCB, in its capacity as collateral agent
for the Lenders.
"COLLATERAL AND GUARANTEE REQUIREMENT" means, at any time, the
requirement that:
(a) the Administrative Agent shall have received from the Company and
each Domestic Subsidiary (other than (i) the Excluded Subsidiaries and
(ii) ▇▇▇▇▇.▇▇▇, Inc. for so long as efforts to sell or wind down such
Subsidiary shall not have been terminated) existing at such time either a
counterpart of the Guarantee and Collateral Agreement duly executed and
delivered on behalf of the Company or such Subsidiary or, in the case of
any Person (other than an Excluded Subsidiary) that becomes a Domestic
Subsidiary after the Effective Date, a supplement to the Guarantee and
Collateral Agreement, in the form specified therein, duly executed and
delivered on behalf of such Domestic Subsidiary;
(b) the Administrative Agent shall have received any Foreign Pledge
Agreements that it determines, based on the advice of counsel, to be
necessary or advisable in connection with the pledge of 65% of the
outstanding voting Equity Interests of The Reader's Digest Association
Limited, Verlag das Beste GmbH and Selection du Reader's Digest S.A., or
any other first-tier Foreign Subsidiary that has accounted for 5% or more
of Consolidated Revenue for any period of four fiscal quarters;
(c) all outstanding Equity Interests of any Subsidiary or any other
Person directly owned by any Grantor at such time shall have been pledged
pursuant to the Guarantee and Collateral Agreement (except that the
Grantors shall not be required to pledge more than 65% of outstanding
voting Equity Interests of any Foreign Subsidiary) and the Collateral
Agent shall have received certificates representing all such Equity
Interests (other than (i) uncertificated Equity Interests, (ii) Equity
Interests in ▇▇▇▇▇.▇▇▇, Inc. for so long as efforts to sell or wind down
such Subsidiary shall not have been terminated, and (iii) Equity Interests
in LookSmart, Ltd. and WebMD Corporation), together with undated stock
powers or other instruments of transfer with respect thereto endorsed in
blank;
(d) all Debt of any Person that is owed to any Grantor at such time
(other than obligations that individually do not exceed $1,000,000) shall
have been pledged pursuant to the Guarantee and Collateral Agreement, and
the Collateral Agent shall have received all promissory notes or other
instruments evidencing any such Debt, together with undated instruments of
transfer with respect thereto endorsed in blank;
(e) all documents and instruments, including all Uniform Commercial
Code financing statements and filings with the United States Copyright
Office and the United States Patent and Trademark Office, required by law
or reasonably requested by the Collateral Agent to be filed, registered or
recorded to perfect the Liens intended to be created by the Guarantee and
Collateral Agreement shall have been filed, registered or recorded or
delivered to the Collateral Agent for filing, registration or recording;
provided that Liens on Intellectual Property, as defined in the Guarantee
and Collateral Agreement, will be perfected by filings in the United
States Copyright Office and the United States Patent and Trademark Office
only insofar as they relate to items of Intellectual Property deemed by
the Collateral Agent, after consultation with the Company, to be material
to the Company and the Subsidiaries, taken as a whole, and will not be
perfected by filings in any jurisdiction outside the United States;
(f) the Collateral Agent shall have received (i) counterparts of a
Mortgage with respect to each Mortgaged Property existing at such time,
duly executed and delivered by the record owner of such Mortgaged
Property, (ii) a policy or policies of title insurance issued by a
nationally
7
recognized title insurance company insuring the Lien of each such
Mortgage as a valid first Lien on the Mortgaged Property described therein,
free of any other Liens except as expressly permitted by Section 6.02,
together with such endorsements, coinsurance and reinsurance as the
Collateral Agent or the Required Lenders may reasonably request, and (iii)
such appraisals, surveys, legal opinions and other documents as may be
required by applicable law or regulation or as the Collateral Agent or the
Required Lenders may reasonably request with respect to any such Mortgage
or Mortgaged Property; and
(g) each Grantor shall have obtained all consents and approvals
required to be obtained by it in connection with the execution and
delivery of the Guarantee and Collateral Agreement and each other Security
Document to which it is a party, the performance of its obligations
thereunder and the granting by it of the Liens thereunder;
PROVIDED, that the foregoing definition shall not require the creation or
perfection of pledges of or security interests in, or the obtaining of title
insurance or legal opinions with respect to, particular assets of the Grantors
if and for so long as, the Collateral Agent, in consultation with the Company,
determines that the cost of creating or perfecting such pledges or security
interests in such assets or obtaining title insurance or legal opinions in
respect of such assets shall be excessive in view of the benefits to be obtained
by the Lenders therefrom. The Collateral Agent may grant extensions of time for
the perfection of security interests in or the obtaining of title insurance or
legal opinions with respect to particular assets (including extensions beyond
the Effective Date for the perfection of security interests in the assets of the
Company and the Subsidiaries on such date) where it determines that perfection
cannot be accomplished without undue effort or expense by the time or times at
which it would otherwise be required by this Agreement or the Security
Documents.
"COMMITMENT" means a Tranche A Commitment or a Tranche B Commitment.
"COMPANY" means The Reader's Digest Association, Inc.,
a Delaware corporation.
"CONSOLIDATED ASSETS" means, at any time, all assets of the Company
and its consolidated Subsidiaries at such date, as determined on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, (a) the
additions to property, plant and equipment and other capital expenditures of the
Company and its consolidated Subsidiaries that are (or would be) set forth in a
consolidated statement of cash flows of the Company for such period prepared in
accordance with GAAP and (b) Capital Lease Obligations incurred by the Company
and its consolidated Subsidiaries during such period.
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net Income
for such period PLUS, to the extent not otherwise included in such Consolidated
Net Income, the sum (without duplication) of (a) income tax expense, (b)
Interest Expense, (c) depreciation and amortization, (d) non-recurring, non-cash
restructuring charges and cash restructuring charges identified in Schedule
1.01(a), (e) losses on the contemplated sale of the Company's subsidiary
▇▇▇▇▇.▇▇▇, Inc., and extraordinary losses, and (f) the cumulative effect of
changes in accounting principles, MINUS, to the extent added in computing such
Consolidated Net Income, the sum (without duplication) of (x) consolidated
interest income, (y) extraordinary gains and (z) the cumulative effect of
changes in accounting principles.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means the ratio of (a)
Consolidated EBITDA minus the sum of (i) Consolidated Capital Expenditures, (ii)
taxes actually paid in cash, (iii) permitted dividends actually paid in cash,
(iv) amounts paid in cash or other consideration other than Equity Interests in
connection with share repurchases (other than the Class B Repurchase and
payments to
8
holders of not more than $5,000,000 in stated value of preferred stock of the
Company that are required to be made as a result of the exercise of appraisal
rights to which they may be entitled in connection with the Recapitalization),
and (v) scheduled amortization payments in respect of Debt, to (b) Consolidated
Net Interest Expense.
"CONSOLIDATED INTEREST COVERAGE RATIO" means the ratio of (a)
Consolidated EBITDA to (b) Consolidated Net Interest Expense.
"CONSOLIDATED LEVERAGE RATIO" means, at any time, the ratio of (a)
Consolidated Total Debt at such time to (b) Consolidated EBITDA for the period
of four fiscal quarters ended at or most recently prior to such time.
"CONSOLIDATED NET INCOME" means, for the Company and the consolidated
Subsidiaries for any period, the aggregate net income (or net deficit) of such
persons, determined on a consolidated basis in accordance with GAAP consistently
applied.
"CONSOLIDATED NET INTEREST EXPENSE" means, with respect to the
Company and the consolidated Subsidiaries for any period, Interest Expense (net
of any interest income for such period determined on a consolidated basis in
accordance with GAAP).
"CONSOLIDATED REVENUE" means, for the Company and the consolidated
Subsidiaries for any period, the aggregate revenues of such persons, determined
on a consolidated basis in accordance with GAAP consistently applied.
"CONSOLIDATED TOTAL DEBT" means, for the Company and the consolidated
Subsidiaries at any date, the aggregate Debt of such persons, determined on a
consolidated basis in accordance with GAAP consistently applied.
"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto.
"CURRENT CONTROL GROUP" has the meaning set forth in the definition
of "Change in Control".
"DEBT" of any Person means, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) the principal
amounts (as defined in the definition of "Swap" herein) of the obligations of
such Person under Swap Agreements, (e) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (f) all obligations of such Person in respect of the
deferred purchase price of property or services, (g) all Debt of others secured
by (or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Debt secured thereby has been assumed, (h) all
Guarantees by such Person of Debt of others, (i) all Capital Lease Obligations
of such Person, (j) all Securitization Transactions of such Person and (k) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit, letters of guaranty and banker's acceptances;
PROVIDED, HOWEVER, that Debt of any Person shall not include (i) trade payables,
(ii) any obligations of such Person incurred in connection with letters of
credit, letters of guaranty, banker's acceptances, bills of exchange and similar
instruments obtained or created in the ordinary course of business to support or
evidence obligations of such Person that do not constitute Debt, (iii)
endorsements of checks, bills of exchange and
9
other instruments for deposit or collection in the ordinary course of business,
(iv) customer deposits and advances and interest payable thereon in the ordinary
course of business in accordance with customary trade terms and other
obligations incurred in the ordinary course of business through credit on an
open account basis customarily extended to such Person, (v) any Debt secured on
a non-recourse basis by any assets of such Person to the extent that the
outstanding balance thereof exceeds the fair market value of such assets, (vi)
statutory or other legal requirements to make deposits in connection with
sweepstakes or similar contests, or surety bonds posted pursuant to such
requirements and (vii) obligations under overdraft arrangements with banks
outside the United States incurred in the ordinary course of business to cover
working capital needs, but only to the extent that such overdrafts remain
outstanding for not more than three Business Days and do not in the aggregate at
any time exceed $5,000,000.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DISCLOSED MATTERS" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 4.06.
"DOLLARS" or "$" means lawful currency of the United States.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" on Schedule
2.01 or, as to any person who becomes a Lender after the date hereof, on the
Assignment and Assumption executed by such person or such other office of such
Lender as such Lender may hereafter designate from time to time as its "Domestic
Lending Office" by notice to the Company and the Administrative Agent.
"DOMESTIC SUBSIDIARY" means any Subsidiary organized under the laws
of the United States, any State thereof, the District of Columbia or any of its
territories or possessions or any political subdivision thereof.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 3.01 are satisfied (or waived in accordance with Section 10.02).
"ENVIRONMENTAL LAWS" means any and all federal, state and local
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Company or any Subsidiary
directly or indirectly resulting from or based upon (a) violation or alleged
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
10
"EQUITY INTEREST" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants or options or other rights to acquire any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder (other than an event for
which the 30-day notice period is waived), with respect to a Plan; (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Company or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Company or any ERISA Affiliate
from the PBGC or a plan administrator of any notice of termination, or the
intention to terminate, any Plan or Plans or to appoint a trustee to administer
any Plan where the Administrative Agent or the Required Lenders shall have
determined in good faith that such termination or appointment is reasonably
likely to result; (f) the incurrence by the Company or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by the Company or any
ERISA Affiliate of any notice of the imposition of, or an intention to impose,
Withdrawal Liability, where the Administrative Agent or the Required Lenders
shall have determined in good faith that such imposition is reasonably likely to
result or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA.
"EURODOLLAR BORROWING" means a Borrowing comprised of
Eurodollar Loans.
"EURODOLLAR LENDING OFFICE" means, with respect to each Lender, the
branch or Affiliate of such Lender which such Lender has designated as its
"Eurodollar Lending Office" on Schedule 2.01 or, as to any person who becomes a
Lender after the date hereof, on the Assignment and Assumption executed by such
person or such other office of such Lender as such Lender may hereafter
designate from time to time as its "Eurodollar Lending Office" by notice to the
Company and the Administrative Agent.
"EURODOLLAR LOAN" means any Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"EVENT OF DEFAULT" has the meaning set forth in Article VII.
"EXCESS CASH FLOW" means, for any fiscal year, the sum (without
duplication) of:
(a) the Consolidated Net Income of the Company and the consolidated
Subsidiaries for such fiscal year, adjusted to exclude any gains or losses
attributable to Prepayment Events; plus
(b) the excess, if any, of the Net Proceeds received during such
fiscal year by the Company and its consolidated Subsidiaries in respect of
any Prepayment Events over the sum of (i) the aggregate principal amount
of Term Loans prepaid pursuant to Section 2.12(b) with such Net Proceeds
and (ii) the aggregate amount of such Net Proceeds reinvested or held for
11
reinvestment in property, plant or equipment of the Company and the
Subsidiaries as provided in Section 2.12(b); plus
(c) depreciation, amortization and other non-cash charges or losses
deducted in determining such Consolidated Net Income for such fiscal year;
plus
(d) the amount, if any, by which Net Working Capital
decreased during such fiscal year; minus
(e) the sum of (i) any non-cash gains included in determining such
consolidated net income (or loss) for such fiscal year plus (ii) the
amount, if any, by which Net Working Capital increased during such fiscal
year; minus
(f) the sum of (i) Consolidated Capital Expenditures for such fiscal
year (except to the extent attributable to the incurrence of Capital Lease
Obligations or otherwise financed by incurring Long-Term Debt) plus (ii)
cash consideration paid during such fiscal year to make acquisitions or
other capital investments (except to the extent financed by incurring
Long-Term Debt) plus (iii) the principal amount of any Long-Term Debt
referred to in the preceding clauses (i) and (ii) that is incurred to
finance capital expenditures, acquisitions or other capital investments in
such fiscal year and that is repaid in such fiscal year; minus
(g) the aggregate principal amount of Long-Term Debt or Capital Lease
Obligations repaid or prepaid by the Company and its consolidated
Subsidiaries during such fiscal year, excluding (i) Term Loans prepaid
pursuant to Section 2.12(b) or (c), (ii) repayments or prepayments of
Long-Term Debt financed by the incurrence of other Long-Term Debt and
(iii) repayments or prepayments under revolving credit or similar
arrangements without concomitant reductions of the lenders' commitments by
the amounts repaid or prepaid; minus
(h) payments to holders of not more than $5,000,000 in stated value
of preferred stock of the Company that are required to be made as a result
of the exercise of appraisal rights to which they may be entitled in
connection with the Recapitalization.
"EXCLUDED SUBSIDIARIES" means, at any time, Domestic Subsidiaries
that do not represent more than 1% for any such Subsidiary, or more than 5% in
the aggregate for all such Subsidiaries, of either (a) Consolidated Assets or
(b) the consolidated revenues of the Company and the Subsidiaries for the period
of four fiscal quarters most recently ended, and that (i) do not own Equity
Interests or Debt (other than de minimis Debt) of any Material Subsidiary, (ii)
do not own material intellectual property and (iii) do not have any Debt that is
guaranteed by the Company or any Material Subsidiary; PROVIDED that no
Subsidiary that is a Borrowing Subsidiary under this Agreement or the Amended
and Restated Five-Year Credit Agreement shall be an Excluded Subsidiary.
"EXCLUDED TAXES" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of any Borrower hereunder, (a) income, franchise or other taxes
imposed on (or measured by) its net income by the United States, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
Applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
such Borrower is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.19(b)), any
withholding tax that is imposed by the United States or by any other
jurisdiction in which such Lender is organized, has its principal office or its
Applicable Lending Office on amounts payable to such Foreign Lender at the time
such Foreign Lender becomes a
12
party to this Agreement (or designates a new lending office) or is attributable
to such Foreign Lender's failure to comply with Section 2.19(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from any Borrower with respect to such withholding tax
pursuant to Section 2.19(a).
"EXISTING FIVE-YEAR CREDIT AGREEMENT" means the Five-Year Revolving
Credit and Competitive Advance Facility Agreement dated as of July 27, 2001,
among the Company, certain borrowing subsidiaries, certain lenders and JPMorgan
Chase Bank (formerly known as The Chase Manhattan Bank), as administrative
agent.
"EXISTING 364-DAY CREDIT AGREEMENT" means the 364-Day Revolving
Credit and Competitive Advance Facility Agreement dated as of July 27, 2001,
among the Company, certain borrowing subsidiaries, certain lenders and JPMorgan
Chase Bank (formerly known as The Chase Manhattan Bank), as administrative
agent.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FINANCIAL OFFICER" of any Person shall means the chief financial
officer, principal accounting officer, treasurer or comptroller of such Person.
"FIVE-YEAR AMENDMENT AND RESTATEMENT" means an amendment and
restatement of the Existing Five-Year Credit Agreement, satisfactory in form and
substance to the Administrative Agent, amending and restating the Existing
Five-Year Credit Agreement as necessary to permit the Acquisition and
Recapitalization, to secure the obligations thereunder ratably with the
Obligations, to conform the interest rates applicable to the loans thereunder to
that applicable to the Tranche A Term Loans, to adjust the fees payable
thereunder, to conform the representations and warranties, affirmative and
negative covenants and events of default to those set forth herein and to make
such other changes as the Company, the Agents and the Required Lenders under and
as defined in the Existing Five-Year Credit Agreement shall agree upon.
"FOREIGN LENDER", with respect to any Loan, means any Lender making
such Loan that is organized under the laws of a jurisdiction other than the
United States.
"FOREIGN PLEDGE AGREEMENT" means a pledge agreement governed by the
law of a jurisdiction other than the United States and satisfactory in form and
substance to the Administrative Agent and the Company.
"FOREIGN SUBSIDIARY" means any Subsidiary organized under the laws of
a jurisdiction outside the United States or any of its territories or
possessions or any political subdivision thereof.
"GAAP" means United States generally accepted accounting principles,
applied on a consistent basis.
"GOVERNMENTAL AUTHORITY" means the government of the United States,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality,
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
"GRANTING LENDER" shall have the meaning assigned to such term in
Section 10.04(h).
"GRANTORS" means the Company and each Domestic Subsidiary that is, or
is required to be, a party to the Guarantee and Collateral Agreement or any
other Security Document.
"GUARANTEE" means any agreement by which the Company or any
Subsidiary assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes liable upon, the Debt of
another Person, or agrees to maintain the net worth or working capital or other
financial condition of such Person so as to enable such Person to pay such Debt
or otherwise assure any creditor of such Person against loss with respect to
such Debt, but shall not include (i) customary indemnifications, representations
and warranties made in connection with purchases, sales or leasing of property
or assets or issuances of securities, (ii) assurances given in the ordinary
course of business of the payment of obligations of customers or suppliers of
the Company or any Subsidiary, (iii) retained liability in connection with sales
of accounts receivable or chattel paper in the ordinary course of business (but
only to the extent customary in connection with sales accounted for as true
sales) or (iv) guarantees of loans or advances made to present or former
officers and directors of the Company or any Subsidiary (x) to enable them to
acquire Equity Interests of the Company or any Subsidiary or (y) so long as the
aggregate amount thereof does not exceed $3,000,000, for any other purpose.
"GUARANTEE AND COLLATERAL AGREEMENT" means the Guarantee and
Collateral Agreement among the Company, the Collateral Agent and the Subsidiary
Guarantors substantially in the form of Exhibit C.
"GUARANTOR" means the Company, in its capacity as guarantor of the
Obligations hereunder.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature which in each case are
regulated pursuant to any Environmental Law.
"INDEMNIFIED TAXES" means Taxes, including Other Taxes,
but excluding Excluded Taxes.
"INDEMNITEE" shall have the meaning assigned to such term in Section
10.03(b).
"INFORMATION" shall have the meaning assigned to such term in Section
10.12.
"INFORMATION MEMORANDUM" means the Confidential Information
Memorandum dated April 2002 relating to the Company and the Transactions.
"INTELLECTUAL PROPERTY" shall have the meaning assigned to such term
in the Guarantee and Collateral Agreement.
"INTEREST ELECTION REQUEST" means, a request by any Company to
convert or continue a Borrowing in accordance with Section 2.06.
14
"INTEREST EXPENSE" means, for any period, the interest expense of the
Company and the consolidated Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP (and giving effect to any Swap
Agreements that have the effect of increasing or decreasing such interest
expense), including (i) the amortization of debt discounts to the extent
included in interest expense in accordance with GAAP, (ii) the amortization of
all fees (including fees with respect to interest rate protection agreements or
other interest rate hedging agreements) payable in connection with the
incurrence of indebtedness to the extent included in interest expense in
accordance with GAAP, (iii) the portion of any rents payable under capital
leases allocable to interest expense in accordance with GAAP and (iv) the amount
of commitment fees incurred prior to the Effective Date under the Fee Letter
dated as of March 21, 2002 as amended as of April 19, 2002, among the Company,
JPMCB and GSCP.
"INTEREST PAYMENT DATE" means (a) with respect to any Loan, the last
day of each Interest Period applicable to the Borrowing of which such Loan is a
part and, in addition, the date of any prepayment of such Loan or conversion of
such Loan to a Loan of a different Type and (b) in the case of a Eurodollar Loan
with an Interest Period of more than three months' duration, each day that would
have been an Interest Payment Date for such Loan had successive Interest Periods
of three months' duration been applicable to such Loan.
"INTEREST PERIOD" means (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months thereafter, as the Borrower may elect and (b) as to any ABR
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the earliest of (i) the next succeeding March
31, June 30, September 30 or December 31, (ii) the Tranche A Maturity Date or
the Tranche B Maturity Date, as the case may be, and (iii) the date such
Borrowing is converted to a Borrowing of a different Type or repaid or prepaid
in accordance with Section 2.11 or Section 2.12; PROVIDED, HOWEVER, that if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of Eurodollar Loans only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"JPMCB" means JPMorgan Chase Bank, and its successors.
"JUDGMENT CURRENCY" shall have the meaning assigned to such term in
Section 10.13(b).
"LENDERS" means the Tranche A Lenders and the Tranche B Lenders.
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to the arithmetic average of the rates that appear
on the Reuters Screen LIBO Page as of 11:00 a.m. (London time) on the date two
Business Days prior to the commencement of such Interest Period for deposits in
Dollars with a maturity comparable to such Interest Period or, in the event no
such rates appear on the Reuters Screen LIBO Page, the rate at which deposits in
Dollars approximately equal in principal amount to such Borrowing and for a
maturity comparable to such Interest Period are offered to the principal London
office of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.
15
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Company or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"LOAN" means a Tranche A Term Loan or a Tranche B Term Loan.
"LOAN DOCUMENTS" means this Agreement, the Guarantee and Collateral
Agreement, each Mortgage and the notes and each amendment, supplement,
modification, consent or waiver of, to or in respect of any of the foregoing.
"LOAN PARTIES" means the Company, the Borrowing
Subsidiaries and the Grantors.
"LONG-TERM DEBT" means any Debt that, in accordance with GAAP,
constitutes (or, when incurred, constituted) a long-term liability.
"MATERIAL ADVERSE EFFECT" means (a) a materially adverse effect on
the business, assets, operations or financial condition of the Company and its
Subsidiaries, taken as a whole, (b) material impairment of the ability of the
Company and its Subsidiaries, taken as a whole, to perform the Obligations or
(c) material impairment of the rights available to the Lenders or the Agents
under any Loan Document.
"MATERIAL DEBT" means Debt (other than the Loans), or obligations in
respect of one or more Swap Agreements, of any one or more of the Company and
its Subsidiaries in an aggregate principal amount exceeding $20,000,000 (or the
equivalent thereof in one or more other currencies).
"MATERIAL SUBSIDIARY" means, at any time, each Subsidiary other than
(a) Excluded Subsidiaries and (b) Foreign Subsidiaries that do not represent
more than 1% for any such Foreign Subsidiary, or more than 5% in the aggregate
for all such Foreign Subsidiaries, of either (a) Consolidated Assets or (b) the
Consolidated Revenues of the Company and the Subsidiaries for the period of four
fiscal quarters most recently ended, and that (i) do not own Equity Interests or
Debt (other than de minimis Debt) of any Material Subsidiary, (ii) do not own
material intellectual property and (iii) do not have any Debt that is guaranteed
by the Company or any Material Subsidiary; PROVIDED that each Subsidiary that is
a Borrowing Subsidiary under this Agreement or the Amended and Restated
Five-Year Credit Agreement or that is a Grantor shall be a Material Subsidiary.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGE" means a mortgage or deed of trust, assignment of leases
and rents, or other security documents reasonably satisfactory in form and
substance to the Collateral Agent granting a Lien on any Mortgaged Property to
secure the Obligations.
"MORTGAGED PROPERTY" means, at any time, each parcel of real property
and the improvements thereto owned by any Grantor, including each such parcel
identified on Schedule 4.05 and each other parcel with respect to which a
Mortgage is required to be granted pursuant to Section 5.11 or 5.12; PROVIDED
that any parcel of real property and improvements thereto with a fair market
value of less than $1,000,000 shall not be a Mortgaged Property.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
16
"NET PROCEEDS" means, with respect to any Prepayment Event, (a) the
cash proceeds received by the Company or any Subsidiary in respect of such
Prepayment Event, including (i) any cash received in respect of any non-cash
proceeds, but only as and when received, (ii) in the case of a casualty,
insurance proceeds in excess of $500,000, and (iii) in the case of a
condemnation or similar event, condemnation awards and similar payments in
excess of $500,000, net of (b) the sum of (i) all fees, discounts, commissions
and out-of-pocket expenses paid by the Company and the Subsidiaries to third
parties (other than Affiliates) in connection with such Prepayment Event, (ii)
in the case of a sale, transfer or other disposition of an asset (including
pursuant to a sale and leaseback transaction or a casualty or a condemnation or
similar proceeding), the amount of all payments required to be made by the
Company and the Subsidiaries as a result of such Prepayment Event to repay Debt
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event, and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) by the Company and the Subsidiaries, and the
amount of any reserves established by the Company and the Subsidiaries to fund
contingent liabilities reasonably estimated to be payable, to the extent such
taxes and reserves are directly attributable to such Prepayment Event (as
determined reasonably and in good faith by the chief financial officer of the
Company).
"NET WORKING CAPITAL" means, at any date, (a) the consolidated
current assets of the Company and its consolidated Subsidiaries as of such date
(excluding cash and Permitted Investments or other cash equivalents) minus (b)
the consolidated current liabilities of the Company and its consolidated
Subsidiaries as of such date (excluding current liabilities in respect of Debt
and excluding unearned revenue). Net Working Capital at any date may be a
positive or negative number. Net Working Capital increases when it becomes more
positive or less negative and decreases when it becomes less positive or more
negative.
"OBLIGATIONS" means (a) the due and punctual payment of (i) the
principal of and interest (including interest accruing during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding) on the Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and (ii) all other monetary obligations of the Loan
Parties to any of the Secured Parties under this Agreement and each of the other
Loan Documents, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), (b) the due and punctual performance of all other
obligations of the Loan Parties under this Agreement and the other Loan
Documents and (c) the due and punctual payment and performance of all
obligations of the Company or any Subsidiary under each Swap Agreement that (i)
shall have been in effect on the Effective Date with a counterparty that shall
have been a Lender or an Affiliate of a Lender as of the Effective Date or (ii)
shall have been entered into after the Effective Date with any counterparty that
shall have been a Lender or an Affiliate of a Lender at the time such Swap
Agreement was entered into.
"OTHER TAXES" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution or delivery
of, or otherwise with respect to, this Agreement.
"PARTICIPANT" has the meaning set forth in Section 10.04.
"PARTICIPATION PERCENTAGE" means, with respect to any Lender, the
percentage of the aggregate Commitments represented by such Lender's Commitment
(or, after the Commitments have terminated, the percentage of the aggregate
outstanding Loans represented by such Lender's outstanding Loans).
17
"PAYMENT LOCATION" shall mean an office, branch or other place of
business of any Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERFECTION CERTIFICATE" means a certificate in the form of Exhibit D
or any other form approved by the Collateral Agent.
"Permitted Encumbrances" means:
(a) Liens imposed by law for Taxes, fees, assessments or other
governmental charges or levies that are not yet due and payable or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, vendors' or lessors' Liens (and deposits to obtain the
release of such Liens), set-off rights and other like Liens imposed by law
(or contract, to the extent that such contractual Liens are similar in
nature and scope to Liens imposed by law), in each case arising in the
ordinary course of business and securing obligations that either (i) are
not overdue by more than 60 days or (ii) are being contested in compliance
with Section 5.04;
(c) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation, disability or
unemployment insurance, old-age pensions, retiree health benefits and
other similar plans or programs and other social security laws or
regulations;
(d) deposits (including deposits made to satisfy statutory or other
legal obligations in connection with sweepstakes or similar contests) to
secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of
business;
(e)(i) easements, covenants, conditions, restrictions, zoning
restrictions, building codes, land use laws, leases, subleases, licenses,
rights of way, minor irregularities in, or lack of, title and similar
encumbrances affecting real property, (ii) with respect to any lessee's or
licensee's interest in real or personal property, mortgages, liens, rights
and obligations and other encumbrances arising by, through or under any
owner, lessor or licensor thereof, with or without the lessee's or
licensee's consent, and (iii) leases, licenses, rights and obligations in
connection with patents, copyrights, trademarks, tradenames and other
intellectual property, in each case that do not secure the payment of
borrowed money (other than, with respect to any lessee's or licensee's
interest in real or personal property, mortgages, liens, rights and
obligations and other encumbrances arising by, through or under any owner,
lessor or licensor thereof) to the extent, in the case of each of (i),
(ii) and (iii), that the Liens referred to therein do not, in the
aggregate, materially detract from the value of the affected property as
used by the Company or any Subsidiary in the ordinary course of business
or materially interfere with the ordinary conduct of the business of the
Company and its Subsidiaries, taken as a whole;
(f) Liens in favor of customs and revenue authorities to secure
payment of customs duties in connection with the importation of goods;
PROVIDED that "Permitted Encumbrances" shall not include any Lien
securing Debt.
18
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States (or
by any agency thereof to the extent such obligations are backed by the
full faith and credit of the United States), in each case maturing within
one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States or any State thereof which
has a short term deposit rating of A1 from S&P and P1 from Moody's and has
a combined capital and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in
clause (c) above; and
(e) money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company
Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody's and (iii) have
portfolio assets of at least $5,000,000,000.
"PERSON" means an individual, a corporation, a partnership, a limited
liability company, a limited liability partnership, an association, a trust or
any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of the Company or
any Subsidiary, other than (i) dispositions described in clauses (a) and
(b) of Section 6.05, (ii) dispositions resulting in Net Proceeds not
exceeding $500,000 for any such disposition, (iii) dispositions resulting
in aggregate Net Proceeds not exceeding $5,000,000 in the aggregate during
any fiscal year of the Company and (iv) dispositions of real estate
located in or near Sydney, New South Wales, Australia as set forth on
Schedule 1.01(b) for net proceeds not exceeding $3,500,000 in the
aggregate; or
(b) any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any
property or asset of the Company or any Subsidiary, but only to the extent
that the Net Proceeds therefrom have not been applied to repair, restore
or replace such property or asset within 180 days after such event; or
19
(c) the incurrence by the Company or any Subsidiary of any Debt,
other than (i) Debt hereunder and from time to time under the Amended and
Restated Five-Year Credit Agreement, (ii) Debt of Subsidiaries permitted
under Section 6.01 as in effect on the date hereof, and (iii) other Debt
for borrowed money in an aggregate principal amount at any time
outstanding not greater than $25,000,000.
"PRIME RATE" means the rate of interest per annum publicly announced
from time to time by JPMCB as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.
"RATINGS" shall mean (a) the published ratings by Moody's and S&P of
the Company's corporate credit, or (b) if either such rating agency shall not
have such a published rating, any confidential or private rating by such rating
agency of the Company's corporate credit. In the event either rating agency
shall have in effect a confidential or private rating of the sort referred to in
clause (b) of the preceding sentence, the Company shall cause such rating to be
reissued by such rating agency at least once during each 12 month period and at
such other times as the Administrative Agent, acting in good faith, shall
reasonably request, and shall provide a copy of such ratings to the
Administrative Agent and the Lenders. At any time when such rating shall not
have been so renewed and provided, such rating agency shall be deemed not to
have a Rating in effect.
"RECAPITALIZATION" means the recapitalization transaction provided
for in the Recapitalization Agreement including the Class B Repurchase.
"RECAPITALIZATION AGREEMENT" means the Recapitalization Agreement
dated as of April 12, 2002, by and among the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Reader's Digest
Fund, Inc., a New York not-for-profit corporation, the ▇▇▇▇ ▇▇▇▇▇▇▇-Reader's
Digest Fund, Inc., a New York not-for-profit corporation, and the Company.
"REGISTER" shall have the meaning assigned to such term in Section
10.04(b).
"REGISTERED NOTE" shall have the meaning assigned to such term in
Section 2.05(d).
"REGULATION U" means Regulation U of the Board, as in effect from
time to time.
"REGULATION X" means Regulation X of the Board, as in effect from
time to time.
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Holding Company, LLC; ▇▇▇▇▇▇ Publications, LLC;
▇▇▇▇▇▇ Management Company; ▇▇▇▇▇▇ Advertising and Promotion, LLC; World Wide
Country Tours, LLC and Homemaker Schools, LLC.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"REQUIRED LENDERS" means, at any time, Lenders having Loans
representing more that 50% of the aggregate principal amount of the total Loans
outstanding (or, if the Loans shall not yet have been made, Lenders having
Commitments representing more that 50% of the aggregate principal amount of the
total Commitments).
"RESTRICTED PAYMENT" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in the Company or any Subsidiary, or any
20
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or termination of any Equity Interests in the Company
or any Subsidiary or any option, warrant or other right to acquire any such
Equity Interests in the Company or any Subsidiary.
"REUTERS SCREEN LIBO PAGE" means the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).
"S&P" means Standard and Poor's Ratings Group, a division of
▇▇▇▇▇▇-▇▇▇▇.
"SECURED PARTIES" means (a) the Agents, (b) the Lenders, (c) the
Agents and Lenders under and as defined in the credit agreement establishing the
Amended and Restated Five-Year Credit Facility, (d) each counterparty to any
Swap Agreement with the Company or any Subsidiary that either (i) is in effect
on the Effective Date if such counterparty is a Lender or an Affiliate of a
Lender (or a Lender or an Affiliate of a Lender under the Amended and Restated
Five-Year Credit Facility) as of the Effective Date or (ii) is entered into
after the Effective Date if such counterparty is a Lender or an Affiliate of a
Lender (or a Lender or an Affiliate of a Lender under the Amended and Restated
Five-Year Credit Facility) at the time such Swap Agreement is entered into, (e)
the beneficiaries of each indemnification obligation undertaken by any Loan
Party under this Agreement or the Amended and Restated Five-Year Credit
Agreement or any other Loan Document, (f) each holder from time to time of
Designated Letter of Credit Obligations (as defined in the Guarantee and
Collateral Agreement) and (g) the successors and assigns of each of the
foregoing.
"SECURITIZATION TRANSACTION" means any transfer by the Company or any
Subsidiary of accounts receivable or interests therein (a) to a trust,
partnership, corporation or other entity, which transfer is funded in whole or
in part, directly or indirectly, by the incurrence or issuance by the transferee
or any successor transferee of debt or other securities that are to receive
payments from, or that represent interests in, the cash flow derived from such
accounts receivable or interests, or (b) directly to one or more investors or
other purchasers. The amount of any Securitization Transaction shall be deemed
at any time to be the aggregate principal or stated amount of the Debt or other
securities referred to in the preceding sentence or, if there shall be no such
principal or stated amount, the uncollected amount of the accounts receivable
transferred pursuant to such Securitization Transaction net of any such accounts
receivable that have been written off as uncollectible.
"SECURITY DOCUMENTS" means the Guarantee and Collateral Agreement,
the Mortgages and the Foreign Pledge Agreements.
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which
21
would be consolidated with those of the parent in the parent's consolidated
financial statements if such financial statements were prepared in accordance
with GAAP as of such date, as well as any other corporation, limited liability
company, partnership, association or other entity of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned by the parent or one
or more subsidiaries of the parent or by the parent and one or more subsidiaries
of the parent.
"SUBSIDIARY" means any subsidiary of the Company.
"SUBSIDIARY GUARANTOR" has the meaning set forth in the Guarantee and
Collateral Agreement.
"SWAP AGREEMENT" means any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Company or the Subsidiaries shall be a Swap Agreement. The
"principal amount" of the obligations of the Company or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Company or such Subsidiary
would be required to pay if such Swap Agreement were terminated at such time.
"SYNDICATION AGENT" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P., in its
capacity as syndication agent hereunder, and its successors in such capacity.
"SYNTHETIC PURCHASE AGREEMENT" means any agreement pursuant to which
the Company or a Subsidiary is or may become obligated to make (i) any payment
in connection with the purchase by any third party from a person other than the
Company or a Subsidiary of any Equity Interest or Debt or (ii) any payment
(other than on account of a permitted purchase by it of any Equity Interest or
Debt) the amount of which is determined by reference to the price or value at
any time of any Equity Interest or Debt of the Company or a Subsidiary; PROVIDED
that no phantom stock or similar plan providing for payments only to current or
former directors, officers or employees of the Company or the Subsidiaries (or
to their heirs or estates) shall be deemed to be a Synthetic Purchase Agreement.
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority, and all liabilities with respect thereto (including without
limitation any interest, penalties or other additions to tax).
"TRANCHE A COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche A Term Loan hereunder on
the Effective Date, expressed as an amount representing the maximum permitted
principal amount of the Tranche A Term Loan to be made by such Lender hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section 2.10
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 10.04. The initial amount of each Lender's
Tranche A Commitment is set forth on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Tranche A
Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche
A Commitments is $250,000,000.
22
"TRANCHE A LENDER" means each financial institution listed on the
signature pages hereof, each Assignee which becomes a Lender pursuant to Section
10.04, and their respective successors, other than any such Person that ceases
to be a party hereto pursuant to an Assignment and Assumption.
"TRANCHE A MATURITY DATE" means May 20, 2007.
"TRANCHE A TERM LOAN" means a Loan made pursuant to clause (a) of
Section 2.01.
"TRANCHE B COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche B Term Loan hereunder on
the Effective Date, expressed as an amount representing the maximum permitted
principal amount of the Tranche B Term Loan to be made by such Lender hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section 2.10
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 10.04. The initial amount of each Lender's
Tranche B Commitment is set forth on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Tranche B
Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche
B Commitments is $700,000,000.
"TRANCHE B LENDER" means each financial institution listed on the
signature pages hereof, each Assignee which becomes a Lender pursuant to Section
10.04, and their respective successors, other than any such Person that ceases
to be a party hereto pursuant to an Assignment and Assumption.
"TRANCHE B MATURITY DATE" means May 20, 2008.
"TRANCHE B TERM LOAN" means a Loan made pursuant to clause (b) of
Section 2.01.
"TRANSACTIONS" means the execution, delivery and performance by the
Loan Parties of the Loan Documents, the borrowing of Loans hereunder, the use of
the proceeds of such Loans, the creation of the Guarantees and Liens provided
for in the Security Documents, the completion of the Acquisition, the Class B
Repurchase and the Recapitalization and the other transactions contemplated
hereby.
"TYPE", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, "RATE" shall include the LIBO
Rate and the Alternate Base Rate.
"UNITED STATES" and "U.S." each means the United States
of America.
"U.S. PERSON" means any Person that is (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any State thereof or (iii) any
estate or trust that is subject to U.S. Federal income taxation regardless of
the source of its income.
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Tranche A Term Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and
Type (e.g., a "Eurodollar Tranche A Term Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Tranche A Term Borrowing") or by
Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar
Tranche A Term Borrowing").
SECTION 1.03. TERMS GENERALLY. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall
23
include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person's successors and assigns, (c) the words "herein", "hereof"
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP as
in effect from time to time; PROVIDED that, if the Company notifies the
Administrative Agent that the Company wishes to amend any provision hereof,
including, without limitation, any covenant in Article VI, to eliminate the
effect of any change in generally accepted accounting principles adopted after
the Effective Date on the operation of such provision (or if the Administrative
Agent notifies the Company that the Required Lenders wish to amend any such
provision for such purpose), then the Company's compliance with such provision
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such provision is amended in a manner satisfactory to the Company and the
Required Lenders.
ARTICLE II
THE LOANS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly (a) to make a Tranche A Term Loan to any
Borrower on the Effective Date in a principal amount not exceeding its Tranche A
Commitment, and (b) to make a Tranche B Term Loan to any Borrower on the
Effective Date in a principal amount not to exceed its Tranche B Commitment. The
Loans will be denominated in Dollars. Amounts repaid or prepaid in respect of
Loans may not be reborrowed.
SECTION 2.02. TERM LOANS. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans of the same Class made by the Lenders ratably in
accordance with their respective applicable Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; PROVIDED that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.13, each Loan shall be comprised entirely
of ABR Loans or Eurodollar Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
PROVIDED that any exercise of such option shall not affect the obligation of the
applicable Borrower to repay such Loan in accordance with the terms of this
Agreement.
24
(c) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Tranche A Maturity Date or Tranche B Maturity Date, as applicable.
(d) Each Lender shall make each Loan to be made by it hereunder on
the proposed date thereof by wire transfer of immediately available funds to the
Administrative Agent in New York, New York, not later than 12:00 noon, New York
City time, and the Administrative Agent shall by 2:00 p.m., New York City time,
credit the amounts so received to the account or accounts specified from time to
time in one or more notices delivered by the Company to the Administrative Agent
or, if a Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met, return the amounts so received to the
respective Lenders.
SECTION 2.03. REQUESTS FOR BORROWINGS. To request each Borrowing,
the Borrower shall notify the Administrative Agent of such request by telephone
(a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before the Effective Date or (b) in the case of
an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business
Day before the Effective Date. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Tranche A Term
Borrowing or Tranche B Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.04.
If no election as to the Type of any Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. FUNDING OF BORROWINGS. (a) Each Lender shall make each
Loan to be made by it hereunder on the Effective Date by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent designated by it for such purpose by notice to the
Lenders. The Administrative Agent will make such Loans available to the Borrower
by promptly crediting the amounts so received, in like funds, to an account of
the Borrower maintained with the Administrative Agent in New York City and
designated by the Borrower in the applicable Borrowing Request.
25
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the Effective Date that such Lender will not make available to
the Administrative Agent such Lender's share of any Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such
Borrowing.
SECTION 2.05. EVIDENCE OF DEBT. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness to such Lender resulting from each Loan made by such Lender,
including the amounts of principal and interest payable and paid to such Lender
from time to time.
(b) The Administrative Agent shall maintain accounts in which it
will record (i) the amount of each Loan made hereunder, the Borrower and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from each Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from each Borrower and each Lender's share thereof.
(c) The entries made in the accounts maintained pursuant to
paragraphs (a) and (b) of this Section shall be prima facie evidence of the
existence and amounts of the obligations therein recorded; PROVIDED, HOWEVER,
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligations of
the Borrowers to repay the Loans in accordance with their terms.
(d) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note or notes payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns (in
each such case, a "REGISTERED NOTE")) and in a form reasonably approved by the
Administrative Agent. Thereafter, the Loans evidenced by such promissory note
and interest thereon shall at all times (including after assignment pursuant to
Section 10.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a Registered Note, to such payee and its registered assigns).
SECTION 2.06. INTEREST ELECTIONS. (a) Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurodollar Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.
26
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election (with references
in such Section 2.03 to the Effective Date being deemed to be references to the
effective date of such election). Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing,
the Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
SECTION 2.07. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.08, the Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Rate from time to time
in effect.
(b) Subject to the provisions of Section 2.08, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be, for
periods during which the Alternate Base Rate is determined by reference to the
Prime Rate and 360 days for other periods) at a rate per annum equal to the
Alternate Base Rate plus the Applicable Rate from time to time in effect.
27
(c) Interest on each Loan shall be payable on each Interest Payment
Date applicable to such Loan except as otherwise provided in this Agreement. The
applicable Adjusted LIBO Rate or Alternate Base Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.08. DEFAULT INTEREST. If any Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, such Borrower shall on demand from time to time from the
Administrative Agent pay interest from and including the date of such default,
to the extent permitted by law, on such defaulted amount up to (but not
including) the date of actual payment (after as well as before judgment) at a
rate per annum (computed as provided in Section 2.07) equal to the higher of (a)
the rate, if any, otherwise applicable to such amount hereunder plus 2% per
annum and (b) the Alternate Base Rate plus the Applicable Rate from time to time
in effect plus 2% per annum.
SECTION 2.09. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined (i) that deposits in Dollars in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market or any other market in which the Lenders shall be funding such Loans,
(ii) that the rates at which such deposits are being offered will not adequately
and fairly reflect the cost to Lenders of making or maintaining their Loans
included in such Borrowing for such Interest Period or (iii) that reasonable
means do not exist for ascertaining the LIBO Rate, the Administrative Agent
shall, as soon as practicable thereafter, give telecopy notice of such
determination to the Company and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Company and
the Lenders that the circumstances giving rise to such notice no longer exist,
any affected Borrowing shall bear interest at the Alternate Base Rate. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.10. TERMINATION OF COMMITMENTS. (a) Unless
previously terminated, the Tranche A Commitments and the Tranche B Commitments
shall terminate at 5:00 p.m., New York City time, on the Effective Date.
SECTION 2.11. AMORTIZATION OF TERM LOANS. (a) Subject to adjustment
pursuant to paragraph (d) of this Section, the Borrowers shall repay Tranche A
Term Borrowings on each date set forth below in the in the aggregate principal
amount set forth opposite such date:
DATE AMOUNT
September 30, 2002 $6,250,000
December 31, 2002 $6,250,000
March 31, 2003 $6,250,000
June 30, 2003 $6,250,000
September 30, 2000 $6,250,000
December 31, 2003 $6,250,000
March 31, 2004 $6,250,000
June 30, 2004 $6,250,000
September 30, 2004 $12,500,000
December 31, 2004 $12,500,000
March 31, 2005 $12,500,000
28
June 30, 2005 $12,500,000
September 30, 2005 $18,750,000
December 31, 2005 $18,750,000
March 31, 2006 $18,750,000
June 30, 2006 $18,750,000
September 30, 2006 $18,750,000
December 31, 2006 $18,750,000
March 31, 2007 $18,750,000
May 20, 2007 $18,750,000
(b) Subject to adjustment pursuant to paragraph (d) of this Section,
the Borrowers shall repay Tranche B Term Borrowings on each date set forth below
in the aggregate principal amount set forth opposite such date:
DATE AMOUNT
September 30, 2002 $1,750,000
December 31, 2002 $1,750,000
March 31, 2003 $1,750,000
June 30, 2003 $1,750,000
September 30, 2003 $1,750,000
December 31, 2003 $1,750,000
March 31, 2004 $1,750,000
June 30, 2004 $1,750,000
September 30, 2004 $1,750,000
December 31, 2004 $1,750,000
March 31, 2005 $1,750,000
June 30, 2005 $1,750,000
September 30, 2005 $1,750,000
December 31, 2005 $1,750,000
March 31, 2006 $1,750,000
June 30, 2006 $1,750,000
September 30, 2006 $1,750,000
December 31, 2006 $1,750,000
March 31, 2007 $1,750,000
June 30, 2007 $1,750,000
September 30, 2007 $166,250,000
December 31, 2007 $166,250,000
March 31, 2008 $166,250,000
May 20, 2008 $166,250,000
(c) To the extent not previously paid, (i) all Tranche A Term Loans
shall be due and payable on the Tranche A Maturity Date and (ii) all Tranche B
Term Loans shall be due and payable on the Tranche B Maturity Date.
29
(d) Each prepayment of the Borrowings pursuant to Section 2.12 will
be applied against the installments of principal becoming due after the date of
such prepayment in respect of Borrowings of the applicable Class ratably in
accordance with the amounts of such installments.
SECTION 2.12. PREPAYMENT. (a) The Borrower shall have the right
at any time and from time to time to prepay any Borrowing, in whole or in part,
without premium or penalty (but including amounts owed under Section 2.15).
(b) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Company or any Subsidiary in respect of any
Prepayment Event, the Company shall, on the Business Day immediately following
the date on which such Net Proceeds are received, prepay Borrowings in an
aggregate amount equal to 100% of such Net Proceeds; provided that, in the case
of any Prepayment Event described in clause (a) of the definition of the term
Prepayment Event, if the Company shall deliver to the Administrative Agent a
certificate of a Financial Officer to the effect that the Company and the
Subsidiaries intend to apply the Net Proceeds from such event (or a portion
thereof specified in such certificate), within one year after receipt of such
Net Proceeds, to acquire property, plant or equipment to be used in the business
of the Company and the Subsidiaries or to acquire other Persons or business
units, and certifying that no Default has occurred and is continuing, then no
prepayment shall be required pursuant to this paragraph in respect of the Net
Proceeds of such event (or the portion of such Net Proceeds specified in such
certificate, if applicable) except to the extent of any such Net Proceeds that
have not been so applied by the end of such one year period, at which time a
prepayment shall be required in an amount equal to such Net Proceeds that have
not been so applied. Notwithstanding the foregoing, if on the date a prepayment
would be due under the preceding sentence the Ratings shall be at least BBB- and
Baa3, in each case with a "stable" outlook, then (i) in the case of a Prepayment
Event described in clause (a) or (b) of the definition of the term Prepayment
Event, the reference to "100%" in the preceding sentence shall be deemed to be a
reference to 50%, and (ii) in the case of a Prepayment Event described in clause
(c) of the definition of the term Prepayment Event, no prepayment shall be
required.
(c) The Company shall prepay Borrowings in an aggregate amount equal
to 50% of Excess Cash Flow for each of its fiscal years, commencing with the
fiscal year ending June 30, 2003. Each prepayment pursuant to this paragraph
shall be made on the date on which financial statements are delivered pursuant
to Section 5.01 with respect to the fiscal year for which Excess Cash Flow is
being calculated (and in any event within 90 days after the end of such fiscal
year). Notwithstanding the foregoing, if on the date a prepayment would be due
under the preceding sentence in respect of any fiscal year the Ratings shall be
at least BBB- and Baa3, in each case with a "stable" outlook, then no prepayment
shall be required in respect of such fiscal year.
(d) The Company shall, on the earlier of December 31, 2002, and the
Business Day immediately following the date on which the Class B Repurchase
shall have been completed, prepay Borrowings in an aggregate amount equal to the
amount, if any, by which $100,000,000 exceeds the amount expended by the Company
to effect the Class B Repurchase.
(e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (f) of this Section. In the event of any optional or mandatory
prepayment of Borrowings made at a time when Borrowings of both Classes remain
outstanding, the Borrower shall select Borrowings to be prepaid so that the
aggregate amount of such prepayment is allocated between the Tranche A Term
Borrowings and Tranche B Term Borrowings ratably based on the aggregate
principal amount of outstanding Borrowings of each such Class; PROVIDED that any
Tranche B Lender may elect, by notice to the Administrative Agent by telephone
(confirmed by
30
telecopy) at least one Business Day prior to the prepayment date, to decline all
or any portion of any prepayment of its Tranche B Term Loans pursuant to this
Section (other than an optional prepayment pursuant to paragraph (a) of this
Section, which may not be declined), in which case the aggregate amount of the
prepayment that was so declined shall be applied to prepay on a ratable basis
Tranche A Term Borrowings; PROVIDED that Tranche B Lenders shall be permitted to
decline any prepayment only to the extent the aggregate amount of the prepayment
declined shall not exceed the aggregate outstanding Tranche A Term Borrowings
(and any reduction of the amounts declined shall be distributed ratably among
the declining Lenders).
(f) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment (or, in the case of a
prepayment under paragraph (b) above, as soon after such time as practicable) or
(ii) in the case of prepayment of an ABR Borrowing, not later than 10:00 a.m.,
New York City time, one Business Day before the date of prepayment (or, in the
case of a prepayment under paragraph (b) above, as soon after such time as
practicable). Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Borrowing or portion thereof to be
prepaid and, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment. Promptly following receipt of any
such notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that is
at least $10,000,000 (or, if smaller, the amount of such Borrowing) and an
integral multiple of $1,000,000 (or, if smaller, the amount of such Borrowing),
except as necessary to apply fully the required amount of a mandatory
prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.07. All prepayments under this
Section 2.12 shall be subject to Section 2.15 but otherwise without premium or
penalty.
SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein but subject to paragraph (d)
below and to Section 2.20, if any Change in Law shall result in the imposition,
modification or applicability of any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender, or shall result in the imposition on any Lender or the
London interbank market or any other market in which the funding operations of
any Lender shall be conducted of any other condition, in any such case,
affecting this Agreement, such Lender's Commitment or any Eurodollar Loan made
by such Lender, and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any Eurodollar Loan or to reduce
the amount of any sum received or receivable by such Lender hereunder (whether
of principal, interest or otherwise) by an amount deemed by such Lender to be
material, then the Company and the applicable Borrower agree to pay such
additional amount or amounts as will compensate such Lender for such additional
costs or reduction.
(b) If any Lender shall have determined that any Change in Law
regarding capital adequacy has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement, such Lender's Commitment or
the Loans made by such Lender pursuant hereto to a level below that which such
Lender or such Lender's holding company could have achieved but for such Change
in Law (taking into consideration such Lender's policies and the policies of
such Lender's holding company with respect to capital adequacy) by an amount
deemed by such Lender to be material, then the Company and the applicable
Borrower agree to pay to such Lender from time to time such additional amount or
amounts as will compensate such Lender for such reduction.
31
(c) A certificate of each Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender or its holding company
as specified in paragraph (a) or (b) above, as the case may be, and setting
forth in reasonable detail the manner in which such amount or amounts shall have
been determined, shall be delivered to the Company with a copy to the
Administrative Agent and shall be conclusive absent manifest error. The Company
or the applicable Borrower, as the case may be, shall pay each Lender the amount
shown as due on any such certificate delivered by it within 10 Business Days
after its receipt of the same.
(d) Failure or delay on the part of any Lender to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's right to demand such compensation with respect to such period or
any other period, except that no Lender shall be entitled to any compensation
under this Section 2.13 for any costs incurred or reduction suffered with
respect to any date unless such Lender shall have notified the Company that it
will demand compensation for such costs or reductions under paragraph (c) above
not more than 60 days after the later of (i) such date and (ii) the date on
which such Lender shall have become aware of such costs or reductions. The
protection of this Section shall be available to each Lender regardless of any
possible contention of the invalidity or inapplicability of any law, rule,
regulation or guideline or any Change in Law. Notwithstanding any other
provision in this Section 2.13, no Lender shall demand compensation for any
increased cost or reduction referred to above if it shall not at the time be the
general policy or practice of such Lender to demand such compensation in similar
circumstances under comparable provisions of other credit agreements, if any. If
any Lender shall receive as a refund any moneys from any source in respect of
any increased cost or reduction that it has identified on any certificate
provided pursuant to paragraph (c) above, to the extent that the Company or any
Borrower has previously paid the Lender any compensation in respect thereof, the
Lender shall promptly forward such refund to the Company or such Borrower, as
the case may be, without interest.
SECTION 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision herein, if any Change in Law shall make it unlawful for any Lender or
its Applicable Lending Office to make or maintain any Eurodollar Loan or to give
effect to its obligations as contemplated hereby with respect to any Eurodollar
Loan, then, such Lender shall give written notice thereof to the Company and to
the Administrative Agent and as long as such illegality, limitation or
impracticality continues to exist, such Lender:
(i) may declare that Eurodollar Loans will not thereafter be
made by such Lender hereunder, and any request by any Borrower for
Eurodollar Loans shall, as to such Lender only, be deemed a request for
an ABR Loan unless such declaration shall be subsequently withdrawn; and
(ii) shall promptly enter into negotiations with the Company
and negotiate in good faith to agree to a solution to such illegality,
limitation or impracticability; PROVIDED, HOWEVER, that if such an
agreement has not been reached by the date at which the applicable notice
becomes effective as provided in paragraph (b) below, the affected
Eurodollar Loans shall be automatically converted on such date into ABR
Loans.
(b) For purposes of this Section 2.14, a notice by any Lender shall
be effective as to each Eurodollar Loan, if lawful, on the last day of the
Interest Period currently applicable to such Eurodollar Loan; in all other cases
such notice shall be effective on the date of receipt.
(c) Each Lender that has delivered a notice pursuant to paragraph
(a) above, if the circumstances giving rise to such notice cease to exist, shall
notify each applicable Borrower thereof as soon as practicable.
32
SECTION 2.15. INDEMNITY. Each Borrower agrees to indemnify each
Lender making any Loan to it against any loss or expense which such Lender may
sustain or incur as a consequence of (a) any failure by any Borrower to borrow
or to refinance, convert or continue any Loan hereunder after irrevocable notice
of such borrowing, refinancing, conversion or continuation has been given
pursuant to Section 2.03, (b) any payment, prepayment or conversion of a Loan to
such Borrower required by any other provision of this Agreement or otherwise
made or deemed made, or any purchase required pursuant to the provisions of
Section 2.20(b) (except pursuant to Sections 2.20 (b)(iii) or (iv)), on a date
other than the last day of the Interest Period, if any, applicable thereto or
(c) any default by such Borrower in payment or prepayment of the principal
amount of any Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, whether by scheduled maturity,
acceleration, irrevocable notice of prepayment or otherwise), including, in each
such case, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof. Such loss or
reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Lender, of (i) its cost of obtaining the funds for
the Loan being paid, prepaid, refinanced or not borrowed (which in the case of a
Eurodollar Loan will be assumed to be the LIBO Rate applicable thereto) for the
period from the date of such payment, prepayment, refinancing or failure to
borrow or refinance to the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow or refinance the Interest Period for such Loan
which would have commenced on the date of such failure) over (ii) the amount of
interest (as reasonably determined by such Lender) that would be realized by
such Lender in reemploying the funds so paid, prepaid or not borrowed or
refinanced for such period or Interest Period, as the case may be. A certificate
of any Lender setting forth any amount or amounts which such Lender is entitled
to receive pursuant to this Section and setting forth in reasonable detail the
manner in which such amount or amounts shall have been determined shall be
delivered to such Borrower with a copy to the Administrative Agent and shall be
conclusive absent manifest error.
SECTION 2.16. PRO RATA TREATMENT. Each Borrowing, each payment of
principal of any Borrowing (other than any prepayment to the extent otherwise
provided in Section 2.12(e)), each payment of interest on the Loans and each
conversion or continuation of any Borrowing shall be allocated pro rata among
the Lenders in accordance with the respective principal amounts of their
outstanding Loans. Each Lender agrees that in computing such Lender's portion of
any Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Lender's percentage of such Borrowing to the next higher
or lower whole dollar amount.
SECTION 2.17. SHARING OF SETOFFS. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim,
or pursuant to a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means (other than
as provided in Section 2.14 or pursuant to an assignment under Section 2.20 or
Section 10.04), obtain payment (voluntary or involuntary) in respect of any Loan
or Loans as a result of which the unpaid principal portion of its Loans shall be
proportionately less than the unpaid principal portion of the Loans of any other
Lender, it shall be deemed simultaneously to have purchased from such other
Lender at face value, and shall promptly pay to such other Lender the purchase
price for, a participation in the Loans of such other Lender, so that the
aggregate unpaid principal amount of the Loans and participations in the Loans
held by each Lender shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding as the principal amount of its
Loans prior to such exercise of banker's lien, setoff or counterclaim or other
event was to the principal amount of all Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; PROVIDED,
HOWEVER, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.17 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase
33
price or prices or adjustment restored without interest. Any Lender holding a
participation in a Loan deemed to have been so purchased may exercise any and
all rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing to such Lender by reason thereof as fully as if such Lender had
made a Loan in the amount of such participation.
SECTION 2.18. PAYMENTS. (a) Each Borrower shall make each payment
(including the principal of or interest on any Borrowing made by it or any other
amounts payable by it) hereunder from a Payment Location in the United States
not later than 12:00 noon, New York City time, on the date when due in Dollars
to the Administrative Agent at its offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, in immediately available funds. The Administrative Agent shall distribute
any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof.
(b) Whenever any payment (including the principal of or interest on
any Borrowing or any other amount) hereunder shall become due, or otherwise
would occur, on a day that is not a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of interest, if applicable.
SECTION 2.19. TAXES. (a) Any and all payments by or on account of
any obligation of the Borrowers hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; PROVIDED that if any Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as determined in good faith by the Administrative Agent or
the applicable Lender to be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent or Lender (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) such Borrower shall make such deductions and (iii) such Borrower
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Administrative Agent and each
Lender within 20 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrowers hereunder or under any other Loan Document
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Company by a Lender, or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by a Borrower to a Governmental Authority, the Company shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which a
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Company (with
34
a copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by the Company as will permit such
payments to be made without withholding or at a reduced rate.
(f) If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by a Borrower or with respect to which a Borrower
has paid additional amounts pursuant to this Section 2.19, it shall pay over
such refund to the Company (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrowers under this Section 2.19 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); PROVIDED, that the Borrowers, upon the request of
the Administrative Agent or such Lender, agree to repay the amount paid over to
such Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This section shall not be construed to
require the Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes which it deems confidential) to
any Borrower or any other Person.
SECTION 2.20. DUTY TO MITIGATE; ASSIGNMENT OF COMMITMENTS UNDER
CERTAIN CIRCUMSTANCES. (a) Any Lender claiming any additional amounts payable
pursuant to Section 2.13, or 2.19, or exercising its rights under Section 2.14,
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to file any certificate or document requested by the Company or to change the
jurisdiction of its Applicable Lending Office or to take such other actions as
may reasonably be requested by the Company if the making of such a filing or
change would avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue or avoid the circumstances giving rise to
such exercise and would not, in the reasonable determination of such Lender, be
otherwise disadvantageous to such Lender.
(b) In the event that (i) any Lender shall have delivered a notice
or certificate pursuant to Section 2.13 or 2.14, (ii) any Borrower shall be
required or reasonably believes it will be required, to make additional payments
to any Lender under Section 2.19, (iii) any Lender shall become, or a
substantial part of the property of any Lender shall become, the subject of any
receivership or similar proceeding or (iv) any Lender shall default on its
commitment to lend hereunder, the Company shall have the right, at its own
expense, upon notice to such Lender and the Administrative Agent, to require
such Lender to transfer and assign without recourse, free and clear of all
deductions and withholding (in accordance with, upon the terms of and subject to
the restrictions contained in Section 10.04), all interests, rights and
obligations contained hereunder to another financial institution or to another
Lender which shall assume such obligations; PROVIDED that (A) no such assignment
shall conflict with any law, rule or regulation or order of any Governmental
Authority and (B) the assignee or the Company, as the case may be, shall pay to
the affected Lender in immediately available funds on the date of such
assignment the principal of and the interest accrued to the date of payment on
the Loans made by it hereunder and all other amounts accrued for its account or
owed to it hereunder.
35
ARTICLE III
CONDITIONS
SECTION 3.01. EFFECTIVENESS. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.02):
(a) The Administrative Agent shall have received counterparts
hereof signed by each of the parties hereto.
(b) The representations and warranties set forth in Article IV
shall be true and correct in all material respects on the Effective Date.
(c) The Borrowers shall be in compliance with all the terms and
provisions set forth herein on their part to be observed or performed,
and at the time of and immediately after the Effective Date, no Event of
Default or Default shall have occurred and be continuing.
(d) The Collateral and Guarantee Requirement shall be satisfied.
(e) The Agents shall have received a certificate, signed by a
Financial Officer of the Company, confirming the satisfaction of the
conditions set forth in paragraphs (b), (c) and (d) above on and as of
the Effective Date, after giving effect to the Transactions occurring on
or prior to such date;
(f) The Agents shall have received written opinions of (i)
▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇, Associate General Counsel of the Company;
(ii) Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, counsel to the Borrowers;
(iii) opinions of local counsel in jurisdictions (other than New York)
in which Mortgaged Properties are located and (iv) opinions of foreign
counsel in Canada, France, Germany and the United Kingdom, each addressing
such matters relating to the pledge of Equity Interests of Subsidiaries
organized in the applicable jurisdiction as the Agents shall reasonably
have requested and in form and substance reasonably acceptable to the
Agents.
(g) The Agents shall have received completed Perfection
Certificates dated the Effective Date and (i) with regard to the Company
and the Grantors, signed by a Financial Officer of the Company and
(ii) with regard to ▇▇▇▇▇▇ and its subsidiaries, signed by a Financial
Officer of ▇▇▇▇▇▇, in each case, together with all attachments
contemplated thereby, including the results of a search of the UCC (or
equivalent) filings made with respect to the Loan Parties in the
jurisdictions contemplated by the Perfection Certificate and copies of
the financing statements (or similar documents) disclosed by such search
and evidence reasonably satisfactory to the Administrative Agent that the
Liens indicated by such financing statements (or similar documents) are
permitted by Section 6.02 or have been released.
(h) The Agents shall have received, on behalf of the Lenders
(i) a copy of the certificate or articles of incorporation or other
` organizational documents, including all amendments thereto, of each of the
Loan Parties, certified as of a recent date by the Secretary of State (or
other appropriate governmental authority) of the state of its
organization; (ii) a certificate as to the good standing or subsistence,
to the extent available, of each of the Loan Parties as of a recent date,
from the appropriate Secretary of State (or other appropriate governmental
authority) or other evidence reasonably satisfactory to the Agents as to
the good standing of such Loan Party; (iii) a certificate of the Secretary
or Assistant Secretary of each Loan Party dated the Effective Date and
36
certifying (A) that attached thereto is a true and complete copy of the
by-laws or other organizational documents of such Loan Party as in effect
on the Effective Date and at all times since a date prior to the date of
the resolutions described in clause (B) below, (B) that attached thereto
is a true and complete copy of resolutions duly adopted by the Board of
Directors (or other analogous governing body) and, where applicable, the
Executive Committee of such Board of Directors) of such Loan Party (and,
if necessary, resolutions duly adopted by the shareholders or other equity
owners of such Loan Party) authorizing the execution, delivery and
performance of the Loan Documents to which such Loan Party is or is to be
a party and the Transactions, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C) that
the certificate or articles of incorporation or other organizational
documents of such Loan Party have not been amended since the date of the
last amendment thereto shown on the certificate furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen signature of
each officer executing any Loan Document or any other document delivered
in connection herewith on behalf of such Loan Party; (iv) a certificate of
another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to
clause (iii) above; and (v) such other documents as the Lenders or
Cravath, Swaine & ▇▇▇▇▇, counsel for the Agents, may reasonably request
related to the foregoing.
(i) The Lenders shall have received a pro forma consolidated
balance sheet of the Company as of March 31, 2002, reflecting all pro
forma adjustments as if the Transactions had been consummated on such
date, and such pro forma consolidated balance sheet shall be consistent
in all material respects with the forecasts and other information
previously provided to the Lenders.
(j) The Acquisition shall have been, or shall substantially
simultaneously with the initial borrowing under the Facilities be,
consummated in accordance with applicable law and the terms of the Asset
Purchase Agreement in substantially the form furnished to the Lenders
prior to the date of this Agreement, without any modification or waiver
of a material term or condition thereof unless such modification or
waiver shall have been approved by the Agents (such approval not to be
unreasonably withheld or delayed).
(k) After giving effect to the Transactions occurring on or prior
to the Effective Date, the Company and the Subsidiaries shall have
outstanding no Debt other than (i) the Loans hereunder, (ii) loans under
the Amended and Restated Five-Year Credit Agreement, (iii) other Debt owed
to Persons other than the Company or any Subsidiary listed or described
on Schedule 6.01 and (iv) Debt owed to the Company or any Subsidiary.
(l) All requisite Governmental Authorities and material third
parties shall have approved or consented to the Acquisition that have
occurred or are to occur prior to or on the Effective Date to the extent
such approvals or consents are required under applicable laws or
agreements or otherwise, and all applicable appeal periods shall have
expired and there shall be no pending governmental or judicial action
that could reasonably be expected to restrain, prevent or impose
materially burdensome conditions on the Acquisition. There shall be no
litigation or administrative action that could reasonably be expected to
have a material adverse effect on the business, operations, properties,
assets, liabilities or condition (financial or otherwise) of the Company
and its subsidiaries taken as a whole (after giving effect to the
Acquisition).
(m) The Five-Year Amendment and Restatement shall have been
approved by the requisite Lenders under the Existing Five-Year Credit
Agreement.
37
(n) The commitments of the lenders under the Existing 364-Day
Credit Agreement shall have been terminated and the principal of and
interest accrued on the loans outstanding thereunder, all fees and other
amounts accrued or otherwise due thereunder, shall have been paid in full
and all Commitments thereunder shall have been cancelled.
(o) The Company shall have Ratings (after giving effect to the
Transactions occurring on or prior to the Effective Date) by S&P and
▇▇▇▇▇'▇ of at least BB and Ba2, respectively.
(p) All fees and other amounts due and payable hereunder on or
prior to the Effective Date, including, to the extent invoiced, all
out-of-pocket expenses required to be reimbursed or paid by any Borrower
hereunder, shall have been paid.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company, as to itself and each of its Subsidiaries, represents
and warrants to the Agents and each of the Lenders as follows:
SECTION 4.01. ORGANIZATION; POWERS. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization (except, in the case of
Subsidiaries that are not Material Subsidiaries, where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect), has all requisite power and authority to carry on
its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 4.02. AUTHORIZATION; ENFORCEABILITY. Except as set forth in
Schedule 4.02, the Transactions are within the corporate powers of each Borrower
and each Subsidiary Guarantor and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Agreement has been duly
executed and delivered by the Company and each Borrowing Subsidiary and
constitutes (assuming due execution by the Lenders and the Agents), and each
other Loan Document to which any Loan Party is a party, when executed and
delivered by such Loan Party, will constitute (assuming due execution by the
Lenders and the Agents), a legal, valid and binding obligation of such Loan
Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
SECTION 4.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. Except as set
forth in Schedule 4.03, the Transactions (a) do not require any consent or
approval of, registration or filing with or other action by any Governmental
Authority, (b) will not violate any applicable material law or regulation or the
charter, by-laws or other organizational documents of the Company or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture or other material agreement or
instrument binding upon the Company or any of its Subsidiaries or any assets of
any of them, or give rise to a right thereunder to require any payment to be
made by the Company or any of its Subsidiaries, and (d) will not result in the
creation or imposition of any Lien (other than the Liens created by the Security
Documents) on any asset of the Company or any of its Subsidiaries.
38
SECTION 4.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.
(a) The Company has heretofore furnished to the Lenders its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended June 30, 2001, reported on by KPMG LLP, independent
public accountants, and (ii) as of and for the fiscal quarter and the portion of
the fiscal year ended March 31, 2002, certified by its chief financial officer.
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Company and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP.
(b) Since June 30, 2001, there has been no change that would
constitute a material adverse change in the business, assets, operations or
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole; PROVIDED that for purposes of the representation and warranty contained
in this paragraph, the term the "Company and its Subsidiaries" shall be deemed
to include the business of ▇▇▇▇▇▇ and its subsidiaries since December 31, 2001.
SECTION 4.05. PROPERTIES. (a) Each of the Company and its
Subsidiaries has good title to all its real and personal property purportedly
owned by it and material to its business, except for defects or lack of title
that could not reasonably be expected to result in a Material Adverse Effect.
All such real and personal property is free and clear of all Liens other than
Liens permitted under Section 6.02.
(b) Each of the Company and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, except where lack of ownership or of any
license could not reasonably be expected to result in a Material Adverse Effect,
and the use thereof by the Company and its Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. All such owned trademarks, tradenames, copyrights,
patents and other intellectual property are free and clear of all Liens other
than Liens permitted under Section 6.02.
(c) Schedule 4.05 sets forth the address and county of each real
property with a fair market value of $1,000,000 or greater that is owned by the
Company or any of its Domestic Subsidiaries as of the Effective Date after
giving effect to the Transactions.
SECTION 4.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) Except for
the Disclosed Matters, there are no actions, suits or proceedings by or before
any arbitrator or Governmental Authority pending against or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect or (ii) that
assert the invalidity or unenforceability of or otherwise challenge this
Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, neither the Company nor any of its
Subsidiaries (i) is in material violation of any Environmental Law or has failed
to obtain, maintain or comply with any material permit, license or other
approval required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received written notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis reasonably
likely to result in any Environmental Liability.
SECTION 4.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Neither the
Company nor any of its Subsidiaries is in violation of any law, regulation or
order of any Governmental Authority
39
applicable to it or its property or any indenture, agreement or other instrument
binding upon it or its property, where such violation, individually or in the
aggregate with other violations, could reasonably be expected to have a Material
Adverse Effect.
SECTION 4.08. NOT AN INVESTMENT COMPANY OR HOLDING COMPANY. Neither
the Company nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 4.09. TAXES. Each of the Company and its Subsidiaries has
timely filed or caused to be timely filed all returns and reports required to
have been filed and has paid or caused to be paid all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Company or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 4.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.
SECTION 4.11. DISCLOSURE. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Company to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished), taken as a whole, contains any material misstatement
of fact or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; PROVIDED that, with respect to projected financial information, the
Company represents only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time (it being understood that
various of such assumptions by the Company's management concerning anticipated
results of the Company are based in part on statements, estimates and
projections of ▇▇▇▇▇▇ that have been reviewed by the Company and that the
Company has no reason to believe should not be relied on, but that themselves
reflect various assumptions by ▇▇▇▇▇▇'▇ management concerning such anticipated
results).
SECTION 4.12. FEDERAL RESERVE REGULATIONS. (a) Neither the
Company nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying margin stock (as defined in Regulation U).
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, for
any purpose that entails a violation of the provisions of the Regulations of the
Board, including Regulation U or X. Not more than 25% of the assets of the
Company or the Company and the Subsidiaries taken as a whole that are subject to
the restrictions of Sections 6.02, 6.04 and 6.05 will at any time constitute
margin stock.
SECTION 4.13. SUBSIDIARIES. At the Effective Date, except as set
forth in Schedule 4.13, all the issued and outstanding Equity Interests of each
of the Subsidiaries have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by it free and clear of all
Liens, and there are no options, warrants, calls, conversions or exchange
rights, commitments or agreements of any character obligating any of the
Subsidiaries to issue, deliver or sell additional shares of capital stock of any
class or any securities convertible into or exchangeable for any such capital
stock or any additional partnership or other Equity Interests. Schedule 4.13
sets forth the name of, and the ownership interest of
40
the Company in, each Subsidiary of the Company and identifies each Subsidiary
that is a Loan Party, in each case as of the Effective Date.
SECTION 4.14. SECURITY DOCUMENTS. (a) The Guarantee and Collateral
Agreement, upon execution and delivery thereof by the parties thereto, will
create in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Collateral (as
defined in the Guarantee and Collateral Agreement), subject to Liens permitted
under Section 6.02. When the Pledged Securities (as defined in the Guarantee and
Collateral Agreement) have been delivered to the Collateral Agent and financing
statements in appropriate form have been filed in the offices specified on
Schedule 4.14, the Guarantee and Collateral Agreement will constitute a fully
perfected Lien on all right, title and interest of the Loan Parties in the
Collateral (other than Intellectual Property, as defined in the Guarantee and
Collateral Agreement) prior and superior to the rights of any other Person,
subject only to Liens permitted under Section 6.02.
(b) Each Mortgage, upon execution and delivery by the parties
thereto, will create in favor of the Collateral Agent, for the ratable benefit
of the Secured Parties, a legal, valid and enforceable Lien on all the
applicable mortgagor's right, title and interest in and to the Mortgaged
Properties subject thereto and the proceeds thereof, and when the Mortgages have
been filed in the counties specified on Schedule 4.05, the Mortgages will
constitute a fully perfected Lien on all right, title and interest of the
mortgagors in the Mortgaged Properties and the proceeds thereof, prior and
superior in right to any other Person (but subject to Liens or other
encumbrances for which exceptions are taken in the policies of title insurance
delivered in respect of the Mortgaged Properties and subject to Liens permitted
under Section 6.02).
(c) Upon the recordation of the Guarantee and Collateral Agreement
or a memorandum of such Agreement with the United States Patent and Trademark
Office and the United States Copyright Office, the Lien created under the
Guarantee and Collateral Agreement will constitute a fully perfected Lien on all
right, title and interest of the Loan Parties in the material Intellectual
Property (as defined in the Guarantee and Collateral Agreement) in which a
security interest may be perfected by filing in the United States and its
territories and possessions, in each case prior and superior in right to any
other Person, subject to Liens permitted under Section 6.02 and other than Liens
that may exist on immaterial Intellectual Property (it being understood that
subsequent recordings in the United States Patent and Trademark Office or the
United States Copyright Office may be necessary to perfect a Lien on registered
trademarks and trademark applications or copyrights, respectively, acquired by
the Grantors after the Effective Date).
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan shall have been paid in full, the Company
covenants and agrees with the Lenders that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Company will furnish to the Agents and each Lender:
(a) within 90 days after the end of each fiscal year of the
Company, its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for
such year, setting forth in each case in comparative form the figures
41
for the previous fiscal year, all reported on by KPMG LLP or other
independent public accountants of recognized national standing (without
a "going concern" or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect
that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the Company
and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, its consolidated balance
sheet and related statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form
the figures for the corresponding period of the previous fiscal year, or
such other financial statements required to be included in Securities and
Exchange Commission Form 10-Q, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial
condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Company (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth
calculations demonstrating that the Company is in compliance with
Sections 6.12, 6.13, 6.14 and 6.15, (iii) in the case of each delivery of
financial statements under clause (a) above, setting forth in reasonable
detail the calculation of the Company's Excess Cash Flow for the
applicable fiscal year and (iv) if any change in GAAP has occurred since
the last date of delivery of financial statements and has had a material
effect on the financial statements of the Company, specifying such effect,
unless such effect is noted in such financial statements;
(d) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed
by the Company or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed by the Company to its shareholders generally, as the case may
be; and
(e) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Company or any Subsidiary, or compliance with the terms
of this Agreement, as the Administrative Agent or any Lender may
reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. Upon becoming aware
of any of the following, the Company will furnish to the Agents and each Lender
prompt written notice thereof:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting
the Company or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event or event that would be an
ERISA Event if the Administrative Agent or the Required Lenders made the
determination referred to in the
42
definition of ERISA Event, in each case, that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Company and its Subsidiaries in an aggregate
amount exceeding $5,000,000; and
(d) any other development that results in, or, in the judgment of
the Company, could reasonably be expected to result in, a Material Adverse
Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Company setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS. The Company will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, patents, copyrights,
trademarks, tradenames and franchises material to the conduct of its business
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect; PROVIDED that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.04.
SECTION 5.04. PAYMENT OF OBLIGATIONS. The Company will, and will
cause each of its Subsidiaries to, pay its Debt (and other obligations,
including Tax liabilities) before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings and the Company or such Subsidiary has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP or (b) the failure to make payment could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 5.05. MAINTENANCE OF PROPERTIES; INSURANCE. The Company
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect and (b)
maintain, with financially sound and reputable insurance companies, insurance in
such amounts and against such risks as are customarily maintained by similar
companies engaged in the same or similar businesses operating in the same or
similar locations; PROVIDED that the Company and its Subsidiaries may (i)
self-insure against such risks and in such amounts as are usually self-insured
by similar companies engaged in the same or similar businesses operating in the
same or similar locations and (ii) elect not to carry publisher's liability
insurance or terrorism insurance.
SECTION 5.06. BOOKS AND RECORDS; INSPECTION RIGHTS. The Company
will, and will cause each of its Subsidiaries to, keep proper books of record
and account in which true and correct entries are made of all material dealings
and transactions in relation to its business and activities. The Company will,
and will cause each of its Subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times during
normal business hours as reasonably requested.
SECTION 5.07. COMPLIANCE WITH LAWS. The Company will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
43
SECTION 5.08. USE OF PROCEEDS. The proceeds of the Loans will be
used only for the purposes set forth in the preamble to this Agreement. No part
of the proceeds of any Loan will be used, whether directly or indirectly, for
any purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.
SECTION 5.09. INFORMATION REGARDING COLLATERAL. (a) The Company will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, principal place of business
or jurisdiction of organization (including any such change resulting from any
merger or consolidation involving such Loan Party), (iii) in any Loan Party's
identity or corporate structure, (iv) in any Loan Party's Federal Taxpayer
Identification Number or organizational identification number and (v) in the
ownership of any Equity Interests pledged under the Guarantee and Collateral
Agreement. The Company agrees not to effect or permit any change referred to in
the preceding sentence until the Company has notified the Collateral Agent in
writing of such change, and that prior to or promptly after any such change the
Company will take all such actions as may be required in order that the
Collateral Agent shall continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral. The Company
also agrees promptly to notify the Collateral Agent if any material portion of
the Collateral is damaged or destroyed.
(b) Each year (commencing with the fiscal year ending June 30,
2003), at the time of delivery of annual financial statements pursuant to clause
(a) of Section 5.01, the Company shall deliver to the Administrative Agent, for
distribution to the Lenders, a certificate of a Financial Officer and the chief
legal officer of the Company dated as of a recent date and (i) setting forth
information of the type set forth in the Perfection Certificate but as of the
date of such certificate (or confirming that there has been no change in such
information since the date of the Perfection Certificate delivered on the
Effective Date or the date of the most recent certificate delivered pursuant to
this Section), (ii) certifying that all Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent necessary to
protect and perfect the security interests under the Guarantee and Collateral
Agreement for a period of not less than 18 months after the date of such
certificate (except as noted therein with respect to any continuation statements
to be filed within such period) and (iii) certifying that the Collateral and
Guarantee Requirement continues to be satisfied.
SECTION 5.10. CASUALTY AND CONDEMNATION. The Company (a) will
furnish to the Collateral Agent and the Lenders prompt written notice of any
casualty or other insured damage to any material Collateral or the commencement
of any action or proceeding for the taking of any material Collateral or any
material part thereof or material interest therein under power of eminent domain
or by condemnation or similar proceeding and (b) will ensure that the Net
Proceeds of any such event (whether in the form of insurance proceeds,
condemnation awards or otherwise) are collected and applied in accordance with
the applicable provisions of the Guarantee and Collateral Agreement and this
Agreement.
SECTION 5.11. ADDITIONAL SUBSIDIARIES. If any additional Domestic
Subsidiary, or Foreign Subsidiary owned in whole or in part by any Domestic
Subsidiary, is formed or acquired after the Effective Date, the Company will,
within ten Business Days after such Subsidiary is formed or acquired, notify the
Administrative Agent and the Lenders thereof and cause the Collateral and
Guarantee Requirement to be satisfied insofar as they apply to such Subsidiary
and its assets.
44
SECTION 5.12. FURTHER ASSURANCES. The Company will, and will cause
each Grantor to, execute any and all further documents, financing statements,
agreements and instruments, and take all further reasonable actions (including
the filing and recording of financing statements, fixture filings, mortgages,
deeds of trust and other documents), that may be required under any applicable
law, or that the Collateral Agent or the Required Lenders may reasonably
request, to cause the Collateral and Guarantee Requirement to be and remain
satisfied, all at the expense of the Grantors. The Company also agrees to
provide to the Collateral Agent, from time to time upon request, evidence
reasonably satisfactory to the Collateral Agent as to the perfection and
priority of the Liens created or intended to be created by the Guarantee and
Collateral Agreement.
SECTION 5.13. INTEREST RATE PROTECTION. As promptly as practicable,
and in any event within 90 days after the Effective Date, the Borrower will
enter into, and thereafter for a period of not less than three years will
maintain in effect, one or more interest rate protection agreements on such
terms and with such parties as shall be reasonably satisfactory to the Agents,
the effect of which shall be to fix or limit the interest cost to the Borrower
with respect to at least 33.33% of the aggregate principal amount of the
outstanding Loans.
SECTION 5.14. FILING OF CREDIT AGREEMENT, AMENDMENTS AND WAIVERS.
The Company will cause this Agreement and any material amendment hereto or
material waiver of any term or condition hereof (but not exhibits or schedules
hereto or thereto) to be filed with the Securities and Exchange Commission
within 20 days after the Effective Date or the effective date of the amendment
or waiver, as the case may be.
SECTION 5.15. COMPLIANCE WITH FEDERAL RESERVE REGULATIONS. The
Company and its Subsidiaries will comply with all rules, regulations and
restrictions of the Regulations of the Board, including Regulation U and X.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan have been paid in full, the Company covenants and
agrees with the Lenders that:
SECTION 6.01. DEBT AND PREFERRED STOCK OF SUBSIDIARIES. (a)
The Company will not permit any Subsidiary to create, incur, assume or permit to
exist any Debt, except:
(i) Debt outstanding on the date hereof and set forth on
Schedule 6.01;
(ii) Debt created under the Loan Documents;
(iii) Debt created under the Amended and Restated Five-Year
Credit Agreement or the "Loan Documents" referred to therein;
(iv) Debt of any Subsidiary to the Company or any other
Subsidiary that in either case shall not have been transferred or pledged
to any third party (other than under the Security Documents);
45
(v) Debt of any Subsidiary incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including
Capital Lease Obligations, and any Debt assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and
replacements of any such Debt that do not increase the outstanding
principal amount thereof; PROVIDED that (A) such Debt is incurred prior to
or within 180 days after such acquisition or the completion of such
construction or improvement and (B) the aggregate principal amount of Debt
permitted by this clause (v) shall not exceed $10,000,000 at any time
outstanding;
(vi) Debt of any Person that becomes a Subsidiary after the date
hereof; PROVIDED that (A) such Debt exists at the time such Person becomes
a Subsidiary and is not created in contemplation of or in connection with
such Person becoming a Subsidiary and (B) the aggregate principal amount
of Debt permitted by this clause (vi) shall not exceed $10,000,000 at any
time outstanding;
(vii) Debt refinancing or replacing any of the Debt referred to
in the preceding clauses (i) through (vi); provided that (A) the principal
amount of such refinancing or replacement Debt shall not exceed that of
the Debt refinanced or replaced, (B) the maturity and weighted average
life to maturity of such refinancing or replacement Debt shall not be less
than that of the Debt refinanced or replaced and (C) the obligors on such
refinancing or replacement Debt shall not include Subsidiaries that were
not obligors in respect of the Debt refinanced or replaced;
(viii) Debt of any Subsidiary as an account party in respect
of trade letters of credit employed in the ordinary course of business;
and
(ix) other Debt that, when aggregated with the aggregate
outstanding Debt of the Company secured by Liens permitted pursuant to
Section 6.02(o) and the aggregate sale price of the assets sold in sale
and leaseback transactions permitted pursuant to Section 6.03, shall at
no time exceed 5.0% of Consolidated Assets.
(b) The Company will not permit any Subsidiary to issue any
preferred stock or other preferred Equity Interest, other than any preferred
stock or other preferred Equity Interest held by the Company or another
Subsidiary.
SECTION 6.02. LIENS. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Company or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02;
PROVIDED that (i) such Lien shall not apply to any other property or asset
of the Company or any Subsidiary and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof as of the date hereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary; PROVIDED that
(i) such Lien is not created in contemplation of or in connection with
such acquisition or such
46
Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of the Company or any Subsidiary and
(iii) such Lien shall secure only those obligations which it secures on
the date of such acquisition or the date such Person becomes a Subsidiary,
as the case may be, and extensions, renewals and replacements thereof that
do not increase the outstanding principal amount thereof as of such date;
(d) any Lien on fixed or capital assets acquired, constructed or
improved by the Company or any Subsidiary, and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof; PROVIDED that (i) such Lien and the Debt secured thereby are
incurred prior to or within 180 days after such acquisition or the
completion of such construction or improvement, (ii) the Debt secured
thereby does not exceed the cost of acquiring, constructing or improving
such fixed or capital assets and (iii) such Lien shall not apply to any
other property or assets of the Company or any Subsidiary;
(e) any Lien on the property or assets of any Subsidiary of the
Company in favor of the Company or any wholly owned Subsidiary;
(f) any Lien on equipment (including printing presses and
data-processing equipment) owned by the Company or any Subsidiary and
located on the premises of any supplier and used in the ordinary course
of the Company's or such Subsidiary's business;
(g) any judgment or judicial attachment Lien with respect to any
judgment that does not constitute an Event of Default;
(h) any Lien securing any reimbursement, indemnification or similar
obligation or liability incurred in connection with any letter of credit,
letter of guaranty, banker's acceptance, ▇▇▇▇ of exchange or similar
instrument to backstop trade obligations (but not Debt) of the Company or
a Subsidiary;
(i) any Lien imposed by law where (x) the validity or amount
thereof is being contested in good faith by appropriate proceedings and
the Company or any Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP or (y) the failure to remove
such Lien could not reasonably be expected to result in a Material Adverse
Effect;
(j) any Lien deemed to exist by virtue of any Capital Lease
Obligation not otherwise prohibited hereunder;
(k) any Lien arising under any Loan Document;
(l) any Lien on assets of a Subsidiary that is not a Material
Subsidiary securing obligations that do not constitute Debt;
(m) Liens or other encumbrances for which exceptions are taken in
the policies of title insurance delivered in respect of the Mortgaged
Properties;
(n) other Liens arising in the ordinary course of business that do
not secure Debt and do not interfere with the material operations of the
Company and the Subsidiaries and do not individually or in the aggregate
materially impair the value of the assets of the Company and the
Subsidiaries; and
47
(o) other Liens securing Debt that, when aggregated with the Debt
of Subsidiaries permitted under Section 6.01(a)(ix) and the aggregate sale
price of the assets sold in sale and leaseback transactions permitted
under Section 6.03, does not exceed 5.0% of Consolidated Assets at any
time.
SECTION 6.03. SALE AND LEASEBACK TRANSACTIONS. The Company will not,
and will not permit any Subsidiary to, enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any property, real
or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease property which it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred; PROVIDED, HOWEVER, that, notwithstanding the above, the Company or
any Subsidiary may engage in any sale and leaseback transactions if the
aggregate sale price of the assets sold in such transactions, when aggregated
with the Debt of Subsidiaries permitted under Section 6.01(a)(ix) and the Debt
secured by Liens permitted pursuant to Section 6.02(o), does not exceed 5.0% of
Consolidated Assets at any time.
SECTION 6.04. FUNDAMENTAL CHANGES. (a) The Company will not, and
will not permit any Material Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions) assets (including capital stock of Subsidiaries)
constituting all or substantially all the assets of the Company and the
Subsidiaries on a consolidated basis (whether now owned or hereafter acquired),
or liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing (i)
the Company or any Subsidiary may merge or consolidate with any Person; PROVIDED
that (A) in the case of any merger or consolidation involving the Company, the
Company shall be the continuing or surviving corporation and (B) in the case of
any merger or consolidation involving a Subsidiary (other than a merger or
consolidation with the Company), the surviving entity shall be a Subsidiary,
(ii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets
to the Company or to another Subsidiary, (iii) any Subsidiary may liquidate or
dissolve if the Company determines in good faith that such liquidation or
dissolution is in the best interests of the Company and is not materially
disadvantageous to the Lenders, (iv) the Company may effect the Recapitalization
and (v) the Company may effect asset transfers permitted under Section 6.05 by
causing Subsidiaries (other than Borrowing Subsidiaries) to be merged with or
into other Persons.
(b) The Company will not, and will not permit any Subsidiary to,
engage to any material extent in any business other than businesses of the type,
or involving similar themes, content and customer orientation, as the business
conducted by the Company and its Subsidiaries and by ▇▇▇▇▇▇ on the date hereof,
businesses reasonably related thereto and extensions thereof consisting of the
licensing of Intellectual Property.
SECTION 6.05. ASSET SALES. The Company will not, and will not permit
any Subsidiary to, sell, transfer, lease or otherwise dispose of (including
pursuant to any merger or consolidation) any asset, including any Equity
Interest owned by it, nor will the Company permit any of the Subsidiaries to
issue any additional Equity Interests in such Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Company or a
Subsidiary; PROVIDED that any such sales, transfers or dispositions
involving a Subsidiary that is not a Subsidiary Guarantor shall be made
in compliance with Section 6.07;
(c) sales of Equity Interests in LookSmart, Ltd. and WebMD
Corporation;
48
(d) sales, transfers and dispositions of assets for consideration
not greater than $5,000,000 for any such transaction or series of related
transactions;
(e) other sales, transfers and dispositions of assets for
consideration in an aggregate amount not greater than $50,000,000 during
any fiscal year of the Company (or, if the Ratings are at least BBB- and
Baa3, in each case with stable outlook, $100,000,000);
(f) issuances by Subsidiaries of directors', officers' or nominees'
qualifying shares; and
(g) issuances of Equity Interests by Subsidiaries to the Company
or other Subsidiaries.
SECTION 6.06. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Company will not, and will not permit any Subsidiary to,
purchase, hold or acquire any Equity Interests in or evidences of indebtedness
or other securities (including any option, warrant or other right to acquire any
of the foregoing) of, make or permit to exist any loans or advances to,
Guarantee any obligations of or make or permit to exist any investment or any
other interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person that are
substantial in relation to the Company and the Subsidiaries taken as a whole
(other than inventory acquired in the ordinary course of business) or that
constitute a business unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof;
(c) investments made with consideration consisting solely of common
stock of Company, PROVIDED that, if the value of such common stock exceeds
$25,000,000 during the period from the Effective Date through June 30,
2003, or $50,000,000 during any fiscal year of the Company thereafter,
such investments may be made so long as (i) no Default shall have
occurred and be continuing at the time of any such investment, (ii) the
Company shall have delivered to the Agents a certificate of a Financial
Officer demonstrating pro forma compliance with the covenant set forth in
Section 6.13 and (iii) the Ratings shall be at least BBB- and Baa3, in
each case with stable outlook;
(d) investments by the Company and its Subsidiaries in Equity
Interests of, and, to the extent permitted by Section 6.01, Guarantees by
the Company and its Subsidiaries of Debt of, persons that are direct or
indirect Subsidiaries of Company prior to the making of such investments;
PROVIDED that (i) any such Equity Interests held by a Loan Party shall be
pledged pursuant to the Collateral and Guarantee Agreement to the extent
required by this Agreement and (ii) the aggregate amount of investments by
Loan Parties in, loans and advances by Loan Parties to, and Guarantees by
Loan Parties of Debt of, Subsidiaries that are not Subsidiary Guarantors
(other than any such investments, loans, advances and Guarantees existing
on the Effective Date) shall not exceed $15,000,000 at any time
outstanding;
(e) loans or advances made by the Company to any Subsidiary or made
by any Subsidiary to the Company or any other Subsidiary; PROVIDED that
(i) any such loans and advances made by a Grantor shall be pledged
pursuant to the Collateral and Guarantee Agreement to the extent required
by this Agreement and (ii) the amount of such loans and advances made by
Subsidiary Guarantors to Subsidiaries that are not Subsidiary Guarantors
shall be subject to the limitation set forth in clause (d) above;
49
(f) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
and
(g) the Acquisition and the Recapitalization;
(h) Restricted Payments permitted by Section 6.10(a)(iii), (vi)
or (vii);
(i) acquisitions of Equity Interests or assets for consideration
with a value not greater than (i) $25,000,000 during the period from the
Effective Date through June 30, 2003, or (ii) $50,000,000 during any
fiscal year of the Company thereafter; PROVIDED that after June 30, 2004,
any acquisition of Equity Interests or assets may be completed without
regard to such limitation so long as (i) no Default shall have occurred
and be continuing at the time of such acquisition, (ii) the Company shall
have delivered to the Agents a certificate of a Financial Officer
demonstrating pro forma compliance with the covenant set forth in Section
6.13 (but with each applicable ratio reduced by 0.25) and (iii) the
Company shall have Ratings of at least BBB- and Baa3, in each case with
stable outlook;
(j) other investments, which would not be permitted but for this
clause (j), in an aggregate amount not to exceed $10,000,000 at any time
outstanding.
SECTION 6.07. TRANSACTIONS WITH AFFILIATES. The Company will not,
and will not permit any Subsidiary to, sell, lease or otherwise transfer any
material property or assets to, or purchase, lease or otherwise acquire any
material property or assets from, or otherwise engage in any other material
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to the Company
or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties, (b) transactions between or among any wholly owned
Subsidiary and the Company or any other wholly owned Subsidiary not involving
any Affiliate that is not a wholly owned Subsidiary, (c) the Class B Repurchase,
the Recapitalization and the other transactions provided for in the
Recapitalization Agreement, and any Restricted Payment permitted by Section
6.10, (d) payments made and other transactions entered into in the ordinary
course of business with officers and directors of the Company or any Subsidiary,
and consulting fees and expenses incurred in the ordinary course of business
payable to former officers or directors of the Company or any Subsidiary, (e)
reclassifications or changes in the terms of or other transactions relating to
Equity Interests in the Company held by Affiliates that do not involve the
payment of any consideration (other than Equity Interests of the Company) or any
other transfer of value by the Company or any Subsidiary to any such Affiliate,
(f) other transactions involving the purchase or redemption, or other
monetization of, Equity Interests of the Company held by members of the Current
Control Group, to the extent such transactions are not otherwise prohibited
under Section 6.10 or any other provision of this Agreement, and (g) any
payments by the Company or any Subsidiary to or on behalf of any Affiliate of
the Company or any Subsidiary in connection with out-of-pocket expenses incurred
in connection with any public or private offering, other issuance or sale of
stock by the Company or an Affiliate of the Company or other transaction for the
benefit of the Company or any Subsidiary; PROVIDED, HOWEVER, that this Section
shall not limit the operation or effect of, or any payments under, (i) any
license, lease, service contract, purchasing agreement, disposition agreement or
similar arrangement entered into in the ordinary course of business between any
Subsidiary and the Company or any other Subsidiary or (ii) any joint venture to
which the Company or any Subsidiary is a party entered into in connection with,
or reasonably related to, its lines of business.
SECTION 6.08. RESTRICTIVE AGREEMENTS. The Company will not, and will
not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other
50
arrangement that prohibits, restricts or imposes any condition upon the ability
of any Subsidiary to pay dividends or other distributions with respect to its
Equity Interests or to make or repay loans or advances to the Company or any
other Subsidiary or to guarantee Debt of the Company or any other Subsidiary;
PROVIDED that the foregoing shall not apply to (a) restrictions and conditions
imposed by law or by this Agreement, (b) restrictions and conditions with
respect to a Person that is not a Subsidiary on the date hereof, which
restrictions and conditions are in existence at the time such Person becomes a
Subsidiary and are not incurred in connection with, or in contemplation of, such
Person becoming a Subsidiary and (c) provisions limiting Restricted Payments by
Subsidiaries that are not more restrictive than the provisions related to
Restricted Payments by Subsidiaries set forth in Section 6.10(a).
SECTION 6.09. SWAP AGREEMENTS. The Company will not, and will not
permit any of its Subsidiaries to, enter into any Swap Agreement, other than (a)
Swap Agreements required by Section 5.13 and (b) Swap Agreements entered into in
the ordinary course of business to hedge or mitigate risks to which the Company
or any Subsidiary is exposed in the conduct of its business or the management of
its liabilities or to take advantage of reduced interest rates by converting
fixed rate obligations to floating rate obligations.
SECTION 6.10. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS.
(a) The Company will not, nor will it permit any Subsidiary to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except (i) the Company
may declare and pay dividends with respect to its capital stock payable solely
in Equity Interests, (ii) Subsidiaries may declare and pay dividends ratably
with respect to their capital stock, (iii) the Company may make payments to
holders of not more than $5,000,000 in stated value of preferred stock of the
Company that are required to be made as a result of the exercise of appraisal
rights to which they may be entitled in connection with the Recapitalization,
(iv) the Company or its Subsidiaries may make Restricted Payments, not exceeding
$5,000,000 during any fiscal year, pursuant to and in accordance with stock
option plans or other benefit plans for management or employees of the Company
and its Subsidiaries, (v) the Company may pay dividends in an amount not
exceeding $25,000,000 during any fiscal year so long as no Default shall have
occurred and be continuing, (vi) the Company may carry out the Class B
Repurchase and the Recapitalization; PROVIDED that such transactions are
completed on or prior to December 31, 2002 and (vii) the Company may repurchase
stock and make other Restricted Payments during any fiscal year with that
portion of Excess Cash Flow for the preceding fiscal year not required to be
applied to prepay Borrowings under Section 2.12 (but in no event in an amount
greater than 50% of Consolidated Net Income for such preceding fiscal year) so
long as (A) no Default shall have occurred and be continuing, (B) the Company
shall demonstrate pro forma compliance with the covenant set forth in Section
6.13 (but with the applicable ratio reduced by 0.25) and (C) the Company shall
have Ratings of at least BBB- and Baa3, in each case with stable outlook.
(b) The Company will not, nor will it permit any Subsidiary to, make
or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) of or in respect of
principal of or interest on any Debt, or any payment or other distribution
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any Debt, except:
(i) payments in respect of Debt created under the Loan
Documents, the Amended and Restated Five-Year Credit Agreement or the
Existing 364-Day Credit Agreement;
(ii) payments in respect of Debt owed to the Company or any
Subsidiary;
51
(iii) required interest and principal payments as and when due in
respect of other Debt, other than payments in respect of any Debt
subordinated to the Obligations that is prohibited by the applicable
subordination provisions; and
(iv) prepayments of Debt with the net proceeds of new Debt
permitted hereunder to the extent such net proceeds are not required to be
applied to prepay Borrowings under Section 2.12; PROVIDED that (A) the
obligors in respect of such new Debt do not include Subsidiaries that are
not obligors in respect of the Debt so prepaid, (B) the maturity of such
new Debt shall not be earlier, and the weighted average life of such new
Debt shall not be shorter, than that of the Debt so prepaid and (C) if the
Debt so prepaid shall have been subordinated to the Obligations, then such
new Debt shall likewise be so subordinated on terms not less favorable to
the Lenders.
(c) Neither the Company nor any Subsidiary shall enter into or be
party to, or make any payment under, any Synthetic Purchase Agreement, except
that the Company may enter into any Synthetic Purchase Agreement related to any
Equity Interest of the Company so long as the payments required to be made
thereunder, if they constituted payments in respect of the purchase of Equity
Interests of the Company, would be permitted under clause (vii) of paragraph (a)
above.
SECTION 6.11. AMENDMENT OF MATERIAL DOCUMENTS. The Company will not,
nor will it permit any Subsidiary to, amend, modify or waive any of its rights
under any instrument or agreement evidencing or governing Material Debt or any
other material instrument or agreement if such amendment, modification or waiver
would shorten the maturity or reduce the weighted average life of any Material
Debt or be adverse in any material respect to the rights or interests of the
Lenders.
SECTION 6.12. CONSOLIDATED INTEREST COVERAGE RATIO. The Company will
not permit the Consolidated Interest Coverage Ratio for any period of four
consecutive fiscal quarters ending after the date hereof to be less than 4.00 to
1.00.
SECTION 6.13. CONSOLIDATED LEVERAGE RATIO. The Company will not
permit the Consolidated Leverage Ratio as of any date during any period set
forth below to be greater than the ratio set forth opposite such period:
PERIOD Ratio
Effective Date through 9/30/02 3.90:1:00
10/1/02 through 3/31/03 3.75:1:00
4/1/03 through 3/31/04 3.25:1.00
4/1/04 and thereafter 2.50:1.00
SECTION 6.14. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Company
will not permit the Consolidated Fixed Charge Coverage Ratio for any period of
four consecutive fiscal quarters ending after the Effective Date to be less than
1.75 to 1.00.
SECTION 6.15. CAPITAL EXPENDITURES. The Company will not permit
Consolidated Capital Expenditures to exceed $40,000,000 during any fiscal year
of the Company ending on or prior to June 30, 2005, or $50,000,000 during any
fiscal year of the Company thereafter; PROVIDED that, notwithstanding the
foregoing, an amount not greater than 50% of the scheduled amount available for
capital expenditures in any given year but not used in such year may be used for
capital expenditures in the next subsequent year only (it being agreed that the
scheduled amount for any year will be deemed used before any amount carried over
from a prior year).
52
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("EVENTS OF DEFAULT") shall occur:
(a) any representation or warranty made or deemed made by or on
behalf of the Company or any Subsidiary in or in connection with any Loan
Document, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document,
shall prove to have been incorrect in any material respect when made or
deemed made;
(b) any Borrower shall fail to pay any principal of any Loan when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(c) any Borrower shall fail to pay any interest on any Loan or any
other amount (other than an amount referred to in clause (b) above)
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days;
(d) the Company or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in Section 5.02, Section
5.03 (with respect to any Borrower's existence) or Section 5.08 or in
Article VI;
(e) the Company or any Subsidiary shall fail to observe or perform
any covenant, condition or agreement contained in any Loan Document (other
than those specified in clause (b), (c) or (d) above), and such failure
shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent or any Lender to the Company;
(f) (i) the Company or any Material Subsidiary shall fail to make
any payment of principal, interest or other amounts in respect of any
Material Debt, when and as the same shall become due and payable (or, in
the case of payments other than principal payments, within any applicable
grace period), or (ii) any other event or condition occurs that results in
any Material Debt becoming due prior to its scheduled maturity or that
enables or permits the holder or holders of any Material Debt or any
trustee or agent on its or their behalf to cause any Material Debt to
become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; PROVIDED that this
clause (ii) shall not apply to secured Debt that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Debt, or (iii) there shall occur any Event of Default under and as
defined in the Amended and Restated Five-Year Credit Agreement;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Company or any Material
Subsidiary or its debts, or of a substantial part of its assets, under
any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Company or any Material Subsidiary or for a substantial
part of its assets; and, in each case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
53
(h) the Company or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in clause
(h)(i) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or any Material Subsidiary or for a substantial part of its
assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(i) the Company or any Material Subsidiary shall become unable, admit
in writing or fail generally to pay its debts as they become due;
(j) one or more judgments (other than pursuant to the exercise of
appraisal rights in connection with the Recapitalization) for the payment
of money in an aggregate amount (to the extent not covered by insurance)
in excess of $20,000,000 shall be rendered against the Company, any
Material Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Company or any
Material Subsidiary to enforce any such judgment;
(k) an ERISA Event shall have occurred that, when taken together with
all other ERISA Events that have occurred, could reasonably be expected to
result in any liability of the Company and its Subsidiaries in an aggregate
amount not exceeding $10,000,000 or could reasonably be expected to result
in a Material Adverse Effect;
(l) a Change in Control shall occur;
(m) any material provision of the Guarantee or Guarantee and
Collateral Agreement, or of any other Security Document relating to any
material portion of the Collateral, shall, for any reason, not be, or
shall be asserted in writing by the Company or any Subsidiary not to be,
in full force and effect, or otherwise valid, binding and enforceable
against any person purported to be bound by it; or
(n) any Lien purported to be created under the Guarantee and
Collateral Agreement or any other Security Document, in each case, with
respect to any material portion of the Collateral shall cease to be, or
shall be asserted by any Loan Party not to be, a valid, perfected first
priority Lien (subject only to Liens permitted under Section 6.02) on such
Collateral, except as a result of the release of such Collateral pursuant
to the provisions of this Agreement or the Security Documents
then, and in every such event (other than an event with respect to any Borrower
described in clause (g), (h) or (i) above), and at any time thereafter during
the continuance of such event, the Administrative Agent may with the consent of
the Required Lenders, and at the request of the Required Lenders shall, by
notice to the Company, take either or both of the following actions, at the same
or different times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all other liabilities of the
Borrowers accrued hereunder, shall become due and payable
54
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers; and in case of any event with
respect to any Borrower described in clause (g), (h) or (i) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all other liabilities of
the Borrowers accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrowers.
Upon the occurrence and during the continuance of any Event of
Default the Administrative Agent may, with the consent of the Required Lenders,
and shall, at the request of the Required Lenders, instruct the Collateral Agent
to exercise any remedies available to it under any Security Document.
ARTICLE VIII
THE AGENTS
Each of the Lenders hereby irrevocably appoints the Agents as its
agents and authorizes the Agents to take such actions on its behalf and to
exercise such powers as are delegated to the Agents by the terms hereof and of
the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto.
The bank or banks serving as the Agents hereunder shall have the same
rights and powers in their capacity as Lenders as any other Lender and may
exercise the same as though they were not Agents, and such bank or banks and
their Affiliates may accept deposits from, lend money to and generally engage in
any kind of business with the Company or any Subsidiary or other Affiliate
thereof as if they were not Agents hereunder.
The Agents shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing (a)
the Agents shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, (b) the Agents
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Agents are required to exercise in writing by the
Required Lenders, and (c) except as expressly set forth herein, the Agents shall
not have any duty to disclose, and shall not be liable for the failure to
disclose, any information communicated to the Agents by or relating to the
Company or any of its Subsidiaries. The Agents shall not be liable for any
action taken or not taken by them with the consent or at the request of the
Required Lenders or the Lenders, as the case may be, or in the absence of their
own gross negligence or wilful misconduct. In addition, the Agents shall be
deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Agents by the Company or a Lender, and the Agents shall
not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article III or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to the
Agents.
The Agents shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed
55
by them to be genuine and to have been signed or sent by the proper Person. The
Agents also may rely upon any statement made to them orally or by telephone and
believed by them to be made by the proper Person, and shall not incur any
liability for relying thereon. The Agents may consult with legal counsel (who
may be counsel for the Company), independent accountants and other experts
selected by them, and shall not be liable for any action taken or not taken by
them in accordance with the advice of any such counsel, accountants or experts.
The Agents may perform any and all their duties and exercise their
rights and powers by or through any one or more sub-agents appointed by the
Agents. The Agents and any such sub-agent may perform any and all their duties
and exercise their rights and powers through their respective Affiliates. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Affiliates of the Agents and any such sub-agent.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Company. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor with the Company's written consent (which shall not
be unreasonably withheld or delayed and shall not be required from the Company
if an Event of Default has occurred and is continuing). If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, with the
Company's written consent (which shall not be unreasonably withheld or delayed
and shall not be required if an Event of Default has occurred and is
continuing), appoint a successor Agent which shall be a bank or an Affiliate
thereof, in each case with a net worth of at least $1,000,000,000 and an office
in New York, New York. Upon the acceptance of its appointment as Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After an
Agent's resignation hereunder, the provisions of this Article and Section 10.03
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
None of the Joint Lead Arrangers, the Co-Arrangers, the Syndication
Agent or the Co-Documentation Agents named on the cover page of this Agreement
shall, in their capacity as such, have any duties or responsibilities under this
Agreement.
ARTICLE IX
JOINT AND SEVERAL LIABILITY OF BORROWERS; GUARANTEE
SECTION 9.01. JOINT AND SEVERAL LIABILITY OF BORROWERS.
Notwithstanding any other provision of this Agreement, it is agreed that each
Borrower shall be fully liable, both severally and jointly with the other
Borrowers, for the full amount of the Obligations, whether incurred by such
Borrower or by any other Borrower.
56
SECTION 9.02. GUARANTEE. In order to induce the Lenders to extend
credit to the Borrowing Subsidiaries hereunder, and without limiting the
provisions of Section 9.01, the Guarantor hereby unconditionally and irrevocably
guarantees, as a primary obligor and not merely as a surety, the Obligations of
the Borrowing Subsidiaries. The Guarantor also agrees that the Obligations of
the Borrowing Subsidiaries may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its Guarantee hereunder notwithstanding any such extension or renewal of any
such Obligation.
The Guarantor waives presentment to, demand of payment from and
protest to any Borrower of any of the Obligations of the Borrowing Subsidiaries,
and also waives notice of acceptance of its obligations and notice of protest
for nonpayment. The obligations of the Guarantor hereunder shall not be affected
by the failure of any Lender or the Agents to assert any claim or demand or to
enforce any right or remedy under the provisions of this Agreement or any of the
other Loan Documents or otherwise, or, except as specifically provided therein,
by any rescission, waiver, amendment or modification of any of the terms or
provisions of this Agreement, any of the other Loan Documents or any other
agreement.
The Guarantor further agrees that its Guarantee hereunder constitutes
a promise of payment when due and not merely of collection, and waives any right
to require that any resort be had by any Lender to any balance of any deposit
account or credit on the books of any Lender in favor of any Borrowing
Subsidiary or any other person.
The obligations of the Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, and shall
not be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations of the Borrowing Subsidiaries, any impossibility in the performance
of such Obligations or otherwise and regardless of any law, regulation or order
of any jurisdiction, or any other event, affecting any term of any such
Obligation or any Lender's rights with respect thereto. Without limiting the
generality of the foregoing, the obligations of the Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the Agents
or any Lender to assert any claim or demand or to enforce any remedy under this
Agreement or under any other Loan Document or any other agreement, by any waiver
or modification in respect of any thereof, by any default, failure or delay,
wilful or otherwise, except as specifically provided therein, in the performance
of the Obligations of the Borrowing Subsidiaries, by any release of any other
guarantor, or by any other act or omission which may or might in any manner or
to any extent vary the risk of the Guarantor or otherwise operate as a discharge
of the Guarantor as a matter of law or equity.
The Guarantor further agrees that its obligations hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation of
the Borrowing Subsidiaries is rescinded or must otherwise be restored by the
Agents or any Lender upon the bankruptcy or reorganization of any Borrower or
otherwise.
In furtherance of the foregoing and not in limitation of any other
right which the Agents or any Lender may have at law or in equity against the
Guarantor by virtue hereof, upon the failure of any Borrowing Subsidiary to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, the Guarantor hereby
promises to and will, upon receipt of written demand by the Agents, forthwith
pay, or cause to be paid, in cash the amount of such unpaid Obligation.
Upon payment by the Guarantor of any sums as provided above, all
rights of the Guarantor against any Borrowing Subsidiary arising as a result
thereof by way of right of subrogation or otherwise shall in all respects be
subordinated and junior in right of payment to the prior indefeasible
57
payment in full of all the Obligations, the Guarantor hereby agreeing that it
will not assert any claim in respect of such rights until all the Obligations
shall have been indefeasibly paid in full.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Company, to it at Reader's ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention of Treasurer (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Administrative Agent or Collateral Agent, to JPMorgan
Chase Bank, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention
of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to JPMorgan
Chase Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇
▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇). Each notice required to be given by
the Administrative Agent or by the Required Lenders under this Agreement,
other than any notice under Article 2 or Section 10.04, shall
simultaneously be given to the Collateral Agent;
(c) if to the Syndication Agent, to ▇▇▇▇▇▇▇, Sachs & Co., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇); and
(d) if to a Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire;
PROVIDED, HOWEVER, that any notice or other communication provided for herein to
be given to or by the Company or any Borrowing Subsidiary shall be deemed
effective as to the Company and as to all Borrowing Subsidiaries when given to
or by the Company, as the case may be.
Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
SECTION 10.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by any Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given.
58
(b) None of this Agreement, any other Loan Document or any provision
hereof or thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrowers and the
Required Lenders or by the Borrowers and the Administrative Agent or the
Collateral Agent, as the case may be, with the consent of the Required Lenders;
PROVIDED that no such agreement shall (i) increase or extend the expiration date
of the Commitment of any Lender without the written consent of such Lender, (ii)
reduce or forgive all or part of the principal amount of any Loan or reduce the
rate of interest thereon, or reduce any other amounts payable hereunder, without
the written consent of each Lender affected thereby, (iii) postpone the date of
any payment due under Section 2.11(a), (b) or (c) of the principal amount of any
Loan or the date of any payment of any interest payable hereunder, or reduce the
amount of, waive or excuse any such payment, without the written consent of each
Lender affected thereby, (iv) change Section 2.16 in a manner that would alter
the pro rata sharing of any payment without the written consent of each Lender
adversely affected thereby, or change any provision of the Guarantee and
Collateral Agreement or any other Security Document to alter the pro rata
distribution of amounts payable to the Secured Parties, in each case without the
written consent of each Lender adversely affected thereby, (v) reduce or
terminate the obligations of the Guarantor or any Borrower under Article IX,
without the written consent of each Lender, (vi) change any of the provisions of
this Section or the definition of "Required Lenders" or any other provision
hereof specifying the number or percentage of Lenders required in order to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender, (vii) release
all or substantially all the Subsidiary Guarantors from their Guarantees under
the Guarantee and Collateral Agreement, or release all or substantially all the
Collateral from the Liens of the Guarantee and Collateral Agreement and the
Mortgages, without the written consent of each Lender, (viii) change the
allocation of prepayments under Section 2.12 as between the Tranche A Term Loans
and the Tranche B Term Loans without the written consent of Tranche A Lenders
holding a majority of the Tranche A Term Loans and Tranche B Lenders holding a
majority of the Tranche B Term Loans, (ix) change the rights of the Tranche B
Lenders to decline mandatory prepayments as provided in Section 2.12(d) without
the written consent of Tranche B Lenders holding a majority of the outstanding
Tranche B Term Loans, or (x) effect any other amendment that by its terms
adversely affects the Lenders holding Loans of one Class without a corresponding
effect on the Lenders holding Loans of the other Class without the written
consent of Lenders holding a majority of the outstanding Loans of the Class
adversely affected; PROVIDED FURTHER that no such agreement shall amend, modify
or otherwise affect the respective rights or duties of either Agent without the
prior written consent of such Agent.
SECTION 10.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Company
agrees to pay (i) all reasonable out-of-pocket expenses incurred by each Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
Cravath, Swaine & ▇▇▇▇▇, counsel for the Agents, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and
evaluations of the Collateral (limited, in the absence of a continuing Default,
to one such evaluation in any fiscal year) or other due diligence conducted by
the Agents and (ii) all reasonable out-of-pocket expenses incurred by either
Agent or any Lender, including the reasonable fees, charges and disbursements of
any counsel for such Agent or Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement or the Loans made
hereunder. The Lenders shall endeavor in good faith to limit the number of
counsel retained by them to avoid duplication of expenses.
(b) The Company agrees to indemnify each Agent and each Lender, each
Affiliate of any of the foregoing Persons and each of their respective
directors, officers, employees, trustee, advisors and agents (each such Person
being called an "INDEMNITEE") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and
59
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee relating to the execution or delivery of this Agreement or any
agreement or instrument contemplated thereby, the performance of its obligations
thereunder, the Borrowings hereunder, the consummation of the Transactions or
any other transactions contemplated hereby, the enforcement of its rights under
any Loan Document or any actual or alleged presence or release of Hazardous
Materials on or from any property currently or formerly owned, operated or
leased by the Company or any of its Subsidiaries or Environmental Liability
related in any way to the Company or any of its Subsidiaries, including any of
the foregoing arising out of, in connection with, or as a result of any claim,
litigation, investigation or proceeding (whether or not any Indemnitee is a
party thereto); PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction to have
resulted from the gross negligence, wilful misconduct or bad faith of such
Indemnitee. The Lenders shall endeavor in good faith to limit the number of
counsel retained by them to avoid duplication of expenses.
(c) To the extent that the Company, any Borrower or the Company in
its capacity as Guarantor fails to pay any amount required to be paid by it to
either Agent under paragraph (a) or (b) of this Section, each Lender severally
agrees to pay to such Agent such Lender's Participation Percentage (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; PROVIDED that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against such Agent in its capacity as such and
are not determined by a court of competent jurisdiction to have resulted from
the gross negligence, wilful misconduct or bad faith of such Agent.
(d) All amounts due under this Section shall be payable promptly
after written demand therefor.
(e) To the extent permitted by applicable law, the Company, any
Borrower or the Company as Guarantor shall not assert, and hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, any Loan or the use of the proceeds
thereof or the Transactions.
(f) Notwithstanding anything above to the contrary, no indemnified
person shall be liable for any damages arising from the use by others of
information or other materials obtained through electronic telecommunications
or other information transmission systems.
SECTION 10.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that (i) no
Borrower may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by any Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement
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(including all or a portion of its Commitments and the Loans at the time owing
to it) with the prior written consent (such consent not to be unreasonably
withheld or delayed) of:
(A) the Company; provided that no consent of the Company shall be
required for an assignment to a Lender, an Affiliate of a Lender, an Approved
Fund (as defined below) or, if an Event of Default has occurred and is
continuing, any other assignee; and
(B) the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender or an Affiliate
of a Lender, the amount of the Commitment of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $1,000,000 or, if smaller, the entire remaining amount of the
assigning Lender's Commitment, unless the Company and the Administrative Agent
shall otherwise consent, PROVIDED that (i) in the event of concurrent
assignments to two or more assignees that are Affiliates of one another, or to
two or more Approved Funds managed by the same investment advisor or by
affiliated investment advisors, all such concurrent assignments shall be
aggregated in determining compliance with this subsection and (ii) no such
consent of the Company shall be required if an Event of Default has occurred and
is continuing;
(B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement. Notwithstanding anything above to the contrary, Section
10.04(b)(ii)(B) shall not be construed to prohibit assignment of a proportionate
part of all the assigning Lender's rights and obligations in respect of one
Class of Loans.
(C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; provided that in the event of concurrent
assignments to two or more assignees that are Affiliates of one another, or to
two or more Approved Funds managed by the same investment advisor or by
affiliated investment advisors, only one such fee shall be payable;
(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and
(E) in the case of an assignment by a Lender to a CLO (as defined
below) managed by such Lender or by an Affiliate of such Lender, unless such
assignment (or an assignment to a CLO managed by the same manager or an
Affiliate of such manager) shall have been approved by the Company (the Company
hereby agreeing that such approval, if requested, will not be unreasonably
withheld or delayed), the assigning Lender shall retain the sole right to
approve any amendment, modification or waiver of any provision of this
Agreement, except that the Assignment and Assumption between such Lender and
such CLO may provide that such Lender will not, without the consent of such CLO,
agree to any amendment, modification or waiver described in the first proviso to
Section 10.02(b) that affects such CLO.
For the purposes of this Section 10.04(b), the terms "Approved Fund"
and "CLO" have the following meanings:
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"Approved Fund" means (a) with respect to any Lender, a CLO managed
by such Lender or by an Affiliate of such Lender and (b) with respect to any
Lender that is a fund which invests in bank loans and similar extensions of
credit, any other fund that invests in bank loans and similar extensions of
credit and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"CLO" means any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.15, 2.19 and 10.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this Section 10.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an agent
of the Borrowers, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amount of
the Loans owing to, each Lender pursuant to the terms hereof from time to time
(the "REGISTER"). The entries in the Register shall be conclusive, and the
Borrowers, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Company and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(c) (i) Any Lender may, without notice to or the consent of the
Company or the Administrative Agent, sell participations to one or more banks or
other entities (a "PARTICIPANT") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender's obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrowers, the Administrative Agent and the Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement;
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provided that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 10.02(b) that
affects such Participant. Subject to paragraph (c)(ii) of this Section, the
Borrowers agree that each Participant shall be entitled to the benefits of
Sections 2.13, 2.15 and 2.19 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 10.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.17 as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.19 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Company's prior written consent. A Participant that would be a Foreign Lender if
it were a Lender shall not be entitled to the benefits of Section 2.19 unless
the Company is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrowers, to comply with Section
2.19(e) as though it were a Lender.
(d) Any Lender, without notice to or the consent of any Borrower or
the Administrative Agent, may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
(e) By executing and delivering an Assignment and Assumption, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitments and the outstanding balances of its Term Loans, in each case
without giving effect to assignments thereof that have not become effective, are
as set forth in such Assignment and Assumption; (ii) except as set forth in
clause (i) above, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other Loan
Document or any other instrument or document furnished pursuant hereto or
thereto, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any of the foregoing, or the financial condition of the
Loan Parties or the performance or observance by the Loan Parties of any of
their obligations under this Agreement or under any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (iii) each of
the assignee and the assignor represents and warrants that it is legally
authorized to enter into such Assignment and Assumption; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
any amendments or consents entered into prior to the date of such Assignment and
Assumption and copies of the most recent financial statements delivered pursuant
to Section 5.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Assumption; (v) such assignee will independently and without
reliance upon the Agents, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Agents to take
such action as agents on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to them by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all the obligations that by the terms of this Agreement are required
to be performed by it as a Lender.
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SECTION 10.05. SURVIVAL. All covenants, agreements, representations
and warranties made by the Borrowers herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any other amount payable under this Agreement is
outstanding and unpaid and so long as the Commitments have not expired or
terminated. The provisions of Sections 2.13, 2.15, 2.19 and 10.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the Loans
and the Commitments or the termination of this Agreement or any other provision
hereof.
SECTION 10.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 3.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
SECTION 10.07. SEVERABILITY. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. RIGHT OF SETOFF. (a) If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Company or any Borrower against any of and
all the Obligations held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
Obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
(b) Each Lender agrees promptly to notify the Administrative Agent
and the Company or the applicable Borrower after any such setoff and
application; PROVIDED, HOWEVER, that the failure to give any such notice shall
not affect the validity of such setoff and application.
SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
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(b) Each Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to this Agreement against any
Borrower or its properties in the courts of any jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. CONFIDENTIALITY. Each of the Administrative Agent and
the Lenders agrees to maintain and cause its Affiliates to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors or to any
other Lender or Participant (it being understood that such disclosure will be
made only to such Persons who have, and only to the extent of, the need to know
such Information and only if the Persons to whom such disclosure is made are
informed of the confidential nature of such Information and instructed to keep
such Information confidential and use such information only as necessary in
connection with (i) their evaluation of the ability of the Company or any
Borrowing Subsidiary to repay the Loans and perform their other obligations
under the Loan Documents, (ii) administering the Obligations under this
Agreement, (iii) servicing the Borrowings hereunder, (iv) protecting their
interests under this Agreement
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or (v) performing any similar function in connection with any other extension of
credit by the Lenders to the Company or a Subsidiary), (b) to the extent
requested by any regulatory authority to which the Lender is subject or in
connection with an examination of the Lender by any such authority, (c) to the
extent otherwise required by applicable laws and regulations or by any subpoena
or similar legal process, (d) in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Agreement or the
enforcement of rights hereunder, (e) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, or, in the case of any Approved
Fund, to any rating agency, commercial paper dealer or provider of a surety,
guarantee or credit or liquidity enhancement to such Approved Fund, (f) with the
prior written consent of the Company, (g) to any direct or indirect contractual
counterparty in any swap, hedge or similar agreement (or to any professional
advisor of such contractual counterparty), so long as such contractual
counterparty (or such professional advisor) agrees in writing to be bound by the
provisions of this Section, or (h) to the extent such Information (i) becomes
publicly available other than as a result of a disclosure by an Agent or Lender
or (ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than any Borrower that is not known to
the Administrative Agent or such Lender to be bound by any duty of
confidentiality with respect thereto. For the purposes of this Section,
"INFORMATION" means all information received from the Borrowers relating to any
Borrower, ▇▇▇▇▇▇, and Subsidiaries of the Company or ▇▇▇▇▇▇ or their respective
businesses, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any Borrower; PROVIDED that, in the case of information received
from the Borrowers after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 10.13. CONVERSION OF CURRENCIES. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.
(b) The obligations of each Borrower in respect of any sum due to any
party hereto or any holder of the obligations owing hereunder (the "APPLICABLE
CREDITOR") shall, notwithstanding any judgment in a currency (the "JUDGMENT
CURRENCY") other than the currency in which such sum is stated to be due
hereunder (the "AGREEMENT CURRENCY"), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 10.13 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
SECTION 10.14. RELEASE OF GRANTORS AND COLLATERAL.
(a) Notwithstanding any contrary provision herein or in any other Loan Document,
if the Company shall request the release under the Guarantee and Collateral
Agreement or any other Security Document of any Subsidiary or any Collateral to
be sold or otherwise disposed of (including through the sale or disposition of
any Subsidiary owning any such Subsidiary or Collateral) to a Person other than
the Company or a Subsidiary in a transaction permitted under the terms of this
Agreement and shall deliver to the Collateral Agent a certificate to the
66
effect that such sale or other disposition and the application of the proceeds
thereof will comply with the terms of this Agreement, the Collateral Agent, if
satisfied that the applicable certificate is correct, shall, without the consent
of any Lender, execute and deliver all such instruments, releases, financing
statements or other agreements, and take all such further actions, as shall be
necessary to effectuate the release of such Subsidiary or such Collateral
substantially simultaneously with or at any time after the completion of such
sale or other disposition. Any such release shall be without recourse to, or
representation or warranty by, the Collateral Agent and shall not require the
consent of any Lender. Notwithstanding the foregoing, in the event the Company
or any Subsidiary shall dispose of Equity Interests in ▇▇▇▇▇.▇▇▇, Inc.,
LookSmart, Ltd. or WebMD Corporation in a transaction permitted under the terms
of this Agreement, such Equity Interests shall be automatically released from
the Guarantee and Collateral Agreement without any action on the part of the
Collateral Agent or any other Person.
(b) Without limiting the provisions of Section 10.03, the Company
shall reimburse the Collateral Agent for all costs and expenses, including
attorneys' fees and disbursements, incurred by it in connection with any action
contemplated by this Section.
SECTION 10.15. INCORPORATION OF AMENDMENTS TO AMENDED AND RESTATED
FIVE-YEAR CREDIT AGREEMENT. Notwithstanding any other provision contained
herein, in the event that the Amended and Restated Five-Year Credit Agreement
shall be amended to add thereto any affirmative or negative covenant or event of
default that is either more restrictive than the corresponding provision
contained herein or not comparable to any provision contained herein, this
Agreement shall be deemed to have been amended to incorporate such affirmative
or negative covenant or event of default, MUTATIS MUTANDIS, into the appropriate
Article herein. The Company covenants and agrees that it will (a) provide the
Lenders with complete and accurate copies of each amendment to the Amended and
Restated Five-Year Credit Agreement of the sort referred to in this Section
promptly after the execution thereof, and (b) execute any and all further
documents and agreements, including amendments hereto, and take all such further
actions, as shall be reasonably requested by the Agents to give effect to this
Section.
SECTION 10.16. SECURITY DOCUMENTS. Each Agent and Lender hereby
authorizes and directs the Collateral Agent to execute and deliver the Guarantee
and Collateral Agreement and each other Security Document. Each Agent and
Lender, by executing and delivering this Agreement, acknowledges and approves,
and agrees to be bound by and act in accordance with the terms and conditions of
the Guarantee and Collateral Agreement and each other Security Document (to the
extent, in the case of each other Security Document, that either (a) such
Security Document shall have been made available to the Lenders prior to the
effectiveness of this Agreement or (b) such terms and conditions are comparable
to those contained in the Guarantee and Collateral Agreement), specifically
including the provisions of Articles VII, VIII, IX and X of the Guarantee and
Collateral Agreement governing the exercise of remedies under such Agreement and
limiting the responsibilities of, and providing for the indemnification of and
the reimbursement of expenses incurred by, the Collateral Agent. Each party
hereto further agrees that the provisions of Articles VII, VIII, IX and X of the
Guarantee and Collateral Agreement shall be deemed to be incorporated by
reference into each other Security Document, MUTATIS MUTANDIS, and as so
incorporated shall govern the exercise of remedies under each such Security
Document and limit the responsibilities of, and provide for the indemnification
of and the reimbursement of expenses incurred by, the Collateral Agent
thereunder.
SECTION 10.17. POWER OF ATTORNEY. Each Lender hereby (i) authorizes
the Collateral Agent to execute and deliver, on behalf of and in the name of
such Lender, the Share Pledge Agreement with Reader's Digest Association, Inc.
in connection with the pledge to the Lenders of shares in Verlag DAS BESTE GmbH,
a company organized under the laws of Germany and registered in the Commercial
Register of the Lower District Court of Stuttgart under no. HR B 1453, (ii)
authorizes the Collateral Agent to appoint any further agents or attorneys to
execute and deliver, or otherwise to act, on behalf of
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and in the name of the Collateral Agent for any such purpose, (iii) authorizes
the Collateral Agent to do any and all acts and to make all declarations which
are deemed necessary or appropriate to the Collateral Agent and (iii) approves,
pursuant to Section 185 of the German Civil Code, the acts performed and
declarations made by the Collateral or its representatives or attorneys-in-fact
before Notary ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in Dusseldorf, Germany in connection with the
pledge to the Lenders of shares in Verlag Das Beste GmbH. The Lenders hereby
relieve the Collateral Agent from the self-dealing restrictions imposed by
Section 181 of the German Civil Code.
SECTION 10.18. APPOINTMENT. Each Agent and Lender hereby appoints the
Collateral Agent to act as its agent and trustee under and in connection with
the Charge over Shares to the Agents and Lenders of shares in The Reader's
Digest Association Limited, a company incorporated under the laws of England and
Wales (registered number 340452) and to hold the assets charged under the Charge
over Shares as trustee for the Agents and Lenders on the trusts and other terms
contained herein and in the Charge over Shares and each Agent and Lender
irrevocably authorizes the Collateral Agent to exercise such rights, powers,
authorities and discretions as are specifically delegated to the Collateral
Agent by the terms of the Charge over Shares together with all such rights,
powers, authorities and discretion as are reasonably incidental thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.