EXHIBIT 99.2
EXECUTION COPY
SECOND-LIEN CREDIT AGREEMENT
dated as of March 29, 2004,
among
WEEKLY READER CORPORATION
and
COMPASSLEARNING, INC.,
as the Borrowers,
WRC MEDIA INC.,
as a Guarantor,
VARIOUS FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTIES HERETO,
as the Lenders,
CREDIT SUISSE FIRST BOSTON,
acting through its Cayman Islands Branch,
and
BANC OF AMERICA SECURITIES LLC,
as Joint Lead Arrangers
and
Joint Book Runners,
GENERAL ELECTRIC CAPITAL CORPORATION,
as the Syndication Agent,
CREDIT SUISSE FIRST BOSTON,
acting through its Cayman Islands Branch,
as the Administrative Agent for the Lenders,
and
BANK OF AMERICA, N.A.,
as the Documentation Agent for the Lenders.
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...........................................................1
SECTION 1.1 Defined Terms.....................................................................1
SECTION 1.2 Use of Defined Terms.............................................................31
SECTION 1.3 Cross-References.................................................................31
SECTION 1.4 Accounting and Financial Determinations..........................................31
ARTICLE II COMMITMENTS, BORROWING PROCEDURES AND NOTES...............................................31
SECTION 2.1 Commitments......................................................................31
SECTION 2.2 Borrowing Procedures.............................................................32
SECTION 2.3 Continuation and Conversion Elections............................................32
SECTION 2.4 Funding..........................................................................32
SECTION 2.5 Register; Notes..................................................................32
ARTICLE III REPAYMENTS, PREPAYMENTS AND INTEREST......................................................34
SECTION 3.1 Repayments and Prepayments; Application..........................................34
SECTION 3.2 Interest Provisions..............................................................37
ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS....................................................39
SECTION 4.1 LIBO Rate Lending Unlawful.......................................................39
SECTION 4.2 Deposits Unavailable.............................................................39
SECTION 4.3 Increased LIBO Rate Loan Costs, etc..............................................39
SECTION 4.4 Funding Losses...................................................................40
SECTION 4.5 Increased Capital Costs..........................................................40
SECTION 4.6 Taxes............................................................................41
SECTION 4.7 Payments, Computations, etc......................................................44
SECTION 4.8 Sharing of Payments..............................................................44
SECTION 4.9 Setoff...........................................................................45
SECTION 4.10 Replacement of Lenders...........................................................45
ARTICLE V CONDITIONS PRECEDENT......................................................................46
SECTION 5.1 Closing Date Conditions..........................................................46
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................................................50
SECTION 6.1 Organization, etc................................................................50
SECTION 6.2 Due Authorization, Non-Contravention, etc........................................51
SECTION 6.3 Government Approval, Regulation, etc.............................................51
SECTION 6.4 Validity, etc....................................................................51
SECTION 6.5 Financial Information............................................................51
SECTION 6.6 No Material Adverse Change.......................................................52
SECTION 6.7 Litigation, Labor Controversies, etc.............................................52
SECTION 6.8 Subsidiaries.....................................................................52
SECTION 6.9 Ownership of Properties..........................................................52
SECTION 6.10 Taxes............................................................................53
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(continued)
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SECTION 6.11 Pension and Welfare Plans........................................................53
SECTION 6.12 Environmental Warranties.........................................................53
SECTION 6.13 Accuracy of Information..........................................................54
SECTION 6.14 Regulations U and X..............................................................54
SECTION 6.15 Issuance of Subordinated Debt; Status of Obligations as Senior Debt, etc.........54
SECTION 6.16 Solvency.........................................................................55
SECTION 6.17 Capitalization...................................................................55
ARTICLE VII COVENANTS.................................................................................56
SECTION 7.1 Affirmative Covenants............................................................56
SECTION 7.2 Negative Covenants...............................................................62
ARTICLE VIII EVENTS OF DEFAULT.........................................................................73
SECTION 8.1 Listing of Events of Default.....................................................73
SECTION 8.2 Action if Bankruptcy.............................................................76
SECTION 8.3 Action if Other Event of Default.................................................76
ARTICLE IX THE ARRANGERS AND AGENTs..................................................................76
SECTION 9.1 Actions..........................................................................76
SECTION 9.2 Funding Reliance, etc............................................................77
SECTION 9.3 Exculpation......................................................................77
SECTION 9.4 Successor........................................................................77
SECTION 9.5 Loan made by each Arranger and the Administrative Agent..........................78
SECTION 9.6 Credit Decisions.................................................................78
SECTION 9.7 Copies, etc......................................................................78
SECTION 9.8 Reliance by Arrangers and the Administrative Agent...............................79
SECTION 9.9 Defaults.........................................................................79
SECTION 9.10 Documentation Agent and Syndication Agent........................................79
SECTION 9.11 Appointment of Supplemental Agents, Sub-Agents; etc..............................80
ARTICLE X GUARANTY..................................................................................81
SECTION 10.1 Guaranty.........................................................................81
SECTION 10.2 Acceleration.....................................................................81
SECTION 10.3 Guaranty Absolute, etc...........................................................81
SECTION 10.4 Reinstatement, etc...............................................................82
SECTION 10.5 Waiver, etc......................................................................83
SECTION 10.6 Postponement of Subrogation, etc.................................................83
SECTION 10.7 Successors, Transferees and Assigns; Transfers of Notes, etc.....................83
ARTICLE XI MISCELLANEOUS PROVISIONS..................................................................84
SECTION 11.1 Waivers, Amendments, etc.........................................................84
SECTION 11.2 Notices; Time....................................................................86
SECTION 11.3 Payment of Costs and Expenses....................................................86
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SECTION 11.4 Indemnification..................................................................86
SECTION 11.5 Survival.........................................................................88
SECTION 11.6 Severability.....................................................................88
SECTION 11.7 Headings.........................................................................88
SECTION 11.8 Execution in Counterparts, Effectiveness, etc....................................88
SECTION 11.9 Governing Law; Entire Agreement..................................................88
SECTION 11.10 Successors and Assigns...........................................................89
SECTION 11.11 Sale and Transfer of Second-Lien Loans; Participations in Notes..................89
SECTION 11.12 Reorganization Transaction.......................................................92
SECTION 11.13 Confidentiality..................................................................93
SECTION 11.14 Other Transactions...............................................................94
SECTION 11.15 Patriot Act......................................................................94
SECTION 11.16 Intercreditor Agreement..........................................................94
SECTION 11.17 Independence of Covenants........................................................94
SECTION 11.18 Release of Subsidiary Guarantors.................................................94
SECTION 11.19 Forum Selection and Consent to Jurisdiction......................................95
SECTION 11.20 Waiver of Jury Trial.............................................................95
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Percentages
SCHEDULE III - LIBOR Office and Notice Addresses for Lead Arrangers
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Closing Date Certificate
EXHIBIT E - Form of Compliance Certificate
EXHIBIT F - Form of Security and Pledge Agreement
EXHIBIT G - Form of Perfection Certificate
EXHIBIT H-1 - Form of Mortgage
EXHIBIT H-2 - [Reserved]
EXHIBIT I - Form of Intercreditor Agreement
EXHIBIT J - Form of Subsidiary Guaranty
EXHIBIT K - Form of Interco Subordination Agreement
EXHIBIT L - Form of Lender Assignment Agreement
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SECOND-LIEN CREDIT AGREEMENT
THIS SECOND-LIEN CREDIT AGREEMENT, dated as of March 29, 2004 (the
"Agreement"), is made by and among WEEKLY READER CORPORATION, a Delaware
corporation ("WRC"), and COMPASSLEARNING, INC., a Delaware corporation ("CLI"
and, together with WRC, the "Borrowers"), WRC MEDIA INC., a Delaware corporation
and the parent of the Borrowers ("Holdings"), as a guarantor, the various
financial institutions and other Persons from time to time parties hereto (the
"Lenders"), CREDIT SUISSE FIRST BOSTON, acting through its Cayman Islands branch
("CSFB"), and BANC OF AMERICA SECURITIES LLC ("BAS"), as joint book running
managers and joint lead arrangers (CSFB and BAS, in such capacities being,
collectively, the "Arrangers"), GENERAL ELECTRIC CAPITAL CORPORATION ("GECC"),
as the syndication agent (in such capacity, the "Syndication Agent"), CSFB, as
the administrative agent (in such capacity, the "Administrative Agent") for the
Lenders, and BANK OF AMERICA, N.A., as the documentation agent (in such
capacity, the "Documentation Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrowers and Holdings have requested that the Lenders
extend loans to the Borrowers in order to (i) prepay in full all term loans and
revolving loans outstanding (without a corresponding reduction in revolving loan
commitments therein) under the First-Lien Facility (defined below), (ii) pay
transaction expenses related to the transactions contemplated by this Agreement
(including with respect to the First-Lien Facility) and (iii) provide for the
general working capital purposes of the Borrowers and their Subsidiaries
(defined below);
WHEREAS, the Obligations (defined below) will be secured by a
second-priority lien on the collateral securing the First-Lien Facility but will
rank equally in right of payment with all payment obligations under the
First-Lien Facility and will not be subordinated in any respect to the
First-Lien Facility; and
WHEREAS, the Lenders are willing to make such loans available upon and
subject to the terms and conditions contained herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the Capital
Securities of any Person, or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (provided that a Borrower or one of its Subsidiaries is the
surviving entity).
"Administrative Agent" is defined in the preamble and includes each
other Person appointed as the successor Administrative Agent pursuant to Section
9.4.
"Affected Lender" is defined in Section 4.10.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person.
"Affiliate Lender Assignment" is defined in clause (a) of Section
11.11.1.
"Agreement" is defined in the preamble.
"AGS" means American Guidance Service, Inc., a Minnesota corporation.
"Alternate Base Rate" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum (rounded upward, if
necessary, to the next highest 1/16 of 1%) equal to the higher of (i) the Base
Rate in effect on such day, and (ii) the Federal Funds Rate in effect on such
day plus 1/2 of 1%. Changes in the rate of interest on that portion of any
Second-Lien Loans maintained as Base Rate Loans will take effect simultaneously
with each change in the Alternate Base Rate. The Administrative Agent will give
notice promptly to the Borrowers and the Lenders of changes in the Alternate
Base Rate; provided, that the failure to give such notice shall not affect the
Alternate Base Rate in effect after such change.
"Amendment No. 2 to the First-Lien Facility" means Amendment No. 2 to
the First-Lien Facility, dated as of March 29, 2004, by and among the Borrowers,
Holdings, the First-Lien Agents and the lenders parties thereto.
"Applicable Margin" means, with respect to (i) Base Rate Loans, a rate
of 4.00% per annum and (ii) LIBO Rate Loans, a rate of 5.00% per annum.
"Arrangers" is defined in the preamble.
"Assignee Lender" is defined in Section 11.11.1.
"Assignor Lender" is defined in Section 11.11.1.
"Authorized Officer" means, relative to any Obligor, those of its
officers, general parties or managing members (as applicable) whose signatures
and incumbency shall have been certified to the Arrangers and the Lenders
pursuant to Section 5.1.1.
"BAS" is defined in the preamble.
"Base Rate" means, at any time, the rate of interest then most recently
established by the Administrative Agent in New York, New York as its base rate
for U.S. dollars loaned in the United States. The Base Rate is not necessarily
intended to be the lowest rate of interest determined by the Administrative
Agent in connection with extensions of credit.
2
"Base Rate Loan" means a Second-Lien Loan bearing interest at a
fluctuating rate determined by reference to the Alternate Base Rate.
"Borrowers" is defined in the preamble.
"Borrowing" means the borrowing of the Second-Lien Loans on the Closing
Date and, in the case of LIBO Rate Loans, any such Second-Lien Loans made or
continued on the same Business Day and pursuant to the same Borrowing Request or
Continuation/Conversion Notice, as the case may be, and having the same Interest
Period.
"Borrowing Request" means a Second-Lien Loan request and certificate
duly executed by an Authorized Officer of the applicable Borrower, substantially
in the form of Exhibit B hereto.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York; and
(b) relative to the making, continuing, prepaying or repaying
of any LIBO Rate Loans, any day which is a Business Day described in
clause (a) above and which is also a day on which dealings in Dollars
are carried on in the London interbank eurodollar market.
"Capital Expenditures" means, for any period, the aggregate amount of
all expenditures of Holdings, the Borrowers and their respective Subsidiaries
for fixed or capital assets made during such period which, in accordance with
GAAP, would be classified as capital expenditures, plus all capitalized software
development costs and capitalized prepublication costs (in each case determined
in accordance with GAAP) incurred during such period. It is further agreed and
understood by the parties hereto that capital expenditures made by acquisition
of all the Capital Securities of an entity that owns fixed or capital assets
will also be considered to constitute "Capital Expenditures".
"Capital Securities" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's capital, whether now outstanding
or issued after the Closing Date.
"Capitalized Lease Liabilities" means all monetary obligations of
Holdings, either Borrower or any of their respective Subsidiaries under any
leasing or similar arrangement which have been (or, in accordance with GAAP,
should be) classified as capitalized leases, and for purposes of each Loan
Document the amount of such obligations shall be the capitalized amount thereof,
determined in accordance with GAAP, and the stated maturity thereof shall be the
date of the last payment of rent or any other amount due under such lease prior
to the first date upon which such lease may be terminated by the lessee without
payment of a premium or a penalty.
3
"Cash Equivalent Investment" means, at any time:
(a) any direct obligation of (or unconditionally guaranteed
by) the United States of America or a State thereof (or any agency or
political subdivision thereof, to the extent such obligations are
supported by the full faith and credit of the United States of America
or a State thereof) maturing not more than six months after such time;
(b) commercial paper maturing not more than 180 days from the
date of issue, which is issued by
(i) a corporation (other than an Affiliate of any
Obligor) organized under the laws of any State of the United
States or of the District of Columbia and rated A-1 or higher
by S&P or P-1 or higher by Xxxxx'x, or
(ii) any Lender (or its holding company);
(c) any certificate of deposit, time deposit or bankers
acceptance, maturing not more than six months after its date of
issuance, which is issued by either
(i) any domestic office of any bank organized under
the laws of (A) the United States (or any State thereof) or
(B) any other member of the OECD, and, in each case, which has
(x) a credit rating of A2 or higher from Xxxxx'x or A or
higher from S&P and (y) a combined capital and surplus greater
than $500,000,000, or
(ii) any Lender;
(d) any repurchase agreement having a term of 7 days or less
entered into with any Lender or any commercial banking institution
satisfying the criteria set forth in clause (c)(i) which
(i) is secured by a fully perfected security interest
in any obligation of the type described in clause (a), and
(ii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the
repurchase obligation of such commercial banking institution
thereunder; or
(e) shares of investment companies that are registered under
the Investment Company Act of 1940, as amended, and that invest solely
in one or more of the types of securities described in clauses (a)
through (c) above.
"Casualty Event" means the damage, destruction or condemnation, as the
case may be, of any property of Holdings, either Borrower or any of their
respective Subsidiaries.
"Casualty Proceeds" means, with respect to any Casualty Event, the
amount of any insurance proceeds or condemnation awards received by Holdings,
either Borrower or any of their respective Subsidiaries in connection therewith,
but excluding any proceeds or awards required to be paid to a creditor (other
than any Secured Party) which holds a first-priority Lien permitted by Section
7.2.3 (other than any such Lien securing First-Lien Obligations) on the property
which is the subject of such Casualty Event.
4
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Certificates of Designation" means, collectively, the Holdings
Certificate of Designation, the WRC Certificate of Designation, the CLI
Certificate of Designation and the Holdings Junior Certificate of Designation.
"Change in Control" means
(a) the failure of Ripplewood to own, directly or indirectly,
beneficially and of record on a fully diluted basis, at least 51% of
the outstanding Voting Securities of EAC III, such Voting Securities to
be held free and clear of all Liens; or
(b) at any time prior to the creation of a Public Market, the
failure of EAC III or Ripplewood to own, directly or indirectly,
beneficially and of record on a fully diluted basis, at least 51% of
the outstanding Voting Securities of Holdings (other than the PIK
Preferred Equity, if any (and any preferred stock having identical
terms thereto that is issued by Holdings to the holders thereof)) free
and clear of all Liens; or
(c) at any time after the creation of a Public Market relating
to Holdings or WRC, any person or group (within the meaning of Sections
13(d) and 14(d) under the Exchange Act), other than Ripplewood or any
other Common Equity Securities Investor, shall become the ultimate
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of more than 20% of the Voting
Securities of Holdings (other than the PIK Preferred Equity, if any
(and any preferred stock having identical terms thereto that is issued
by Holdings to the holders thereof)) or WRC (other than the WRC Mirror
PIK Preferred Equity, if any, and the WRC PIK Preferred Equity, if any
(and any preferred stock having identical terms thereto that is issued
by WRC to the holders thereof)), as the case may be; or
(d) the first day on which a majority of the members of the
Board of Directors of Holdings or either Borrower are not Continuing
Directors; or
(e) at any time prior to the creation of a Public Market, (i)
prior to the Permitted Common Stock Exchange, the failure of Holdings
at any time to directly own beneficially and of record on a fully
diluted basis at least 78.80% and (ii) following the Permitted Common
Stock Exchange, the failure of Holdings at any time to directly own
beneficially and of record on a fully diluted basis at least 74.78%, in
each case, of the outstanding Voting Securities of WRC (other than the
WRC Mirror PIK Preferred Equity, if any, and the WRC PIK Preferred
Equity, if any (and any preferred stock having identical terms thereto
that is issued by WRC to the holders thereof in exchange therefor)),
such Voting Securities to be held free and clear of all Liens (other
than Liens granted under a Loan Document); or
5
(f) the failure of Holdings and WRC, individually or
collectively, at any time to directly own beneficially and of record on
a fully diluted basis 83.90% of the outstanding Voting Securities of
CLI (other than the CLI PIK Preferred Equity, if any (and any preferred
stock having identical terms thereto that is issued by CLI to the
holders thereof in exchange therefor)), such Voting Securities to be
held free and clear of all Liens (other than Liens granted under a Loan
Document); or
(g) (i) prior to the Permitted Common Stock Exchange, the
failure of at least 78.80%, and (ii) following the Permitted Common
Stock Exchange, the failure of at least 74.78%, in each case, of the
outstanding Voting Securities of WRC (other than the WRC Mirror PIK
Preferred Equity, if any, and the WRC PIK Preferred Equity, if any (and
any preferred stock having identical terms thereto that is issued by
WRC to the holders thereof in exchange therefor)) to be pledged by the
holder(s) thereof to secure the Obligations under the Security and
Pledge Agreement, provided, however, that after the creation of a
Public Market of WRC, each such percentage of WRC's Voting Securities
shall be equitably adjusted based upon the amount of Voting Securities
issued in connection with a Public Offering of WRC; or
(h) the failure of the holders thereof to pledge at least
83.90% of the outstanding Voting Securities of CLI (other than the CLI
PIK Preferred Equity, if any (and any preferred stock having identical
terms thereto that is issued by CLI to the holders thereof in exchange
therefor)) to secure the Obligations under the Security and Pledge
Agreement; or
(i) the occurrence of any "Change of Control" (or similar
term) under (and as defined in) any Sub Debt Document or First-Lien
Document.
"ChildU" means ChildU, Inc., a Florida corporation.
"ChildU Agreement" means the agreement and plan of merger dated as of
May 9, 2001, among Holdings, CU Acquisition, Inc., a Florida corporation, and
ChildU.
"CLI" is defined in the preamble.
"CLI Certificate of Designation" means a certificate of designation
substantially in the form of the certificate of designation described in clause
(i) of the definition of the term "WRC Certificate of Designation" and relating
to the CLI PIK Preferred Equity.
"CLI PIK Preferred Equity" means pay-in-kind preferred stock of CLI,
for which the PIK Preferred Equity is exchangeable.
"CLI Warrants" means the warrants received by the PIK Preferred Equity
Holders to acquire not more than 13.1% of the common stock of CLI on a
fully-diluted basis in connection with the issuance by Holdings of the PIK
Preferred Equity.
6
"Closing Date" means March 29, 2004.
"Closing Date Certificate" means, collectively, the officer's
certificate executed and delivered by an authorized officer of each of Holdings,
each Borrower and each Subsidiary Guarantor pursuant to Section 5.1.4
substantially in the form of Exhibit D.
"Code" means the Internal Revenue Code of 1986, and the regulations
thereunder, in each case as amended, reformed or otherwise modified from time to
time.
"Collateral Agent" means Bank of America, N.A., as the administrative
agent under the First-Lien Facility, or any successor or replacement
administrative agent thereunder; provided that any such successor or replacement
administrative agent shall have agreed to be bound by the terms of the
Intercreditor Agreement as the successor or replacement administrative agent
under the First-Lien Facility.
"Common Equity Securities Investors" means, collectively, Ripplewood,
its Affiliates and co-investors (including SG Capital Partners and Lexington
Partners).
"Compliance Certificate" means a certificate duly completed and
executed by the chief financial or accounting Authorized Officer of Holdings,
substantially in the form of Exhibit E hereto, together with such changes
thereto as the Arrangers may from time to time request for the purpose of
monitoring Holdings' and the Borrowers' compliance with the financial covenants
contained herein.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the Indebtedness of any
other Person (other than by endorsements of instruments in the course of
collection), or guarantees the payment of dividends or other distributions upon
the Capital Securities of any other Person. The amount of any Person's
obligation under any Contingent Liability shall (subject to any limitation set
forth therein) be deemed to be the outstanding principal amount of the debt,
obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
applicable Borrower, substantially in the form of Exhibit C hereto.
"Continuing Director" means, as of any date of determination, any
member of the Board of Directors of Holdings or either Borrower who (i) was a
member of the Board of Directors of such Obligor on the Closing Date or (ii) was
nominated for election or elected to the Board of Directors of such Obligor with
the approval of a majority of the Continuing Directors who were members of the
Board of Directors of such Obligor at the time of such nomination or election.
"control" of a Person (and its derivatives) means the power, directly
or indirectly, (i) to vote 10% or more of the Capital Securities (on a fully
diluted basis) of such Person, having ordinary voting power for the election of
directors, managing members or general partners (as applicable), or (ii) to
direct or cause the direction of the management and policies of such Person
(whether by contract or otherwise).
7
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with Holdings
or either Borrower, are treated as a single employer under Section 414(b) or
414(c) of the Code or Section 4001 of ERISA.
"Copyright Security Agreement" means any Copyright Security Agreement
executed and delivered by any Obligor in substantially the form of Exhibit D to
the Security and Pledge Agreement, as amended, supplemented, amended and
restated or otherwise modified from time to time.
"CSFB" is defined in the preamble.
"Current Assets" means, on any date, without duplication, all assets
which, in accordance with GAAP, would be included as current assets on a
consolidated balance sheet of Holdings and its Subsidiaries at such date as
current assets (excluding, however, amounts due and to become due from
Affiliates of the Borrowers which have arisen from transactions which are other
than arm's-length and in the ordinary course of its business).
"Current Liabilities" means, on any date, without duplication, all
amounts which, in accordance with GAAP, would be included as current liabilities
on a consolidated balance sheet of Holdings and its Subsidiaries at such date,
excluding current maturities of Indebtedness.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented, amended and restated or
otherwise modified from time to time by the Borrowers with the written consent
of the Required Lenders.
"Disposition" (or similar words such as "Dispose") means any sale,
transfer, lease, contribution or other conveyance (including by way of merger)
of, or the granting of options, warrants or other rights to, either of the
Borrower's or their respective Subsidiaries' assets (including accounts
receivables and Capital Securities of Subsidiaries) to any other Person in a
single transaction or series of transactions; provided that the term
"Disposition" shall not include any Permitted Equity Exchange.
"DLJMB" means the DLJ Merchant Banking Partners II, L.P.
"DLJMB Related Party" means (i) any controlling stockholder, majority
(or more) owned Subsidiary, or immediate family member (in the case of an
individual) of DLJMB; or (ii) any trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding a majority or more controlling interest of which consist of
DLJMB and/or such other Persons referred to in the immediately preceding clause
(i).
"Documentation Agent" is defined in the preamble.
8
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means the office of a Lender designated as its
"Domestic Office" on its signature page hereto or in a Lender Assignment
Agreement, or such other office within the United States as may be designated
from time to time by notice from such Lender to the Arrangers and the Borrowers.
"Domestic Subsidiary" means any Subsidiary that is not a Foreign
Subsidiary.
"EAC III" means EAC III L.L.C., the parent of Holdings.
"EBITDA" means, for any applicable period, the sum of
(a) the excess of (i) the amount of Net Income for such period
(excluding any non-cash revenues included in the computation of Net
Income) over (ii) the amount of Restricted Payments permitted under
clauses (c) and (d) of Section 7.2.6 and made during such period (but
only to the extent not deducted in the computation of Net Income in
clause (i) above),
plus
(b) to the extent deducted in determining Net Income, the sum
of (i) amounts attributable to amortization, (ii) income tax expense,
(iii) Interest Expense, (iv) amounts attributable to depreciation of
assets, (v) other non-cash, non-recurring charges, (vi) separation
costs incurred in connection with the departure of the former Chief
Operating Officer and Director of Holdings, (vii) legal and other
expenses incurred in connection with the investigation commenced by the
SEC in 2003, as reported in Holding's Form 8-K on December 15, 2003 and
(viii) costs and charges related to the restructuring of various
operational functions of the Borrowers and their Subsidiaries,
including, without limitation, in respect of the consolidation or
rationalization of accounting platforms, warehouse and distribution
facilities, human resource management and information technology;
provided that (x) the items identified in clauses (vi), (vii) and
(viii) above shall only be included in the calculation of the amounts
set forth in this clause (b) to the extent they do not exceed
$8,500,000 in the aggregate and (y) the items identified in clause
(vii) above shall only be included in the calculation of the amounts
set forth in this clause (b) to the extent they do not exceed
$3,000,000 in the aggregate.
"Engagement Letter" means the confidential engagement letter dated
January 28, 2004, by and among the Borrowers, CSFB and BAS.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules and regulations (including consent
decrees and administrative orders) relating to the protection of the
environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to Sections of ERISA also refer to any successor Sections thereto.
9
"Event of Default" is defined in Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excess Cash Flow" means, for any Fiscal Year, the excess (if any) of
(a) EBITDA for such Fiscal Year
over
(b) the sum (for such Fiscal Year), without duplication, of
(i) Interest Expense actually paid in cash by Holdings, the Borrowers
and their respective Subsidiaries, (ii) all voluntary or mandatory
payments or prepayments of Second-Lien Loans and First-Lien Loans, in
each case to the extent actually made; provided that payments and
repayments of Revolving Loans (as defined in the First-Lien Facility)
shall only be included in this clause (b) to the extent accompanied by
a permanent reduction of the Revolving Loan Commitment Amount (as
defined in the First-Lien Facility), (iii) all income taxes actually
paid in cash by Holdings, the Borrowers and their respective
Subsidiaries, (iv) Capital Expenditures actually made by the Borrowers
and their respective Subsidiaries in such Fiscal Year, (v) Investments
permitted to be made and actually made in cash pursuant to clause (d),
(g) or (i) of Section 7.2.5, by the Borrowers and their respective
Subsidiaries in such Fiscal Year, (vi) Restricted Payments of the types
described in clauses (b), (c), (d), and (f) (other than Restricted
Payments made by WRC in respect of the WRC Mirror PIK Preferred Equity
that are used by Holdings to make scheduled payments of dividends on
the PIK Preferred Equity to WRC) of Section 7.2.6 that are permitted to
be made and actually made in cash during such Fiscal Year and (vii)
payments of interest described in Section 7.2.8(a)(i) that are
permitted to be made and actually made in cash during such Fiscal Year;
minus (plus)
(c) the amount of the net increase (decrease) of Current
Assets, other than cash and Cash Equivalent Investments, over Current
Liabilities of Holdings, the Borrowers and their respective
Subsidiaries for such applicable period.
"Exemption Certificate" is defined in clause (e) of Section 4.6.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to (i) the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or (ii) if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"Filing Agent" is defined in Section 5.1.9.
10
"Filing Statements" is defined in Section 5.1.9.
"Financed Acquisition" means the acquisition by Holdings of 94.9% of
the outstanding common stock of WRC pursuant to a Redemption, Stock Purchase and
Recapitalization Agreement, dated as of August 13, 1999, as amended by Amendment
No. 1 thereto, dated as of October 26, 1999 and Amendment No. 2 thereto, dated
as of November 10, 1999, between Holdings and Primedia Inc., a Delaware
corporation, for an aggregate purchase price of $396,054,500.
"First-Lien Agents" collectively means the administrative agent and the
syndication agent for the lenders under the First-Lien Facility.
"First-Lien Documents" collectively means the First-Lien Facility, the
Intercreditor Agreement and any other documents or agreements executed and
delivered in connection with, or designated as "Loan Documents" under, the
First-Lien Facility.
"First-Lien Facility" means the Amended and Restated Credit Agreement,
dated as of May 9, 2001, as amended by Amendment No. 1 thereto, dated as of July
15, 2002, and as amended and restated pursuant to Amendment No. 2 thereto, dated
as of March 29, 2004, among the Borrowers, Holdings, the financial institutions
from time to time parties thereto as lenders, CSFB, as syndication agent, GECC,
as documentation agent, and Bank of America, N.A., as administrative agent, for
the lenders, as amended, supplemented, amended and restated or otherwise
modified from time to time in accordance with the terms hereof and thereof, and
any extension, renewal, refunding or refinancing, or any restructuring of the
Indebtedness thereunder, or any increase to the amount of Indebtedness
thereunder to the extent permitted by clause (b) of Section 7.2.2 hereof;
provided that no such extension, renewal, refunding, refinancing, or
restructuring shall increase the amount of Indebtedness under the First-Lien
Facility above the amounts permitted under Section 7.2.2 hereof.
"First-Lien Loans" means, as the case may be, any Revolving Loans (as
defined in the First-Lien Facility), Swing Line Loans (as defined in the
First-Lien Facility) or any other First-Lien Obligations.
"First-Lien Obligations" means any monetary obligations under the
First-Lien Facility, including any Revolving Loans, Swing Line Loans or Letter
of Credit Outstandings, in each case as defined in the First-Lien Facility, made
or outstanding pursuant thereto.
"First-Lien Security and Pledge Agreement" means the Security and
Pledge Agreement referred to in the First-Lien Facility.
"First-Lien Termination Date" means, in respect of the First-Lien
Facility, the date on which all obligations thereunder have been paid in full in
cash and all commitments thereunder and all Liens securing the obligations
thereunder have been terminated.
"Fiscal Quarter" means a quarter ending on the last day of March, June,
September or December.
11
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "2004 Fiscal Year") refer to the Fiscal Year
ending on December 31 of such calendar year.
"Foreign Pledge Agreement" means any supplemental pledge agreement
governed by the laws of a jurisdiction other than the United States or a State
thereof executed and delivered by either Borrower or any of its Subsidiaries
pursuant to the terms of this Agreement, in form and substance satisfactory to
the Arrangers, as may be necessary or desirable under the laws of organization
or incorporation of a Subsidiary to further protect or perfect the Lien on and
security interest in any Collateral (as defined in the Security and Pledge
Agreement).
"Foreign Subsidiary" means any Subsidiary of Holdings (a) which is
organized under the laws of any jurisdiction outside of the United States of
America, (b) which conducts the major portion of its business outside of the
United States of America and (c) all or substantially all of the property and
assets of which are located outside of the United States of America.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"GECC" is defined in the preamble.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantor" means, as the context may require, Holdings and/or each
Subsidiary Guarantor.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended; or
(c) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance (including any petroleum product)
within the meaning of any other applicable Environmental Law.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under currency exchange agreements, interest rate
swap agreements, interest rate cap agreements and interest rate collar
agreements, and all other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency exchange rates.
12
"herein", "hereof", "hereto", "hereunder" and similar terms contained
in any Loan Document refer to such Loan Document as a whole and not to any
particular Section, paragraph or provision of such Loan Document.
"Holdings" is defined in the preamble.
"Holdings Certificate of Designation" means that certain Certificate of
Designation, Performance and Rights of 15% Senior Preferred Stock due 2011 of
Holdings, dated November 16, 1999 and made pursuant to Section 151 of the
General Corporation Law of the State of Delaware.
"Holdings Junior Certificate of Designation" means that certain
Certificate of Designations, Performance and Rights of Junior Participating
Cumulative Convertible Preferred Stock of Holdings, dated May 8, 2001 and made
pursuant to Section 151 of the General Corporation Law of the State of Delaware.
"Holdings (Unit) Common Stock" means the common stock of Holdings.
"Impermissible Qualification" means any qualification or exception to
the opinion or certification of any independent public accountant as to any
financial statement of Holdings or either Borrower
(a) which is of a "going concern" or similar nature
(excluding, however, the "going concern" qualification described in
Holdings' current report on Form 8-K filed with the SEC on March 24,
2004 with respect to Holdings' audited financial statements for Fiscal
Years 2002 and 2003);
(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause Holdings or such Borrower to be in Default.
"including" and "include" means including without limiting the
generality of any description preceding such term, and, for purposes of each
Loan Document, the parties hereto agree that the rule of ejusdem generis shall
not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money or
advances and all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
13
(c) all Capitalized Lease Liabilities of such Person;
(d) net termination value of such Person under all of its
Hedging Obligations as if such Hedging Obligations were terminated on
the date of the determination of the amount of Indebtedness;
(e) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services excluding trade accounts payable in the
ordinary course of business which are not overdue for a period of more
than 90 days or, if overdue for more than 90 days, as to which a
dispute exists and adequate reserves in conformity with GAAP have been
established on the books of such Person, and indebtedness secured by
(or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) a Lien on property owned or
being acquired by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited
in recourse;
(f) obligations of such Person arising under Synthetic Leases;
(g) Redeemable Capital Stock of such Person; and
(h) all Contingent Liabilities of such Person in respect of
any of the foregoing.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Interco Subordination Agreement" means the Intercompany Subordination
Agreement, substantially in the form of Exhibit K hereto, executed and delivered
by two or more Obligors pursuant to the terms of this Agreement, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Intercompany Note" means, with respect to Holdings, either Borrower or
any of their respective Subsidiaries, as the maker thereof, a promissory note
substantially in the form of Exhibit A to the Security and Pledge Agreement
(with such modifications as the Arrangers may consent to, such consent not to be
unreasonably withheld), which promissory note shall evidence all intercompany
loans which may be made from time to time by the payee thereunder to such maker
and shall be duly endorsed and pledged by the payee in favor of the
Administrative Agent.
"Intercreditor Agreement" means the intercreditor agreement, dated as
of March 29, 2004, by and among the Borrowers, Holdings, the Collateral Agent
and the Administrative Agent, as amended, supplemented, amended and restated or
otherwise modified from time to time.
14
"Interest Expense" means, for any period, the aggregate interest
expense (both accrued and paid) of Holdings, the Borrowers and their respective
Subsidiaries for such period, including the portion of any payments made in
respect of Capitalized Lease Liabilities allocable to interest expense (net of
interest income and net payments under Hedging Obligations relating to interest
rate swaps, caps or collars paid during such period to the Borrowers and their
respective Subsidiaries) or made in respect of Hedging Obligations relating to
interest rate swaps, caps or collars; provided that, with respect to
calculations of the Senior Secured Leverage Ratio and the Leverage Ratio, there
shall be excluded from interest expense of Holdings for any period the interest
expense of all Unrestricted Subsidiaries for such period.
"Interest Period" means, relative to any LIBO Rate Loan, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Sections 2.2 or
2.3 and shall end on (but exclude) the day which numerically corresponds to such
date one, two, three, six months or, if then available to each applicable
Lender, nine or twelve months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), as the applicable
Borrower may select in its relevant notice pursuant to Sections 2.2 or 2.3;
provided, however, that
(a) such Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than ten different dates;
(b) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is the
first Business Day of a calendar month, in which case such Interest
Period shall end on the Business Day next preceding such numerically
corresponding day); and
(c) no Interest Period for any Second-Lien Loan may end later
than the Stated Maturity Date for such Second-Lien Loan.
"Investment" means, relative to any Person,
(a) any loan, advance or extension of credit made by such
Person to any other Person, including the purchase by such Person of
any bonds, notes, debentures or other debt securities of any other
Person; and
(b) any Capital Securities held by such Person in any other
Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property at the time of such Investment.
"Junior Preferred Stock" means the shares of junior participating
cumulative convertible preferred stock of Holdings issued pursuant to the
Holdings Junior Certificate of Designations.
"Landlord Waiver" means an agreement in favor of the Administrative
Agent, for the benefit of the Secured Parties, in form and substance reasonably
satisfactory to the Arrangers.
15
"Lender Assignment Agreement" means an assignment agreement
substantially in the form of Exhibit L hereto.
"Lenders" is defined in the preamble and includes each Person that
becomes a Lender pursuant to Section 11.11.1.
"Lender's Environmental Liability" means any and all losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
costs, judgments, suits, proceedings, damages (including consequential damages),
disbursements or expenses of any kind or nature whatsoever (including reasonable
attorneys' fees at trial and appellate levels and experts' fees and
disbursements and expenses incurred in investigating, defending against or
prosecuting any litigation, claim or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against either Arranger, the
Administrative Agent, any Lender or any of such Person's Affiliates,
shareholders, directors, officers, employees, and agents in connection with or
arising from:
(a) any Hazardous Material on, in, under or affecting all or
any portion of any property of Holdings, either Borrower or any of
their respective Subsidiaries, the groundwater thereunder, or any
surrounding areas thereof to the extent caused by Releases from
Holdings', either Borrower's or any of their respective Subsidiaries'
or any of their respective predecessors' properties;
(b) any misrepresentation, inaccuracy or breach of any
warranty, contained or referred to in Section 6.12;
(c) any violation or claim of violation by Holdings, either
Borrower or any of their respective Subsidiaries of any Environmental
Laws; or
(d) the imposition of any lien for damages caused by or the
recovery of any costs for the cleanup, release or threatened release of
Hazardous Material by Holdings, either Borrower or any of their
respective Subsidiaries, or in connection with any property owned or
formerly owned by Holdings, either Borrower or any of their respective
Subsidiaries.
"Leverage Ratio" means, as of any date of determination, the ratio of
(a) Total Debt outstanding as of such date of determination
to
(b) EBITDA computed as of the last day of the Reference
Period; provided that, for purposes of determining EBITDA for such
applicable Reference Period, Pro Forma Effect shall be given to all
Permitted Acquisitions or other acquisitions or dispositions of assets
permitted pursuant to this Agreement (other than acquisitions or sales
of assets in the ordinary course) and made at any time during such
Reference Period or thereafter up to and including such date of
determination by any of Holdings, the Borrowers or any of their
respective Subsidiaries.
16
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the interest rate per annum for deposits in Dollars, if any, for a period equal
to the relevant Interest Period which appears on Telerate Page 3750 at
approximately 11:00 a.m., London time, prior to the commencement of such
Interest Period. If such a rate does not appear on Telerate Page 3750, the LIBO
Rate shall be the rate of interest equal to the average (rounded, if necessary,
to the nearest 1/100 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Administrative Agent's LIBOR
Office in the London interbank market as at or about 11:00 a.m. London, England
time two Business Days prior to the beginning of such Interest Period for
delivery on the first day of such Interest Period, and in an amount
approximately equal to the amount of the Administrative Agent's LIBO Rate Loan
and for a period approximately equal to such Interest Period.
"LIBO Rate Loan" means a Second-Lien Loan bearing interest, at all
times during an Interest Period applicable to such Second-Lien Loan, at a rate
of interest determined by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any Second-Lien Loan
to be made, continued or maintained as, or converted into, a LIBO Rate Loan for
any Interest Period, a rate per annum determined pursuant to the following
formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) -------------------------------
1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans
will be determined by the Administrative Agent on the basis of the LIBOR Reserve
Percentage in effect two Business Days before the first day of such Interest
Period.
"LIBOR Office" means the office of a Lender designated as its "LIBOR
Office" on Schedule III attached hereto or in a Lender Assignment Agreement, or
such other office designated from time to time by notice from such Lender to the
Borrowers and the Arrangers, whether or not outside the United States, which
shall be making or maintaining the LIBO Rate Loans of such Lender.
"LIBOR Reserve Percentage" means, relative to any Interest Period for
LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of or including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or other priority or preferential
arrangement of any kind or nature whatsoever, to secure payment of a debt or
performance of an obligation.
"Lifetime" means Lifetime Learning Systems, Inc., a Delaware
corporation.
17
"Xxxxx" means Xxxxx Enterprises, Inc., a Texas corporation.
"Xxxxx Acquisition" means the acquisition consummated pursuant to the
Xxxxx Agreement, whereby AGS purchased substantially all of the assets of Xxxxx.
"Xxxxx Agreement" means the asset purchase agreement dated as of May 9,
2001, among AGS, Xxxxx Acquisition Co., LLC, a Delaware limited liability
company, Xxxxx and certain shareholders of Xxxxx.
"Loan Documents" collectively means this Agreement, each Secured
Hedging Agreement, the Interco Subordination Agreement, the Intercreditor
Agreement, each agreement pursuant to which the Administrative Agent is granted
a Lien to secure the Obligations, the Borrowing Request and each other agreement
which specifies that it is a Loan Document and to which Holdings, either
Borrower or any Subsidiary Guarantor is a signatory.
"Management Fees" means all management and similar fees payable to any
Person (including Ripplewood) by Holdings, either Borrower or any Subsidiary.
"Material Adverse Effect" means a material adverse effect on (i) the
business, assets, condition (financial or otherwise), operations, performance,
properties or prospects of Holdings, the Borrowers and their respective
Subsidiaries, taken as a whole, (ii) the rights and remedies of any Secured
Party under any Loan Document or (iii) the ability of any Obligor to perform its
material Obligations under any Loan Document.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgage" means each mortgage, deed of trust or agreement executed and
delivered by any Obligor in favor of the Administrative Agent for the benefit of
the Secured Parties pursuant to the requirements of this Agreement in
substantially the form of Exhibit H-1 hereto under which a Lien is granted on
the real property and fixtures described therein, in each case as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Net Debt Proceeds" means, with respect to the incurrence, sale or
issuance by Holdings, either Borrower or any of their respective Subsidiaries of
any Indebtedness (other than Indebtedness permitted by Section 7.2.2), the
excess of:
(a) the gross cash proceeds received by Holdings, such
Borrower or such Subsidiaries from such incurrence, sale or issuance,
over
(b) all reasonable and customary underwriting commissions and
legal, investment banking, brokerage and accounting and other
professional fees, sales commissions and disbursements actually
incurred in connection with such incurrence, sale or issuance which
have not been paid to Affiliates of Holdings or either Borrower in
connection therewith.
18
"Net Disposition Proceeds" means, with respect to any Restricted Asset
Disposition of any assets of Holdings, either Borrower or any of their
respective Subsidiaries, the excess of
(a) the gross cash proceeds received by Holdings, such
Borrower or such Subsidiaries from any such Disposition and any cash
payments received in respect of promissory notes or other non-cash
consideration delivered to such Person in respect thereof,
over
(b) the sum (without duplication) of (i) all reasonable and
customary legal, investment banking, brokerage and accounting and other
professional fees and disbursements actually incurred in connection
with such Disposition which have not been paid to Affiliates of
Holdings or either Borrower in connection therewith, (ii) all taxes and
other governmental costs and expenses actually paid or estimated by
such Person (in good faith) to be payable in cash in connection with
such Disposition, (iii) payments made by such Person to retire
Indebtedness (other than (x) Indebtedness constituting any Second-Lien
Loans or (y) Indebtedness constituting any Credit Extensions (as
defined in the First-Lien Facility)) of such Person where payment of
such Indebtedness is required in connection with such Disposition and
(iv) reserves for purchase price adjustments and retained fixed
liabilities that are payable by such Borrower or such Subsidiary in
cash to the extent required under GAAP in connection with such
Disposition;
provided, however, that if, after the payment of all taxes, purchase price
adjustments and retained fixed liabilities with respect to such Disposition, the
amount of estimated taxes, if any, pursuant to clause (b)(ii) above exceeded the
amount of taxes, purchase price adjustments and retained fixed liabilities
actually paid in cash in respect of such Disposition, the aggregate amount of
such excess shall, at such time, constitute Net Disposition Proceeds.
"Net Equity Proceeds" means with respect to the sale or issuance by
Holdings, either Borrower or any of their respective Subsidiaries to any Person
(other than Holdings, either Borrower or any of their respective Subsidiaries)
of any Capital Securities, warrants or options (other than the sale or issuance
by Holdings to EAC III or SGC Partners II LLC of Junior Preferred Stock or
Holdings common stock, to the extent the proceeds of such sale or issuance are
used to make Investments pursuant to and in compliance with Sections 7.2.5
(h)(ii) and 7.2.5(j)) or the exercise of any such warrants or options (other
than pursuant to a Permitted Equity Exchange), the excess of:
(a) the gross cash proceeds received by Holdings, such
Borrower or such Subsidiaries from such sale, exercise or issuance,
over
(b) all reasonable and customary underwriting commissions and
legal, investment banking, brokerage and accounting and other
professional fees, sales commissions and disbursements actually
incurred in connection with such sale or issuance which have not been
paid to Affiliates of Holdings or either Borrower in connection
therewith.
19
"Net Income" means, for any period, the aggregate of all amounts
(exclusive of all amounts in respect of any extraordinary gains but including
extraordinary losses) which would be included as net income of Holdings on the
consolidated financial statements of Holdings for such period, provided that,
with respect to calculations of the Senior Secured Leverage Ratio and the
Leverage Ratio, there shall be excluded from consolidated net income of Holdings
for any period the net income of all Unrestricted Subsidiaries for such period,
except to the extent such net income is actually received in cash by Holdings or
any of its Subsidiaries that are not Unrestricted Subsidiaries during such
period through advances, dividends or other distributions.
"Non-Domestic Lender" means any Lender that is not a "United States
person", as defined under Section 7701(a)(30) of the Code.
"Non-Excluded Taxes" means any Taxes other than income, franchise or
similar Taxes imposed on, or measured by, the net income of a Secured Party by a
Governmental Authority in the country or political subdivision therein in which
such Secured Party is organized or in which it maintains its applicable lending
office or in any other jurisdiction to which a Secured Party has any contact
constituting a basis for the imposition of such Taxes, other than a contact
arising solely from the Secured Party having executed, delivered, or performed
its obligations under, or received a payment under, or enforced this Agreement
or any other Loan Document.
"Non-Recourse Debt" means Indebtedness (i) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of Holdings,
either Borrower or any of the Restricted Subsidiaries to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity, and (ii) as to which the lenders of such
Indebtedness have been notified in writing that they will not have any recourse
to the Capital Securities or assets of Holdings, either Borrower or any of the
Restricted Subsidiaries (other than Capital Securities of Unrestricted
Subsidiaries pledged by either Borrower or a Restricted Subsidiary to secure
Debt of such Unrestricted Subsidiary).
"Note" means a joint and several promissory note of the Borrowers
payable to any Lender, in the form of Exhibit A hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the Borrowers to such Lender resulting from
outstanding Second-Lien Loans, and also means all other promissory notes
accepted from time to time in substitution therefor or renewal thereof.
"Obligations" means (i) all obligations (monetary or otherwise, whether
absolute or contingent, matured or unmatured) of Holdings, each Borrower and
each other Obligor arising under or in connection with a Loan Document,
including the principal of and premium, if any, and interest (including interest
accruing during the pendency of any proceeding of the type described in Section
8.1.9, whether or not allowed in such proceeding) on the Second-Lien Loans and
(ii) all monetary obligations in respect of overdrafts and related liabilities
owed to a Lender or any of its Affiliates and arising from treasury, depositary
or cash management services in connection with any automated clearinghouse
transfers of funds; provided, however, that, solely for purposes of Article VIII
hereof, (x) no obligation of the type described in clause (ii) above shall
constitute an "Obligation" for any purpose of such Article VIII, and (y) no
failure of Holdings, any Borrower or any other Obligor to pay or perform any
obligation of the type described in such clause (ii) shall constitute an Event
of Default for any purpose of such Article VIII.
20
"Obligor" means, as the context may require, Holdings, each Borrower
and each other Person (other than a Secured Party) obligated under any Loan
Document and their permitted successors and assigns.
"OECD" means the Organization for Economic Cooperation and Development.
"Organic Document" means, relative to any Obligor, as applicable, its
certificate of incorporation, by-laws, certificate of partnership, partnership
agreement, certificate of formation, limited liability agreement and all
certificates of designation, shareholder agreements, voting trusts and similar
arrangements applicable to any of such Obligor's partnership interests, limited
liability company interests or authorized shares of Capital Securities.
"Other Taxes" means any and all stamp, documentary or similar taxes, or
any other excise or property taxes or similar levies that arise on account of
the execution, delivery, registration, recording or enforcement of any Loan
Document.
"Participant" is defined in Section 11.11.2.
"Patent Security Agreement" means any Patent Security Agreement
executed and delivered by any Obligor in substantially the form of Exhibit B to
the Security and Pledge Agreement, as amended, supplemented, amended and
restated or otherwise modified from time to time.
"Patriot Act" means the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)), as amended and supplemented from time to
time.
"Patriot Act Disclosures" means all documentation and other information
which a Lender, if subject to the Patriot Act, is required to provide pursuant
to the applicable section of the Patriot Act and which required documentation
and information the Arrangers reasonably request in order to comply with their
ongoing obligations under applicable "know your customer" and anti-money
laundering rules and regulations, including the Patriot Act.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which
Holdings, either Borrower or any corporation, trade or business that is, along
with Holdings or such Borrower, a member of a Controlled Group, may have
liability, including any liability by reason of having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under Section 4069 of ERISA.
21
"Percentage" means, relative to any Lender, the applicable percentage
relating to Second-Lien Loans hereto as set forth on Schedule II or in a Lender
Assignment Agreement on file with the Arrangers hereto under the Second-Lien
Loan column or set forth in a Lender Assignment Agreement, under the Second-Lien
Loan column, as such percentage may be adjusted from time to time pursuant to
Lender Assignment Agreements executed by such Lender and its Assignee Lender and
delivered pursuant to Section 11.11.1.
"Perfection Certificate" means the Perfection Certificate executed and
delivered by an Authorized Officer of each Obligor that is a party to the
Security and Pledge Agreement pursuant to Section 5.1.14 or 7.1.8, substantially
in the form of Exhibit G hereto, as amended, supplemented, amended and restated
or otherwise modified from time to time.
"Permitted Acquisition" means an Acquisition by any of Holdings,
Borrower or any of their respective Restricted Subsidiaries in which the
following conditions are satisfied:
(a) immediately before and after giving effect to such
Acquisition no Specified Default shall have occurred and be continuing
or would result therefrom (including under Section 7.2.1); and
(b) Holdings shall have delivered to the Arrangers a
Compliance Certificate for the period of four full Fiscal Quarters
immediately preceding such Acquisition (prepared in good faith and in a
manner and using such methodology which is consistent with the most
recent financial statements delivered pursuant to Section 7.1.1) giving
pro forma effect to the consummation of such Acquisition and evidencing
compliance with the covenant set forth in Section 7.2.4.
"Permitted Asset Disposition" means any Disposition consisting of (a)
Dispositions of inventory in the ordinary course of business, (b) Dispositions
of equipment which, in the aggregate during any Fiscal Year, have a fair market
value or book value, whichever is greater, of not more than $2,500,000, (c)
Dispositions of property that is substantially worn, damaged, obsolete or, in
the judgment of either Borrower, no longer best used or useful in its respective
business or that of any of its respective Subsidiaries, (d) leases or subleases
of real property and the licensing of intellectual property in the ordinary
course of business, (e) Dispositions of property to either of the Borrowers or
any of their respective Restricted Subsidiaries or (f) Restricted Asset
Dispositions in a single transaction or series of transactions.
"Permitted Common Stock Exchange" means a Permitted Equity Exchange of
the type set forth in (i) clause (iv) of the definition thereof or (ii) clause
(v) of the definition thereof.
"Permitted Equity Exchange" means (i) the issuance by CLI or WRC of
common stock upon the exercise of the CLI Warrants or the WRC Warrants,
respectively, (ii) the issuance by CLI and/or WRC of CLI PIK Preferred Equity
and/or WRC PIK I Preferred Equity in exchange for all of the PIK Preferred
Equity, (iii) the issuance by CLI and/or WRC of preferred stock to the holders
of the CLI PIK Preferred Equity and/or the WRC PIK Preferred Equity that is
identical to such CLI PIK Preferred Equity and/or such WRC PIK Preferred Equity,
except that such preferred stock is not subject to restrictions upon transfer
under the federal securities laws, (iv) the issuance of common stock of WRC and
WRC XXX XX Preferred Equity to Holdings pursuant to a transaction permitted
under Section 11.12, (v) the issuance of common stock of WRC in exchange for the
Holdings (Unit) Common Stock (A) in connection with (1) a Public Offering
relating to WRC or (2) to the extent permitted hereunder, the sale of all or
substantially all of the assets of WRC or (B) in connection with a transaction
permitted under Section 11.12 or (vi) in connection with a Public Offering
relating to Holdings, the issuance of common stock of Holdings in exchange for
CLI Warrants (or warrant shares issued by CLI in connection with the exchange of
such CLI Warrants) and/or WRC Warrants (or warrant shares issued by WRC in
connection with the exchange of such WRC Warrants), in each case to the holders
of such Capital Securities so being exchanged.
22
"Person" means any natural person, corporation, limited liability
company, partnership, joint venture, association, trust or unincorporated
organization, Governmental Authority or any other legal entity, whether acting
in an individual, fiduciary or other capacity.
"PIK Preferred Equity" means the 15% Senior Preferred Stock of Holdings
issued in connection with the financing of the Financed Acquisition, which
preferred equity is redeemable in 2011, par value $0.01 per share, which is
exchangeable (i) at the option of the holders thereof, for an equal amount of
WRC PIK I Preferred Equity and/or CLI PIK Preferred Equity and (ii) at the
election of Holdings under certain circumstances, into pay-in-kind preferred
stock of WRC XXX XX Preferred Equity pursuant to Section 11.12(d) of the
First-Lien Facility.
"PIK Preferred Equity Holders" means certain of the DLJMB Related
Parties and certain other third parties.
"Pledged Subsidiary" means each Subsidiary in respect of which the
Administrative Agent has been granted a security interest in or a pledge of (i)
any of the Capital Securities of such Subsidiary or (ii) any intercompany notes
of such Subsidiary owing to either Borrower or another Subsidiary.
"PRI" means Primedia Reference Inc., a Delaware corporation.
"Prepayment Premium" is defined in Section 3.1.3.
"Primary Syndication" means the period commencing on or prior to the
Closing Date and ending on the earlier of (a) the date that is 90 days following
the Closing Date and (b) the date that the Arrangers have declared the primary
syndication of the Second-Lien Loans to have ended.
"Pro Forma Effect" means, with respect to (i) any determination of
EBITDA for purposes of determining the Leverage Ratio or the Senior Secured
Ratio, as the case may be, and (ii) any Permitted Acquisition or other
acquisition or disposition of assets permitted pursuant to the terms of this
Agreement (other than acquisitions or sales of inventory in the ordinary course
of business), including any financing transaction in connection with any such
Permitted Acquisition or other permitted acquisition or disposition, giving
effect to such Permitted Acquisition or other permitted acquisition or
disposition as if it occurred on the first day of the Reference Period; provided
that all such pro forma determinations shall be made in accordance with
Regulation S-X as promulgated by the Securities and Exchange Commission, as in
effect as of any time of determination.
23
"Projections" means the projected consolidated financial statements
(including balance sheets and statements of operations, stockholders' equity and
cash flows) of each of Holdings and each Borrower, delivered pursuant to Section
5.1.7(a).
"Public Market" shall exist if (i) a Public Offering has been
consummated and (ii) any Capital Securities of Holdings has been distributed by
means of an effective registration statement under the Securities Act of 1933,
as amended.
"Public Offering" means a public offering of the outstanding Capital
Securities of Holdings or WRC pursuant to an effective registration statement
under the Securities Act of 1933, as amended, resulting in Net Equity Proceeds
of at least $60,000,000.
"Quarterly Payment Date" means the last Business Day of March, June,
September and December.
"Redeemable Capital Stock" means, with respect to any Person, any class
of Capital Securities of such Person or any of its Subsidiaries which, either by
its terms, by the terms of any security into which it is convertible or
exchangeable or otherwise, (a) is or upon the happening of an event or passage
of time would be required to be redeemed on or prior to the first anniversary of
the Stated Maturity Date for the Second-Lien Loans, (b) is redeemable at the
option of the holder thereof at any time prior to such anniversary or (c) is
convertible into or exchangeable for debt securities of such Person or any of
its Subsidiaries at any time prior to such anniversary.
"Reference Period" means, as of any date, the most recently ended four
Fiscal Quarters for which financial statements have been delivered pursuant to
clause (b) or (c) of Section 7.1.1, as the case may be.
"Refinancing" means, concurrently with the Borrowing of Second-Lien
Loans hereunder on the Closing Date, the prepayment in full of all outstanding
Term Loans and Revolving Loans (as each such term is defined in the First-Lien
Facility); provided that there shall not be any corresponding reduction of the
Revolving Loan Commitment Amount (as defined in the First-Lien Facility).
"Register" is defined in Section 2.5(b).
"Related Fund" means, with respect to any Lender that is a fund or
equivalent investment vehicle that invests in commercial loans, any other fund
or equivalent investment vehicle that invests in commercial loans and is managed
or advised by (i) such Lender, (ii) an Affiliate of such Lender that is
controlled by such Lender or (iii) the same investment advisor as such Lender or
by an Affiliate of such investment advisor.
"Related Transaction Documents" means the First-Lien Documents and the
Intercreditor Agreement, in each case as amended, supplemented, amended and
restated or otherwise modified from time to time in accordance with Section
7.2.12.
"Release" means a "release", as such term is defined in CERCLA.
"Replacement Lender" is defined in Section 4.10.
24
"Replacement Notice" is defined in Section 4.10.
"Required Lenders" means, at any time Lenders holding at least 51% of
the Total Exposure Amount of the Lenders.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended.
"Responsible Officer" means, with respect to any Person, its chief
executive officer, president or any vice president, managing director, chief
operating officer, chief financial or accounting officer, treasurer, controller
or other officer thereof having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants, the
chief financial or accounting officer, treasurer or controller of such Person,
or any other officer having substantially the same authority and responsibility.
"Restricted Asset Disposition" means any Disposition other than a
Disposition referred to in clauses (a) through (e) of the definition of
Permitted Asset Disposition having an aggregate fair market value or book value,
whichever is greater, of not more than $2,500,000; provided that the proceeds
therefrom shall be applied as provided in Section 3.1.1(d).
"Restricted Payment" means (a) the declaration or payment of any
dividend (other than dividends payable solely in Capital Securities of either
Borrower) on, or the making of any payment or distribution on account of, or
setting apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of any class of Capital
Securities of either Borrower or any Subsidiary or any warrants or options to
purchase any such Capital Securities, whether now or hereafter outstanding, or
the making of any other distribution in respect thereof, either directly or
indirectly, whether in cash or property, obligations of either Borrower or any
Subsidiary or otherwise, (b) the exchange of the Capital Securities of either
Borrower for the Capital Securities of Holdings other than in connection with a
Permitted Equity Exchange, (c) the making of any Investment in Holdings by any
of its Subsidiaries, or (d) the payment of any Management Fee.
"Restricted Subsidiary" means any Subsidiary of Holdings or either
Borrower that is not an Unrestricted Subsidiary.
"Ripplewood" means Ripplewood Partners, L.P., a Delaware limited
partnership.
"S&P" means Standard & Poor's Rating Services, a division of
XxXxxx-Xxxx, Inc.
"SEC" means the Securities and Exchange Commission.
"Second-Lien Loan Commitment Amount" means $145,000,000.
"Second-Lien Loans" is defined in Section 2.1.
"Second Priority" means, with respect to any Lien purported to be
created in any collateral pursuant to any Loan Document for purposes of securing
any Obligations thereunder, such Lien is the most senior Lien to which such
collateral is subject (other than (i) any Lien permitted pursuant to Section
7.2.3 (other than clause (b) thereof) or pursuant to such Loan Document, in each
case to the extent such Lien described in this clause (i) is granted priority as
provided by law or (ii) any Lien created pursuant to clause (b) of Section 7.2.3
to secure the obligations under the First-Lien Facility to the extent provided
in the Intercreditor Agreement); provided that, to the extent any Senior Secured
Debt is created or incurred pursuant to clause (b) of Section 7.2.2 and clause
(b) of Section 7.2.3 but is not outstanding under the First-Lien Facility, such
Senior Secured Debt may only be secured by a Lien that is pari passu with, or
junior to, the Liens created pursuant to the Loan Documents securing the
Obligations.
25
"Secured Hedging Agreements" means, collectively, all currency exchange
agreements, interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements, and all other agreements or arrangements
designed to protect either Borrower or any of its Subsidiaries against
fluctuations in interest rates or currency exchange rates that are entered into
in the ordinary course of business to limit risks of currency or interest rate
fluctuations and not for speculative purposes by such Borrower or any such
Subsidiary and under which the counterparty of such agreement is (or at the time
such agreement was entered into, was) a Lender or an Affiliate of a Lender.
"Secured Parties" means, collectively, the Lenders, the Arrangers, the
Administrative Agent, each counterparty to a Secured Hedging Agreement that is
(or at the time such Secured Hedging Agreement was entered into, was) a Lender
or an Affiliate thereof, each holder of the liabilities referred to in clause
(ii) of the definition of "Obligations" and, in each case, each of their
respective successors, transferees and assigns.
"Security and Pledge Agreement" means the Security and Pledge Agreement
executed in favor of the Administrative Agent on behalf of the Lenders and
delivered by an Authorized Officer of Holdings, each Borrower and each
Subsidiary Guarantor pursuant to Sections 5.1.11 or 7.1.8, substantially in the
form of Exhibit F hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Senior Secured Debt" means, as of any date of determination, any item
or type of Total Debt of Holdings, the Borrowers or any of their respective
Restricted Subsidiaries outstanding as of such date that (i) does not constitute
Indebtedness (x) of the type described in Section 7.2.2(h) or (y) of a type that
is subordinated to the Obligations on substantially the same terms as the
Subordinated Debt referred to in such Section 7.2.2(h) and (ii) is secured by a
Lien on any assets or property of Holdings, the Borrowers or any of their
respective Subsidiaries.
"Senior Secured Leverage Ratio" means, as of any date of determination,
the ratio of
(a) Total Senior Secured Debt outstanding as of such date of
determination
to
(b) EBITDA computed for the Reference Period; provided that,
EBITDA shall be determined for such Reference Period by giving Pro
Forma Effect to all Permitted Acquisitions or other acquisitions or
dispositions of assets permitted pursuant to this Agreement (other than
acquisitions or sales of assets in the ordinary course) made at any
time during such Reference Period or thereafter up to and including
such date of determination by any of Holdings, the Borrowers or any of
their respective Subsidiaries.
26
"Solvent" means, with respect to any Person and its Subsidiaries on a
particular date, that on such date (a) the fair value of the property of such
Person and its Subsidiaries on a consolidated basis is greater than the total
amount of liabilities, including contingent liabilities, of such Person and its
Subsidiaries on a consolidated basis, (b) the present fair salable value of the
assets of such Person and its Subsidiaries on a consolidated basis is not less
than the amount that will be required to pay the probable liability of such
Person and its Subsidiaries on a consolidated basis on its debts as they become
absolute and matured, (c) such Person does not intend to, and does not believe
that it or its Subsidiaries will, incur debts or liabilities beyond the ability
of such Person and its Subsidiaries to pay as such debts and liabilities mature,
and (d) such Person and its Subsidiaries on a consolidated basis is not engaged
in business or a transaction, and such Person and its Subsidiaries on a
consolidated basis is not about to engage in business or a transaction, for
which the property of such Person and its Subsidiaries on a consolidated basis
would constitute an unreasonably small capital. The amount of Contingent
Liabilities at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at such time, can reasonably be expected to
become an actual or matured liability.
"Specified Default" means the occurrence and continuance of (a) a
Default under Section 8.1.1 or Section 8.1.9 or (b) any Event of Default.
"Stated Maturity Date" means, with respect to all Second-Lien Loans,
March 29, 2009.
"Sub Debt Documents" means, collectively, the loan agreements,
indentures, note purchase agreements, promissory notes, guarantees, and other
instruments (including the Subordinated Notes) and agreements evidencing the
terms of Subordinated Debt, as amended, supplemented, amended and restated or
otherwise modified in accordance with Section 7.2.12.
"Subordinated Debt" means (i) the Indebtedness evidenced by the
Subordinated Notes and (ii) any other unsecured Indebtedness of the Obligors
which is subordinated in right of payment to the Obligations on substantially
the same terms (including, without limitation, in respect of subordination and
related provisions, redemption and other prepayment events, covenants, events of
default, remedies and acceleration rights) as the Subordinated Notes or such
other terms which are reasonably satisfactory to the Arrangers and which are not
less favorable to either the Lenders or the Obligors than the comparable terms
relating to the Subordinated Notes; provided that no such other unsecured
Indebtedness described in clause (ii) hereof shall have stated maturities or
otherwise be required to be prepaid, redeemed, repurchased or defeased prior to
the final stated maturity date of the Subordinated Notes.
"Subordinated Notes" means the $152,000,000 12-3/4% Senior Subordinated
Notes due 2009 jointly issued by Holdings, CLI and WRC.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership or other entity of which more than 50% of
the outstanding Voting Securities (irrespective of whether at the time Capital
Securities of any other class or classes of such corporation, limited liability
company, partnership or other entity shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more other Subsidiaries of
such Person, or by one or more other Subsidiaries of such Person. Unless the
context otherwise specifically requires, the term "Subsidiary" shall be a
reference to a Subsidiary of the applicable Borrower.
27
"Subsidiary Guarantor" means each Domestic Subsidiary of Holdings or
the Borrowers that has executed and delivered to the Administrative Agent the
Subsidiary Guaranty (or a supplement thereto).
"Subsidiary Guaranty" means the subsidiary guaranty executed and
delivered by each Subsidiary Guarantor pursuant to Section 5.1.10 or Section
7.1.8, substantially in the form of Exhibit J hereto, in each case, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Supplemental Agents" is defined in Section 9.11.
"Syndication Agent" is defined in the preamble.
"Synthetic Lease" means, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) (i) that is not a capital lease in accordance
with GAAP and (ii) in respect of which the lessee retains or obtains ownership
of the property so leased for federal income tax purposes, other than any such
lease under which that Person is the lessor.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated November
17, 1999, among Holdings and each of its Subsidiaries, as the same may be
amended, supplemented, amended and restated or otherwise modified from time to
time in accordance with the terms thereof.
"Taxes" means any and all income, stamp or other taxes, duties, levies,
imposts, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, and all
interest, penalties or similar liabilities with respect thereto.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace Page 3750 on the service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association interest settlement rates for Dollar deposits).
"Termination Date" means the date on which all monetary Obligations
have been paid in full in cash and all Secured Hedging Agreements have been
terminated.
"ThinkBox" means ThinkBox Inc., a Delaware corporation.
"ThinkBox Agreement" means the preferred stock purchase agreement
between Holdings and ThinkBox, pursuant to which Holdings purchased the ThinkBox
Investment.
28
"ThinkBox Investment" means the purchase by Holdings of (i) up to 38%
of the shares of the issued and outstanding capital stock of ThinkBox and (ii) a
conditional option to purchase the remaining portion of ThinkBox's outstanding
capital stock, in exchange for Holdings common stock (the maintenance of which
option requires Holdings to make monthly cash payments of approximately $357,000
to ThinkBox, in the form of Continued Funding and Post-Exercise Funding, as
defined in the ThinkBox Agreement, in exchange for ThinkBox stock).
"Total Debt" means, on any date, the outstanding principal amount of
all Indebtedness of Holdings, the Borrowers and their respective Restricted
Subsidiaries of the type referred to in clauses (a), (b), (c), (e), (f), and (g)
of the definition of "Indebtedness" and any Contingent Liability in respect of
any of the foregoing.
"Total Exposure Amount" means, on any date of determination, the
outstanding principal amount of all Second-Lien Loans.
"Total Senior Secured Debt" means, on any date of determination, the
outstanding principal amount of all Senior Secured Debt.
"Trademark Security Agreement" means any Trademark Security Agreement
executed and delivered by any Obligor substantially in the form of Exhibit C to
the Security and Pledge Agreement, as amended, supplemented, amended and
restated or otherwise modified from time to time.
"type" means, relative to any Second-Lien Loan, the portion thereof, if
any, being maintained as a Base Rate Loan or a LIBO Rate Loan.
"U.C.C." means the Uniform Commercial Code as in effect from time to
time in the State of New York; provided, that if, with respect to any Filing
Statement or by reason of any provisions of law, the perfection or the effect of
perfection or non-perfection of the security interests granted to the
Administrative Agent pursuant to the applicable Loan Document is governed by the
Uniform Commercial Code as in effect in a jurisdiction of the United States
other than New York, U.C.C. means the Uniform Commercial Code as in effect from
time to time in such other jurisdiction for purposes of the provisions of this
Agreement, each Loan Document and any Filing Statement relating to such
perfection or effect of perfection or non-perfection.
"Uniform Customs" is defined in Section 11.9.
"United States" or "U.S." means the United States of America, its fifty
states and the District of Columbia.
"Unrestricted Subsidiary" means ThinkBox (upon becoming a Subsidiary of
Holdings) and any Subsidiary of Holdings that is acquired in compliance with
clause (j) of Section 7.2.5 and is designated as an Unrestricted Subsidiary by a
resolution of the Board of Directors of Holdings delivered to the Administrative
Agent, but, in each case, only to the extent that such Subsidiary (and each of
its respective Subsidiaries) (i) has no Indebtedness other than Non-Recourse
Debt and (ii) is a Person with respect to which neither Holdings, any Borrower
nor any of the Restricted Subsidiaries has any direct or indirect obligation (a)
to subscribe for additional Capital Securities or warrants, options or other
rights to acquire Capital Securities or (b) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results. For the purposes hereof, each Subsidiary of an
Unrestricted Subsidiary shall be considered an Unrestricted Subsidiary. If, at
any time, any Unrestricted Subsidiary fails to meet any of the foregoing
requirements as an Unrestricted Subsidiary, it (and each of its respective
Subsidiaries) shall thereafter cease to be an Unrestricted Subsidiary for
purposes hereof. The Board of Directors of Holdings may, with the consent of the
Required Lenders, at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) Holdings shall have delivered to the Arrangers a Compliance
Certificate for the period of four full Fiscal Quarters immediately preceding
such designation (prepared in good faith and in a manner and using such
methodology which is consistent with the most recent financial statements
delivered pursuant to Section 7.1.1) giving pro forma effect to such designation
and evidencing compliance with the covenant set forth in Section 7.2.4 and (ii)
no Default or Event of Default would be in existence following such designation;
and provided further that the consent of the Required Lenders shall not be
required in the event that (i) for each of the twelve month periods ending as of
the two Fiscal Quarters immediately preceding the date of such designation, the
sum of (A) net income for such Unrestricted Subsidiary plus (B) to the extent
deducted in determining such net income for such Unrestricted Subsidiary, the
sum of (1) amounts attributable to amortization, (2) income tax expense, (3)
aggregate interest expense (both accrued and paid), (4) depreciation of assets
and (5) other non-cash, non-recurring charges is greater than zero and (ii) such
Unrestricted Subsidiary has no Indebtedness immediately prior to such
designation.
29
"Voting Securities" means, with respect to any Person, Capital
Securities of any class or kind ordinarily having the power to vote for the
election of directors, managers or other voting members of the governing body of
such Person.
"Welfare Plan" means a "welfare plan", as such term is defined in
Section 3(1) of ERISA.
"wholly owned" means any Subsidiary all of the outstanding common stock
(or similar equity interest) of which (other than any director's qualifying
shares or investments by foreign nationals mandated by applicable laws) is owned
directly or indirectly by either Borrower.
"WRC" is defined in the preamble.
"WRC Certificate Designation" means (i) that certain Certificate of
Designation of 15% Senior Preferred Stock due 2011 of WRC, dated November 16,
1999 and made pursuant to Section 151 of the General Corporation Law of the
State of Delaware and (ii) each other certificate of designation in
substantially the same form as the certificate of designation described in
clause (i) above and relating to the WRC PIK Preferred Equity.
"WRC Mirror PIK Preferred Equity" means the pay-in-kind preferred stock
of WRC issued by Holdings in connection with the consummation of the financing
of the Financed Acquisition for not less than $75,000,000, which has terms
substantially the same as the PIK Preferred Equity, except that such stock has
no exchange rights.
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"WRC PIK Preferred Equity" means, as the context may require, the WRC
PIK I Preferred Equity and/or the WRC XXX XX Preferred Equity, which shall not
have an aggregate liquidation preference exceeding an amount equal to the sum of
(x) $75,000,000, (y) any accrued but unpaid dividends on the PIK Preferred
Equity and (z) the aggregate liquidation preference of additional PIK Preferred
Equity issued in lieu of cash dividends on the PIK Preferred Equity.
"WRC PIK I Preferred Equity" means pay-in-kind preferred stock of WRC
for which the PIK Preferred Equity is exchangeable at the option of the holders
thereof.
"WRC XXX XX Preferred Equity" means pay-in-kind preferred stock of WRC
for which the PIK Preferred Equity is exchangeable at the election of Holdings
pursuant to Section 11.12(d).
"WRC Warrants" means the warrants received by the PIK Preferred Equity
Holders to acquire not more than 13.1% of the common stock of WRC on a
fully-diluted basis in connection with the issuance by Holdings of the PIK
Preferred Equity.
SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in each other Loan Document and the
Disclosure Schedule.
SECTION 1.3 Cross-References. Unless otherwise specified, references in
a Loan Document to any Article or Section are references to such Article or
Section of such Loan Document, and references in any Article, Section or
definition to any clause are references to such clause of such Article, Section
or definition.
SECTION 1.4 Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used in each Loan Document shall be interpreted,
and all accounting determinations and computations thereunder (including under
Section 7.2.4 and the definitions used in such calculations) shall be made, in
accordance with those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in Section 5.1.7.
Unless otherwise expressly provided, all financial covenants and defined
financial terms shall be computed on a consolidated basis for Holdings, the
Borrowers and their respective Subsidiaries, in each case without duplication.
ARTICLE II
COMMITMENTS, BORROWING
PROCEDURES AND NOTES
SECTION 2.1 Commitments. On the terms and subject to the conditions of
this Agreement, each Lender severally (but not jointly) agrees to make term
loans ("Second-Lien Loans") as set forth below to the Borrowers on the Closing
Date in an amount equal to such Lender's Percentage of the Second-Lien Loan
Commitment Amount. No amounts paid or prepaid with respect to Second-Lien Loans
may be reborrowed.
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SECTION 2.2 Borrowing Procedures. The Borrowers shall deliver a
Borrowing Request to the Administrative Agent on or before 12:00 noon at least
three Business Days in advance of the Closing Date, which Borrowing Request
shall, among other things, identify the amount of the Borrowing to be made as
LIBO Rate Loans and the amount of the Borrowing to be made as Base Rate Loans.
On or prior to the Closing Date, each Lender shall deposit with the
Administrative Agent same day funds in an amount equal to such Lender's
Percentage of the Borrowing. To the extent funds are received from the Lenders,
the Administrative Agent shall make such funds available to the applicable
Borrower by wire transfer to the accounts such Borrower shall have specified in
its Borrowing Request. No Lender's obligation to make any Second-Lien Loan shall
be affected by any other Lender's failure to make any Second-Lien Loan.
SECTION 2.3 Continuation and Conversion Elections. By delivering a
Continuation/ Conversion Notice to the Administrative Agent on or before 10:00
a.m. on a Business Day, each Borrower may from time to time irrevocably elect,
on not less than one Business Day's notice in the case of Base Rate Loans, or
three Business Days' notice in the case of LIBO Rate Loans, and in either case
not more than five Business Days' notice, that all, or any portion in an
aggregate minimum amount of $2,000,000 and an integral multiple of $1,000,000
be, in the case of Base Rate Loans, converted into LIBO Rate Loans or be, in the
case of LIBO Rate Loans, converted into Base Rate Loans or continued as LIBO
Rate Loans. In the absence of delivery of a Continuation/Conversion Notice with
respect to any LIBO Rate Loan at least three Business Days (but not more than
five Business Days) before the last day of the then current Interest Period with
respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan; provided, however, that (x) each such conversion or
continuation shall be pro rated among the outstanding Second-Lien Loans of all
Lenders that have made such Second-Lien Loans, and (y) no portion of the
outstanding principal amount of any Second-Lien Loans may be continued as, or be
converted into, LIBO Rate Loans when any Default has occurred and is continuing.
SECTION 2.4 Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the applicable Borrower to
repay such LIBO Rate Loan shall nevertheless be to such Lender for the account
of such foreign branch, Affiliate or international banking facility. In
addition, each Borrower hereby consents and agrees that, for purposes of any
determination to be made for purposes of Sections 4.1, 4.2, 4.3 or 4.4, it shall
be conclusively assumed that each Lender elected to fund all LIBO Rate Loans by
purchasing Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.5 Register; Notes. (a) Each Lender may maintain in accordance
with its usual practice an account or accounts evidencing the Indebtedness of
each Borrower to such Lender resulting from the Second-Lien Loans made by such
Lender, including the amounts of principal and interest payable and paid to such
Lender from time to time hereunder. In the case of a Lender that does not
request, pursuant to clause (c) below, execution and delivery of a Note
evidencing the Second-Lien Loans made by such Lender to the Borrowers, such
account or accounts shall, to the extent not inconsistent with the notations
made by the Administrative Agent in the Register, be conclusive and binding on
each Borrower absent manifest error; provided, however, that the failure of any
Lender to maintain such account or accounts shall not limit or otherwise affect
any Obligations of either Borrower or any other Obligor.
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(b) Each Borrower hereby designates the Administrative Agent to serve
as such Borrower's agent, solely for the purpose of this clause (b), to maintain
a register (the "Register") in which the Administrative Agent will record the
Second-Lien Loans made by each Lender and each repayment in respect of the
principal amount of the Second-Lien Loans of each Lender and annexed to which
the Administrative Agent shall retain a copy of each Lender Assignment Agreement
delivered to the Administrative Agent pursuant to Section 11.11.1. Failure to
make any recordation, or any error in such recordation, shall not affect the
Obligation of either Borrower in respect of such Second-Lien Loans. The entries
in the Register shall be conclusive, in the absence of manifest error, and each
Borrower, each Arranger, the Administrative Agent and each Lender shall treat
each Person in whose name a Second-Lien Loan (and as provided in clause (c)
below the Note evidencing such Second-Lien Loan, if any) is registered as the
owner thereof for all purposes of this Agreement, notwithstanding notice or any
provision herein to the contrary. The Second-Lien Loans may be assigned or
otherwise transferred in whole or in part only in accordance with the terms and
provisions of this Section 2.5 and Section 11.11. No assignment or transfer of
any Second-Lien Loan shall be registered in the Register unless the
Administrative Agent shall have received a Lender Assignment Agreement duly
executed by the assignor and assignee thereof. The Administrative Agent agrees
to record in the Register any such assignment or transfer of the Second-Lien
Loans made pursuant thereto promptly upon its receipt of a Lender Assignment
Agreement duly executed by the assignor and assignee thereof in accordance with
Section 11.11.1. In the case of an Affiliate Lender Assignment that is not
reflected in the Register, the Assignor Lender shall maintain a comparable
register.
(c) Each Borrower agrees that, upon the request to the Administrative
Agent by any Lender, such Borrower will execute and deliver to such Lender a
Note evidencing the Second-Lien Loans made by such Lender. Each Borrower hereby
irrevocably authorizes each Lender to make (or cause to be made) appropriate
notations on the grid attached to such Lender's Notes (or on any continuation of
such grid), which notations, if made, shall evidence, inter alia, the date of,
the outstanding principal amount of, and the interest rate and Interest Period
applicable to the Second-Lien Loans evidenced thereby. Such notations shall, to
the extent not inconsistent with the notations made by the Administrative Agent
in the Register, be conclusive and binding on each Borrower absent manifest
error; provided, however, that the failure of any Lender to make any such
notations or any error in any such notations shall not limit or otherwise affect
any Obligations of either Borrower or any other Obligor. The Second-Lien Loans
evidenced by any such Note and interest thereon shall at all times (including
after assignment pursuant to Section 11.11.1) be represented by one or more
Notes payable to the order of the payee named therein and its registered
assigns. A Note and the obligation evidenced thereby may be assigned or
otherwise transferred in whole or in part only in accordance with the terms and
provisions of this Section 2.5 and Section 11.11 (and each Note shall expressly
so provide). No assignment or transfer of all or part of an obligation evidenced
by a Note shall be registered in the Register unless the Administrative Agent
shall have received such Note evidencing such obligation, accompanied by a
Lender Assignment Agreement duly executed by the assignor and assignee thereof,
and thereupon, if requested by the assignee, one or more new Notes shall be
issued to the designated assignee and the old Note shall be returned by the
Administrative Agent to the Borrowers marked "exchanged". Moreover, no
assignment of a Note and the obligation evidenced thereby shall be effective
among the parties of this Agreement unless such assignment shall have been made
in accordance with Section 11.11 and recorded in the Register by the
Administrative Agent as provided in this Section.
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ARTICLE III
REPAYMENTS, PREPAYMENTS AND INTEREST
SECTION 3.1 Repayments and Prepayments; Application. Each Borrower
jointly and severally agrees that the Second-Lien Loans shall be repaid and
prepaid pursuant to the following terms.
SECTION 3.1.1 Repayments and Prepayments. The Borrowers shall jointly
and severally repay in full the entire unpaid principal amount of the
Second-Lien Loans on the Stated Maturity Date. Prior thereto, payments and
prepayments of Second-Lien Loans shall or may be made jointly and severally by
the Borrowers as set forth below, subject, in each case to the extent
applicable, to the terms of the Intercreditor Agreement, Section 3.1.3 and the
last sentence of this Section 3.1.1.
(a) From time to time on any Business Day, each Borrower may
make a voluntary prepayment, in whole or in part, of the outstanding
principal amount of the Second-Lien Loans; provided, however, that (A)
any such prepayment of the Second-Lien Loans shall be made pro rata
among the Second-Lien Loans having the same Interest Period (to be
applied as set forth in Section 3.1.2) (B) (i) all such voluntary
prepayments of Base Rate Loans shall require at least one Business
Days' prior written notice to the Administrative Agent and (ii) all
such voluntary prepayments of LIBO Rate Loans shall require at least
three Business Days' prior written notice to the Administrative Agent;
and (C) all such voluntary partial prepayments shall be, in the case of
LIBO Rate Loans, in an aggregate minimum amount of $1,000,000 and an
integral multiple of $1,000,000 and, in the case of Base Rate Loans, in
an aggregate minimum amount of $500,000 and an integral multiple of
$100,000.
(b) Immediately upon any Change in Control, the Borrowers,
jointly and severally, agree to repay the Second-Lien Loans, in an
amount equal to 101% of the principal amount of the Second-Lien Loans
so repaid; provided that, (i) in the event such Change of Control
results in an event of default under the First-Lien Facility which is
not waived, cured or otherwise satisfied, no such repayment shall be
required until such time as all Indebtedness under the First-Lien
Facility has been repaid in full or cash collateralized (all in
accordance with the terms thereof) and (ii) any Lender may, by
delivering a notice to the Administrative Agent, elect not to have any
portion of its pro rata share of the Second-Lien Loans so repaid;
provided, further that, for purposes of clause (i) above, no such
waiver, cure or other satisfaction in respect of the First-Lien
Facility shall, without the consent of the Lenders, result in any
waiver or other satisfaction of the Borrowers' obligations under this
clause (b).
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(c) The Borrowers shall, following the receipt by Holdings,
either Borrower or any of their respective Subsidiaries of any Casualty
Proceeds in excess of $250,000 (individually or in the aggregate (when
taken together with all other Casualty Proceeds)) over the course of a
Fiscal Year, deliver to the Arrangers a calculation of the amount of
such Casualty Proceeds and jointly and severally make a mandatory
prepayment of the Second-Lien Loans in an amount equal to 100% of such
Casualty Proceeds within 30 days of the receipt thereof to be applied
as set forth in Section 3.1.2; provided, however, that no mandatory
prepayment on account of Casualty Proceeds shall be required under this
clause if the Borrowers inform the Arrangers in writing no later than
30 days following the occurrence of the Casualty Event resulting in
such Casualty Proceeds of their or such Subsidiary's good faith
intention to apply such Casualty Proceeds to (x) the rebuilding or
replacement of the damaged, destroyed or condemned assets or property
or (y) the acquisition of long-term assets that are necessary or useful
in the operation of the Borrowers' and their respective Subsidiaries'
business activities in accordance with Section 7.2.1, and the Borrowers
or such Subsidiary in fact uses such Casualty Proceeds to rebuild or
replace such assets or property or acquire such long-term assets within
360 days following the receipt of such Casualty Proceeds, with the
amount of such Casualty Proceeds unused after such 360-day period being
applied to the Second-Lien Loans pursuant to Section 3.1.2; provided,
further, however, that (i) at any time when any Specified Default shall
have occurred and be continuing, all Casualty Proceeds shall be
deposited in an account maintained with the Administrative Agent to pay
for such rebuilding, replacement or acquisition whenever no Specified
Default is then continuing or except as otherwise agreed to by the
Arrangers for disbursement at the request of the Borrowers or such
Subsidiary, as the case may be, or (ii) if all such Casualty Proceeds
aggregating in excess of $250,000 have not yet been applied as
described in the notice required above, all such Casualty Proceeds
shall be deposited in an account maintained with the Administrative
Agent for disbursement at the request of the Borrowers or such
Subsidiary, as the case may be, to be used for the purpose(s) set forth
in such written notice(s).
(d) The Borrowers shall, following the receipt by Holdings,
either Borrower or any of their respective Subsidiaries of any Net
Disposition Proceeds in excess of $250,000 (individually or in the
aggregate (when taken together with all other Net Disposition
Proceeds)) over the course of a Fiscal Year, deliver to the Arrangers a
calculation of the amount of such Net Disposition Proceeds and jointly
and severally make a mandatory prepayment of the Second-Lien Loans in
an amount equal to 100% of such Net Disposition Proceeds within one
Business Day of the receipt thereof to be applied as set forth in
Section 3.1.2; provided, however, that no mandatory prepayment on
account of Net Disposition Proceeds shall be required under this clause
if the Borrowers inform the Arrangers in writing no later than one
Business Day following the receipt of such Net Disposition Proceeds of
their or such Subsidiary's good faith intention to apply such Net
Disposition Proceeds to (x) the replacement of the assets or property
that was the subject of the Disposition that resulted in such Net
Disposition Proceeds or (y) the acquisition of long-term assets that
are necessary or useful in the operation of the Borrowers' and their
respective Subsidiaries' business activities in accordance with Section
7.2.1, and the Borrowers or such Subsidiary in fact uses such Net
Disposition Proceeds to replace such assets or property or acquire such
long-term assets within 360 days following the receipt of such Net
Disposition Proceeds, with the amount of such Net Disposition Proceeds
unused after such 360-day period being applied to the Second-Lien Loans
pursuant to Section 3.1.2; provided, further, however, that (i) at any
time when any Specified Default shall have occurred and be continuing,
all Net Disposition Proceeds shall be deposited in an account
maintained with the Administrative Agent to pay for such replacement or
acquisition whenever no Specified Default is then continuing or except
as otherwise agreed to by the Arrangers for disbursement at the request
of the Borrowers or such Subsidiary, as the case may be, or (ii) if all
such Net Disposition Proceeds aggregating in excess of $250,000 have
not been applied as described in the notice required above, all such
Net Disposition Proceeds shall be deposited in an account maintained
with the Administrative Agent for disbursement at the request of the
Borrowers or such Subsidiary, as the case may be, to be used for the
purpose(s) set forth in such written notice(s).
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(e) Concurrently with the receipt by Holdings, either Borrower
or any of their respective Subsidiaries of any Net Debt Proceeds, the
Borrowers shall deliver to the Arrangers a calculation of the amount of
such Net Debt Proceeds, as the case may be, and jointly and severally
make a mandatory prepayment of the Second-Lien Loans in an amount equal
to 100% of such Net Debt Proceeds, to be applied as set forth in
Section 3.1.2.
(f) The Borrowers shall, no later than five Business Days
following the delivery by Holdings of its annual audited financial
reports required pursuant to clause (c) of Section 7.1.1 (beginning
with the financial reports delivered in respect of the 2004 Fiscal
Year), deliver to the Arrangers a calculation of the Excess Cash Flow
for the Fiscal Year last ended and jointly and severally make a
mandatory prepayment of the Second-Lien Loans in an amount equal to 50%
of the Excess Cash Flow (if any) for such Fiscal Year, to be applied as
set forth in Section 3.1.2.
(g) Immediately upon any acceleration of the Stated Maturity
Date pursuant to Section 8.2 or Section 8.3, the Borrowers shall
jointly and severally repay all the Second-Lien Loans, unless, pursuant
to Section 8.3, only a portion of all the Second-Lien Loans is so
accelerated (in which case the portion so accelerated shall be so
repaid).
Each prepayment of any Second-Lien Loans made pursuant to this Section shall be
without premium or penalty, except as may be required by Section 3.1.3 and
Section 4.4. Any term or provision of this Section 3.1.1 to the contrary
notwithstanding, any prepayment of Second-Lien Loans required pursuant to
clauses (c), (d), (e) or (f) hereof shall be reduced, on a dollar-for-dollar
basis, by the amount of any corresponding mandatory prepayment as may be
required to be made, at any time or from time to time, under the First-Lien
Facility; provided that in the event such mandatory prepayment under the
First-Lien Facility is made in respect of revolving loans or other First-Lien
Obligations under a revolving loan commitment, such dollar-for-dollar reduction
shall only be applicable to the extent such revolving loan commitment has
likewise been reduced on a dollar-for-dollar basis.
SECTION 3.1.2 Application. Amounts prepaid pursuant to Section 3.1.1
shall be applied as set forth in this Section.
(a) Each prepayment or repayment of the principal of the
Second-Lien Loans shall be applied, to the extent of such prepayment or
repayment, first, to the principal amount thereof being maintained as
Base Rate Loans, and second, subject to the terms of Section 4.4, to
the principal amount thereof being maintained as LIBO Rate Loans.
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SECTION 3.1.3 Prepayment of Second-Lien Loans. In the event that either
Borrower makes a voluntary prepayment pursuant to clause (a) of Section 3.1.1 or
is required to make a mandatory prepayment of the Second-Lien Loans pursuant to
clause (e) of Section 3.1.1 during any period set forth below, such Borrower
shall, at the time of such prepayment, pay the amount of such prepayment plus an
amount (the "Prepayment Premium") equal to the percentage of the principal
amount so voluntarily prepaid or required to be prepaid during such period as
follows:
Closing Date through and including 2.00%
3/29/2005
3/29/2005 through and including 1.00%
3/29/2006
3/29/2006 and thereafter 0%
SECTION 3.2 Interest Provisions. Interest on the outstanding principal
amount of Second-Lien Loans shall accrue and be payable by the Borrowers jointly
and severally in accordance with the terms set forth below.
SECTION 3.2.1 Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, each Borrower may elect that
Second-Lien Loans accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Base
Rate Loan, equal to the sum of the Alternate Base Rate from time to
time in effect plus the Applicable Margin; and
(b) on that portion maintained as a LIBO Rate Loan, during
each Interest Period applicable thereto, equal to the sum of the LIBO
Rate (Reserve Adjusted) for such Interest Period plus the Applicable
Margin.
All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan.
SECTION 3.2.2 Post-Default Rates. Upon the occurrence and during the
continuance of an Event of Default described in Section 8.1.1, the Borrowers
shall jointly and severally pay, but only to the extent permitted by law,
interest (after as well as before judgment) in an amount equal to (a) in the
case of any principal of LIBO Rate Loans or accrued interest thereon, the rate
that would otherwise be applicable to such LIBO Rate Loans pursuant to Section
3.2.1 plus 2%, and (b) in the case of any principal of Base Rate Loans, accrued
interest thereon or any other monetary Obligations, the rate that would
otherwise be applicable to such Base Rate Loans pursuant to Section 3.2.1 plus
2%.
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SECTION 3.2.3 Payment Dates. Interest accrued on each Second-Lien Loan
shall be payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in
part, of principal outstanding on such Second-Lien Loan on the
principal amount so paid or prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring after the Closing Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, on the date occurring on each three-month interval
occurring after the first day of such Interest Period);
(e) with respect to any Base Rate Loans converted into LIBO
Rate Loans on a day when interest would not otherwise have been payable
pursuant to clause (c), on the date of such conversion; and
(f) on that portion of any Second-Lien Loans the Stated
Maturity Date of which is accelerated pursuant to Section 8.2 or
Section 8.3, immediately upon such acceleration.
Interest accrued on Second-Lien Loans or other monetary Obligations after the
date such amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1 LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrowers and the
Administrative Agent, be conclusive and binding on the Borrowers) that the
introduction of or any change in or in the interpretation of any law, in each
case after the date upon which such Lender shall have become a Lender hereunder,
makes it unlawful, or any Governmental Authority asserts that it is unlawful,
for such Lender to make or continue any Second-Lien Loan as, or to convert any
Second-Lien Loan into, a LIBO Rate Loan, the obligations of such Lender to make,
continue or convert any such LIBO Rate Loan shall, upon such determination,
forthwith be suspended until such Lender shall notify the Administrative Agent
that the circumstances causing such suspension no longer exist, and all
outstanding LIBO Rate Loans payable to such Lender shall automatically convert
into Base Rate Loans at the end of the then current Interest Periods with
respect thereto or sooner, if required by such law or assertion.
SECTION 4.2 Deposits Unavailable. If the Administrative Agent shall
have determined that
(a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to it in its relevant
market; or
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(b) by reason of circumstances affecting its relevant market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBO Rate Loans;
then, upon notice from the Administrative Agent to the Borrowers and the
Lenders, the obligations of all Lenders under Section 2.2 and Section 2.3 to
make or continue any Second-Lien Loans as, or to convert any Second-Lien Loans
into, LIBO Rate Loans shall forthwith be suspended until the Administrative
Agent shall notify the Borrowers and the Lenders that the circumstances causing
such suspension no longer exist.
SECTION 4.3 Increased LIBO Rate Loan Costs, etc. The Borrowers agree to
jointly and severally reimburse each Lender for any increase in the cost to such
Lender of, or any reduction in the amount of any sum receivable by such Secured
Party in respect of the making, continuing or maintaining of any Second-Lien
Loans as, or of converting (or of its obligation to convert) any Second-Lien
Loans into, LIBO Rate Loans that arise in connection with any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in after the date hereof of, any law or regulation, directive, guideline,
decision or request (whether or not having the force of law) of any Governmental
Authority that occurs after the Closing Date except for any such changes with
respect to increased capital costs and Taxes (which are governed by Sections 4.5
and 4.6, respectively). Each affected Secured Party shall promptly notify the
Administrative Agent and the Borrowers in writing of the occurrence of any such
event, stating the reasons therefor and the additional amount required fully to
compensate such Secured Party for such increased cost or reduced amount. Such
additional amounts shall be payable by the Borrowers jointly and severally
directly to such Secured Party within five days of its receipt of such notice,
and such notice shall, in the absence of manifest error, be conclusive and
binding on the Borrowers.
SECTION 4.4 Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make or continue any portion of the principal amount of any Second-Lien Loan
as, or to convert any portion of the principal amount of any Second-Lien Loan
into, a LIBO Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loan on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to
Article III or otherwise;
(b) any Second-Lien Loans not being made as LIBO Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Second-Lien Loans not being continued as, or converted
into, LIBO Rate Loans in accordance with the Continuation/Conversion
Notice therefor;
then, upon the written notice of such Lender to the Borrowers (with a copy to
the Administrative Agent), the Borrowers shall, within five days of its receipt
thereof, jointly and severally pay directly to such Lender such amount as will
(in the reasonable determination of such Lender) reimburse such Lender for such
loss or expense. Such written notice shall, in the absence of manifest error, be
conclusive and binding on the Borrowers.
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SECTION 4.5 Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any Governmental Authority affects
or would affect the amount of capital required or expected to be maintained by
any Secured Party or any Person controlling such Secured Party, and such Secured
Party determines (in good faith but in its sole and absolute discretion) that
the rate of return on its or such controlling Person's capital as a consequence
of the Second-Lien Loans by such Secured Party is reduced to a level below that
which such Secured Party or such controlling Person could have achieved but for
the occurrence of any such circumstance, then upon notice from time to time by
such Secured Party to the Borrowers, the Borrowers shall within five days
following receipt of such notice jointly and severally pay directly to such
Secured Party additional amounts sufficient to compensate such Secured Party or
such controlling Person for such reduction in rate of return; provided that such
Secured Party shall if requested by the Borrowers use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
lending office for any Second-Lien Loans affected by such event or take other
action so long as such Lender and its lending office suffer no economic, legal
or regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of this Section; provided, however, that no
Borrower shall have any obligation to pay any such additional amount under this
Section 4.5 with respect to any such change unless such Lender shall have
notified the applicable Borrower of its demand within 120 days after the date
upon which such Lender or such controlling Person has obtained audited financial
statements with respect to the fiscal year of such Lender or such controlling
Person in which such change occurred. Nothing in the first proviso to the
immediately preceding sentence shall affect or postpone any of the Obligations
of such Borrower or the right of any Lender provided in this Section. A
statement of such Secured Party as to any such additional amount or amounts
shall, in the absence of manifest error, be conclusive and binding on the
Borrowers. In determining such amount, such Secured Party may use any method of
averaging and attribution that it (in its sole and absolute discretion) shall
deem applicable.
SECTION 4.6 Taxes. Each of Holdings and each Borrower covenants and
agrees as follows with respect to Taxes.
(a) Any and all payments by Holdings and such Borrower under
each Second-Lien Loan Document shall be made without setoff,
counterclaim or other defense, and (subject to clause (f) below and
Section 11.11) free and clear of, and without deduction or withholding
for or on account of, any Taxes. In the event that any Taxes are
required by law to be deducted or withheld from any payment required to
be made by Holdings or such Borrower, as the case may be, to or on
behalf of any Secured Party under any Loan Document, then:
(i) subject to clause (f) below and Section 11.11, if
such Taxes are Non-Excluded Taxes, the amount of such payment
shall be increased as may be necessary such that such payment
is made, after withholding or deduction for or on account of
such Taxes, in an amount that is not less than the amount
provided for in such Loan Document; and
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(ii) Holdings or such Borrower, as the case may be,
shall withhold the full amount of such Taxes from such payment
(as increased pursuant to clause (a) (i)) and shall pay such
amount to the Governmental Authority imposing such Taxes in
accordance with applicable law.
(b) In addition, Holdings shall, and the Borrowers shall
jointly and severally, pay any and all Other Taxes imposed to the
relevant Governmental Authority imposing such Other Taxes in accordance
with applicable law.
(c) As promptly as practicable after the payment of any Taxes
or Other Taxes, and in any event within 45 days of any such payment
being due, Holdings or the Borrowers, as the case may be, shall furnish
to the Administrative Agent a copy of an official receipt (or a
certified copy thereof) evidencing the payment of such Taxes or Other
Taxes. The Administrative Agent shall make copies thereof available to
any Lender upon request therefor.
(d) Subject to clause (f) below and Section 11.11, Holdings
shall, and the Borrowers shall jointly and severally, indemnify each
Secured Party for any Non- Excluded Taxes and Other Taxes levied,
imposed or assessed on (and whether or not paid directly by) such
Secured Party (whether or not such Non-Excluded Taxes or Other Taxes
are correctly asserted by the relevant Governmental Authority).
Promptly upon having knowledge that any such Non-Excluded Taxes or
Other Taxes have been levied, imposed or assessed, and promptly upon
notice thereof by any Secured Party, Holdings shall, and the Borrowers
shall jointly and severally, pay such Non-Excluded Taxes or Other Taxes
directly to the relevant Governmental Authority (provided, however,
that no Secured Party shall be under any obligation to provide any such
notice to Holdings or the Borrowers, as the case may be). In addition,
Holdings shall, and the Borrowers shall jointly and severally,
indemnify each Secured Party for any incremental Taxes that may become
payable by such Secured Party as a result of any failure of Holdings or
the Borrowers, as the case may be, to pay any Taxes when due to the
appropriate Governmental Authority or to deliver to the Administrative
Agent, pursuant to clause (c), documentation evidencing the payment of
Taxes or Other Taxes. With respect to indemnification for Non-Excluded
Taxes and Other Taxes actually paid by any Secured Party or the
indemnification provided in the immediately preceding sentence, such
indemnification shall be made within 30 days after the date such
Secured Party makes written demand therefor. Holdings and each Borrower
acknowledges that any payment made to any Secured Party or to any
Governmental Authority in respect of the indemnification obligations of
Holdings or such Borrower, as the case may be, provided in this clause
shall constitute a payment in respect of which the provisions of clause
(a) and this clause shall apply.
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(e) Each Non-Domestic Lender, on or prior to the date on which
such Non-Domestic Lender becomes a Lender hereunder (and from time to
time thereafter upon the request of Holdings, the Borrowers or the
Administrative Agent, but only for so long as such Non-Domestic Lender
is legally entitled to do so), shall deliver to Holdings, the Borrowers
and the Administrative Agent either
(i) two duly completed copies of either (A) Internal
Revenue Service Form W-8BEN or (B) Internal Revenue Service
Form W-8ECI, or in either case an applicable successor form,
certifying that such Lender is entitled to an exemption from
U.S. federal withholding tax on payments of interest pursuant
to an income tax treaty to which the United States is a party
or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade
or business in the United States; or
(ii) in the case of a Non-Domestic Lender that is not
legally entitled to deliver either form listed in clause
(e)(i) (with respect to a complete exemption under an income
tax treaty or that the income is effectively connected with
the conduct of a trade or business in the United States), (x)
a certificate of a duly authorized officer of such
Non-Domestic Lender to the effect that such Non-Domestic
Lender is not (A) a "bank" within the meaning of Section
881(c)(3)(A) of the Code, (B) a "10 percent shareholder" of
Holdings or either Borrower within the meaning of Section
881(c)(3)(B) of the Code, or (C) a controlled foreign
corporation receiving interest from a related person within
the meaning of Section 881(c)(3)(C) of the Code (such
certificate, an "Exemption Certificate") and (y) two duly
completed copies of Internal Revenue Service Form W-8BEN (with
respect to the portfolio interest exemption) or applicable
successor form, certifying that such Lender is entitled to an
exemption from U.S. federal withholding tax on payments of
interest.
(f) Notwithstanding any provision herein to the contrary,
neither Holdings nor either Borrower shall be obligated to gross up any
payments to any Lender pursuant to clause (a)(i), or to indemnify any
Lender pursuant to clause (d), in respect of United States federal
withholding taxes to the extent imposed as a result of (i) the failure
of such Lender to deliver to Holdings or the Borrowers, as the case may
be, the form or forms and/or an Exemption Certificate, as applicable to
such Lender, pursuant to clause (e), (ii) such form or forms and/or
Exemption Certificate not establishing a complete exemption from U.S.
federal withholding tax or the information or certifications made
therein by the Lender being untrue or inaccurate on the date delivered
in any material respect, or (iii) the Lender designating a successor
lending office at which it maintains its Second-Lien Loans which has
the effect of causing such Lender to become obligated for tax payments
in excess of those in effect immediately prior to such designation;
provided, however, that Holdings shall, and the Borrowers shall jointly
and severally, be obligated to gross up any payments to any such Lender
pursuant to clause (a)(i), and to indemnify any such Lender pursuant to
clause (d), in respect of United States federal withholding taxes if
(i) any such failure to deliver a form or forms or an Exemption
Certificate or the failure of such form or forms or Exemption
Certificate to establish a complete exemption from U.S. federal
withholding tax or inaccuracy or untruth contained therein resulted
from a change in any applicable statute, treaty, regulation or other
applicable law or any official interpretation of any of the foregoing
occurring after the date hereof such Lender acquired its interest in
the Loan Documents, which change rendered such Lender no longer legally
entitled to deliver such form or forms or Exemption Certificate or
otherwise ineligible for a complete exemption from U.S. federal
withholding tax, or rendered the information or certifications made in
such form or forms or Exemption Certificate untrue or inaccurate in a
material respect or (ii) the obligation to gross up payments to any
such Lender pursuant to clause (a)(i) or to indemnify any such Lender
pursuant to clause (d) is with respect to an Assignee Lender that
becomes an Assignee Lender as a result of an assignment made at the
request of the Borrowers.
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(g) If Holdings or either Borrower, as the case may be, is
required to pay additional amounts to or for the account of a Lender
pursuant to this Section 4.6, then such Lender will agree to use
reasonable efforts to change the jurisdiction of its applicable lending
office or take any other action reasonably requested by Holdings or
either Borrower, as the case may be, so as to eliminate or reduce any
such additional payment which may thereafter accrue if such change
would not, in the sole good faith determination of such Lender, be
otherwise disadvantageous to such Lender (taking into account any
reimbursement of costs that Holdings or either Borrower, as the case
may be, may elect to offer).
(h) If a Secured Party receives a refund of any Taxes or Other
Taxes as to which it has been indemnified by Holdings and the Borrowers
or with respect to which Holdings or either Borrower, as the case may
be, has paid additional amounts pursuant to this Section 4.6, which
refund in the good faith judgment of such Secured Party is attributable
to such payment made by Holdings or either Borrower, as the case may
be, shall reimburse Holdings or either Borrower, as the case may be,
for such amount as the Secured Party determines to be the proportion of
the refund as will leave it, after such reimbursement, in no better or
worse position than it would have been in if the payment had not been
required. A Secured Party shall not be obliged to disclose information
regarding its tax affairs or computations to Holdings and the Borrowers
in connection with this clause (h) or any other provision of this
Section 4.6.
SECTION 4.7 Payments, Computations, etc. Unless otherwise expressly
provided in a Loan Document, all payments by each Borrower pursuant to each Loan
Document shall be made by such Borrower to the Administrative Agent for the pro
rata account of the Secured Parties entitled to receive such payment. All
payments shall be made without setoff, deduction (except as permitted under
Section 4.6(f)) or counterclaim not later than 11:00 a.m. on the date due in
same day or immediately available funds to such account as the Administrative
Agent shall specify from time to time by notice to the Borrowers. Funds received
after that time shall be deemed (at the Administrative Agent's discretion) to
have been received by the Administrative Agent on the next succeeding Business
Day. The Administrative Agent shall promptly remit in same day funds to each
Secured Party its share, if any, of such payments received by the Administrative
Agent for the account of such Secured Party. All interest (including interest on
LIBO Rate Loans) and fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day) occurring during the
period for which such interest or fee is payable over a year comprised of 360
days (or, in the case of interest on a Base Rate Loan (calculated at other than
the Federal Funds Rate), 365 days or, if appropriate, 366 days). Payments due on
other than a Business Day shall (except as otherwise required by clause (c) of
the definition of the term "Interest Period") be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
and fees in connection with that payment.
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SECTION 4.8 Sharing of Payments. If any Secured Party shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Second-Lien Loans (other than pursuant to
the terms of Sections 4.3, 4.4, 4.5 or 4.6) in excess of its pro rata share of
payments obtained by all Secured Parties, such Secured Party shall purchase from
the other Secured Parties such participations in the Second-Lien Loans made by
them as shall be necessary to cause such purchasing Secured Party to share the
excess payment or other recovery ratably (to the extent such other Secured
Parties were entitled to receive a portion of such payment or recovery) with
each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Secured
Party, the purchase shall be rescinded and each Secured Party which has sold a
participation to the purchasing Secured Party shall repay to the purchasing
Secured Party the purchase price to the ratable extent of such recovery together
with an amount equal to such selling Secured Party's ratable share (according to
the proportion of (a) the amount of such selling Secured Party's required
repayment to the purchasing Secured Party to (b) total amount so recovered from
the purchasing Secured Party) of any interest or other amount paid or payable by
the purchasing Secured Party in respect of the total amount so recovered. Each
Borrower agrees that any Secured Party purchasing a participation from another
Secured Party pursuant to this Section may, to the fullest extent permitted by
law, exercise all its rights of payment (including pursuant to Section 4.9) with
respect to such participation as fully as if such Secured Party were the direct
creditor of such Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law any Secured Party
receives a secured claim in lieu of a setoff to which this Section applies, such
Secured Party shall, to the extent practicable, exercise its rights in respect
of such secured claim in a manner consistent with the rights of the Secured
Parties entitled under this Section to share in the benefits of any recovery on
such secured claim.
SECTION 4.9 Setoff. Each Secured Party shall, upon the occurrence and
during the continuance of any Default described in clauses (a) through (d) of
Section 8.1.9 or, with the consent of the Required Lenders, upon the occurrence
and during the continuance of any other Event of Default, have the right to
appropriate and apply to the payment of the monetary Obligations owing to it
(whether or not then due), and (as security for such Obligations) each Borrower
hereby grants to each Secured Party a continuing security interest in, any and
all balances, credits, deposits, accounts or moneys of such Borrower then or
thereafter maintained with such Secured Party; provided, however, that any such
appropriation and application shall be subject to the provisions of Section 4.8.
Each Secured Party agrees promptly to notify the applicable Borrower and the
Administrative Agent after any such setoff and application made by such Secured
Party; provided, however, that the failure to give such notice shall not affect
the validity of such setoff and application. The rights of each Secured Party
under this Section are in addition to other rights and remedies (including other
rights of setoff under applicable law or otherwise) which such Secured Party may
have.
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SECTION 4.10 Replacement of Lenders. If any Lender (an "Affected
Lender") makes demand upon the Borrowers for (or if the Borrowers are otherwise
required to pay) amounts pursuant to Section 4.3, 4.5 or 4.6 and the payment of
such additional amounts is, and is likely to continue to be, more onerous in the
reasonable judgment of the Borrowers than with respect to the other Lenders, the
Borrowers may, within 30 days of receipt by the Borrowers of such demand, give
notice (a "Replacement Notice") in writing to the Arrangers and such Affected
Lender of their intention to replace such Affected Lender with a financial
institution (a "Replacement Lender") designated in such Replacement Notice;
provided, however, that no Replacement Notice may be given by the Borrowers if
(i) such replacement conflicts with any applicable law or regulation, (ii) any
Event of Default shall have occurred and be continuing at the time of such
replacement or (iii) prior to any such replacement, such Lender shall have taken
any necessary action under Section 4.5 or 4.6 (if applicable) so as to eliminate
the continued need for payment of amounts owing pursuant to Section 4.5 or 4.6.
If the Arrangers shall, in the exercise of their reasonable discretion and
within 10 days of their receipt of such Replacement Notice, notify the Borrowers
and such Affected Lender in writing that the designated financial institution is
satisfactory to the Arrangers (such consent not being required where the
Replacement Lender is already a Lender), then such Affected Lender shall,
subject to the payment of any amounts due pursuant to Section 4.4, assign, in
accordance with Section 11.11.1, all of its Second-Lien Loans, Notes (if any)
and other rights and obligations under this Agreement and all other Loan
Documents to such designated financial institution; provided, however, that (i)
such assignment shall be without recourse, representation or warranty and shall
be on terms and conditions reasonably satisfactory to such Affected Lender and
such designated financial institution, (ii) the purchase price paid by such
designated financial institution shall be in the amount of such Affected
Lender's Second-Lien Loans, together with all accrued and unpaid interest and
fees in respect thereof, plus all other amounts (including the amounts demanded
and unreimbursed under Sections 4.3, 4.5 and 4.6), owing to such Affected Lender
hereunder and (iii) the Borrowers shall pay to the Affected Lender and the
Arrangers all reasonable out-of-pocket expenses incurred by the Affected Lender
and the Arrangers in connection with such assignment and assumption (including
the processing fees described in Section 11.11.1). Upon the effective date of an
assignment described above, the Replacement Lender shall become a "Lender" for
all purposes under this Agreement and the other Loan Documents.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Closing Date Conditions. The obligations of the Lenders to
make Second-Lien Loans on the Closing Date shall be subject to the prior or
concurrent satisfaction of each of the conditions precedent set forth in this
Section 5.1.
SECTION 5.1.1 Resolutions, etc. The Arrangers shall have received from
each Obligor (i) a copy of a good standing certificate from the jurisdiction of
its organization and each other jurisdiction where the nature of its business
requires such Obligor to be qualified to do business and in good standing as a
foreign entity (except where the failure to be so qualified or in good standing
as a foreign entity could not reasonably be expected to have a Material Adverse
Effect), dated a date reasonably close to the Closing Date, for each such Person
and (ii) a certificate, dated the Closing Date, duly executed and delivered by
such Person's Authorized Officer, as to
(a) the fact that a complete and correct copy of the
resolutions of each such Person's Board of Directors (or other managing
body, in the case of other than a corporation) then in full force and
effect authorizing, to the extent relevant, all aspects of the
transactions contemplated hereby applicable to such Person and the
execution, delivery and performance of each Loan Document to be
executed by such Person and the transactions contemplated hereby and
thereby is attached to such certificate and that those resolutions have
not been amended, modified or rescinded by subsequent action;
45
(b) the incumbency and signatures of those of its Authorized
Officers authorized to act with respect to each Loan Document to be
executed by such Person; and
(c) the fact that a complete, correct and current copy of each
Organic Document of such Person is attached to such certificate;
upon which certificates each Secured Party may conclusively rely until it shall
have received a further certificate of the Authorized Officer of any such Person
canceling or amending the prior certificate of such Person.
SECTION 5.1.2 Related Transactions. The Arrangers shall have received
evidence that (i) Amendment No. 2 to the First-Lien Facility shall be in full
force and effect and (ii) the Refinancing shall have been consummated.
SECTION 5.1.3 Related Transaction Documents. The Arrangers shall have
received copies of fully executed versions of the Related Transaction Documents,
each certified to be true and correct copies thereof by an Authorized Officer of
each of Holdings and the Borrowers. Each Related Transaction Document shall be
in full force and effect and shall not have been modified or waived in any
material respect.
SECTION 5.1.4 Closing Date Certificate. The Arrangers shall have
received, with counterparts for each Lender, the Closing Date Certificate, dated
the Closing Date and duly executed and delivered by an Authorized Officer of
each of Holdings and each of the Borrowers, in which certificate each of
Holdings and each Borrower shall agree and acknowledge that the statements made
therein shall be deemed to be true and correct representations and warranties of
Holdings and each such Borrower as of such date, and, at the time each such
certificate is delivered, such statements shall in fact be true and correct. All
documents and agreements required to be appended to the Closing Date Certificate
shall be in form and substance satisfactory to the Arrangers.
SECTION 5.1.5 Delivery of Notes. The Arrangers shall have received, for
the account of each Lender that has requested a Note in writing two Business
Days prior to the Closing Date, such Lender's Notes duly executed and delivered
by an Authorized Officer of each of the Borrowers.
SECTION 5.1.6 Closing Fees, Expenses, etc. The Arrangers shall have
received for their respective accounts, or for the account of each Lender, as
the case may be, all fees, costs and expenses due and payable pursuant to
Section 11.3, to the extent then invoiced.
46
SECTION 5.1.7 Financial Information, Material Adverse Change. (a) The
Arrangers shall have received, with copies for each Lender that has requested
such copies, financial statements for each of the Borrowers, consisting of (i)
consolidated audited annual balance sheets (including notes thereto) for each of
the Fiscal Years ended December 31, 2000, 2001 (as previously audited by Xxxxxx
Xxxxxxxx LLP in 2001, together with the restatements to be made thereto as
reported in the Form 8-Ks filed by Holdings on March 22, 2004 and March 24,
2004) and 2002 (as previously audited by Deloitte & Touche LLP in 2002, together
with the restatements to be made thereto as reported in the Form 8-Ks filed by
Holdings on March 22, 2004 and Xxxxx 00, 0000), (xx) consolidated audited annual
statements of operations and cash flows for the Fiscal Years ended 2000, 2001
(as previously audited by Xxxxxx Xxxxxxxx LLP in 2001, together with the
restatements to be made thereto as reported in the Form 8-Ks filed by Holdings
on March 22, 2004 and March 24, 2004) and 2002 (as previously audited by
Deloitte & Touche LLP in 2002, together with the restatements to be made thereto
as reported in the Form 8-Ks filed by Holdings on March 22, 2004 and March 24,
2004) (including notes thereto), (iii) consolidated unaudited quarterly
financial statements for each Fiscal Quarter ended since the last annual audited
financial statements of the Borrowers, together with the restatements to be made
thereto as reported in the Form 8-Ks filed by Holdings on March 22, 2004 and
March 24, 2004, (iv) a consolidated unaudited annual balance sheet for the
Fiscal Year ended December 31, 2003, together with the amendments to be made
thereto as reported in the Form 8-Ks filed by Holdings on March 22, 2004 and
March 24, 2004, and (v) consolidated unaudited annual statements of operations
and cash flows for the Fiscal Year ended December 31, 2003, together with the
amendments to be made thereto as reported in the Form 8-Ks filed by Holdings on
March 22, 2004 and March 24, 2004, in each case, after giving effect to the
restatements as reported in the Form 8-Ks filed by Holdings on March 22, 2004
and March 24, 2004, to be prepared in accordance with GAAP and together with
other supporting documentation reasonably requested and reasonably satisfactory
to the Arrangers. The Arrangers shall have also received, with copies for each
Lender that has requested such copies, projections in respect of the Borrowers
and their respective Subsidiaries prepared on a quarterly basis for the period
up to and including December 31, 2005 and prepared on an annual basis for the
period from January 1, 2006 through the fifth anniversary of the Closing Date.
No financial statements or projections delivered pursuant to this section shall
be materially inconsistent with any similar financial statements, projections or
estimates previously provided to the Arrangers and, if applicable, the Lenders.
(b) Since December 31, 2002, there has not been any material
adverse change in the condition (financial or otherwise), operations,
assets, business, performance, properties, or prospects of Holdings,
the Borrowers and their respective Subsidiaries, taken as a whole.
SECTION 5.1.8 Opinions of Counsel. The Arrangers shall have received
opinions, dated the Closing Date and addressed to the Arrangers, the
Administrative Agent and all of the Lenders, from
(a) Cravath, Swaine & Xxxxx LLP, New York counsel to the
Obligors, in form and substance satisfactory to the Arrangers; and
(b) local counsel to the Obligors in the following
jurisdictions, in form and substance, and from counsel, satisfactory to
the Arrangers:
(i) Xxxxx & Lardner LLP, Wisconsin counsel to the
Obligors; and
(ii) Xxxxxx and Xxxxxx, P.A, Minnesota counsel to the
Obligors.
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SECTION 5.1.9 Filing Agent, etc. All Uniform Commercial Code financing
statements or other similar financing statements required pursuant to the Loan
Documents (collectively, the "Filing Statements") shall have been delivered to
CT Corporation System or another similar filing service company acceptable to
the Arrangers (the "Filing Agent"). The Filing Agent shall have acknowledged in
a writing satisfactory to the Arrangers and their counsel (i) the Filing Agent's
receipt of all Filing Statements, (ii) that the Filing Statements have either
been submitted for filing in the appropriate filing offices or will be submitted
for filing in the appropriate offices within ten days following the Closing Date
and (iii) that the Filing Agent will notify the Arrangers and their counsel of
the results of such submissions within 30 days following the Closing Date.
SECTION 5.1.10 Subsidiary Guaranty. The Arrangers shall have received
the Subsidiary Guaranty, dated as of the date hereof, duly executed and
delivered by each Subsidiary Guarantor.
SECTION 5.1.11 Security and Pledge Agreement. The Arrangers shall have
received the Security and Pledge Agreement, dated as of the Closing Date and
duly executed and delivered by an Authorized Officer of each of Holdings, each
Borrower and each Subsidiary Guarantor, together with
(a) copies of the certificates evidencing all of the issued
and outstanding Capital Securities pledged pursuant to the First-Lien
Security and Pledge Agreement, together with copies of the undated
instruments of transfer executed in blank by effective endorsement;
(b) copies of all Intercompany Notes, if any, pledged pursuant
to the First-Lien Security and Pledge Agreement; and
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Administrative Agent, dated a
date reasonably near to the Closing Date, listing all effective
financing statements which name such Obligor (under its present name
and any previous names of such Obligor within the four month period
preceding the date hereof) as the debtor and which are filed in the
jurisdictions in which filings are to be made pursuant to clause (c)
above, together with copies of such financing statements.
The Arrangers and their counsel shall be satisfied that (i) the Lien granted to
the Administrative Agent, for the benefit of the Secured Parties in the
collateral described above is a Second Priority (or local equivalent thereof)
security interest; and (ii) no Lien exists on any of the Collateral (as defined
in the Security and Pledge Agreement) other than the Lien created in favor of
the Administrative Agent, for the benefit of the Secured Parties, pursuant to a
Loan Document and Liens permitted by Section 7.2.3.
SECTION 5.1.12 Patent Security Agreement, Trademark Security Agreement,
and Copyright Security Agreement. The Arrangers shall have received the Patent
Security Agreement, the Trademark Security Agreement, and the Copyright Security
Agreement (other than the instruments or documents to be delivered pursuant to
Section 7.1.10) as applicable, each dated as of the Closing Date, duly executed
and delivered by an Authorized Officer of each Obligor that has delivered the
Security and Pledge Agreement.
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SECTION 5.1.13 Intercreditor Agreement. The Arrangers shall have
received a copy of the Intercreditor Agreement, dated as of the Closing Date and
duly executed and delivered by an Authorized Officer of each of Holdings and
each Borrower, the Collateral Agent and the Administrative Agent, which
agreement shall set forth the priority of the Collateral Agent's and the
Administrative Agent's respective Liens upon and security interests in the
Collateral.
SECTION 5.1.14 Perfection Certificate. The Arrangers shall have
received Perfection Certificates, dated as of the Closing Date, duly executed
and delivered by an Authorized Officer of each of Holdings, each Borrower and
each other Obligor that is a party to the Security and Pledge Agreement.
SECTION 5.1.15 [Reserved].
SECTION 5.1.16 Insurance. The Arrangers shall have received certified
copies of the insurance policies (or binders in respect thereof), from one or
more insurance companies satisfactory to the Arrangers, evidencing coverage
required to be maintained pursuant to each Loan Document.
SECTION 5.1.17 Litigation. There shall exist no pending or threatened
action, suit, investigation, litigation or proceeding pending or threatened in
any court or before any arbitrator or governmental instrumentality which (x)
contests the consummation of the transactions contemplated hereby or the
legality or validity of the Credit Agreement, any other Loan Document or any
Related Transaction Document or (y) could reasonably be expected to have a
Material Adverse Effect.
SECTION 5.1.18 Approvals. All governmental and third party consents and
approvals necessary or desirable in connection with the consummation of the
transactions contemplated hereby shall have been duly obtained (except for any
such consents and approvals the failure of which to obtain could not reasonably
be expected to have a Material Adverse Effect) and all applicable waiting
periods shall have expired without any action being taken by any competent
authority that could restrain, prevent or impose any materially adverse
conditions on the transactions contemplated hereby, and no such law or
regulation shall be applicable which in the judgment of the Arrangers could have
any such effect.
SECTION 5.1.19 Patriot Act Disclosures. The Arrangers shall have
received all Patriot Act Disclosures requested by them prior to execution of
this Agreement.
SECTION 5.1.20 Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of either Borrower or any of its
Subsidiaries or any other Obligors shall be reasonably satisfactory in form and
substance to the Arrangers and their counsel; the Arrangers and their counsel
shall have received all information, approvals, documents or instruments as the
Arrangers or their counsel may reasonably request.
SECTION 5.1.21 Compliance with Warranties, No Default, etc. On the
Closing Date, the following statements shall be true and correct:
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(a) the representations and warranties set forth in each Loan
Document shall, in each case, be true and correct (unless stated to
relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of
such earlier date); and
(b) no Default shall have then occurred and be continuing.
SECTION 5.1.22 Borrowing Request, etc. The Administrative Agent shall
have received a Borrowing Request at least three (3) Business Days prior to the
Closing Date. The delivery of a Borrowing Request and the acceptance by the
applicable Borrower of the proceeds of such Second-Lien Loan shall constitute a
representation and warranty by such Borrower that on the date of such
Second-Lien Loan (concurrently with and immediately after giving effect to such
Borrowing and Amendment No. 2 to the First-Lien Facility, including the
Refinancing) the statements made in Section 5.1.21 are true and correct in all
material respects.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Secured Parties to enter into this Agreement and
to make Second-Lien Loans hereunder, Holdings and each Borrower represents and
warrants to each Secured Party as set forth in this Article.
SECTION 6.1 Organization, etc. Holdings, each Borrower and each of
their respective Subsidiaries is validly organized and existing and in good
standing under the laws of the state or jurisdiction of its incorporation or
organization, is duly qualified to do business and is in good standing as a
foreign entity in each jurisdiction where the nature of its business requires
such qualification (except where the failure to be so qualified or in good
standing as a foreign entity could not reasonably be expected to have a Material
Adverse Effect), and has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and perform its
Obligations under each Loan Document to which it is a party and to own and hold
under lease its property and to conduct its business substantially as currently
conducted by it (except where the failure to hold any such license, permit or
other approval could not reasonably be expected to have a Material Adverse
Effect).
SECTION 6.2 Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by each Borrower of each Loan Document executed or to
be executed by it, the execution, delivery and performance by each other Obligor
of each Loan Document executed or to be executed by it, such Borrower's and each
such other Obligor's participation in the consummation of all aspects of the
transactions contemplated hereby, and the execution, delivery and performance by
such Borrower or (if applicable) any Obligor of the agreements executed and
delivered in connection with the transactions contemplated hereby are in each
case within each such Person's powers, have been duly authorized by all
necessary action, and do not
(a) contravene any (i) Obligor's Organic Documents, (ii)
material contractual restriction binding on any Obligor, (iii) court
decree or order binding on any Obligor or (iv) law or governmental
regulation applicable to any Obligor; or
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(b) result in, or require the creation or imposition of, any
Lien on any Obligor's properties (except as permitted by this
Agreement).
SECTION 6.3 Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person (other than those that have been
duly obtained or made and which are in full force and effect) is required for
the consummation of the transactions contemplated hereby or the due execution,
delivery or performance by Holdings, either Borrower or any other Obligor of any
Loan Document to which it is a party, or for the due execution, delivery and/or
performance of the Related Transaction Documents, in each case by the parties
thereto or the consummation of the transactions contemplated hereby (except
where the failure to obtain or make any such authorization, approval, action,
notice or filing could not reasonably be expected to have a Material Adverse
Effect). None of Holdings, either Borrower or any of their respective
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 6.4 Validity, etc. (a) This Agreement and the Related
Transaction Documents to which it is a party constitute, and each other Loan
Document executed by each of Holdings and each Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of Holdings and such Borrower, enforceable against Holdings and such
Borrower in accordance with their respective terms and (b) each Loan Document
executed by each other Obligor will, on the due execution and delivery thereof
by such Obligor, constitute the legal, valid and binding obligation of such
Obligor enforceable against such Obligor in accordance with its terms (except,
in any case under clause (a) or (b) above, as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and by principles of equity).
SECTION 6.5 Financial Information.
(a) Except to the extent described in the Form 8-Ks filed by
Holdings on March 22, 2004 and March 24, 2004, the consolidated
financial statements of Holdings and each Borrower furnished to the
Arrangers and each Lender pursuant to Section 5.1.7(a)(i), (ii), (iii),
(iv) and (v) have been prepared in accordance with GAAP consistently
applied, and present fairly the consolidated financial condition of the
Persons covered thereby as at the dates thereof and the results of
their operations for the periods then ended (subject, in the case of
any such financial statements which are unaudited, to customary
year-end adjustments and the absence of notes).
(b) The Projections were prepared by Holdings in good faith on
the basis of information and assumptions that Holdings and its senior
management believed to be reasonable as of the date of the Projections
and such assumptions are reasonable as of the Closing Date.
(c) All balance sheets, all statements of operations,
shareholders' equity and cash flow and all other financial information
of each of Holdings and each Borrower and their respective Subsidiaries
furnished pursuant to Section 7.1.1 have been and will for periods
following the Closing Date be prepared in accordance with GAAP
consistently applied, and do or will present fairly the consolidated
financial condition of the Persons covered thereby as at the dates
thereof and the results of their operations for the periods then ended.
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SECTION 6.6 No Material Adverse Change. There has been no material
adverse change in the business, assets, condition (financial or otherwise),
operations, performance, properties, or prospects of Holdings, the Borrowers and
their respective Subsidiaries, taken as a whole, since December 31, 2002.
SECTION 6.7 Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of any Responsible Officer of Holdings, either Borrower or
any of their respective Subsidiaries, threatened litigation, action, proceeding
or labor controversy
(a) except as disclosed in Item 6.7 of the Disclosure
Schedule, affecting Holdings, such Borrower, any such Subsidiaries or
any other Obligor, or any of their respective properties, businesses,
assets or revenues, which could reasonably be expected to have a
Material Adverse Effect, and no adverse development has occurred in any
labor controversy, litigation, arbitration or governmental
investigation or proceeding disclosed in Item 6.7 which could
reasonably be expected to have a Material Adverse Effect; or
(b) which purports to affect the legality, validity or
enforceability of any Loan Document, the Related Transaction Documents
or the transactions contemplated hereby.
SECTION 6.8 Subsidiaries. Holdings has no direct Subsidiaries other
than its Unrestricted Subsidiaries and the Borrowers. Each Borrower has no
Subsidiaries, except those Subsidiaries
(a) which are identified in Item 6.8 of the Disclosure
Schedule; or
(b) which are permitted to have been organized or acquired in
accordance with Section 7.2.5 or 7.2.10.
SECTION 6.9 Ownership of Properties. Holdings, each Borrower and each
of their respective Subsidiaries owns (i) in the case of owned real property,
good and marketable fee title to, and (ii) in the case of owned personal
property, good and valid title to, or, in the case of leased real or personal
property, valid and enforceable leasehold interests (as the case may be) in, all
of its properties and assets, real and personal, tangible and intangible, of any
nature whatsoever, free and clear in each case of all Liens or claims, except
for Liens permitted pursuant to Section 7.2.3.
SECTION 6.10 Taxes. Holdings, each Borrower and each of their
respective Subsidiaries has filed all material tax returns and reports required
by law to have been filed by it and has paid or caused to be paid all taxes and
governmental charges thereby shown to be due and owing, except (i) any such
taxes or charges which are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books or (ii) to the extent that a failure to do so could
not reasonably be expected to have a Material Adverse Effect.
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SECTION 6.11 Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the Closing Date, no steps have been
taken to terminate any Pension Plan, and no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which might result in the incurrence by Holdings,
either Borrower or any member of the Controlled Group of any material liability,
fine or penalty. Except as disclosed in Item 6.11 of the Disclosure Schedule,
none of Holdings, either Borrower or any member of the Controlled Group has any
contingent liability with respect to any post-retirement benefit under a Welfare
Plan, other than liability for continuation coverage described in Part 6 of
Title I of ERISA.
SECTION 6.12 Environmental Warranties. Except as set forth in Item 6.12
of the Disclosure Schedule, and except as could not be reasonably expected to
have a Material Adverse Effect:
(a) the operations of Holdings, the Borrowers and their
respective Subsidiaries are in material compliance with all
Environmental Laws;
(b) there is no pending or threatened litigation, action or
proceeding against Holdings, either Borrower or any of their respective
Subsidiaries arising out of an alleged violation of any Environmental
Law;
(c) there have been no Releases of Hazardous Materials at, on
or under any property now owned or leased by Holdings, either Borrower
or any of their respective Subsidiaries;
(d) Holdings, each Borrower and each of their respective
Subsidiaries have been issued and are in material compliance with all
permits, certificates, approvals, licenses and other authorizations
required under Environmental Laws for the conduct of their operations;
(e) no property now owned or leased by Holdings, either
Borrower or any of their respective Subsidiaries is listed or, to the
knowledge of any Responsible Officer of Holdings or either Borrower,
proposed for listing (with respect to owned property only), on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list of sites, requiring investigation or clean-up;
(f) to the knowledge of any Responsible Officer of Holdings or
either Borrower, there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now owned or leased by Holdings, either Borrower or any of their
respective Subsidiaries that, singly or in the aggregate, have, or
could reasonably be expected to have, a Material Adverse Effect;
(g) none of Holdings, either Borrower nor any of their
respective Subsidiaries has directly transported or directly arranged
for the transportation of any Hazardous Material to any location which
is listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list or
which is the subject of federal, state or local enforcement actions or
other investigations which may lead to material claims against
Holdings, either Borrower or any of their respective Subsidiaries for
any remedial work, damage to natural resources or personal injury,
including claims under CERCLA; and
53
(h) there are no polychlorinated biphenyls, and there is no
friable asbestos present at any property now or previously owned or
leased by Holdings, either Borrower or any of their respective
Subsidiaries that, singly or in the aggregate, have, or could
reasonably be expected to have, a Material Adverse Effect.
SECTION 6.13 Accuracy of Information. None of the factual information
heretofore or contemporaneously furnished in writing to any Secured Party by or
on behalf of any Obligor in connection with any Loan Document or any transaction
contemplated hereby contains any untrue statement of a material fact, or omits
to state any material fact necessary to make any information not misleading, and
no other factual information hereafter furnished in connection with any Loan
Document by or on behalf of any Obligor to any Secured Party will contain any
untrue statement of a material fact or will omit to state any material fact
necessary to make any information not misleading on the date as of which such
information is dated or certified.
SECTION 6.14 Regulations U and X. No Obligor is engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock, and
no proceeds of the Second-Lien Loans will be used to purchase or carry margin
stock or otherwise for a purpose which violates, or would be inconsistent with,
F.R.S. Board Regulation U or Regulation X. Terms for which meanings are provided
in F.R.S. Board Regulation U or Regulation X or any regulations substituted
therefor, as from time to time in effect, are used in this Section with such
meanings.
SECTION 6.15 Issuance of Subordinated Debt; Status of Obligations as
Senior Debt, etc. Each of the Borrowers and Holdings has the power and authority
to incur the Subordinated Debt evidenced by the Subordinated Notes as provided
for under the Sub Debt Documents applicable thereto and has duly authorized,
executed and delivered the Sub Debt Documents applicable to such Subordinated
Debt. Each of the Borrowers and Holdings has issued, pursuant to due
authorization, the Subordinated Debt evidenced by the Subordinated Notes under
the applicable Sub Debt Documents, and such Sub Debt Documents constitute the
legal, valid and binding obligations of each of the Borrowers and Holdings
enforceable against it in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and by
principles of equity). The subordination provisions of the Subordinated Debt
contained in the Sub Debt Documents are enforceable against the holders of the
Subordinated Debt by the holder of any "Senior Debt" or similar term referring
to the Obligations (as defined in the Sub Debt Documents). All monetary
Obligations, including those to pay principal of and interest (including
post-petition interest, whether or not allowed as a claim under bankruptcy or
similar laws) on the Second-Lien Loans, and fees and expenses in connection
therewith, constitute "Senior Debt" or a similar term relating to the monetary
Obligations (as defined in the Sub Debt Documents) and all such monetary
Obligations are entitled to the benefits of the subordination created by the Sub
Debt Documents. Each of the Borrowers and Holdings acknowledges that each
Arranger, the Administrative Agent and each Lender is entering into this
Agreement and is willing to make Second-Lien Loans to the Borrowers in reliance
upon the subordination provisions of the Sub Debt Documents. No Indebtedness is
senior in right of payment to the Obligations, and no Liens securing any
Indebtedness, other than the Liens securing the obligations under the First-Lien
Facility and Liens otherwise permitted by Section 7.2.3 (other than (clause
(b)(ii) thereof), rank higher in priority than the Liens securing the
Obligations.
54
SECTION 6.16 Solvency. (a) The transactions contemplated hereby
(including, among other things, the undertaking by Holdings of its Obligations
consisting of the Second-Lien Loans made on the Closing Date and the
Indebtedness represented by the Notes and the execution and delivery by the
Subsidiary Guarantors of the Subsidiary Guaranty) do not involve or result in
any fraudulent transfer or fraudulent conveyance under the provisions of Section
548 of the Bankruptcy Code (11 U.S.C. ss.101 et seq.) or any applicable state
law respecting fraudulent transfers or fraudulent conveyances. On the Closing
Date, after giving effect to the transactions contemplated hereby (including,
among other things, the undertaking by Holdings of its Obligations consisting of
the Second-Lien Loans made on the Closing Date and the Indebtedness represented
by the Notes and the execution and delivery by the Subsidiary Guarantors of the
Subsidiary Guaranty), Holdings, each Borrower and each Subsidiary Guarantor was
Solvent (taking into account rights of indemnity, subrogation and contribution);
and
(b) the incurrence by the Borrowers of the Second-Lien Loans and the
application of the proceeds thereof, will not involve or result in any
fraudulent transfer or fraudulent conveyance under the provisions of Section 548
of the Bankruptcy Code (11 U.S.C. ss.101 et seq., as from time to time hereafter
amended, and any successor or similar statute) or any applicable state law
respecting fraudulent transfers or fraudulent conveyances. On the Closing Date,
after giving effect to such incurrence and application, Holdings, each Borrower
and each Subsidiary Guarantor is Solvent.
SECTION 6.17 Capitalization. On the Closing Date:
(a) The authorized Capital Securities of Holdings consists of
(i) 20,000,000 shares of common stock, $0.01 par value per share, of
which 7,008,406 shares are issued outstanding, and (ii) 20,000,000
shares of preferred stock, $0.01 par value per share, of which
3,000,000 shares of 15% Series B Senior Preferred Stock due 2011 and
547,975 shares of Junior Participating Cumulative Convertible Preferred
Stock are issued and outstanding.
(b) The authorized Capital Securities of WRC consists of (i)
22,000,000 shares of common stock, $0.01 par value per share, of which
20,000,000 shares are classified as Common Stock of which 2,830,000
shares are issued and outstanding, and of which 1,000,000 shares are
classified as Class A Non-Voting Common Stock and of which 1,000,000
shares are classified as Class B Non-Voting Common Stock, none of which
are issued and outstanding, (ii) 422,874 warrants to purchase shares of
such WRC Common Stock, and (iii) 20,000,000 shares of preferred stock,
$0.01 par value per share, of which 3,000,000 shares are issued and
outstanding.
55
(c) The authorized Capital Securities of CLI consists of (i)
20,000 shares of common stock, $0.01 par value per share, of which
10,000 shares were issued and outstanding, (ii) 1,495 warrants to
purchase shares of such CLI Common Stock and (iii) 10,000,000 shares of
preferred stock, $0.01 par value per share, of which no such shares are
issued and outstanding.
(d) The authorized Capital Securities of ChildU consists of
1,000 shares of common stock, $0.01 par value per share, of which 1,000
shares are issued and outstanding.
(e) All outstanding shares of Capital Securities of Holdings,
WRC, CLI and ChildU (to the extent owned by Holdings or its
Subsidiaries) are owned by the persons and in the amounts set forth on
Items 6.17(a), 6.17(b), 6.17(c) and 6.17(d) of the Disclosure Schedule,
respectively.
(f) All of such outstanding Capital Securities of Holdings,
WRC, CLI and ChildU are duly and validly issued, are fully paid and
nonassessable and are free of preemptive rights, and all of the Capital
Securities of WRC and CLI (other than the WRC PIK Preferred Equity and
the CLI PIK Preferred Equity, if any) are and will be subject to
drag-along rights available to certain other holders of the common
stock of WRC or CLI, as the case may be.
ARTICLE VII
COVENANTS
SECTION 7.1 Affirmative Covenants. Holdings and each Borrower agrees
with each Lender, each Arranger and the Administrative Agent that until the
Termination Date has occurred, Holdings and such Borrower will, and will cause
their respective Subsidiaries to, perform or cause to be performed the
obligations set forth in this Section 7.1.
SECTION 7.1.1 Financial Information, Reports, Notices, etc. Holdings
and each Borrower will furnish or cause to be furnished to the Administrative
Agent (who will distribute to each Lender) copies of the following financial
statements, reports, notices and information:
(a) as soon as available and in any event within 30 days after
the end of each calendar month (other than a calendar month which is
also the third month of a Fiscal Quarter), (i) unaudited consolidated
balance sheets of Holdings and its Restricted Subsidiaries as of the
end of such calendar month, and (ii) consolidated statements of income
and cash flow of Holdings and its Restricted Subsidiaries for such
calendar month and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such calendar month, and
including (in the case of consolidated statements of income) in
comparative form the figures for the corresponding calendar month in,
and year to date portion of, the immediately preceding Fiscal Year and
as compared to the budget for the current Fiscal Year, in each case
certified by the chief financial or accounting Authorized Officer of
Holdings as fairly presenting the consolidated financial condition of
Holdings and its Restricted Subsidiaries and as having been prepared in
accordance with GAAP consistently applied;
56
(b) as soon as available and in any event within 50 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year,
unaudited consolidated balance sheets of (i) Holdings and its
Restricted Subsidiaries, (ii) Holdings and its Subsidiaries, (iii) each
Borrower and its respective Restricted Subsidiaries and (iv) each
Borrower and its respective Subsidiaries, in each case as of the end of
such Fiscal Quarter, and consolidated statements of income and cash
flow of (i) Holdings and its Restricted Subsidiaries, (ii) Holdings and
its Subsidiaries, (iii) each Borrower and its respective Restricted
Subsidiaries and (iv) each Borrower and its respective Subsidiaries for
such Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter,
and including (in each case), in comparative form the figures for the
corresponding Fiscal Quarter in, and year to date portion of, the
immediately preceding Fiscal Year and as compared to the budget for the
current Fiscal Year, certified by the chief financial or accounting
Authorized Officer of Holdings as fairly presenting the consolidated
financial condition of (i) Holdings and its Restricted Subsidiaries,
(ii) Holdings and its Subsidiaries, (iii) each Borrower and its
respective Restricted Subsidiaries and (iv) each Borrower and its
respective Subsidiaries and as having been prepared in accordance with
GAAP consistently applied;
(c) as soon as available and in any event within 95 days after
the end of each Fiscal Year, a copy of (i) the audited consolidated
balance sheets of Holdings and its Subsidiaries and the unaudited
consolidated balance sheets of Holdings and its Restricted
Subsidiaries, (ii) the unaudited consolidated balance sheets of (A)
each Borrower and its respective Restricted Subsidiaries and (B) each
Borrower and its respective Subsidiaries, (iii) the related audited
consolidated statements of income and cash flow of Holdings and its
Subsidiaries and the related unaudited consolidated statements of
income and cash flow of Holdings and its Restricted Subsidiaries, and
(iv) the related unaudited statements of income and cash flow of (A)
each Borrower and its respective Restricted Subsidiaries and (B) each
Borrower and its respective Subsidiaries for such Fiscal Year, setting
forth, in each case, in comparative form the figures for the
immediately preceding Fiscal Year and, in the case of such audited
consolidated balance sheets and statements of income and cash flow of
Holdings and its Subsidiaries, audited (without any Impermissible
Qualification) by Deloitte & Touche LLP or such other independent
public accountants acceptable to the Arrangers, which shall state that,
in performing the examination necessary to deliver such audited
financial statements, no knowledge was obtained of any Event of Default
relating to Section 7.2.4 and, in the case of such unaudited
consolidated balance sheets and statements of income and cash flow of
Holdings and each Borrower described above, certified as complete and
correct by the chief financial or accounting Authorized Officer of
Holdings;
(d) concurrently with the delivery of the financial
information pursuant to clauses (b) and (c), a Compliance Certificate,
executed by the chief financial or accounting Authorized Officer of
Holdings, showing compliance with the financial covenants tested for
such period set forth in Section 7.2.4 and stating that no Default has
occurred and is continuing (or, if a Default has occurred, specifying
the details of such Default and the action that Holdings, the Borrowers
or an Obligor has taken or proposes to take with respect thereto);
57
(e) as soon as available and in any event no later than the
earlier to occur of (i) 30 days after the approval thereof by the Board
of Directors of Holdings and (ii) 90 days after the first day of the
Fiscal Year of Holdings, an annual budget, prepared on a monthly basis
for such Fiscal Year containing consolidated projected financial
statements (including balance sheets and statements of operations,
stockholders' equity and cash flows) of (i) Holdings and its Restricted
Subsidiaries and (ii) Holdings and its Subsidiaries, and (iii) each
Borrower and its respective Restricted Subsidiaries and (iv) each
Borrower and its respective Subsidiaries for such succeeding Fiscal
Year and each subsequent Fiscal Year, prepared in a manner consistent
with the Projections;
(f) as soon as possible and in any event within five Business
Days after any Responsible Officer of Holdings, either Borrower or any
Subsidiary Guarantor obtains knowledge of the occurrence of a Default,
a statement of an Authorized Officer of the Borrowers setting forth
details of such Default and the action which Holdings, the Borrowers or
such Obligor has taken and proposes to take with respect thereto;
(g) as soon as possible and in any event within five Business
Days after any Responsible Officer of Holdings, either Borrower or any
Subsidiary Guarantor obtains knowledge of (i) the occurrence of any
material adverse development with respect to any litigation, action,
proceeding or labor controversy described in Item 6.7 of the Disclosure
Schedule or (ii) the commencement of any litigation, action, proceeding
or labor controversy of the type and materiality described in Section
6.7, notice thereof and, to the extent either Arranger reasonably
requests, copies of all documentation relating thereto;
(h) promptly after the sending or filing thereof, copies of
all reports, notices, prospectuses and registration statements which
any Obligor files with the SEC or any national securities exchange;
(i) immediately upon becoming aware of (i) the institution of
any steps by any Person to terminate any Pension Plan, (ii) the failure
to make a required contribution to any Pension Plan if such failure is
sufficient to give rise to a Lien under Section 302(f) of ERISA, (iii)
the taking of any action with respect to a Pension Plan which could
result in the requirement that any Obligor furnish a bond or other
security to the PBGC or such Pension Plan, or (iv) the occurrence of
any event with respect to any Pension Plan which could result in the
incurrence by any Obligor of any material liability, fine or penalty,
notice thereof and copies of all documentation relating thereto;
(j) promptly upon receipt thereof, copies of all "management
letters" submitted to Holdings, either Borrower or any other Obligor by
the independent public accountants referred to in clause (b) in
connection with each audit made by such accountants;
(k) promptly following the mailing or receipt of any notice or
report delivered under the terms of any First-Lien Document or
Subordinated Debt, copies of such notice or report; and
(l) such other financial and other information as any Lender
through the Administrative Agent or either Arranger may from time to
time reasonably request (including information and reports in such
detail as either Arranger may request with respect to the terms of and
information provided pursuant to the Compliance Certificate).
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SECTION 7.1.2 Maintenance of Existence; Compliance with Laws, etc.
Holdings and each Borrower will, and will cause each of their respective
Subsidiaries to,
(a) except as otherwise permitted by Section 7.2.10, preserve
and maintain its legal existence; and
(b) comply in all material respects with all applicable laws,
rules, regulations and orders (except those the failure of which to
comply with individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect), including the payment
(before the same become delinquent), of all taxes, assessments and
governmental charges imposed upon Holdings, either Borrower or any of
their respective Subsidiaries or upon their property except to the
extent being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
have been set aside on the books of Holdings, such Borrower or any such
Subsidiary, as applicable.
SECTION 7.1.3 Maintenance of Properties. Holdings and each Borrower
will, and will cause each of their respective Subsidiaries to, maintain,
preserve, protect and keep its and their respective properties in good repair,
working order and condition (ordinary wear and tear excepted), and make
necessary repairs, renewals and replacements so that the business carried on by
each Borrower and its Subsidiaries may be properly conducted at all times,
unless such Borrower or such Subsidiary determines in good faith that the
continued maintenance of such property is no longer economically desirable.
SECTION 7.1.4 Insurance. Holdings and each Borrower will, and will
cause each of their respective Subsidiaries to:
(a) maintain insurance on its property with financially sound
and reputable insurance companies against loss and damage in at least
the amounts (and with only those deductibles) customarily maintained,
and against such risks as are typically insured against in the same
general area, by Persons of comparable size engaged in the same or
similar business as the Borrowers and their Subsidiaries; and
(b) all worker's compensation, employer's liability insurance
or similar insurance as may be required under the laws of any state or
jurisdiction in which it may be engaged in business.
Without limiting the foregoing, all insurance policies required pursuant to this
Section shall name each of the Collateral Agent and the Administrative Agent as
mortgagees (in the case of property insurance) or additional insureds (in the
case of liability insurance), as applicable, in each case as their interests may
appear, and provide that no cancellation or modification of the policies will be
made without thirty days' prior written notice to the Administrative Agent.
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SECTION 7.1.5 Books and Records. Holdings and each Borrower will, and
will cause each of their respective Subsidiaries to, keep books and records in
accordance with GAAP which accurately reflect all of its business affairs and
transactions and permit each Arranger and the Administrative Agent (or any other
Secured Party if a Specified Default has occurred and is then continuing) or any
of their respective representatives, at reasonable times and intervals upon
reasonable notice to the Borrowers, to visit Holdings', either Borrowers' or any
other Obligor's offices, to discuss Holdings', such Borrower's or such other
Obligor's financial matters with its officers and employees, and its independent
public accountants (and Holdings and the Borrowers hereby authorizes such
independent public accountant to discuss Holdings', the Borrowers' and each
Obligor's financial matters with each Secured Party or their representatives
whether or not any representative of Holdings, either Borrower or such Obligor
is present so long as Holdings, such Borrower or such Obligor has been afforded
a reasonable opportunity to be present) and to examine (and photocopy extracts
from) any of its books and records; provided that, in the case of a visit by a
Secured Party (other than an Arranger or the Administrative Agent), such visit
shall be coordinated by the Administrative Agent). Unless a Specified Event
shall have occurred and be continuing at the time of any such visit or
discussion with such independent public accountants, (a) costs of visits by each
Secured Party (other than each Arranger or the Administrative Agent) shall be
for the account of such Secured Party and (b) costs associated with any such
discussions with such independent public accountants shall be for the account of
the applicable Arranger, the Administrative Agent or such other applicable
Secured Party.
SECTION 7.1.6 Environmental Law Covenant. Holdings and each Borrower
will, and will cause each of their respective Subsidiaries to,
(a) use and operate all of its and their facilities and
properties in material compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other
authorizations required by applicable Environmental Laws in effect and
remain in material compliance therewith; and
(b) notify the Arrangers within ten Business Days after any
Responsible Officer of such Obligor receives any material written
claim, complaint or notice relating to the condition of its facilities
and properties relating to compliance with Environmental Laws, and (ii)
take reasonable steps to resolve any material non-compliance with
Environmental Laws and keep its property free of any Lien imposed by
any Environmental Law.
SECTION 7.1.7 Use of Proceeds. The Borrowers shall apply the proceeds
of the Second-Lien Loans
(a) to prepay the loans under the First-Lien Facility pursuant
to the Refinancing;
(b) to pay fees and expenses related to the Second-Lien
Facility and all transactions contemplated in connection therewith; and
(c) for general corporate purposes of the Borrowers and their
Subsidiaries.
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SECTION 7.1.8 Future Subsidiary Guarantors, Security, etc. Holdings and
each Borrower will, and will cause each of their respective Domestic
Subsidiaries and, subject to the qualifications provided herein, Foreign
Subsidiaries to, execute any documents, Perfection Certificates, Filing
Statements, agreements and instruments, and take all further action (including
filing Mortgages not relating to leaseholds of either Borrower or any
Subsidiary) that may be required under applicable law, or that either Arranger
may reasonably request, in order to effectuate the transactions contemplated by
the Loan Documents and in order to grant, preserve, protect and perfect (on a
Second Priority basis) the perfection and priority of the security interests
created or intended to be created by the Loan Documents. Holdings and each
Borrower will cause any subsequently acquired or organized Domestic Subsidiary
of such Borrower to promptly, but in no event later than 45 days following such
acquisition or organization, execute a Subsidiary Guaranty (or a supplement
thereto) and each applicable Loan Document (including a supplement to the
Security and Pledge Agreement) in favor of the Secured Parties. In addition,
from time to time, Holdings and each Borrower will, at its cost and expense,
promptly secure the Obligations by pledging or creating, or causing to be
pledged or created (on a Second Priority basis), perfected security interests
with respect to such of its assets and properties as either Arranger or the
Required Lenders shall designate (it being understood that it is the intent of
the parties that the Obligations shall be secured (on a Second Priority basis)
by, among other things, substantially all the assets of Holdings, the Borrowers
and their respective Domestic Subsidiaries) (including real and other properties
acquired subsequent to the Closing Date (provided that it is the intent of the
parties that neither of the Borrowers nor any of their Subsidiaries shall be
required to deliver any leasehold mortgages); provided, however, that neither
Borrower nor any Subsidiary shall be required to pledge more than 65% of the
total voting power of all classes of Securities of a first tier Foreign
Subsidiary or any shares of any other Foreign Subsidiary required to be pledged
hereunder. Such security interests and Liens will be created under the Loan
Documents in form and substance satisfactory to the Arrangers, and Holdings and
the Borrowers shall deliver or cause to be delivered to the Lenders all such
instruments and documents (including legal opinions, title insurance policies
and lien searches) as the Arrangers shall reasonably request to evidence
compliance with this Section.
SECTION 7.1.9 Rate Protection Agreements. Holdings and the Borrowers
will enter into or maintain interest rate swaps, caps, collars or similar
agreements in a notional amount that, when taken together with the aggregate
principal amount of Total Debt subject to a fixed interest rate, is at least
equal to 50% of the aggregate principal amount of all Total Debt, with terms of
such hedging agreements having terms as the Arrangers, Holdings and the
Borrowers shall mutually agree.
SECTION 7.1.10 Leased Property. Prior to entering into any new lease of
real property or renewing any existing lease of real property following the
Closing Date, each of Holdings and each Borrower shall, and shall cause each of
its Subsidiaries to, use its commercially reasonable best efforts to deliver to
the Administrative Agent a Landlord Waiver executed by the lessor of any real
property that is to be leased by Holdings, such Borrower or such Subsidiary for
a term in excess of one year in any state which by statute grants such lessor a
"landlord's" (or similar) Lien which is superior to that of the Administrative
Agent and to the extent any such Landlord Waiver is not so executed and
delivered, a written explanation of Holdings as to why Holdings, such Borrower
or such Subsidiary, as the case may be, was unable to obtain such Landlord
Waiver.
SECTION 7.1.11 [Reserved].
SECTION 7.1.12 Preservation of Corporate Existence. Holdings will do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect the legal existence of each Unrestricted Subsidiary and maintain such
legal existence separate from that of Holdings or the Borrowers or any of their
Restricted Subsidiaries, including maintenance of separate financial statements.
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SECTION 7.2 Negative Covenants. Holdings and each Borrower covenants
and agrees with each Lender, each Arranger and the Administrative Agent that
until the Termination Date has occurred, Holdings and such Borrower will, and
will cause each of its respective Subsidiaries to, perform or cause to be
performed the obligations set forth in this Section 7.2.
SECTION 7.2.1 Business Activities. Holdings and each Borrower will not,
and will not permit any of their respective Subsidiaries to, engage in any
business activity except those business activities engaged in on the date of
this Agreement and activities reasonably incidental or related thereto. Without
limiting, directly or indirectly, the foregoing, Holdings will not engage in any
business activity other than (a) its direct ownership of the Capital Securities
of each of WRC, CLI, ChildU and ThinkBox and its indirect ownership of the
Capital Securities of each Subsidiary of each Borrower and ChildU and ThinkBox
and the direct and indirect ownership of the Capital Securities of any Person to
the extent Investment in such Person is permitted pursuant to Section 7.2.5 and
(b) its compliance with the obligations applicable to it under the Loan
Documents and the Related Transaction Documents. Without limiting the generality
of the immediately preceding sentence, Holdings will not (i) create, incur,
assume or suffer to exist any Indebtedness (other than Indebtedness under this
Agreement, the First-Lien Facility or any Loan Document, Indebtedness permitted
to be incurred by it pursuant to Section 7.2.2(d), Indebtedness in respect of a
Holdings' guaranty of Indebtedness permitted pursuant to Section 7.2.2(b) hereof
or any Subordinated Debt pursuant to clause (h) (or (m) (but only to the extent
that it refinances any Subordinated Debt incurred under clause (h))) of Section
7.2.2), (ii) create, assume, or suffer to exist any Lien upon, or grant any
options or other rights with respect to, any of its revenues, property or other
assets, whether now owned or hereafter acquired (other than pursuant to the Loan
Documents), (other than any Liens permitted by Section 7.2.3) (iii) wind-up,
liquidate or dissolve itself (or suffer to exist any of the foregoing), or
consolidate or amalgamate with or merge into or with any other Person, or
convey, sell, transfer, lease or otherwise dispose of all or any part of its
assets, in one transaction or a series of transactions, to any Person or
Persons, (iv) create, incur, assume or suffer to exist any Investment in any
Person (other than Investments permitted pursuant to Section 7.2.5) or (v)
permit to be taken any action that would result in a Change in Control.
SECTION 7.2.2 Indebtedness. Holdings and each Borrower will not, and
will not permit any of their respective Subsidiaries to, create, incur, assume
or permit to exist any Indebtedness, other than:
(a) Indebtedness in respect of the monetary Obligations;
(b) (i) Indebtedness under the First-Lien Facility in an
aggregate principal amount not to exceed the sum of (x) $30,000,000,
plus (y) up to (but not in excess of) $30,000,000 of additional
Indebtedness of the type (and to the extent) permitted pursuant to
clause (ii) below, and (ii) additional Indebtedness constituting Senior
Secured Debt; provided that, for purposes of this clause (ii), both
immediately before and after giving effect to the creation, incurrence
or assumption of any such Indebtedness (including any Indebtedness
described in clause (i)(y) above pursuant to this clause (ii)), the
Senior Secured Leverage Ratio shall not exceed 4.0:1.0;
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(c) Indebtedness existing as of the Closing Date which is
identified in Item 7.2.2(c) of the Disclosure Schedule;
(d) unsecured Indebtedness of Holdings, the Borrowers and
their respective Subsidiaries (i) incurred in the ordinary course of
business of Holdings, such Borrower and its Subsidiaries (including
open accounts extended by suppliers on normal trade terms in connection
with purchases of goods and services which are not overdue for a period
of more than 120 days or, if overdue for more than 120 days, as to
which a dispute exists and adequate reserves in conformity with GAAP
have been established on the books of Holdings, such Borrower or such
Subsidiary) and (ii) in respect of performance, surety or appeal bonds
provided in the ordinary course of business, but excluding (in each
case), Indebtedness incurred through the borrowing of money or
Contingent Liabilities in respect thereof (provided, however, that the
amount of outstanding unsecured Indebtedness incurred by Holdings under
this clause (d) shall not at any time exceed $1,000,000);
(e) Indebtedness of the Borrowers and their respective
Subsidiaries (i) in respect of industrial revenue bonds or other
similar governmental or municipal bonds, (ii) evidencing the deferred
purchase price of newly acquired property or incurred to finance the
acquisition, construction or improvement of any fixed or capital assets
of such Borrower and its Subsidiaries (pursuant to purchase money
mortgages or otherwise, whether owed to the seller or a third party)
used in the ordinary course of business of such Borrower and its
Subsidiaries (provided, that such Indebtedness is incurred within 60
days of the acquisition or the completion of such construction or
improvement of such property) and (iii) constituting Capitalized Lease
Liabilities; provided, that the aggregate amount of all Indebtedness
outstanding pursuant to this clause shall not at any time exceed
$5,000,000;
(f) Indebtedness of any Restricted Subsidiary owing to either
Borrower or any other Restricted Subsidiary, which Indebtedness (i)
shall, if payable to either Borrower or a Domestic Subsidiary and
evidenced by one or more Intercompany Notes, be delivered (subject to
the Intercreditor Agreement) in pledge to the Administrative Agent
pursuant to the Security and Pledge Agreement, and whether or not
evidenced by a note, shall not be forgiven or otherwise discharged for
any consideration other than payment in full or in part in cash
(provided, that only the amount repaid in part shall be discharged),
and (ii) if incurred by a Foreign Subsidiary owing to either Borrower
or a Subsidiary Guarantor, shall not (when aggregated with the amount
of Investments made by the Borrowers and the Subsidiary Guarantors in
Foreign Subsidiaries under clause (e)(i) of Section 7.2.5), exceed
$20,000,000;
(g) unsecured Indebtedness (not evidenced by a note or other
instrument) of either Borrower owing to a Restricted Subsidiary that
has previously executed and delivered to the Arrangers the Interco
Subordination Agreement (or a supplement thereto);
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(h) unsecured Subordinated Debt of Holdings and the Borrowers
evidenced by the Subordinated Notes incurred pursuant to the terms of
the Sub Debt Documents in a principal amount not to exceed
$152,000,000, and unsecured Contingent Liabilities of the Subsidiary
Guarantors in respect of such Subordinated Debt, but only if such
Contingent Liabilities are subordinated to the Obligations on
substantially the same terms as such Subordinated Debt of Holdings and
the Borrowers is subordinated to the Obligations;
(i) Indebtedness of a Person existing at the time such Person
became a Subsidiary of either Borrower in an aggregate amount for all
such Persons not to exceed $10,000,000, but only to the extent that
such Indebtedness was not created or incurred in contemplation of such
Person becoming a Subsidiary;
(j) Indebtedness under Hedging Obligations entered into in the
ordinary course of business to limit risks of currency or interest rate
fluctuations and not for speculative purposes;
(k) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(l) unsecured Indebtedness consisting of guaranties of loans
made to officers, directors or employees of Holdings or any of its
Subsidiaries in an aggregate outstanding amount, when taken together
with the loans referred to in clause (f)(iv)(B) of Section 7.2.5, not
to exceed $7,500,000;
(m) Indebtedness which refinances Indebtedness permitted by
clauses (c), (h), and (i) above; provided, however, that after giving
effect to such refinancing, (i) the principal amount of outstanding
Indebtedness is not increased, (ii) neither the tenor nor the average
life thereof is reduced, (iii) the respective obligor or obligors shall
be the same on the refinancing Indebtedness as on the Indebtedness
being refinanced, (iv) the security, if any, for the refinancing
Indebtedness shall be the same as that for the Indebtedness being
refinanced (except to the extent that less security is granted to
holders of refinancing Indebtedness), (v) the holders of refinancing
Indebtedness are not afforded covenants, defaults, rights or remedies
more burdensome to the obligor or obligors than those contained in the
Indebtedness being refinanced and (vi) the refinancing Indebtedness is
subordinated to the same degree (and on substantially the same terms),
if any, as the Indebtedness being refinanced;
(n) Contingent Liabilities of Holdings and the Borrowers in
respect of Indebtedness consisting of guaranties made by Holdings and
the Borrowers in respect of Indebtedness of the Subsidiary Guarantors
of the type permitted and described in clause (d)(i) above, in an
aggregate amount not to exceed at any time outstanding $2,500,000; and
(o) other Indebtedness of the Borrowers and their respective
Subsidiaries (other than Indebtedness of Foreign Subsidiaries owing to
either Borrower or any of its Domestic Subsidiaries), including
Indebtedness constituting Subordinated Debt; provided that, both
immediately before and after giving effect to the creation, incurrence
or assumption of any such Indebtedness pursuant to this clause (o), the
Leverage Ratio shall not exceed 6.0:1.0;
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provided, however, that no Indebtedness otherwise permitted by clauses (f)(ii),
(h), (i), (m) or (o) shall be assumed or otherwise incurred if a Specified
Default has occurred and is then continuing or would result therefrom.
SECTION 7.2.3 Liens. Holdings and each Borrower will not, and will not
permit any of their respective Subsidiaries to, create, incur, assume or permit
to exist any Lien upon any of its property (including Capital Securities of any
Person), revenues or assets, whether now owned or hereafter acquired, except:
(a) Liens securing payment of the monetary Obligations;
(b) (x) Liens securing Indebtedness described in clause
(b)(i)(x) of Section 7.2.2 and (y) Liens securing Indebtedness
described in clause (b) of Section 7.2.2 (other than Liens securing
Indebtedness described in clause (b)(i)(x) of Section 7.2.2) to the
extent (but only to the extent) that, immediately prior to the creation
of such Lien, (i) the Senior Secured Leverage Ratio would not exceed
4:00:1.00 and (ii) the Leverage Ratio would not exceed 6.0:1.0, in each
case on a pro forma basis after giving effect thereto; provided that,
unless securing Indebtedness outstanding under the First-Lien Facility
(including any additional indebtedness under the First Lien Facility
incurred pursuant to the leverage test set forth in clause (b)(ii) of
Section 7.2.2), no such Lien shall rank senior to the Liens securing
the Second-Lien Loans, whether in respect of right to payment, right to
realize on collateral or otherwise;
(c) Liens existing as of the Closing Date and disclosed in
Item 7.2.3(c) of the Disclosure Schedule securing Indebtedness
described in clause (c) of Section 7.2.2, and any permitted
refinancing, refunding, renewal or extension of such Indebtedness;
provided, that no such Lien shall encumber any additional property and
the amount of Indebtedness secured by such Lien is not increased from
that existing on the Closing Date (as such Indebtedness may have been
permanently reduced subsequent to the Closing Date);
(d) Liens securing Indebtedness of the type permitted under
clause (e) of Section 7.2.2; provided, that (i) such Lien is granted
within 90 days after such Indebtedness is incurred, (ii) the
Indebtedness secured thereby does not exceed 80% of the cost of the
applicable property, improvements or equipment at the time of such
acquisition (or construction) and (iii) such Lien secures only the
assets that are the subject of the Indebtedness referred to in such
clause;
(e) Liens securing Indebtedness permitted by clause (i) of
Section 7.2.2; provided, that such Liens existed prior to such Person
becoming a Subsidiary, were not created in anticipation thereof and
attach only to specific tangible assets of such Person (and not assets
of such Person generally);
(f) Liens in favor of carriers, warehousemen, mechanics,
materialmen and landlords granted in the ordinary course of business
for amounts not overdue or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
65
(g) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment
insurance or other forms of governmental insurance or benefits, or to
secure performance of tenders, statutory obligations, bids, leases or
other similar obligations (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety
and appeal bonds or performance bonds;
(h) judgment Liens in existence for less than 45 days after
the entry thereof or with respect to which execution has been stayed or
the payment of which is covered in full (subject to a customary
deductible) by insurance maintained with responsible insurance
companies and which do not otherwise result in an Event of Default
under Section 8.1.6;
(i) easements, rights-of-way, zoning restrictions, minor
defects or irregularities in title and other similar encumbrances not
interfering in any material respect with the value or use of the
property to which such Lien is attached;
(j) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books;
(k) Liens (including financing statements that are filed as a
precautionary measure and undertakings to file such financing
statements) provided for in equipment leases under which either
Borrower or any of their respective Subsidiaries is the lessee;
provided that any such Lien in respect of any equipment lease is
limited to the equipment being leased under such lease and the proceeds
thereof;
(l) leases, subleases, licenses and sublicenses granted to
third parties in the ordinary course of business, in each case not
interfering in any respect with the operations or business of any
Borrower or any of its Subsidiaries or the Liens of the Administrative
Agent or the Lenders granted by the Loan Documents;
(m) banker's liens and rights of offset of the holders of
Indebtedness of the Borrowers or their respective Subsidiaries on
monies deposited by either Borrower or any such Subsidiary with such
holders of Indebtedness in the ordinary course of business of either
Borrower or any such Subsidiary; and
(n) other Liens that do not, individually or in the aggregate,
attach to a material portion of the assets of the Borrowers or any
Subsidiary or the Capital Securities of either Borrower or any of their
respective Subsidiaries and do not secure obligations in an aggregate
amount in excess of $4,000,000.
SECTION 7.2.4 Financial Condition and Operations. Holdings and each
Borrower will not permit the Senior Secured Leverage Ratio as of the last day of
(a) any Fiscal Quarter (other than the Fiscal Quarter ending June 30, 2005) to
be greater than 4.25:1.00 and (b) the Fiscal Quarter ending June 30, 2005 to be
greater than 4.50:1.00.
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SECTION 7.2.5 Investments. Holdings and each Borrower will not, and
will not permit any of their respective Subsidiaries to, purchase, make, incur,
assume or permit to exist any Investment in any other Person, except:
(a) Investments existing on the Closing Date and identified in
Item 7.2.5(a) of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) 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;
(d) Investments made by the Borrowers and their respective
Subsidiaries that are permitted as Capital Expenditures pursuant to
Section 7.2.7 of the First-Lien Facility;
(e) Investments by way of contributions to capital or
purchases of Capital Securities (i) by either Borrower in any
Restricted Subsidiaries or by any Restricted Subsidiary in other
Restricted Subsidiaries; provided, that the aggregate amount of
intercompany loans made pursuant to clause (f)(ii) of Section 7.2.2 and
Investments under this clause made by the Borrowers and Subsidiary
Guarantors in Restricted Subsidiaries that are not Subsidiary
Guarantors shall not exceed $20,000,000 at any time, or (ii) by any
Restricted Subsidiary in either Borrower;
(f) Investments made by the Borrowers and their respective
Restricted Subsidiaries that constitute (i) accounts receivable
arising, (ii) trade debt granted, (iii) deposits made in connection
with the purchase price of goods or services, in each case in the
ordinary course of business or (iv) loans to officers, directors or
employees of Holdings or any of its Restricted Subsidiaries (A) to
finance the acquisition of Capital Securities (or securities linked to
such securities) of Holdings so long as Holdings makes a capital
contribution of such proceeds to the Borrowers, or (B) in the ordinary
course of business for items such as travel, entertainment and
relocation expenses in an aggregate outstanding principal amount, when
taken together with the amount of guaranties referred to in clause (l)
of Section 7.2.2, not exceeding $7,500,000;
(g) Investments (in addition to Investments made pursuant to
clause (h) or (j) hereof) made by Holdings, the Borrowers and their
respective Restricted Subsidiaries constituting Permitted Acquisitions
in an aggregate amount not to exceed $20,000,000 over the term of this
Agreement; provided, that (i) any such Investment shall result in the
acquisition of a wholly owned Restricted Subsidiary, and (ii) upon
making such Investment, the provisions of Section 7.1.8 are complied
with;
(h) Investments made by Holdings in connection with the
ThinkBox Investment.
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(i) Investments consisting of any deferred portion of the
sales price received by either Borrower or any Subsidiary in connection
with any Disposition permitted under Section 7.2.11;
(j) other Investments (in addition to or in combination with
Investments made pursuant to clause (g) or (h) hereof) made by Holdings
by way of capital contributions made to any Subsidiary or resulting in
the Acquisition of a Subsidiary; provided that such Investments made
pursuant to this clause (j) are funded solely with Net Equity Proceeds
resulting from the issuance of Capital Securities of Holdings; or
(k) other Investments made by Holdings, the Borrowers and
their respective Subsidiaries in an aggregate amount not to exceed
$5,000,000 over the term of this Agreement;
provided, however, that (i) any Investment which when made complies with the
requirements of clauses (a), (b) or (c) of the definition of the term "Cash
Equivalent Investment" may continue to be held notwithstanding that such
Investment if made thereafter would not comply with such requirements, and (ii)
no Investment otherwise permitted by clause (g), (j) or (k) shall be permitted
to be made if any Default has occurred and is continuing or would result
therefrom.
SECTION 7.2.6 Restricted Payments, etc. Holdings and each Borrower will
not, and will not permit any of their respective Subsidiaries to, declare or
make a Restricted Payment, or make any deposit for any Restricted Payment, other
than
(a) Restricted Payments made by Subsidiaries to the Borrowers
or wholly owned Restricted Subsidiaries of either Borrower;
(b) Restricted Payments made by the Borrowers and the
Subsidiaries, as applicable, to Holdings in accordance with the Tax
Sharing Agreement, but in aggregate amounts no greater than, and
limited to the amount necessary to enable Holdings to make payments in
cash in respect of the aggregate federal income tax liability then due
of the "affiliated group" (within the meaning of Section 1504(a)(1) of
the Code) of which Holdings is the common parent corporation; provided,
however, that any payment required to be made by any Borrower or
Subsidiary to Holdings in accordance with the Tax Sharing Agreement
that otherwise would be prohibited pursuant to the preceding limitation
may be paid directly to another Borrower or Subsidiary, as applicable,
to the extent that Holdings would have been required to make a payment
to such other Borrower or Subsidiary in accordance with the Tax Sharing
Agreement;
(c) Restricted Payments made by the Borrowers to Holdings
solely to the extent necessary to enable Holdings to pay Management
Fees in an aggregate amount of up to $1,000,000 in any Fiscal Year;
(d) Restricted Payments made by the Borrowers to Holdings
solely to the extent necessary to enable Holdings to pay for general
administrative and operating expenses of Holdings;
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(e) Restricted Payments made by the Borrowers to Holdings
solely to the extent necessary to enable Holdings to repurchase, redeem
or otherwise acquire or retire for value any Capital Securities of
Holdings, or any warrant, option or other right to acquire Capital
Securities of Holdings, held by any member of management or employee of
Holdings or any of its Subsidiaries pursuant to any management equity
subscription agreement or stock option agreement as a result of the
cessation of the employment such Person (by death, disability or
otherwise) in an aggregate amount of up to $5,000,000 in each Fiscal
Year;
(f) (i) Restricted Payments made by the Borrowers to Holdings
(including Restricted Payments made by WRC on the WRC Mirror PIK
Preferred Equity) on or subsequent to November 17, 2004 solely to the
extent necessary to enable Holdings to make scheduled payments of
dividends on the PIK Preferred Equity and Holdings does in fact make
such scheduled payments thereon and (ii) Restricted Payments made by
CLI and WRC on or subsequent to November 17, 2004 to make scheduled
payments of dividends on the CLI PIK Preferred Equity and the WRC PIK
Preferred Equity (other than any such Capital Securities held by
Holdings), respectively; provided, that such Restricted Payments may
only occur so long as, in each case, the conditions set forth in the
proviso to this Section are satisfied and at the time of such payments
and after giving effect to the making of each such Restricted Payment,
the Leverage Ratio for the most recently ended Fiscal Quarter for which
a Compliance Certificate was delivered by Holdings to the Arrangers
pursuant to clause (d) of Section 7.1.1 as calculated on a pro forma
basis shall be less than 4.75:1.0;
(g) (i) Restricted Payments made by the Borrowers to Holdings
solely to the extent necessary to enable Holdings to redeem shares of
the PIK Preferred Equity (other than any such Capital Securities held
by Holdings or WRC) or (ii) Restricted Payments made by CLI and WRC to
redeem shares of the CLI PIK Preferred Equity and the WRC PIK Preferred
Equity (other than any such Capital Securities held by Holdings),
respectively, in each case, using Net Equity Proceeds; provided, that
such Restricted Payments may only occur so long as the conditions set
forth in the proviso to this Section are satisfied and at the time of
such payments and after giving effect to the making of each such
Restricted Payment, the Leverage Ratio for the most recently ended
Fiscal Quarter for which a Compliance Certificate was delivered by
Holdings to the Arrangers pursuant to clause (d) of Section 7.1.1 as
calculated on a pro forma basis shall be less than 4.75:1.0;
(h) Restricted Payments by Holdings on the Holdings Junior
Preferred Stock or PIK Preferred Equity which dividends are paid solely
by, at the option of Holdings, (i) the issuance of additional shares of
Holdings Junior Preferred Stock or PIK Preferred Equity, respectively,
or (ii) adding an amount equal to the dividends otherwise payable
therein for the liquidation preference of such Holdings Junior
Preferred Stock or PIK Preferred Equity, respectively; or
(i) Restricted Payment by Holdings which are funded solely
with Net Equity Proceeds resulting from the issuance of Capital
Securities of Holdings;
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provided, however, that no Restricted Payments under clause (c), (e), (f), (g),
(h) or (i) may be made if (A) any Default shall have occurred and be continuing
on the date such Restricted Payment is declared or made, or a Default would
result from the making of any such Restricted Payment and (B) after giving
effect to the making of each such Restricted Payment, the Borrowers would not be
in pro forma compliance with the covenant set forth in Section 7.2.4 for the
most recently ended Fiscal Quarter for which a Compliance Certificate was
delivered by Holdings to the Arrangers pursuant to clause (c) of Section 7.2.2.
SECTION 7.2.7 [Reserved].
SECTION 7.2.8 Restrictions on Prepayment of Subordinated Indebtedness.
Holdings and each Borrower will not, and will not permit any of their respective
Subsidiaries to,
(a) make any payment or prepayment of principal of, or premium
or interest on, any Subordinated Debt (i) other than payments of
interest on the stated, scheduled date for payment of interest set
forth in the applicable Sub Debt Documents, (ii) other than as
permitted below in clause (b) or (iii) which would violate the terms of
this Agreement or the applicable Sub Debt Documents;
(b) redeem, retire, purchase, defease or otherwise acquire any
Subordinated Debt (including, in the case of each Borrower and each of
their respective Subsidiaries, by way of issuing notes evidencing
Subordinated Debt in exchange for Subordinated Notes of Holdings);
provided, however, that, so long as no Specified Default shall have
occurred and be continuing on the date such redemption, retirement,
purchase, defeasance or other acquisition is declared or made, or a
Specified Default would result from the consummation thereof, Holdings
and the Borrowers may redeem, retire, purchase, defease or otherwise
acquire any Subordinated Debt, in whole or in part, using (i) proceeds
of unsecured Indebtedness that, at the time of incurrence, would be
permitted under both clauses (m) and (o) of Section 7.2.2, and (ii) Net
Equity Proceeds resulting from the issuance of Capital Securities of
Holdings; or
(c) make any deposit (including the payment of amounts into a
sinking fund or other similar fund) for any of the foregoing purposes.
SECTION 7.2.9 [Reserved].
SECTION 7.2.10 Consolidation, Merger, etc. Holdings and each Borrower
will not, and will not permit any of their respective Subsidiaries to, liquidate
or dissolve, consolidate with, or merge into or with, any other Person, or
purchase or otherwise acquire all or substantially all of the assets of any
Person (or any division thereof), except
(a) any Restricted Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, either Borrower or any
other Restricted Subsidiary (provided, however, that a Subsidiary
Guarantor may only liquidate or dissolve into, or merge with and into,
either Borrower or another Subsidiary Guarantor), and the assets or
Capital Securities of any Subsidiary may be purchased or otherwise
acquired by either Borrower or any other Restricted Subsidiary
(provided, however, that the assets or Capital Securities of any
Subsidiary Guarantor may only be purchased or otherwise acquired by
either Borrower or another Subsidiary Guarantor); provided, further,
that in no event shall any Pledged Subsidiary consolidate with or merge
with and into (x) any Unrestricted Subsidiary or (y) any other
Subsidiary which is not another Pledged Subsidiary unless after giving
effect thereto, the Administrative Agent shall have a perfected pledge
(on a Second Priority basis) of, and security interest in and to, at
least the same percentage of the issued and outstanding interests of
Capital Securities (on a fully diluted basis) of the surviving Person
as the Administrative Agent had immediately prior to such merger or
consolidation in form and substance satisfactory to the Administrative
Agent and its counsel, pursuant to such documentation and opinions as
shall be necessary in the opinion of the Administrative Agent to
create, perfect or maintain the collateral position of the Secured
Parties therein;
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(b) a Borrower may merge with or into the other Borrower;
(c) so long as no Specified Default has occurred and is
continuing or would occur after giving effect thereto, either Borrower
or any of its Subsidiaries may (to the extent permitted by clause (g)
of Section 7.2.5) purchase all or substantially all of the assets or
Capital Securities of any Person (or any division thereof) (other than
either Borrower or any of its Subsidiaries), or acquire such Person by
merger (it being understood that the foregoing shall not prohibit
consummation of any transaction committed to in a definitive agreement
that was entered into prior to the occurrence of any such Specified
Default); and
(d) any transaction permitted under Section 11.12.
SECTION 7.2.11 Permitted Dispositions. Holdings and each Borrower will
not, and will not permit any of their respective Subsidiaries to, Dispose of
Holdings', any of such Borrower's or such Subsidiaries' (other than Unrestricted
Subsidiaries') assets (including accounts receivable and Capital Securities of
Subsidiaries (other than Unrestricted Subsidiaries)) to any Person in one
transaction or series of transactions unless such Disposition is a Permitted
Asset Disposition or is permitted under Section 11.12.
SECTION 7.2.12 Modification of Certain Agreements. Holdings and each
Borrower will not, and will not permit any of their respective Subsidiaries to,
consent to any amendment, supplement, waiver or other modification of, or enter
into any forbearance from exercising any rights with respect to the terms or
provisions contained in,
(a) the Sub Debt Documents, other than any amendment,
supplement, waiver or modification for which no (or only a nominal) fee
is payable to the holders of the Subordinated Debt and which (i)
extends the date or reduces the amount of any required repayment,
prepayment or redemption of the principal of such Subordinated Debt,
(ii) reduces the rate or extends the date for payment of the interest,
premium (if any) or fees payable on such Subordinated Debt or (iii)
makes the covenants, events of default or remedies in such Sub Debt
Documents less restrictive on the applicable Obligor; or
(b) any of the Related Transaction Documents, except in
accordance with the Intercreditor Agreement.
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SECTION 7.2.13 Transactions with Affiliates. Except (a) as permitted
under clause (d), (e) or (f)(iv) of Section 7.2.5, Section 7.2.6, or clause (a)
or (b) of Section 7.2.10, (b) payments made by Holdings, the Borrowers and their
respective Subsidiaries in accordance with the Tax Sharing Agreement and (c) for
Permitted Asset Dispositions of the type described in clause (f) of the
definition thereof, Holdings and each Borrower will not, and will not permit any
of their respective Subsidiaries to, enter into or cause or permit to exist any
arrangement, transaction or contract (including for the purchase, lease or
exchange of property or the rendering of services) with any of its other
Affiliates, unless such arrangement, transaction or contract (i) is on fair and
reasonable terms no less favorable to Holdings or such Borrower or such
Subsidiary than it could obtain in an arm's-length transaction with a Person
that is not an Affiliate and (ii) is of the kind which would be entered into by
a prudent Person in the position of Holdings or such Borrower or such Subsidiary
with a Person that is not one of its Affiliates.
SECTION 7.2.14 Restrictive Agreements, etc. Holdings and each Borrower
will not, and will not permit any of their respective Subsidiaries to, enter
into any agreement prohibiting (i) the creation or assumption of any Lien upon
its properties, revenues or assets, whether now owned or hereafter acquired
securing any Obligations, (ii) the ability of any Obligor to amend or otherwise
modify any Loan Document, or (iii) the ability of any Subsidiary to make any
payments, directly or indirectly, to either Borrower, including by way of
dividends, advances, repayments of loans, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on investments. The
foregoing prohibitions shall not apply to restrictions contained (x) in any Loan
Document or First-Lien Document or any agreement governing any other
Indebtedness permitted by clause (b) of Section 7.2.2, (y) in the case of clause
(i), any agreement governing any Indebtedness permitted by clause (e) of Section
7.2.2 as to the assets financed with the proceeds of such Indebtedness or (z) in
the case of clauses (i) and (iii), any agreement of a Foreign Subsidiary
governing the Indebtedness permitted by clause (f)(ii) of Section 7.2.2.
SECTION 7.2.15 Sale and Leaseback. Holdings and each Borrower will not,
and will not permit any of their respective Subsidiaries to, directly or
indirectly enter into any agreement or arrangement providing for the sale or
transfer by it of any property (now owned or hereafter acquired) to a Person and
the subsequent lease or rental of such property or other similar property from
such Person.
SECTION 7.2.16 Designation of Senior Debt. None of Holdings or either
Borrower will permit any Indebtedness (other than the Indebtedness incurred
hereunder, under any other Loan Document, or under any First-Lien Documents) to
constitute "Designated Senior Debt" (or any other similar term) under the
Subordinated Debt Documents, without the consent of the Required Lenders.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 Listing of Events of Default. Each of the following events
or occurrences described in this Article shall constitute an "Event of Default".
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SECTION 8.1.1 Non-Payment of Obligations. Either Borrower shall default
in the payment or prepayment when due of (i) any principal of any Second-Lien
Loan, or (ii) any interest on any Second-Lien Loan or any other monetary
Obligation, and, in the case of clause (ii), such default shall continue
unremedied for a period of five Business Days after such amount was due.
SECTION 8.1.2 Breach of Warranty. Any representation or warranty of any
Obligor made or deemed to be made in any Loan Document (including any
certificates delivered pursuant to Article V or Section 11.18) is or shall be
incorrect when made or deemed to have been made in any material respect.
SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations.
Holdings or either Borrower shall default in the due performance or observance
of any of its obligations under 7.1.7, 7.1.10 or 7.2.
SECTION 8.1.4 Non-Performance of Other Covenants and Obligations. Any
Obligor shall default in the due performance and observance of any other
agreement contained in any Loan Document executed by it, and such default shall
continue unremedied for a period of 30 days after notice thereof shall have been
given to the Borrowers by either Arranger or the Administrative Agent.
SECTION 8.1.5 Default on Other Indebtedness. Either (i) a default shall
occur in the payment of any amount when due (subject to any applicable grace
period), whether by acceleration or otherwise, of any principal or stated amount
of, or interest or fees on, any Indebtedness (including, without limitation,
Indebtedness under the First-Lien Facility, but excluding Indebtedness described
in Section 8.1.1) of Holdings, either Borrower or any of their respective
Subsidiaries or any other Obligor having a principal or stated amount,
individually or in the aggregate, in excess of $5,000,000; or (ii) a default
(other than a default under Section 7.2.4 of the First-Lien Facility) shall
occur in the performance or observance of any obligation or condition under the
First-Lien Facility or any other First-Lien Document (other than a default of
the type described in clause (i) above) if the effect of such default is to
accelerate the maturity (in whole or in part) of any Indebtedness outstanding
under the First Lien Facility or such default shall continue unremedied for a
period of 30 days following the date on which (after giving effect to any
applicable grace periods) the holder or holders of such Indebtedness, or any
trustee or agent for such holders, would be permitted to cause or declare such
Indebtedness to be accelerated or to become due and payable prior to its
expressed maturity; or (iii) Indebtedness under the First-Lien Facility shall be
declared to be accelerated or shall become due and payable prior to its
expressed maturity thereof; or (iv) a default shall occur in the performance or
observance of any obligation or condition with respect to any other Indebtedness
in excess of $5,000,000 if the effect of such default is to accelerate the
maturity of any such Indebtedness or such default shall continue unremedied for
any applicable period of time sufficient to permit the holder or holders of such
Indebtedness, or any trustee or agent for such holders, to cause or declare such
Indebtedness to become due and payable or to require such Indebtedness to be
prepaid, redeemed, purchased or defeased, or require an offer to purchase or
defease such Indebtedness to be made, prior to its expressed maturity.
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SECTION 8.1.6 Judgments. Any judgment or order for the payment of money
individually or in the aggregate in excess of $5,000,000 (exclusive of any
amounts fully covered by insurance (less any applicable deductible) and as to
which the insurer has acknowledged its responsibility to cover such judgment or
order) shall be rendered against Holdings, either Borrower or any of their
respective Subsidiaries or any other Obligor and such judgment shall not have
been vacated or discharged or stayed or bonded pending appeal within 30 days
after the entry thereof or enforcement proceedings shall have been commenced by
any creditor upon such judgment or order.
SECTION 8.1.7 Pension Plans. Any of the following events shall occur
with respect to any Pension Plan
(a) the institution of any steps by either Borrower, any
member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, such Borrower or any
such member could be required to make a contribution to such Pension
Plan, or could reasonably expect to incur a liability or obligation to
such Pension Plan, in excess of $1,000,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of ERISA.
SECTION 8.1.8 [Reserved].
SECTION 8.1.9 Bankruptcy, Insolvency, etc. Holdings, either Borrower,
any of their respective Subsidiaries or any other Obligor shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness generally to pay, debts as they
become due;
(b) apply for, consent to, or acquiesce in the appointment of
a trustee, receiver, sequestrator or other custodian for any
substantial part of the property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for a substantial part of the
property of any thereof, and such trustee, receiver, sequestrator or
other custodian shall not be discharged within 60 days; provided, that
Holdings, each Borrower, each Subsidiary and each other Obligor hereby
expressly authorizes each Secured Party to appear in any court
conducting any relevant proceeding during such 60-day period to
preserve, protect and defend their rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law or any dissolution,
winding up or liquidation proceeding, in respect thereof, and, if any
such case or proceeding is not commenced by Holdings, either Borrower,
any Subsidiary or any Obligor, such case or proceeding shall be
consented to or acquiesced in by Holdings, such Borrower, such
Subsidiary or such Obligor, as the case may be, or shall result in the
entry of an order for relief or shall remain for 60 days undismissed;
provided, that Holdings, each Borrower, each Subsidiary and each
Obligor hereby expressly authorizes each Secured Party to appear in any
court conducting any such case or proceeding during such 60-day period
to preserve, protect and defend their rights under the Loan Documents;
or
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(e) take any action authorizing, or in furtherance of, any of
the foregoing.
SECTION 8.1.10 Impairment of Security, etc. Any Loan Document or any
Lien granted thereunder shall (except in accordance with its terms), in whole or
in part, terminate, cease to be effective, cease to be a perfected Second
Priority Lien or cease to be the legally valid, binding and enforceable
obligation of any Obligor party thereto; any Obligor shall, directly or
indirectly, contest in any manner such effectiveness, priority, perfection,
validity, binding nature or enforceability; except as permitted under any Loan
Document, any Lien securing any Obligation shall, in whole or in part, cease to
be a perfected Second Priority Lien; the Intercreditor Agreement shall (except
in accordance with its terms), in whole or in part, cease to be effective or
cease to be the legally valid, binding and enforceable obligation of the holders
of Indebtedness under the First-Lien Facility (or any refinancing thereof); or
any such holders of Indebtedness under the First-Lien Facility (or any
refinancing thereof), directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability.
SECTION 8.1.11 Failure of Subordination. Unless otherwise waived or
consented to by the Arrangers, the Administrative Agent and each Lender in
writing, the subordination provisions relating to any Subordinated Debt (the
"Subordination Provisions") shall fail to be enforceable by the Arrangers, the
Administrative Agent and the Lenders in accordance with the terms thereof, or
the monetary Obligations shall fail to constitute "Senior Debt" (or similar
term) referring to the Obligations; or Holdings, either Borrower or any of their
respective Subsidiaries shall, directly or indirectly, disavow or contest in any
manner (i) the effectiveness, validity or enforceability of any of the
Subordination Provisions, (ii) that the Subordination Provisions exist for the
benefit of the Arrangers, the Administrative Agent and the Lenders or (iii) that
all payments of principal of or premium and interest on the Subordinated Debt,
or realized from the liquidation of any property of any Obligor, shall be
subject to any of such Subordination Provisions.
SECTION 8.2 Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur, the outstanding principal
amount of all outstanding Second-Lien Loans and all other monetary Obligations
shall automatically be and become immediately due and payable jointly and
severally by the Borrowers, without notice or demand to any Person.
SECTION 8.3 Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by notice to the Borrowers declare all or any portion of the
outstanding principal amount of the Second-Lien Loans and other monetary
Obligations to be due and payable jointly and severally by the Borrowers,
whereupon the full unpaid amount of such Second-Lien Loans and other monetary
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment.
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ARTICLE IX
THE ARRANGERS AND AGENTs
SECTION 9.1 Actions. Each Lender hereby appoints CSFB as its
Administrative Agent under and for purposes of each Loan Document. Each Lender
authorizes (i) each Arranger to act on behalf of such Lender under each Loan
Document (other than the Intercreditor Agreement) and (ii) the Administrative
Agent to act on behalf of such Lender under each Loan Document and to enter into
the Intercreditor Agreement on its behalf and to act on behalf of such Lender
under the Intercreditor Agreement and, in the absence of other written
instructions from the Required Lenders received from time to time by the
Arrangers (with respect to which each Arranger agrees that it will comply,
except as otherwise provided in this Section or as otherwise advised by counsel
in order to avoid contravention of applicable law), to exercise such powers
hereunder and thereunder as are specifically delegated to or required of such
Arranger or the Administrative Agent, as the case may be, by the terms hereof
and thereof, together with such powers as may be reasonably incidental thereto,
including, in the case of the Administrative Agent, as required by the
Intercreditor Agreement, releasing collateral securing the Obligations. Each
Lender hereby indemnifies (which indemnity shall survive any termination of this
Agreement) each Arranger and the Administrative Agent, pro rata according to
such Lender's proportionate Total Exposure Amount, from and against any and all
liabilities, obligations, losses, damages, claims, costs or expenses of any kind
or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, such Person in any way relating to or arising out of any Loan
Document, including reasonable attorneys' fees, to the extent the same shall not
have been reimbursed by the Borrowers; provided, however, that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted from such Person's
gross negligence or wilful misconduct. Neither Arranger nor the Administrative
Agent shall be required to take any action under any Loan Document (including,
in the case of the Administrative Agent, the Intercreditor Agreement), or to
prosecute or defend any suit in respect of any Loan Document (including, in the
case of the Administrative Agent, the Intercreditor Agreement), unless it is
indemnified hereunder to its satisfaction. If any indemnity in favor of either
Arranger or the Administrative Agent shall be or become, in such Person's
determination, inadequate, such Person may call for additional indemnification
from the Lenders and cease to do the acts indemnified against hereunder until
such additional indemnity is given.
SECTION 9.2 Funding Reliance, etc. Unless the Administrative Agent
shall have been notified in writing by any Lender by 3:00 p.m. on the Business
Day prior to a Borrowing that such Lender will not make available the amount
which would constitute its Percentage of such Borrowing on the date specified
therefor, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent and, in reliance upon such
assumption, make available to the applicable Borrower a corresponding amount. If
and to the extent that such Lender shall not have made such amount available to
the Administrative Agent, such Lender and the Borrowers severally agree (and the
Borrowers as among themselves jointly and severally agree) to repay the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date the Administrative Agent made such
amount available to the applicable Borrower to the date such amount is repaid to
the Administrative Agent, at the interest rate applicable at the time to
Second-Lien Loans comprising such Borrowing (in the case of either Borrower) and
(in the case of a Lender), at the Federal Funds Rate (for the first two Business
Days after which such amount has not been repaid, and thereafter at the interest
rate applicable to Second-Lien Loans comprising such Borrowing).
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SECTION 9.3 Exculpation. None of the Administrative Agent, the
Arrangers or any of their respective directors, officers, employees or agents
shall be liable to any Lender for any action taken or omitted to be taken by it
under any Loan Document, or in connection herewith or therewith, except for its
own wilful misconduct or gross negligence, nor responsible for any recitals or
warranties herein or therein, nor for the effectiveness, enforceability,
validity or due execution of any Loan Document, nor for the creation, perfection
or priority of any Liens purported to be created by any of the Loan Documents,
or the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
any Obligor of its Obligations. Any such inquiry which may be made by either
Arranger or the Administrative Agent shall not obligate it to make any further
inquiry or to take any action. The Administrative Agent shall be entitled to
rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which the Administrative Agent
believes to be genuine and to have been presented by a proper Person.
SECTION 9.4 Successor. The Syndication Agent may resign as such upon
one Business Day's notice to the Borrowers and the Administrative Agent. The
Administrative Agent may resign as such at any time upon at least 30 days' prior
notice to the Borrowers and all Lenders. If the Administrative Agent at any time
shall resign, the Required Lenders, with the prior consent of Holdings (which
consent of Holdings shall not unreasonably be withheld and shall not be required
upon the occurrence and during the continuation of a Specified Default) may
appoint another Lender as a successor Administrative Agent which shall thereupon
become the Administrative Agent hereunder. If no successor Administrative Agent
shall have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Administrative Agent's
giving notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which shall be
one of the Lenders or a commercial banking institution organized under the laws
of the U.S. (or any State thereof) or a U.S. branch or agency of a commercial
banking institution, and having a combined capital and surplus of at least
$250,000,000; provided, however, that if, such retiring Administrative Agent is
unable to find a commercial banking institution which is willing to accept such
appointment and which meets the qualifications set forth in above, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor as provided for above. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall be entitled to receive from the retiring
Administrative Agent such documents of transfer and assignment as such successor
Administrative Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Administrative Agent's resignation hereunder as the Administrative Agent, the
provisions of this Article shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Administrative Agent under the Loan
Documents, and Sections 11.3 and 11.4 shall continue to inure to its benefit.
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SECTION 9.5 Loan made by each Arranger and the Administrative Agent.
Each Arranger and the Administrative Agent shall have the same rights and powers
with respect to (i) the Second-Lien Loans made by it or any of its Affiliates,
and (ii) the Notes held by it or any of its Affiliates as any other Lender and
may exercise the same as if it were not an Arranger or an Administrative Agent,
as the case may be. Each Arranger, the Administrative Agent and each Lender and
each of their respective Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with Holdings, either Borrower or any
Subsidiary or Affiliate of Holdings or either Borrower as if such Person were
not an Arranger, the Administrative Agent or a Lender hereunder.
SECTION 9.6 Credit Decisions. Each Lender acknowledges that it has,
independently of each Arranger and each other Lender, and based on such Lender's
review of the financial information of Holdings, the Borrowers and their
respective Subsidiaries, the Loan Documents (the terms and provisions of which
being satisfactory to such Lender) and such other documents, information and
investigations as such Lender has deemed appropriate, made its own credit
decision to make its Second-Lien Loans. Each Lender also acknowledges that it
will, independently of each Arranger and each other Lender, and based on such
other documents, information and investigations as it shall deem appropriate at
any time, continue to make its own credit decisions as to exercising or not
exercising from time to time any rights and privileges available to it under the
Loan Documents.
SECTION 9.7 Copies, etc. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by Holdings or either Borrower pursuant to the
terms of the Loan Documents (unless concurrently delivered to the Lenders by the
Borrowers). The Administrative Agent will distribute to each Lender each
document or instrument received for its account and copies of all other
communications received by the Administrative Agent from Holdings or either
Borrower for distribution to the Lenders by the Administrative Agent in
accordance with the terms of the Loan Documents.
SECTION 9.8 Reliance by Arrangers and the Administrative Agent. Each of
the Arrangers and the Administrative Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by such Person. As to any matters not expressly provided for by
the Loan Documents, each of the Arrangers and the Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of the Lenders as is required in such circumstance, and such instructions of
such Lenders and any action taken or failure to act pursuant thereto shall be
binding on all Secured Parties. For purposes of applying amounts in accordance
with this Section, each of the Arrangers and the Administrative Agent shall be
entitled to rely upon any Secured Party that has entered into a Secured Hedging
Agreement with any Obligor for a determination (which such Secured Party agrees
to provide or cause to be provided upon request of the Administrative Agent) of
the outstanding monetary Obligations owed to such Secured Party under any
Secured Hedging Agreement. Unless it has actual knowledge evidenced by way of
written notice from any such Secured Party and either Borrower to the contrary,
each of the Arrangers and the Administrative Agent, in acting in such capacity
under the Loan Documents, shall be entitled to assume that no Secured Hedging
Agreements or Obligations in respect thereof are in existence or outstanding
between any Secured Party and any Obligor.
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SECTION 9.9 Defaults. Neither the Arrangers nor the Administrative
Agent shall be deemed to have knowledge or notice of the occurrence of a Default
unless such Person has received a written notice from a Lender or either
Borrower specifying such Default and stating that such notice is a "Notice of
Default". In the event that any of the Arrangers or the Administrative Agent
receives such a notice of the occurrence of a Default, such Person shall give
prompt notice thereof to the Lenders. Each of the Arrangers and the
Administrative Agent shall (subject to Section 11.1) take such action with
respect to such Default as shall be directed by the Required Lenders; provided,
that unless and until such Person shall have received such directions, such
Person may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interest of the Lenders except to the extent that this Agreement
requires that such action be taken, or not be taken, only with the consent or
upon the authorization of the Required Lenders or all Lenders, as applicable.
SECTION 9.10 Documentation Agent and Syndication Agent. The Persons
identified on the signature pages of this Agreement as the "Documentation Agent"
or "Syndication Agent" shall not have any right, power, obligation, liability,
responsibility or duty under this Agreement (or any other Loan Document) other
than those applicable to it in its capacity as a Lender to the extent it is a
Lender hereunder. Without limiting the foregoing, the Lender so identified as
the "Documentation Agent" or "Syndication Agent", as the case may be, shall not
have or be deemed to have any fiduciary relationship with any Lender. Each
Person acknowledges that it has not relied, and will not rely, on the Person so
identified as the "Documentation Agent" or the "Syndication Agent", as the case
may be, in deciding to enter into this Agreement and each other Loan Document to
which it is a party or in taking or not taking action hereunder or thereunder.
SECTION 9.11 Appointment of Supplemental Agents, Sub-Agents; etc.
(a) In the event the Arrangers reasonably deem it necessary or
desirable, they may, with the prior consent of Holdings (which consent
of Holdings shall not be required upon the occurrence and during the
continuation of a Default, and otherwise shall not be unreasonably
withheld or delayed), appoint an additional individual or institution
as a separate trustee, co-trustee, collateral agent or collateral
co-agent in respect of the collateral securing the Obligations (any
such additional individual or institution being referred to herein
individually as a "Supplemental Agent" and collectively as
"Supplemental Agents"). Such Supplemental Agent or Supplemental Agents
shall have, in respect of the collateral securing the Obligations, each
and every right, power, privilege or duty expressed or intended by this
Agreement or any of the other Loan Documents to be exercised by or
vested in or conveyed to the Arrangers or the Administrative Agent with
respect to such collateral, to the extent necessary to enable such
Supplemental Agent to exercise such rights, powers and privileges with
respect to such collateral and to perform such duties with respect to
such collateral.
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(b) Without limiting the provisions of the foregoing clause
(a), the Arrangers and the Administrative Agent may perform any and all
of their respective duties and exercise their respective rights and
powers hereunder or under any other Loan Document by or through any one
or more sub-agents appointed by such Arrangers or the Administrative
Agent, as the case may be. The Arrangers, the Administrative Agent and
any such sub-agent may perform any and all of their respective duties
and exercise their respective rights and powers by or through their
respective officers, directors, employees and agents.
(c) Should any instrument in writing from any Obligor be
required by any Supplemental Agent or sub-agent so appointed by the
Arrangers or the Administrative Agent to more fully and certainly vest
in and confirm to him or it such rights, powers, privileges and duties,
the Borrowers shall, or shall cause such Obligor to, execute,
acknowledge and deliver any and all such instruments promptly upon
request by the Arrangers or the Administrative Agent, as the case may
be. In case any Supplemental Agent or sub-agent, or a successor
thereto, shall die, become incapable of acting, resign or be removed,
all the rights, powers, privileges and duties of such Supplemental
Agent or sub-agent, to the extent permitted by law, shall vest in and
be exercised by the Arrangers and the Administrative Agent until the
appointment of a new Supplemental Agent or sub-agent. The provisions of
Section 9.1, 9.3 and Section 11.4 that refer to the Arrangers and the
Administrative Agent shall inure to the benefit of each Supplemental
Agent and each sub-agent and all references therein to the Arrangers
and the Administrative Agent shall be deemed to be references to the
Arrangers, the Administrative Agent and/or each Supplemental Agent
and/or sub-agent, as the context may require.
ARTICLE X
GUARANTY
SECTION 10.1 Guaranty. Holdings (with respect to each Obligor) and each
Borrower (with respect to the other Borrower) hereby absolutely, unconditionally
and irrevocably
(a) guarantees the full and punctual payment when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all monetary Obligations of each Borrower and
each other Obligor, as the case may be, now or hereafter existing,
whether for principal, interest, fees, expenses or otherwise (including
all such amounts which would become due but for the operation of the
automatic stay under Section 362(a) of the United States Bankruptcy
Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and
506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and
ss.506(b)), and
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(b) indemnifies and holds harmless each Secured Party and each
holder of a Note for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Secured Party
or such holder, as the case may be, in enforcing any rights under the
guaranty set forth in this Article X.
The guaranty set forth in this Article X constitutes a guaranty of payment when
due and not of collection, and Holdings and each Borrower specifically agrees
that it shall not be necessary or required that any Secured Party or any holder
of any Note exercise any right, assert any claim or demand or enforce any remedy
whatsoever against either Borrower or any other Obligor (or any other Person),
as the case may be, before or as a condition to the obligations of Holdings or
any Borrower under the guaranty set forth in this Article X.
SECTION 10.2 Acceleration. Holdings and each Borrower agrees that, in
the event of the dissolution or insolvency of either Borrower, any other Obligor
or Holdings, or the inability or failure of either Borrower, any other Obligor
or Holdings to pay debts as they become due, or an assignment by either
Borrower, any other Obligor or Holdings for the benefit of creditors, or the
commencement of any case or proceeding in respect of either Borrower, any other
Obligor or Holdings under any bankruptcy, insolvency or similar laws, and if
such event shall occur at a time when any of the monetary Obligations of any
Borrower or any other Obligor may not then be due and payable, each of Holdings
and the Borrowers agree to pay to the Administrative Agent for the account of
the Secured Parties forthwith the full amount which would be payable under the
guaranty set forth in this Article X by Holdings or such Borrower, as the case
may be, if all such monetary Obligations were then due and payable.
SECTION 10.3 Guaranty Absolute, etc. The guaranty set forth in this
Article X shall in all respects be a continuing, absolute, unconditional and
irrevocable guaranty of payment, and shall remain in full force and effect until
all monetary Obligations of each Borrower and each other Obligor have been paid
in full in cash and all obligations of Holdings and each Borrower under the
guaranty set forth in this Article X shall have been paid in full in cash. Each
of Holdings and the Borrowers guarantee that the monetary Obligations of each
Borrower and each other Obligor, as the case may be, will be paid strictly in
accordance with the terms of this Agreement and each other Loan Document under
which they arise, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Secured Party or any holder of any Note with respect thereto. The liability of
Holdings and the Borrowers under the guaranty set forth in this Article X shall
be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of this
Agreement, any Note or any other Loan Document;
(b) the failure of any Secured Party or any holder of any Note
(i) to assert any claim or demand or to enforce any
right or remedy against either Borrower, any other Obligor or
any other Person (including any other guarantor (including
either Borrower or Holdings)) under the provisions of this
Agreement, any Note, any other Loan Document or otherwise, or
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(ii) to exercise any right or remedy against any
other guarantor (including either Borrower or Holdings) of, or
collateral securing, any Obligations of either Borrower or any
other Obligor;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of either Borrower
or any other Obligor (other than Holdings), or any other extension,
compromise or renewal of any Obligation of either Borrower or any other
Obligor (other than Holdings);
(d) any reduction, limitation, impairment or termination of
any Obligations of either Borrower for any reason, including any claim
of waiver, release, surrender, alteration or compromise, and shall not
be subject to (and Holdings hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Obligations of either Borrower or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
this Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any other
guaranty, held by any Secured Party or any holder of any Note securing
any of the Obligations of either Borrower; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, either
Borrower, any surety or any guarantor.
SECTION 10.4 Reinstatement, etc. Holdings and each Borrower agree that
the guaranty set forth in this Article X shall continue to be effective or be
reinstated, as the case may be, if at any time any payment (in whole or in part)
of any of the Obligations is rescinded or must otherwise be restored by any
Secured Party or any holder of any Note, upon the insolvency, bankruptcy or
reorganization of either Borrower or otherwise, all as though such payment had
not been made.
SECTION 10.5 Waiver, etc. Holdings and each Borrower hereby waive
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations of either Borrower and the guaranty set forth in this
Article X and any requirement that the Administrative Agent, any other Secured
Party or any holder of any Note protect, secure, perfect or insure any security
interest or Lien, or any property subject thereto, or exhaust any right or take
any action against either Borrower, any other Obligor or any other Person
(including any other guarantor (including Holdings)) or entity or any collateral
securing the Obligations of either Borrower.
SECTION 10.6 Postponement of Subrogation, etc. Holdings agrees that it
will not exercise any rights which it may acquire by way of rights of
subrogation under the guaranty set forth in this Article X, by any payment made
under the guaranty set forth in this Article X or otherwise, until the prior
payment in full in cash of all monetary Obligations of each Borrower and each
other Obligor. Each Borrower hereby permanently and irrevocably waives any such
rights of subrogation it may acquire under the guaranty set forth in this
Article X. Any amount paid to Holdings on account of any such subrogation rights
prior to the payment in full in cash of all monetary Obligations of each
Borrower and each other Obligor shall be held in trust for the benefit of the
Secured Parties and each holder of a Note and shall immediately be paid to the
Administrative Agent for the benefit of the Secured Parties and each holder of a
Note and credited and applied against the monetary Obligations of each Borrower
and each other Obligor, whether matured or unmatured, in accordance with the
terms of this Agreement; provided, however, that if
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(a) Holdings has made payment to the Secured Parties and each
holder of a Note of all or any part of the monetary Obligations of
either Borrower, and
(b) all monetary Obligations of each Borrower and each other
Obligor have been paid in full in cash,
each Secured Party and each holder of a Note agrees that, at Holdings' request,
the Administrative Agent, on behalf of the Secured Parties and the holders of
the Notes, will execute and deliver to Holdings appropriate documents (without
recourse and without representation or warranty) necessary to evidence the
transfer by subrogation to Holdings of an interest in the monetary Obligations
of the applicable Borrower resulting from such payment by Holdings. In
furtherance of the foregoing, for so long as any Obligations remain outstanding,
Holdings shall refrain from taking any action or commencing any proceeding
against either Borrower (or its successors or assigns, whether in connection
with a bankruptcy proceeding or otherwise) to recover any amounts in the respect
of payments made under the guaranty set forth in this Article X to any Secured
Party or any holder of a Note.
SECTION 10.7 Successors, Transferees and Assigns; Transfers of Notes,
etc. The guaranty set forth in this Article X shall:
(a) be binding upon Holdings, each Borrower and their
permitted successors, transferees and assigns;
(b) inure to the benefit of and be enforceable by each
Arranger, the Administrative Agent and each other Secured Party; and
(c) shall not constitute a novation.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Second-Lien Loans
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all rights and benefits in respect thereof granted
to such Lender under any Loan Document (including the guaranty set forth in this
Article X) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 11.11 and Article IX.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 Waivers, Amendments, etc. The provisions of each Loan
Document may from time to time be amended, modified or waived, if such
amendment, modification or waiver is in writing and consented to by Holdings,
the Borrowers and the Required Lenders; provided, however, that no such
amendment, modification or waiver shall:
(a) modify this Section without the consent of all Lenders;
(b) increase the aggregate amount of any Second-Lien Loans
required to be made by a Lender pursuant to this Agreement without the
consent of such Lender;
(c) extend any date of payment of principal for any Lender's
Second-Lien Loan, or reduce or forgive the principal amount of, rate of
interest or fees on, or any Prepayment Premium in respect of, any
Second-Lien Loan (which shall in each case include the conversion of
all or any part of the Obligations into equity of any Obligor), or
extend the date on which such interest, fees or Prepayment Premiums are
payable in respect of such Second-Lien Loan without the consent of the
Lender which has made such Second-Lien Loan (it being understood and
agreed, however, that any vote to rescind any acceleration made
pursuant to Section 8.2 and Section 8.3 of amounts owing with respect
to the Second-Lien Loans and other Obligations shall only require the
vote of the Required Lenders);
(d) reduce the percentage set forth in the definition of
"Required Lenders" or modify any requirement hereunder that any
particular action be taken by all Lenders without the consent of all
Lenders;
(e) except as otherwise expressly provided in a Loan Document
(including the Intercreditor Agreement), release (including by way of
assignment or transfer of rights or Obligations) (i) either Borrower
from its Obligations under the Loan Documents, Holdings from its
Obligations under Article X or any Subsidiary Guarantor from its
Obligations under the Subsidiary Guaranty or (ii) all or substantially
all of the collateral under the Loan Documents, in each case without
the consent of all Lenders;
(f) cause any monetary Obligation owing to any Lender to
become contractually subordinated to any other Indebtedness owing to
any other Person without the consent of such Lender;
(g) modify the definition of "Affiliate" or "Related Fund";
(h) as to any Lender, modify the terms or provisions of
Section 4.7 or Section 4.8 hereof or Section 6.1(b) of the Security and
Pledge Agreement, relating to such Lender without the consent of such
Lender; or
(i) affect adversely the interests, rights or obligations of
either Arranger (in its capacity as an Arranger or as the
Administrative Agent, as the case may be), unless consented to by such
Arranger.
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No failure or delay on the part of either Arranger, the Administrative Agent or
any Lender in exercising any power or right under any Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on any Obligor in
any case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by either Arranger, the Administrative
Agent or any Lender under any Loan Document shall, except as may be otherwise
stated in such waiver or approval, be applicable to subsequent transactions. No
waiver or approval hereunder shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
For purposes of this Section 11.1, the Arrangers, in coordination with
the Administrative Agent, shall have primary responsibility, together with the
Borrowers, in the negotiation, preparation and documentation relating to any
amendment, modification or waiver under this Agreement, any other Loan Document
or any other agreement or document related hereto or thereto contemplated
pursuant to this Section.
Notwithstanding the foregoing, if at any time the Borrowers shall
advise the Administrative Agent that they wish to issue or incur, in compliance
with Sections 7.2.2 and 7.2.3, additional Indebtedness secured by Liens ranking
pari passu with the Liens securing the Obligations, the parties hereto agree
that the Intercreditor Agreement (and, if the Administrative Agent shall deem it
advisable, the Security and Pledge Agreement) will be amended as appropriate (i)
to provide for the securing of such additional Indebtedness, (ii) to subordinate
the Liens securing such additional Indebtedness to the Liens securing the
First-Lien Obligations (as defined in the Intercreditor Agreement), (iii) to
provide that the Liens securing such additional Indebtedness will rank pari
passu with the Liens securing the Obligations, regardless of the order of
creation or perfection of such Liens, (iv) to provide for the ratable
distribution of Collateral (as defined in the Intercreditor Agreement) or
proceeds thereof among the holders of such additional Indebtedness and the
holders of the Obligations and (v) to incorporate such other changes as shall be
reasonably requested to afford to the holders of such additional Indebtedness
and any collateral agent acting on their behalf rights with respect to such
Collateral equal to those of the holders of the Obligations, and each Lender
hereby authorizes and directs the Administrative Agent to enter into such
amendments without any further action by the Lenders.
Any term or provision hereof or otherwise to the contrary
notwithstanding, neither the execution and delivery of this Agreement or any
other Loan Document, nor the making of the initial Second-Lien Loans hereunder,
shall be deemed to be (or intended to be) a waiver by any Lender, the
Administrative Agent or either Arranger of any Default or Event of Default that
may arise as a result of any of the events described in the Form 8-Ks filed by
Holdings on March 22, 2004 and March 24, 2004, respectively, and the
Administrative Agent, the Arrangers and the Lenders hereby expressly reserve any
and all rights or remedies which may arise at any time after the date hereof,
whether hereunder, under any other Loan Document or at law, equity or otherwise,
in respect of any such events or any Default or Event of Default resulting
therefrom.
SECTION 11.2 Notices; Time. All notices and other communications
provided under each Loan Document shall be in writing or by facsimile and
addressed, delivered or transmitted, if to the Administrative Agent, Holdings or
either Borrower, at its address or facsimile number set forth below its
signature in this Agreement, and if to a Lender to the applicable Person at its
address or facsimile number set forth below its signature in this Agreement or
set forth in the Lender Assignment Agreement pursuant to which it became a
Lender hereunder, and if to either Arranger, at its address or facsimile number
set forth on Schedule III, or at such other address or facsimile number as may
be designated by any such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when the confirmation
of transmission thereof is received by the transmitter. Unless otherwise
indicated, all references to the time of a day in a Loan Document shall refer to
New York City time.
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SECTION 11.3 Payment of Costs and Expenses. The Borrowers jointly and
severally agree to pay on demand all expenses of each Arranger and the
Administrative Agent (including the fees and out-of-pocket expenses of Mayer,
Brown, Xxxx & Maw LLP, counsel to the Arrangers and of local counsel, if any,
who may be retained by or on behalf of the Arrangers) in connection with
(a) the negotiation, preparation, execution and delivery of
each Loan Document, including schedules and exhibits, and any
amendments, waivers, consents, supplements or other modifications to
any Loan Document as may from time to time hereafter be required,
whether or not the transactions contemplated hereby are consummated;
and
(b) the filing or recording of any Loan Document (including
the Filing Statements) and all amendments, supplements, amendment and
restatements and other modifications to any thereof, searches made
following the Closing Date in jurisdictions where Filing Statements (or
other documents evidencing Liens in favor of the Secured Parties) have
been recorded and any and all other documents or instruments of further
assurance required to be filed or recorded by the terms of any Loan
Document; and
(c) the preparation and review of the form of any document or
instrument relevant to any Loan Document.
The Borrowers further jointly and severally agree (i) to pay all fees required
to be paid under the Engagement Letter in the amounts and on the dates provided
therein, (ii) to pay, and to save each Secured Party harmless from all liability
for, any stamp or other taxes which may be payable in connection with the
execution or delivery of each Loan Document, the Second-Lien Loans or the
issuance of the Notes and (iii) to reimburse each Secured Party upon demand for
all reasonable out-of-pocket expenses (including reasonable attorneys' fees and
legal expenses of counsel to each Secured Party) incurred by such Secured Party
in connection with (x) the negotiation of any restructuring or "work-out" with
either Borrower, whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations.
SECTION 11.4 Indemnification. In consideration of the execution and
delivery of this Agreement by each Secured Party, the Borrowers hereby jointly
and severally indemnify, exonerate and hold each Secured Party and each of their
respective officers, directors, employees, trustees, advisors and agents
(collectively, the "Indemnified Parties") free and harmless from and against any
and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements,
whether incurred in connection with actions between or among the parties hereto
or the parties hereto and third parties (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
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(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of Second-Lien Loans,
including all Indemnified Liabilities arising in connection with the
transactions contemplated hereby;
(b) the entering into and performance of any Loan Document
(including the Intercreditor Agreement) by any of the Indemnified
Parties;
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by any Obligor or any Subsidiary
thereof of all or any portion of the Capital Securities or assets of
any Person, whether or not an Indemnified Party is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the Release by any Obligor or any
Subsidiary thereof of any Hazardous Material;
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by any Obligor or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, such Obligor or Subsidiary; or
(f) each Lender's Environmental Liability (the indemnification
herein shall survive repayment of the monetary Obligations and any
transfer of the property of any Obligor or its Subsidiaries by
foreclosure or by a deed in lieu of foreclosure for any Lender's
Environmental Liability, regardless of whether caused by, or within the
control of, such Obligor or such Subsidiary);
except for Indemnified Liabilities arising for the account of a particular
Indemnified Party by reason of the relevant Indemnified Party's gross negligence
or wilful misconduct (as determined by a court having jurisdiction in a final
proceeding) or disputes between Indemnified Parties. Each Obligor and its
successors and assigns hereby waive, release and agree not to make any claim or
bring any cost recovery action against, any Indemnified Party under CERCLA or
any state equivalent, or any similar law now existing or hereafter enacted. It
is expressly understood and agreed that to the extent that any Indemnified Party
is strictly liable under any Environmental Laws, each Obligor's obligation to
such Indemnified Party under this indemnity shall likewise be without regard to
fault on the part of any Obligor with respect to the violation or condition
which results in liability of an Indemnified Party. If and to the extent that
the foregoing undertaking may be unenforceable for any reason, each Obligor
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
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It is understood and agreed that, to the extent not precluded by a
conflict of interest, each Indemnified Party shall endeavor to make reasonable
efforts to minimize the legal and other expenses associated with any defense and
any potential settlement or judgment (including the use of single counsel
selected by such Indemnified Parties). Settlement of any such claim or
litigation involving any material indemnified amount will require the approval
of the relevant Obligor (such approval not to be unreasonably withheld or
delayed).
SECTION 11.5 Survival. The obligations of each Borrower under Sections
4.3, 4.4, 4.5, 4.6, 11.3 and 11.4, the obligations of Holdings under Article X
in respect of such obligations of each such Borrower and the obligations of the
Lenders under Section 9.1, shall in each case survive any assignment from one
Lender to another (in the case of Sections 11.3 and 11.4) and the occurrence of
the Termination Date. The representations and warranties made by each Obligor in
each Loan Document shall survive the execution and delivery of such Loan
Document.
SECTION 11.6 Severability. Any provision of any Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 11.7 Headings. The various headings of each Loan Document are
inserted for convenience only and shall not affect the meaning or interpretation
of such Loan Document or any provisions thereof.
SECTION 11.8 Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of each Borrower, each Arranger, the Administrative
Agent and each Lender (or notice thereof satisfactory to the Arrangers), shall
have been received by the Arrangers.
SECTION 11.9 Governing Law; Entire Agreement. EACH LOAN DOCUMENT (OTHER
THAN AS OTHERWISE EXPRESSLY SET FORTH IN A LOAN DOCUMENT) WILL EACH BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK). The Loan Documents constitute the
entire understanding among the parties hereto with respect to the subject matter
thereof and supersede any prior agreements, written or oral, with respect
thereto, except the Engagement Letter.
SECTION 11.10 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither Borrower may assign or
transfer its rights or obligations hereunder without the consent of all of the
Lenders.
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SECTION 11.11 Sale and Transfer of Second-Lien Loans; Participations in
Notes. Each Lender may assign, or sell participations in, its Second-Lien Loans
to one or more other Persons in accordance with the terms set forth below.
SECTION 11.11.1 Assignments. Any Lender (an "Assignor Lender"),
(a) with the written consent of Holdings and the
Administrative Agent (which consents (i) shall not be unreasonably
delayed or withheld, (ii) of Holdings shall not be required (x) during
the Primary Syndication or (y) upon the occurrence and during the
continuance of any Event of Default, (iii) of the Administrative Agent
shall not be required in the case of any assignment made by CSFB, BAS,
GECC or any of their respective Affiliates, and (iv) of Holdings and
the Administrative Agent shall not be required in the case of any
assignment made by such Lender to any of its Affiliates or Related
Funds (an "Affiliate Lender Assignment")) may at any time assign and
delegate to one or more commercial banks, funds or similar investment
vehicles that are regularly engaged in making, purchasing or investing
in loans or securities, or other financial institutions, and
(b) with notice to Holdings and the Administrative Agent
(except in the case of an Affiliate Lender Assignment), but without the
consent of Holdings and the Administrative Agent, may assign and
delegate to any other Lender or any Affiliate or Related Fund of any
other Lender
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "Assignee Lender"), all or any fraction of such Assignor Lender's
Second-Lien Loans in a minimum aggregate amount of (i) $1,000,000 (provided that
(1) assignments that are made on the same day to funds that (x) invest in
commercial loans and (y) are managed or advised by the same investment advisor
or any Affiliate of such investment advisor may be treated as a single
assignment for purposes of the minimum amount and (2) no minimum amount shall be
required in the case of any assignment between two Lenders so long as the
Assignor Lender has an aggregate amount of Second-Lien Loans of at least
$1,000,000 following such assignment) unless Holdings and the Administrative
Agent otherwise consent or (ii) the then remaining amount of such Assignor
Lender's Second-Lien Loans; provided, however, that any such Assignee Lender
will comply, if applicable, with the provisions contained in Section 4.6 and the
Borrowers, each other Obligor, the Arrangers and the Administrative Agent shall
be entitled to continue to deal solely and directly with such Assignor Lender in
connection with the interests so assigned and delegated to an Assignee Lender
until
(A) written notice of such assignment and delegation,
together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall have
been given to Holdings and the Administrative Agent by such
Assignor Lender and such Assignee Lender;
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(B) such Assignee Lender shall have (i)
electronically executed and delivered to Holdings and the
Administrative Agent a Lender Assignment Agreement via an
electronic settlement system acceptable to the Administrative
Agent (which initially shall be ClearPar, LLC) or (ii)
manually executed and delivered to Holdings and the
Administrative Agent a Lender Assignment Agreement, in each
case accepted by the Administrative Agent;
(C) in the case of assignments made pursuant to
clause (B)(ii) above, the processing fees described below
shall have been paid; and
(D) the Administrative Agent shall have registered
such assignment and delegation in the Register pursuant to
clause (b) of Section 2.5;
provided, however, that should an Assignor Lender or Assignee Lender in respect
of an Affiliate Lender Assignment deliver a Lender Assignment Agreement to
Holdings and the Administrative Agent for recording, such Assignor Lender or
Assignee Lender shall provide relevant administration details and applicable tax
forms with such Lender Assignment Agreement.
Notwithstanding anything contained in this Section 11.11 to the contrary, a
Lender may effect an Affiliate Lender Assignment without delivering a Lender
Assignment Agreement to Holdings and the Administrative Agent and without
payment of the processing fee (only if such Lender Assignment Agreement is
delivered to the Administrative Agent via ClearPar, LLC or such other electronic
settlement system acceptable to the Administrative Agent); provided, however,
that the Borrowers, each other Obligor, the Arrangers, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Assignor Lender in connection with such Assignor Lender's assigned rights and
obligations under this Agreement and shall have no obligations or duties to such
Assignee Lender until a Lender Assignment Agreement has been delivered to the
Administrative Agent and pursuant to Section 2.5 promptly recorded in the
Register. The failure of such Assignor Lender to deliver a Lender Assignment
Agreement to the Administrative Agent with respect to such Affiliate Lender
Assignment shall not affect the legality, validity or binding effect of such
assignment. Each assignee party to an Affiliate Lender Assignment shall be
deemed to have consented to be bound by the terms of the Intercreditor
Agreement.
From and after the date that the Administrative Agent accepts a Lender
Assignment Agreement and such assignment and delegation is registered pursuant
to clause (b) of Section 2.5 (or, with respect to an Affiliate Lender
Assignment, from and after the date of such assignment), (x) the Assignee Lender
thereunder shall be deemed automatically to have become a party hereto and to
the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee Lender in connection with such Lender Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and under
the other Loan Documents, and (y) the Assignor Lender, to the extent that rights
and obligations hereunder have been assigned and delegated by it in connection
with such Lender Assignment Agreement, shall be released from its obligations
hereunder and under the other Loan Documents. Any Assignor Lender that shall
have previously requested and received any Note or Notes shall, upon the
acceptance by the Administrative Agent of the applicable Lender Assignment
Agreement, xxxx such Note or Notes "exchanged" and deliver them to the Borrowers
(against, if the Assignor Lender has retained Second-Lien Loans and has
requested replacement Notes pursuant to clause (b)(ii) of Section 2.5, its
receipt from the Borrowers of replacement Notes in the principal amount of the
Second-Lien Loans). Such Assignor Lender or such Assignee Lender (unless the
Assignor Lender or the Assignee Lender is CSFB, BAS, GECC or any of their
respective Affiliates) must also pay a processing fee to the Administrative
Agent upon delivery of any Lender Assignment Agreement in the amount of $3,500,
unless such assignment and delegation is made pursuant to clause (B)(i) above or
by a Lender to a Federal Reserve Bank, as provided below, or is otherwise
consented to by the Administrative Agent. Any attempted assignment and
delegation not made in accordance with this Section 11.11.1 shall be null and
void. Nothing contained in this Section 11.11.1 shall prevent or prohibit any
Lender from pledging its rights (but not its obligations to make Second-Lien
Loans) under this Agreement and/or its Second-Lien Loans hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from such Federal
Reserve Bank and any Lender that is a fund that invests in bank loans may pledge
all or any portion of its rights (but not its obligations to make Second-Lien
Loans) hereunder to any trustee or holders of obligations owed, or securities
issued by, such fund as security for such obligations or securities or to any
other representative of such holders; provided, however, that no such pledge
shall conflict with any law, regulation or order of any governmental authority.
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SECTION 11.11.2 Participations. Any Lender may sell to one or more
commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any of
the Second-Lien Loans or other interests of such Lender hereunder; provided,
however, that
(a) no participation contemplated in this Section shall
relieve such Lender from its obligations under any Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its obligations;
(c) each Obligor, the Administrative Agent and the Arrangers
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under each Loan
Document;
(d) no Participant, unless such Participant is an Affiliate of
such Lender or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action under any Loan
Document, except that such Lender may agree with any Participant that
such Lender will not, without such Participant's consent, take any
actions of the type described in clauses (a), (b), (c) or (f) of
Section 11.1 with respect to Obligations participated in by such
Participant; and
(e) neither Holdings nor either Borrower shall be required to
pay any amount under this Agreement that is greater than the amount
which it would have been required to pay had no participating interest
been sold.
Each Borrower and Holdings acknowledges and agrees that each Participant, for
purposes of Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 7.1.1, 11.3 and 11.4, shall
be considered a Lender. Each Participant shall only be indemnified for increased
costs pursuant to Section 4.3, 4.5 or 4.6 if and to the extent that the Lender
which sold such participating interest to such Participant concurrently is
entitled to make, and does make, a claim on such Borrower or (with respect to
any claim under Section 4.6) Holdings for such increased costs and, in the case
of Section 4.6, such Participant complies therewith as if it were a Lender. Any
Lender that sells a participating interest in any Second-Lien Loan or other
interest to a Participant under this Section shall indemnify and hold harmless
Holdings, each Borrower and the Administrative Agent from and against any taxes,
penalties, interest or other costs or losses (including reasonable attorneys'
fees and expenses) incurred or payable by Holdings, such Borrower or the
Administrative Agent as a result of the failure of such Borrower or the
Administrative Agent to comply with its obligations to deduct or withhold any
Taxes from any payments made pursuant to this Agreement to such Lender or the
Administrative Agent, as the case may be, which Taxes would not have been
incurred or payable if such Participant had been a Non-Domestic Lender that was
entitled to deliver to the Borrowers, the Administrative Agent or such Lender,
and did in fact so deliver, a duly completed and valid Form W-8BEN or W-8ECI (or
applicable successor form) entitling such Participant to receive payments under
this Agreement without deduction or withholding of any United States federal
Taxes.
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Each Lender shall, as agent of Holdings and the Borrowers solely for
the purpose of this Section, record in book entries maintained by such Lender
the name and the amount of the participating interest of each Participant
entitled to receive payments in respect of any participating interests sold
pursuant to this Section.
SECTION 11.12 Reorganization Transaction. Notwithstanding any provision
in this Agreement or any other Loan Document to the contrary, so long as there
shall not exist any pending or threatened action, suit, investigation,
litigation or proceeding pending or threatened in any court or before any
arbitrator or governmental instrumentality which contests the consummation of
any of the following transactions, upon an election by Holdings,
(a) Holdings, at any time, in its sole discretion may,
contemporaneously with the assumption and issuances referred to in
clauses (b) and (c) below, contribute all of its assets (including the
Capital Securities of WRC) to WRC; provided that the Administrative
Agent shall have a perfected pledge of, and security interest in and to
all such assets so contributed as it had immediately prior to such
contribution pursuant to such documentation and opinions in form and
substance reasonably satisfactory to the Administrative Agent and its
counsel as shall be necessary in the opinion of the Administrative
Agent to create, perfect or maintain the collateral position of the
Secured Parties therein;
(b) WRC may, contemporaneously with the contribution referred
to in clause (a) above and the issuances referred to in clause (c)
below, assume substantially all of the liabilities of Holdings so long
as (i) no Specified Default shall have occurred and be continuing on
the date any such liabilities are to be assumed, nor would a Specified
Default result from any such assumption and (ii) after giving effect to
any such assumption, Holdings and the Borrowers shall be in pro forma
compliance with the covenant set forth in Section 7.2.4 for the most
recent fully ended Fiscal Quarter preceding the date of such
assumption;
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(c) WRC may, contemporaneously with the contribution and
assumption referred to in clauses (a) and (b) above, issue its common
stock and its WRC XXX XX Preferred Equity to Holdings so long as
(A) no Specified Default shall have occurred and be
continuing on the date of such issuance, nor would a Specified
Default result from any such issuance;
(B) after giving effect to such issuance, the
Borrowers shall be in pro forma compliance with the covenant
set forth in Section 7.2.4 for the most recent fully ended
Fiscal Quarter preceding the date of such issuance; and
(C) after giving effect to such issuance, the
Administrative Agent shall have a perfected pledge of, and
security interest in and to all of the issued and outstanding
interests of Capital Securities of each Borrower (including
the WRC XXX XX Preferred Equity) as the Administrative Agent
had immediately prior to such issuance in form and substance
reasonably satisfactory to the Administrative Agent and its
counsel, pursuant to such documentation and opinions as shall
be necessary in the opinion of the Administrative Agent to
create, perfect or maintain the collateral position of the
Secured Parties therein; and
(d) Holdings may distribute all of the WRC XXX XX Preferred
Equity to the PIK Preferred Equity Holders in exchange for all of the
PIK Preferred Equity and distribute up to 3% of the outstanding WRC
common stock held by Holdings in exchange for all or the remainder of
the Holdings (Unit) Common Stock.
The parties hereto agree to cooperate with each other in connection
with any such contribution or assumption or related transaction described in
this Section 11.12 to amend the Loan Documents to the extent reasonably
necessary to adjust for the effect of any such contribution, assumption or
related transaction described in this Section 11.12; provided that such
amendments could not reasonably be expected to have a material adverse effect on
the rights or remedies of any Secured Party under any Loan Document as in effect
immediately prior to any such amendment.
SECTION 11.13 Confidentiality. Each of the Arrangers, the
Administrative Agent and the Lenders agrees to maintain the confidentiality of
the Confidential Information (as defined below), except that Confidential
Information may be disclosed (a) to its and its Affiliates' directors, officers,
employees and agents, including accountants, legal counsel and other advisors on
a need-to-know basis (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Confidential Information and instructed to keep such Confidential Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) 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,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee or participant of, or any successor to,
any of its rights or obligations under this Agreement, or to any direct or
indirect contractual counterparties in agreements relating to Hedging
Obligations or such contractual counterparties' professional advisors, (g) with
the consent of Holdings or (h) to the extent such Confidential Information (i)
becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to any Arranger, the Administrative Agent or any Lender
on a nonconfidential basis from a source other than Holdings or any of its
Subsidiaries. For the purposes of this Section, "Confidential Information" means
all information received from Holdings or any of its Subsidiaries relating to
its business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by Holdings or any of its Subsidiaries; provided that, in the case of
information received from Holdings or any of its Subsidiaries after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of
Confidential 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 Confidential Information
as such Person would accord to its own confidential information.
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SECTION 11.14 Other Transactions. Nothing contained herein shall
preclude the Administrative Agent or any other Lender from engaging in any
transaction, in addition to those contemplated by the Loan Documents, with
Holdings, either Borrower or any of their respective Affiliates in which
Holdings, such Borrower or such Affiliate is not restricted hereby from engaging
with any other Person.
SECTION 11.15 Patriot Act. Each Lender that is subject to Section 326
of the Patriot Act and/or the Administrative Agent and/or the Arrangers (each of
the foregoing acting for themselves and not acting on behalf of any of the
Lenders) hereby notify the Borrowers that pursuant to the requirements of the
Patriot Act, it is required to obtain, verify and record information that
identifies the Borrowers, which information includes the name and address of the
Borrowers and other information that will allow such Lender, Administrative
Agent or Arranger, as the case may be, to identify each Borrower in accordance
with the Patriot Act.
SECTION 11.16 Intercreditor Agreement. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document (i) the Liens granted
to the Administrative Agent in favor of the Secured Parties pursuant to this
Agreement and the other Loan Documents and the exercise of any right related to
any collateral shall be subject, in each case, to the terms of the Intercreditor
Agreement; and (ii) in the event of any direct conflict between the express
terms and provisions of this Agreement and the Intercreditor Agreement or the
Intercreditor Agreement and any other Loan Document, in each case, with respect
to the Liens granted to the Administrative Agent in favor of the Secured Parties
pursuant to this Agreement and the other Loan Documents and the exercise of any
right related to any collateral, the terms and provisions of the Intercreditor
Agreement shall control.
SECTION 11.17 Independence of Covenants. All covenants contained in
this Agreement and each other Loan Document shall be given independent effect
such that, in the event a particular action or condition is not permitted by any
of such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not, unless
expressly so provided in such first covenant, avoid the occurrence of a Default
or an Event of Default if such action is taken or such condition exists.
94
SECTION 11.18 Release of Subsidiary Guarantors. If (i) the
Administrative Agent receives a certificate from Holdings signed by an
Authorized Officer certifying as of the date of such certificate that, after the
consummation of the transaction or series of transactions described in
reasonable detail satisfactory to the Administrative Agent in such certificate
on such date, the Subsidiary Guarantor identified in such certificate will no
longer be a Subsidiary of Holdings or the Borrowers, (ii) such transactions are
consummated on such date in accordance with and without violating the provisions
of this Agreement or any other Loan Document, and (iii) both before and after
giving effect to such transactions, no Default shall have occurred and be
continuing, then the Subsidiary Guaranty of such Subsidiary Guarantor shall
automatically terminate and such Subsidiary shall cease to be a party to any
Loan Document. No such termination or cessation shall release, reduce, or
otherwise adversely affect the obligations of any other Obligor under this
Agreement, any other Subsidiary Guaranty, or any other Loan Document, all of
which obligations continue to remain in full force and effect. The Lenders
shall, at the expense of Holdings, execute such documents as Holdings may
reasonably request to evidence such termination or cessation, as the case may
be.
SECTION 11.19 Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, ANY
LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE LENDERS, ANY ISSUER, HOLDINGS OR
EITHER BORROWER IN CONNECTION HEREWITH OR THEREWITH MAY BE BROUGHT AND
MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENTS' OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. HOLDINGS AND EACH BORROWER
IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE
ADDRESS FOR NOTICES SPECIFIED IN SECTION 11.2. HOLDINGS AND EACH BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT HOLDINGS OR EITHER BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, HOLDINGS AND SUCH BORROWER
HEREBY IRREVOCABLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS.
95
SECTION 11.20 Waiver of Jury Trial. EACH AGENT, EACH LENDER, EACH
ISSUER, HOLDINGS AND EACH BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH, EACH LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
SUCH AGENT, SUCH LENDER, SUCH ISSUER, HOLDINGS OR SUCH BORROWER IN CONNECTION
THEREWITH. HOLDINGS AND EACH BORROWER ACKNOWLEDGE AND AGREE THAT THEY HAVE
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR EACH AGENT, EACH LENDER AND EACH ISSUER
ENTERING INTO THE LOAN DOCUMENTS.
[End of Agreement]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
WEEKLY READER CORPORATION
By:___________________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.:
Attention: Xxxxxxx Xxxxxx
COMPASSLEARNING, INC.
By:___________________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.:
Attention: Xxxxxxx Xxxxxx
WRC MEDIA INC.
By:___________________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.:
Attention: Xxxxxxx Xxxxxx
CREDIT SUISSE FIRST BOSTON,
acting through its Cayman
Islands Branch, as
Administrative Agent and as
a Lender
By:___________________________________________
Name:
Title:
By:___________________________________________
Name:
Title:
Address: Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.:
Attention: Xxxxx Xxxxxxxxx
SCHEDULE I
DISCLOSURE SCHEDULE TO CREDIT AGREEMENT
ITEM 6.7. Litigation.
ITEM 6.8. Existing Subsidiaries.
ITEM 6.11. Employee Benefit Plans.
ITEM 6.12. Environmental Matters.
ITEM 6.17(a) Holdings Share Ownership.
ITEM 6.17(b) WRC Share Ownership.
ITEM 6.17(c) CLI Share Ownership.
ITEM 6.17(d) ChildU Share Ownership.
ITEM 7.1.11. States with more than $1,000,000 Collateral.
ITEM 7.2.2(c) Existing Indebtedness.
ITEM 7.2.3(c) Ongoing Liens.
ITEM 7.2.5(a) Ongoing Investments.
