EXHIBIT 10.8
EXECUTION COPY
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
XINHUA FINANCE MEDIA LIMITED
AS BORROWER,
THE SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME GUARANTORS HEREUNDER
AS GUARANTORS,
PATRIARCH PARTNERS MEDIA HOLDINGS, LLC
AS LENDER,
AND
PATRIARCH PARTNERS AGENCY SERVICES, LLC
AS AGENT
DATED AS OF SEPTEMBER 20, 2006
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September 20, 2006,
among XINHUA FINANCE MEDIA LIMITED, a Cayman Islands limited company (the
"Borrower"), the Subsidiaries of the Borrower that from time to time become
guarantors hereunder (collectively, the "Guarantors"), PATRIARCH PARTNERS MEDIA
HOLDINGS, LLC, a Delaware limited liability company (the "Lender"; and, together
with any other Persons from time to time lenders under this Agreement, the
"Lenders"), and PATRIARCH PARTNERS AGENCY SERVICES, LLC, a Delaware limited
liability company ("PPAS"), as agent for the Lenders (in such capacity, the
"Agent").
RECITALS
WHEREAS, Borrower has purchased certain assets and desires to purchase
certain additional assets, all set forth on Annex A (the "Media Assets") from
the sellers set forth on Annex A (collectively, the "Sellers");
WHEREAS, the Borrower has requested and Lenders have agreed to finance the
working capital and general corporate purposes of the Borrower, but only upon
the terms and conditions set forth in this Agreement;
WHEREAS, each Guarantor is willing to guaranty all of the obligations of
the Borrower under the Credit Documents on the terms and conditions set forth in
the Guaranty (as defined herein), and is willing to secure its guaranty
obligations by granting to the Agent, for the benefit of the Agent and the
Lenders, security interests in and liens upon certain of its property; and
NOW THEREFORE, in consideration of the premises and the mutual covenants
and the agreements herein set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
Defined Terms
Section 1.1 Definitions. As used in this Agreement, including,
without limitation, the preamble, recitals, exhibits and schedules
hereto, the following terms have the meanings stated:
"Accreting Interest" has the meaning stated in Section 2.7(a).
"Action" against a Person means an action, suit, litigation, arbitration,
investigation, complaint, contest, hearing, inquiry, inquest, audit,
examination or other proceeding threatened or pending against or affecting
the Person or its property, whether civil, criminal, administrative,
investigative or appellate, in law or equity before any arbitrator or
Governmental Body.
"Affiliate" of a Person means any other Person (a) that directly or
indirectly controls, is controlled by or is under common control with, the
Person or any of its Subsidiaries, (b) that directly or indirectly
beneficially owns or holds 5% or more of any class of equity Security or
other similar interests of the Person or any of its Subsidiaries or (c) 5%
or more of the equity Securities of which is directly
or indirectly beneficially owned or held by the Person or any of its
Subsidiaries. For purposes of this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, agreement or otherwise.
Notwithstanding the foregoing, no Lender or any Affiliate of any Lender
shall be an Affiliate of the Parent, the Borrower or any of their
Subsidiaries.
"Affiliate Assignee" means any Affiliate of any Lender or any Related Fund
(any two or more Related Funds being treated as a single Affiliate Assignee
for all purposes hereof); provided, neither Borrower nor any Affiliate of
the Borrower shall be an Affiliate Assignee.
"Agent" means initially PPAS and thereafter any successor Agent appointed
pursuant to Section 9.8.
"Aggregate Amounts Due" has the meaning stated in Section 2.15.
"Agreement" means this Amended and Restated Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time.
"Amendment Date" means September 20, 2006.
"Applicable Margin" means 2.75%.
"Articles of Association" means the Amended and Restated Articles of
Association of the Borrower.
"Asset Sale" means a sale, lease or sublease (as lessor or sublessor), sale
and leaseback, assignment, conveyance, transfer or other disposition to, or
any exchange of property with, any Person, in one transaction or a series
of transactions, of all or any part of the businesses of the Borrower or
any of its Subsidiaries, assets or properties of any kind, whether real,
personal, or mixed and whether tangible or intangible, whether now owned or
hereafter acquired, including, without limitation, the Capital Stock of any
Subsidiary of the Borrower, but excluding (i) inventory (or other assets)
sold or leased in the ordinary course of business and (ii) disposals of
obsolete, worn out or surplus property.
"Assignee" means an Affiliate Assignee or an Eligible Assignee.
"Assignment Agreement" has the meaning stated in Section 10.4(b).
"Assignment Fee" has the meaning stated in Section 10.4(b).
"Authorized Officer" means, as applied to any Person, any individual
holding the position of chairman of the board (if an office), chief
executive officer, president
2
or one of its vice presidents (or the equivalent thereof), and such
Person's chief financial officer or treasurer.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Borrower" has the meaning stated in the Preamble of this Agreement.
"Borrower Common Shares" means common shares in the capital of the
Borrower, par value $0.001.
"Borrowing" means the making of any Loan.
"Borrowing Date" means the date of a Borrowing.
"Bridge Loan" means the loan dated March 2, 2006 in the principal amount of
$2,000,000 from Xinhua Financial Network Limited to Borrower.
"Business Day" means a day other than Saturday or Sunday or other day on
which commercial banks in New York City, New York, Charlotte, North
Carolina, Hong Kong, or Tokyo, Japan, are authorized or required by law or
other governmental action to close and a day on which dealings are carried
on for deposits in Dollars by and among banks in the London interbank
market.
"Capital Lease" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is or should be accounted for as a capital lease on
the balance sheet of that Person.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation), including, without limitation, partnership interests and
membership interests, and any and all warrants, rights or options to
purchase or other arrangements or rights to acquire any of the foregoing.
"Cash" means money, currency or a credit balance in any Deposit Account.
"Cash Interest" has the meaning stated in Section 2.7(a).
"Change of Control" means any one or more of the following events:
(i) Any individual, corporation, partnership, trust, association,
pool, syndicate, or any other entity or any group of persons acting in
concert (other than any Lender, any Affiliate of any Lender, the Parent or
any of its Subsidiaries) becomes the beneficial owner, as that concept is
defined in Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Exchange Act of securities of the Borrower possessing either (A)
fifty percent (50%) or
3
more of the voting power for the election of directors of the Borrower or
(B) fifty percent (50%) or more in value of the outstanding equity
securities (or the right to acquire thirty (50%) per cent or more) of the
Borrower;
(ii) There shall be consummated any consolidation, merger, or other
business combination involving the Borrower or the securities of the
Borrower in which (A) holders of voting securities of the Borrower
immediately prior to such consummation own, as a group, immediately after
such consummation, voting securities of the Borrower (or, if the Borrower
does not survive such transaction, voting securities of the corporation
surviving such transaction) having less than fifty percent (50%) of the
total voting power in an election of directors of the Borrower (or such
other surviving corporation) or (B) holders of equity securities of the
Borrower immediately prior to such consummation own, as a group,
immediately after such consummation, equity securities of the Borrower (or,
if the Borrower does not survive such transaction, voting securities of the
corporation surviving such transaction) having less than fifty percent
(50%) of the equity securities of the Borrower (or such other surviving
corporation);
(iii) There shall be consummated any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of assets
representing all or substantially all of the assets of the Borrower (on a
consolidated basis) to a party which is not controlled by or under common
control with the Borrower either before or after such transaction or series
of related transactions; or
(iv) The Parent ceases to possess total voting power of the
outstanding equity securities of the Borrower sufficient to elect a
majority of the members of the board of directors of the Borrower.
"Closing Date" means the date on which the Term Loan is made.
"Closing Date Certificate" has the meaning stated in Section 3.1(e).
"Collateral" has the meaning stated in the Security Agreement.
"Collateral Documents" means the Security Agreement, the Pledge Agreement,
and all other instruments, documents and agreements delivered by any Credit
Party pursuant to this Agreement or any of the other Credit Documents
(including, without limitation, all UCC financing statements) in order to
grant to the Agent, for the benefit of the Lenders, a Lien on any property
of that Credit Party as security for the Obligations.
"Commitment Period" means the period from the date of this Agreement to but
excluding April 15, 2006.
"Commitments" means the Term Loan Commitments.
4
"Consents" means any approval, consent, authorization or order of, notice
to or registration or filing with, or any other action by, any Governmental
Body or other Person.
"Conversion Price" means the Initial Conversion Price, as may be adjusted
in accordance with Section 2.13 herein.
"Contract Rate" has the meaning stated in Section 10.14(a).
"Credit Document" means any of this Agreement, the Term Notes (if any), the
Collateral Documents, the Guaranty, and all other documents, instruments or
agreements executed and delivered by a Credit Party for the benefit of
Agent or any Lender in connection herewith.
"Credit Party" means each Person (other than the Agent or any Lender or any
Affiliate or representative thereof) from time to time party to a Credit
Document.
"Default" means a condition or event that, after notice or lapse of time or
both, would constitute an Event of Default.
"Default Rate" means LIBOR plus 8.0% per annum, compounded monthly.
"Deposit Account" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate
of deposit.
"Dollars" and the sign "$" mean the lawful money of the United States of
America.
"Domestic Subsidiary" means any Subsidiary organized under the laws of the
PRC.
"Eligible Assignee" means (a) any commercial bank, insurance company,
investment or mutual fund or other entity that is an "accredited investor"
(as defined in Regulation D under the Securities Act) and that extends
credit or buys loans as one of its businesses and/or (b) any other Person
approved by the Agent; provided, neither Borrower nor any Affiliate of the
Borrower shall be an Eligible Assignee.
"Environmental Laws" means all national, state, regional, provincial, and
local laws (including without limitation common law), statutes, regulations
and rules whether now or hereinafter in effect relating in any way to the
environment, the preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or
health and safety matters.
"Environmental Liability" means any actual, alleged or contingent liability
or obligations of the Borrower or any of its Subsidiaries directly or
indirectly resulting from or based on (a) the violations or alleged
violations of any
5
Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Material, (c) exposure to
any Hazardous Material, (d) the release or threatened release of any
Hazardous Material into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or
imposed with any of the foregoing.
"Environmental Permits" means all permits, licenses, authorizations,
registrations and other governmental consents required by applicable
Environmental Laws for the use, storage, treatment, transportation,
release, emission and disposal of raw materials, by-products, wastes and
other substances used or produced by or otherwise relating to the
operations of the Borrower and any of its Subsidiaries.
"Equity Documents" means "Equity Documents" as defined in the Articles of
Association of the Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"Event of Default" means each of the conditions or events set forth in
Section 8.1.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Financial Officer Certification" means, with respect to the financial
statements for which such certification is required, the certification of
the chief financial officer of the Borrower that such financial statements
fairly present, in all material respects, the financial condition of the
Borrower and its Subsidiaries on a consolidated basis as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, subject to the absence of footnotes and changes
resulting from audit and normal year-end adjustments.
"Financials" means, with respect to any Person for any period, the balance
sheet of such Person as at the end of such period, and the related
statement of income and expense and statement of cash flow of such Person
for such period, each setting forth in comparative form the figures for the
previous comparable fiscal period, all in reasonable detail and prepared in
accordance with GAAP.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of the Borrower and its Subsidiaries
ending on December 31 of each calendar year.
"Foreign Lender" has the meaning stated in Section 7.2(a).
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.
"Fully-Diluted Common Shares" means, as of the time of determination, all
issued and outstanding common shares of the Borrower and all common shares
of
6
the Borrower issuable upon conversion or exercise of any rights, options,
warrants or other securities convertible into or exercisable for common
shares, including, without limitation, the Preferred Shares.
"Funding Notice" means a notice substantially in the form of Exhibit B.
"GAAP" means International Financial Reporting Standards as in effect from
time to time, consistently applied throughout the periods to which
reference is made.
"Governmental Body" means any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other
instrumentality of any administrative, judicial, legislative, executive,
regulatory, police or taxing authority of any government, whether
supranational, national, federal, state, regional, provincial, local,
domestic or foreign.
"Guaranty" means the Guaranty, in the form attached hereto as Exhibit D.
"Guarantors" has the meaning stated in the Preamble to this Agreement.
"Hazardous Materials" means any hazardous or toxic substance, waste,
contaminant, pollutant, gas or material, including, without limitation,
radioactive materials, oil, petroleum and petroleum products and
constituents thereof, which are regulated under any Environmental Law,
including, without limitation, any substance, waste or material which is
(a) designated a "pollutant", "hazardous substance", "extremely hazardous
substance" or "toxic chemical" under any Environmental Law, or (b)
regulated in any way under the Regulations of any state where the Borrower
or any of its Subsidiaries conducts its business or owns any real property
or has any leasehold or in which any Relevant Property is located.
"HK Dollar" and the sign "HK$" mean the lawful money of Hong Kong.
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China.
"Indebtedness" means, with respect to any Person, without duplication, the
following: (i) all indebtedness of such Person for borrowed money, (ii) all
obligations of such Person for the deferred purchase price of property or
services other than accounts payable and accrued liabilities that would be
classified as current liabilities under GAAP which payables and expenses
are incurred in respect of property or services purchased in the ordinary
course of business, (iii) all obligations of such Person evidenced by
notes, bonds, debentures or similar borrowing or securities instruments,
(iv) all obligations of such Person created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person, (v) all obligations of such Person as
lessee under Capital Leases, (vi) all obligations of such Person in respect
of banker's acceptances and letters of credit, (vii) all obligations of
such Person secured by
7
Liens on the assets and property of such Person, (viii) all obligations of
such Person to purchase, redeem, retire, defease or otherwise make any
payment in respect of any capital stock or other ownership or profit
interest in such Person or any other Person or any warrants, rights or
options to acquire such capital stock, (ix) all obligations of such Person
in respect of any guaranty by such Person of any obligation of another
Person of the type described in clauses (i) through (viii) of this
definition and (x) all obligations of another Person of the type described
in clauses (i) through (ix) secured by a Lien on the property or assets of
such Person (whether or not such Person is otherwise liable for such
obligations of such other Person).
"Initial Conversion Price" means
(i) $3.657438 if neither of the Newspaper Assets is acquired directly
or indirectly by the Borrower; and
(ii) $5.1746376 if 100% of the ownership of both Newspaper Assets is
acquired directly or indirectly by the Borrower;
provided, for the avoidance of doubt, that any adjustment previously made
to the Initial Conversion Price shall be made again to any new substituted
Initial Conversion Price. The purpose of this proviso is to clarify that
the Lenders shall receive the full benefit of any such adjustment and shall
not be deprived of such benefit due to the acquisition of the Newspaper
Assets by the Borrower.
"Intellectual Property" means, collectively, all copyrights, all patents
and all trademarks, together with: (a) all inventions, processes,
production methods, proprietary information, know-how and trade secrets;
(b) all licenses or user or other agreements granted to the Borrower or any
of its Subsidiaries with respect to any of the foregoing, in each case
whether now or hereafter owned or used including the licenses or other
agreements with respect to any Collateral; (c) all customer lists,
identification of suppliers, data, plans, blueprints, specifications,
designs, drawings, recorded knowledge, surveys, engineering reports, test
reports, manuals, materials standards, processing standards, performance
standards, catalogs, computer and automatic machinery software and
programs; (d) all field repair data, sales data and other information
relating to sales or service of products now or hereafter manufactured; (e)
all accounting information and all media in which or on which any
information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such
information, knowledge, records or data; and (f) all causes of action,
claims and warranties, in each case, now or hereafter owned or acquired by
the Borrower or any of its Subsidiaries in respect of any of the items
listed above.
"Interest Period" means consecutive three-month periods, beginning on the
date hereof and ending on the Maturity Date; provided that:
8
(i) the initial Interest Period shall begin on the Closing Date and
end on June 30, 2006. Thereafter, each subsequent Interest Period will
begin on the day following the last day of the preceding Interest Period
(with such last day of such preceding Interest Period determined with
reference to clauses (ii) through (v) below;
(ii) any Interest Period that would otherwise end on a day that is not
a Business Day shall, subject to the provisions of clause (iv) below, be
extended to the next succeeding Business Day unless such Business Day falls
in the next calendar month, in which case such Interest Period shall end on
the immediately preceding Business Day;
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (iv) below, end on the last Business Day of a calendar
month;
(iv) any Interest Period that would otherwise end after the Maturity
Date shall end on the Maturity Date; and
(v) except as otherwise provided under clause (i), (iii) or (iv)
above, no Interest Period shall have a duration of less than three months
and if any applicable Interest Period would be for a shorter period, such
Interest Period shall not be available hereunder.
"Internal Control Agreement" means (i) any appointment or indemnification
arrangement or agreement with a natural Person, who is a citizen of the
PRC, designated by Parent or Borrower or any Affiliate or Subsidiary of
Parent or Borrower to act as nominee shareholder and legal representative
of any Domestic Subsidiary, and any action, arrangement, declaration, or
agreement undertaken by such Person, or caused to be undertaken by such
Person, in connection with the fulfillment of such role, including, without
limitation, the acquisition of any beneficial interest or the holding of
record in the Securities (including Capital Stock) of such Domestic
Subsidiary and the execution, either with Parent, Borrower, Affiliate or
Subsidiary of Parent or Borrower or any other third party whether or not
affiliated with Parent or Borrower, of any secured promissory note, equity
pledge agreement, equity purchase option agreement, subrogation agreement,
declaration of waiver of pre-emption rights, and declaration of waiver of
spousal communal rights or (ii) any arrangement or agreement (including,
without limitation, any consulting or service arrangements or agreements)
pursuant to which Borrower or any Subsidiary of Borrower indirectly
receives the economic benefit of revenue generated by any Media Asset.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, and any successor
statute.
"Investment" means (a) any direct or indirect purchase or other acquisition
by the Borrower or any of its Subsidiaries of, or of a beneficial interest
in, any of the
9
Securities (including any Capital Stock) of any other Person, (b) any
direct or indirect redemption, retirement, purchase or other acquisition
for value, by the Borrower or any of its Subsidiaries from any Person, of
any Capital Stock of such Person, and (c) any direct or indirect loan,
advance (other than advances to employees for moving, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by the Borrower or any of its
Subsidiaries to any other Person, including all Indebtedness and accounts
receivable from that other Person that are not current assets or did not
arise from sales to that other Person in the ordinary course of business.
The amount of any Investment shall be the original cost of such Investment
plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment.
"IPO" means an initial public offering of common stock of the Borrower
which has been admitted for listing and trade on a Qualified Exchange.
"IPO Date" means the date of the initial IPO.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form;
provided, in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"Knowledge" means, with respect to the Borrower or any Credit Party as the
context requires, the knowledge of the Borrower's or such Credit Party's
Authorized Officers, after reasonable inquiry by such Authorized Officers;
provided, however, with respect to Section 4.1(n) herein, "Knowledge" means
the knowledge of the Borrower's or such Credit Party's (i) Authorized
Officers or (ii) any employees or consultants of the Borrower or any Credit
Party who participated in the acquisitions of the Media Assets, in each
case after reasonable inquiry by such Person.
"Leasehold Property" means any leasehold interest of any Credit Party as
lessee under any lease of real property.
"Lender" and "Lenders" have the meanings set forth in the Preamble to this
Agreement.
"LIBOR" means, as to any Loan for any Interest Period, the rate quoted by
Bloomberg Information Service (or by any successor or substitute for such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided by such Service, as
determined by the Agent from time to time for purposes of providing
quotations of interest rates applicable to Dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, two Business
Days before the beginning of such Interest Period, as the rate for Dollar
deposits with a maturity comparable
10
to such Interest Period. If such rate is not available at such time for any
reason, LIBOR for any Interest Period shall be the arithmetic mean (rounded
upward, if necessary, to the next 1/16 of 1%) of the offered quotations of
at least two Reference Banks to the prime banks in the London interbank
market for dollar deposits with a maturity comparable to such Interest
Period at approximately 11:00 a.m., London time, two Business Days before
the beginning of such Interest Period. For purposes of this definition,
"Reference Banks" shall mean major banks in the London interbank market
selected by the Agent. For all purposes hereunder, LIBOR shall never be
below 2.0% per annum.
"Lien" means any encumbrance, mortgage, pledge, hypothecation, charge,
assignment, lien, restriction or other security interest of any kind
securing any obligation of any Person.
"Loans" means the Term Loans.
"Loan Payment Amount" means, with respect to each Lender, as of any date of
determination, the sum of (i) all accrued and unpaid interest due under
such Lender's Loans on such date of determination, plus (ii) the
outstanding principal amount of such Lender's Loans on such date of
determination plus (iii) an amount equal to the Loan Payment Percentage
multiplied by the aggregate principal amounts of all Loans advanced by such
Lender (whether or not they have been repaid) plus (iv) $3,000,000 less any
amount of accrued Accreting Interest paid simultaneously therewith plus (v)
an amount equal to the Loan Payment Percentage multiplied by $3,000,000.
"Loan Payment Percentage" means (i) 42.86% or (ii) solely with respect to
calculating the Loan Payment Amount payable upon an Event of Default prior
to December 31, 2008, the percentage equal to (x) 42.86% multiplied by (y)
the number of calendar days in the period from the Closing Date until the
date of payment of the Loan Payment Amount divided by (z) the number of
calendar days in the period from the Closing Date until December 31, 2008.
For the avoidance of doubt, the Loan Payment Percentage is determined by
(ii) above if and only if (i) there has been an Event of Default prior to
December 31, 2008, (ii) there has not been an IPO and (iii) the Borrower
has not given notice of a voluntary prepayment pursuant to Section 2.11
hereunder. In all other cases, the Loan Payment Percentage shall be
determined by (i) above.
"Margin Stock" as defined in Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Material Adverse Effect" means any (i) material adverse effect on the
business, operations, properties, assets or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole that may
affect the ability of the Borrower to perform its material obligations
under the Credit Documents, (ii) material impairment of the ability of the
Credit Parties to perform their obligations hereunder or under of any of
the other Credit Documents, (iii) material adverse
11
effect on the legality, validity, binding effect or enforceability of the
Credit Documents against the Credit Parties or (iv) material adverse effect
on the rights or remedies available to the Agent or the Lenders under any
Credit Document, excluding any written waivers or releases by the Agent or
any Lender.
"Material Contracts" means, with respect to any Person, each contract
listed on Schedule 4.1(w), each contract which is a replacement or a
substitute for any contract listed on such Schedule and each other contract
to which such Person is a party which is material to the business,
financial condition, operations, performance, properties or reasonably
foreseeable business prospects of such Person, in each case where the
aggregate future liability, benefit or right to payment to or from such
Person is in excess of $100,000.
"Maturity Date" means the earlier of (a) December 31, 2008 and (b) the date
that the Loans shall become due and payable in full hereunder, whether by
acceleration or otherwise.
"Maximum Rate" means the highest rate of interest permissible under
applicable law.
"Media Assets" means the assets set forth in Annex A as "Media Assets".
"Newspaper Assets" means the assets set forth in Annex B as "Newspaper
Assets".
"Notes" means the Term Notes.
"OFAC" means the Office of Foreign Assets Control of the United States
Department of the Treasury.
"Obligations" means all indebtedness, obligations and liabilities of each
Credit Party from time to time owed to the Agent, the Lenders or any of
them or their respective Affiliates direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise,
arising or incurred under this Agreement or any other Credit Document or in
respect of any of the Loans, the Notes or any other instruments at any time
evidencing any thereof.
"Optional Prepayment Date" means the optional prepayment date defined in
Section 2.11.
"Parent" means Xinhua Finance Limited.
"Parent Exchange Shares" means, with respect to each Lender, as of any date
of determination, the aggregate number of shares of fully paid and
non-assessable common stock, par value HK$20, of the Parent (as such shares
shall then be constituted) equal in value to (i) all accrued and unpaid
interest due under such Lender's Loans on such date of determination plus
(ii) the outstanding principal
12
amount of such Lender's Loans on such date of determination plus (iii)
$3,000,000 less any amount of accrued Accreting Interest paid
simultaneously therewith, with the price per share of such common stock of
the Parent determined at a 10% discount to the 30 Trading Day trailing
average closing price of such common stock of the Parent on the Relevant
Exchange as of the date that is (w) for Parent Exchange Shares delivered
under Section 2.10, three (3) days prior to the Maturity Date, (x) for
Parent Exchange Shares delivered under Section 2.11, three (3) days prior
to the Optional Prepayment Date, (y) for Parent Exchange Shares delivered
under Section 2.12, three (3) days prior to the IPO Date, or (z) for Parent
Exchange Shares delivered under Section 8.2, three (3) days prior to the
date of Event of Default.
"Permit" means any permit, license, approval, consent, permission, notice,
franchise, confirmation, endorsement, waiver, certification, registration,
qualification, clearance or other authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body
or pursuant to any federal, state, local or foreign Regulation.
"Permitted Business" means the business of investing in the Media Assets
and other related media businesses.
"Permitted Indebtedness" means the Indebtedness permitted pursuant to
Section 6.1(a).
"Permitted Liens" means each of the Liens permitted pursuant to Section
6.1(b).
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities,
other legal entities and Governmental Bodies.
"Pledge Agreement" means the Pledge Agreement and Irrevocable Proxy, dated
as of the date hereof, among the Borrower, the Guarantors and the Agent.
"PPAS" has the meaning set forth in the Preamble to this Agreement.
"PRC" means the People's Republic of China excluding Hong Kong, Macau
Special Administrative Region and Taiwan.
"Projections" has the meaning stated in Section 4.1(dd).
"Preferred Shares" means the convertible preferred shares purchased under
the Share Purchase Agreement.
"Principal Office" means, for the Agent, its office located at 000 Xxxx
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxx Xxxxxxxx, 00000, Attention: Xxxx
Xxxxxx, or
13
such other office as the Agent may from time to time designate in writing
to the Borrower and each Lender.
"Pro Rata Share" means, with respect to all payments, computations and
other matters relating to the Term Loan of any Lender, the percentage
obtained by dividing (a) the Term Loan Exposure of such Lender by (b) the
aggregate Term Loan Exposure of all Lenders.
"QIPO" means an IPO of the Borrower in which the QIPO Valuation is no less
than $400 million or, if 100% of the ownership of both Newspaper Assets has
been acquired directly or indirectly by the Borrower, an IPO of the
Borrower in which the QIPO Valuation is no less than $500 million.
"QIPO Date" means the date of the QIPO.
"QIPO Valuation" means an amount equal to (i) the initial price per share
of Borrower Common Shares issued in the IPO (and, if such price is not
expressed in Dollars, then its equivalent in Dollars) multiplied by (ii)
the number of outstanding Borrower Common Shares immediately following the
closing of the IPO.
"Qualified Exchange" means any Designated Offshore Securities Market as
defined in Section 230.902(b) of Regulation S of the Securities Act or any
securities exchanges or inter-dealer quotation systems in the United
States.
"Register" has the meaning stated in Section 2.6(b).
"Regulation" means each applicable law, rule, regulation, order, guidance
or recommendation (or any change in its interpretation or administration)
by any Governmental Body, central bank or comparable agency and any request
or directive (whether or not having the force of law) of any of those
Persons and each judgment, injunction, order, writ, decree or award of any
Governmental Body, arbitrator or other Person.
"Related Fund" means, with respect to any Lender that is an investment
fund, any other investment fund that invests in commercial loans and that
is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.
"Relevant Exchange" means the Tokyo Stock Exchange.
"Relevant Property" means, for the Borrower and/or any of its Subsidiaries,
all sites, facilities, locations, real property and leaseholds (a)
presently or formerly owned, leased, used or operated by the Borrower or
any of its Subsidiaries (whether or not such properties are currently
owned, leased, used or operated by the Borrower or any of its
Subsidiaries), (b) at which any Hazardous Material has been transported,
disposed, treated, stored or released by the Borrower or any of its
Subsidiaries, or (c) that are directly adjacent to any sites, facilities,
locations,
14
real property or leaseholds presently or formerly owned, leased, used or
operated by the Borrower or any of its Subsidiaries.
"Repayment of EconWorld Indebtedness" means repayment of (i) the loan dated
February 14, 2006 in the principal amount of $1,330,000 by EconWorld Media
Limited as borrower to Xinhua Financial Network Limited as lender, (ii) the
loan dated October 18, 2005 in the principal amount of $300,000 by
EconWorld Media Limited as borrower to Xinhua Financial Network Limited as
lender and (iii) the loan dated October 18, 2005 in the principal amount of
$200,000 by EconWorld Media Limited as borrower to Xinhua Financial Network
Limited as lender, in each case solely by set off of such amounts against
any amounts owed by Xinhua Financial Network Limited or the Parent to
EconWorld Media Limited.
"Required Lenders" means, at any time, one or more Lenders having or
holding a Loan, and representing more than 50% of the sum of the aggregate
outstanding principal amount of the Loans of all Lenders.
"Restricted Junior Payment" means, for the Borrower and/or any of its
Subsidiaries, (a) any dividend or other distribution, direct or indirect,
on account of any shares of any class of Capital Stock of the Borrower or
such Subsidiary now or hereafter outstanding, except a dividend payable
solely in shares of that class of Capital Stock to the holders of that
class; (b) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares
of any class of stock of the Borrower or such Subsidiary now or hereafter
outstanding, and (c) any payment made to retire, or to obtain the surrender
of, any outstanding warrants, options or other rights to acquire shares of
any class of Capital Stock of the Borrower or such Subsidiary now or
hereafter outstanding; provided, however, Restricted Junior Payments shall
not include any dividends paid under the Preferred Shares (unless, upon the
occurrence of an Event of Default, the Agent provides notice to the
Borrower that dividends under the Preferred Shares may no longer be paid);
provided, further, with respect to subclauses (a), (b) and (c) above,
Restricted Junior Payments shall not include any dividends or other
distributions by a Subsidiary which are made pro rata to all of its
shareholders or members.
"RMB" means the lawful money of the PRC.
"Sanctioned Entity" shall mean (i) the government of or an agency of the
government of, (ii) an organization directly or indirectly controlled by,
or (iii) a person resident in a country that is subject to a sanctions
program identified on the list maintained by OFAC and available at
xxxx://xxx.xxxxxxx.xxx/xxxxxxx/xxxxxxxxxxx/xxxx/xxxxxxxx/, or as otherwise
published from time to time as such program may be applicable to such
agency, organization or person.
"Sanctioned Person" shall mean a person named on the list of Specially
Designated Nationals or Blocked Persons maintained by OFAC available at
15
xxxx://xxx.xxxxx.xxx/xxxxxxx/xxxxxxxxxxx/xxxx/xxx/xxxxx.xxxx, or as
otherwise published from time to time.
"Securities" means any stock, shares, limited liability company membership
interests, partnership interests, voting trust certificates, certificates
of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated
or otherwise, or in general any instruments commonly known as "securities"
or any certificates of interest, shares or participations in temporary or
interim certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"Securities Act" means the United States Securities Act of 1933, as amended
from time to time, and any successor statute.
"Security Agreement" means the Security Agreement, dated as of the date
hereof, among the Borrower, the Guarantors and the Agent.
"Share Purchase Agreement" means the share purchase agreement dated the
date hereof between the Borrower and the Lender.
"Significant Person" means (i) any holder of 5% or more of any class of
Capital Stock of the Parent, any Credit Party or any of their Subsidiaries,
(ii) any Person holding a senior management or executive position in the
Parent, any Credit Party or any of their Subsidiaries, or (iii) any Person
who is a member of the board of directors of the Parent, any Credit Party
or any of their Subsidiaries. For purposes of clarification, "Significant
Person" does not include the Parent.
"Solvent" means, with respect to any Person, that as of the date of
determination both (a)(i) the sum of such Person's debt (including
contingent liabilities) does not exceed all of its property, at a fair
valuation, (ii) the present fair saleable value of the property of such
Person is not less than the amount that will be required to pay the
probable liabilities on such Person's then existing debts as they become
absolute, and matured, (iii) such Person's capital is not unreasonably
small in relation to its business or any contemplated or undertaken
transaction, and (iv) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond its ability
to pay such debts as they become due, and (b) such Person is "solvent"
within the meaning given that term and similar terms under applicable laws
relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
"Subsidiary" means (i) with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares
of stock or other
16
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the
management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (ii) the entities
listed on Annex C hereto and their Subsidiaries as defined in clause (i) of
this definition.
"Tax" means any present or future tax, levy, impost, duty, assessment,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed, provided, "Tax on the overall net income" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's applicable principal office
(and/or, in the case of a Lender, its lending office) is located or in
which that Person (and/or, in the case of a Lender, its lending, office) is
deemed to be doing business on all or part of the net income, profits or
gains (whether worldwide, or only insofar as such income, profits or gains
are considered to arise in or to relate to a particular jurisdiction, or
otherwise) of that Person (and/or, in the case of a Lender, its applicable
lending office).
"Term Loan Commitment" means (a) with respect to each Lender that is a
lender on the Closing Date, the amount set forth opposite such Lender's
name on Schedule 2.1 as such Lender's "Term Loan Commitment" and (b) in the
case of any lender that becomes a Lender after the Closing Date, the amount
specified as such Lender's "Term Loan Commitment" in the Assignment and
Acceptance pursuant to which such Lender assumed such Term Loan Commitment,
in each case as the same may be reduced or increased from time to time
pursuant to the terms hereof.
"Term Loan" means a Term Loan made by a Lender to the Borrower pursuant to
Section 2.1.
"Term Loan Exposure" means, with respect to any Lender, as of any date of
determination, the outstanding principal amount of the Term Loan of such
Lender.
"Term Note" has the meaning stated in Section 2.6(c).
"Trading Day" means a day during which trading in securities generally
occurs on the Relevant Exchange (provided that no day on which trading of
the applicable security is suspended on such exchange or other trading
market will count as a Trading Day).
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
17
"WFOE" means a direct or indirect wholly owned Domestic Subsidiary of the
Borrower.
ARTICLE II
Loans
Section 2.1 Term Loans.
(a) During the Commitment Period, subject to the terms and conditions
hereof and relying on the representations and warranties herein set forth,
each Lender agrees to make a single Term Loan to the Borrower on the
Closing Date in an amount equal to but not exceeding such Lender's Term
Loan Commitment.
(b) Any amount borrowed under this Section 2.1 and subsequently repaid
or prepaid may not be reborrowed. Subject to Sections 2.11 and 2.12, all
amounts owed under this Section 2.1 shall be paid in full no later than the
Maturity Date.
(c) Any amount borrowed under this Section 2.1 shall (i) bear interest
as provided in Section 2.7(a) hereof and (ii) be entitled to the security
interests, collateral and other rights and benefits provided pursuant to
this Agreement and the other Credit Documents.
Section 2.2 [Reserved]
Section 2.3 Borrowing Mechanics.
(a) Whenever the Borrower desires that Lenders make Loans, the
Borrower shall deliver to Agent a fully executed Funding Notice no later
than 10:00 a.m. (New York City time) at least three Business Days in
advance of the proposed Borrowing Date, which Borrowing Date shall be a
Business Day.
(b) Notice of receipt of each Funding Notice, together with the amount
of each Lender's Pro Rata Share thereof, together with the applicable
interest rate, shall be provided by Agent to the Lenders by facsimile with
reasonable promptness, but (provided, Agent shall have received such notice
by 10:00 a.m. (New York City time)) not later than 4:00 p.m. (New York City
time) on the same day as Agent's receipt of such Funding Notice from
Borrower.
(c) Each Lender shall make the amount of Loans available to Agent no
later than 2:00 p.m. (New York City time) on the applicable Borrowing Date
by wire transfer of same day funds in Dollars, at the Agent's Principal
Office. Except as provided herein, upon satisfaction or waiver of the
conditions precedent specified herein, Agent shall make the proceeds of
such Loans available to Borrower on the applicable Borrowing Date by
causing an amount of same day funds in Dollars equal to the proceeds of all
such Loans received by Agent from Lenders to be deposited by wire transfer
to the account of the Borrower designated in writing to Agent by Borrower.
18
Section 2.4 Pro Rata Shares. All Loans shall be made by Lenders
simultaneously and proportionately to their respective Pro Rata
Shares, it being understood that no Lender shall be responsible for
any default by any other Lender in such other Lender's obligation to
make the Loans hereunder nor shall any Commitment of any Lender be
increased or decreased as a result of a default by any other Lender in
such other Lender's obligation to make a Loan requested hereunder. In
the event of a default by a Lender with respect to the funding of its
Commitment, in addition to any rights, claims and causes of action
that the Borrower may have against such defaulting Lender, the Agent
shall use its commercially reasonable efforts to obtain a substitute
Commitment from a new Lender or Lenders, some of or all of the
non-defaulting Lenders or a combination thereof, in an amount equal to
the defaulting Lender's remaining Commitment.
Section 2.5 Use of Proceeds. The proceeds of the Term Loans made
on the Closing Date shall be used by Borrower and its Subsidiaries
solely (w) to repay the Bridge Loan in full, (x) for working capital
and general corporate purposes of the Borrower and its Subsidiaries,
(y) to pay the costs and expenses related to the transactions
contemplated by this Agreement and (z) to finance the purchase price
of certain radio businesses (including any acquisition financings) in
the PRC that will be directly or indirectly wholly-owned by the
Borrower not to exceed $10,000,000 in the aggregate and not to finance
any other businesses or media assets. No portion of the proceeds of
any Borrowing shall be used by the Borrower or any of its Subsidiaries
in any manner that might cause such Borrowing or the application of
such proceeds to violate Regulation T, Regulation U or Regulation X of
the Board of Governors of the Federal Reserve System or any other
regulation thereof or to violate the Exchange Act, in each case as in
effect on the date or dates of such Borrowing and such use of
proceeds.
Section 2.6 Evidence of Debt; Register; Lenders' Books and
Records; Notes.
(a) Lenders' Evidence of Debt. Each Lender shall maintain on its
internal records an account or accounts evidencing the Indebtedness of
Borrower to such Lender, including the amounts of the Loans owed to it and
each repayment and prepayment in respect thereof. Any such recordation
shall be conclusive and binding on Borrower, absent manifest error;
provided, failure to make any such recordation, or any error in such
recordation, shall not affect any Lender's Commitments, Loans or any of
Borrower's Obligations in respect of any applicable Loans; and provided,
further, in the event of any inconsistency between the Register and any
Lender's records, the recordations in the Register shall govern.
(b) Register. Agent shall maintain, as the Borrower's agent, at
Agent's Principal Office a register for the recordation of the names and
addresses of each Lender and such Lender's Commitments and the fees,
interest and principal amount of Loans owed to each Lender (the
"Register"). The Register shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable
prior notice. Agent shall record in the Register the Commitments, and the
fees, interest and the
19
outstanding balance of the Loans, and each repayment or prepayment in
respect of the principal amount of and interest, fees and other amounts
with respect to the Loans, and any such recordation shall be conclusive and
binding on the Borrower and each Lender, absent manifest error; provided,
failure to make any such recordation, or any error in such recordation,
shall not affect any Lender's Commitments or the Borrower's Obligations in
respect of any Loan. No transfer of the Commitments, the Loans and/or any
interests therein shall be effective until such transfer is recorded in the
Register.
(c) Notes. If so requested by any Lender by written notice to Borrower
(with a copy to Agent) at least two (2) Business Days prior to the Closing
Date or Borrowing Date, as applicable, or at any time thereafter, Borrower
shall execute and deliver to such Lender (and/or, if applicable and if so
specified in such notice, to any Person who is an assignee of such Lender
pursuant to Section 10.4) on the Closing Date or Borrowing Date (or, if
such request is delivered after the Closing Date or Borrowing Date,
promptly after the Borrower's receipt of such request) a promissory note,
in the form of Exhibit C (each, a "Term Note"), to evidence such Lender's
Term Loan.
Section 2.7 Interest on Loans.
(a) Applicable Rate. Except as otherwise set forth herein, each Loan
shall bear interest on the unpaid principal amount thereof at a rate equal
to (i) from the date made through repayment (whether by acceleration or
otherwise) a rate per annum equal to LIBOR plus the Applicable Margin (the
"Cash Interest") plus (ii) from April 1, 2006 through repayment (whether by
acceleration or otherwise), a rate per quarter equal to $272,727.27 (the
"Accreting Interest").
(b) Calculation of Interest Rates. Interest payable pursuant to this
Section 2.7 shall be computed on the basis of a 360-day year for the actual
number of days elapsed in the period during which it accrues. In computing
interest on any Loan, the date of the making of such Loan or the first day
of an interest period applicable to such Loan shall be included, and the
date of payment of such Loan or the expiration date of an interest period
applicable to such Loan shall be excluded; provided, if such Loan is repaid
on the same day on which it is made, one day's interest shall be paid on
such Loan.
(c) Payment of Interest. Cash Interest on the Loans shall be payable
to the Agent on behalf of the Lenders in arrears on (i) June 30, September
30, December 31 and March 31 of each year, commencing on June 30, 2006,
(ii) the date of any prepayment of the Loans, whether voluntary or
mandatory, to the extent accrued on the amount being prepaid, and (iii) the
Maturity Date, including final maturity. Accreting Interest on the Loans
shall be payable to the Agent on behalf of the Lenders on (i) the date of
any prepayment of the Loans, whether voluntary or mandatory, to the extent
accrued on the amount being prepaid, and (ii) the Maturity Date, including
final maturity.
Section 2.8 Changed Circumstances. If the introduction of or any
change in or in the interpretation of (in each case, after the date
hereof) any law or regulation applicable to any Lender makes it
unlawful, or any Governmental Body asserts, after the date hereof,
that it is unlawful, for any Lender to perform its
20
obligations hereunder to maintain the Loans at LIBOR, such Lender
shall notify the Agent of such event and the Agent shall notify the
Borrower of such event, and the right of the Borrower to apply LIBOR
to any subsequent Interest Period shall be suspended until the Agent
shall notify the Borrower that the circumstances causing such
suspension no longer exist, and the Agent and the Borrower shall enter
into negotiations (for a period of not more than fifteen (15) days)
with a view to agreeing on a substitute basis for determining the rate
of interest; provided however, that the Agent shall have no obligation
to reach any such agreement. If no such agreement is reached, the
Borrower shall forthwith prepay in full the Loans then outstanding,
and shall pay all interest accrued thereon through the date of such
prepayment.
Section 2.9 Priority of Payments. Notwithstanding anything to the
contrary, any and all payments received by the Agent or any Lender
from the Borrower or any Credit Party pursuant to the Credit Documents
shall be applied in the order of priority determined by the Agent in
its sole discretion.
Section 2.10 Repayment. On the Maturity Date, the Borrower shall
either (i) pay to each Lender an amount equal to the Loan Payment
Amount (determined as of the Maturity Date) for such Lender, or (ii)
deliver to each Lender the Parent Exchange Shares (determined as of
the Maturity Date) for such Lender; provided, the Borrower may not
elect to deliver Parent Exchange Shares (and therefore must make the
Loan Payment Amount) unless such Parent Exchange Shares is listed on a
Qualified Exchange and freely tradable subject only to the rules and
regulations of the Qualified Exchange generally applicable to stock
actively traded on the Qualified Exchange; provided further, that such
Lender may reject any such payment of the Loan Payment Amount or
delivery of the Parent Exchange Shares and instead elect to convert
its Loans into Borrower Common Shares pursuant to Section 2.13
hereunder. Borrower shall provide five (5) Business Days prior written
notice to the Agent of its election pursuant to this Section 2.10
either to pay the Loan Payment Amount or to provide the Parent
Exchange Shares and Agent shall have three (3) Business Days from the
date it receives such notice from Borrower to elect to convert into
Borrower Common Shares pursuant to Section 2.13. For purposes of
clarification, if any Lender elects to convert to Borrower Common
Shares pursuant to Section 2.13 hereunder, the Borrower shall not have
the option of paying the Loan Payment Amount or delivering Parent
Exchange Shares. If the Borrower fails to pay the Loan Payment Amount
or deliver the Parent Exchange Shares or Borrower Common Shares, as
the case may be, to each Lender on the Maturity Date, then (in
addition to all other remedies) interest shall accrue on the Loan
Payment Amount and the Loans, respectively, at the Default Rate, and
all amounts due shall thereafter be payable on demand.
Section 2.11 Optional Prepayments. Borrower may voluntarily
prepay the Loans, in whole but not in part, at any time, with five (5)
days advance written notice of the date of prepayment (the "Optional
Prepayment Date") being provided to the Agent, by either (i) paying to
each Lender an amount equal to the Loan Payment Amount (determined as
of the Optional Prepayment Date) for such
21
Lender, or (ii) delivering to each Lender the Parent Exchange Shares
(determined as of the Optional Prepayment Date) for such Lender;
provided, the Borrower may not elect to deliver Parent Exchange Shares
(and therefore must make the Loan Payment Amount) unless such Parent
Exchange Shares is listed on a Qualified Exchange and freely tradable
subject only to the rules and regulations of the Qualified Exchange
generally applicable to stock actively traded on the Qualified
Exchange; provided further, that such Lender may reject any such
payment of the Loan Payment Amount or delivery of the Parent Exchange
Shares and instead elect to convert its Loans into Borrower Common
Shares pursuant to Section 2.13 hereunder. Borrower shall provide five
(5) Business Days prior written notice to the Agent of its election
pursuant to this Section 2.11 either to pay the Loan Payment Amount or
to provide the Parent Exchange Shares and Agent shall have three (3)
Business Days from the date it receives such notice from Borrower to
elect to convert into Borrower Common Shares pursuant to Section 2.13.
For purposes of clarification, if any Lender elects to convert to
Borrower Common Shares pursuant to Section 2.13 hereunder, the
Borrower shall not have the option of paying the Loan Payment Amount
or delivering Parent Exchange Shares. If the Borrower fails to pay the
Loan Payment Amount or deliver the Parent Exchange Shares or Borrower
Common Shares, as the case may be, to each Lender on the Optional
Prepayment Date, then (in addition to all other remedies) interest
shall accrue on the Loan Payment Amount and the Loans, respectively,
at the Default Rate, and all amounts due shall thereafter be payable
on demand.
Section 2.12 Mandatory Prepayments.
(a) IPO. Upon an IPO of the Borrower that is not a QIPO, the Borrower
shall, on the IPO Date, either (i) pay to each Lender an amount equal to
the Loan Payment Amount (determined as of the IPO Date) for such Lender, or
(ii) deliver to each Lender the Parent Exchange Shares (determined as of
the IPO Date) for such Lender; provided, the Borrower may not elect to
deliver Parent Exchange Shares (and therefore must make the Loan Payment
Amount) unless such Parent Exchange Shares is listed on a Qualified
Exchange and freely tradable subject only to the rules and regulations of
the Qualified Exchange generally applicable to stock actively traded on the
Qualified Exchange; provided further, that such Lender may reject any such
payment of the Loan Payment Amount or delivery of the Parent Exchange
Shares and instead elect to convert its Loans into Borrower Common Shares
pursuant to Section 2.13 hereunder. Borrower shall provide five (5)
Business Days prior written notice to the Agent of its election pursuant to
this Section 2.12 either to pay the Loan Payment Amount or to provide the
Parent Exchange Shares and Agent shall have three (3) Business Days from
the date it receives such notice from Borrower to elect to convert into
Borrower Common Shares pursuant to Section 2.13. For purposes of
clarification, if any Lender elects to convert to Borrower Common Shares
pursuant to Section 2.13 hereunder, the Borrower shall not have the option
of paying the Loan Payment Amount or delivering Parent Exchange Shares. If
the Borrower fails to pay the Loan Payment Amount or deliver the Parent
Exchange Shares or Borrower Common Shares, as the case may be, to each
Lender on the IPO Date, then (in addition to all other remedies) interest
shall accrue on the Loan Payment Amount and the Loans, respectively, at the
Default Rate, and all amounts due shall thereafter be
22
payable on demand.
(b) Payment Certificate. Concurrently with any payment or prepayment
of the Loans pursuant to Sections 2.10, 2.11, 2.12(a) or 8.2(a), Borrower
shall deliver to Agent a certificate of an Authorized Officer demonstrating
the calculation, with respect to each Lender, of the Loan Payment Amount,
the Parent Exchange Shares or the number of Borrower Common Shares to be
delivered, as the case may be.
Section 2.13 Conversion. The sum of (i) the aggregate amount of
the outstanding principal amount of the Loans plus (ii) all accrued
and unpaid interest plus (iii) $3,000,000 less any amount of accrued
Accreting Interest paid simultaneously therewith (collectively, the
"Loan Conversion Amount") shall be convertible into Borrower Common
Shares as follows:
(a) Conversion Ratio. The Loan Conversion Amount held by each Lender
shall be convertible into such number of fully paid and nonassessable
Borrower Common Shares as is determined by dividing the Loan Conversion
Amount held by each Lender by the applicable Conversion Price in effect on
the applicable conversion date.
(b) Optional Conversion by Lender. The Loan Conversion Amount shall be
convertible into Borrower Common Shares at the option of each Lender at any
time after the Closing Date, by written notice to the Borrower. The
Conversion Price shall be determined as of the date of such written notice.
The Borrower will promptly thereafter, issue and deliver to such Lender or
its designee a certificate for the number of Borrower Common Shares to
which such holder shall be entitled after the conversion. The conversion
will be deemed to have been completed immediately prior to the close of
business on the date of such Lender's notice to the Borrower and the Person
entitled to receive the Borrower Common Shares issuable upon such
conversion shall be treated as the record holder of such Borrower Common
Shares as of such date.
(c) Mandatory Conversion. The Loan Conversion Amount held by each
Lender shall be converted automatically into Borrower Common Shares
immediately upon a QIPO of the Borrower that occurs prior to the Maturity
Date. The Conversion Price will be determined as of the QIPO Date. Upon the
occurrence of such event, the Borrower shall promptly issue and deliver to
each Lender or its designee in such Lender's or its designee's name a
certificate or certificates for the number of Borrower Common Shares into
which the Loan Conversion Amount was converted.
(d) Accrued Interest. Borrower shall have the option to pay in cash
prior to the date of such conversion all accrued but unpaid Cash Interest.
(e) Conversion Price Adjustments. The Conversion Price shall be
subject to adjustment from time to time as described below. Capitalized
terms used in this section but not otherwise defined have the meanings
given to them in the definitions in Section 2.13(e)(vi).
23
(i) Adjustments for Borrower Common Shares Issuances Below
Conversion Price. The Conversion Price will be subject to adjustment
if and whenever on or after the Closing Date, the Borrower issues or
sells (or in accordance with Section 2.13(e)(i)(A) or 2.13(e)(i)(B) is
deemed to have issued or sold), any Borrower Common Shares for a
consideration per share which is less than the Conversion Price in
effect immediately prior to such issuance or sale. Upon such an event,
the Conversion Price shall be automatically adjusted and reduced to
the consideration per share for which such Borrower Common Shares were
issued or sold; provided that no adjustment in the Conversion Price
will be made pursuant to this Section 2.13 in connection with any
Exempt Issuance. For the avoidance of doubt, there shall be no
increase to the Conversion Price as a result of any issuance of shares
for a consideration per share that is in excess of the Conversion
Price in effect immediately prior to such issuance. If any adjustment
to the Conversion Price is made upon the issuance of Options or
Convertible Securities and such Options or Convertible Securities
expire without being converted or exercised, then the Conversion Price
shall be readjusted to the amount that would have been in effect had
such Options or Convertible Securities never been issued or sold;
provided that no readjustment provided for in this Section 2.13(e)(i)
shall have the effect of increasing the Conversion Price to an amount
which exceeds the lowest of (x) the Conversion Price that was in
effect immediately prior to the adjustment made in connection with the
issuance of such Options or Convertible Securities or (y) the
Conversion Price that results from any actual issuance of additional
Borrower Common Shares between the original adjustment date and such
readjustment date. Conversion Price adjustments under this Section
2.13(e) shall be calculated based on the following provisions in the
event Options or Convertible Securities are issued.
(A) Issuance of Options. If the Borrower in any manner
grants or sells any Options and the price per share for which
Borrower Common Shares are issuable upon the exercise of such
Options, or upon the conversion or exchange of any Convertible
Securities issuable upon the exercise of such Options, is less
than the Conversion Price in effect immediately prior to the time
of the granting or sale of such Options, then the maximum number
of Borrower Common Shares issuable upon the exercise of such
Options, or upon conversion or exchange of the maximum amount of
such Convertible Securities issuable upon the exercise of such
Options, will be deemed to be outstanding and to have been issued
and sold by the Borrower at the time of the granting or sale of
such Options for such price per share. For purposes of this
Section 2.13(e)(i)(A), the "price per share for which Borrower
Common Shares are issuable upon the exercise of such Options, or
upon conversion or exchange of any Convertible Securities
issuable upon exercise of such Options" will be determined by
dividing (1) the total amount, if any, received or receivable by
the Borrower as consideration for the granting or sale of such
Options, plus the minimum aggregate amount of additional
consideration payable to the Borrower upon the exercise of all
such
24
Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Borrower upon
the issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (2) the maximum number of
Borrower Common Shares issuable upon the exercise of such Options
or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further
adjustment of the Conversion Price will be made upon the actual
issuance of Borrower Common Shares or of such Convertible
Securities upon the exercise of such Options or upon the issuance
of Borrower Common Shares upon conversion or exchange of such
Convertible Securities.
(B) Effect of Issuance of Convertible Securities. If the
Borrower in any manner issues or sells any Convertible Securities
and the price per share for which Borrower Common Shares are
issuable upon the conversion or exchange thereof is less than the
Conversion Price in effect immediately prior to the time of such
issue or sale, then the maximum number of Borrower Common Shares
issuable upon conversion or exchange of all such Convertible
Securities will be deemed to be outstanding and to have been
issued and sold by the Borrower at the time of the issuance or
sale of such Convertible Securities for such price per share. For
the purposes of this Section 2.13(e)(i)(B), the "price per share
for which Borrower Common Shares are issuable upon conversion or
exchange thereof" will be determined by dividing (1) the total
amount received or receivable by the Borrower as consideration
for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Borrower upon the conversion or exchange thereof,
by (2) the maximum number of Borrower Common Shares issuable upon
the exchange of all such Convertible Securities. No further
adjustment of the Conversion Price will be made upon the actual
issuance of such Borrower Common Shares upon conversion or
exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any
Options for which adjustments of the Conversion Price had been or
are to be made pursuant to other provisions of this Section
2.13(e), no further adjustment of the Conversion Price will be
made by reason of such issue or sale.
(C) Integrated Transaction. If Options or Convertible
Securities are issued in connection with the issue or sale of
other securities of the Borrower, together comprising one
integrated transaction in which no specific consideration is
allocated to such Options or Convertible Securities by the
parties thereto, the Options or Convertible Securities will be
deemed to have been issued without consideration.
25
(D) Calculation of Consideration Received. If any Borrower
Common Shares, Options, or Convertible Securities are issued or
sold or deemed to have been issued or sold for cash, then the
consideration received therefor will be deemed to be the net
amount received by the Borrower. If any Borrower Common Shares,
Options, or Convertible Securities are issued or sold for a
consideration other than cash, then the amount of the
consideration other than cash received by the Borrower will be
the fair value of such consideration as determined in good faith
by mutual agreement between the Borrower and the Required
Lenders, except where such consideration consists of securities
traded on a Qualified Exchange, in which case the amount of
consideration received by the Borrower will be the Market Price
thereof as of the date of receipt. If any Borrower Common Shares,
Options, or Convertible Securities are issued to the owners of
the non surviving entity in connection with any merger in which
the Borrower is the surviving entity, then the amount of
consideration therefor will be deemed to be the fair value of
such portion of the net assets of the non surviving entity as is
attributable to such Borrower Common Shares, Options or
Convertible Securities, as the case may be.
(ii) Dividend or Split. If there is (1) a split or subdivision of
the outstanding Borrower Common Shares or (2) a dividend or other
distribution payable in Borrower Common Shares or Options or
Convertible Securities without payment of any consideration, then, as
of the record date for such event, the Conversion Price shall be
appropriately decreased so the number of Borrower Common Shares
issuable on conversion of the Loan Conversion Amount shall be
increased in proportion to such increase in the aggregate number of
Borrower Common Shares outstanding or issuable with respect to such
Options or Convertible Securities.
(iii) Combinations. If the number of Borrower Common Shares
outstanding is decreased by a combination of the outstanding Borrower
Common Shares, then, as of the record date of such combination, the
Conversion Price shall be appropriately increased so the number of
Borrower Common Shares issuable on conversion of each share of such
series shall be decreased in proportion to such decrease in
outstanding Borrower Common Shares.
(iv) Recapitalization, Consolidation, Merger, Etc. In case of any
change in the Borrower Common Shares through recapitalization,
reclassification, or other change in the capital structure of the
Borrower (other than a combination of shares or the issuance of
additional Borrower Common Shares by stock split or stock dividend) or
through any merger or consolidation which is effected such that
holders of Borrower Common Shares are entitled to receive stock,
securities, cash, or other assets in exchange for Borrower Common
Shares, then, as a condition of the change in capital structure or
merger, provision shall be made so that the Lenders will have the
right thereafter to receive upon conversion the kind and amount of
shares of stock or other securities or property to which such
26
Lenders would have been entitled if, immediately prior to such change
in capital structure, such Lender had held the number of Borrower
Common Shares issuable upon conversion of the Loan Conversion Amount.
In addition, appropriate provision will be made with respect to the
Lender's rights and interests to ensure that the provisions in this
Section 2.13 will thereafter be applicable in relation to any shares
of stock, securities, cash, or other assets thereafter deliverable
upon the conversion of the Loan Conversion Amount.
(v) Protection Against Dilution. If any event occurs as to which,
in the mutual opinion of the Borrower and the Required Lenders
determined in good faith, the other provisions of this Section 2.13(e)
are not strictly applicable or would not fairly protect the rights of
the Lenders in accordance with the intent of these anti-dilution
provisions, then the Borrower and the Required Lenders shall agree to
an adjustment in accordance with the intent of these provisions to
protect the Lenders' rights under this Section 2.13, but in no event
shall any adjustment have the effect of increasing the Conversion
Price (except in the case of a combination of Borrower Common Shares
described in Section 2.13(e)(iii)).
(vi) Definitions for Section 2.13(e).
"Convertible Securities" means any securities or other rights to
acquire securities directly or indirectly convertible into or
exchangeable for Borrower Common Shares.
"Exempt Issuance" means the issuance of any Borrower Common
Shares: (a) under any employee benefit plan, employee share option
plan, share incentive plan or other similar plan adopted by the
Borrower's Board of Directors (an "Exempt Plan") only to the extent
that the total number of Borrower Common Shares issued to such Exempt
Plan on a fully-diluted as converted basis does not exceed the lesser
of (i) 20% of the Fully-Diluted Common Shares determined as of the
date immediately prior to such issuance and (ii) the maximum number of
shares set forth next to Exempt Plans on Annex D, as adjusted in
accordance with the provisions of Section 2.13(e)(ii)-(iv); (b) to any
Person listed on Annex D (each, an "Exempt Issuee") in consideration
for the contribution of assets as indicated on Annex D (the "Specified
Contributed Assets"), (i) at an effective per share price equal to or
greater than $3.00 per Borrower Common Share and (ii) only to the
extent that (A) the total number of Borrower Common Shares issued to
such Exempt Issuee on a fully-diluted as converted basis does not
exceed the maximum number of shares set forth next to such Exempt
Issuee's name on Annex D and (B) the Exempt Issuee contributes the
Specified Contributed Assets in consideration for the issuance of such
Borrower Common Shares; or (c) not exceeding 0.5% of the lesser of (i)
the Fully-Diluted Common Shares determined as of the date immediately
prior to such issuance and (ii) the number equal to the sum of (A) the
number of outstanding Fully-Diluted Common Shares determined as of the
Closing Date plus (B) the number of Fully-Diluted Common Shares issued
pursuant to any Exempt Issuance under clauses (a) and (b) of this
definition, each of (A) and (B) as adjusted in accordance with the
provisions of
27
Section 2.13(e)(ii)-(v). For the avoidance of doubt, any issuance of
Borrower Common Shares pursuant to clause (a) of this definition for
numbers of Borrower Common Shares in excess of the maximum numbers
listed on Annex D shall be subject to adjustments as set forth in
Section 2.13 and any issuance of Borrower Common Shares pursuant to
clause (b) of this definition (w) for an effective per share price
less than $3.00, (x) in consideration for assets other than the
Specified Contributed Assets, (y) to any Person not listed on Annex D,
or (z) for numbers of Borrower Common Shares in excess of the maximum
numbers listed on Annex D shall be subject to adjustments as set forth
in Section 2.13.
"Market Price" of any security means the average of the closing
prices of such security's sales on the Qualified Exchange, averaged
over a period of five days consisting of the day as of which "Market
Price" is being determined and the four consecutive business days
prior to such day. If at any time such security is not listed on a
Qualified Exchange then the "Market Price" will be the fair value
thereof determined in good faith by mutual agreement between the
Borrower and the Lenders.
"Options" means any securities or other rights to subscribe for
or purchase, directly or indirectly, Borrower Common Shares or
Convertible Securities.
(f) Notice of Conversion Price Adjustments. When an adjustment or
readjustment of the Conversion Price is required pursuant to Section
2.13(e), the Borrower, at its expense, shall promptly compute such
adjustment or readjustment in accordance with the terms of this Section
2.13 and prepare and furnish to each Lender a notice setting forth such
adjustment or readjustment and showing in reasonable detail the facts upon
which such adjustment or readjustment is based.
(g) Reservation of Shares. The Borrower shall at all times reserve and
keep available from its authorized but unissued Borrower Common Shares such
number of Borrower Common Shares as shall be sufficient to effect the
conversion of the aggregate Loan Conversion Amount; and if at any time the
number of authorized but unissued Borrower Common Shares shall not be
sufficient to effect the conversion of the aggregate Loan Conversion
Amount, the Borrower will take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued
Borrower Common Shares to such number of shares as shall be sufficient for
such purposes, including, without limitation, engaging in reasonable
efforts to obtain the requisite shareholder approval of any necessary
amendment to the Borrower's Articles of Association.
(h) No Fractional Shares. No fractional shares shall be issued upon
the conversion of the Loan Conversion Amount and the number of Borrower
Common Shares to be issued shall be rounded to the nearest whole share. The
Borrower shall, in lieu of issuance of such fractional share, pay the
Lender otherwise entitled to such fractional share cash for the outstanding
Loan Conversion Amount not converted.
28
Section 2.14 General Provisions Regarding Payments.
(a) Payments. All payments by Borrower of principal, interest, fees
and other Obligations shall be made to the Agent for the benefit of the
Lenders in Dollars in same day funds, without defense, setoff or
counterclaim, free of any restriction or condition, and delivered to Agent
not later than 12:00 p.m. (New York City time) on the date due at the
Agent's Principal Office without presentment, demand, protest or notice or
any kind, all of which are expressly waived by the Borrower. All funds
received by Agent after that time on such due date shall be deemed to have
been paid by Borrower on the next succeeding Business Day.
(b) Non-Conforming Payments. The Agent shall deem any payment by or on
behalf of the Borrower that is not made to the Agent in same day funds
prior to 12:00 p.m. (New York City time) to be a non-conforming payment.
Any such payment shall not be deemed to have been received by Agent until
the later of (i) the time such funds become available funds and (ii) the
applicable next Business Day. Agent shall give prompt telephonic notice to
Borrower and each applicable Lender (confirmed in writing) if any payment
is non-conforming. Any non-conforming payment may constitute or become a
Default or Event of Default in accordance with the terms of Section 8.1.
Interest shall continue to accrue on any principal as to which a
non-conforming payment is made until such funds become available funds (but
in no event less than the period from the date of such payment to the next
succeeding applicable Business Day) at the rate determined pursuant to
Section 2.7 from the date such amount was due and payable until the date
such amount is paid in full.
(c) Payments to Include Accrued Interest. All payments in respect of
the principal amount of any Loan (whether mandatory or optional) shall
include payment of accrued interest on the principal amount being, repaid
or prepaid, and all such payments (and, in any event, any payments in
respect of any Loan on a date when interest is due and payable with respect
to such Loan) shall be applied to the payment of interest before
application to principal.
(d) Distributions by Agent. Agent shall promptly distribute to each
Lender by wire transfer, such Lender's applicable Pro Rata Share of all
payments and prepayments of principal and interest due hereunder, together
with all other amounts due thereto, including, without limitation, all fees
payable with respect thereto, to the extent received by Agent. If and to
the extent that Agent has not forwarded to any Lender such Lender's share
of any such payment on the same Business Day as such payment is received
(or deemed received) from the Borrower, Agent shall pay to such Lender
interest on such amount at LIBOR for each day until payment is received by
such Lender.
(e) Business Days. Whenever any payment to be made hereunder shall be
stated to be due on a day that is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall
be included in the computation of the payment of interest hereunder.
29
Section 2.15 Ratable Sharing. Lenders hereby agree among
themselves that, except as otherwise provided in the Collateral
Documents with respect to amounts realized from the exercise of rights
with respect to Liens on the Collateral, if any of them shall, whether
by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms hereof), through the exercise
of any right of set-off or banker's lien, by counterclaim or cross
action or by the enforcement of any right under the Credit Documents
or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of
a proportion of the aggregate amount of principal, interest, fees and
other amounts then due and owing to such Lender hereunder or under the
other Credit Documents (collectively, the "Aggregate Amounts Due" to
such Lender) which is greater than the proportion received by any
other Lender in respect of the Aggregate Amounts Due to such other
Lender, then the Lender receiving such proportionately greater payment
shall (a) notify Agent and each other Lender of the receipt of such
payment and (b) apply a portion of such payment to purchase
participations (which it shall be deemed to have purchased from each
seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to
the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts
Due to them; provided, if all or part of such proportionately greater
payment received by such purchasing Lender is thereafter recovered
from such Lender upon the bankruptcy or reorganization of the Borrower
or otherwise, those purchases shall be rescinded and the purchase
prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without
interest. The Borrower expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may
exercise any and all rights of banker's lien, set-off or counterclaim
with respect to any and all monies owing by the Borrower to that
holder with respect thereto as fully as if that holder were owed the
amount of the participation held by that holder.
Section 2.16 Termination of Commitments. Unless previously
terminated, the Term Commitment will terminate on the Maturity Date.
ARTICLE III
Conditions Precedent; Conditions Subsequent
Section 3.1 Conditions Precedent; Closing Date. The obligation of
any Lender to make any Loan and the other financial accommodations
described herein on the Closing Date is subject to the satisfaction,
or waiver in accordance with Section 10.1, of the following conditions
on or before the Closing Date:
(a) Secretary's Certificate. The Lenders shall have received a
certificate of the secretary or assistant secretary, the manager or the
general partner, as the case may be, of each Credit Party, each
substantially in the form of Exhibit E, with respect to (i) the articles of
incorporation or certificate of formation, as the case may be, of such
Credit Party, (ii) the bylaws, operating agreement or limited partnership
agreement, as the case
30
may be, of such Credit Party, (iii) the resolutions of the board of
directors, manager or general partner, as the case may be, of such Credit
Party approving each Credit Document to which such Credit Party is a party
and the other documents to be delivered by such Credit Party under the
Credit Documents and the performance of the obligations of such Credit
Party thereunder, and (iv) the names and true signatures of the officers of
such Credit Party or such other persons authorized to sign each Credit
Document to which such Credit Party is a party and the other documents to
be delivered by it under the Credit Documents.
(b) Organizational and Capital Structure. The organizational structure
and the capital structure of the Borrower and its Subsidiaries, shall be as
set forth in Section 4.1(m) and Schedule 4.1(m).
(c) Good Standing Certificates. The Lenders shall have received a good
standing certificate from the applicable Governmental Body of each Credit
Party's jurisdiction of incorporation, organization or formation and in
each jurisdiction in which it is qualified as a foreign corporation or
other entity to do business, each dated a recent date prior to the Closing
Date.
(d) [Reserved]
(e) Closing Date Certificate. The Agent shall have received an
originally executed Closing Date Certificate, in the form of Exhibit F (the
"Closing Date Certificate"), from the Borrower, together with any
attachments thereto.
(f) UCC Financing Statements. The Agent shall have received UCC
financing statements duly authorized by each applicable Credit Party with
respect to all personal property Collateral of such Credit Party, for
filing in all jurisdictions as may be necessary or, in the opinion of the
Lenders, desirable, to perfect the security interests created in such
Collateral pursuant to the Collateral Documents.
(g) Credit and Equity Documents. The Agent shall have received duly
executed original copies of each Credit Document and each Equity Document
from each applicable Credit Party. The financing statements and other
Credit Documents related to perfection of the security interest of the
Agent and the Lenders in the Collateral shall have been filed in all
appropriate jurisdictions.
(h) Security Collateral. The Agent shall have received the Pledge
Agreement (including the stocks pledged thereunder), certificates,
instruments and promissory notes (which certificates, instruments and
promissory notes shall be accompanied by instruments of transfer or
assignment duly endorsed in blank and otherwise in form and substance
satisfactory to Agent and Lenders) representing or evidencing all
negotiable documents, instruments, tangible chattel paper, certificated
securities and certificates of title covering goods included in the
Collateral and pledged pursuant to the Collateral Documents.
31
(i) Other Actions to Perfect Security Interests. The Lenders shall
have received evidence that each Credit Party shall have taken or caused to
be taken any other action, executed and delivered or caused to be executed
and delivered any other agreement, document and instrument, and made or
caused to be made any other filing and recording (other than as set forth
herein) reasonably required by the Lenders.
(j) Other Information. The Agent and Lenders shall have received any
other financial or non-financial information regarding the Borrower and its
Subsidiaries as the Agent or any Lender may reasonably request.
(k) Opinions. Lenders and their respective counsel shall have received
originally executed copies of the favorable written opinions of Xxxxxxx
Xxxxx Xxxxx LLP, counsel for the Credit Parties and Xxxxxxx Xxxx & Xxxxxxx,
special Cayman and British Virgin Islands counsel to the Credit Parties, in
the forms attached as Exhibit I and as to such other matters as Agent may
reasonably request, dated as of the Closing Date and otherwise in form and
substance reasonably satisfactory to Agent (and each Credit Party hereby
instructs such counsel to deliver such opinions to Agent and Lenders).
Section 3.2 Conditions to Each Borrowing. The obligation of each
Lender to make any Loan on any Borrowing Date, including the Closing
Date, is subject to the satisfaction, or waiver in accordance with
Section 10.1, of the following conditions precedent:
(a) Funding Notice. The Agent and Lenders shall have received a fully
executed and delivered Funding Notice, in accordance with Section 2.3. Each
Funding Notice shall be executed by an Authorized Officer of the Borrower
in a writing delivered to the Agent and Lenders on a Business Day. In lieu
of delivering a Funding Notice, the Borrower may give the Agent and Lenders
telephonic notice by the required time of any proposed Borrowing; provided,
each such notice shall be promptly confirmed in writing by delivery of the
Funding Notice to the Agent and Lenders on or before the applicable date of
Borrowing. The Agent shall not incur any liability to Borrower in acting
upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person
authorized on behalf of the Borrower or for otherwise acting in good faith.
(b) Representations and Warranties. As of such Borrowing Date, the
representations, warranties and covenants of the Credit Parties contained
in the Credit Documents shall be true, correct and complied with on and as
of that Borrowing Date, except as to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall be true, correct and complied with on
and as of such earlier date.
(c) No Default or Event of Default. As of such Borrowing Date, no
event shall have occurred and be continuing or would result from the
consummation of the applicable Borrowing that would constitute an Event of
Default or a Default.
(d) Consents. The Lenders shall have received such Consents and other
32
information, approvals, opinions or documents reasonably requested by the
Agent or the Lenders in connection with such Borrowing.
(e) Available Commitment. After making the Loans requested on such
Borrowing Date, the aggregate outstanding principal amount of Term Loans
shall not exceed the aggregate amount of Term Loan Commitments.
(f) No Material Adverse Effect. No Material Adverse Effect shall have
occurred after giving effect to the making of such Loans.
(g) Equity Closing. The Initial Closing under the Share Purchase
Agreement shall have occurred simultaneously.
ARTICLE IV
Representations and Warranties
Section 4.1 Representations and Warranties of Credit Parties. In
order to induce the Agent and the Lenders to enter into this Agreement
and to make each Borrowing to be made thereby, each Credit Party
hereby represents and warrants to the Agent and each Lender, on the
Closing Date, on each Borrowing Date and on the Amendment Date as
follows:
(a) Corporate Status; Corporate Authorization. Each of the Parent,
each Credit Party and each of their Subsidiaries is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
organization and is duly qualified and in good standing in every other
jurisdiction where it is doing business except where the failure to so
qualify does not have a Material Adverse Effect on the Parent, such Credit
Party or its Subsidiaries, and the execution, delivery and performance by
each Credit Party of the Credit Documents (i) are within its respective
authority, (ii) have been duly authorized, and (iii) do not conflict with
or contravene its respective constitutive documents. The execution,
delivery, performance of its respective obligations, and exercise of its
respective rights under the Credit Documents by each Credit Party thereto,
including, without limitation, the making of the Loans under this
Agreement, the issuance of the Parent Exchange Shares (if any), and the
issuance of Borrower Common Shares upon conversion of the Loan Conversion
Amount (if any), (i) do not require any Consents that have not been
obtained and (ii) are not and will not be in conflict with or prohibited or
prevented by (A) any Regulation or (B) any corporate governance document,
corporate minute or resolution of the Parent or any Credit Party or (C) any
instrument, agreement or provision thereof, in each case binding on any of
them or affecting any of their property.
(b) Execution and Binding Effect. Upon execution and delivery thereof,
each Credit Document shall constitute the legal, valid and binding
obligation of each Credit Party which is a party thereto, enforceable in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency or other similar laws relating to the
enforcement of creditors' rights generally and by general equitable
principles.
33
(c) Properties.
(i) Each Credit Party and its Subsidiaries has good and
marketable title to all material real property owned or purported to
be owned by it, in each case free of all Liens other than the
Permitted Liens.
(ii) Each Credit Party and its Subsidiaries is, or when leases
creating Leasehold Properties are executed will be, lawfully possessed
of a valid and subsisting leasehold estate in and to its Leasehold
Properties which it purports to lease free and clear of all Liens
other than the Permitted Liens.
(iii) Each Credit Party and its Subsidiaries enjoys, and will
enjoy, peaceful and undisturbed possession of, or a license to use,
all property (subject only to the Permitted Liens) that are necessary
for their respective businesses.
(iv) Set forth on Schedule 4.1(c) is a list, as of the date
hereof, of all real property held, or, to the Knowledge of each Credit
Party, planned to be held, by each Credit Party and its Foreign
Subsidiaries, indicating in each case whether the respective property
is (or is expected to be) owned or leased, the identity of the owner
or lessee, the location of the respective property, the approximate
value of such property, in the case of real property owned and, in the
case of property not yet owned or leased, the estimated date of
acquisition or leasing (if known to such Credit Party on the date
hereof).
(v) Each Credit Party and its Subsidiaries owns, or is licensed
or otherwise has the right to use the Intellectual Property necessary
to own and operate its properties and to carry on its business as
presently conducted and presently planned to be conducted without
conflict with the rights of others, except for such instances of
non-compliance that, individually or in the aggregate, do not have a
Material Adverse Effect.
(d) Senior Indebtedness. The Obligations of each Credit Party under
this Agreement and each other Loan Document ranks and shall continue to
rank senior in priority of payment to all other Indebtedness of such Credit
Party.
(e) Laws. Each Credit Party and its Subsidiaries is in material
compliance with all Regulations.
(f) Litigation. There are no legal or other proceedings or
investigations pending or threatened against any Credit Party or any of its
Subsidiaries before any court, tribunal or regulatory authority which
would, if adversely determined, alone or together, have a Material Adverse
Effect on such Credit Party or such Subsidiary.
(g) Governmental Approvals and Filings. No approval, order, consent,
authorization, certificate, license, permit or validation of, or exemption
or other action by, or filing, recording or registration with, or notice
to, any Governmental Body (collectively, "Governmental Action") is or will
be necessary in connection with the execution and delivery of this
Agreement or any other Credit Document, consummation
34
by the Credit Parties of the transactions herein or therein contemplated,
or performance of or compliance with the terms and conditions hereof or
thereof, other than the filings and recordations contemplated by the
Collateral Documents. None of the Credit Parties is subject to regulation
any statute or regulation limiting the Borrower's ability to incur
Indebtedness for money borrowed. None of the Credit Parties is an
"investment company" or a company "controlled" by an "investment company",
with the meaning of the United States Investment Company Act of 1940, as
amended.
(h) Absence of Conflicts. The execution and delivery by each Credit
Party of this Agreement and each other Credit Document to which it is a
party and performance by it hereunder and thereunder will not violate any
law (including, without limitation, Regulations T, U and X of the Federal
Reserve Board) and will not conflict with or result in a breach of any
order, writ, injunction, resolution, decree or other similar document or
instrument of any court or Governmental Body or its certificate of
incorporation or by-laws or similar constituent documents or create (with
or without the giving of notice or lapse of time, or both) a default under
or breach of any material agreement, bond, note or indenture, in each case
to which it is a party (by successor in interest or otherwise), or by which
it is bound or any material portion of its properties or assets is
affected, or, except under the Collateral Documents, result in the
imposition of any Lien (other than Permitted Liens) of any nature
whatsoever upon any of the properties or assets owned by or used in
connection with the business of the Credit Parties or their Subsidiaries.
(i) Collateral. From and after the execution and delivery of the
Collateral Documents and the filing of the documents thereby required, the
Agent, on behalf of the Lenders, shall have, subject only to Permitted
Liens, a first-priority perfected security interest in and to all of the
Collateral, free and clear of any Liens other than the Permitted Liens, and
entitled to priority under applicable law, with no financing statements,
chattel mortgages, real estate mortgages or similar filings on record
anywhere other than such filings in connection with this Agreement, the
Collateral Documents or the Permitted Liens. Each of the representations
and warranties made by each Credit Party in each Collateral Document to
which it is a party is true and correct in all material respects as of each
date made or deemed made.
(j) Partnerships, Etc. No Credit Party is a partner (general or
limited) of any partnership, is a party to any Joint Venture or owns
(beneficially or of record) any equity or similar interest in any similar
Person (including, without limitation, any interest pursuant to which such
Credit Party has or may in any circumstance have an obligation to make
capital contributions to, or be generally liable for or on account of the
liabilities, acts or omissions of such other Person).
(k) Fiscal Year. Each fiscal year of the Credit Parties and their
Subsidiaries begins on January 1 of each calendar year and ends on December
31 of each calendar year.
(l) Subsidiaries. Schedule 4.1(m) sets forth a true, correct and
complete list, as of the Closing Date, of each Credit Party and its
Subsidiaries, showing as to each entity (i) the jurisdiction of its
organization and jurisdictions in which it is qualified to do business,
35
(ii) the number of shares of Capital Stock of each class (A) authorized and
(B) issued and outstanding, (iii) the percentage of the outstanding shares
of Capital Stock of each Credit Party and its Subsidiaries owned directly
or indirectly by the Borrower, (iv) the names of the record holders of each
class of outstanding shares of Capital Stock of each Credit Party and its
Subsidiaries and the number of such shares held by each such holder, (v)
the number of shares of Capital Stock of each Credit Party and its
Subsidiaries covered by all outstanding options, warrants, rights of
conversion or purchase, and similar rights, (vi) the percentage of those
options, warrants or rights owned directly or indirectly by the Borrower or
such other Persons, and (vii) the names of the record holders of such
options, warrants and rights and the number of such options, warrants and
rights held by each such holder.
(m) Capitalization. All outstanding shares of Capital Stock of each
Credit Party and its Subsidiaries are duly authorized, validly issued,
fully paid and nonassessable and are free of any preemptive rights and,
except as set forth on Schedule 4.1(m) and pursuant to the Collateral
Documents, are owned, directly or indirectly, beneficially and of record by
the Borrower free and clear of all Liens and any options, warrants and
other rights.
(n) Material Misstatements and Omissions. To the Knowledge of each
Credit Party, there are no facts pertaining to any Credit Party or its
Subsidiaries, their assets or properties or their businesses which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect and which have not been disclosed in this
Agreement. To the Knowledge of each Credit Party, there is no information,
as of the Closing Date or the Amendment Date, which would contradict or is
inconsistent in any material respect with any representation or warranty of
any Credit Party contained in the Credit Documents.
(o) Solvency. Each Credit Party and each of its Subsidiaries is
Solvent.
(p) Labor Practices. No Credit Party or any of its Subsidiaries is
engaged in any unfair labor practice that would have a Material Adverse
Effect. There is (i) no complaint of unfair labor practice pending against
any Credit Party or any of its Subsidiaries or threatened against any of
them before any Governmental Body and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement that
is so pending against any Credit Party or any if its Subsidiaries or
threatened against any of them, (ii) no strike or work stoppage in
existence or threatened involving any Credit Party or any of its
Subsidiaries that would have a Material Adverse Effect, and (iii) no union
representation question existing with respect to the employees of any
Credit Party or any of its Subsidiaries, as the case may be, and no union
organization activity that is taking place, except (with respect to any
matter specified in clause (i), (ii) or (iii) above, either individually or
in the aggregate) such as is not reasonably likely to have a Material
Adverse Effect.
(q) Employee Benefits. No Credit Party or any Affiliate thereof
sponsors, maintains, contributes to or has any obligation under any
employee benefit plan, pension plan or any other plan maintained for
employees which are subject to ERISA or the
36
Internal Revenue Code. No Credit Party or any Subsidiary thereof sponsors,
maintains, contributes to or has any obligation under any employee benefit
plan, pension plan or any other plan maintained for employees where the
aggregate liability of such Credit Party or Subsidiary is in excess of
$100,000 per year. To the Knowledge of each Credit Party, each Credit Party
is in compliance with all Regulations governing plans maintained for
employees in the jurisdictions in which they do business.
(r) Environmental Matters.
(i) No Credit Party or any of its Subsidiaries has any
Environmental Liabilities at any Relevant Property, which individually
or in the aggregate, would have a Material Adverse Effect.
(ii) Each Credit Party and each of its Subsidiaries: (A) has
operated its business in compliance with all applicable Environmental
Laws; (B) has obtained all Environmental Permits required by
applicable Environmental Laws for the ownership and operation of its
properties, and all such Environmental Permits are in full force and
effect or such Person has made all appropriate filings for issuance or
renewal of such Environmental Permits; (C) is not aware of any acts,
omissions, events or circumstances that may interfere with or prevent
continued compliance with the Environmental Laws and Environmental
Permits referred to in the preceding clauses (A) and (B); (D) has not
received notice of any asserted or threatened claim, action, suit,
proceeding, hearing, investigation or request for information relating
to any environmental matter; and (E) has not received notice from any
Governmental Body that any Credit Party or any of its Subsidiaries is
a potentially responsible party under any Environmental Law at any
disposal site containing Hazardous Materials, nor received any that
any lien under any Environmental Law against any property of any
Credit Party or any of its Subsidiaries exists, in the case of each of
clauses (A) through (E), except for matters, which individually or in
the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
(s) Insurance. The policies, binders or self-insurance programs for
fire, liability, product liability, workmen's compensation, vehicular and
other insurance currently held by or on behalf of each Credit Party and
each of its Subsidiaries insure its material properties and business
activities against such losses and risks as are commensurate with customary
industry practice when entered into or renewed. As of the date hereof, all
such policies, binders and self-insurance programs are in full force and
effect. To the Knowledge of each Credit Party, as of the date hereof, none
of the Credit Parties or any of their Subsidiaries has received notice from
any insurer or agent of such insurer that substantial capital improvements
or other expenditures are required. As of the date hereof, no Credit Party
or any of its Subsidiaries has received notice of cancellation of any
material insurance policy or binder.
(t) Intellectual Property. Each Credit Party and each of its
Subsidiaries owns, or is licensed or otherwise has the right to use, all
the patents, trademarks, service marks, names (trade, service, fictitious
or otherwise), copyrights, technology (including, without
37
limitation, computer programs and software), processes, data bases and
other rights necessary to own and operate its properties and to carry on
its business as presently conducted and presently planned to be conducted
without conflict with the rights or otherwise, except for such instances of
non-compliance that, individually or in the aggregate, would not have a
Material Adverse Effect.
(u) Absence of Events of Default. No event has occurred and is
continuing and no condition exists which constitutes an Event of Default.
(v) Absence of Other Defaults. No Credit Party or any of its
Subsidiaries is in default under any agreement, ordinance, resolution,
decree, bond, note, indenture, order or judgment to which it is a party (by
successor in interest or otherwise) or by which it is bound, or any other
agreement or other instrument by which any of the properties or assets
owned by it or used in the conduct of its business is affected, which
individually or in the aggregate would have a Material Adverse Effect. Each
Credit Party and each of its Subsidiaries has complied and is in compliance
in all respect with all laws, except for such instances of non-compliance
that, individually or in the aggregate, would not have a Material Adverse
Effect.
(w) Material Contracts. Part I of Schedule 4.1(w) sets forth a true,
correct and complete list and description of all the Material Contracts, as
of the Closing Date, to which any Credit Party or any of its Subsidiaries
is a party. Except as set forth on Part II of Schedule 4.1(w), no Credit
Party or any of its Subsidiaries is in material default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any of the Material Contracts, and no condition
exists which, with the giving of notice or the lapse of time or both, could
constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, could not reasonably be
expected to have a Material Adverse Effect.
(x) Brokerage Fees. No broker's or finder's fee or commission will be
payable with respect to the execution and delivery of this Agreement and
the other Credit Documents, and no other similar fees or commissions will
be payable by the Credit Parties for any other services rendered to the
Credit Parties ancillary to the credit transactions contemplated herein.
(y) Margin Regulations. No part of the proceeds of the Loans issued
hereunder will be used for the purpose of buying or carrying any Margin
Stock or to extend credit to others for the purpose of buying or carrying
any Margin Stock, in either case in a manner which would violate or
conflict with Regulations T, U or X of the Board Governors of the Federal
Reserve System. No Credit Party is engaged in the business of extending
credit to others for the purpose of buying or carrying Margin Stock.
Neither the making of the Loans nor any use of proceeds of any such Loans
will violate or conflict with the provisions of Regulations T, U or X of
the Board of Governors of the Federal Reserve System, as amended from time
to time.
(z) Taxes.
38
(i) Each Credit Party and each of its Foreign Subsidiaries has
filed all tax returns required by any jurisdiction in which the Credit
Party or Foreign Subsidiary does business and has not failed to pay
any material taxes, or interest and penalties relating thereto, on or
before the due dates thereof except for Taxes not yet due and except
for those the amount or validity of which is currently being contested
in good faith by appropriate proceedings. Except to the extent that
reserves therefor are reflected in the Financials, (i) there are no
material tax liabilities of any Credit Party or any of its Foreign
Subsidiaries due or to become due for any tax year ended on or prior
to the date hereof relating to such Credit Party or any of its Foreign
Subsidiaries, which are not properly reflected in the consolidated
financials of the Borrower, and (ii) there are no material claims
pending, proposed or threatened against any Credit Party or any of its
Foreign Subsidiaries for past taxes, except those, if any, as to which
proper reserves in accordance with GAAP are reflected in such
Financials.
(ii) Each Domestic Subsidiary of the Credit Parties has filed all
tax returns required by any jurisdiction in which such Domestic
Subsidiary does business and has not failed to pay any material taxes,
or interest and penalties relating thereto, on or before the due dates
thereof except for Taxes not yet due and except for those the amount
or validity of which is currently being contested in good faith by
appropriate proceedings and except where such failure, individually or
in the aggregate, would not have a Material Adverse Effect. Except to
the extent that reserves therefor are reflected in the Financials, (i)
there are no material tax liabilities of any Domestic Subsidiary of
the Credit Parties due or to become due for any tax year ended on or
prior to the date hereof relating to such Domestic Subsidiary, which
are not properly reflected in the consolidated financials of the
Borrower, and (ii) there are no material claims pending, proposed or
threatened against any Domestic Subsidiary of the Credit Parties for
past taxes, except those, if any, as to which proper reserves in
accordance with GAAP are reflected in such Financials and, in each
case, except where such liabilities and claims, individually or in the
aggregate, would not have a Material Adverse Effect.
(aa) USA Patriot Act; Etc. Each Credit Party and each of its
Subsidiaries is in compliance in all material respects with the USA Patriot
Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001)) (the
"Patriot Act"). No part of the proceeds of the extensions of credit
hereunder will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the federal Foreign Corrupt Practices
Act of 1977.
(bb) OFAC. None of the Parent, any Credit Party, any Subsidiary of the
Parent or any Credit Party or any Affiliate of the Parent or any Credit
Party: (i) is a Sanctioned Person, (ii) has more than 10% of its assets in
Sanctioned Entities, or (iii) derives more than 10% of its operating income
from investments in, or transactions with Sanctioned Persons or Sanctioned
Entities. The proceeds of any Loans will not be used and have not
39
been used to fund any operations in, finance any investments or activities
in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.
(cc) No Material Adverse Change. Since December 31, 2005, no event,
circumstance or change has occurred that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect.
(dd) Financial Projections. On and as of the Closing Date, the
financial projections for the Borrower attached as Schedule 4.1(dd) for the
period of Fiscal Year 2006 through and including Fiscal Year 2008 (the
"Projections") are (i) consistent with the organizational and capital
structure of the Credit Parties and their Subsidiaries described in
Sections 4.1(l) and 4.1(m) and set forth on Schedule 4.1(m), (ii)
consistent with the ownership of Media Assets set forth on Annex A, and
(iii) based on good faith estimates and assumptions made by the management
of Borrower (in light of circumstances known to management at such time)
and, as of the Closing Date, management of Borrower believed that the
Projections were reasonable and attainable in light of circumstances known
at such time and taken as a whole.
(ee) Indebtedness. Schedule 6.1(a) contains a complete and correct
listing of all Indebtedness of the Credit Parties and their Subsidiaries in
excess of $100,000 as of the Closing Date. Each Credit Party and its
Subsidiaries has performed and is in compliance with all of the material
terms of such Indebtedness and all instruments and agreements relating
thereto, and no default or event of default, or event or condition which
with notice or lapse of time or both would constitute such a default or
event of default on the part of any Credit Party or any of its Subsidiaries
exists with respect to any such Indebtedness.
(ff) Liens. None of the properties and assets of any Credit Party or
any of its subsidiaries is subject to any Lien, except Permitted Liens. No
Credit Party or any of its Subsidiaries has signed any mortgage, financing
statement or any security agreement authorizing any secured party
thereunder to file any financing statement, except in connection with any
Permitted Lien.
(gg) Media Assets. With respect to the Media Assets listed on Annex A
as having been acquired on or prior to the date hereof, Borrower, or a
wholly owned direct or indirect Foreign Subsidiary of the Borrower, either
(i) has good and marketable title to such Media Assets or (ii) owns all
outstanding shares of Capital Stock of the WFOE which is party to an
Internal Control Agreement with respect to such Media Assets.
(hh) Internal Control Agreements. Each of the Internal Control
Agreements that has been duly executed by the parties thereto is in full
force and effect and constitutes legal, valid and binding obligation of the
parties thereto, enforceable in accordance with its terms, except (1) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors'
rights generally, and (2) as limited by laws relating to the availability
of specific performance, injunctive relief, or other equitable principle.
40
Section 4.2 Representations and Warranties of Lenders. Each
Lender hereby represents and warrants to the Borrower, on the Closing
Date and on each Borrowing Date as follows:
(a) Purchase Entirely for Own Account. The Lender hereby confirms that
the Borrower Common Shares issuable upon conversion of the Loans (if any)
and the Parent Exchange Shares issuable upon conversion of the Loans (if
any) will be acquired for investment for the Lenders's own account, not as
a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that the Lender has no present intention of selling,
granting any participation in, or otherwise distributing the same. The
Lender further represents that it does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the
Borrower Common Shares or the Parent Exchange Shares.
(b) Accredited Investor. It is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) under the Securities Act.
(c) Investment Experience. It is an investor in securities of
companies in the development stage and acknowledges that it is able to bear
the economic risk of its investment and has such knowledge and experience
in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Borrower Common Shares and Parent
Exchange Shares.
(d) Acknowledgement of Risks. It understands and accepts the following
risks that may be associated with the Borrower Common Shares:
(i) No Operating History. An investment in the Borrower involves
a high degree of risk. The Borrower is a recently formed entity and
therefore has no operating history upon which investors can evaluate
its anticipated performance. The Borrower has been formed for the
purpose of developing, owning and operating media assets in the PRC;
however, certain staff (other than senior management) have yet to be
hired, and therefore the Borrower has no operating history or
historical financial information. Projections and forecasts regarding
the Borrower and its future performance are subject to a high level of
risk and uncertainty.
(ii) No Liquidity. The Borrower Common Shares will not be
registered under any securities laws and therefore cannot be resold
unless they are subsequently registered under such laws or
registration thereunder is not required pursuant to an exemption from
such registration or otherwise. There is no public market for the
Borrower Common Shares and none is expected to develop for a number of
years. An investment in the Borrower is suitable only for
sophisticated investors who do not require immediate liquidity for
their investment.
(iii) Country Risk. Substantially all of the Borrower's assets
will be located in the PRC and enforcement of existing laws and
regulations may be
41
uncertain and sporadic, and implementation and interpretation thereof
may be inconsistent. The outcome of litigation in PRC courts may be
uncertain. Further, it may be difficult to obtain swift and equitable
enforcement or to obtain enforcement of a judgment by a court of
another jurisdiction. The introduction of new PRC laws and regulations
and the interpretation of existing ones may be subject to policy
changes reflecting domestic political or social changes. As the PRC
legal system develops, there can be no assurance that changes in such
regulation or interpretation will not have a material adverse effect
on the business, financial condition, results of operations and future
prospects of the Borrower.
(iv) Regulatory Environment. PRC laws relating to foreign
investments, media and financial markets are relatively new compared
with those in more mature markets. New laws and regulations continue
to be promulgated. There are substantial uncertainties regarding the
interpretation, application and administration of current PRC laws and
regulations and the impact of any new laws and regulations is unknown.
(v) Currency Restrictions. As a holding company for operations in
the PRC, the Borrower will depend on dividends and other payments from
its subsidiaries and related entities in the PRC for its revenues. The
remittance of funds out of the PRC as well as the exchange rate of the
RMB to other currencies are highly regulated. Changes to the exchange
rate regime as well as the regulations affecting the remittance of
funds out of the PRC may have an adverse impact on the Borrower's
ability to fund its expenses outside of the PRC or to issue dividends
to its shareholders. Furthermore, any change in the exchange rates
between the RMB and other currencies may also have an impact on the
amount of proceeds in other currencies the Borrower receives from the
PRC and, ultimately, the value of the Purchaser's investment in the
Borrower. The value of the Purchaser's investment in the Borrower will
also be affected by the foreign exchange rate between the HK Dollar
and other currencies.
ARTICLE V
Affirmative Covenants
Section 5.1 Affirmative Covenants. Each Credit Party covenants
and agrees that until payment in full of all Obligations, each Credit
Party shall perform all the covenants in this Article V:
(a) Basic Reporting Requirements. The Borrower shall furnish to the
Agent and the Lenders:
(i) as soon as available but in any event within ninety (90) days
after the close of each Fiscal Year, the audited consolidated
Financials of the Borrower and its Subsidiaries for such Fiscal Year,
certified by the Borrower's accountants;
42
(ii) as soon as available but in any event within sixty (60) days
after the end of each Fiscal Quarter, the unaudited consolidated
Financials of the Borrower and its Subsidiaries for such quarter;
(iii) as soon as available but in any event within thirty (30)
Business Days after the end of each fiscal month the unaudited
consolidated Financials of the Borrower and its Subsidiaries for such
month, certified by its chief financial officer pursuant to a
Financial Officer Certification;
(iv) together with the quarterly and annual audited consolidated
Financials, a certificate of the Borrower certifying that no Default
or Event of Default has occurred, or if a Default or an Event of
Default has occurred, the actions taken by the Borrower with respect
thereto;
(v) promptly upon Borrower obtaining knowledge of (i) the
institution of, or non frivolous written threat of, any Action not
previously disclosed in writing by Borrower to Lenders, or (ii) any
material development in any Action that, in the case of either clause
(i) or (ii), if adversely determined could be reasonably expected to
have a Material Adverse Effect, or seeks to enjoin or otherwise
prevent the consummation of, or to recover any material damages or
obtain relief as a result of, the transactions contemplated hereby,
written notice thereof together with such other information as may be
reasonably available to Borrower to enable Lenders and their counsel
to evaluate such matters;
(vi) as soon as available but in no event later than the end of
each Fiscal Year an updated financial projection for the succeeding
Fiscal Year;
(vii) promptly upon their becoming available, all minutes and
written resolutions of the Board of Directors of the Borrower; and
(viii) promptly upon their becoming available, copies of all
statements, reports, releases, notices and any other information or
data sent or made available generally by the Borrower to its
shareholders.
(b) Visitation; Verification. The Borrower and each of the other
Credit Parties shall keep true and accurate books of account in accordance
with GAAP and shall permit the Agent and/or any Lender and or any of their
designated representatives, upon reasonable notice and at the expense of
the Borrower, to visit and inspect the premises of the Borrower and/or
other Credit Party, to examine the books of account of any such Persons and
their Affiliates (and to make copies and/or extracts therefrom) and to
discuss the affairs, finances and accounts of such Persons and their
Affiliates with, and to be advised as to the same by, the officers of such
Persons and to be advised as to such or other business records upon the
request of the Agent and/or Lender.
(c) Maintenance of Properties. The Borrower and each of the other
Credit Parties shall maintain its corporate/legal existence and business,
maintain its assets in good operating conditions and repair (subject to
ordinary wear and tear and casualty damage
43
and to all provisions of this Agreement permitting sales of certain of
Borrower's assets), keep its business and assets adequately insured.
(d) Notice of Material Events. The Borrower and each of the other
Credit Parties shall notify the Agent and the Lenders promptly in writing
upon an Authorized Officer becoming aware of any of the following: (i) the
occurrence of any Default or Event of Default, (ii) any noncompliance with
any Environmental Law or proceeding in respect thereof which could have a
Material Adverse Effect, (iii) any change of address of the Borrower or any
other Credit Party, (iv) any threatened or pending litigation or similar
proceeding affecting the Borrower or any other Credit Party involving
claims in excess of $500,000 in the aggregate or any material change in any
such litigation or proceeding previously reported, (v) claims in excess of
$500,000 in the aggregate against any assets or properties of the Borrower
or any other Credit Party encumbered in favor of the Agent and/or the
Lenders and (vi) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
(e) Use of Proceeds. The Borrower and each other Credit Party shall
use the proceeds of the Loans only as permitted by Section 2.5 hereof (for
the avoidance of doubt, the proceeds of the Loans shall not be used for the
purpose of purchasing or carrying of "margin security" or "margin stock"
within the meaning of Regulations U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Parts 221 and 224). The Borrower shall
not transfer any of the proceeds of the Loans to, nor use any such proceeds
for the benefit of, any of its Subsidiaries that is not a Guarantor
hereunder.
(f) Further Assurances.
(i) The Borrower and each of the other Credit Parties shall
cooperate with the Agent, take such action, execute such documents,
and provide such information as the Agent may from time to time
reasonably request in order further to effect the transactions
contemplated by and the purposes of the Credit Documents.
(ii) The Borrower and each of the other Credit Parties shall
promptly, upon request by any Lender, correct, and cause each of the
other parties to the Credit Document to promptly correct, any defect
or error that may be discovered in any Credit Document or in the
execution, acknowledgment or recordation of the Credit Document.
Promptly upon request by the Agent or the Required Lenders, the
Borrower and each other Credit Party shall execute, authorize,
acknowledge, deliver, record, file and register, any and all such
further acts, deeds, conveyances, documents, security agreements,
pledge agreements, mortgages, deeds of trust, trust deeds,
assignments, financing statements and continuations, notices of
assignment, transfers, certificates, assurances and other instruments
as the Agent or the Required Lenders may require from time to time in
order to carry out more effectively the purposes of each Credit
Document. Without limiting the foregoing, the Borrower and/or each
other Credit Party shall (A) authorize the filing by Agent of UCC-1
financing statements for all jurisdictions requested by the Agent, and
(B) take such action from time to time
44
(including, without limitation, authorizing, filing, executing and/or
delivering such assignments, security agreement and other instruments)
as shall be reasonably requested by the Agent to create, in favor of
the Lenders, to the extent required under the respective Collateral
Documents and to the maximum extent permitted under applicable law, a
first-priority perfected Lien in all of the Collateral, subject only
to Permitted Liens.
(g) Bridge Loan. Borrower shall repay the Bridge Loan in full within
five (5) Business Days from the date hereof.
(h) Insurance. The Borrower and each of the other Credit Parties shall
maintain, at its respective expense, and keep in effect with responsible
insurance companies, such liability insurance for bodily injury and
third-party property damage as is customary in the case of companies
engaged in the same or similar business or having similar properties,
similarly situated. The Borrower and each of the other Credit Parties shall
keep and maintain, at its expense, its material real and personal property
insured against loss or damage by fire, theft, explosion, spoilage and all
other risks ordinarily insured against by other owners or users of such
properties in similar businesses in an amount equal to the full replacement
or cash value thereof, subject to deductible amounts which the Borrower, in
its reasonable judgment, deems prudent.
(i) Information Regarding Collateral. The Borrower and each of the
other Credit Parties will furnish to the Agent prompt written notice of any
change in (i) any Credit Party's corporate name or any trade name used to
identify it in the conduct of its business or any Credit Party's chief
executive office, its principal place of business or its jurisdiction of
organization, (ii) any Credit Party's identity or corporate structure or
(iii) any Credit Party's federal Taxpayer Identification Number (if any).
The Borrower and each of the other Credit Parties will not effect or permit
any change referred to in the preceding sentence unless all filings have
been made under the UCC and all other actions have been taken that are
required so that such change will not at any time adversely affect the
validity, perfection or priority of any Lien established under any Credit
Document on the Collateral.
(j) Existence; Conduct of Business. The Borrower and each of the other
Credit Parties will do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and
the rights, licenses, permits (including, without limitation, Environmental
Permits) privileges, franchises, patent, copyrights, trademarks and trade
names material to the conduct of its business; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.1(g).
(k) Payment of Obligations. The Borrower and each of the other Credit
Parties will pay their Indebtedness and other obligations, including Tax
liability, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Borrower or such Credit Party has set
aside on its books adequate reserves with respect thereto in accordance
with GAAP, (c) such contest effectively suspends collection of the
contested obligation and
45
the enforcement of any Lien securing such obligation and (d) the failure to
make payment pending such contest would not result in a Material Adverse
Effect.
(l) Compliance with Laws. The Borrower and each of the other Credit
Parties will comply with all laws (including, without limitation, all
Environmental Laws), rules, licenses, permits, Regulations and orders of
any Governmental Body applicable to it or its property, except where
failures to do so, in the aggregate, would not result in a Material Adverse
Effect.
(m) Subsidiaries. If any Foreign Subsidiary is formed or acquired
after the Closing Date, the Borrower and each of the other Credit Parties
will, within three Business Days after such Foreign Subsidiary is formed or
acquired, notify the Agent and the Lenders thereof and, if such Foreign
Subsidiary directly or indirectly holds any Media Assets or any outstanding
shares of Capital Stock of a WFOE which is party to an Internal Control
Agreement with respect to such Media Assets, each Credit Party will cause
any equity interest in or Indebtedness owned by or on behalf of any Credit
Party to be added to the Collateral.
(n) Guarantors. The Borrower and each of the other Credit Parties
shall cause any wholly-owned Foreign Subsidiaries formed after the date
hereof which directly or indirectly holds any Media Assets or any
outstanding shares of Capital Stock of a WFOE which is party to an Internal
Control Agreement with respect to such Media Assets (each, a "Guarantor")
to become a Guarantor hereunder by (i) executing a joinder to this
Agreement in the form of Exhibit G hereto and (ii) executing a guaranty in
the form of Exhibit D hereto. Upon delivery of any such joinder and such
guaranty to Agent, notice of which is hereby waived by the parties hereto,
each such Guarantor shall be as fully a party hereto as if such Guarantor
were an original signatory hereof. Each Guarantor expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Guarantor hereunder, nor by any election
of Agent not to cause any such Foreign Subsidiary of the Borrower and each
of the other Credit Parties to become a Guarantor hereunder.
(o) Reserved Shares. The Borrower shall reserve a sufficient number of
authorized Borrower Common Shares for issuance such that at all times there
are enough Borrower Common Shares to fully convert the Loan Conversion
Amount upon election by the Lenders to convert into Borrower Common Shares
in accordance with Section 2.13 herein.
(p) Additional Media Assets. Any Media Asset acquired after the date
hereof shall be (i) held by the Borrower or a Subsidiary of the Borrower or
(ii) subject to an Internal Control Agreement with any Credit Party or any
Subsidiary of any Credit Party.
46
ARTICLE VI
Negative Covenants/Financial Covenants
Section 6.1 Negative Covenants. Each Credit Party covenants and
agrees that until all of the Obligations have been paid in full, each
Credit Party shall perform all covenants in this Section 6.1:
(a) Indebtedness. No Credit Party or any of its Subsidiaries shall
create, incur, permit to exist or assume any Indebtedness other than (i)
Indebtedness to the Agent and/or the Lenders arising under the Credit
Documents, (ii) Indebtedness of Credit Parties existing as of the date
hereof set forth on Schedule 6.1(a) hereto, (iii) Indebtedness in respect
of taxes or other governmental charges contested in good faith by
appropriate proceedings and for which such Credit Party has made
appropriate reserves, (iv) Indebtedness of the Credit Parties incurred
under Capital Leases entered into in the ordinary course of business in an
aggregate amount not to exceed $500,000 on any date of determination, (v)
Indebtedness in RMB which is entirely secured by a Dollar deposit and which
is incurred solely for the purpose of converting Dollars into RMB required
for working capital purposes in the PRC, (vi) Indebtedness owing to a
Credit Party by a Subsidiary of any Credit Party which is subordinated to
the Obligations; or (vii) trade or other similar Indebtedness on normal
commercial terms incurred in the ordinary course of business in an
aggregate amount not to exceed $500,000 on any date of determination and
payable within 90 days (the Indebtedness described in the foregoing clauses
(i) through (vii) of this paragraph, collectively, the "Permitted
Indebtedness").
(b) Liens. No Credit Party shall create or incur any Liens on any of
the property or assets of such Credit Party except (i) Liens securing the
Obligations, (ii) Liens securing taxes or other governmental charges not
yet due or due but contested in good faith by appropriate proceedings and
for which such Credit Party has made appropriate reserves (so long as the
holder of any such Lien is not taking any active steps to enforce or
foreclose on such Lien), (iii) Liens of landlords, carriers, warehousemen,
mechanics and materialmen and other similar statutory Liens arising in the
ordinary course of such Credit Party's business, less than 120 days old as
to obligations not yet due or due but contested in good faith by
appropriate proceedings and for which such Credit Party has made
appropriate reserves (so long as the holder of any such Lien is not taking
any active steps to enforce or foreclose on such Lien), (iv) easements,
rights of way, zoning restrictions and similar minor Liens which
individually and in the aggregate do not have a Material Adverse Effect on
the Borrower and/or any Credit Party, (v) Liens securing obligations
arising under the Equity Documents (the liens described in the foregoing
clauses (i) through (v) of this paragraph, the "Permitted Liens").
(c) Sales and Lease-Backs. No Credit Party shall directly or
indirectly, become or remain liable as lessee or as a guarantor or other
surety with respect to any lease of any property where the market value of
such property or the aggregate obligations are in excess of $100,000
(whether real, personal or mixed), whether now owned or hereafter acquired,
which such Credit Party (i) has sold or transferred or is to sell or to
transfer to any other Person (other than the Borrower or any other Credit
Party), or (ii) intends to use for substantially the same purpose as any
other property which has been or is to be sold
47
or transferred by such Credit Party to any Person (other than a Borrower or
any other Credit Party) in connection with such lease.
(d) Transactions with Shareholders and Affiliates. No Credit Party
shall directly or indirectly, enter into or permit to exist any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service, but excluding the transactions contemplated by
this Agreement and purchase agreements in connection therewith) between a
Significant Person and the Borrower or any of its Subsidiaries except (i)
transactions between the Borrower and any of its wholly owned Subsidiaries,
(ii) transactions between any wholly-owned Subsidiaries of the Borrower and
(iii) those transactions that are (A) on terms no less favorable to the
Borrower or such Credit Party, as the case may be, than those that
generally might be obtained at the time from a Person who is not such a
holder or an Affiliate and (B) approved by the board of directors of the
Borrower or such Credit Party; provided, the foregoing restriction shall
not apply to (x) any transaction between the Borrower and the Parent and
(y) compensation and expense reimbursement arrangements for directors,
officers and other employees of the Credit Parties entered into in the
ordinary course of business.
(e) [Reserved]
(f) [Reserved]
(g) Mergers; Asset Sales. Neither the Borrower nor any other Credit
Party shall (i) become party to a merger or consolidation, (ii) sell, lease
or otherwise dispose of assets other than (A) in the ordinary course and
not to exceed in the aggregate $500,000 per Fiscal Year and (B) disposals
of obsolete, worn out or surplus property, (iii) make any changes in the
corporate structure or identity of the Borrower or any other Credit Party
which has a Material Adverse Effect on the Borrower and/or such Credit
Party or (iv) enter into any agreement to do any of the foregoing;
provided, that, any Credit Party (other than the Borrower) may merge with
and into the Borrower or any other Credit Party upon not less than thirty
(30) days' prior written notice to the Agent of such merger. For the
avoidance of doubt, sales and other dispositions of assets which are either
not prohibited by this Section 6.1(g) or expressly consented to by the
Agent shall be deemed permitted sales of assets for all purposes of this
Agreement, including, without limitation, Section 10.1(e)
(h) [Reserved]
(i) Restricted Payments. Neither the Borrower nor any other Credit
Party shall, directly or indirectly, declare, order, pay, make or set apart
any sum for (i) any Restricted Junior Payment or (ii) Indebtedness owed to
any Affiliate of a Credit Party other than (A) payments in respect of
Permitted Indebtedness made to the Borrower or a wholly-owned Subsidiary or
(B) Repayment of EconWorld Indebtedness.
(j) Limitations on Exchange and Issuance of Capital Stock. Neither the
Borrower nor any other Credit Party shall create, issue or sell (i) any
class, series or shares of preferred stock (other than the Preferred
Shares), (ii) any class, series or shares of Capital
48
Stock (other than the Preferred Shares) that is senior in rights in any
respect (including, without limitation, right of payment, right of
repayment, rights in liquidation, right of redemption or right to
dividends) to the Borrower Common Shares or the common stock of any Credit
Party, (iii) any class or series of Capital Stock that is convertible or
exchangeable into Indebtedness, preferred stock or Capital Stock that is
senior in rights in any respect (including, without limitation, right of
payment, right of repayment, rights in liquidation, right of redemption or
right to dividends) to the Borrower Common Shares or the common stock of
any Credit Party or (iv) any shares of Preferred Shares other than those
shares issued under the Share Purchase Agreement.
(k) Subsidiaries. Neither the Borrower nor any other Credit Party
shall form, cause or permit to be formed or cause or permit to exist, any
other Foreign Subsidiary, unless (i) such Foreign Subsidiary does not
(directly or indirectly) hold any Media Asset and does not (directly or
indirectly) hold any outstanding shares of Capital Stock of a Subsidiary
which is party to an Internal Control Agreement with respect to such Media
Asset or (ii) if such Foreign Subsidiary directly or indirectly holds any
Media Assets or directly or indirectly holds any outstanding shares of
Capital Stock of a Subsidiary which is party to an Internal Control
Agreement with respect to such Media Asset, such Foreign Subsidiary is
wholly-owned by a Credit Party and (x) all property and assets of such
newly formed Foreign Subsidiary and (y) all stock of any class of such
newly formed Foreign Subsidiary, in each case, are pledged to the Agent for
the benefit of the Agent and Lenders in accordance with the terms hereof
and of the Collateral Documents.
(l) Conduct of Business. From and after the Closing Date, neither the
Borrower nor any other Credit Party shall engage in any business other than
(i) the Permitted Business, and (ii) such other lines of business as may be
consented to by the Lenders.
(m) Organizational Documents. From and after the Closing Date, neither
the Borrower nor any other Credit Party shall agree to any material
amendment, restatement, supplement or other modification to, or waiver of
(x) any provision in the Articles of Association relating to the rights of
the Preferred Shares, or (y) any of its organizational or constitutive
documents in a manner adverse to the rights of any Lender, without in each
case obtaining the prior written consent of Requisite Lenders to such
amendment, restatement, supplement or other modification or waiver.
(n) Bankruptcy. Neither the Borrower nor any other Credit Party shall
institute any proceeding seeking to adjudicate it bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or seek
the entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any of its assets, or
make a general assignment for the benefit of creditors.
(o) Liquidation or Dissolution. The Borrower shall not seek, or cause
or permit, the liquidation, dissolution or winding up of the Borrower.
49
ARTICLE VII
Increased Costs; Taxes; Indemnification; Set Off; Etc.
Section 7.1 Increased Costs; Capital Adequacy. In the event that
the adoption, effectiveness, phase in or applicability after the
Closing Date of any law, rule or Regulation (or any provision thereof)
regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any Governmental Body,
central bank or comparable agency charged with the interpretation or
administration thereof, has or would have the effect of reducing the
rate of return on the capital of such Lender or any company
controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitments or other obligations hereunder with
respect to the Loans to a level below that which such Lender or such
controlling company could have achieved but for such adoption,
effectiveness, phase in, applicability, change or compliance (taking
into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy), then from time to time,
within five (5) Business Days after receipt by the Borrower from such
Lender of the statement referred to in the next sentence, the Borrower
shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such controlling, corporation on an after
tax basis for such reduction. Such Lender shall deliver to the
Borrower (with a copy to Agent) a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts
owed to Lender under this Section 7.1, which statement shall be
conclusive and binding, upon all parties hereto absent manifest error.
This provision shall not apply to the extent any such increased cost
is attributable to the willful breach or gross negligence by the
Lender or its Affiliates in respect of any law or regulation.
Section 7.2 Taxes; Withholding, etc.
(a) Payments to Be Free and Clear. All sums payable by any Credit
Party hereunder and under the other Credit Documents shall (except to the
extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on the
overall net income of any Lender) imposed, levied, collected, withheld or
assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other jurisdiction
from or to which a payment is made by or on behalf of any Credit Party or
by any federation or organization of which the United States of America or
any such jurisdiction is a member at the time of payment.
(b) Withholding of Taxes. If any Credit Party or any other Person is
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by any Credit Party to Agent or any Lender
under any of the Credit Documents: (i) the Borrower shall notify Agent of
any such requirement or any change in any such requirement as soon as the
Borrower becomes aware of it, (ii) Borrower shall pay any such Tax before
the date on which penalties attach thereto, such payment to be made (if the
liability to pay is imposed on any Credit Party) for its own account or (if
that liability is imposed on Agent or such Lender, as the case may be) on
behalf of and in the
50
name of Agent or such Lender, (iii) the sum payable by such Credit Party in
respect of which the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, Agent or such Lender, as the
case may be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been required or
made, and (iv) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30 days
after the due date of payment of any Tax which it is required by clause
(ii) above to pay, Borrower shall deliver to Agent evidence satisfactory to
the other affected parties of such deduction, withholding or payment and of
the remittance thereof to the relevant taxing or other authority.
(c) [Reserved]
Section 7.3 Indemnification.
(a) Indemnification by the Borrower. The Borrower and each Credit
Party will indemnify and defend the Agent, the Lenders and each of their
respective shareholders, partners, members, managers, directors, officers,
employees, agents, attorneys and Affiliates (collectively, the "Indemnified
Persons") against and hold each Indemnified Person harmless from any and
all liabilities, obligations, losses, damages, costs, expenses, claims,
penalties, Actions, judgments, disbursements of any kind or nature
whatsoever, interest, fines, cleanup costs, settlements, costs of
preparation and investigation, costs incurred in enforcing this indemnity
and reasonable attorneys' fees and expenses (collectively, "Losses"), that
the Indemnified Persons may incur, suffer, sustain or become subject to
arising out of, relating to, or due to (i) any inaccuracy or breach of any
of the representations and warranties of any Credit Party contained in any
Credit Document or in any certificate delivered thereunder, (ii) the
nonfulfillment or breach of any covenant, undertaking, agreement or other
obligation of any Credit Party contained in any Credit Document or in any
certificate delivered thereunder, (iii) any Environmental Liability, (iv)
any use of proceeds of any Loans and/or (v) any amendment of any Credit
Document or Equity Document; provided that such indemnity shall not, as to
any Indemnified Person, be available to the extent such Losses arise out of
the gross negligence or willful misconduct of such Indemnified Person. Upon
request of an Indemnified Person, the Borrower shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person in connection with any Losses or threatened Losses and
shall pay the reasonable fees and disbursements of such counsel. The
Indemnified Person shall have the right to employ its own counsel at the
expense of the Borrower if (i) the employment of counsel by the Indemnified
Person at the Borrower's expense has been authorized in writing by
Borrower, (ii) the Borrower has not in fact employed counsel to represent
the Indemnified Person within a reasonable time after receiving notice of a
request for the retention of counsel or (iii) both the Indemnified Person
and Borrower are implicated with respect to the Losses or the threatened
Losses, and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them,
in each of which cases the reasonable fees and expenses of counsel
(including local counsel) will be at the expense of the Borrower, and all
such fees and expenses will be reimbursed promptly as
51
they are incurred.
(b) Contribution. If the indemnification provided for in this Section
7.3 is prohibited under applicable Regulations to an Indemnified Person,
then the Borrower and each Credit Party, in lieu of indemnifying the
Indemnified Person, will contribute to the amount paid or payable by the
Indemnified Person as a result of the Losses in such proportion as is
appropriate to reflect the relative fault of Borrower, on the one hand, and
of the Indemnified Person, on the other, in connection with the events or
circumstances which resulted in the Losses as well as any other relevant
equitable considerations.
Section 7.4 Right of Set Off. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of
any such rights, upon the occurrence of any Event of Default each
Lender and Agent are hereby authorized by each Credit Party at any
time or from time to time, without notice to any Credit Party or to
any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and to apply any and all deposits (general
or special, including Indebtedness evidenced by certificates of
deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by such
Lender or Agent to or for the credit or the account of any Credit
Party against and on account of the Obligations of any Credit Party to
such Lender or Agent hereunder, irrespective of whether or not (a)
such Lender or Agent shall have made any demand hereunder or (b) the
principal of or the interest on the Loans or any other amounts due
hereunder or the other Credit Documents shall have become due and
payable and although such obligations and liabilities, or any of them,
may be contingent or unmatured.
Section 7.5 Funding Breakage. In addition to the compensation
required under Section 7.1, the Borrower agrees to pay all reasonable
administrative fees charged by Lender and indemnify each Lender
against any loss or expense (including loss of margin) which such
Lender has incurred as a consequence of any payment or prepayment of
any Loan on a day other than the last day of the corresponding
Interest Period (whether or not such payment is mandatory or automatic
and whether or not such payment or prepayment is then due).
If any Lender sustains or incurs any such loss or expense or if Lender has
charged the Borrower for an administrative expense it shall from time to time
promptly notify the Borrower and the Agent in writing setting forth in
reasonable detail the amount determined in good faith by such Lender (such
determination shall be conclusive absent manifest error) to be necessary to
indemnify such Lender for such loss or expense and the amount of such
administrative expense. Such amount shall be due and payable by the Borrower to
the Agent for the account of such Lender, five Business Days after such notice
is given.
Section 7.6 Mitigation. The Lenders shall, in consultation with
the Borrower, take reasonable steps to mitigate any circumstances
which arise and which would result in any amount becoming payable
under or pursuant to, or cancelled pursuant to, any of Section 2.8
(Changed Circumstances) Section 7.1 (Increased Costs; Capital
Adequacy), Section 7.2 (Taxes; Withholding, etc.) or
52
Section 7.5 (Funding Breakage) including (but not limited to)
transferring its rights and obligations under the Credit Documents to
another then-existing Affiliate of Lender; provided, that no Lender
shall be required to take any action that would require such Lender to
incur or increase any cost or would have any adverse economic effect
on such Lender.
ARTICLE VIII
Events of Default
Section 8.1 Events of Default. Any one or more of the following
events which shall occur and be continuing shall constitute an "Event
of Default":
(a) Failure to Make Payments When Due. Failure by the Borrower to pay
when due any installment of principal or, or interest on, the Loans,
whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise, or any fee or any other
amount due hereunder, and such failure, except in respect of principal, is
continuing two (2) Business Days after the date due therefor unless both
(i) such failure to pay is caused by administrative or technical error and
(ii) payment is made within thirty (30) days of its due date;
(b) Breach of Certain Covenants. Failure of any Credit Party to
perform or comply with any term or condition contained in Section 2.5,
Article V or Article VI and such failure is continuing and not waived by
the Required Lenders sixty (60) days after the date such term or condition
should have been performed or complied with;
(c) Breach of Representations, Etc. Any representation, warranty,
certification or other statement made or deemed made by any Credit Party in
any Credit Document or in any statement or certificate at any time given by
any Credit Party or any of its Subsidiaries in writing, pursuant hereto or
thereto or in connection herewith or therewith shall be false in any
material respect as of the date made or deemed made or, if the
circumstances giving rise to the false representation, warranty,
certification or other statement are capable of modification or
rectification such that thereafter the representation, warranty,
certification or other statement would be correct, the representation,
warranty, certification or other statement shall be false in any material
respect as of the date that is sixty (60) days from the date when
originally made or deemed made;
(d) Other Defaults Under Credit Documents. Any Credit Party shall
default in the performance of or compliance with any term contained herein
or any of the other Credit Documents, other than any such term referred to
in any other section of this Section 8.1, and such default shall not have
been remedied or waived within sixty (60) days after the earlier of (i) the
date upon which an Authorized Officer of the Borrower had Knowledge of such
default and (ii) the date upon which written notice thereof is given to the
Borrower by the Agent or any Lender;
(e) Default Under Other Agreements. (i) Failure of any Credit Party to
pay when due any principal of or interest on or any other amount payable in
respect of one or
53
more items of Indebtedness beyond the grace period, if any, provided
therefor, (ii) any Indebtedness of any Credit Party is declared to be or
otherwise becomes due and payable prior to its scheduled maturity as a
result of an event of default (however described) or (iii) any creditor of
any Credit Party declares any Indebtedness of any Credit Party due and
payable prior to its scheduled maturity as a result of an event of default
(however described); provided, however, that no Event of Default shall
occur under this Section 8.1(e) if the aggregate amounts payable under
subsections (i) to (iii) above is less than $500,000 (or its equivalent in
any other currency or currencies);
(f) Involuntary Bankruptcy, Appointment of Receiver, etc. (i) A court
of competent jurisdiction shall enter a decree or order for relief in
respect of the Parent, the Borrower or any of Borrower's Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which
decree or order is not stayed, or any other similar relief shall be granted
under any applicable federal or state law, or (ii) an involuntary case
shall be commenced against the Parent, the Borrower or any of Borrower's
Subsidiaries under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, or a
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Parent, the Borrower or any of
Borrower's Subsidiaries, or over all or a substantial part of its property,
shall have been entered; or there shall have occurred the involuntary
appointment of an interim receiver, trustee or other custodian of the
Parent, the Borrower or any of Borrower's Subsidiaries for all or a
substantial part of its property or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property the Parent, the Borrower or any of Borrower's Subsidiaries, and
any such event described in this clause (ii) shall continue for sixty (60)
days without having been dismissed, bonded or discharged;
(g) Voluntary Bankruptcy, Appointment of Receiver, etc. (i) The
Parent, the Borrower or any of Borrower's Subsidiaries shall have an order
for relief entered with respect to it or shall commence a voluntary case
under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law,
or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property;
or the Parent, the Borrower or any of Borrower's Subsidiaries shall make
any assignment for the benefit of creditors, or (ii) the Parent, the
Borrower or any of Borrower's Subsidiaries shall be unable, or shall fail
generally, or shall admit in writing its inability, to pay its debts as
such debts become due; or the board of directors (or similar governing
body) of the Parent, the Borrower or any of Borrower's Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any
action to approve any of the actions referred to herein or in Section
8.1(f);
(h) Judgments and Attachments. Any money judgment, writ or warrant of
attachment or similar process involving (i) in any individual case an
amount in excess of $500,000 or (ii) in the aggregate at any time an amount
in excess of $1,000,000 (in either
54
case to the extent not adequately covered by insurance as to which a
solvent and unaffiliated insurance company has acknowledged coverage) shall
be entered or filed against the Borrower or any of its Subsidiaries or any
of their respective assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of sixty (60) days (or in any event later
than five (5) days prior to the date of any proposed sale thereunder);
(i) Dissolution. Any order, judgment or decree shall be entered
against any Credit Party decreeing the dissolution or split up of the
Parent, the Borrower or any of Borrower's Subsidiaries and such order shall
remain undischarged or unstayed for a period in excess of sixty (60) days;
(j) Change of Control. A Change of Control shall occur;
(k) Collateral Documents and other Credit Documents. At any time after
the execution and delivery thereof, (i) this Agreement or any Credit
Document ceases to be in full force and effect (other than by reason of a
release of Collateral in accordance with the terms hereof or thereof or the
satisfaction in full of the Obligations in accordance with the terms
hereof) or shall be declared null and void, or Agent shall not have or
shall cease to have a valid and perfected first priority Lien, subject only
to Permitted Liens, in any material portion of Collateral purported to be
covered by the Collateral Documents or (ii) any Credit Party shall contest
the validity or enforceability of any Credit Document in writing or deny in
writing that it has any further liability under any Credit Document to
which it is a party; or
(l) Internal Control Agreements. At any time after the execution and
delivery thereof, any Internal Control Agreement ceases to be in full force
and effect (other than by its terms) or shall be declared null and void,
except where such cessation or declaration would not result in a Material
Adverse Effect.
Section 8.2 Remedies. Upon and after the occurrence of an Event
of Default:
(a) Certain Remedies. The Borrower shall immediately either (i) pay to
each Lender an amount equal to the Loan Payment Amount (determined as of
the date of the Event of Default) for such Lender, or (ii) deliver to each
Lender the Parent Exchange Shares (determined as of the date of the Event
of Default) for such Lender; provided, the Borrower may not elect to
deliver Parent Exchange Shares (and therefore must make the Loan Payment
Amount) unless such Parent Exchange Shares is listed on a Qualified
Exchange and freely tradable subject only to the rules and regulations of
the Qualified Exchange generally applicable to stock actively traded on the
Qualified Exchange; provided further, that such Lender may reject any such
payment of the Loan Payment Amount or delivery of the Parent Exchange
Shares and instead elect to convert its Loans into Borrower Common Shares
pursuant to Section 2.13 hereunder. Borrower shall provide five (5)
Business Days prior written notice (if possible) to the Agent of its
election pursuant to this Section 8.2(a) either to pay the Loan Payment
Amount or to provide the Parent Exchange Shares and Agent shall have three
(3) Business Days from the date it receives such notice from Borrower to
elect to convert into Borrower Common
55
Shares pursuant to Section 2.13. For purposes of clarification, if any
Lender elects to convert to Borrower Common Shares pursuant to Section 2.13
hereunder, the Borrower shall not have the option of paying the Loan
Payment Amount or delivering Parent Exchange Shares. If the Borrower fails
to pay the Loan Payment Amount or deliver the Parent Exchange Shares or
Borrower Common Shares, as the case may be, to each Lender on the date of
the Event of Default, then (in addition to all other remedies) interest
shall accrue on the Loan Payment Amount and the Loans, respectively, at the
Default Rate, and all amounts due shall thereafter be payable on demand.
(b) Remedies in All Events of Default. The Agent shall, at the request
of or with the consent of the Required Lenders, (i) exercise all rights and
remedies provided in the Credit Documents, (ii) exercise any right of
counterclaim, setoff, banker's lien or otherwise which it may have with
respect to money or property of the Borrower, (iii) bring any lawsuit,
action or other proceeding permitted by law for the specific performance
of, or injunction against any violation of, any Credit Document and may
exercise any power granted under or to recover judgment under any Credit
Document, (iv) enforce any and all Liens and security interests created
pursuant to the Credit Documents, and (v) exercise any other right or
remedy permitted by applicable Regulations.
(c) Lenders' Remedies. Unless otherwise directed by the Required
Lenders, in case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Lenders shall have
accelerated the maturity of the Loans pursuant to Section 8.2, the Required
Lenders, if owed any amounts with respect to the Loans, may proceed to
protect and enforce their rights by suit in equity, action at law or other
appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement and the other Credit
Documents or any instrument pursuant to which the Obligations to the
Lenders are evidenced, including as permitted by applicable law the
obtaining of the ex parte appointment of a receiver, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right of the such Lenders,
but subject to the provisions of Section 9.9(b).
(d) Remedies Non-Exclusive. No remedy herein conferred upon any Lender
or the Agent or the holder of any Note is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by statute or any other provision of law.
ARTICLE IX
The Agent
Section 9.1 Appointment of Agent. PPAS is hereby appointed Agent
hereunder, and each Lender hereby authorizes the Agent to act as its
agent in accordance with the terms hereof and the other Credit
Documents. The Agent hereby agrees to act upon the express conditions
contained herein and the other Credit Documents, as applicable. The
provisions of this Article IX are solely for
56
the benefit of the Agent and the Lenders and no Credit Party shall
have any rights as a third party beneficiary of any of the provisions
thereof. In performing its functions and duties hereunder, the Agent
shall act solely as an agent of Lenders and does not assume and shall
not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for the Borrower or any of the Credit Parties.
The Agent without consent of or notice to any party hereto, may assign
any and all of its rights or obligations hereunder to any of its
Affiliates.
Section 9.2 Powers and Duties. Each Lender irrevocably authorizes
the Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Credit
Documents as are specifically delegated or granted to the Agent by the
terms hereof and thereof, together with such powers, rights and
remedies as are reasonably incidental thereto. The Agent shall have
only those duties and responsibilities that are expressly specified
herein and the other Credit Documents. The Agent may execute any of
its duties under this Agreement and the other Credit Documents by or
through agents or attorneys in fact, or may assign such duties to its
wholly owned nominee without the consent of the Lenders, and shall be
entitled to rely on advice of counsel concerning all matters
pertaining to such duties. The Agent shall not have, by reason hereof
or any of the other Credit Documents, a fiduciary relationship in
respect of any Lender and nothing herein or any of the other Credit
Documents, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect
hereof or any of the other Credit Documents except as expressly set
forth herein or therein.
Section 9.3 Delegation of Duties. Agent may execute any of its
duties under this Agreement or any other Credit Document by or through
third parties, agents, employees or attorneys in fact (any such
entity, a "Sub-Agent") or may assign such duties to its wholly owned
nominee without the consent of the Lenders, and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.
Agent shall not be responsible for the negligence or misconduct of any
Sub-Agent that it selects as long as such selection was made with
reasonable care. The Borrower and each Lender hereby agree that any
Sub-Agent appointed hereunder shall be entitled to the benefit of the
provisions of Sections 7.3, 9.2, 9.4, 9.5, 9.6, 9.7, 9.9, 9.10 and
9.11 of this Agreement as if such Sub-Agent is a party to this
Agreement.
Section 9.4 General Immunity.
(a) No Responsibility for Certain Matters. The Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectability or sufficiency hereof or any other
Credit Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements
or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by the Agent to any
Lender or by or on behalf of any Credit Party to the Agent or any Lender in
connection with the Credit Documents and the transactions contemplated
thereby or for the financial condition or
57
business affairs of any Credit Party or any other Person liable for the
payment of any Obligations, nor shall the Agent be required to ascertain or
inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the
Credit Documents or as to the use of the proceeds of the Loans or as to the
existence or possible existence of any Event of Default or Default.
Anything contained herein to the contrary notwithstanding, Agent shall not
have any liability arising from confirmations of the amount of outstanding
Loans.
(b) Exculpatory Provisions. None of the Agent or any of its officers,
trustees, partners, members, directors, employees, attorneys or agents
shall be liable to Lenders for any action taken or omitted by the Agent
under or in connection with any of the Credit Documents except to the
extent caused by the Agent's gross negligence or willful misconduct. The
Agent shall be entitled to refrain from any act or the taking of any action
(including the failure to take an action) in connection herewith or any of
the other Credit Documents or from the exercise of any power, discretion or
authority vested in it hereunder or thereunder unless and until the Agent
shall have received instructions in respect thereof from the Required
Lenders (or such other Lenders as may be required to give such instructions
under Section 10.1) and, upon receipt of such instructions from the
Required Lenders (or such other Lenders, as the case may be), the Agent
shall be entitled to act or (where so instructed) refrain from acting, or
to exercise such power, discretion or authority, in accordance with such
instructions. Without prejudice to the generality of the foregoing, (i) the
Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine
and correct and to have been signed or sent by the proper Person or
Persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for the Borrower
and the other Credit Parties), accountants, experts and other professional
advisors selected by it, and (ii) no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining
from acting hereunder or any of the other Credit Documents in accordance
with the instructions of the Required Lenders (or such other Lenders as may
be required to give such instructions under Section 10.1). The Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document which involves discretionary
decision-making absent express written instructions from the Required
Lenders with respect thereto.
Section 9.5 Agent Entitled to Act with Borrower. The Agent and
its Affiliates may accept deposits from, lend money to and generally
engage in any kind of banking, trust, financial advisory or other
business with the Borrower or any of its Affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection herewith
and otherwise without having to account for the same to Lenders.
Section 9.6 Lenders' Representations, Warranties and
Acknowledgment.
(a) Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the
Borrower and its Subsidiaries in
58
connection with Borrowings hereunder and that it has made and shall
continue to make its own appraisal of the creditworthiness of the Borrower
and its Subsidiaries. The Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to make any such investigation
or any such appraisal on behalf of Lenders or to provide any Lender with
any credit or other information with respect thereto, whether coming into
its possession before the making of the Loans or at any time or times
thereafter, and the Agent shall not have any responsibility with respect to
the accuracy of or the completeness of any information provided to Lenders.
(b) Each Lender, by delivering its signature page to this Agreement
and funding or holding any of its Loans and accepting its Commitments on
the Closing Date, shall be deemed to have acknowledged receipt of, and
consented to and approved, each Credit Document and each other document
required to be approved by the Agent or Lenders, as applicable on the
Closing Date.
Section 9.7 Right to Indemnity. Each Lender, in proportion to its
Pro Rata Share, severally (and not jointly) agrees to indemnify the
Agent and its stockholders, directors, officers, employees, agents,
attorneys and Affiliates (each an "Indemnified Agent Person"), to the
extent that the Agent shall not have been reimbursed by any Credit
Party, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys' fees and disbursements) or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or
asserted against such Indemnified Agent Person in exercising its
powers, rights and remedies or performing its duties hereunder or
under the other Credit Documents or otherwise in its capacity as the
Agent in any way relating to or arising out hereof or in connection
with the Credit Documents; provided, no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct. If any
indemnity furnished to the Agent for any purpose shall, in the opinion
of such Agent, be insufficient or become impaired, the Agent may call
for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished;
provided, further, in no event shall this sentence require any Lender
to indemnify the Agent against any liability, obligation, loss,
damage, penalty, action, judgment, suit, cost, expense or disbursement
in excess of such Lender's Pro Rata Share thereof, and provided,
further, this sentence shall not be deemed to require any Lender to
indemnify the Agent against any liability, obligation, loss, damage,
penalty, action, judgment, suit, cost, expense or disbursement
described in the proviso in the immediately preceding sentence.
Section 9.8 Successor Agent.
(a) The Agent may resign at any time by giving not less than ten (10)
Business Days prior written notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the right to
appoint a successor Agent, which shall be (i) one of the Lenders or an
Affiliate of one of the Lenders or (ii) a Person
59
who would be an eligible successor agent if appointed by the resigning
Agent under Section 9.8(b).
(b) If no successor Agent shall have been so appointed by the Lenders
within ten (10) Business Days after the resigning Agent's giving of notice
of resignation, then the resigning Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or of any
state thereof and having a combined capital and surplus of at least
$250,000,000. In the event that the Agent is unable to appoint a
replacement successor within ten (10) Business Days after it is entitled to
do so after using reasonable efforts, the Agent may nonetheless resign by
delivering a written resignation to the Lenders and the Borrower, provided
that in such circumstances, and unless and until a successor Agent is
appointed, the Agent shall remain Agent solely for the purpose of serving
as secured party of record with respect to the Collateral, its sole duty in
that capacity shall be to take such ministerial actions as it shall be
directed to take by the Lenders (including, without limitation, the
execution and delivery of documents or instruments relating to the
Collateral), and the Agent shall be entitled to reimbursement from the
Borrower for its out of pocket costs and expenses and reasonable
compensation from the Borrower for its services. If the Agent has resigned
and no successor Agent has been appointed, subject to the preceding
sentence, the Lenders shall perform the duties of the Agent hereunder, and
the Borrower shall make all payments in respect of the Obligations to the
applicable Lender and shall deal directly with the Lenders.
(c) No successor Agent shall be deemed to be appointed hereunder until
such successor Agent has accepted the appointment in writing. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent and
upon the execution and filing of such financing statements, or amendments
thereto, and such other instruments and notices, as may be necessary or
desirable or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted under the
Collateral Documents, such successor Agent shall succeed to and become
vested with all the rights, powers, discretion, privileges and duties of
the resigning Agent, and the resignation or termination of the Agent shall
then be effective for all purposes. Upon the effectiveness of the
resignation or termination of the Agent, the resigning Agent shall be
discharged from its duties and obligations under the Credit Documents.
After the effectiveness of the resignation or termination of an Agent, the
provisions of Section 7.3, Section 10.3 and this Article IX shall inure to
the former Agent's benefit as to any actions taken or omitted to be taken
by it while it was acting as the Agent under this Agreement.
Section 9.9 Collateral Documents.
(a) Agent as Agent under Collateral Documents. Each Lender hereby
further authorizes Agent, on behalf of and for the benefit of Lenders, to
be the agent for and representative of Lenders with respect to the
Collateral and the Collateral Documents. Subject to Section 10.1, without
further written consent or authorization from Lenders, Agent may execute
any documents or instruments necessary to release any Lien encumbering any
item of Collateral that is the subject of a sale or other disposition of
assets permitted hereby or to which Lenders have otherwise consented in the
manner
60
provided herein.
(b) Agent's Right to Realize on Collateral. Anything contained in any
of the Credit Documents to the contrary notwithstanding the Borrower, Agent
and each Lender hereby agree that (i) no Lender shall have any right
individually to realize upon any of the Collateral, it being understood and
agreed that all powers, rights and remedies hereunder may be exercised
solely by Agent, on behalf of Lenders in accordance with the terms hereof,
and (ii) in the event of a foreclosure by Agent on any of the Collateral
pursuant to a public or private sale, Agent or any Lender may be the
purchaser of any or all of such Collateral at any such sale and Agent, as
agent for and representative of Lenders (but not any Lender or Lenders in
its or their respective individual capacities unless the Required Lenders
shall otherwise agree in writing) shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or
any portion of the Collateral sold at any such public sale, to use and
apply any of the Obligations as a credit on account of the purchase price
for any collateral payable by Agent at such sale.
Section 9.10 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Agent has received notice from a Lender
or a Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of Default as shall
be reasonably directed by the Lenders; provided that unless and until
the Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Lenders.
Section 9.11 Delivery of Documents, Notices, Etc. In addition
to, and in furtherance of any requirement placed upon the Agent herein
to deliver, provide, distribute, notify or otherwise convey items
received from the Borrower to the Lenders, the Agent shall promptly
notify Lenders of any notices, documents, requests, demands or other
items Agent received from Borrower and promptly deliver or convey, to
the extent they are in written form, such notices, documents,
requests, demands or items to the Lenders.
ARTICLE X
Miscellaneous
Section 10.1 Amendments and Waivers; Release of Collateral.
(a) General. Subject to Section 10.1(b) and Section 10.1(c) below, no
amendment, modification, termination or waiver of any provision of the
Credit Documents, or consent to any departure by any Credit Party
therefrom, shall be effective without the written consent of the Required
Lenders.
61
(b) Other Consent. Notwithstanding the provisions of Section 10.1(a)
above, no amendment, modification, termination or waiver of any provision
of the Credit Documents, or consent to any departure by any Credit Party
therefrom, shall amend, modify, terminate or waive any provision of Article
IX as the same applies to the Agent, or any other provision hereof as the
same applies to the rights or obligations of the Agent, in each case
without the consent of the Agent.
(c) Prior Unanimous Written Consent. Without the prior unanimous
written consent of the affected Lenders,
(i) no amendment, consent or waiver shall (A) affect the amount
or extend the time of the obligation of any Lender to make Loans or
(B) extend the originally scheduled time or times of repayment of the
principal of the Loans or (C) alter the time or times of payment of
interest on any Loan or of any fees payable for the account of the
Lenders or (D) alter the amount of the principal of the Loans or the
rate of interest thereon or (E) alter the amount of any fee payable
hereunder to the account of the Lenders or (F) permit any
subordination of the principal of or interest on the Loans or (G)
permit the subordination of the Lien created by the Collateral
Documents in any of the Collateral,
(ii) no Collateral, other than in connection with any Asset Sale
made in accordance with the terms hereof or as otherwise specifically
permitted in this Agreement or the Collateral Documents, shall be
released from the Lien of the Collateral Documents; and
(iii) none of the provisions of this Section 10.1(c) shall be
amended.
(d) Effect of Notices, Waivers or Consents. Any waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on any Credit Party
in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section
10.1 shall be binding upon each Lender at the time outstanding, each future
Lender and, if signed by a Credit Party, on such Credit Party.
(e) Certain Collateral Releases. The Borrower is entitled to receive,
and the Agent is authorized to effect, the release of Collateral that is
the subject of an Asset Sale or any other sale made in accordance with the
terms hereof or as otherwise specifically permitted in this Agreement or
the Collateral Documents from the Lien of the Collateral Documents.
Section 10.2 Notices. All notices, requests, demands and other
communications to any party or given under any Credit Document
(collectively, the "Notices") will be in writing and delivered
personally, by overnight courier or by registered mail to the parties
at the following address or sent by facsimile, with confirmation
received, to the facsimile number specified below (or at such other
62
address or telecopy number as will be specified by a party by like
notice given at least five calendar days prior thereto):
(a) If to the Borrower, at:
Xinhua Finance Media Limited
Xxxxx 0000-0
Xxxxxxx Xxxxx
000 Xxx Xxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Xxxxxxxxx: Xxxx XxXxxx
Telephone: x000 0000 0000
Facsimile: x000 0000 0000
With a copy to:
Xxxxxxx Xxxxx & Xxxxx
35th Floor
Two International Finance Xxxxxx
0 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx
Xxxxxxxxx: Xxxxxxxx Xx
Telephone: x000 0000 0000
Facsimile: x000 0000 0000
(b) If to the Agent, at:
Patriarch Partners Agency Services, LLC
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Loan Administration/XFM
Telephone: (000) 000 0000
Facsimile: (000) 000 0000
with a copy to:
Patriarch Partners, LLC
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxx Xxxxx & Xxxx LLP
Xxx Xxxxx Xxxxxxxxx Xxxxxx
00
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxx, Esq.
Telephone: (000) 000 0000
Facsimile: (000) 000 0000
(c) If to the Lenders, to the address for such Lender set forth on the
signature pages hereto.
All Notices will be deemed delivered when actually received. Each of the parties
will hereafter notify the other in accordance with this Section of any change of
address or telecopy number to which notice is required to be mailed.
Section 10.3 Expenses. Whether or not the transactions
contemplated hereby shall be consummated or any Loans shall be made,
the Borrower agrees to pay promptly:
(a) all the actual and reasonable costs and expenses of preparation of
the Credit Documents and any consents, amendments, waivers or other
modifications thereto; the reasonable fees, expenses and disbursements of
counsel to Lenders and Agent in connection with the negotiation,
preparation, execution and administration of the Credit Documents and any
consents, amendments, supplements, waivers or other modifications thereto
and any other documents or matters requested by the Borrower;
(b) all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Agent, for the benefit of Lenders and Agent,
pursuant hereto, including, without limitation, filing and recording fees,
expenses and taxes, stamp or documentary taxes, search fees, title
insurance premiums and reasonable fees, expenses and disbursements of
counsel to Agent and Lenders;
(c) all the actual costs and reasonable fees, expenses and
disbursements of any auditors, accountants, consultants or appraisers;
(d) all the actual costs and reasonable expenses (including, without
limitation, the reasonable fees, expenses and disbursements of any
appraisers, consultants, advisors and agents employed or retained by Agent
and its counsel) in connection with the inspection, verification, custody
or preservation of any of the Collateral, to the extent required or
permitted hereunder;
(e) after the occurrence of a Default or an Event of Default, all
costs and expenses, including, without limitation, reasonable attorneys'
fees (including allocated costs of internal counsel) and costs of
settlement, incurred by any Agent or Lenders in enforcing any Obligations
of or in collecting any payments due from any Credit Party hereunder or
under the other Credit Documents by reason of such Default or Event of
Default (including in connection with the sale of, collection from, or
other realization upon any of the Collateral or the enforcement of any
guaranty) or in connection with any negotiations, reviews, refinancing or
restructuring of the credit arrangements provided
64
hereunder, including without limitation in the nature of a "work out" or
pursuant to any insolvency or bankruptcy cases or proceedings; and
(f) all third party costs, fees and expenses incurred in connection
with payment of any amounts due under the Loan Documents or Equity
Documents (including, without limitation, any fees charged by any sending
bank or receiving bank); and
(g) the foregoing shall be in addition to, and shall not be construed
to limit, any other provisions of the Credit Documents regarding costs and
expenses to be paid by the Borrower.
Section 10.4 Enforceability; Successors and Assigns.
(a) Enforceability; Successors and Assigns. This Agreement will be
binding upon and inure to the benefit of and is enforceable by the
respective successors and permitted assigns of the parties hereto. This
Agreement may not be assigned by the Borrower hereto without the prior
written consent of the Agent and each Lender. Any assignment or attempted
assignment in contravention of this Section will be void ab initio and will
not relieve the assigning party of any obligation under this Agreement.
(b) Assignments. Each Lender may assign (each, an "Assignment") to one
or more (i) Affiliated Assignees and/or to any other Lender all or a
portion of its rights and obligations under this Agreement (including all
or a portion of such Lender's Loans, Commitments and Notes, as the case may
be) without the consent of the Borrower or the Agent or (ii) Eligible
Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of such Lender's Loans, Commitments
and Notes, as the case may be) only with the prior written consent of the
Borrower (not to be unreasonably withheld or delayed), unless an Event of
Default shall have occurred and is continuing in which case no consent of
the Borrower is required, and the Agent. In connection with any such
Assignment, the assigning Lender and the Assignee shall execute and deliver
to the Agent an Assignment Agreement, in the form of Exhibit H (each, an
"Assignment Agreement"), and a $3,500.00 fee (the "Assignment Fee") payable
to Agent. Upon its receipt of a duly executed and completed Assignment
Agreement, Agent shall record the information contained in such Assignment
Agreement in the Register, shall give prompt notice thereof to the Borrower
and shall maintain a copy of such Assignment Agreement in its Principal
Office. From and after the effective date of an Assignment, the Assignee
shall be a party hereto and, to the extent of the interest assigned
pursuant to the Assignment, have the rights and obligations of a lender
under this Agreement, and the assigning Lender shall, to the extent of the
interest assigned, be released from its obligations under this Agreement.
The Borrower hereby consents to the disclosure of any information obtained
by Lender in connection with this Agreement to any Person to which Lender
sells, or proposes to sell, its Loans, Commitment or Notes provided any
such Person shall agree to keep any such information confidential.
(c) Participations. Each Lender may sell participations (each, a
"Participation") to one or more Persons (each, a "Participant") in all or a
portion of such Lender's rights
65
and obligations under this Agreement (including all or a portion of such
Lender's Loans, Commitment and Notes, as the case may be); provided that
(i) such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the Borrower for the
performance of such obligations, and (iii) the Borrower shall continue to
deal solely and directly with the Lender and Agent in connection with the
Lender's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which the Lender sells such a participation shall
provide that the Lender shall retain the sole right to enforce the Credit
Documents and to approve any amendment, modification or waiver of any
provision of the Credit Documents. The Borrower hereby consents to the
disclosure of any information obtained by a Lender in connection with this
Agreement and/or any other Credit Agreement to any Person to which such
Lender participates, or proposes to participate, its Loans, Commitments or
Notes.
(d) Notwithstanding anything else to the contrary contained herein,
any Lender may any time pledge its Loans and such Lender's rights under
this Agreement and the other Credit Documents to a Federal Reserve Bank
and, in the case of any Lender that is a fund, to its trustee for the
benefit of its investors; provided, that no such pledge to a Federal
Reserve Bank (or in the case of any Lender that is a fund, to its trustee
for the benefit of its investors) shall release such Lender from such
Lender's obligations hereunder or under any other Credit Document.
Section 10.5 Lenders' Obligations Several: Independent Nature of
Lenders' Rights. The obligation of each Lender hereunder is several
and not joint and neither Agent nor any Lender shall be responsible
for the obligation of any other Lender hereunder. Nothing contained in
any Credit Document and no action taken by Agent or any Lender
pursuant hereto or thereto shall be deemed to constitute Lenders to be
a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall
be a separate and independent debt, and, provided the Agent fails or
refuses to exercise any independent debt, and, provided the Agent
fails or refuses to exercise any remedies against Borrower after
receiving the direction of the Lenders, each Lender shall be entitled
to protect and enforce its rights arising out of this Agreement and it
shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
Section 10.6 Integration. This Agreement and the other Credit
Documents contain and constitute the entire agreement of the parties
with respect to the subject matter hereof and supersede all prior
negotiations, agreements and understandings, whether written or oral,
of the parties hereto.
Section 10.7 No Waiver; Remedies. No failure or delay by any
party in exercising any right, power or privilege under this Agreement
or any of the other Credit Documents will operate as a waiver of the
right, power or privilege. A single or partial exercise of any right,
power or privilege will not preclude any other or further exercise of
the right, power or privilege or the exercise of any other right,
power or privilege. The rights and remedies provided in the Credit
66
Documents will be cumulative and not exclusive of any rights or
remedies provided by law.
Section 10.8 Submission to Jurisdiction. Each of the Borrower,
the other Credit Parties, the Agent and the Lenders hereby (a) agrees
that any Action with respect to any Credit Document may be brought
only in the New York State courts sitting in New York County or the
federal courts of the United States of America for the Southern
District of New York and sitting in New York County, (b) accepts for
itself and in respect of its property, generally and unconditionally,
the exclusive jurisdiction of such courts, (c) irrevocably waives any
objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, which it may
now or hereafter have to the bringing of any Action in those
jurisdictions, and (d) irrevocably consents to the service of process
of any of the courts referred to above in any Action by the mailing of
copies of the process to the parties hereto as provided in Section
10.2. Service effected as provided in this manner will become
effective ten (10) calendar days after the mailing of the process.
Section 10.9 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered,
shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of
an executed counterpart of this Agreement by facsimile or other
electronic transmission shall be equally as effective as delivery of
an original executed counterpart of this Agreement.
Section 10.10 Governing Law. This Agreement and the other Credit
Documents, and all claims, disputes and matters arising hereunder or
thereunder or related hereto or thereto, will be governed by, and
construed in accordance with, the laws of the state of New York
applicable to contracts executed in and to be performed entirely
within that state, without reference to conflicts of laws provisions.
Section 10.11 Waiver of Jury. THE PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT THAT THEY MAY HAVE TO TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION, OR IN ANY LEGAL PROCEEDING, DIRECTLY OR INDIRECTLY
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR
ANY OTHER THEORY). EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTIES WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER
67
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 10.12 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by
any rule of law, or public policy, all other conditions and provisions
of this Agreement will nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby
are fulfilled to the extent possible.
Section 10.13 Survival. All representations, warranties,
covenants, agreements, and conditions contained in or made pursuant to
this Agreement or the other Credit Documents shall survive (a) the
making of the Loans and the payment of the Obligations and (b) the
performance, observance and compliance with the covenants, terms and
conditions, express or implied, of all Credit Documents, until the due
and punctual (i) indefeasible payment of the Obligations and (ii)
performance, observance and compliance with the covenants, terms and
conditions, express or implied, of this Agreement and all of the other
Credit Documents; provided, however, that the provisions of Article
VII, Section 9.6 and Section 10.3 shall survive (i) indefeasible
payment of the Obligations and (ii) performance, observance and
compliance with the covenants, terms and conditions, express or
implied, of this Agreement and all of the other Credit Documents.
Section 10.14 Maximum Lawful Interest.
(a) Notwithstanding anything to the contrary contained in this
Agreement or any other Credit Document, no interest rate specified in this
Agreement or any other Credit Document shall at any time exceed the Maximum
Rate. If at any time the interest rate otherwise (but for the terms and
provisions of this Section 10.14) contracted for in this Agreement or any
other Credit Document (the "Contract Rate") for any Obligation shall exceed
the Maximum Rate, then any subsequent reduction in the Contract Rate for
such Obligation shall not reduce the rate of interest on such Obligation
below the Maximum Rate until the aggregate amount of interest accrued on
such Obligation equals the aggregate amount of interest which would have
accrued on such Obligation if the Contract Rate for such Obligation had at
all time been in effect.
(b) Notwithstanding anything to the contrary contained in this
Agreement or any other Credit Document, none of the terms and provisions of
this Agreement or any other Credit Document shall ever be construed to
create a contract or obligation to pay interest at a rate in excess of the
Maximum Rate; and neither the Agent nor any Lender shall ever charge,
receive, take, collect, reserve or apply, as interest on the Obligations,
any amount in excess of the Maximum Rate. The parties hereto agree that any
interest, charge, fee, expense or other obligation provided for in this
Agreement or in the other Credit
68
Documents which constitutes interest under applicable law shall be, ipso
facto and under any and all circumstances, limited or reduced to an amount
equal to the lesser of (i) the amount of such interest, charge, fee,
expense or other obligation that would be payable in the absence of this
Section 11.14(b) or (ii) an amount which, when added to all other interest
payable under this Agreement and the other Credit Documents, equal the
Maximum Rate. If, notwithstanding the foregoing, the Agent or any Lender
ever contracts for, charges, receives, takes, collects, reserves or applies
as interest any amount in excess of the Maximum Rate, such amount which
would be deemed excessive interest shall be deemed a partial payment or
prepayment of principal of the Obligations and treated hereunder as such;
and if the Obligations, or applicable portions thereof, are paid in full,
any remaining excess shall promptly be paid to the Borrower or other
appropriate Credit Party. In determining whether the interest paid or
payable, under any specific contingency, exceeds the Maximum Rate, the
Borrower, the Agent and the Lenders shall, to the maximum extent permitted
by law, (a) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate and spread in equal or
unequal parts the total amount of interest throughout the entire
contemplated term of the Obligations, or applicable portions thereof, so
that the interest rate does not exceed the Maximum Rate at any time during
the term of the Obligations; provided that, if the unpaid principal balance
is paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received for the actual period of
existence thereof exceeds the Maximum Rate, the Agent and/or the Lenders,
as appropriate, shall refund to the Borrower or other appropriate Credit
Party the amount of such excess and, in such event, the Agent and the
Lenders shall not be subject to any penalties provided for by any laws for
contracting for, charging, receiving, taking, collecting, reserving or
applying interest in excess of the Maximum Rate.
Section 10.15 Interpretation. As used in this Agreement,
references to the singular will include the plural and vice versa and
references to the masculine gender will include the feminine and
neuter genders and vice versa, as appropriate. Unless otherwise
expressly provided in this Agreement (a) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any
particular provision of this Agreement and (b) article, section,
subsection, schedule and exhibit references are references with
respect to this Agreement unless otherwise specified. Unless the
context otherwise requires, the term "including" will mean "including,
without limitation." The headings in this Agreement and in the
Schedules are included for convenience of reference only and will not
affect in any way the meaning or interpretation of this Agreement.
Section 10.16 Ambiguities. This Agreement and the other Credit
Documents were negotiated between legal counsel for the parties and
any ambiguity in this Agreement or the other Credit Documents shall
not be construed against the party who drafted this Agreement or such
other Credit Documents.
Section 10.17 Agent for Service of Process. The Borrower and each
Credit Party irrevocably appoints Market News International with an
office at 40 Xxxxxx
00
Xxxxxx 0/X, Xxx Xxxx, XX 00000 as its agent for service of process and
consents to the service of copies of the summons and complaint and any
other process which may be served in any action or proceeding by the
mailing of copies of such process to such agent.
[Remainder of page intentionally left blank; signatures on following pages.]
70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER: XINHUA FINANCE MEDIA LIMITED
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Director
Credit Agreement
S-1
GUARANTORS: XXXX XXXXX INTERNATIONAL LIMITED
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: Director
UPPER WILL ENTERPRISES LIMITED
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: Director
ACTIVE ADVERTISING AGENCY LIMITED
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: Director
Credit Agreement
S-2
AGENT: PATRIARCH PARTNERS AGENCY
SERVICES, LLC, as Agent
By: /s/ Xxxx Xxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Credit Agreement
S-3
LENDERS:
Address for Notices: PATRIARCH PARTNERS MEDIA HOLDINGS, LLC
c/o Patriarch Partners, LLC By: /s/ Xxxx Xxxxxx
00 Xxxx Xxxxxx, 00xx Xxxxx ------------------------------------
Xxx Xxxx, XX 00000 Name:
----------------------------------
Attention: Xxxx Xxxxxx; Xxxxx Xxxxxx Title:
---------------------------------
Facsimile No.: (000) 000-0000
Credit Agreement
S-4
TABLE OF CONTENTS
ARTICLE I DEFINED TERMS................................................
Section 1.1 Definitions..............................................
ARTICLE II LOANS.......................................................
Section 2.1 Term Loans...............................................
Section 2.2 [Reserved]...............................................
Section 2.3 Borrowing Mechanics......................................
Section 2.4 Pro Rata Shares..........................................
Section 2.5 Use of Proceeds..........................................
Section 2.6 Evidence of Debt; Register; Lenders' Books and Records;
Notes....................................................
Section 2.7 Interest on Loans........................................
Section 2.8 Changed Circumstances....................................
Section 2.9 Priority of Payments.....................................
Section 2.10 Repayment................................................
Section 2.11 Optional Prepayments.....................................
Section 2.12 Mandatory Prepayments....................................
Section 2.13 Conversion...............................................
Section 2.14 General Provisions Regarding Payments....................
Section 2.15 Ratable Sharing..........................................
Section 2.16 Termination of Commitments...............................
ARTICLE III CONDITIONS PRECEDENT; CONDITIONS SUBSEQUENT................
Section 3.1 Conditions Precedent; Closing Date.......................
i
Section 3.2 Conditions to Each Borrowing.............................
ARTICLE IV REPRESENTATIONS AND WARRANTIES..............................
Section 4.1 Representations and Warranties of Credit Parties.........
Section 4.2 Representations and Warranties of Lenders................
ARTICLE V AFFIRMATIVE COVENANTS........................................
Section 5.1 Affirmative Covenants.....................................
ARTICLE VI NEGATIVE COVENANTS/FINANCIAL COVENANTS......................
Section 6.1 Negative Covenants........................................
ARTICLE VII Increased Costs; Taxes; Indemnification; Set Off; Etc......
Section 7.1 Increased Costs; Capital Adequacy........................
Section 7.2 Taxes; Withholding, etc..................................
Section 7.3 Indemnification..........................................
Section 7.4 Right of Set Off.........................................
Section 7.5 Funding Breakage.........................................
Section 7.6 Mitigation...............................................
ARTICLE VIII EVENTS OF DEFAULT.........................................
Section 8.1 Events of Default........................................
Section 8.2 Remedies.................................................
ARTICLE IX THE AGENT...................................................
Section 9.1 Appointment of Agent.....................................
Section 9.2 Powers and Duties........................................
Section 9.3 Delegation of Duties.....................................
ii
Section 9.4 General Immunity.........................................
Section 9.5 Agent Entitled to Act with Borrower......................
Section 9.6 Lenders' Representations, Warranties and Acknowledgment..
Section 9.7 Right to Indemnity.......................................
Section 9.8 Successor Agent..........................................
Section 9.9 Collateral Documents.....................................
Section 9.10 Notice of Default........................................
Section 9.11 Delivery of Documents, Notices, Etc......................
ARTICLE X MISCELLANEOUS................................................
Section 10.1 Amendments and Waivers; Release of Collateral............
Section 10.2 Notices..................................................
Section 10.3 Expenses.................................................
Section 10.4 Enforceability; Successors and Assigns...................
Section 10.5 Lenders' Obligations Several: Independent Nature of
Lenders' Rights..........................................
Section 10.6 Integration..............................................
Section 10.7 No Waiver; Remedies......................................
Section 10.8 Submission to Jurisdiction...............................
Section 10.9 Execution in Counterparts................................
Section 10.10 Governing Law............................................
Section 10.11 Waiver of Jury...........................................
Section 10.12 Severability.............................................
Section 10.13 Survival.................................................
Section 10.14 Maximum Lawful Interest..................................
iii
Section 10.15 Interpretation...........................................
Section 10.16 Ambiguities..............................................
Section 10.17 Agent for Service of Process.............................
Exhibit A [Reserved]
Exhibit B Form of Funding Notice
Exhibit C Form of Term Note
Exhibit D Form of Guaranty
Exhibit E Form of Secretary's Certificate
Exhibit F Form of Closing Date Certificate
Exhibit G Form of Joinder
Exhibit H Form of Assignment Agreement
Exhibit I Form of Opinion
SCHEDULE 2.1 Commitments
SCHEDULE 4.1(c) Real Property
SCHEDULE 4.1(m) Subsidiaries and Capitalization
SCHEDULE 4.1(w) Material Contracts
SCHEDULE 4.1(dd) Financial Projections
ANNEX A Media Assets
ANNEX B Newspaper Assets
ANNEX C Additional Subsidiaries
ANNEX D Exempt Issuances
iv
SCHEDULE 2.1
COMMITMENTS AND LOANS
Term Loan Commitments
Lender Term Loan Commitment
------ --------------------
Patriarch Partners Media Holdings, LLC $10,000,000
-----------
TOTAL $10,000,000
===========
5
SCHEDULE 4.1(C)
LEASED PROPERTY
(1) ACTIVE ADVERTISING AGENCY LIMITED
Tenancy agreement dated 26 July 2004 entered into among Active Advertising
Agency Limited and Trinity Advertising Agency Limited as tenants and Newbh
Limited as landlord for the lease of the property situated at 21/F, On Hong
Xxxxxxxxxx Xxxxxxxx, 000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx for a term of 2 years
from 1 September 2004 and 31 August 2006 at a monthly rental of HK$27,000.00
(inclusive of management fees and Government rates).
(2) ECONWORLD MEDIA LIMITED
Memorandum of tenancy dated 16 July 2005 entered into between EconWorld Media
Limited as tenant and Hang Lung Real Estate Agency Limited as agent for the
registered owner Zarat Limited for the lease of the property situated at Xxxx
Xx. 000X, 0xx Xxxxx, Xxxxxxxx House, 734 King's Road, Quarry Bay, Hong Kong for
a term of 2 years from 15 July 2005 to 14 July 2007 at a monthly rental of
HK$10,798.50, exclusive of monthly management fees of HK$3,192.60,
air-conditioning charges and Government rates.
6
SCHEDULE 4.1(M)
(1) UPPER STEP HOLDINGS LIMITED (BVI)
ISSUED SHARE CAPITAL 500 SHARES OF US$1.00 EACH
SHAREHOLDING
SHAREHOLDER NO. OF ORDINARY SHARES PERCENTAGE (%)
-------------------- -------------------------- --------------
Fine Power Limited 80 16
Honour Rise Services Limited 220 44
Quality Idea Limited 60 12
Sino Investments Holdings Limited 45 9
Xinhua Finance Media Limited 95 19
--- ---
TOTAL: 500 100
=== ===
(2) CHINA LEAD PROFITS LIMITED (BVI)
ISSUED SHARE CAPITAL 1 SHARE OF US$1. 00 EACH
SHAREHOLDING
SHAREHOLDER NO. OF ORDINARY SHARES PERCENTAGE (%)
-------------------- ------------------------ --------------
Upper Step Holdings Limited 1 100
--- ---
TOTAL: 1 100
=== ===
(3) XXX XXX CONSULTING LIMITED (PRC WFOE)
REGISTERED CAPITAL US$3,200,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
China Lead Profits Limited US$3,200,000 100
------------ ---
TOTAL: US$3,200,000 100
============ ===
7
(4) SHANGHAI YUANZHI ADVERTISING CO., LTD (PRC)
REGISTERED CAPITAL RMB100,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Li Guang Jie RMB49,000 49
Wan Jun RMB51,000 51
---------- ---
TOTAL: RMB100,000 100
========== ===
(5) ACCORD GROUP INVESTMENTS LIMITED (BVI)
ISSUED SHARE CAPITAL 100 SHARES OF US$1.00 EACH
SHAREHOLDING
SHAREHOLDER NO. OF ORDINARY SHARES PERCENTAGE (%)
-------------------- -------------------------- --------------
Sino Investments Holdings Limited 81 81
Xinhua Finance Media Limited 19 19
--- ---
TOTAL: 100 100
=== ===
(6) GREAT TRIUMPH INVESTMENTS LIMITED (BVI)
ISSUED SHARE CAPITAL 1 SHARE OF US$1.00 EACH
SHAREHOLDING
SHAREHOLDER NO. OF ORDINARY SHARES PERCENTAGE (%)
-------------------- ----------------------- --------------
Accord Group Investments Limited 1 100
--- ---
TOTAL: 1 100
=== ===
(7) NEW CHINA MEDIA CO., LIMITED (PRC WFOE)
REGISTERED CAPITAL US$1,400,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Great Triumph Investments Limited US$1,400,000 100
------------ ---
TOTAL: US$1,400,000 100
============ ===
(8) BEIJING SHIJI GUANGNIAN ADVERTISING CO., LIMITED (PRC)
REGISTERED CAPITAL RMB3,000,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Xxxx Xxxx Hong RMB2,514,000 83.8
Yu Gang RMB486,000 16.2
------------ ----
TOTAL: RMB3,000,000 100
============ ====
8
(9) XXXX XXXXX INTERNATIONAL LIMITED (BVI)
ISSUED SHARE CAPITAL 1,000 SHARES OF US$1.00 EACH
NO. OF ORDINARY SHAREHOLDING
SHAREHOLDER SHARES PERCENTAGE (%)
-------------------- --------------- --------------
Xinhua Finance Media Limited 1,000 100
----- ---
TOTAL: 1,000 100
===== ===
(10) UPPER WILL ENTERPRISES LIMITED (BVI)
ISSUED SHARE CAPITAL 2 SHARES OF US$1.00 EACH
SHAREHOLDING
SHAREHOLDER NO. OF ORDINARY SHARES PERCENTAGE (%)
-------------------- ------------------------ --------------
Xxxx Xxxxx International Limited 2 100
--- ---
TOTAL: 2 100
=== ===
(11) ACTIVE ADVERTISING AGENCY LIMITED (HONG KONG)
ISSUED SHARE CAPITAL 2 SHARES OF HK$1.00 EACH
SHAREHOLDING
SHAREHOLDER NO OF ORDINARY SHARES PERCENTAGE (%)
-------------------- ------------------------ --------------
Upper Will Enterprises Limited 2 100
--- ---
TOTAL: 2 100
=== ===
(12) ACTIVE ADVERTISING (GUANGZHOU) CO., LTD. (PRC WFOE)
REGISTERED CAPITAL US$300,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Active Advertising Agency Limited US$300,000 100
---------- ---
TOTAL: US$300,000 100
========== ===
(13) BEIJING CENTURY MEDIA CULTURE CO., LTD. (PRC)
REGISTERED CAPITAL RMB1,000,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
An Li Zhang XXX 000,000 00
Xxxx Xxxx Xxxx XXX 500,000 50
------------ ---
TOTAL: RMB1,000,000 100
============ ===
9
(14) BEIJING WORKSHOP COMMUNICATIONS CO., LTD. (PRC)
REGISTERED CAPITAL RMB1,000,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Beijing Century Media Culture
Co., Ltd. RMB 900,000 90
Yu Gang XXX 00,000 0
Xxx Xxxx XXX 50,000 5
------------ ---
TOTAL: RMB1,000,000 100
============ ===
10
(15) BEIJING GOLDEN WAYS CULTURE DEVELOPMENT CO., LTD. (PRC)
REGISTERED CAPITAL RMB300,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Beijing Century Media Culture
Co., Ltd. RMB270,000 90
Yu Gang XXX 00,000 0
Xxx Xxxx XXX 15,000 5
---------- ---
TOTAL: RMB300,000 100
========== ===
(16) SHENZHEN ACTIVE TRINITY CO., LTD. (PRC)
REGISTERED CAPITAL RMB300,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
An Li Zhang RMB150,000 50
Xxxx Xxxx Hong RMB150,000 50
---------- ---
TOTAL: RMB300,000 100
========== ===
(17) BEIJING XXXXX ADVERTISING CO., LTD. (PRC)
REGISTERED CAPITAL RMB10,000,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
An Li Zhang RMB 5,000,000 00
Xxxx Xxxx Xxxx XXX 5,000,000 50
------------- ---
TOTAL: RMB10,000,000 100
============= ===
11
(18) SHANGTUO ZHIYANG INTERNATIONAL ADVERTISING (BEIJING) CO., LTD. (PRC)
REGISTERED CAPITAL RMB1,000,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Beijing Xxxxx Advertising Co.,
Ltd. RMB 800,000 80
Wang Xxxx Xx RMB 200,000 20
------------ ---
TOTAL: RMB1,000,000 100
============ ===
(19) BEIJING LONGMEI TELEVISOIN AND BROADCAST ADVERTISING CO., LTD. (PRC)
REGISTERED CAPITAL RMB500,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Beijing Xxxxx Advertising Co.,
Ltd. RMB400,000 80
Xxxx Xxx XXX 00,000 00
Xxxxx Xxxxx XXX 50,000 10
---------- ---
TOTAL: RMB500,000 100
========== ===
(20) BEIJING JINLONG RUNXIN ADVERTISING CO., LTD. (PRC)
REGISTERED CAPITAL RMB500,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Beijing Xxxxx Advertising Co.,
Ltd. XXX000,000 00
Xxxx Xxx XXX 50,000 10
Xxxxx Xx Yu RMB 50,000 10
---------- ---
TOTAL: RMB500,000 100
========== ===
12
(21) SHANGHAI YUANXIN ADVERTISING CO., LTD. (PRC)
REGISTERED CAPITAL RMB2,000,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
Beijing Xxxxx Advertising Co.,
Ltd. XXX0,000,000 00
Xx Xxx Xxxx XXX 400,000 20
------------ ---
TOTAL: RMB2,000,000 100
============ ===
(22) ECONWORLD MEDIA LIMITED (HONG KONG)
ISSUED SHARE CAPITAL 350,000 SHARES OF HK$0.01 EACH
NO OF SHAREHOLDING
SHAREHOLDER ORDINARY SHARES PERCENTAGE (%)
----------- --------------- --------------
Best Gain Group Ltd. 10,000 2.86
Cheers Perfect Ltd. 20,000 5.71
Xxxxxx Xxx Xxxxx 10,000 2.86
EconWorld Holdings Ltd. 15,000 4.29
Gainful Concept Ltd. 30,000 8.57
Justly Investment
International Ltd. 5,000 1.42
Lo Xx Xxxx 30,000 8.57
Lo Xxxx Xxxx Xxxxxxx 10,000 2.86
Xxxxx Xxxx Vi 10,000 2.86
Xinhua Finance Media Limited 210,000 60.00
------- -----
TOTAL: 350,000 100
======= =====
(23) FINANCIAL WORLD (SHANGHAI) CO., LTD. (PRC)
REGISTERED CAPITAL US$210,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
EconWorld Media Limited US$210,000 100
---------- ---
TOTAL: US$210,000 100
========== ===
(24) ECONWORLD (SHANGHAI) CO., LTD. (PRC)
REGISTERED CAPITAL US$140,000
EQUITY INTEREST
EQUITY INTEREST HOLDER EQUITY INTEREST PERCENTAGE (%)
---------------------- --------------- ---------------
EconWorld Media Limited US$140,000 100
---------- ---
TOTAL: US$140,000 100
========== ===
13
(25) ECONWORLD PUBLISHING LIMITED (HONG KONG)
ISSUED SHARE CAPITAL 100,000 SHARES OF HK$0.01 EACH
NO OF SHAREHOLDING
SHAREHOLDER ORDINARY SHARES PERCENTAGE (%)
----------- ------------------------ --------------
ECONWORLD MEDIA LIMITED 99,999 100
Fan Cho Tak Alex 1
(hold in trust for
EconWorld Media Limited)
------- ---
TOTAL: 100,000 100
======= ===
(26) MONEY JOURNAL PUBLICATION LIMITED (HONG KONG)
ISSUED SHARE CAPITAL 1,000 SHARES OF HK$0.01 EACH
NO OF SHAREHOLDING
SHAREHOLDER ORDINARY SHARES PERCENTAGE (%)
----------- ------------------------ --------------
ECONWORLD MEDIA LIMITED 999 100
Fan Cho Tak Alex 1
(hold in trust for
EconWorld Media Limited)
----- ---
TOTAL: 1,000 100
===== ===
(27) MONEY JOURNAL ADVERTISING COMPANY LIMITED (HONG KONG)
ISSUED SHARE CAPITAL 10,000 SHARES OF HK$1.00 EACH
NO OF SHAREHOLDING
SHAREHOLDER ORDINARY SHARES PERCENTAGE (%)
----------- ------------------------ --------------
MONEY JOURNAL PUBLICATION
LIMITED 10,000 100
------ ---
TOTAL: 10,000 100
====== ===
14
SCHEDULE 4.1.W
NATURE OF
COMPANY CLIENT NAME IN ENGLISH CONTRACT RMB USD @8.05 CONTRACT PERIOD
------- --------------------------------- ----------- ------------- ------------ ---------------
Yuanxin Shanghai Xxxxxxxxx Food Co., Ltd. Advertising 1,700,000.00 211,180.12 1/06 - 12/06
Shanghai Yangzhi Media Co., Ltd. 6,000,000.00 745,341.61 2/06 - 12/06
------------- ------------
7,700,000.00 956,521.74
Xxxxx Beijing Be-one Advertising
Co., Ltd. Advertising 2,400,000.00 298,136.65 2/06 --
Beijing Longmei Chuangli Media Group Advertising 3,023,030.00 375,531.68 1/06 - 5/06
Beijing Fulite Industrial
Co.,Ltd. Advertising 2,400,000.00 298,136.65 1/06 - 12/06
Beijing diantong Advertising
co.,Ltd. Advertising 2,343,036.00 297,060.37 1/06 - 5/06
Guangzhou Tianhen Xingzhi
Advertising Co., Ltd. Advertising 2,000,000.00 248,447.20 3/06 - 12/06
Shengshi Greatwall Advertising
Co., Ltd. Advertising 1,821,490.00 226,272.05 1/06 - 5/06
Beijing Yuanqi East Advertising
co., Ltd. Advertising 1,800,000.00 223,602.48 3/06 - 12/06
Guangdong Kailuo Advertising
Co., Ltd. Advertising 1,453,800.00 180,596.27 1/06 - 5/06
Beijing Jianguo Hospital Advertising 1,339,200.00 166,360.25 1/06 - 12/06
Beijing Hongzhi Shidai
Advertising Co., Ltd. Advertising 1,311,860.00 162,963.98 1/06 - 5/06
Shanghai Liaobeina Advertising
Co., Ltd. Advertising 1,096,810.00 136,249.69 1/06 - 5/06
------------- ------------
18,589,226.00 2,309,220.62
Active Advertising King Sturge LLP Advertising 811,973.84 100,866.32 2/06 - 3/06
Agency Limited
15
Beijing Century Media Haishi Tourism Weishi Media
Culture Co., Ltd. Co., Ltd. Production 2,954,880.00 367,065.84 0/00 - 00/00
Xxxxxxx Xxxxxxx Xxxxx Xxxxx Radio International Advertising 1,475,000.00 183,229.81 1/06 - 12/06
Culture Co., Ltd. (for FM91.5) - Beijiatong Wanwei
Yihua Golf Sports Technology
Service Co., Ltd.
China Radio International Advertising 817,000 101,490.68 4/06 - 12/06
(for FM91.5) - Mingsheng Bank
16
Financial Projections of the Company
17
Schedule 6.1(a)
List of Indebtedness of Credit Parties existing as of the date of the Credit
Agreement:-
Date of loan Lender Borrower Amount of Indebtedness Repayment Date
------------ ---------------------------- ---------------------------- -------------------------- --------------
Mar 2, 06 Xinhua Financial Network Xinhua Finance Media Limited US$2 million plus interest On demand
at 4% per annum
Feb 28, 2006 Xinhua Finance Media Limited Upper Step Holdings Limited US$2,000,000 On demand
Mar 6, 2006 Upper Step Holdings Limited China Lead Profits Limited US$2,000,000 On xxxxxx
Xxx 00, 0000 Xxxxx Lead Profits Limited Xxx Xxx Consulting US$2,000,000 On demand
Oct 18, 2005 Xinhua Financial Network Econworld Media Limited US$300,000 plus interest June 30, 2006
at 4% per annum
Oct 18, 2005 Xinhua Financial Network Econworld Media Limited US$200,000 plus interest June 30, 2006
at 4% per annum
Feb 14, 2006 Xinhua Financial Network Econworld Media Limited US$1,330,000 plus interest June 30, 2006
at 4% per annum
18
MEDIA ASSETS
NUMBER OF SHARES/EQUITY
COMPANY NAME INTEREST OWNED PERCENTAGE OWNED BY XFM STATUS
------------ ----------------------- ----------------------- ---------------
Accord Group Holdings Limited and all of 19 19% Completed
the radio assets held directly and
indirectly by Accord Group Holdings
Limited as of the date hereof, as
illustrated on the attached structure
chart (the "RADIO ASSETS")
EconWorld Media Limited and all of the 210,000 60% Completed
magazine assets held directly and
indirectly by EconWorld Media Limited as
of the date hereof, as illustrated on the
attached structure chart (the "FINANCIAL
MAGAZINE ASSETS")
Xxxx Xxxxx International Limited and all 1,000 100% Completed
of the advertising assets held directly
and indirectly by Xxxx Xxxxx International
Limited as of the date hereof, as
illustrated on the attached structure
chart (the "ADVERTISING ASSETS")
Upper Step Holdings Limited and all of the 95 19% Completed
television assets held directly and
indirectly by Upper Step Holdings Limited
as of the date hereof, as illustrated on
the attached structure chart (the
"TELEVISION ASSETS")
Beijing Jingguan Xincheng Advertising Co., n/a 50% To be completed
Ltd. (Economic Observer) (held through a
nominee domestic entity) and
19
all of the newspaper assets held directly
and indirectly by Beijing Jingguan
Xincheng Advertising Co., Ltd. (Economic
Observer) as of the date hereof (the
"FINANCIAL NEWSPAPER ASSETS")
Shanghai Hyperlink Market Research Co., n/a 51% To be completed
Ltd. (Hyperlink) (held through a nominee
domestic entity and after the
restructuring of its subsidiary in
Guangzhou) and all of the media market
research assets held directly and
indirectly by Shanghai Hyperlink Market
Research Co., Ltd. (Hyperlink) as of the
date hereof (the "MEDIA MARKET RESEARCH
ASSETS")
20
ANNEX B
NEWSPAPER ASSETS
21
NEWSPAPER ASSETS
NUMBER OF SHARES/EQUITY
COMPANY NAME INTEREST OWNED SHAREHOLDING PERCENTAGE STATUS
------------ ----------------------- ----------------------- ---------------
Hong Kong Economic Journal and all of the n/a 100% To be completed
newspaper assets held directly and
indirectly by Hong Kong Economic Journal
as of the date hereof (the "HK FINANCIAL
NEWSPAPER ASSETS")
Certain media assets held by The Wealth n/a 100% To be completed
Group (Taiwan), including "Wealth News"
and all of the newspaper assets held
directly and indirectly by The Wealth
Group (Taiwan) as of the date hereof (the
"TAIWAN FINANCIAL NEWSPAPER ASSETS")
22
ANNEX C
ADDITIONAL SUBSIDIARIES
23
SUBSIDIARIES
Accord Group Holdings Limited
Upper Step Holdings Limited
24
ANNEX D
EXEMPT ISSUANCES
25
EXHIBIT D
EXEMPT ISSUANCES
All defined terms used herein and not defined shall have the meanings set forth
in Annex A to the Credit Agreement.
MAXIMUM NUMBER
OF XFM SHARES
SHAREHOLDER SPECIFIED CONTRIBUTED ASSETS TO BE ISSUED
----------- ------------------------------------- --------------
1. Best Gain Group Ltd 40% of the fully-diluted equity of 955,556
EconWorld Media Limited so long as
2. Cheers Perfect Ltd. EconWorld Media Limited holds the
Financial Magazine Assets.
3. Xxxxxx Xxx Keung
4. EconWorld Holdings Ltd.
5. Gainful Concept Ltd.
6. Justly Investment International Ltd.
7. Lo Xx Xxxx
8. Lo Xxxx Xxxx Xxxxxxx
9. Xxxxx Xxxx Vi
Sanlian Group and its Affiliates 42% of the fully-diluted equity of 4,781,893
Beijing Jingguan Xincheng Co.,
Ltd.(Economic Observer) so long as
Beijing Jingguan Xincheng Co., Ltd.
(Economic Observer) holds the
Financial Newspaper Assets.
Economic Observer Shareholders 8% of the fully-diluted equity of 979,424
Beijing Jingguan Xincheng Co., Ltd.
(Economic Observer) so long as
Beijing Jingguan Xincheng Co., Ltd.
(Economic Observer) holds the
Financial Newspaper Assets.
Hyperlink Shareholder 49% of the fully-diluted equity of 1,613,169
Shanghai Hyperlink Market Research
Co., Ltd. (Hyperlink) so long as
Shanghai Hyperlink Market Research
Co., Ltd. (Hyperlink) holds the Media
Market Research Assets.
Yu Gang 16% of the fully-diluted equity of 125,053
Accord Group Investments Limited so
long as Accord Group Investments
holds the Radio Assets.
Sino Investments Holdings Limited 37% of the fully-diluted equity of 6,478,437
Upper Step Holdings Limited so long
as Upper Step Holdings Limited holds
the Television
Assets.
Sino Investments Holdings Limited 49% of the fully-diluted equity of 451,107
Accord Group Investments Limited so
long as Accord Group Investments
holds the Radio Assets.
Sungolden Limited 44% of the fully-diluted equity of 6,407,018
Upper Step Holdings Limited so long
as Upper Step Holdings Limited holds
the Television Assets.
Sungolden Limited 16% of the fully-diluted equity of 125,053
Accord Group Investments Limited so
long as Accord Group Investments
holds the Radio Assets.
Xinhua Finance Limited 50% of the fully-diluted equity of 5,761,317
Beijing Jingguan Xincheng Co., Ltd.
(Economic Observer) so long as
Beijing Jingguan Xincheng Co., Ltd.
(Economic Observer) holds the
Financial Newspaper Assets.
Xinhua Finance Limited 51% of the fully-diluted equity of 1,679,012
Shanghai Hyperlink Market Research
Co., Ltd. (Hyperlink) so long as
Shanghai Hyperlink Market Research
Co., Ltd. (Hyperlink) holds the Media
Market Research Assets.
Exempt Plan if both Newspaper Assets are N/A 22,777,602
not acquired
Exempt Plan if both Newspaper Assets are N/A 22,340,962
acquired
Fully-diluted capitalization of Xinhua Finance Media Limited assuming completion
of all Exempt Issuances above if both Newspaper Assets are not acquired:
SHAREHOLDER OWNERSHIP PERCENTAGE XFM SHARES
----------- -------------------- -----------
Xinhua Finance Limited 44.0% 50,054,619
Patriarch Partners Media Holdings, LLC 16.8% 19,139,080
EconWorld Shareholders 0.8% 955,556
Sino Investments Holdings Limited 6.1% 6,929,544
Sungolden Limited 5.7% 6,532,070
Yu Gang 0.1% 125,053
-2-
Sanlian Group and its Affiliates 4.2% 4,781,893
Economic Observer Shareholders 0.9% 979,424
Hyperlink Shareholders 1.4% 1,613,169
Exempt Plan 20.0% 22,777,602
----- -----------
Total 100.0% 113,888,009
===== ===========
Fully-diluted capitalization of Xinhua Finance Media Limited assuming completion
of all Exempt Issuances above if both Newspaper Assets are acquired:
SHAREHOLDER OWNERSHIP PERCENTAGE XFM SHARES
----------- -------------------- -----------
Xinhua Finance Limited 44.8% 50,054,619
Patriarch Partners Media Holdings, LLC 15.6% 17,392,522
EconWorld Shareholders 0.9% 955,556
Sino Investments Holdings Limited 6.2% 6,929,544
Sungolden Limited 5.8% 6,532,070
Yu Gang 0.1% 125,053
Sanlian Group and its Affiliates 4.3% 4,781,893
Economic Observer Shareholders 0.9% 979,424
Hyperlink Shareholders 1.4% 1,613,169
Exempt Plan 20.0% 22,340,962
----- -----------
Total 100.0% 111,704,811
===== ===========
-3-
EXHIBIT B
FORM OF
FUNDING NOTICE
[DATE]
Patriarch Partners Agency Services, LLC
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Loan Administration/XFM
Re: Loan Request
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement, dated as of
[__________], 2006 (the "Credit Agreement"), among XINHUA FINANCE MEDIA LIMITED,
a Cayman Islands limited company (the "Borrower"), the Subsidiaries that from
time to time become guarantors thereunder (collectively, the "Guarantors"), the
financial institutions and other investors from time to time lenders thereunder
(collectively, the "Lenders"), and PATRIARCH PARTNERS AGENCY SERVICES, LLC, a
Delaware limited liability company as agent for the Lenders (in such capacity,
the "Agent"). Unless otherwise defined herein, capitalized terms used herein
shall have the meanings set forth in the Credit Agreement.
Pursuant to Sections 2.1 and 2.3 of the Credit Agreement, we hereby request
that a Term Loan in the principal amount of $[__________] be made on
[__________] (the "Borrowing Date"). We understand that this request is
irrevocable and binding on us and obligates us to accept the requested loan on
such date.
We hereby certify (a) that according to our records, prior to giving effect
to the Borrowing requested hereunder, the aggregate outstanding principal amount
of the Term Loan on and as of the Borrowing Date is $0, (b) that we will use the
proceeds of the requested Term Loan in accordance with Section 2.5 of the Credit
Agreement, (c) that each of the representations, warranties and covenants
contained in the Credit Agreement or in any other Credit Document shall be true,
correct and complied with on and as of the Borrowing Date, (d) that all
conditions precedent under the Credit Agreement for a Borrowing have been
satisfied and (e) that as of the Borrowing Date, no event shall have occurred
and be continuing or would result from the consummation of the applicable
Borrowing that would constitute a Default or Event of Default.
-4-
[Remainder of page intentionally left blank; signature pages follow]
-5-
Very truly yours,
XINHUA FINANCE MEDIA LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-6-
EXHIBIT C
ARTICLE XI
FORM OF
TERM NOTE
$[__________] New York, New York
[__________], 2006
FOR VALUE RECEIVED, the undersigned XINHUA FINANCE MEDIA LIMITED (together
with its successors in title and assigns, the "Borrower"), hereby promises to
pay, unless this Note has been earlier converted into Parent Exchange Shares or
Borrower Common Shares in accordance with the terms of that certain Credit
Agreement (as such term is defined below), on or before the Maturity Date (as
hereinafter defined by reference) to the order of [__________] (hereinafter,
together with its successors in title and assigns, called the "Lender"), the
principal sum of [__________] Dollars ($[__________]), in immediately available
funds or, if less, the aggregate unpaid principal amount of the Term Loans
payable to the holder hereof pursuant to the terms of the Credit Agreement, and
to pay interest, in like money, on the unpaid principal amount owing hereunder
from time to time as provided in the Credit Agreement, and to pay all other
amounts owning hereunder from time to time as provided in the Credit Agreement,
with final payment of all outstanding amounts due on the Maturity Date (as
defined in the Credit Agreement).
This Term Note is made and delivered by the Borrower pursuant to Sections
2.1 and 2.6 of the Credit Agreement, dated as of [__________], 2006, by and
among the Borrower, the Guarantors party thereto, the Lenders party thereto and
Patriarch Partners Agency Services, LLC, as Agent, and as may be further
amended, modified, supplemented and in effect from time to time (as so amended,
modified and supplemented, the "Credit Agreement"), and is entitled to the
benefits and is subject to the provisions of the Credit Agreement. All
capitalized terms used herein which are defined in the Credit Agreement shall
have the same meanings herein as therein.
The Indebtedness evidenced by this Term Note is secured as set forth in the
Credit Agreement, the Security Agreement and the other Credit Documents.
The principal amount, accrued interest and all other amounts owed under
this Term Note shall be due and payable, or convertible into Parent Exchange
Shares or Borrower Common Shares, as the case may be, on the dates and in the
manner set forth in the Credit Agreement.
-7-
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Term Note and all of the unpaid interest accrued
thereon and all other amounts owed under this Term Note may become or be
declared due and payable, or due and convertible into Parent Exchange Shares or
Borrower Common Shares, as the case may be, in the manner and with the effect
provided in the Credit Agreement.
Overdue payments of principal (whether at stated maturity, by acceleration
or otherwise), and, to the extent permitted by law, overdue interest, and, to
the extent permitted by law, all other amounts overdue, shall bear interest and
shall either be payable on demand in immediately available funds, or be
convertible immediately into Parent Exchange Shares or Borrower Common Shares,
as the case may be, in accordance with the terms of the Credit Agreement.
Time is of the essence on this Term Note. To the fullest extent permitted
by applicable law, the Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption or insolvency laws.
No delay or omission on the part of the Lender or any holder in exercising
any right hereunder shall operate as a waiver of such right or of any other
rights of the Lender or such holder, nor shall any delay, omission or waiver on
any one occasion be deemed a bar or waiver of the same or any other right on any
future occasion.
The Borrower agrees to pay all reasonable expenses or costs, including
reasonable attorneys' fees and costs of collection, which may be incurred by the
holder hereof in connection with the enforcement of any obligations hereunder or
representation with respect to bankruptcy or insolvency proceedings.
THIS TERM NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK (WITHOUT REGARD TO THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF
LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE STATE AND COUNTY OF NEW YORK AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF
SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 10.2 OF THE CREDIT
AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
-8-
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.
[Remainder of page intentionally left blank; signature follows on next page]
-9-
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be duly
executed and delivered on the date first above written.
XINHUA FINANCE MEDIA LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-10-
FORM OF
GUARANTY
This GUARANTY (as amended, restated, supplemented or otherwise modified
from time to time, this "Guaranty") is made as of [_______________________] by
THE UNDERSIGNED (the "Guarantor") in favor of and for the benefit of [PATRIARCH
PARTNERS AGENCY SERVICES, LLC,] a Delaware limited liability company, as agent
(in such capacity, the "Guarantied Party") for itself and the Lenders (as
defined herein).
RECITALS
WHEREAS, Xinhua Finance Media Limited, as borrower (the "Borrower"), the
Guarantors, the lenders party thereto (together with any other financial
institutions or investors from time to time lenders thereunder, collectively,
the "Lenders") and the Guarantied Party, as agent for the Lenders, have entered
into that certain Credit Agreement, dated as March 16, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement");
WHEREAS, the Guarantor is a Foreign Subsidiary (as defined by reference
herein) of the Borrower;
WHEREAS, it is a requirement under Section 5.1(n) of the Credit Agreement
that the Borrower's obligations thereunder be guarantied by the Guarantor
pursuant to the terms of this Guaranty; and
WHEREAS, the Guarantor has determined that it will directly benefit from
the execution, delivery and performance of this Guaranty, this Guaranty is in
its best interest and is willing irrevocably and unconditionally to guaranty
such obligations of Borrower pursuant to the terms of this Guaranty.
NOW THEREFORE, in consideration of the premises and the covenants and the
agreements herein set forth and in order to induce the Agent and the Lenders to
execute certain of the Credit Documents (as defined by reference herein) and the
Lenders to make the Loans and/or other financial accommodations under the Credit
Agreement, each Guarantor hereby agrees as follows:
ARTICLE XII
DEFINITIONS
Section 12.1 Certain Defined Terms. Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the
Credit
-11-
Agreement. In addition, as used in this Guaranty, the following terms
shall have the following meanings unless the context otherwise
requires:
"Beneficiaries" means the Guarantied Party and Lenders.
"Fraudulent Transfer Law" has the meaning set forth in Section 2.2.
"Guarantied Obligations" has the meaning set forth in Section 2.1.
"payment in full", "paid in full" or any similar term means payment and
performance in full of the Guarantied Obligations, including, without
limitation, all principal, interest, costs, fees and expenses (including,
without limitation, reasonable attorneys' fees and expenses) of Beneficiaries as
and to the extent required under the Credit Documents.
Section 12.2 Interpretation.
(a) References to "Sections" shall be to Sections of this Guaranty
unless otherwise specifically provided.
(b) In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Guaranty and the terms, conditions and
provisions of the Credit Agreement, the terms, conditions and provisions of
the Credit Agreement shall prevail.
ARTICLE XIII
THE GUARANTY
Section 13.1 Guaranty of the Guarantied Obligations. Subject to
the provisions of Section 2.2, Guarantors jointly and severally hereby
irrevocably and unconditionally guaranty for the benefit of the
Beneficiaries and their respective permitted successors, endorsees,
transferees and assigns, as primary obligors and not merely as
sureties, the due and punctual payment in full of all the following
obligations when the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy
Code) (collectively, the "Guarantied Obligations"):
(a) any and all Obligations of Borrower and/or any other Credit Party,
in each case now or hereafter made, incurred or created, whether absolute
or contingent, liquidated or unliquidated, whether due or not due, and
however
-12-
arising under or in connection with the Credit Agreement and the other
Credit Documents, including those arising under successive borrowing
transactions (if any) under the Credit Agreement which shall either
continue the Obligations of Borrower or from time to time renew them after
they have been satisfied and including interest which, but for the filing
of a petition in bankruptcy with respect to the Borrower, would have
accrued on any Guarantied Obligations, whether or not a claim is allowed
against the Borrower for such interest in the related bankruptcy
proceeding, including all extensions and refinancings of the foregoing; and
(b) those expenses set forth in Section 2.8 hereof.
Section 13.2 Limitation on Amount Guarantied; Contribution by
Guarantors. Anything contained in this Guaranty to the contrary
notwithstanding, if any Fraudulent Transfer Law is determined by a
court of competent jurisdiction to be applicable to the obligations of
any Guarantor under this Guaranty, such obligations of such Guarantor
hereunder shall be limited to a maximum aggregate amount equal to the
largest amount that would not render its obligations hereunder subject
to avoidance as a fraudulent transfer or conveyance under Section 548
of the Bankruptcy Code or any applicable provisions of comparable
state law (collectively, the "Fraudulent Transfer Laws"), in each case
after giving effect to all other liabilities of such Guarantor,
contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of
such Guarantor (x) in respect of intercompany indebtedness to Borrower
or its Affiliates to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor
hereunder and (y) under any guaranty of any subordinated indebtedness
which guaranty contains a limitation as to maximum amount similar to
that set forth in this Section 2.2, pursuant to which the liability of
such Guarantor hereunder is included in the liabilities taken into
account in determining such maximum amount).
Section 13.3 Payment by Guarantors; Application of Payments.
Subject to the provisions of Section 2.2, Guarantors hereby jointly
and severally agree, in furtherance of the foregoing and not in
limitation of any other right which any Beneficiary may have at law or
in equity against any Guarantor by virtue hereof, that upon the
failure of Borrower to pay any of the Guarantied Obligations when and
as the same shall become due in accordance with the Credit Documents,
whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including, without limitation,
amounts that would become due but for the
-13-
operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), Guarantors will upon demand pay, or cause to be paid, in cash,
to Guarantied Party for the ratable benefit of Beneficiaries, an
amount equal to the sum of the unpaid principal amount of all
Guarantied Obligations then due as aforesaid, accrued and unpaid
interest on such Guarantied Obligations (including, without
limitation, interest which, but for the filing of a petition in
bankruptcy with respect to the Borrower, would have accrued on such
Guarantied Obligations, whether or not a claim is allowed against the
Borrower for such interest in the related bankruptcy proceeding) and
all other Guarantied Obligations then owed to Beneficiaries as
aforesaid. All such payments shall be applied promptly from time to
time by Guarantied Party as provided in the Credit Agreement.
Section 13.4 Liability of Guarantors Absolute. Each Guarantor
agrees that its obligations hereunder are irrevocable, absolute,
independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a
guarantor or surety other than payment in full of the Guarantied
Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows; provided, that
nothing contained herein shall amend, contradict or alter any rights
or obligations that any Guarantor, the Borrower, any Lender or the
Guarantied Party may have under the Credit Agreement or any other
Credit Document or any term or provision thereof:
(a) This Guaranty is a guaranty of payment and performance when due
and not of collectibility.
(b) Guarantied Party may enforce this Guaranty upon the occurrence of
an Event of Default under the Credit Agreement notwithstanding the
existence of any dispute between the Borrower and any Beneficiary with
respect to the existence of such Event of Default.
(c) The obligations of each Guarantor hereunder are independent of the
obligations of the Borrower under the Credit Documents and the obligations
of any other guarantor (including any other Guarantor) of the obligations
of the Borrower under the Credit Documents, and a separate action or
actions may be brought and prosecuted against such Guarantor whether or not
any action is brought against the Borrower or any of such other guarantors
and whether or not Guarantor is the alter ego of the Borrower and whether
or not the Borrower is joined in any such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge any
Guarantor's
-14-
liability for any portion of the Guarantied Obligations which has not been
paid. Without limiting the generality of the foregoing, if Guarantied Party
is awarded a judgment in any suit brought to enforce any Guarantor's
covenant to pay a portion of the Guarantied Obligations, such judgment
shall not be deemed to release such Guarantor from its covenant to pay the
portion of the Guarantied Obligations that is not the subject of such suit,
and such judgment shall not, except to the extent satisfied by such
Guarantor, limit, affect, modify or abridge any other Guarantor's liability
hereunder in respect of the Guarantied Obligations.
(e) Any Beneficiary, upon such terms as it deems appropriate, without
notice or demand and without affecting the validity or enforceability of
this Guaranty or giving rise to any reduction, limitation, impairment,
discharge or termination of any Guarantor's liability hereunder, from time
to time may (i) renew, extend, accelerate, increase the principal amount of
and/or the rate of interest on, or otherwise change the time, place, manner
or terms of payment of the Guarantied Obligations; (ii) settle, compromise,
release or discharge, or accept or refuse any offer of performance with
respect to, or substitutions for, the Guarantied Obligations or any
agreement relating thereto and/or subordinate the payment of the same to
the payment of any other obligations; (iii) request and accept other
guaranties of the Guarantied Obligations and take and hold security for the
payment of this Guaranty or the Guarantied Obligations; (iv) release,
surrender, exchange, substitute, compromise, settle, rescind, waive, alter,
subordinate or modify, with or without consideration, any security for
payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person (including
any other Guarantor) with respect to the Guarantied Obligations; (v)
enforce and apply any security now or hereafter held by or for the benefit
of such Beneficiary in respect of this Guaranty or the Guarantied
Obligations and direct the order or manner of sale thereof, or exercise any
other right or remedy that such Beneficiary may have against any such
security, in each case as such Beneficiary in its discretion may determine
consistent with the Credit Agreement and any applicable security agreement,
including foreclosure on any such security pursuant to one or more judicial
or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of any Guarantor against the Borrower or any other Guarantor or any
security for the Guarantied Obligations; and (vi) exercise any other rights
available to it under the Credit Documents.
(f) This Guaranty and the obligations of Guarantors hereunder shall be
valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
payment in full of
-15-
the Guarantied Obligations), including, without limitation, the occurrence
of any of the following, whether or not any Guarantor shall have had notice
or Knowledge of any of them: (i) any failure or omission to assert or
enforce or agreement or election not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the
exercise or enforcement of, any claim or demand or any right, power or
remedy (whether arising under the Credit Documents, at law, in equity or
otherwise) with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security for
the payment of the Guarantied Obligations; (ii) any rescission, waiver,
amendment or modification of, or any consent to departure from, any of the
terms or provisions (including, without limitation, provisions relating to
Events of Default) of the Credit Agreement, any of the other Credit
Documents or any agreement or instrument executed pursuant thereto, or of
any other guaranty or security for the Guarantied Obligations, in each case
whether or not in accordance with the terms of the Credit Agreement or such
Credit Document or any agreement relating to such other guaranty or
security; (iii) the Guarantied Obligations, or any agreement relating
thereto, at any time being found to be illegal, invalid or unenforceable in
any respect; (iv) the application of payments received from any source
(other than payments received pursuant to the other Credit Documents or
from the proceeds of any security for the Guarantied Obligations, except to
the extent such security also serves as collateral for indebtedness other
than the Guarantied Obligations) to the payment of indebtedness other than
the Guarantied Obligations, even though any Beneficiary might have elected
to apply such payment to any part or all of the Guarantied Obligations; (v)
any Beneficiary's consent to the change, reorganization or termination of
the corporate structure or existence of the Borrower or any of its
Subsidiaries and to any corresponding restructuring of the Guarantied
Obligations; (vi) any failure to perfect or continue perfection of a
security interest in any collateral which secures any of the Guarantied
Obligations; (vii) any defenses, set-offs or counterclaims which the
Borrower may allege or assert against any Beneficiary in respect of the
Guarantied Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury; and (viii) any other act or
thing or omission, or delay to do any other act or thing, which may or
might in any manner or to any extent vary the risk of any Guarantor as an
obligor in respect of the Guarantied Obligations.
(g) Should a Guarantor become insolvent, fail to pay its debts
generally as they become due, voluntarily seek, consent to, or acquiesce in
the benefits of any debtor relief law or become a party to or be made the
subject of any proceeding provided for by any debtor relief law (other than
as a creditor or claimant) that could suspend or otherwise adversely affect
the rights of Beneficiaries hereunder,
-16-
then, the Guarantied Obligations shall be, as between such Guarantor and
the Beneficiaries, a fully matured, due, and payable obligation of the
Guarantor to the Beneficiaries, payable in full by the Guarantor to the
Beneficiaries upon demand, which obligations shall be an amount equal to
the estimated amount owing in respect of the contingent claim created
hereunder as reasonably estimated by the Beneficiaries unless the petition
or application described above which was filed or commenced against the
Guarantor is dismissed within 60 days from the date of filing.
Section 13.5 Waivers by Guarantors. Each Guarantor hereby waives,
for the benefit of the Beneficiaries:
(a) any right to require any Beneficiary, as a condition of payment or
performance by such Guarantor, to (i) proceed against the Borrower, any
other guarantor (including any other Guarantor) of the Guarantied
Obligations or any other Person, (ii) proceed against or exhaust any
security held from the Borrower, any such other guarantor or any other
Person, (iii) proceed against or have resort to any balance of any deposit
account or credit on the books of any Beneficiary in favor of the Borrower
or any other Person, or (iv) pursue any other remedy in the power of any
Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of the Borrower including, without
limitation, any defense based on or arising out of the lack of validity or
the unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the liability
of the Borrower from any cause other than payment in full of the Guarantied
Obligations;
(c) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(d) any defense based upon any Beneficiary's errors or omissions in
the administration of the Guarantied Obligations, except behavior which
amounts to bad faith, gross negligence or willful misconduct;
(e) (i) any principles or provisions of law, statutory or otherwise,
which are or might be in conflict with the terms of this Guaranty and any
legal or equitable discharge of such Guarantor's obligations hereunder,
(ii) the benefit of any statute of limitations affecting such Guarantor's
liability hereunder or the enforcement hereof, (iii) any rights to
set-offs, recoupments and counterclaims, and (iv) promptness, diligence and
any requirement that any Beneficiary protect, secure, perfect or insure any
security interest or lien or any property subject
-17-
thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default under any Credit Document
or any agreement or instrument related thereto, notices of any renewal,
extension or modification of the Guarantied Obligations or any agreement
related thereto, notices of any extension of credit to the Borrower and
notices of any of the matters referred to in Section 2.4 and any right to
consent to any thereof;
(g) any defenses or benefits that may be derived from or afforded by
law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Guaranty;
(h) any defense based upon any Beneficiary's election, in any
proceeding instituted under the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code or any successor statute;
(i) any defense based upon any use of cash collateral or borrowing or
any grant of a security interest under Section 363 or 364 of the Bankruptcy
Code; and
(j) any defense based upon disallowance of any portion of any
Beneficiary's claims for repayment of Guarantied Obligations under Section
502 or 506 of the Bankruptcy Code.
Section 13.6 Waiver of Guarantors' Rights of Subrogation,
Contribution, Etc. Each Guarantor hereby waives any claim, right or
remedy, direct or indirect, that such Guarantor now has or may
hereafter have against the Borrower or any other Credit Party or any
of the Borrower's or such other Credit Party's assets in connection
with this Guaranty or the performance by such Guarantor of its
obligations hereunder, in each case whether such claim, right or
remedy arises in equity, under contract, by statute, under common law
or otherwise and including without limitation (a) any right of
subrogation, reimbursement or indemnification that such Guarantor now
has or may hereafter have against any such Person, (b) any right to
enforce, or to participate in, any claim, right or remedy that any
Beneficiary now has or may hereafter have against any such Person, and
(c) any benefit of, and any right to participate in, any collateral or
security now or hereafter held by any Beneficiary. In addition, until
the Guarantied Obligations shall have been indefeasibly paid in full,
each Guarantor shall withhold exercise of any right of contribution
such Guarantor may have against any other guarantor (including any
other Guarantor) of the Guarantied Obligations. Each Guarantor further
agrees
-18-
that, to the extent the waiver or agreement to withhold the exercise
of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent
jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have
against the Borrower or any other Credit Party or against any
collateral or security, and any rights of contribution such Guarantor
may have against any such other such Person, shall be junior and
subordinate to any rights any Beneficiary may have against such
Person, to all right, title and interest any Beneficiary may have in
any such collateral or security, and to any right any Beneficiary may
have against such other Person. If any amount shall be paid to any
Guarantor on account of any such subrogation, reimbursement,
indemnification or contribution rights at any time when all Guarantied
Obligations shall not have been paid in full, such amount shall be
held in trust for Guarantied Party on behalf of Beneficiaries and
shall forthwith be paid over to Guarantied Party for the benefit of
Beneficiaries to be credited and applied against the Guarantied
Obligations, whether matured or unmatured, in accordance with the
terms hereof.
Section 13.7 Subordination of Other Obligations. Any Indebtedness
of the Borrower or any other Credit Party now or hereafter held by any
Guarantor is hereby subordinated in right of payment to the Guarantied
Obligations, and any such Indebtedness of any the Borrower or such
other Credit Party to such Guarantor collected or received by such
Guarantor after an Event of Default has occurred and is continuing
shall be held in trust for Guarantied Party on behalf of Beneficiaries
and shall forthwith be paid over to Guarantied Party for the benefit
of Beneficiaries to be credited and applied against the Guarantied
Obligations but without affecting, impairing or limiting in any manner
the liability of such Guarantor under any other provision of this
Guaranty; provided that prior to the occurrence of an Event of
Default, Guarantors may borrow, repay and reborrow intercompany
Indebtedness from Borrower to the extent such intercompany
Indebtedness is permitted under Section 6.1(a) of the Credit
Agreement.
Section 13.8 Expenses. Guarantors jointly and severally agree to
pay, or cause to be paid, on demand, and to save Beneficiaries
harmless against liability for, any and all costs and expenses
(including fees and disbursements of counsel and allocated costs of
internal counsel) incurred or expended by any Beneficiary in
connection with the enforcement of or preservation of any rights under
this Guaranty.
-19-
Section 13.9 Continuing Guaranty. This Guaranty is a continuing
guaranty and shall remain in effect until all of the Guarantied
Obligations shall have been paid in full. Each Guarantor hereby
irrevocably waives any right to revoke this Guaranty as to future
transactions giving rise to any Guarantied Obligations.
Section 13.10 Authority of Guarantors or Borrower. It is not
necessary for any Beneficiary to inquire into the capacity or powers
of any Guarantor or the Borrower or the officers, directors or any
agents acting or purporting to act on behalf of any of them.
Section 13.11 Financial Condition of Borrower. Any credit
advances may be granted to the Borrower or continued from time to time
without notice to or authorization from any Guarantor regardless of
the financial or other condition of the Borrower at the time of any
such grant or continuation. No Beneficiary shall have any obligation
to disclose or discuss with any Guarantor its assessment, or any
Guarantor's assessment, of the financial condition of the Borrower.
Each Guarantor has adequate means to obtain information from the
Borrower on a continuing basis concerning the financial condition of
the Borrower and their ability to perform their obligations under the
Credit Documents, and each Guarantor assumes the responsibility for
being and keeping informed of the financial condition of the Borrower
and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations. Each Guarantor hereby waives and relinquishes
any duty on the part of any Beneficiary to disclose any matter, fact
or thing relating to the business, operations or conditions of the
Borrower now known or hereafter known by any Beneficiary.
Section 13.12 Rights Cumulative. The rights, powers and remedies
given to Beneficiaries by this Guaranty are cumulative and shall be in
addition to and independent of all rights, powers and remedies given
to Beneficiaries by virtue of any statute or rule of law or in any of
the other Credit Documents or any agreement between any Guarantor and
any Beneficiary or Beneficiaries or between the Borrower and any
Beneficiary or Beneficiaries. Any forbearance or failure to exercise,
and any delay by any Beneficiary in exercising, any right, power or
remedy hereunder shall not impair any such right, power or remedy or
be construed to be a waiver thereof, nor shall it preclude the further
exercise of any such right, power or remedy.
Section 13.13 Bankruptcy; Post-Petition Interest; Reinstatement
of Guaranty.
-20-
(a) So long as any Guarantied Obligations remain outstanding, no
Guarantor shall, without the prior written consent of Guarantied Party
acting pursuant to the instructions of all Lenders, commence or join with
any other Person in commencing any bankruptcy, reorganization or insolvency
proceedings of or against the Borrower. The obligations of Guarantors under
this Guaranty shall not be reduced, limited, impaired, discharged,
deferred, suspended or terminated by any proceeding, voluntary or
involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation or arrangement of the Borrower or by any
defense which the Borrower may have by reason of the order, decree or
decision of any court or administrative body resulting from any such
proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any
portion of the Guarantied Obligations which accrues after the commencement
of any proceeding referred to in clause (a) above (or, if interest on any
portion of the Guarantied Obligations ceases to accrue by operation of law
by reason of the commencement of said proceeding, such interest as would
have accrued on such portion of the Guarantied Obligations if said
proceedings had not been commenced) shall be included in the Guarantied
Obligations because it is the intention of Guarantors and Beneficiaries
that the Guarantied Obligations which are guarantied by Guarantors pursuant
to this Guaranty should be determined without regard to any rule of law or
order which may relieve the Borrower of any portion of such Guarantied
Obligations. Guarantors will permit any trustee in bankruptcy, receiver,
debtor in possession, assignee for the benefit of creditors or similar
person to pay Guarantied Party, or allow the claim of Guarantied Party in
respect of, any such interest accruing after the date on which such
proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations
are paid by the Borrower, the obligations of Guarantors hereunder shall
continue and remain in full force and effect or be reinstated, as the case
may be, in the event that all or any part of such payment(s) are rescinded
or recovered directly or indirectly from any Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments which are so
rescinded or recovered shall constitute Guarantied Obligations for all
purposes under this Guaranty.
Section 13.14 [Reserved]
Section 13.15 Set Off. In addition to any other rights any
Beneficiary may have under law or in equity, if any amount shall at
any time be due and owing by any Guarantor to any Beneficiary under
this Guaranty, such Beneficiary is authorized at any time or from time
to time,
-21-
without notice (any such notice being hereby expressly waived), to set
off and to appropriate and to apply any and all deposits (general or
special, including but not limited to indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness of such Beneficiary owing to such Guarantor and any other
property of such Guarantor held by any Beneficiary to or for the
credit or the account of such Guarantor against and on account of the
Guarantied Obligations and liabilities of such Guarantor to any
Beneficiary under this Guaranty.
Section 13.16 Discharge of Guaranty Upon Sale of Guarantor. If
all of the stock of any Guarantor or any of its successors in interest
under this Guaranty shall be sold or otherwise disposed of (including
by merger or consolidation) in a sale not prohibited by the Credit
Agreement or otherwise consented to by all Lenders, the Guaranty of
such Guarantor or such successor in interest, as the case may be,
hereunder shall automatically be discharged and released without any
further action by any Beneficiary or any other Person effective as of
the time of such sale; provided that, (i) as a condition precedent to
such discharge and release, Guarantied Party shall have received
evidence satisfactory to it that arrangements satisfactory to it have
been made for delivery to Guarantied Party of the applicable net sale
proceeds, and (ii) the Borrower may retain such amounts permitted
under Section 2.11 of the Credit Agreement.
ARTICLE XIV
REPRESENTATIONS AND WARRANTIES
Section 14.1 General Representations and Warranties. Each
Guarantor hereby represents and warrants to the Beneficiaries as
follows:
(a) Guarantor's Relationship to Borrowers. Guarantor and the Borrower
are members of the same consolidated group of companies and are engaged in
related businesses and Guarantor will derive substantial direct and
indirect benefit from the execution and delivery of this Guaranty.
(b) Representations and Warranties. Each representation and warranty
contained in Section 4.1 of the Credit Agreement relating to such Guarantor
is true and correct as if made by such Guarantor.
-22-
ARTICLE XV
MISCELLANEOUS
Section 15.1 Survival of Warranties. All agreements,
representations and warranties made herein shall survive the execution
and delivery of this Guaranty and the other Credit Documents.
Section 15.2 Notices. Any communications between Guarantied Party
and any Guarantor and any notices or requests provided herein to be
given shall be made in accordance with the provisions of Section 10.2
of the Credit Agreement.
Section 15.3 Severability. In case any provision in or obligation
under this Guaranty shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected
or impaired thereby.
Section 15.4 Amendments and Waivers. No amendment, modification,
termination or waiver of any provision of this Guaranty, and no
consent to any departure by any Guarantor therefrom, shall in any
event be effective without the written concurrence of each Beneficiary
and, in the case of any such amendment or modification, each Guarantor
against whom enforcement of such amendment or modification is sought.
Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
Section 15.5 Headings. Section and subsection headings in this
Guaranty are included herein for convenience of reference only and
shall not constitute a part of this Guaranty for any other purpose or
be given any substantive effect.
Section 15.6 Applicable Law. THIS GUARANTY, AND ALL CLAIMS,
DISPUTES AND MATTERS ARISING HEREUNDER OR RELATED HERETO, AND THE
RIGHTS AND OBLIGATIONS OF GUARANTORS AND BENEFICIARIES HEREUNDER SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
-23-
Section 15.7 Successors and Assigns. This Guaranty is a
continuing guaranty and shall be binding upon each Guarantor and its
respective successors and assigns. This Guaranty shall inure to the
benefit of Beneficiaries and their respective successors and assigns.
No Guarantor shall assign this Guaranty or any of the rights or
obligations of such Guarantor hereunder without the prior written
consent of all Lenders. Any Beneficiary may, without notice or
consent, assign its interest in this Guaranty in whole or in part. The
terms and provisions of this Guaranty shall inure to the benefit of
any transferee or assignee of any Guarantied Obligation, and in the
event of such transfer or assignment the rights and privileges herein
conferred upon such Beneficiary shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and
conditions hereof.
Section 15.8 Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY, OR
ANY OBLIGATIONS HEREUNDER, SHALL BE BROUGHT ONLY IN THE NEW YORK STATE
COURTS SITTING IN NEW YORK COUNTY OR THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA SITTING IN THE SOUTHERN DISTRICT OF NEW YORK AND NEW
YORK COUNTY. BY EXECUTING AND DELIVERING THIS GUARANTY, EACH
GUARANTOR, EACH LENDER AND AGENT IRREVOCABLY:
(a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION
AND VENUE OF SUCH COURTS;
(b) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 4.2;
(d) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c) ABOVE IS SUFFICIENT
TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY SUCH PROCEEDING
IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE
IN EVERY RESPECT;
(e) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW; AND
-24-
(f) AGREES THAT THE PROVISIONS OF THIS SECTION 4.8 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
Section 15.9 Waiver of Trial by Jury. EACH GUARANTOR AND, BY ITS
ACCEPTANCE OF THE BENEFITS HEREOF, EACH BENEFICIARY EACH HEREBY AGREES
TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of
this waiver is intended to be all encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter
of this transaction, including without limitation contract claims,
tort claims, breach of duty claims and all other common law and
statutory claims. Each Guarantor and, by its acceptance of the
benefits hereof, each Beneficiary, (i) acknowledges that this waiver
is a material inducement for such Guarantor and Beneficiaries to enter
into a business relationship, that such Guarantor and Beneficiaries
have already relied on this waiver in entering into this Guaranty or
accepting the benefits thereof, as the case may be, and that each will
continue to rely on this waiver in their related future dealings and
(ii) further warrants and represents that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 4.9 AND EXECUTED BY EACH
BENEFICIARY AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
GUARANTY. In the event of litigation, this Guaranty may be filed as a
written consent to a trial by the court.
Section 15.10 Integration. This writing is intended by Guarantors
and Beneficiaries as the final expression of this Guaranty and is also
intended as a complete and exclusive statement of the terms of their
agreement with respect to the matters covered hereby and shall
supersede all prior negotiations, agreements and understandings,
whether written or oral, of the parties hereto. No course of dealing,
course of performance or trade usage, and no parol evidence of any
nature, shall be used to supplement or modify any terms of this
Guaranty. There are no conditions to the full effectiveness of this
Guaranty.
-25-
Section 15.11 Further Assurances. At any time or from time to
time, upon the request of Guarantied Party, Guarantors shall execute
and deliver such further documents and do such other acts and things
as Guarantied Party may reasonably request in order to effect fully
the purposes of this Guaranty.
Section 15.12 Additional Guarantors. The initial Guarantors
hereunder shall be such of the Foreign Subsidiaries of Borrower as are
signatories hereto on the date hereof. From time to time subsequent to
the date hereof, additional Foreign Subsidiaries of the Borrower may
become parties hereto, as additional Guarantors (each an "Additional
Guarantor"), by executing a joinder in the form of Exhibit A attached
hereto. Upon delivery of any such joinder to Agent, notice of which is
hereby waived by Guarantors, each such Additional Guarantor shall be a
Guarantor and shall be as fully a party hereto as if such Additional
Guarantor were an original signatory hereof. Each Guarantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Guarantor
hereunder, nor by any election of Agent not to cause any Foreign
Subsidiary of the Borrower to become an Additional Guarantor
hereunder. This Guaranty shall be fully effective as to any Guarantor
that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Guarantor
hereunder.
Section 15.13 Counterparts; Effectiveness. This Guaranty may be
executed by telecopy in any number of counterparts and by the parties
hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same document. Transmission by telecopier of an
executed counterpart of this Guaranty shall be deemed to constitute
due and sufficient delivery of such counterpart. Each fully executed
counterpart of this Guaranty shall be deemed to be a duplicate
original. This Guaranty shall become effective as to each Guarantor
upon the execution of a counterpart hereof by such Guarantor (whether
or not a counterpart hereof shall have been executed by any other
Guarantor) and receipt by Guarantied Party of written or telephonic
notification of such execution and authorization of delivery thereof.
Section 15.14 Guarantied Party as Agent.
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Lenders. Guarantied Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or
refrain from
-26-
exercising any rights, and to take or refrain from taking any action,
solely in accordance with this Guaranty and the Credit Agreement.
(b) Guarantied Party shall at all times be the same Person that is
Agent under the Credit Agreement. Written notice of resignation by Agent
pursuant to the Credit Agreement shall also constitute notice of
resignation as Guarantied Party under this Guaranty; removal of Agent
pursuant to the Credit Agreement shall also constitute removal as
Guarantied Party under this Guaranty; and appointment of a successor Agent
pursuant to the Credit Agreement shall also constitute appointment of a
successor Guarantied Party under this Guaranty. Upon the acceptance of any
appointment as Agent under the Credit Agreement by a successor Agent, that
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Guarantied
Party under this Guaranty, and the retiring or removed Guarantied Party
under this Guaranty shall promptly (i) transfer to such successor
Guarantied Party all sums held hereunder, together with all records and
other documents necessary or appropriate in connection with the performance
of the duties of the successor Guarantied Party under this Guaranty, and
(ii) take such other actions as may be necessary or appropriate in
connection with the assignment to such successor Guarantied Party of the
rights created hereunder, whereupon such retiring or removed Guarantied
Party shall be discharged from its duties and obligations under this
Guaranty. After any retiring or removed Guarantied Party's resignation or
removal hereunder as Guarantied Party, the provisions of this Guaranty
shall inure to its benefit as to any actions taken or omitted to be taken
by it under this Guaranty while it was Guarantied Party hereunder.
[Remainder of page intentionally left blank; signatures follow on next page]
-27-
IN WITNESS WHEREOF, the undersigned Guarantor has caused this Guaranty to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
GUARANTORS:
---------------------------------------------
XFM -- Guaranty
S-1
EXHIBIT D
AGENT:
[PATRIARCH PARTNERS AGENCY SERVICES,
LLC]
By:
------------------------------------
[Name: Xxxx Xxxxxx
Title: Manager]
Exhibit A
Form of Joinder to Guaranty
The undersigned, _____________, a ___________________, hereby joins in the
execution of that certain Guaranty dated as of [__________] (as amended,
restated, supplemented or otherwise modified from time to time, the "Guaranty")
issued and executed by each Person that is or becomes a Guarantor thereunder on
and/or after the date and pursuant to the terms thereof to and in favor of
Guarantied Party and the other Beneficiaries. By executing this Joinder, the
undersigned hereby agrees that it is a Guarantor thereunder with the same force
and effect as if originally named therein as a Guarantor. The undersigned agrees
to be bound by all of the terms and provisions of the Guaranty and represents
and warrants that the representations and warranties set forth in Section 3 of
the Guaranty are, with respect to the undersigned, true, complete and correct as
of the date hereof. Each reference to a Guarantor in the Guaranty shall be
deemed to include the undersigned. Capitalized terms used but not defined herein
shall have the meanings set forth in the Guaranty.
IN WITNESS WHEREOF, the undersigned has executed this Joinder this ___ day
of _________, 200_.
[Name of Guarantor]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
XFM -- Guaranty
S-3
EXHIBIT E
Form of
Secretary's Certificate
Xinhua Finance Media Limited
(the "Company")
Date: __________
We, Codan Trust Company (Cayman) Limited, being the Secretary of the Company,
hereby certify in such capacity as follows:-
1. The copies of the documents listed below and attached to this certificate
are true, correct, complete and in full force and effect as at the date
hereof:
(a) the Certificate of Incorporation dated 7 November 2005; and
(b) The Memorandum and New Articles of Association of the Company adopted
on [__________].
2. The copies of the resolutions listed below and attached to this certificate
are true, correct, complete and such resolutions have not been modified,
amended or rescinded and remain in full force and effect as at the date
hereof:
(c) Written resolutions of the directors of the Company passed on
[__________]; and
(d) Written resolutions of the shareholder of the Company passed on
[__________].
-------------------------------------
Codan Trust Company (Cayman) Limited
Secretary
XFM -- Guaranty
S-4
EXHIBIT F
FORM OF
CLOSING DATE CERTIFICATE
This Closing Date Certificate (this "Certificate") is delivered pursuant to
Section 3.1(e) of that certain Credit Agreement, dated as of [____________],
2006 (the "Credit Agreement"), among Xinhua Finance Media Limited (the
"Borrower"), the Subsidiaries of the Borrower that from time to time become
guarantors thereunder, the financial institutions from time to time lenders
thereunder (collectively, the "Lenders") and Patriarch Partners Agency Services,
LLC, as agent for the Lenders (in such capacity, the "Agent"). Unless otherwise
defined herein, capitalized terms used in this Certificate shall have the
meanings set forth in the Credit Agreement.
The undersigned does hereby certify that:
1. I am the duly elected [__________] of the Borrower.
2. In my capacity as [__________] of the Borrower, I am qualified to and I
have reviewed the Credit Agreement and each of the Credit Documents, and to the
best of my knowledge after due inquiry each representation and warranty
contained in each of the Credit Documents to which the Borrower is a party was
correct in all material respects when made and is true and correct in all
material respects as of the date hereof (except to the extent that any such
representation and warranty expressly relates to a specific date, in which case
such representation and warranty was correct in all material respects as of such
date).
3. To the best of my knowledge after due inquiry, the Borrower has
performed, satisfied or complied in all material respects with all covenants,
warranties and representations, conditions and other obligations to be
performed, satisfied or complied with by it under the Credit Documents on or
before the date hereof, and to the best of my knowledge after due inquiry no
Default or Event of Default exists as of the date hereof.
4. The proceeds of the Loans made on the Closing Date shall be used only in
accordance with the provisions of Section 2.5 of the Credit Agreement.
[Signature page follows on next page]
XFM -- Guaranty
S-5
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed as of this [____________], 2006.
----------------------------------------
[Name]
XFM -- Guaranty
S-6
EXHIBIT G
FORM OF JOINDER TO CREDIT AGREEMENT
The undersigned, _____________, a ___________________, hereby joins in the
execution of that certain Credit Agreement, dated as of 16 March, 2006 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Xinhua Finance Media Limited (the "Borrower"), the
Subsidiaries of the Borrower from time to time guarantors thereunder
(collectively, the "Guarantors"), the lenders signatory thereto (together with
any other financial institutions or investors from time to time signatory
thereto, collectively, the "Lenders"), and Patriarch Partners Agency Services,
LLC, as agent for the Lenders (in such capacity the "Agent") issued and executed
by each Person that is or becomes a Guarantor thereunder on and/or after the
date and pursuant to the terms thereof to. By executing this Joinder, the
undersigned hereby agrees that it is a Guarantor thereunder with the same force
and effect as if originally named therein as a Guarantor. The undersigned agrees
to be bound by all of the terms and provisions of the Credit Agreement and
represents and warrants that the representations and warranties set forth in
Section 4.1 of the Credit Agreement are, with respect to the undersigned, true,
complete and correct as of the date hereof. Each reference to a Guarantor in the
Credit Agreement shall be deemed to include the undersigned. Capitalized terms
used but not defined herein shall have the meanings set forth in the Credit
Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Joinder this ___ day
of _________, 200_.
[Name of Guarantor]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
XFM -- Guaranty
S-7
EXHIBIT H
FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment") is dated as of the Effective
Date set forth below and is entered into by and between ________________________
(the "Assignor") and ___________________________ (the "Assignee"). Capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Credit Agreement (as defined below), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1 attached hereto (the "Standard Terms and Conditions") are hereby agreed
to and incorporated herein by reference and made a part of this Assignment as if
set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date to be inserted
by the Agent as contemplated below, the interest in and to all of the Assignor's
rights and obligations under the Credit Agreement and any other documents or
instruments delivered pursuant thereto that represents the amount and percentage
interest identified below of all of the Assignor's outstanding rights and
obligations under the respective Commitments and Loans identified below (the
"Assigned Interest"). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment, without
representation or warranty by the Assignor.
1. Assignor: _________________________________________________
2. Assignee: _________________________________________________
3. Borrower: Xinhua Finance Media Limited
4. Agent: Patriarch Partners Agency Services, LLC
5. Credit Agreement: Credit Agreement, dated as of [_______], 2006 (as
amended, restated, supplemented or otherwise
modified from time to time, the "Credit
Agreement"), among Xinhua Finance Media Limited
(the "Borrower"), the Subsidiaries of the
XFM -- Guaranty
S-8
Borrower from time to time guarantors thereunder
(collectively, the "Guarantors"), the lenders
signatory thereto (together with any other
financial institutions or investors from time to
time signatory thereto, collectively, the
"Lenders"), and Patriarch Partners Agency
Services, LLC, as agent for the Lenders (in such
capacity the "Agent").
6. Assigned Interest: _________________________________________________
AGGREGATE AMOUNT OF
COMMITMENT/LOANS OF
THE ASSIGNOR PRIOR AMOUNT OF PERCENTAGE OF
COMMITMENT TO GIVING EFFECT COMMITMENT/LOANS COMMITMENT/
ASSIGNED TO THE ASSIGNMENT ASSIGNED LOANS ASSIGNED
---------- ------------------- ---------------- --------------
Term Loan
7. Effective Date: _______ ___, 200_
[Remainder of page intentionally left blank; signature follows on next page]
XFM -- Guaranty
S-9
The terms set forth in this Assignment are hereby agreed to:
ASSIGNOR:
----------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ASSIGNEE:
----------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted and Consented to this ____ day of ______________, 200__:
PATRIARCH PARTNERS AGENCY SERVICES,
LLC, as Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XFM -- Guaranty
S-10
ANNEX 1
TO
ASSIGNMENT AGREEMENT
STANDARD TERMS AND CONDITIONS
1. Representations and Warranties and Covenants.
(a) Assignor. The Assignor (i) represents and warrants that (A) it is the legal
and beneficial owner of the Assigned Interest, (B) it owns the Assigned Interest
free and clear of all Liens, security interests and other encumbrances in favor
of any third party, and it has not executed any prior assignment or pledge of
the Assigned Interest, or any Lien or other rights, privileges or interests
arising under the Credit Agreement or any of the other Credit Documents, (C) it
has the full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and to consummate the transactions contemplated
hereby, and (D) this Assignment constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject, as to
enforcement of remedies, to the following qualifications: (x) an order of
specific performance and an injunction are discretionary remedies and, in
particular, may not be available where damages are considered an adequate remedy
at law, (y) enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Assignor and the Assignee), and (z)
enforcement may be subject to general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law) and
may be limited by public policies which may affect the enforcement of certain
rights or remedies provided for in this Agreement; and (ii) assumes no
responsibility with respect to (A) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Credit Document,
(B) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other Credit Document, or any Collateral
thereunder, (C) the financial condition of the Borrower, any of its Subsidiaries
or Affiliates or any other Person obligated in respect of the Credit Agreement
or any other Credit Document, or (D) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under the Credit Agreement or any other Credit
Document.
(b) Assignee. The Assignee (i) represents and warrants that (A) it has the full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and to consummate the transactions contemplated hereby and to
become a Lender under the Credit Agreement, (B) this Assignment constitutes its
legal, valid and binding obligation,
XFM -- Guaranty
S-11
enforceable against it in accordance with its terms, subject, as to enforcement
of remedies, to the following qualifications: (x) an order of specific
performance and an injunction are discretionary remedies and, in particular, may
not be available where damages are considered an adequate remedy at law, (y)
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Assignor and the Assignee), and (z)
enforcement may be subject to general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law) and
may be limited by public policies which may affect the enforcement of certain
rights or remedies provided for in this Agreement, (C) it meets all requirements
of an Eligible Assignee under the Credit Agreement, (D) from and after the
Effective Date, it shall be bound by the provisions of the Credit Agreement and,
to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (E) it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to Section
5.1(a) thereof, as applicable, and such other documents and other information as
it has deemed appropriate to make its own credit analysis and decision, and (F)
if it is a Lender which is organized in a jurisdiction other than the United
States or a political subdivision thereof, attached to this Assignment is any
documentation required to be delivered by it pursuant to the terms of the Credit
Agreement, duly completed and executed by the Assignee; and (ii) agrees that (A)
it will, independently and without reliance on the Agent, the Assignor or any
other Credit Party, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement and the other Credit Documents, and
(B) it will perform in accordance with their terms all of the obligations which
by the terms of the Credit Agreement and the other Credit Documents are required
to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued
to but excluding the Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.
3. General Provisions. This Assignment shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and assigns.
This Assignment may be executed in any number of counterparts, each of which
shall be deemed to be an original and shall be binding upon the parties, their
successors and assigns. Delivery of an executed counterpart of this Assignment
by facsimile shall be equally as effective as delivery of an original executed
counterpart of this Assignment. Any party delivering an executed counterpart of
this Assignment by facsimile also shall deliver an original executed counterpart
of this Assignment but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability and binding effect of this
Assignment. This Agreement shall be construed in accordance with and governed by
the laws of the State of New York, without regard to the conflict of laws
principles thereof.
XFM -- Guaranty
S-12
EXHIBIT I
FORM OF OPINION
XFM -- Guaranty
S-13
[16] March 2006
Patriarch Partners Media Holdings, LLC DIRECT LINE: 2842 9531
c/o Patriarch Partners, LLC E-MAIL: xxxx.xxxxx@xxxxxxxxxxxxxxxxxxxxx.xxx
00 Xxxx Xxxxxx, 25thFloor OUR REF: #890621/209625
Xxx Xxxx, XX 00000 YOUR REF:
Patriarch Partners Agency Services, LLC
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs
XXXX XXXXX INTERNATIONAL LIMITED
UPPER WILL ENTERPRISES LIMITED (TOGETHER, THE "COMPANIES")
XFM -- Guaranty
S-14
We have acted as special legal counsel in the British Virgin Islands to Xinhua
Finance Media Limited ("XFM") in connection with:
i. a credit agreement (the "Credit Agreement") dated [16] March 2006 among
XFM, the Companies, Active Advertising Agency Limited (together with the
Companies, the "Pledgors"), Patriarch Partners Media Holdings, LLC (the
"Lender") and Patriarch Partners Agency Services, LLC (the "Agent);
ii. a guaranty (the "Guaranty") dated [16] March 2006 by Xxxx Xxxxx
International Limited (the "Xxxx Xxxxx Guaranty");
iii. a guaranty (the "Guaranty") dated [16] March 2006 by Upper Will Enterprises
Limited (the "Upper Will Guaranty" and together with the Xxxx Xxxxx
Guaranty, the "Guaranties");
iv. a security agreement (the "Debt Security Agreement") dated [16] March 2006
among XFM, the Pledgors and the Agent;
v. a pledge agreement (the "Debt Pledge Agreement") dated [16] March 2006
among XFM, Xxxx Xxxxx International Limited, Active Advertising Agency
Limited and the Agent;
vi. a security agreement (the "Equity Security Agreement") dated [16] March
2006 among the XFM, the Pledgors and Patriarch Partners Media Holdings, LLC
(the "Investor");
vii. a pledge agreement (the "Equity Pledge Agreement") dated [16] March 2006
among XFM, Xxxx Xxxxx International Limited, Active Advertising Agency
Limited and the Investor;
viii. a share mortgage (the "Debt Share Mortgage") dated [16] March 2006 between
Upper Will Enterprises Limited ("Upper Will") and the Lender; and
ix. a share mortgage (the "Equity Share Mortgage") dated [16] March 2006
between Upper Will Enterprises Limited ("Upper Will") and the Agent.
The Debt Share Mortgage and the Equity Share Mortgage are together the "Share
Mortgages".
For the purposes of giving this opinion, we have examined the following
documents:
(i) a copy of the signed Credit Agreement;
(ii) a copy of the signed Xxxx Xxxxx Guarantee;
(iii) a copy of the signed Upper Will Guarantee;
1
(iv) a copy of the signed Debt Security Agreement;
(v) a copy of the signed Debt Pledge Agreement;
(vi) a copy of the signed Equity Security Agreement;
(vii) a copy of the signed Equity Pledge Agreement;
(viii) a copy of the signed Debt Share Mortgage; and
(ix) a copy of the signed Equity Share Mortgage.
The documents listed in items (i) through (ix) above are herein sometimes
collectively referred to as the "Documents" (which term does not include any
other instrument or agreement whether or not specifically referred to therein or
attached as an exhibit or schedule thereto).
We have also reviewed the memorandum of association and the articles of
association of the Companies, as obtained from the Registrar of Corporate
Affairs on 3 March 2006, minutes of meetings of the directors of each of the
Companies dated [16] March 2006 and written resolutions of their shareholders,
each passed on [16] March, 2006 (the "Minutes"), the two certificates of good
standing in respect of the Companies issued by the Registrar of Corporate
Affairs on 3 March 2006 and such other documents and made such enquiries as to
questions of law as we have deemed necessary in order to render the opinion set
forth below.
We have assumed (a) the genuineness and authenticity of all signatures and the
conformity to the originals of all copies (whether or not certified) examined by
us and the authenticity and completeness of the originals from which such copies
were taken; (b) that where a document has been examined by us in draft form, it
will be or has been executed in the form of that draft, and where a number of
drafts of a document have been examined by us all changes thereto have been
marked or otherwise drawn to our attention; (c) the capacity, power and
authority of each of the parties to the Documents, other than the Companies, to
enter into and perform its respective obligations under the Documents; (d) the
due execution and delivery of the Documents by each of the parties thereto,
other than the Companies, and the physical delivery thereof by the Companies
with an intention to be bound thereby; (e) the accuracy and completeness of all
factual representations made in the Documents and other documents reviewed by
us; (f) that the resolutions contained in the Minutes were passed at one or more
duly convened, constituted and quorate meetings or by unanimous written
resolutions, remain in full force and effect and have not been rescinded or
amended; (g) that there is no provision of the law of any jurisdiction, other
than the British Virgin Islands, which would have any implication in relation to
the opinions expressed herein; (h) the validity and binding effect under the
laws of the State of New York (the "New York Laws") of the documents listed in
items (i) through (vii) above which are expressed to be governed by New York
Laws in accordance with their respective terms; (i) the validity and binding
effect under New York Laws of the submission by the Companies pursuant to the
documents listed in items (i) through (vii) above to the exclusive jurisdiction
of the state and federal courts
2
located within the county of New York, State of New York (the "New York
Courts"); (j) the validity and binding effect under the laws of the Hong Kong
Special Administrative Region of the People's Republic of China (the "Hong Kong
Laws") of the Share Mortgages which are expressed to be governed by Hong Kong
Laws in accordance with their respective terms; (k) the validity and binding
effect under Hong Kong Laws of the submission by Upper Will pursuant to the
Share Mortgages to the non-exclusive jurisdiction of the courts of Hong Kong
(the "Hong Kong Courts") (the New York Laws and the Hong Kong Laws are
collectively referred to as the "Foreign Laws" and the New York Courts and the
Hong Kong Courts are collectively referred to as the "Foreign Courts") and (j)
that on the date of entering into the Documents the Companies are and after
entering into the Documents will be able to pay their liabilities as they become
due.
The obligations of the Companies under the Documents (a) will be subject to the
laws from time to time in effect relating to bankruptcy, insolvency,
liquidation, possessory liens, rights of set off, reorganisation, merger,
consolidation, moratorium or any other laws or legal procedures, whether of a
similar nature or otherwise, generally affecting the rights of creditors; (b)
will be subject to statutory limitation of the time within which proceedings may
be brought; (c) will be subject to general principles of equity and, as such,
specific performance and injunctive relief, being equitable remedies, may not be
available; (d) may not be given effect to by a British Virgin Islands court,
whether or not it was applying the respective Foreign Laws, if and to the extent
they constitute the payment of an amount which is in the nature of a penalty and
not in the nature of liquidated damages; (e) may not be given effect by a
British Virgin Islands court to the extent that they are to be performed in a
jurisdiction outside the British Virgin Islands and such performance would be
illegal under the laws of that jurisdiction. Notwithstanding any contractual
submission to the jurisdiction of specific courts, a British Virgin Islands
court has inherent discretion to stay or allow proceedings in the British Virgin
Islands courts.
We express no opinion as to the enforceability of any provision of the Documents
which provides for the payment of a specified rate of interest on the amount of
a judgment after the date of judgment or which purports to xxxxxx the statutory
powers of the Companies.
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than the British Virgin Islands. This opinion is to be
governed by and construed in accordance with the laws of the British Virgin
Islands and is limited to and is given on the basis of the current law and
practice in the British Virgin Islands. This opinion is issued solely for your
benefit and is not to be relied upon by any other person, firm or entity or in
respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion that:
1. The Companies are duly incorporated and existing under the laws of the
British Virgin Islands in good standing (meaning solely that it has not
failed to make any filing with any British Virgin Islands governmental
authority or to pay any British Virgin Islands government fee or tax which
would make it liable to be struck off the Register of Companies and thereby
cease to exist under the laws of the British Virgin Islands).
3
2. The Companies have the necessary corporate power and authority to enter
into and perform their obligations under the Documents. The execution and
delivery of the Documents by the Companies and the performance by the
Companies of their obligations thereunder will not violate the memorandum
of association or articles of association of the Companies nor any
applicable law, regulation, order or decree in the British Virgin Islands.
3. The Companies have taken all corporate action required to authorise their
execution, delivery and performance of the Documents. The Documents have
been duly executed and delivered by or on behalf of the Companies, and
constitute the valid and binding obligations of the Companies in accordance
with their respective terms thereof.
4. No order, consent, approval, licence, authorisation or validation of or
exemption by any government or public body or authority of the British
Virgin Islands or any sub-division thereof is required to authorise or is
required in connection with the execution, delivery, performance and
enforcement of the Documents.
5. It is not necessary or desirable to ensure the enforceability in the
British Virgin Islands of the Documents that they be registered in any
register kept by, or filed with, any governmental authority or regulatory
body in the British Virgin Islands. However, to the extent that any of the
Documents creates a charge over assets of the Companies, it may be
desirable to ensure the priority in the British Virgin Islands of the
charge that it be registered in the Register of Mortgages, Charges and
other Encumbrances of the Companies at their registered offices in
accordance with Section 70A of the International Business Companies Act
(Cap. 291) (the "Act") and that a copy of such register be registered by
the Registrar of Corporate Affairs pursuant to Section 111A of the Act. On
registration in the Register of Mortgages, Charges and Other Encumbrances,
to the extent that British Virgin Islands law governs the priority of a
charge, such charge will have priority in the British Virgin Islands over
any unregistered charges, and over any subsequently registered charges, in
respect of the assets which are the subject of the charge. A fee of $50
will be payable in respect of the registration by the Registrar of
Corporate Affairs pursuant to Section 111A of the Act.
While there is no exhaustive definition of a charge under British Virgin
Islands law, a charge normally has the following characteristics:
(i) it is a proprietary interest granted by way of security which entitles
the chargee to resort to the charged property only for the purposes of
satisfying some liability due to the chargee (whether from the chargor
or a third party); and
(ii) the chargor retains an equity of redemption to have the property
restored to him when the liability has been discharged.
4
However, as the Documents are governed by the respective Foreign Laws, the
question of whether they would possess these particular characteristics
would be determined under the respective Foreign Laws.
6. The Documents will not be subject to ad valorem stamp duty in the British
Virgin Islands.
7. The choice of the respective Foreign Laws as the governing law of the
Documents is a valid choice of law and would be recognised and given effect
to in any action brought before a court of competent jurisdiction in the
British Virgin Islands, except for those laws (i) which such court
considers to be procedural in nature, (ii) which are revenue or penal laws
or (iii) the application of which would be inconsistent with public policy,
as such term is interpreted under the laws of the British Virgin Islands.
The submission in the documents listed in items (i) through (vii) above to
the exclusive jurisdiction of the New York Courts is valid and binding upon
the Companies. The submission in the Share Mortgages to the non-exclusive
jurisdiction of the Hong Kong Courts is valid and binding upon Upper Will.
8. The courts of the British Virgin Islands would recognise as a valid
judgment, a final and conclusive judgment in personam obtained in the
respective Foreign Courts against the Companies based upon the Documents
under which a sum of money is payable (other than a sum of money payable in
respect of multiple damages, taxes or other charges of a like nature or in
respect of a fine or other penalty) and would give a judgment based thereon
provided that (a) such courts had proper jurisdiction over the parties
subject to such judgment, (b) such courts did not contravene the rules of
natural justice of the British Virgin Islands, (c) such judgment was not
obtained by fraud, (d) the enforcement of the judgment would not be
contrary to the public policy of the British Virgin Islands, (e) no new
admissible evidence relevant to the action is submitted prior to the
rendering of the judgment by the courts of the British Virgin Islands and
(f) there is due compliance with the correct procedures under the laws of
the British Virgin Islands.
9. Based solely on a search of the public records in respect of the Companies
maintained at the offices of the Registrar of Corporate Affairs at 11:00am
on 14 March 2006 which would not reveal details of matters which have not
been lodged for registration or have been lodged for registration but not
actually registered at the time of our search) and a search of the Index of
Civil Suits maintained at the Supreme Court Registry, Road Town, Tortola
British Virgin Islands conducted at 3:00pm on 14 March 2006 (which would
not reveal details of proceedings which have been filed but not actually
entered in the Index of Civil Suits at the time of our search), there are
no judgments against any of the Companies, nor any legal or governmental
proceedings pending in the British Virgin Islands to which any of the
Companies is subject, and no steps have been, or are being, taken in the
British Virgin Islands for the appointment of a receiver, administrator or
liquidator to, or for the winding-up, dissolution, reconstruction or
reorganisation of, any of the Companies (however, it should be noted that
failure
5
to file notice of appointment of a receiver does not invalidate the
receivership but only gives rise to penalties on the part of the receiver).
Yours faithfully
XXXXXXX XXXX & XXXXXXX
6
[16] March 2006
Patriarch Partners Media Holdings, LLC DIRECT LINE: 2842 9531
c/o Patriarch Partners, LLC E-MAIL: xxxx.xxxxx@xxxxxxxxxxxxxxxxxxxxx.xxx
00 Xxxx Xxxxxx, 25thFloor OUR REF: M#870617/209621
Xxx Xxxx, XX 00000 YOUR REF:
Patriarch Partners Agency Services, LLC
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs
XINHUA FINANCE MEDIA LIMITED (THE "COMPANY")
We have acted as special legal counsel in the Cayman Islands to the Company in
connection with (i) a credit agreement (the "Credit Agreement") dated [16] March
2006 among the Company, the Guarantors named therein, Patriarch Partners Media
Holdings, LLC (the "Lender") and Patriarch Partners Agency Services, LLC (the
"Agent) and (ii) a share purchase agreement (the "Share Purchase Agreement")
dated [16] March 2006 between the Company and Patriarch Partners Media Holdings,
LLC (the "Investor") in connection with the issue of convertible preferred
shares ("Convertible Preferred Shares") in the capital of the Company.
For the purposes of giving this opinion, we have examined the following
documents:
(i) a copy of the signed Credit Agreement;
(ii) a copy of the signed Note dated [16] March 2006 by the Company;
(iii) a copy of a signed security agreement (the "Debt Security Agreement")
dated [16] March 2006 among the Company, the other Grantors named therein
and the Agent;
(iv) a copy of a signed pledge agreement (the "Debt Pledge Agreement") dated
[16] March 2006 among the Company, the other Pledgors named therein and the
Agent;
(v) a copy of the signed Share Purchase Agreement;
(vi) a copy of a signed security agreement (the "Equity Security Agreement")
dated [16] March 2006 among the Company, the other Grantors named therein
and the Investor;
(vii) a copy of a signed pledge agreement (the "Equity Pledge Agreement") dated
[16] March 2006 among the Company, the other Pledgors named therein and the
7
Investor;
(viii) a copy of a signed investor rights agreement (the "Investor Rights
Agreement") dated [16] March 2006 among the Company, the Investor and
Xinhua Finance Limited;
(ix) a share mortgage (the "Debt Share Mortgage") dated [16] March 2006 between
the Company and the Lender; and
(x) a share mortgage (the "Equity Share Mortgage") dated [16] March 2006
between the Company and the Agent.
The Debt Share Mortgage and the Equity Share Mortgage are together the "Share
Mortgages".
The documents listed in items (i) through (x) above are herein sometimes
collectively referred to as the "Documents" (which term does not include any
other instrument or agreement whether or not specifically referred to therein or
attached as an exhibit or schedule thereto).
We have also reviewed the Memorandum and Articles of Association of the Company,
minutes of a meeting of its directors and written resolutions of its
shareholders, each passed on [16] March 2006 (the "Minutes"), a Certificate of
Good Standing issued by the Registrar of Companies in relation to the Company on
2 March 2006 (the "Certificate Date") and such other documents and made such
enquiries as to questions of law as we have deemed necessary in order to render
the opinion set forth below.
We have assumed (a) the genuineness and authenticity of all signatures and the
conformity to the originals of all copies (whether or not certified) examined by
us and the authenticity and completeness of the originals from which such copies
were taken; (b) that where a document has been examined by us in draft form, it
will be or has been executed in the form of that draft, and where a number of
drafts of a document have been examined by us all changes thereto have been
marked or otherwise drawn to our attention; (c) the capacity, power and
authority of each of the parties to the Documents, other than the Company, to
enter into and perform its respective obligations under the Documents; (d) the
due execution and delivery of the Documents by each of the parties thereto,
other than the Company, and the physical delivery thereof by the Company with an
intention to be bound thereby; (e) the accuracy and completeness of all factual
representations made in the Documents and other documents reviewed by us; (f)
that the resolutions contained in the Minutes were passed at one or more duly
convened, constituted and quorate meetings or by unanimous written resolutions,
remain in full force and effect and have not been rescinded or amended; (g) that
there is no provision of the law of any jurisdiction, other than the Cayman
Islands, which would have any implication in relation to the opinions expressed
herein; (h) the validity and binding effect under the laws of the State of New
York (the "New York Laws") of the documents which are expressed to be governed
by New York Laws in accordance with their respective terms; (i) the validity and
binding effect under the New York Laws of the submission by the Company pursuant
to the documents referred to in items (i) through
8
(viii) above to the exclusive jurisdiction of the state and federal courts
located within the County of New York, State of New York (the "New York
Courts"); (j) the validity and binding effect under the laws of the Hong Kong
Special Administrative Region of the People's Republic of China (the "Hong Kong
Laws") of the Share Mortgages which are expressed to be governed by Hong Kong
Laws in accordance with their respective terms; (k) the validity and binding
effect under Hong Kong Laws of the submission by the Company pursuant to the
Share Mortgages to the non-exclusive jurisdiction of the courts of Hong Kong
(the "Hong Kong Courts") (the New York Laws and the Hong Kong Laws are
collectively referred to as the "Foreign Laws" and the New York Courts and the
Hong Kong Courts are collectively referred to as the "Foreign Courts") and (k)
that on the date of entering into the Documents the Company is and after
entering into the Documents will be able to pay its liabilities as they become
due.
The term "enforceable" as used in this opinion means that an obligation is of a
type which the courts of the Cayman Islands enforce. It does not mean that those
obligations will be enforced in all circumstances. In particular, the
obligations of the Company under the Documents and the rights attaching to the
Convertible Preferred Shares and the Common Shares (as defined in the Articles
of Association of the Company) (a) will be subject to the laws from time to time
in effect relating to bankruptcy, insolvency, liquidation, possessory liens,
rights of set off, reorganisation, amalgamation, moratorium or any other laws or
legal procedures, whether of a similar nature or otherwise, generally affecting
the rights of creditors; (b) will be subject to statutory limitation of the time
within which proceedings may be brought; (c) will be subject to general
principles of equity and, as such, specific performance and injunctive relief,
being equitable remedies, may not be available; (d) may not be given effect to
by a Cayman Islands court, whether or not it was applying the Foreign Laws, if
and to the extent they constitute the payment of an amount which is in the
nature of a penalty and not in the nature of liquidated damages; (e) may not be
given effect by a Cayman Islands court to the extent that they are to be
performed in a jurisdiction outside the Cayman Islands and such performance
would be illegal under the laws of that jurisdiction; and (f) in the case of the
Share Purchase Agreement, may be subject to the common law rule that damages
against the Company are only available when the Investor rescinds the Share
Purchase Agreement. Notwithstanding any contractual submission to the
jurisdiction of specific courts, a Cayman Islands court has inherent discretion
to stay or allow proceedings in the Cayman Islands against the Company under the
Documents if there are other proceedings in respect of those Documents
simultaneously underway against the Company in another jurisdiction.
We express no opinion as to validity or the binding effect of obligations to
make any payment at an increased rate on overdue amounts or on the happening of
an event or default or to pay a specified rate or interest on the amount of a
judgment after the date of judgement. In addition, any provision expressly or
impliedly providing that certain statements, calculations and/or certificates
are incorrect on their face or fraudulent will not necessarily prevent judicial
enquiry into the merits of a claim of an aggrieved party. We express no opinion
in respect of the enforceability of any provision in the Documents which
purports to xxxxxx the statutory powers of the Company.
We have made no investigation of and express no opinion in relation to the laws
of any
9
jurisdiction other than the Cayman Islands. This opinion is to be governed by
and construed in accordance with the laws of the Cayman Islands and is limited
to and is given on the basis of the current law and practice in the Cayman
Islands. This opinion is issued solely for your benefit and is not to be relied
upon by any other person, firm or entity or in respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion that:
1. As at the Certificate Date, the Company is duly incorporated and existing
under the laws of the Cayman Islands in good standing (meaning solely that
it has not failed to make any filing with any Cayman Islands government
authority or to pay any Cayman Islands government fee which would make it
liable to be struck off by the Registrar of Companies and thereby cease to
exist under the laws of the Cayman Islands).
2. The authorised share capital of the Company as at the date hereof is
US$100,000 divided into 978,000,000 Common Shares of a nominal or par value
of US$0.001 each and 22,000,000 Preferred Shares of a nominal or par value
US$0.001 each. Based on the share register of the Company, 2,000 Common
Shares are issued and outstanding as at the date hereof.
3. The Company has the necessary corporate power and authority to enter into
and perform its obligations under the Documents. The execution and delivery
of the Documents by the Company and the performance by the Company of its
obligations thereunder will not violate the Memorandum or Articles of
Association of the Company nor any applicable law, regulation, order or
decree in the Cayman Islands.
4. The Company has taken all corporate action required to authorise its
execution, delivery and performance of the Documents. The Documents have
been duly executed and delivered by or on behalf of the Company, and
constitute the valid and binding obligations of the Company in accordance
with the terms thereof.
5. No order, consent, approval, licence, authorisation or validation of or
exemption by any government or public body or authority of the Cayman
Islands or any sub-division thereof is required to authorise or is required
in connection with the execution, delivery, performance and enforcement of
the Documents.
6. It is not necessary or desirable to ensure the enforceability in the Cayman
Islands of the Documents that they be registered in any register kept by,
or filed with, any governmental authority or regulatory body in the Cayman
Islands. However, to the extent that any of the Documents creates a charge
over assets of the Company, the Company and its Directors are under an
obligation to enter such charge in the Register of Mortgages and Charges of
the Company in accordance with section 54 of the Companies Law. While there
is no exhaustive definition of a charge under Cayman Islands law, a charge
normally has the following characteristics:
(i) it is a proprietary interest granted by way of security which entitles
the chargee to resort to the charged property only for the purposes of
10
satisfying some liability due to the chargee (whether from the chargor
or a third party); and
(ii) the chargor retains an equity of redemption to have the property
restored to him when the liability has been discharged.
However, as the Documents are governed by the Foreign Laws, the question of
whether they would possess these particular characteristics would be
determined under the Foreign Laws.
7. The Documents will be subject to nominal stamp duty if they are executed in
or brought into the Cayman Islands but will otherwise not be subject to
stamp duty.
8. The choice of the Foreign Laws as the governing law of the Documents is a
valid choice of law and would be recognised and given effect to in any
action brought before a court of competent jurisdiction in the Cayman
Islands, except for those laws (i) which such court considers to be
procedural in nature, (ii) which are revenue or penal laws or (iii) the
application of which would be inconsistent with public policy, as such term
is interpreted under the laws of the Cayman Islands. The submission in the
documents listed in items (i) through (vii) above to the exclusive
jurisdiction of the New York Courts is valid and binding upon the Company.
The submission in the Share Mortgages to the non-exclusive jurisdiction of
the Hong Kong Courts is valid and binding upon the Company.
9. The courts of the Cayman Islands would recognise as a valid judgment, a
final and conclusive judgment in personam obtained in the Foreign Courts
against the Company based upon the Documents under which a sum of money is
payable (other than a sum of money payable in respect of multiple damages,
taxes or other charges of a like nature or in respect of a fine or other
penalty) and would give a judgment based thereon provided that (a) such
courts had proper jurisdiction over the parties subject to such judgment;
(b) such courts did not contravene the rules of natural justice of the
Cayman Islands; (c) such judgment was not obtained by fraud; (d) the
enforcement of the judgment would not be contrary to the public policy of
the Cayman Islands; (e) no new admissible evidence relevant to the action
is submitted prior to the rendering of the judgment by the courts of the
Cayman Islands; and (f) there is due compliance with the correct procedures
under the laws of the Cayman Islands.
10. The Convertible Preferred Shares, when issued and paid for in accordance
with the Share Purchase Agreement, will be validly issued, fully paid and
non-assessable (which terms when used herein means that no further sums are
required to be paid by the holder thereof in connection with the issue
thereof). The Convertible Preferred Shares and the Common Shares (as
defined as aforesaid) will benefit from such rights and entitlements and be
bound by such obligations as are ascribed thereto and imposed thereon in
the Articles of Association of the Company (including the Schedules
thereto) which rights and obligations, and in particular the rights and
obligations set out in Schedule 2 to the Articles of Association, are
enforceable in accordance with the terms thereof, including by
11
the holders of the Convertible Preferred Shares, and will constitute valid
and binding obligations of the Company and its members.
11. Based solely upon a search of the Register of Writs and other Originating
Process of the Grand Court of the Cayman Islands conducted at 3.15pm on 14
March 2006, (which would not reveal details of proceedings which have been
filed but not actually entered in the Register of Writs and other
Originating Process of the Grand Court of the Cayman Islands at the time of
our search), there are no judgments against the Company, nor any legal or
governmental proceedings, nor any petitions to wind up the Company pending
in the Grand Court of the Cayman Islands to which the Company is subject.
Yours faithfully
Xxxxxxx Xxxx & Xxxxxxx
12
Our Email Address : xxx@xxxxxxxxxxxx.xxx
Direct Line : (000) 0000-0000
Our Ref : 49528-00025/CSMN/ewcm
Date : 16 March 2006
PRIVILEGED & CONFIDENTIAL
PATRIARCH PARTNERS MEDIA HOLDINGS, LLC
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
and
PATRIARCH PARTNERS AGENCY SERVICES, LLC
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs
RE: ACTIVE ADVERTISING AGENCY LIMITED (THE "ACTIVE ADVERTISING") ECONWORLD
MEDIA LIMITED ("ECONWORLD") (Active Advertising and EconWorld collectively
the "COMPANIES" and each one a "COMPANY" as the context requires)
We are lawyers qualified to practice law in the Hong Kong Special Administrative
Region of the People's Republic of China ("HONG KONG") and we act as Hong Kong
legal advisers on the instructions of Xinhua Finance Media Limited ("XFM"). We
have been asked to provide you with this legal opinion in connection with:
(1) the credit agreement (the "CREDIT AGREEMENT") dated 16 March 2006 among (1)
XFM as borrower, (2) the subsidiaries of XFM from time to time as
guarantors, (3) Patriarch Partners Media Holdings, LLC (the "LENDER"); and
(4) Patriarch Partners Agency Services, LLC (the "Agent") as agent for the
Lenders;
(2) the guaranty ("GUARANTY") dated 16 March 2006 made by the Active
Advertising as a guarantor;
(3) the share purchase agreement dated 16 March 2006 (the "SHARE PURCHASE
AGREEMENT") between XFM and the Lender;
(4) the security agreement dated 16 March 2006 among the Active Advertising,
the other Grantors named therein and the Agent (the "DEBT SECURITY
AGREEMENT");
(5) the security agreement dated 16 March 2006 among the Active Advertising,
the other Grantors named therein and the Lender (the "EQUITY SECURITY
13
AGREEMENT");
(6) the share mortgage dated 16 March 2006 made by Upper Will Enterprises
Limited ("UPPER WILL") as mortgagor in favour of the Agent (the "UPPER WILL
DEBT MORTGAGE") of shares in the capital of Active Advertising;
(7) the share mortgage dated 16 March 2006 made by Upper Will as mortgagor in
favour of the Lender (the "UPPER WILL EQUITY MORTGAGE") of shares in the
capital of Active Advertising;
(8) a Share Mortgage dated 16 March 2006 made by XFM as a mortgagor in favour
of the Lender (the "XFM EQUITY MORTGAGE") of shares in EconWorld; and
(9) a Share Mortgage dated 16 March 2006 made by XFM as a mortgagor in favour
of the Agent (the "XFM DEBT MORTGAGE") of shares in EconWorld.
A. DOCUMENTS
For the purposes of rendering this opinion, we have reviewed and relied upon
either the originals or copies of the following documents:
1. a copy of the executed Credit Agreement;
2. a copy of the executed Guaranty;
3. a copy of the executed Share Purchase Agreement;
4. a copy of the executed Debt Security Agreement;
5. a copy of the executed Equity Security Agreement;
6. a copy of the executed Upper Will Debt Mortgage;
7. a copy of the executed Upper Will Equity Mortgage;
8. a copy of the executed XFM Debt Mortgage;
9. a copy of the executed XFM Equity Mortgage;
10. a copy of the certificate of incorporation of each of the Companies;
11. a copy of the memorandum and articles of association of each of the
Companies;
12. copies of the registers of directors and members of each of the Companies;
13. a copy of the resolutions of the directors of Active Advertising approving
the
14
form, contents and execution of the Credit Agreement and the Guaranty (the
"RESOLUTIONS");
14. results of a company search conducted at the Hong Kong Companies Registry
in respect of each of the Companies on 16 March 2006;
15. the results of a compulsory winding-up search conducted at the Hong Kong
Official Receiver's Office in respect of each of the Companies on 16 March
2006;
Items 1 to 13 above are collectively referred to as the "DOCUMENTS". Items 1 to
5 above are collectively referred to as the "TRANSACTION DOCUMENTS"; Items 6 to
9 above shall be collectively referred to as the "SECURITY DOCUMENTS". We have
relied exclusively upon the above documents without independent investigation
for the purposes of providing our opinions expressed below.
B. FACTS AND ASSUMPTIONS
For the purposes of rendering this opinion we have assumed without further
enquiry:
1. each party to the Documents (except the Companies) has the capacity, power
and authority to enter into and to exercise its rights and to perform its
obligations under the Documents to which it is a party;
2. all signatures, stamps and seals are genuine, all original Documents are
authentic and all copy Documents are complete and conform to the originals;
3. the conformity with the originals of all Documents submitted to us as
copies and the authenticity of such originals;
4. all Documents have been signed and sealed where indicated;
5. the genuineness of all signatures and seals;
6. all facts and information stated or given in the Documents are true and
correct through the date of the Documents;
7. the accuracy and completeness of all corporate minutes, resolutions and
records which we have reviewed and that the same remain in full force and
effect and unamended through the date of the Documents;
8. there have been no amendments to the memorandum and/or articles of
association of either of the Companies;
9. the resolutions passed under the Resolutions were duly passed at a properly
convened meeting of duly appointed directors of the Companies and have not
been amended or rescinded and are in full force and effect;
10. there has been no alteration in the status or condition of the Companies as
15
disclosed by the searches referred to in Section A above; and
11. in respect of any Credit Party (as defined in the Credit Agreement) to any
of the Transaction Documents save for the Companies (each, an "OFFSHORE
COMPANY"):
(a) the Offshore Company is incorporated and validly existing in a
jurisdiction other than Hong Kong;
(b) the Offshore Company is not registered to carry on and does not carry
on any business in Hong Kong;
(c) the Offshore Company does not have a place of business or permanent
establishment in Hong Kong;
(d) the execution of the Transaction Documents by an Offshore Company has
been duly authorized and executed under the laws of its jurisdictions
of incorporation and existence;
(e) the Offshore Company has authorized a signatory in Hong Kong to
execute the Transaction Documents;
(f) the Offshore Company retains an agent in the Cayman Islands (in
respect of XFM) or the British Virgin Islands (in respect of Xxxx
Xxxxx, Upper Will and Upper Step) each of which has an office in Hong
Kong to maintain a duplicate register of members and other corporate
documents in Hong Kong; and
(g) aside from the matters set out in sections 11(a)-(f) above, the
Offshore Company have no nexus to Hong Kong.
C. OPINIONS
Based on the above and subject to the qualifications expressed below, we are of
the following opinion on the basis of Hong Kong laws as they exist on the date
hereof that:
1. The Companies are each Companies duly incorporated and validly existing in
Hong Kong and has the capacity and power to enter into the Transaction
Documents to which they are a party and exercise their respective rights
and perform their respective obligations under the same.
2. All corporate action required to authorise the execution by the Companies
of the Transaction Documents to which they are a party and the exercise by
them of their rights and the performance by it of its obligations under the
Transaction Documents to which it is a party have been duly taken.
3. The respective obligations expressed to be assumed by the Companies in the
Transaction Documents to which they are a party constitute the legal,
valid, binding obligations of the Companies enforceable in accordance with
their terms under the laws of Hong Kong.
16
4. No further acts, conditions or things (including any consents or approvals
by any governmental authority of Hong Kong) are required under the laws of
Hong Kong to be done, fulfilled or performed in connection with the
execution, delivery, performance or enforcement of the Security Documents.
5. The execution, delivery and performance by the Companies of the Transaction
Documents to which they are a party will not contravene (i) their
respective certificates of incorporation or memorandum and articles of
association; or (ii) any law, regulation, ordinance, decree, public policy
or authorisation to which each Company is subject in Hong Kong.
7. It is not necessary under the laws of Hong Kong in order to ensure the
validity, effectiveness and enforceability of the Security Documents that
they be filed, registered or recorded in any public or other office or
register.
9. The choice of New York law as the governing law of the Transaction
Documents is a valid choice of law and would be recognised and given effect
to in any action brought before a court of competent jurisdiction in Hong
Kong.
10. There are no judgments, legal or governmental proceedings or petitions to
wind up either of the Companies pending in the Hong Kong Official
Receiver's Office to which the Companies are subject.
11. Each Transaction Document to which the Companies are a party has been duly
executed and delivered by such Company.
12. Each Transaction Document to which any of the Offshore Companies are a
party have been duly executed under the laws of Hong Kong to the extent, if
any, that Hong Kong laws apply to determine the due execution of them.
D. QUALIFICATIONS
The opinions expressed above are subject to the following qualifications:
1. the opinions given in this opinion relate only to Hong Kong laws as applied
by the Hong Kong courts as at the date of this letter. We express no
opinion on the laws of any other jurisdiction;
2. the enforceability of the documents may be limited by bankruptcy,
winding-up, insolvency, arrangement, fraudulent preference and conveyance,
assignment and preference and other similar laws of general application
affecting the enforcement of creditor's rights;
3. a court may exercise discretion in the granting of equitable remedies such
as specific performance and injunction;
4. the enforceability of the documents may be limited by general principles of
law
17
and equity relating to the conduct of the respective parties prior to
execution of or in the administration or performance of the documents,
including, without limitation, (i) undue influence, unconscionability,
duress, misrepresentation and deceit, (ii) estoppel and waiver, (iii)
laches, and (iv) reasonableness and good faith in the exercise of
discretionary powers;
5. a court may decline to accept the factual and legal determinations of a
party notwithstanding that a contract or instrument provides that the
determinations of that party shall be conclusive;
6. we express no opinion as to the enforceability of any provision of a
document that is inconsistent with any provision of any other document
except, where that inconsistency is addressed by a paramountcy clause, the
paramountcy clause would be enforceable;
7. in this opinion "ENFORCEABLE" means that an obligation is of a type which
the Hong Kong courts enforce. It does not mean that those obligations will
be enforced in all circumstances in accordance with the terms of the
relevant document. In particular:
(a) the power of a Hong Kong court to order specific performance of an
obligation or other equitable remedy is discretionary and accordingly
a Hong Kong court might make an award of damages where specific
performance of an obligation or other equitable remedy is sought;
(b) where any party to the documents is vested with a discretion or may
determine a matter in its opinion, that party may be required to
exercise its discretion in good faith, reasonably and for a proper
purpose, and to form its opinion in good faith and on reasonable
grounds;
(c) enforcement may be limited by the provisions of Hong Kong law
applicable to agreements held to have been frustrated by events
happening after their execution;
(d) claims may become barred under the Limitation Ordinance (Cap.347) or
may be or become subject to a defence of set-off or counterclaim;
(e) a Hong Kong court may stay proceedings if concurrent proceedings are
being brought elsewhere and may decline to accept jurisdiction in
certain cases;
(f) a party to a contract may be able to avoid its obligations under that
contract (and may have other remedies) where it has been induced to
enter into that contract by a misrepresentation and Hong Kong courts
will generally not enforce an obligation if there has been fraud;
(g) whilst an English or a Hong Kong court has power to give judgment in a
currency other than pounds sterling or, as the case may be, Hong Kong
18
dollars, it has the discretion to decline to do so; and
(h) any provisions providing that any calculation, determination or
certification is to be conclusive and binding may not be effective if
such calculation, determination or certification is fraudulent or
manifestly incorrect and an English or a Hong Kong court may regard
any certification, determination or calculation as no more than prima
facie evidence.
8. The parties to a document may be able to amend that document by oral
agreement despite any provision to the contrary.
E. GENERAL
This opinion is provided in connection with the satisfaction of conditions
precedent under the Credit Agreement and is addressed to you only. It may not,
without our prior written consent, be relied on for any other purpose or by any
other person or be delivered or disclosed to or relied upon by any other person.
Yours faithfully
XXXXXXX XXXXX & XXXXX
19
March _____, 2006
Patriarch Partners Media Holdings, LLC
[address]
Ladies and Gentlemen:
We have acted as special legal counsel in the United States to Xinhua
Finance Media Limited (the "Company") in connection with (i) a Credit Agreement
(the "Credit Agreement") dated [___________], 2006 among the Company, the
Guarantors named therein, Patriarch Partners Media Holdings, LLC (in that
capacity, the "Lender") and Patriarch Partners Agency Services, LLC (the "Agent)
and (ii) a Share Purchase Agreement (the "Share Purchase Agreement") dated
[_____________], 2006 between the Company and Patriarch Partners Media Holdings,
LLC (in that capacity the "Investor") in connection with the issue of the
Company's convertible preferred shares ("Convertible Preferred Shares"). This
opinion letter is being delivered pursuant to Section 3.1(m) of the Credit
Agreement and Section 7(a)(iv) of the Share Purchase Agreement.
For the purposes of giving this opinion, we have examined executed copies
of the following documents:
(i) Credit Agreement;
(ii) Security Agreement (Debt) dated [______________], 2006 among the
Company, the other Grantors named therein and the Agent named therein
(the "Security Agreement");
(iii) Pledge Agreement (Debt) dated [______________], 2006 among the
Company, the other Pledgors named therein and the Agent (the "Pledge
Agreement");
(iv) Share Purchase Agreement;
(v) Equity Security (Equity) dated [______________], 2006 among the
Company, the other Grantors named therein and the Investor (the
"Equity Security");
(vi) Pledge Agreement (Equity) dated [______________], 2006 among the
Company, the other Pledgors named therein and the Investor (the
"Equity Pledge");
(vii) Investor Rights Agreement dated [______________], 2006 among the
Company, the Investor and Xinhua Finance Limited;
(viii) Uniform Commercial Code Financing Statement naming the Company as
debtor and the Agent as secured party;
(ix) Uniform Commercial Code Financing Statement naming the Company as
debtor and the Lender as secured party;
20
The Uniform Commercial Code financing statements described in items (viii)
and (ix) are referred to as the "UCCs".
The documents listed in items (i) through (ix) above are collectively
referred to as the "Transaction Documents" (which term does not include any
other instrument or agreement whether or not specifically referred to therein or
attached as an exhibit or schedule thereto).
Subject to the Qualifications defined and set forth below, we are of the
opinion that:
(1) Each of the Transaction Documents, when duly delivered by the Company,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(2) The offer and sale of the Convertible Preferred Shares to the Purchaser
in accordance with the terms of the Share Purchase Agreement is exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), assuming: (i) the accuracy of the representations of the
Purchaser in the Share Purchase Agreement, (ii) the facts and circumstances are
as contemplated in the Share Purchase Agreement, and (iii) the sale of
Convertible Preferred Shares under the Share Purchase Agreement is not
integrated with any other securities offering of the Company.
(3) Assuming (i) through (ii) of Item 2 above, no approval, consent of or
filing with any U.S. federal regulatory authority is required in connection with
the offer, sale and issuance of the Purchased Shares to the Purchasers other
than the filing of a Form D with the U.S. Securities and Exchange Commission.
(4) The Company is not and, immediately after giving effect to the offering
and sale of the Securities and the receipt of the proceeds thereof, will not be
an "investment company," as such term is defined in the Investment Company Act
of 1940, as amended.
(5) The UCCs are in a form that, upon tender of the proper filing fee and
the proper communication (as described in section 9-516 of the Uniform
Commercial Code as adopted in the State of New York (the "New York UCC")) of the
UCCs with the Recorder of Deed of the District of Columbia ("DC Filing Office"),
will create a perfected security interest in such of the property described in
the UCCs as can be perfected by the filing of the UCCs with the DC Filing
Office.
(6) The Security Agreement, the Equity Security and the Pledge Agreement
and Equity Pledge taken togeter create a security interest in so much of the
property ("Collateral") described in such documents as constitute personal
property under Article 9 of the New York UCC.
Our opinion numbers 5 and 6 are based solely on a review of the New York
UCC. We have not reviewed any commentary to the New York UCC or any case law or
other interpretations of the New York UCC (the "Other Authorities"). We advise
you that our
21
opinion numbers 5 and 6 above might be further limited or qualified were we to
undertake review of the Other Authorities.
The forgoing opinions are subject to the assumptions, qualifications,
exceptions, definitions, limitations on coverage and other limitations set forth
below (the "QUALIFICATIONS"). The law covered by the opinions expressed herein
is limited to the laws of the State of New York, and the Securities Act, in each
case as limited by the Qualifications ("COVERED LAW"). In rendering our opinions
above, we have not considered and no opinion is given with respect to the laws
of any other jurisdiction, including, without limitation, whether compliance or
non- compliance by any party to the Transaction Documents with the laws of any
other jurisdiction may qualify, preclude, limit or provide a defense to
enforceability of those instruments. To the extent that the matters addressed in
our opinions are governed by laws other than the Covered Law, we have assumed
that such other laws are identical in all material respect to the law of the
State of New York. In addition to the foregoing Qualifications, this letter is
subject to the following additional Qualifications:
(a) We have assumed that (i) each natural person who has executed a
document submitted to us for review has sufficient legal capacity to execute and
deliver such document and to enter into and perform his or her obligations set
forth therein or to carry out his or her role in it, if any; (ii) each
Transaction Document has been duly and validly authorized, executed and
delivered by the parties thereto; (iii) each document submitted to us for review
in connection with this letter is accurate and complete, with all blanks
completed and schedules and exhibits attached each such document that is an
original is authentic, each such document that is a copy conforms to an
authentic original, and all signatures on each such document are genuine; and
(iv) the documents issued by state officials are accurate, complete, and
authentic and all official public records in them are accurate, complete and
properly indexed and referenced.
(b) With respect to our opinion in Item 1 above, we have further assumed
that the Company has power and authority to enter into binding agreements and
perform them and that the execution, delivery and performance of the Transaction
Documents by the Company will not violate or conflict with, result in a breach
of, or constitute a default under, (i) its organizational and governance
documents, (ii) any agreement or instrument to which it is bound or its property
or assets subject, (iii) any order, decision, judgment or decree that may be
applicable to it or its property or assets, or (iv) any law or governmental rule
or regulation that may be applicable to it or its properties or assets.
(c) With respect to our opinion expressed in Item 1 above, to the extent
relating to the choice of New York law and submission to the jurisdiction and
venue of a New York State court, we limit our opinion to analysis of Sections
5-1401 and 5-1402 of the New York General Obligations Law and have assumed that
the choice of New York law and venue in a New York State court would not be
unreasonable or unjust under the circumstances, and that there has not been any
fraud or overreaching by the party selecting to enforce such provisions. We
express no opinion as to the subject matter jurisdiction of any U.S. federal
court to adjudicate any action where jurisdiction based on diversity of
citizenship under 28 U.S.C. section 1332 does not exist. We note that any
designation of a U.S. federal court sitting in a particular location is subject
to the power
22
of such court to transfer such action or proceeding pursuant to 28 U.S.C.
section 1404(a) or to dismiss such action or proceeding on the grounds that such
federal court is an inconvenient forum for such action or proceeding.
(d) With respect to our opinion in Items 5 and 6 above we assume the
following:
(i) The Collateral in which the Agent is to acquire a security
interest under the Transaction Documents is not used principally or
primarily for agricultural purposes or primarily for personal, family
or household purposes;
(ii) The descriptions of the Collateral in the Transaction Documents
and the UCCs (and any schedule thereto) accurately and sufficiently
describe the property intended to be covered thereby to provide notice
to third parties of the liens and security interests provided by the
Transaction Documents;
(iii) The Company has rights or the power to transfer rights (within
the meaning of Section 9-203(b)(2) of the New York UCC), in each item
of Company's Collateral existing on the date of this opinion, and
Company will have rights in each item of Collateral arising after the
date of this opinion;
(iv) The UCCs correctly identify: (a) the name of the secured party of
record within the meaning of Section 9-511 of the New York UCC and (b)
the secured party's mailing address within the meaning of Section
9-516(b)(4) of the New York UCC;
(v) None of the Collateral constitutes property in which it is illegal
or violative of any laws or regulations for the Company to hold or to
xxxxx x xxxx or security interest by reason of such Collateral or
proceeds of such Collateral deriving from or being deemed to derive
from the proceeds of wrongdoing or being otherwise illegal.
(e) The Agent and the Lender have satisfied all legal requirements
applicable to them (if any) that relate to their ability to enforce the
Transaction Documents;
(f) The initial loan has been made in accordance with the terms of the
Credit Agreement;
(g) Neither the Agent nor the Lender has any notice of any defense against
the enforcement of the Transaction Documents;
(h) There has not been any mutual mistake of fact or misunderstanding,
fraud, duress or undue influence;
(i) There are no agreements or understandings among the parties, written or
23
oral, and there is no usage of trade or course of prior dealing among the
parties that would, in either case, define, supplement or qualify the terms of
the Transaction Documents; that each condition, if any, pertinent to delivery of
any Transaction Documents has been satisfied and that the schedules and exhibits
referred to in any of the Transaction Documents are each completed correctly,
consistent with the document to which it relates and to the mutual satisfaction
of the parties to the Transaction Documents;
(j) Each of the Agent and the Lender will sell, assign, participate or
otherwise transfer any of its respective interests in Transaction Documents only
in compliance with all applicable laws and regulations, including, without
limitation, all applicable securities laws and regulations;
(k) Each party to the Transaction Documents and its assigns will not in the
future take any discretionary acts (including a decision not to act) permited
under the Credit Agreement or other Transaction Documetns that would result in
violation of law or constitute a breach or default under any other agreement or
court order;
(l) Each party to the Transaction Documents and its assigns will obtain all
permits and government approvals required in the future, and take all actions
similarly required, relevant to consummation of the transaction or performance
of the Transaction Documents;
(m) To the extent that the Company is pledging or mortgaging property,
interests in property or rights to Agent or Lender, the Company owns all
property, interests in property, and rights purported to be pledged or mortgaged
the Company in the Transaction Documents, free and clear of any claims, liens,
restrictions, security interests, or other interests or rights of any person,
other than Agent and Lender, except as specified to the contrary in the
Transaction Documents;
(n) No interest, charges, fees, or other benefits or compensation in the
nature of interest will be paid or charged in connection with the loans under
the Credit Agreement, other than those that Company has specifically agreed in
writing in the Transaction Documents to pay to Lender;
(o) Our opinions are subject to the effect of general rules of contract law
limiting the recovery of damages to the extent the aggrieved party could have
avoided damages by reasonable effort.
(p) All parties to the Transaction Documents will act in accordance with,
and will refrain from taking any action that is forbidden by, the terms and
conditions of such agreements.
(q) Except as expressly stated in this letter, we express no opinion with
regard to any factual representation or the accuracy of any calculations,
descriptions or facts contained in the Transaction Documents or in any document
referenced in or related to the Transaction Documents.
24
(r) We express no opinion as to the enforceability of cumulative remedies
to the extent such cumulative remedies purport to or would have the effect of
compensating the party entitled to the benefits thereof in amounts in excess of
the actual loss suffered by such party or would violate applicable laws
concerning election of remedies.
(s) We advise you that the enforceability of the Transaction Documents is
subject to (i) the effect of applicable state or federal bankruptcy, insolvency,
conservatorship, receivership, seizure, liquidation, reorganization, moratorium,
fraudulent conveyance or transfer, forfeiture, or similar laws affecting the
rights of creditors generally, and (ii) the effect of rules of law or principles
of equity, including, without limitation, concepts of materiality, good faith
and fair dealing, commercial reasonableness, course of dealing and usage in
trade, unconscionability, public policy, specific performance, injunctive
relief, appointment of a receiver and other equitable remedies, and the
discretion of the court before which proceedings may be brought to enforce or
interpret the Transaction Documents, or any documents or instruments
contemplated thereby.
(t) We express no opinion with respect to the enforceability of any
contractual provisions: (i) purporting to fix evidentiary standards or waiving
or modifying constitutional provisions, court rules or statutes regarding
litigation (including but not limited to service of process, jurisdiction,
venue, and rights to a jury trial), (ii) waiving, releasing or imposing
liability, where such provisions are in conflict with rights conferred by
statute or other law, (iii) allowing a third party to take action as
attorney-in-fact or otherwise for a party, (iv) broadly waiving rights or
unknown future rights, (v) providing for the severability of clauses, (vi)
making ineffective oral waivers or modifications, (vii) setting forth liquidated
damages or other agreed upon damages which are deemed to constitute a penalty,
(viii) providing for payment of attorney fees, (ix) providing for conflicting
terms (if any), (x) restricting competition or engagement in any area of
business; (xi) waiving, releasing or imposing liability notwithstanding defenses
or claims, where such provisions are unconscionable or against public policy, or
(xii) allowing extrajudicial setoff or setoff in circumstances not allowed by
law.
(u) Rights to indemnification and contribution may be limited by provisions
of securities and environmental law and by principles governing the construction
and interpretation of indemnity provisions.
(v) This opinion is provided to you as a legal opinion only, not as a
guaranty or warranty of the matters discussed in this letter. Our opinion is
limited to the matters expressly stated in this letter and no other opinions may
be implied or inferred;
(w) We express no opinion as to any matter relating to:
(i) the financial status of the Company;
25
(ii) the ability of the Company to meet its obligations under the
Transaction Documents; or
(iii) whether the Agent or the Lender is doing business in the State
of New York.
(x) We express no opinion as to creation or perfection of security
interests except for the limited opinions contained in opinion numbers 5 and 6.
We express no opinion as to matters of title, ownership, or priorities of
security interests or liens nor, (except to the extent security interests in
patents or trademarks may be perfected by the filing of the UCCs and are thus
covered by the limited opinions contained in our opinion numbers 5 and 6) as to
any matter pertaining to patents, trademark or copyright.
(y) We express no opinion as to the following:
(i) Perfection of any security interest in collateral represented by
a certificate of title.
(ii) The priority of any mortgage lien or security interest.
(iii) The effect of, or compliance with, any land use, zoning,
environmental, health and safety, building code or human
disabilities laws, rules or regulations.
(z) We except from our opinions and express no opinion as to the following:
(i) The enforceability of any security interest in any accounts,
chattel paper, documents, instruments or general intangibles with
respect to which the account debtor or obligor is (A) the United
States of America (unless the same has been assigned to Lender
pursuant to the Assignment of Claims Act of 1940, as amended, and
all similar laws and regulations relating to the assignment or
pledge thereof), or (B) any state, county, city, municipality or
other governmental body, or any department, agency or
instrumentality thereof;
(ii) Our opinions 5 and 6 set forth above are also subject to the
effect of the limitations on the existence and perfection of
security interests in proceeds which are not identifiable
proceeds within the meaning of Section 9-315(b) of the New York
UCC; (ii) the limitations in favor of buyers, lessees and
licensees imposed by Sections 9-317, 9-318 and 9-320 of the New
York UCC; (iii) the limitations with respect to documents,
instruments and securities imposed by Sections 9-330 and 8-302 of
the New York UCC; (iv) other rights of persons in possession of
money, instruments and proceeds constituting certificated or
uncertificated securities; and (v) Section 547 of the Bankruptcy
Code with respect to preferential transfers and Section 552 of
the Bankruptcy Code;
26
(iii) We further advise you (and our opinions are qualified by the
fact) that the perfection of any security interests purported to
be created under the Transaction Documents will be terminated (a)
as to any collateral acquired or created more than four months
after Company so changes its name, corporate identity (by merger
or reincorporation, for example) as to make the UCCs for Company
seriously misleading, unless an appropriate amendment and/or new
financing statement indicating the new name and/or corporate
identity of Company is properly filed before the expiration of
such four months, and (b) as to assets that are not otherwise
collateral under the Transaction Documents purchased by the
Company with proceeds consisting of cash.
(iv) Our opinions 5 and 6 set forth above are also subject to and
qualified by the following: (i) failure to comply with the
notifications requirements prior to the disposition of collateral
set forth in Sections 9-611 through 9- 613 of the New York UCC
may result in claims by other secured parties or impair the
secured party's ability to seek a deficiency against the debtor
or other obligors of the obligations secured by the collateral;
and (ii) the rights of the secured party are limited by Section
9-602 of the New York UCC, the application of proceeds derived
from a disposition of the collateral must be applied in
accordance with Section 9-615 of the New York UCC, the debtor,
any secondary obligor or other secured party or lienholder has
rights to redeem the collateral as provided in Section 9-623 of
the New York UCC, the liability of the secured party will be
subject to Section 9-626(a)(3) of the Code, and Article 9 of the
New York UCC will otherwise apply to the extent the terms of the
Transaction Documents do not constitute a valid waiver or
variation of the terms thereof.
This letter may be relied upon by you, the addressee, only in connection
with the Credit Agreement and the Share Purchase Agreement and the transactions
contemplated thereby and may not be used or relied upon by you or by any other
person for any purpose whatsoever without in each instance our prior written
consent.
The opinions contained in this letter are given as of the date of this
letter. We hereby disclaim any obligation to notify any person after the date
hereof if any change in fact or law should change our opinion with respect to
any matter set forth in this letter.
Very truly yours,
XXXXXXX XXXXX & XXXXX LLP
By
-------------------------------------
27
