EXHIBIT 10.10
EXECUTION COPY
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$100,000,000
TERM LOAN AGREEMENT
among
HAIGHTS CROSS OPERATING COMPANY,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
BEAR XXXXXXX CORPORATE LENDING INC.,
as Administrative Agent
Dated as of August 20, 2003
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BEAR, XXXXXXX & CO. INC., as Lead Arranger
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS................................................................................... 1
1.1. Defined Terms................................................................................. 1
1.2. Other Definitional Provisions................................................................. 33
SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS.......................................................... 34
2.1. Term Commitments.............................................................................. 34
2.2. Procedure for Term Loan Borrowing............................................................. 34
2.3. Repayment of Term Loans....................................................................... 34
SECTION 3. GENERAL PROVISIONS APPLICABLE TO TERM LOANS................................................... 35
3.1. Prepayments................................................................................... 35
3.2. Mandatory Asset Sale Offers................................................................... 36
3.3. Interest Rates and Payment Dates.............................................................. 38
3.4. Computation of Interest and Fees.............................................................. 38
3.5. Pro Rata Treatment and Payments............................................................... 38
3.6. Requirements of Law........................................................................... 39
3.7. Taxes......................................................................................... 40
3.8. Indemnity..................................................................................... 42
3.9. Change of Lending Office...................................................................... 43
3.10. Replacement of Lenders........................................................................ 43
3.11. Evidence of Debt.............................................................................. 43
SECTION 4. REPRESENTATIONS AND WARRANTIES................................................................ 44
4.1. Financial Condition........................................................................... 44
4.2. No Change..................................................................................... 45
4.3. Corporate Existence; Compliance with Law...................................................... 45
4.4. Power; Authorization; Enforceable Obligations................................................. 45
4.5. No Contractual or Legal Bar................................................................... 46
4.6. Litigation.................................................................................... 46
4.7. No Default.................................................................................... 46
4.8. Ownership of Property; Liens.................................................................. 46
4.9. Intellectual Property......................................................................... 46
4.10. Taxes......................................................................................... 46
4.11. Federal Regulations........................................................................... 47
4.12. Labor Matters................................................................................. 47
4.13. ERISA......................................................................................... 47
4.14. Investment Company Act; Other Regulations..................................................... 48
4.15. Subsidiaries.................................................................................. 48
4.16. Use of Proceeds............................................................................... 48
4.17. Environmental Matters......................................................................... 48
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4.18. Accuracy of Information, etc.................................................................. 49
4.19. Security Documents............................................................................ 49
4.20. Solvency...................................................................................... 50
4.21. Regulation H.................................................................................. 50
4.22. Certain Documents............................................................................. 51
4.23. Financial Assistance.......................................................................... 51
SECTION 5. CONDITIONS PRECEDENT.......................................................................... 51
5.1. Conditions to Extension of Credit............................................................. 51
SECTION 6. COVENANTS..................................................................................... 56
6.1. Reports....................................................................................... 56
6.2. Compliance Certificate........................................................................ 57
6.3. Taxes......................................................................................... 57
6.4. Stay, Extension and Usury Laws................................................................ 57
6.5. Restricted Payments........................................................................... 58
6.6. Dividend and Other Payment Restrictions Affecting Subsidiaries................................ 61
6.7. Incurrence of Indebtedness and Issuance of Preferred Stock.................................... 63
6.8. Asset Sales................................................................................... 65
6.9. Transactions with Affiliates.................................................................. 67
6.10. Liens......................................................................................... 68
6.11. Business Activities........................................................................... 68
6.12. Corporate Existence........................................................................... 68
6.13. Offer to Prepay Upon Change of Control........................................................ 69
6.14. Limitation on Sale and Leaseback Transactions................................................. 70
6.15. Payments for Consent.......................................................................... 70
6.16. Additional Guarantees......................................................................... 71
6.17. Designation of Restricted and Unrestricted Subsidiaries....................................... 71
6.18. Further Assurances............................................................................ 71
6.19. Additional Collateral......................................................................... 71
SECTION 7. SUCCESSORS.................................................................................... 72
7.1. Merger, Consolidation, or Sale of Assets...................................................... 72
7.2. Successor Corporation Substituted............................................................. 73
SECTION 8. DEFAULTS AND REMEDIES......................................................................... 73
8.1. Events of Default............................................................................. 73
8.2. Acceleration.................................................................................. 75
8.3. Other Remedies................................................................................ 76
8.4. Waiver of Past Defaults....................................................................... 76
8.5. Control by Majority........................................................................... 76
8.6. Limitation on Suits........................................................................... 76
8.7. Rights of Lenders to Receive Payment.......................................................... 77
8.8. Collection Suit by Administrative Agent....................................................... 77
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8.9. Priorities.................................................................................... 77
8.10. Undertaking for Costs......................................................................... 77
SECTION 9. THE AGENTS.................................................................................... 78
9.1. Appointment................................................................................... 78
9.2. Delegation of Duties.......................................................................... 78
9.3. Exculpatory Provisions........................................................................ 78
9.4. Reliance by Agents............................................................................ 78
9.5. Notice of Default............................................................................. 79
9.6. Non-Reliance on Agents and Other Lenders...................................................... 79
9.7. Indemnification............................................................................... 80
9.8. Agent in Its Individual Capacity.............................................................. 80
9.9. Successor Administrative Agent................................................................ 80
9.10. Agents Generally.............................................................................. 81
9.11. The Lead Arranger............................................................................. 81
9.12. Withholding Tax............................................................................... 81
SECTION 10. MISCELLANEOUS................................................................................. 81
10.1. Amendments and Waivers........................................................................ 81
10.2. Notices....................................................................................... 82
10.3. No Waiver; Cumulative Remedies................................................................ 83
10.4. Survival of Representations and Warranties.................................................... 83
10.5. Payment of Expenses and Taxes................................................................. 83
10.6. Successors and Assigns; Participations and Assignments........................................ 85
10.7. Adjustments; Set-off.......................................................................... 88
10.8. Counterparts.................................................................................. 88
10.9. Severability.................................................................................. 88
10.10. Integration................................................................................... 88
10.11. GOVERNING LAW................................................................................. 89
10.12. Submission To Jurisdiction; Waivers........................................................... 89
10.13. Acknowledgments............................................................................... 89
10.14. Releases of Guarantees and Liens.............................................................. 89
10.15. Confidentiality............................................................................... 90
10.16. WAIVERS OF JURY TRIAL......................................................................... 90
10.17. Delivery of Addenda........................................................................... 91
10.18. Statements Required in Certificate or Opinion................................................. 91
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SCHEDULES:
1.1(a) Mortgaged Intellectual Property
1.1(b) Mortgaged Real Property
1.1(c) Leased Real Property
4.4 Consents, Authorizations, Filings and Notices
4.6 Material Litigation
4.15(a) Subsidiaries
4.19(c) Mortgage Filing Jurisdictions
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Closing Certificate
C-1 Form of Copyright Mortgage
C-2 Form of Trademark Mortgage
C-3 Form of Patent Mortgage
C-4 Form of Real Property Mortgage
D Form of Assignment and Assumption
E-1 Form of Legal Opinion of Xxxxxxx Procter LLP
E-2 Form of Legal Opinion of Xxxxxx X. Xxxx, Esq.
E-3 Form of Legal Opinion of Eversheds LLP
F Form of Exemption Certificate
G Form of Term Note
H Form of Addendum
I Form of Subordinated Intercompany Note
J Form of Solvency Certificate
K Form of Collateral Trust Agreement
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TERM LOAN AGREEMENT, dated as of August 20, 2003, among
Haights Cross Operating Company, a Delaware corporation (the "Borrower"), the
several banks and other financial institutions or entities from time to time
parties to this Agreement (the "Lenders"), BEAR, XXXXXXX & CO. INC., as lead
arranger (in such capacity, the "Lead Arranger"), and BEAR XXXXXXX CORPORATE
LENDING INC., as administrative agent (in such capacity, the "Administrative
Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. Defined Terms. As used in this Agreement, the terms
listed in this Section 1.1 shall have the respective meanings set forth in this
Section 1.1.
"Acquired Debt": with respect to any specified Person:
(a) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in connection
with, or in contemplation of, such other Person merging with or into, or
becoming a Subsidiary of, such specified Person; and
(b) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Addendum": an instrument, substantially in the form of
Exhibit H, by which a Lender becomes a party to this Agreement as of the Closing
Date.
"Additional Collateral": as defined in Section 6.19.
"Administrative Agent": as defined in the recitals to this
Agreement, and including any successor thereto appointed in accordance with
Section 9.9.
"Affiliate": of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control," as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" will have
correlative meanings.
"Affiliate Transaction": as defined in Section 6.9(a).
"Agents": the collective reference to the Collateral Trustee,
the Lead Arranger and the Administrative Agent.
"Aggregate Exposure": with respect to any Lender at any time,
an amount equal to the aggregate then unpaid principal amount of such Lender's
Term Loans.
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"Aggregate Exposure Percentage": with respect to any Lender at
any time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the Aggregate Exposure of all Lenders at such time.
"Agreement" or "Term Loan Agreement": this Term Loan
Agreement, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection herewith, and in each case as
amended, restated, modified, renewed, refunded, replaced (whether upon or after
termination or otherwise) or refinanced (including by means of sales of debt
securities to institutional investors) in whole or in part from time to time,
whether with the original agents and lenders or other agents and lenders or
otherwise, whether provided under this Agreement or otherwise and whether the
Borrower or an Affiliate thereof is the borrower.
"Applicable Margin": the rate per annum of 4.50%; provided
that, on and after the first Adjustment Date (as defined below) occurring after
completion of the first two full fiscal quarters of the Borrower after the
Closing Date, the Applicable Margin will be determined in accordance with the
following chart:
Pricing
Level Applicable Margin
------- -----------------
I 6.00%
II 5.50%
III 4.50%
with such adjustments to become effective on the date (the "Adjustment Date")
that is one Business Day after the date on which the relevant financial
statements are delivered to the Lenders pursuant to Section 6.1(a) and to remain
in effect until the next adjustment to be effected pursuant to this paragraph.
If any financial statements referred to above are not delivered within the time
periods specified in Section 6.1(a), then, until the date that is one Business
Day after the date on which such financial statements are delivered, the rate
set forth opposite Pricing Level I in the chart above shall apply. On each
Adjustment Date, the Applicable Margin shall be adjusted to be equal to the
Applicable Margins opposite the Pricing Level determined to exist on such
Adjustment Date from the financial statements relating to such Adjustment Date.
Notwithstanding anything herein to the contrary, at any time when a Default or
Event of Default shall have occurred and be continuing, the highest rate set
forth in the applicable column of the chart above shall apply to all Term Loans.
As used herein, the following rules shall govern the
determination of Pricing Levels on each Adjustment Date:
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"Pricing Level I" shall exist on an Adjustment Date if the Borrower's
Secured Debt to Cash Flow Ratio on the last day of the fiscal quarter
for which financial statements have been delivered pursuant to Section
6.1(a) is greater than or equal to 3.50 to 1.00.
"Pricing Level II" shall exist on an Adjustment Date if the Borrower's
Secured Debt to Cash Flow Ratio on the last day of the fiscal quarter
for which financial statements have been delivered pursuant to Section
6.1(a) is less than 3.50 to 1.00 but greater than or equal to 3.00 to
1.00.
"Pricing Level III" shall exist on an Adjustment Date if the Borrower's
Secured Debt to Cash Flow Ratio on the last day of the fiscal quarter
for which financial statements have been delivered pursuant to Section
6.1(a) is less than 3.00 to 1.00.
"Approved Fund" means (a) a CLO and (b) with respect to any
Lender that is a fund which invests in bank loans and similar extensions of
credit, any other fund that invests in bank loans and similar extensions of
credit and is managed by the same investment advisor as such Lender or by an
affiliate of such investment advisor.
"Asset Sale":
(a) the sale, lease, conveyance or other disposition of
any assets or rights; provided that the sale, conveyance or other
disposition of all or substantially all of the assets of the Borrower
and its Restricted Subsidiaries taken as a whole will be governed by
the provisions of Section 6.13 hereof and/or Section 7.1 hereof and not
by the provisions of Section 6.8 hereof; and
(b) the issuance of Equity Interests in any of the
Borrower's Restricted Subsidiaries or the sale of Equity Interests in
any of its Subsidiaries.
(c) Notwithstanding the preceding, none of the following
items will be deemed to be an Asset Sale:
(i) any single transaction or series of related
transactions that involves assets or Equity Interests having a
Fair Market Value of less than $1.0 million;
(ii) a transfer of assets between or among the
Borrower and its Restricted Subsidiaries;
(iii) an issuance of Equity Interests by a
Restricted Subsidiary of the Borrower to the Borrower or to a
Restricted Subsidiary of the Borrower;
(iv) the sale or lease of products, services,
accounts receivable or other assets in the ordinary course of
business and any sale or other disposition of damaged,
worn-out or obsolete assets in the ordinary course of
business;
(v) the sale or other disposition of cash or
Cash Equivalents;
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(vi) the licensing of intellectual property for
Fair Market Value in the ordinary course of business; and
(vii) a Restricted Payment or Permitted Investment
that is permitted by Section 6.5 hereof.
"Asset Sale Offer": as defined in Section 3.2(b).
"Assignee": as defined in Section 10.6(b).
"Assignment and Assumption": an Assignment and Assumption,
substantially in the form of Exhibit D.
"Attributable Debt": in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP; provided, however, that if such sale and leaseback transaction results in
a Capital Lease Obligation, the amount of Indebtedness represented thereby will
be determined in accordance with the definition of "Capital Lease Obligation."
"Bankruptcy Law": Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"Beneficial Owner": has the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only after the passage of time. The terms
"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.
"Benefitted Lender": as defined in Section 10.7(a).
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Board of Directors":
(a) with respect to a corporation, the board of directors
of the corporation or any committee thereof duly authorized to act on
behalf of such board;
(b) with respect to a partnership, the Board of Directors
of the general partner of the partnership;
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(c) with respect to a limited liability company, the
managing member or members or any controlling committee of managing
members thereof; and
(d) with respect to any other Person, the board or
committee of such Person serving a similar function.
"Borrower": as defined in the preamble to this Agreement.
"Business": as defined in Section 4.17(b).
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close, provided, that with respect to notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
such day is also a day for trading by and between banks in Dollar deposits in
the interbank eurodollar market.
"Capital Lease Obligation": at the time any determination is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP, and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.
"Capital Stock":
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any
and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(c) in the case of a partnership or limited liability
company, partnership interests (whether general or limited) or
membership interests; and
(d) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person, but excluding from all
of the foregoing any debt securities convertible into Capital Stock,
whether or not such debt securities include any right of participation
with Capital Stock.
"Cash Equivalents":
(a) United States dollars;
(b) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality of the United States government (provided that the full
faith and credit of the United States is pledged in support of those
securities) having maturities of not more than one year from the date
of acquisition;
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(c) certificates of deposit and eurodollar time deposits
with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case, with any domestic commercial
bank having capital and surplus in excess of $500.0 million and a
Thomson Bank Watch Rating of "B" or better;
(d) repurchase obligations with a term of not more than
30 days for underlying securities of the types described in clauses (b)
and (c) above entered into with any financial institution meeting the
qualifications specified in clause (c) above;
(e) commercial paper having one of the two highest
ratings obtainable from Xxxxx'x Investors Service, Inc. ("Moody's") or
Standard & Poor's Rating Services ("S&P") and in each case maturing
within one year after the date of acquisition; and
(f) money market funds at least 95% of the assets of
which constitute Cash Equivalents of the kinds described in clauses (a)
through (e) of this definition.
"Change of Control":
(a) the direct or indirect sale, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all of
the properties or assets of the Borrower and its Subsidiaries taken as
a whole to any "person" (as that term is used in Section 13(d) of the
Exchange Act) other than a Principal or a Related Party of a Principal;
(b) the adoption of a plan relating to the liquidation or
dissolution of the Borrower;
(c) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is
that any "person" (as defined above) other than a Principal or a
Related Party of a Principal becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of the Borrower,
measured by voting power rather than number of shares;
(d) the Borrower consolidates with, or merges with or
into, any Person, or any Person consolidates with, or merges with or
into, the Borrower, in any such event pursuant to a transaction in
which any of the outstanding Voting Stock of the Borrower or such other
Person is converted into or exchanged for cash or Cash Equivalents,
securities or other property, other than any such transaction where the
Voting Stock of the Borrower outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting
a majority of the outstanding shares of such Voting Stock of such
surviving or transferee Person (immediately after giving effect to such
issuance);
(e) after an initial public offering of the Borrower or
any direct or indirect parent of the Borrower, the first day on which a
majority of the members of the Board of Directors of the Borrower are
not Continuing Directors; or
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(f) the first day on which Parent ceases to own a
majority of the outstanding Equity Interests of the Borrower.
"Change of Control Offer": as defined in Section 6.13(a).
"Change of Control Payment": as defined in Section 6.13(a).
"Change of Control Payment Date": as defined in Section
6.13(a).
"Charge Over Shares": that certain Charge Over Shares, dated
as of the date hereof, executed by Recorded Xxxxx, XXX pertaining to the Capital
Stock of the UK Loan Party.
"CLO" means any entity (whether a corporation, partnership,
trust or otherwise) that is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary course
of its business and is administered or managed by a Lender or an affiliate of
such Lender.
"Closing Date": the date on which the conditions precedent set
forth in Section 5.1 shall have been satisfied, which date is August 20, 2003.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"Collateral Trust Agreement": that certain Collateral Trust
Agreement, dated as of the date hereof, by and between the Borrower, the
Guarantors, the Collateral Trustee, the Administrative Agent, and The Bank of
New York, as administrative agent for the lenders under the Revolving Credit
Agreement, substantially in the form of Exhibit K hereto.
"Collateral Trustee": The Bank of New York as Collateral
Trustee under the Collateral Trust Agreement.
"Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Conduit Lender": any special purpose entity organized and
administered by any Lender for the purpose of making Term Loans otherwise
required to be made by such Lender and designated by such Lender in a written
instrument, subject to the consent of the Administrative Agent or each of the
Lenders; provided, that the designation by any Lender of a Conduit Lender shall
not relieve the designating Lender of any of its obligations to fund a Term Loan
under this Agreement if, for any reason, its Conduit Lender fails to fund any
such Term Loan, and the designating Lender (and not the Conduit Lender) shall
have the sole right and responsibility to deliver all consents and waivers
required or requested under this Agreement with respect to its Conduit Lender,
and provided, further, that no Conduit Lender shall (a) be entitled to receive
any greater amount pursuant to Section 3.6, 3.7, 3.8, or 10.5 than the
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designating Lender would have been entitled to receive in respect of the
extensions of credit made by such Conduit Lender or (b) be deemed to have any
Term Commitment.
"Consolidated Cash Flow": with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus,
without duplication:
(a) an amount equal to any extraordinary loss plus any
net loss realized by such Person or any of its Restricted Subsidiaries
in connection with (i) an Asset Sale or (ii) the extinguishment of any
Indebtedness of such Person or any of the Restricted Subsidiaries, in
each case, to the extent such losses were deducted in computing such
Consolidated Net Income; plus
(b) provision for taxes based on income or profits of
such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such
Consolidated Net Income; plus
(c) the Consolidated Interest Expense of such Person and
its Restricted Subsidiaries for such period, to the extent that such
Consolidated Interest Expense was deducted in computing such
Consolidated Net Income; plus
(d) depreciation, amortization (including amortization of
goodwill and other intangibles and amortization of product development
expenditures, but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any
such non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person
and its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; plus
(e) the non-recurring charge of $2.8 million for the year
ended December 31, 2002 associated with the Borrower's management
incentive plan and the non-recurring restructuring charge in an amount
not to exceed $2.0 million for the year ended December 31, 2003
associated with the Borrower's warehousing, customer service and order
fulfillment functions; plus
(f) any expenses incurred or charges taken in connection
with (i) the issuance of the Senior Notes on the date of this
Agreement, (ii) the borrowings under this Agreement on the date of this
Agreement and (iii) the execution and delivery of the Revolving Credit
Agreement on the date of this Agreement; plus
(g) an amount equal to any gains or losses realized in
connection with foreign currency exchange transactions; minus
(h) non-cash items increasing such Consolidated Net
Income for such period, other than the accrual of revenue in the
ordinary course of business and other than the reversal of any non-cash
expense to the extent that it represented an accrual of or reserve for
cash expenses in any future period;
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in each case, on a consolidated basis and determined in
accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based
on the income or profits of, and the depreciation and amortization and
other non-cash expenses of, a Restricted Subsidiary of the Borrower
will be added to Consolidated Net Income to compute Consolidated Cash
Flow of the Borrower only to the extent that a corresponding amount
would be permitted at the date of determination to be dividended to the
Borrower by such Restricted Subsidiary without prior governmental
approval (that has not been obtained), and without direct or indirect
restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or
its stockholders.
"Consolidated Indebtedness": with respect to any specified
Person as of any date of determination, the sum, without duplication, of
(a) the total amount of Indebtedness of such Person and
its Restricted Subsidiaries; plus
(b) the total amount of Indebtedness of any other Person,
to the extent that such Indebtedness has been Guaranteed by the
referent Person or one or more of its Restricted Subsidiaries; plus
(c) the aggregate liquidation value of all Disqualified
Stock of such Person and any of its Restricted Subsidiaries that have
Guaranteed the Indebtedness of such Person and all preferred stock of
the Restricted Subsidiaries of such Person,
in each case, on a consolidated basis and determined in
accordance with GAAP.
"Consolidated Interest Expense": with respect to any specified
Person for any period, the sum, without duplication, of
(a) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued,
including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net of the effect of all payments
made or received pursuant to Hedging Obligations in respect of interest
rates; plus
(b) the consolidated interest expense of such Person and
its Restricted Subsidiaries that was capitalized during such period;
plus
(c) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries, whether or not such Guarantee or Lien is
called upon; plus
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(d) the product of (a) all dividends, whether paid or
accrued and whether or not in cash, on any series of preferred stock of
such Person or any of its Restricted Subsidiaries, other than dividends
on Equity Interests payable solely in Equity Interests of the Borrower
(other than Disqualified Stock) or to the Borrower or a Restricted
Subsidiary of the Borrower, times (b) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in
accordance with GAAP.
"Consolidated Net Income": with respect to any specified
Person for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:
(a) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity
method of accounting will be included only to the extent of the amount
of dividends or similar distributions paid in cash to the specified
Person or a Restricted Subsidiary of the Person;
(b) the Net Income of any Restricted Subsidiary will be
excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income
is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its
stockholders;
(c) the cumulative effect of a change in accounting
principles will be excluded;
(d) notwithstanding clause (a) above, the Net Income of
any Unrestricted Subsidiary will be excluded, whether or not
distributed to the specified Person or one of its Subsidiaries; and
(e) any non-cash restructuring or non-cash extraordinary
charges taken by the specified Person or its Restricted Subsidiaries
will be added to Net Income in calculating Consolidated Net Income.
"Consolidated Priority Secured Indebtedness": with respect to
any specified Person as of any date of determination, the sum, without
duplication, of:
(a) the total amount of Secured Indebtedness that is
secured on a first priority basis of such Person and its Restricted
Subsidiaries; plus
(b) the total amount of Secured Indebtedness that is
secured on a first priority basis of any other Person, to the extent
that such Indebtedness has been Guaranteed by the referent Person or
one or more of its Restricted Subsidiaries,
in each case, on a consolidated basis and determined in accordance with GAAP.
11
"Consolidated Secured Indebtedness": with respect to any
specified Person as of any date of determination, the sum, without duplication,
of:
(a) the total amount of Secured Indebtedness of such
Person and its Restricted Subsidiaries; plus
(b) the total amount of Secured Indebtedness of any other
Person, to the extent that such Indebtedness has been Guaranteed by the
referent Person or one or more of its Restricted Subsidiaries,
in each case, on a consolidated basis and determined in accordance with GAAP.
"Continuing Directors": as of any date of determination, any
member of the Board of Directors of the Borrower who
(a) was a member of such Board of Directors on the date
of this Agreement;
(b) was nominated for election or elected to such Board
of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination
or election; or
(c) was nominated by any Principal or Related Party.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement (including any
Intellectual Property license), instrument or other undertaking to which such
Person is a party or by which it or any of its property is bound.
"Copyright Mortgages": each of the copyright security
agreements made by any Loan Party in favor of, or for the benefit of, the
Collateral Trustee for the benefit of the Secured Parties, substantially in the
form of Exhibit C-1 (with such changes thereto as shall be advisable under the
law of the jurisdiction in which such security agreement is to be recorded).
"Credit Facilities": one or more debt facilities (including,
without limitation, this Agreement and the Revolving Credit Agreement) or
commercial paper facilities, in each case with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced (including by means of sales of debt securities to
institutional investors) in whole or in part from time to time, whether with the
original agents and lenders or other agents and lenders or otherwise and whether
provided under the original debt or commercial paper facility or otherwise.
"Debenture": that certain Debenture, dated as of the date
hereof, executed by the UK Loan Party, granting a security interest in all
assets of the UK Loan Party to the Collateral Trustee on behalf of the Secured
Parties.
12
"Debt to Cash Flow Ratio": with respect to any specified
Person as of any date of determination, the ratio of (a) the Consolidated
Indebtedness of such Person as of such date to (b) the Consolidated Cash Flow of
such Person for the four most recently ended full fiscal quarters for which
internal financial statements are available immediately prior to such date of
determination, determined on a pro forma basis after giving effect to all
acquisitions or dispositions of assets made by such Person and its Restricted
Subsidiaries from the beginning of such four-quarter period through and
including such date of determination (including any related financing
transactions) as if such acquisitions and dispositions (and related financing
transactions) had occurred at the beginning of such four-quarter period.
In addition, for purposes of calculating the Debt to Cash Flow
Ratio:
(a) acquisitions that have been made by the specified
Person or any of its Restricted Subsidiaries, including through mergers
or consolidations, or any Person or any of its Restricted Subsidiaries
acquired by the specified Person or any of its Restricted Subsidiaries,
and including any related financing transactions and including
increases in ownership of Restricted Subsidiaries, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the date on which the event for which the
calculation of the Debt to Cash Flow Ratio is made (the "Calculation
Date") will be given pro forma effect (in accordance with Regulation
S-X under the Securities Act) as if they had occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated without giving effect to
clause (c) of the proviso set forth in the definition of Consolidated
Net Income (it being understood that the accounting principles of the
specified Person shall be applied to any such acquired Person as if
those accounting principles had been applied since the first day of the
four-quarter reference period);
(b) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses (and ownership interests therein) disposed of
prior to the Calculation Date, will be excluded;
(c) the Consolidated Interest Expense attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses (and ownership interests therein) disposed of
prior to the Calculation Date, will be excluded, but only to the extent
that the obligations giving rise to such Consolidated Interest Expense
will not be obligations of the specified Person or any of its
Restricted Subsidiaries following the Calculation Date;
(d) any Person that is a Restricted Subsidiary on the
Calculation Date will be deemed to have been a Restricted Subsidiary at
all times during such four-quarter period;
(e) any Person that is not a Restricted Subsidiary on the
Calculation Date will be deemed not to have been a Restricted
Subsidiary at any time during such four-quarter period; and
(f) if any Indebtedness bears a floating rate of
interest, the interest expense on such Indebtedness will be calculated
as if the rate in effect on the Calculation Date had
13
been the applicable rate for the entire period (taking into account any
Hedging Obligation applicable to such Indebtedness if such Hedging
Obligation has a remaining term as at the Calculation Date in excess of
12 months).
"Default": any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Disqualified Stock": any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the Maturity Date. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders of the Capital Stock have the right to require the Borrower to
repurchase such Capital Stock upon the occurrence of a change of control or an
asset sale will not constitute Disqualified Stock if the terms of such Capital
Stock provide that the Borrower may not repurchase or redeem any such Capital
Stock pursuant to such provisions unless such repurchase or redemption complies
with Section 6.5 hereof. The amount of Disqualified Stock deemed to be
outstanding at any time for purposes of this Agreement will be the maximum
amount that the Borrower and its Restricted Subsidiaries may become obligated to
pay upon the maturity of, or pursuant to any mandatory redemption provisions of,
such Disqualified Stock, exclusive of accrued dividends.
"Dollars" and "$": dollars in lawful currency of the United
States.
"Domestic Subsidiary": any Restricted Subsidiary of the
Borrower that was formed under the laws of the United States or any state of the
United States or the District of Columbia or that guarantees or otherwise
provides direct credit support for any Indebtedness of the Borrower.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability or
standards of conduct concerning the use, storage, handling, release or disposal
of Materials of Environmental Concern of the protection of human health or the
environment, as now or may at any time hereafter be in effect.
"Equity Interests": Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day, the
aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including basic,
supplemental, marginal and emergency reserves under any regulations of the Board
or other Governmental Authority having jurisdiction with respect
14
thereto) dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to three months commencing on the first
day of such Interest Period appearing on Page 3750 of the Telerate screen as of
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the Eurodollar Base Rate shall be
determined by reference to such other comparable publicly available service for
displaying eurodollar rates as may be selected by the Administrative Agent or,
in the absence of such availability, by reference to the rate at which the
Administrative Agent offers to place Dollar deposits at or about 11:00 A.M., New
York City time, two Business Days prior to the beginning of such Interest Period
in the interbank eurodollar market where its eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein; provided,
however, if the Eurodollar Base Rate, as determined pursuant to this definition
is less than 2.00% per annum, then the Eurodollar Base Rate shall be deemed to
equal 2.00% per annum.
"Eurodollar Loans": loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
-----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Exchange Act": the Securities Exchange Act of 1934, as
amended.
"Exchange Notes": the notes issued pursuant to the
Registration Rights Agreement.
"Excess Proceeds": as defined in Section 6.8(d).
"Existing Credit Facility": the credit agreement, dated as of
December 10, 1999, as amended, among the Borrower, the lenders party thereto,
DLJ Capital Funding, Inc., as syndication agent, lead arranger and book manager,
Fleet National Bank and Bank One, N.A., as co-documentation agents, and Canadian
Imperial Bank of Commerce, as administrative agent.
"Existing Indebtedness": Indebtedness of the Borrower and its
Subsidiaries (other than Indebtedness under this Agreement or under the
Revolving Credit Agreement) in existence on the date of this Agreement, until
such amounts are repaid.
15
"Fair Market Value": the value that would be paid by a willing
buyer to an unaffiliated willing seller in a transaction not involving distress
or necessity of either party, determined in good faith by the Board of Directors
of the Borrower (unless otherwise provided in this Agreement).
"Federal Funds Effective Rate": for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
"Foreign Pledge Agreement": any supplemental pledge agreement
governed by the laws of a jurisdiction other than the United States or a State
thereof executed and delivered by the Borrower or any of its Subsidiaries
pursuant to the terms of this Agreement, in form and substance satisfactory to
the Administrative Agent or each of the Lenders, as may be necessary or
desirable under the laws of organization or incorporation of a Subsidiary to
further protect or perfect the Lien on, and security interest in, any
Collateral, including without limitation the Charge Over Shares and the
Debenture.
"Foreign Subsidiary": any Restricted Subsidiary that is not a
Domestic Subsidiary.
"Funding Office": the office of the Administrative Agent
specified in Section 10.2 or such other office as may be specified from time to
time by the Administrative Agent as its funding office by written notice to the
Borrower and the Lenders.
"GAAP": generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.
"Group Members": the collective reference to Holdings, the
Borrower and their respective Subsidiaries.
"Guarantee": a guarantee other than by endorsement of
negotiable instruments for collection in the ordinary course of business, direct
or indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take or pay or to maintain financial statement
conditions or otherwise).
16
"Guarantee and Collateral Agreement": the Guarantee and
Collateral Agreement to be executed and delivered by the Borrower and each
Guarantor, substantially in the form of Exhibit A.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Guarantors": each of:
(a) Holdings;
(b) the Borrower's direct and indirect Domestic
Subsidiaries existing on the date of this Agreement; and
(c) any other Subsidiary of the Borrower that executes
the Guarantee and Collateral Agreement in accordance with the
provisions of this Agreement,
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any specified
Person, the obligations of such Person under:
(a) interest rate swap agreements (whether from fixed to
floating or from floating to fixed), interest rate cap agreements and
interest rate collar agreements;
17
(b) other agreements or arrangements designed to manage
interest rates or interest rate risk; and
(c) other agreements or arrangements designed to protect
such Person against fluctuations in currency exchange rates or
commodity prices.
"Holder": means a Person in whose name a Note is registered.
"Holdings": Haights Cross Communications, Inc., a Delaware
corporation.
"Immaterial Subsidiary": as of any date, any Restricted
Subsidiary whose total assets, as of that date, are less than $100,000 and whose
total revenues for the most recent 12-month period do not exceed $100,000;
provided that a Restricted Subsidiary will not be considered to be an Immaterial
Subsidiary if it, directly or indirectly, guarantees or otherwise provides
direct credit support for any Indebtedness of the Borrower.
"Indebtedness": with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses and trade payables),
whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in
respect thereof);
(c) in respect of banker's acceptances;
(d) representing Capital Lease Obligations or
Attributable Debt in respect of sale and leaseback transactions;
(e) representing the balance deferred and unpaid of the
purchase price of any property or services due more than six months
after such property is acquired or such services are completed; or
(f) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of
credit, Attributable Debt and Hedging Obligations) would appear as a
liability upon a balance sheet of the specified Person prepared in
accordance with GAAP. In addition, the term "Indebtedness" includes all
Indebtedness of others secured by a Lien on any asset of the specified
Person (whether or not such Indebtedness is assumed by the specified
Person) and, to the extent not otherwise included, the Guarantee by the
specified Person of any Indebtedness of any other Person.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent": pertaining to a condition of Insolvency.
18
"Installment": as defined in Section 2.3.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including copyrights, copyright licenses, patents, patent licenses, trademarks,
service marks, trademark licenses, service xxxx licenses, technology, know-how
and processes, rights to use names and likenesses of natural persons, and all
rights to xxx at law or in equity for any past, present or future infringement,
misappropriation, dilution or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"Intellectual Property Mortgages": all Copyright Mortgages,
Trademark Mortgages and Patent Mortgages.
"Interest Payment Date": each of February 15, May 15, August
15 and November 15 of each year, or if any such day is not a Business Day, on
the next succeeding Business Day.
"Interest Period": (a) initially, the period commencing on the
Closing Date and ending on November 15, 2003; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period and ending on
the immediately succeeding Interest Payment Date.
"Investments": with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Borrower
or any Subsidiary of the Borrower sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Borrower such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Borrower, the Borrower will be deemed to have made an
Investment on the date of any such sale or disposition equal to the Fair Market
Value of the Borrower's Investments in such Subsidiary that were not sold or
disposed of in an amount determined as provided in the final paragraph of
Section 6.5 hereof. The acquisition by the Borrower or any Subsidiary of the
Borrower of a Person that holds an Investment in a third Person will be deemed
to be an Investment by the Borrower or such Subsidiary in such third Person in
an amount equal to the Fair Market Value of the Investments held by the acquired
Person in such third Person in an amount determined as provided in the final
paragraph of Section 6.5 hereof. Except as otherwise provided in this Agreement,
the amount of an Investment will be determined at the time the Investment is
made and without giving effect to subsequent changes in value.
"Landlord Waiver": an agreement in favor of the Collateral
Trustee, for the benefit of the Secured Parties, in form and substance
reasonably satisfactory to the Administrative Agent or each of the Lenders.
"Lead Arranger": as defined in the recitals to this Agreement.
19
"Lenders": as defined in the preamble hereto; provided, that
unless the context otherwise requires, each reference herein to the Lenders
shall be deemed to include any Conduit Lender.
"Lien": means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction.
"Loan Documents": this Agreement, the Security Documents, the
Notes, if any, and the Subordinated Intercompany Notes, if any.
"Loan Parties": each Group Member that is a party to a Loan
Document.
"Material Adverse Change": any event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, property, condition (financial or other), results of
operations or prospects of the Borrower and its Subsidiaries taken as a whole,
(b) the validity or enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Agents, the Lenders or the other
Secured Parties hereunder or thereunder, or (c) the validity, perfection or
priority of the liens upon the Collateral in favor of the Collateral Trustee for
the benefit of the Secured Parties.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil, petroleum products, petroleum by-products) or
any hazardous or toxic substances, materials or wastes, defined, listed or
regulated as such in or under any Environmental Law, including asbestos,
asbestos-containing materials, radioactive materials, infectious, carcinogenic
or mutagenic substances, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Maturity Date": the earlier of (a) August 20, 2008 and (b)
the date that all Term Loans shall become due and payable in full hereunder,
whether by acceleration or otherwise.
"Mortgaged Intellectual Property": the Intellectual Property
as to which the Collateral Trustee for the benefit of the Secured Parties shall
be granted a Lien pursuant to the Intellectual Property Mortgages, including the
Mortgaged Intellectual Property listed on Schedule 1.1(a).
"Mortgaged Real Properties": the real properties listed on
Schedule 1.1(b), as to which the Collateral Trustee for the benefit of the
Secured Parties shall be granted a Lien pursuant to the Real Property Mortgages.
"Mortgaged Properties": the Mortgaged Intellectual Property
and Mortgaged Real Property.
"Mortgages": the Intellectual Property Mortgages and Real
Property Mortgages.
20
"Multiemployer Plan": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Income": with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however
(a) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection
with: (i) any Asset Sale; or (ii) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment
of any Indebtedness of such Person or any of its Restricted
Subsidiaries; and
(b) any extraordinary gain (but not loss), together with
any related provision for taxes on such extraordinary gain (but not
loss).
"Net Proceeds": the aggregate cash proceeds received by the
Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result of the Asset Sale, taxes paid or
payable as a result of the Asset Sale, in each case, after taking into account
any available tax credits or deductions and any tax sharing arrangements, and
amounts required to be applied to the repayment of Indebtedness, other than
Indebtedness under a Credit Facility, secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"Non-Excluded Taxes": as defined in Section 3.7(a).
"Non-Recourse Debt": Indebtedness
(a) as to which neither the Borrower nor any of its
Restricted Subsidiaries (i) provides credit support of any kind
(including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable as a
guarantor or otherwise, or (iii) constitutes the lender;
(b) no default with respect to which (including any
rights that the holders of the Indebtedness may have to take
enforcement action against an Unrestricted Subsidiary) would permit
upon notice, lapse of time or both any holder of any other Indebtedness
of the Borrower or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment of the
Indebtedness to be accelerated or payable prior to its Stated Maturity;
and
(c) as to which the lenders have been notified in writing
that they will not have any recourse to the stock or assets of the
Borrower or any of its Restricted Subsidiaries.
21
"Non-U.S. Lender": as defined in Section 3.7(a).
"Notes": the collective reference to any promissory note
evidencing the Term Loans.
"Obligations": any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offer Amount": as defined in Section 3.2(b).
"Offer Period": as defined in Section 3.2(b).
"Officer": with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate": a certificate signed on behalf of the
Borrower by two Officers of the Borrower, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Borrower, that meets the requirements of
Section 10.18 hereof.
"Opinion of Counsel": an opinion from legal counsel who is
reasonably acceptable to the Administrative Agent or each of the Lenders, that
meets the requirements of Section 10.18 hereof. The counsel may be an employee
of or counsel to the Borrower, any Subsidiary of the Borrower or the
Administrative Agent.
"Other Taxes": any and all present or future stamp or
documentary taxes or any other mortgage-related taxes or excise or property
taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.
"Participant": as defined in Section 10.6(c).
"Patent Mortgages": each of the patent security agreements
made by any Loan Party in favor of, or for the benefit of, the Collateral
Trustee for the benefit of the Secured Parties, substantially in the form of
Exhibit C-3 (with such changes thereto as shall be advisable under the law of
the jurisdiction in which such security agreement is to be recorded).
"Payment Default": as defined in Section 8.2(e).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Business": the lines of business conducted by the
Borrower and its Subsidiaries on the date of this Agreement and any businesses
similar, related, incidental or ancillary thereto or that constitutes a
reasonable extension or expansion thereof.
22
"Permitted Debt": as defined in Section 6.7(b).
"Permitted Investments":
(a) any Investment in the Borrower or in a Restricted
Subsidiary of the Borrower;
(b) any Investment in Cash Equivalents;
(c) any Investment by the Borrower or any Restricted
Subsidiary of the Borrower in a Person, if as a result of such
Investment:
(i) such Person becomes a Restricted Subsidiary
of the Borrower; or
(ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the
Borrower or a Restricted Subsidiary of the Borrower;
(d) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and
in compliance with Section 6.8 hereof;
(e) any acquisition of assets or Capital Stock solely in
exchange for the issuance of Equity Interests (other than Disqualified
Stock) of the Borrower;
(f) any Investments received in compromise or resolution
of (A) obligations of trade creditors or customers that were incurred
in the ordinary course of business of the Borrower or any of its
Restricted Subsidiaries, including pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency
of any trade creditor or customer; or (B) litigation, arbitration or
other disputes with Persons who are not Affiliates;
(g) Investments represented by Hedging Obligations;
(h) repurchases of the Notes and repayments of the Term
Loans; and
(i) other Investments in any Person engaged primarily in
a Permitted Business having an aggregate Fair Market Value (measured on
the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (i) that are at the time
outstanding not to exceed $10.0 million.
"Permitted Liens":
(a) Liens securing Indebtedness and other Obligations
that was incurred pursuant to clause (i) or clause (xii) of the
definition of Permitted Debt;
(b) Liens in favor of the Borrower or the Guarantors;
23
(c) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of
business;
(d) Liens existing on the date of this Agreement;
(e) Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and
diligently concluded; provided that any reserve or other appropriate
provision as is required in conformity with GAAP has been made
therefor;
(f) Liens imposed by law, such as carriers',
warehousemen's, landlord's and mechanics' Liens, in each case, incurred
in the ordinary course of business;
(g) survey exceptions, easements or reservations of, or
rights of others for, licenses, rights-of-way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of real property that were not
incurred in connection with Indebtedness and that do not in the
aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such
Person;
(h) Liens to secure Guarantees of Indebtedness of the
Borrower permitted to be incurred pursuant to clauses (i) or (xii) of
Section 6.7(b);
(i) Liens to secure any Permitted Refinancing
Indebtedness permitted to be incurred under this Agreement; provided,
however, that:
(i) the new Lien shall be limited to all or part
of the same property and assets that secured or, under the
written agreements pursuant to which the original Lien arose,
could secure the original Lien (plus improvements and
accessions to, such property or proceeds or distributions
thereof); and
(ii) the Indebtedness secured by the new Lien is
not increased to any amount greater than the sum of (x) the
outstanding principal amount or, if greater, committed amount,
of the Permitted Referencing Indebtedness and (y) an amount
necessary to pay any fees and expenses, including premiums,
related to such refinancings, refunding, extension, renewal or
replacement;
(j) Liens securing reimbursement obligations with respect
to commercial letters of credit that encumber documents and other
property relating to letters of credit and products and proceeds
thereof;
(k) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty, including
rights of offset and set-off;
(l) Liens securing Hedging Obligations, which Hedging
Obligations relate to Indebtedness that is otherwise permitted under
this Agreement;
24
(m) leases or subleases granted to others;
(n) Liens under licensing agreements;
(o) Liens arising from filing Uniform Commercial Code
financing statements regarding leases;
(p) judgment Liens not giving rise to an Event of
Default;
(q) Liens encumbering property of the Borrower or any of
its Restricted Subsidiaries incurred in the ordinary course of business
in connection with workers' compensation, unemployment insurance or
other forms of governmental insurance or benefits, or to secure
performance of bids, tenders, statutory obligations, leases and
contracts (other than for Indebtedness) entered into in the ordinary
course of business of the Borrower or any of its Restricted
Subsidiaries; and
(r) Liens securing other Indebtedness provided that (a)
if the Lien securing such Indebtedness is pari passu with or junior to
the Liens securing the Obligations under this Term Loan Agreement the
Secured Debt to Cash Flow Ratio for the Borrower's most recently ended
four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such Lien is created,
incurred or assumed or has been first suffered to exist would have been
no greater than 2.25 to 1, determined on a pro forma basis, as if the
Obligations secured by such Lien had been incurred at the beginning of
such four-quarter period and (b) if the Lien securing such Indebtedness
is prior or senior to the Liens securing the Obligations under this
Term Loan Agreement the Priority Secured Debt to Cash Flow Ratio for
the Borrower's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the
date on which such Lien is created, incurred or assumed or has been
first suffered to exist would have been no greater than 1.25 to 1,
determined on a pro forma basis, as if the Obligations secured by such
Lien had been incurred at the beginning of such four-quarter period
"Permitted Refinancing Indebtedness": any Indebtedness of the
Borrower or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to refund, refinance, replace, defease or
discharge other Indebtedness of the Borrower or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); provided that:
(a) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed
the principal amount (or accreted value, if applicable) of the
Indebtedness extended, refinanced, renewed, replaced, defeased or
refunded (plus all accrued interest on the Indebtedness and the amount
of all expenses and premiums incurred in connection therewith);
(b) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded;
25
(c) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of
payment to the Term Loans, such Permitted Refinancing Indebtedness has
a final maturity date later than the final maturity date of, and is
subordinated in right of payment to, the Term Loans on terms at least
as favorable to the Lenders as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(d) such Indebtedness is incurred either by the Borrower
or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person": any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.
"Plan": at a particular time, any employee benefit plan that
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Prepayment Date": as defined in Section 3.2(b).
"Principals": Media/Communications Partners III Limited
Partnership and M/C Investors L.L.C. and Great Hill Partners, LLC and its
related investment funds.
"Priority Secured Debt to Cash Flow Ratio": with respect to
any specified Person as of any date of determination, the ratio of (a) the
Consolidated Priority Secured Indebtedness of such Person as of such date to (b)
the Consolidated Cash Flow of such Person for the four most recently ended full
fiscal quarters for which internal financial statements are available
immediately prior to such date of determination, determined on a pro forma basis
after giving effect to all acquisitions or dispositions of assets made by such
Person and its Restricted Subsidiaries from the beginning of such four-quarter
period through and including such date of determination (including any related
financing transactions) as if such acquisitions and dispositions (and related
financing transactions) had occurred at the beginning of such four-quarter
period.
In addition, for purposes of calculating the Priority Secured
Debt to Cash Flow Ratio:
(a) acquisitions that have been made by the specified
Person or any of its Restricted Subsidiaries, including through mergers
or consolidations, or any Person or any of its Restricted Subsidiaries
acquired by the specified Person or any of its Restricted Subsidiaries,
and including any related financing transactions and including
increases in ownership of Restricted Subsidiaries, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the date on which the event for which the
calculation of the Priority Secured Debt to Cash Flow Ratio is made
(the "Priority Secured Debt Calculation Date") will be given pro forma
effect (in accordance with Regulation S-X under the Securities Act) as
if they had occurred on the first day of
26
the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause
(iii) of the proviso set forth in the definition of Consolidated Net
Income (it being understood that the accounting principles of the
specified Person shall be applied to any such acquired Person as if
those accounting principles had been applied since the first day of the
four-quarter reference period);
(b) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses (and ownership interests therein) disposed of
prior to the Priority Secured Debt Calculation Date, will be excluded;
(c) the Consolidated Interest Expense attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses (and ownership interests therein) disposed of
prior to the Priority Secured Debt Calculation Date, will be excluded,
but only to the extent that the obligations giving rise to such
Consolidated Interest Expense will not be obligations of the specified
Person or any of its Restricted Subsidiaries following the Priority
Secured Debt Calculation Date;
(d) any Person that is a Restricted Subsidiary on the
Priority Secured Debt Calculation Date will be deemed to have been a
Restricted Subsidiary at all times during such four-quarter period;
(e) any Person that is not a Restricted Subsidiary on the
Priority Secured Debt Calculation Date will be deemed not to have been
a Restricted Subsidiary at any time during such four-quarter period;
and
(f) if any Indebtedness bears a floating rate of
interest, the interest expense on such Indebtedness will be calculated
as if the rate in effect on the Priority Secured Debt Calculation Date
had been the applicable rate for the entire period (taking into account
any Hedging Obligation applicable to such Indebtedness if such Hedging
Obligation has a remaining term as at the Priority Secured Debt
Calculation Date in excess of 12 months).
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Properties": as defined in Section 4.17(a).
"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Real Property Mortgages": each of the mortgages and deeds of
trust made by any Loan Party in favor of, or for the benefit of, the Collateral
Trustee for the benefit of the Secured Parties, substantially in the form of
Exhibit C-4 (with such changes thereto as shall be advisable under the law of
the jurisdiction in which such mortgage or deed of trust is to be recorded).
27
"Recapitalization": the consummation of each of the following
transactions: (a) the effectiveness of this Agreement and the consummation of
the extensions of credit hereunder in the gross amount of $100,000,000, (b) the
issuance and sale by the Borrower of $140,000,000 in aggregate principal amount
of the Senior Notes and (c) the effectiveness of the Revolving Credit Agreement
and the occurrence of the Closing Date thereunder, and the use of the proceeds
of each of such transactions to (x) repay in full the obligations under the
Existing Credit Facility and (y) redeem all outstanding 13% Senior Subordinated
Notes due 2009 of the Borrower.
"Reference Lender": The Bank of New York.
"Register": as defined in Section 10.6(b).
"Registration Rights Agreement": the Registration Rights
Agreement, dated as of August 20, 2003, among the Borrower, the Guarantors and
the other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation U": Regulation U of the Board as in effect from
time to time.
"Related Party": means
(a) any controlling stockholder, 80% (or more) owned
Subsidiary, or immediate family member (in the case of an individual)
of any Principal;
(b) any trust, corporation, partnership or other entity,
the beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which
consist of any one or more Principals and/or such other Persons
referred to in the immediately preceding clause (a); or
(c) any trust, corporation, partnership or other entity,
the general partner of which is controlled, directly or indirectly, by
Persons who, directly or indirectly, are general partners of a
Principal.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. Section 4043.
"Required Lenders": the holders of more than 50% of the
aggregate unpaid principal amount of the Term Loans then outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such
28
Person or any of its property is subject, or which pertains to or governs the
legality, validity, perfection, performance or enforcement of the Loan Documents
or the Liens thereunder.
"Responsible Officer": the chief executive officer, president,
chief financial officer or chief accounting officer of the Borrower, but in any
event, with respect to financial matters, the chief financial officer or chief
accounting officer of the Borrower.
"Restricted Investment": an Investment other than a Permitted
Investment.
"Restricted Subsidiary": of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"Restricted Payments": as defined in Section 6.5(a).
"Revolving Credit Agreement": that certain Revolving Credit
Agreement, dated as of the date of this Agreement, by and among the Borrower and
the financial institutions party thereto, providing for revolving credit
borrowings, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, restated, modified, renewed, refunded, replaced (whether upon or after
termination or otherwise) or refinanced (including by means of sales of debt
securities to institutional investors) in whole or in part from time to time,
whether with the original agents and lenders or other agents and lenders or
otherwise, whether provided under the original Revolving Credit Agreement or
otherwise and whether the Borrower or an Affiliate thereof is the borrower.
"SEC": the Securities and Exchange Commission, any successor
thereto and any analogous Governmental Authority.
"Secured Debt to Cash Flow Ratio": with respect to any
specified Person as of any date of determination, the ratio of (a) the
Consolidated Secured Indebtedness of such Person as of such date to (b) the
Consolidated Cash Flow of such Person for the four most recently ended full
fiscal quarters for which internal financial statements are available
immediately prior to such date of determination, determined on a pro forma basis
after giving effect to all acquisitions or dispositions of assets made by such
Person and its Restricted Subsidiaries from the beginning of such four-quarter
period through and including such date of determination (including any related
financing transactions) as if such acquisitions and dispositions (and related
financing transactions) had occurred at the beginning of such four-quarter
period.
In addition, for purposes of calculating the Secured Debt to
Cash Flow Ratio:
(a) acquisitions that have been made by the specified
Person or any of its Restricted Subsidiaries, including through mergers
or consolidations, or any Person or any of its Restricted Subsidiaries
acquired by the specified Person or any of its Restricted Subsidiaries,
and including any related financing transactions and including
increases in ownership of Restricted Subsidiaries, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the date on which the event for which the
calculation of the Secured Debt to Cash Flow Ratio is made (the
"Secured Debt Calculation Date") will be given pro forma effect (in
accordance with Regulation S-X under the Securities Act) as if they had
occurred on the first day of the four-quarter
29
reference period and Consolidated Cash Flow for such reference period
shall be calculated without giving effect to clause (iii) of the
proviso set forth in the definition of Consolidated Net Income (it
being understood that the accounting principles of the specified Person
shall be applied to any such acquired Person as if those accounting
principles had been applied since the first day of the four-quarter
reference period);
(b) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses (and ownership interests therein) disposed of
prior to the Secured Debt Calculation Date, will be excluded;
(c) the Consolidated Interest Expense attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses (and ownership interests therein) disposed of
prior to the Secured Debt Calculation Date, will be excluded, but only
to the extent that the obligations giving rise to such Consolidated
Interest Expense will not be obligations of the specified Person or any
of its Restricted Subsidiaries following the Secured Debt Calculation
Date;
(d) any Person that is a Restricted Subsidiary on the
Secured Debt Calculation Date will be deemed to have been a Restricted
Subsidiary at all times during such four-quarter period;
(e) any Person that is not a Restricted Subsidiary on the
Secured Debt Calculation Date will be deemed not to have been a
Restricted Subsidiary at any time during such four-quarter period; and
(f) if any Indebtedness bears a floating rate of
interest, the interest expense on such Indebtedness will be calculated
as if the rate in effect on the Secured Debt Calculation Date had been
the applicable rate for the entire period (taking into account any
Hedging Obligation applicable to such Indebtedness if such Hedging
Obligation has a remaining term as at the Secured Debt Calculation Date
in excess of 12 months).
"Secured Indebtedness": with respect to any specified Person,
any Indebtedness of such Person that is secured by a Lien on the assets of such
Person, plus any Indebtedness of any other Person to the extent that such
Indebtedness is secured by a Lien on the assets of the specified Person.
"Securities Act": means the Securities Act of 1933, as
amended.
"Secured Parties": collectively, the Agents, the Lenders and,
with respect to any Specified Hedge Agreement, any counterparty thereto that has
agreed to be bound by the provisions of Section 7.2 of the Guarantee and
Collateral Agreement as if it were a Lender party hereto and by the provisions
of Article 9 hereof as if it were a Lender party hereto (regardless of whether
or not such counterparty thereafter continues to be a Lender or an Affiliate of
a Lender).
"Security Documents": the collective reference to the
Collateral Trust Agreement, the Guarantee and Collateral Agreement, the
Mortgages, the Foreign Pledge Agreements and all other security documents now or
hereafter delivered to the Administrative
30
Agent granting a Lien on any property of any Person to secure the obligations
and liabilities of any Loan Party under any Loan Document.
"Senior Note Indenture": the Indenture entered into by the
Borrower in connection with the issuance of the Senior Notes, together with all
instruments and other agreements entered into by the Borrower or its
Subsidiaries in connection therewith.
"Senior Notes": the notes of the Borrower issued on the
Closing Date pursuant to the Senior Note Indenture.
"Significant Subsidiary": any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Agreement.
"Single Employer Plan": any Plan that is covered by Title IV
of ERISA, but that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Specified Hedge Agreement": any agreement with respect to any
swap, forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or the Subsidiaries shall be a Specified Hedge
Agreement; and provided further that such agreement (a) is entered into by (i)
the Borrower or any of its Subsidiaries and (ii) any Agent or Lender or any
affiliate thereof, as counterparty and (b) has been designated by such Agent or
Lender, as the case may be, and the Borrower, by notice to the Administrative
Agent, as a Specified Hedge Agreement. The designation of any such agreement as
a Specified Hedge Agreement shall not create in favor of the Agent, Lender or
affiliate thereof that is a party thereto any rights in connection with the
31
management or release of any Collateral or of the obligations of any Guarantor
under the Guarantee and Collateral Agreement or any other Security Document.
"Stated Maturity": with respect to any installment of interest
or principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the documentation governing
such Indebtedness as of the date of this Agreement, and will not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.
"Subordinated Intercompany Note": with respect to the Borrower
or any of its Subsidiaries, as the maker thereof, a promissory note
substantially in the form of Exhibit I (with such modifications as the
Administrative Agent or each of the Lenders may agree to), which promissory note
shall evidence all intercompany loans which may be made from time to time by the
payee thereunder to such maker and shall be duly endorsed and pledged by the
payee in favor of the Collateral Trustee.
"Subsidiary": with respect to any specified Person
(a) any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency and
after giving effect to any voting agreement or stockholders' agreement
that effectively transfers voting power) to vote in the election of
directors, managers or trustees of the corporation, association or
other business entity 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
(b) any partnership (i) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (ii) the only general partners of which are that Person
or one or more Subsidiaries of that Person (or any combination
thereof).
"Tax Payments": as defined in Section 6.5(b).
"Term Commitment": as to any Lender, the obligation of such
Lender, if any, to make a Term Loan to the Borrower hereunder in a principal
amount not to exceed the amount set forth under the heading "Term Commitment"
under such Lender's name on such Lender's Addendum. The original aggregate
amount of the Term Commitments is $100,000,000.
"Term Loan Obligations": the unpaid principal of and interest
on (including interest accruing after the maturity of the Term Loans and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Term Loans and all other obligations and
liabilities of the Borrower to any Agent or to any Lender (or, in the case of
Specified Hedge Agreements, any Lender or affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document, any Specified Hedge Agreement or
any other document made, delivered or given in connection herewith or therewith,
whether on
32
account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including all fees, charges and disbursements of counsel to any
Agent or to any Lender that are required to be paid by the Borrower pursuant
hereto) or otherwise; provided, that any release of Collateral or Guarantors
effected in the manner permitted by this Agreement shall not require the consent
of holders of obligations under Specified Hedge Agreements.
"Term Loans": as defined in Section 2.1(a).
"Term Percentage": as to any Lender at any time, the
percentage which the aggregate principal amount of such Lender's Term Loans then
outstanding constitutes of the aggregate principal amount of the Term Loans then
outstanding.
"Title Insurance Company": as defined in Section 5.1(l).
"Trademark Mortgages": each of the trademark security
agreements made by any Loan Party in favor of, or for the benefit of, the
Collateral Trustee for the benefit of the Secured Parties, substantially in the
form of Exhibit C-2 (with such changes thereto as shall be advisable under the
law of the jurisdiction in which such security agreement is to be recorded).
"Transferee": any Assignee or Participant.
"UK Loan Party": X X Xxxxx Limited (a company incorporated in
England and Wales with registered number 03662159).
"United States": the United States of America.
"Unrestricted Subsidiary": any Subsidiary of the Borrower that
is designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution, but only to the extent that such Subsidiary:
(a) has no Indebtedness other than Non-Recourse Debt;
(b) except as permitted by Section 6.9 hereof, is not
party to any agreement, contract, arrangement or understanding with the
Borrower or any Restricted Subsidiary of the Borrower unless the terms
of any such agreement, contract, arrangement or understanding are no
less favorable the Borrower or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates
of the Borrower;
(c) is a Person with respect to which neither the
Borrower nor any of its Restricted Subsidiaries has any direct or
indirect obligation (i) to subscribe for additional Equity Interests or
(ii) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results;
and
(d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Borrower
or any of its Restricted Subsidiaries.
33
Any designation of a Subsidiary of the Borrower as an
Unrestricted Subsidiary will be evidenced to the Administrative Agent by filing
with the Administrative Agent a certified copy of the Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the preceding conditions and was permitted by Section
6.5 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the
preceding requirements as an Unrestricted Subsidiary, it will thereafter cease
to be an Unrestricted Subsidiary for purposes of this Agreement and any
Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted
Subsidiary of the Borrower as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under Section 6.7 hereof, the Borrower
will be in default of such section. The Board of Directors of the Borrower may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation will be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Borrower of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation will only be
permitted if (i) such Indebtedness is permitted under Section 6.7 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (ii) no Default or Event of
Default would be in existence following such designation.
"U.S. Person": as defined in Section 3.7(a).
"Voting Stock": of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Weighted Average Life to Maturity": when applied to any
Indebtedness at any date, the number of years obtained by dividing
(a) the sum of the products obtained by multiplying (i)
the amount of each then remaining installment, sinking fund, serial
maturity or other required payments of principal, including payment at
final maturity, in respect of the Indebtedness, by (ii) the number of
years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by
(b) the then outstanding principal amount of such
Indebtedness.
1.2. Other Definitional Provisions. (a) Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or
other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and
any certificate or other document made or delivered pursuant hereto or thereto,
(i) accounting terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and
34
properties, including cash, Capital Stock, securities, revenues, accounts,
leasehold interests and contract rights, (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time (subject to any applicable restrictions
hereunder) and (vi) the word "will" shall be construed to have the same meaning
as the word "shall."
(c) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS
2.1. Term Commitments. Subject to the terms and conditions
hereof, each Lender severally agrees to make a term loan (a "Term Loan") to the
Borrower on the Closing Date in an amount not to exceed the amount of the Term
Commitment of such Lender. The Borrower may make only one borrowing under the
Term Commitment which shall be on the Closing Date. Each Lender's Term
Commitment shall terminate immediately and without further action on the Closing
Date after giving effect to the funding of such Lender's Term Commitment. The
Term Loans shall be Eurodollar Loans.
2.2. Procedure for Term Loan Borrowing. The Borrower shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 A.M., New York City time, one
Business Day prior to the anticipated Closing Date) requesting that the Lenders
make the Term Loans on the Closing Date and specifying the amount to be
borrowed. Upon receipt of such notice the Administrative Agent shall promptly
notify each Lender thereof. Not later than 12:00 Noon, New York City time, on
the Closing Date each Lender shall make available to the Administrative Agent at
the Funding Office an amount in immediately available funds equal to the Term
Loan or Term Loans to be made by such Lender. The Administrative Agent shall
credit the account of the Borrower on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Lenders in immediately available funds.
2.3. Repayment of Term Loans. The Borrower shall pay
interest quarterly in arrears on the principal amount of the Term Loans pursuant
to Section 3.3. The principal amount of the Term Loans shall be repaid in
consecutive quarterly installments (each, an "Installment") in an amount equal
to the aggregate principal amount of the Term Loans made on the Closing Date
multiplied by the percentage set forth below opposite the quarter on the last
day of such quarter:
35
Quarter Ending On Percentage
----------------- ----------
November 15, 2003 0.25%
February 15, 2004 0.25%
May 15, 2004 0.25%
August 15, 2004 0.25%
November 15, 2004 0.25%
February 15, 2005 0.25%
May 15, 2005 0.25%
August 15, 2005 0.25%
November 15, 2005 0.25%
February 15, 2006 0.25%
May 15, 2006 0.25%
August 15, 2006 0.25%
November 15, 2006 0.25%
February 15, 2007 0.25%
May 15, 2007 0.25%
August 15, 2007 0.25%
November 15, 2007 0.25%
February 15, 2008 0.25%
May 15, 2008 0.25%
August 15, 2008 95.25%
Notwithstanding the foregoing, (a) such Installments shall be reduced in
connection with any voluntary or mandatory prepayments of the Term Loans, in
accordance with Sections 3.1, 3.2, 6.8 and 6.13, as applicable; and (b) the Term
Loans, together with all other amounts owed hereunder with respect thereto,
shall, in any event, be paid in full no later than the Maturity Date.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO TERM LOANS
3.1. Prepayments. (a) Subject to paragraph (b) below,
the Borrower may at any time and from time to time prepay the Term Loans, in
whole or in part, without premium or penalty, upon irrevocable notice delivered
to the Administrative Agent no later than 11:00 A.M., New York City time, three
Business Days prior thereto, which notice shall specify the date and amount of
prepayment; provided, that if the Term Loan is prepaid on any day other than the
last day of the Interest Period applicable thereto, the Borrower shall also pay
any amounts owing
36
pursuant to Section 3.8. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to such date on the amount
prepaid. Partial prepayments of the Term Loans shall be in an aggregate
principal amount of $1,000,000 or a whole multiple thereof. Any prepayment of
any Term Loan pursuant to this Section 3.1 shall be applied on a pro rata basis
among the Lenders and applied to reduce the scheduled remaining Installments of
principal on such Term Loan in inverse order of maturity
(b) In the event that the Term Loans are voluntarily
prepaid prior to December 31, 2006, the Borrower shall pay the Lenders a
prepayment premium equal to the percentage set forth below opposite the period
in which prepayment shall occur multiplied by the principal amount of the Term
Loans being prepaid. Term Loans may be prepaid without prepayment premium on or
after December 31, 2006.
Period Percentage
------ ----------
Prior to December 31, 2004 3.00%
December 31, 2004 to December 30, 2005 2.00%
December 31, 2005 to December 30, 2006 1.00%
(c) If on any date any Group Member or the Collateral
Trustee shall receive proceeds with respect to title insurance covering any
Mortgaged Real Property, subject to any required prepayments under the Revolving
Credit Agreement pursuant to Section 3.1(b) thereof, there shall occur on such
date a prepayment of the Term Loans in an amount equal to the lesser of (x) the
amount of such proceeds or (y) the aggregate principal amount outstanding under
the Term Loans. Each prepayment of the Term Loans under this Section 3.1(c)
shall be accompanied by accrued interest to the date of such prepayment on the
amount prepaid.
3.2. Mandatory Asset Sale Offers(a). (a) If the Borrower
is required to prepay any Term Loans by reason of any Lender's acceptance of an
Asset Sale Offer, the amount payable to such Lender shall be paid to the
Administrative Agent for the account of such Lender and credited to the
remaining aggregate principal amount outstanding under the Term Loans to such
Lender. Any prepayment of any Term Loan pursuant hereto shall be applied to
reduce the scheduled remaining Installments of principal on such Term Loan of
such Lender in inverse order of maturity.
(b) In the event that, pursuant to Section 6.8 hereof,
the Borrower shall be required to commence an offer to all Lenders to prepay
Term Loans (an "Asset Sale Offer"), it shall follow the procedures specified
below.
(i) The Asset Sale Offer shall remain open for a period
of 20 Business Days following its commencement and not more than 30
Business Days, except to the extent that a longer period is required by
applicable law (the "Offer Period"). No later than three Business Days
after the termination of the Offer Period (the "Prepayment Date"),
37
the Borrower shall prepay the principal amount of Term Loans required
to be prepaid pursuant to Section 6.8 hereof (the "Offer Amount") or,
if less than the Offer Amount has been requested to be prepaid, all
Term Loans for which prepayment was requested in response to the Asset
Sale Offer. Payment for any Term Loans shall be made in the same manner
as interest payments are made.
(ii) Upon the commencement of an Asset Sale Offer, the
Borrower shall send a notice to the Administrative Agent (for delivery
to each Lender). The notice shall contain all instructions and
materials necessary to enable such Lenders to request prepayment for
the Term Loans pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Lenders. The notice, which shall govern the terms
of the Asset Sale Offer, shall state:
(A) that the Asset Sale Offer is being made
pursuant to this Section 3.2 and Section 6.8 hereof and the
length of time the Asset Sale Offer shall remain open;
(B) the Offer Amount, the purchase price and the
Prepayment Date;
(C) that any Term Loan for which prepayment is
not requested or accepted for prepayment shall continue to
accrue interest;
(D) that, unless the Borrower defaults in making
such payment, any Term Loan accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest after the
Prepayment Date;
(E) that Lenders electing to have Term Loans
prepaid pursuant to an Asset Sale Offer may only elect to have
all Term Loans prepaid and may not elect to have only a
portion of its Term Loans;
(F) that Lenders shall be entitled to withdraw
their request if the Borrower, or the Administrative Agent, as
the case may be, receives, not later than the expiration of
the Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Lender, the principal
amount of the Term Loans for which the Lender requested
prepayment and a statement that such Lender is withdrawing his
request to have Term Loans prepaid; and
(G) that, if the aggregate principal amount of
Term Loans for which prepayment is requested by Lenders
exceeds the Offer Amount, the Administrative Agent shall
select the Term Loans to be prepaid on a pro rata basis.
(iii) On or before the Prepayment Date, the Borrower shall,
to the extent lawful, accept for prepayment, on a pro rata basis to the
extent necessary, the Offer Amount of Term Loans or portions thereof
for which prepayment is requested pursuant to the Asset Sale Offer, or
if prepayment for Term Loans in an aggregate amount less than the Offer
Amount have been requested, all Term Loans for which prepayment is
requested, and shall deliver to the Administrative Agent (for delivery
to the Lenders) an
38
Officers' Certificate stating that such Term Loans or portions thereof
were accepted for prepayment by the Borrower in accordance with the
terms of this Section 3.2. The Borrower shall promptly (but in any case
not later than five days after the Prepayment Date) deliver to the
Administrative Agent for the account of each Lender for which
prepayment is requested an amount equal to all outstanding amounts
under the Term Loans for which prepayment is requested by all Lenders
that were accepted by the Borrower for prepayment. The Administrative
Agent shall promptly forward the appropriate amount to each Lender
being prepaid.
3.3. Interest Rates and Payment Dates(a). (a) Each Term
Loan shall bear interest for each day during each Interest Period at a rate per
annum equal to the Eurodollar Rate determined for such day plus the Applicable
Margin.
(b) (i) If all or a portion of the principal amount of
any Term Loan shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), all outstanding Term Loans (whether or not overdue)
shall bear interest at a rate per annum equal to the rate that would otherwise
be applicable thereto pursuant to the foregoing provisions of this Section plus
2.00% and (ii) if all or a portion of any interest payable on any Term Loan
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2.00%, in each case, with respect to clauses (i) and (ii) above,
from the date of such non-payment until such amount is paid in full (after as
well as before judgment).
(c) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (b) of this
Section shall be payable from time to time on demand.
3.4. Computation of Interest and Fees(a). (a) Interest
and fees payable pursuant hereto shall be calculated on the basis of a 360-day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Term Loan resulting
from a change in the Eurocurrency Reserve Requirements shall become effective as
of the opening of business on the day on which such change becomes effective.
The Administrative Agent shall as soon as practicable notify the Borrower and
the relevant Lenders of the effective date and the amount of each such change in
interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
3.3(a).
3.5. Pro Rata Treatment and Payments(a). (a) Each
borrowing by the Borrower from the Lenders hereunder shall be made pro rata
according to the respective Term Percentages of the relevant Lenders.
39
(b) Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Term Loans shall be made
pro rata according to the respective outstanding principal amounts of the Term
Loans then held by the Lenders. Amounts prepaid on account of the Term Loans may
not be reborrowed.
(c) All payments (including prepayments) to be made by
the Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 11:00 a.m., New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Funding Office, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received.
(d) Unless the Administrative Agent shall have been
notified in writing by the Borrower prior to the date of any payment due to be
made by the Borrower hereunder that the Borrower will not make such payment to
the Administrative Agent, the Administrative Agent may assume that the Borrower
is making such payment, and the Administrative Agent may, but shall not be
required to, in reliance upon such assumption, make available to the Lenders
their respective pro rata shares of a corresponding amount. If such payment is
not made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
3.6. Requirements of Law(a). (a) If the adoption of or
any change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Term Loan made by it,
or change the basis of taxation of payments to such Lender in respect
thereof (except for Non-Excluded Taxes covered by Section 3.7 and
changes in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of continuing or maintaining
the Term Loans or to reduce any amount receivable hereunder in respect thereof,
then, in any such case, the Borrower shall promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate
40
such Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this paragraph, it
shall promptly notify the Borrower (with a copy to the Administrative Agent) of
the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, after submission by such Lender to the
Borrower (with a copy to the Administrative Agent) of a written request
therefor, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such corporation for such reduction.
(c) A certificate as to any additional amounts payable
pursuant to this Section submitted by any Lender to the Borrower (with a copy to
the Administrative Agent) shall be conclusive in the absence of manifest error.
Notwithstanding anything to the contrary in this Section, the Borrower shall not
be required to compensate a Lender pursuant to this Section for any amounts
incurred more than six months prior to the date that such Lender notifies the
Borrower of such Lender's intention to claim compensation therefor; provided
that, if the circumstances giving rise to such claim have a retroactive effect,
then such six-month period shall be extended to include the period of such
retroactive effect. The obligations of the Borrower pursuant to this Section
shall survive the termination of this Agreement and the payment of the Term
Loans and all other amounts payable hereunder.
3.7. Taxes. (a) All payments made by or on behalf of
the Borrower under this Agreement shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on any Agent or any Lender as a
result of a present or former connection between such Agent or such Lender and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or Other Taxes are required to be withheld from any
amounts payable to any Agent or any Lender hereunder, the amounts so payable to
such Agent or such Lender shall be increased to the extent necessary to yield to
such Agent or such Lender (after payment of all Non-Excluded Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement; provided, however, that the Borrower
shall not be required to
41
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (f) of this Section or (ii) in the case of any Lender
(or Transferee) that is not a "U.S. Person" as defined in Section 7701(a)(30) of
the Code (a "Non-U.S. Lender"), that are United States withholding taxes imposed
on amounts payable to such Lender at the time such Lender becomes a party to
this Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph. The
Borrower shall make (or cause to be made) any required withholding and pay (or
cause to be paid) the full amount withheld to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Administrative Agent for its own account or for the account of the
relevant Agent or Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the Agents and
the Lenders for any incremental taxes, interest or penalties that may become
payable by any Agent or any Lender as a result of any such failure.
(d) The Borrower shall indemnify the Administrative Agent
and any Lender for the full amount of Non-Excluded Taxes (to the extent the
Borrower would be required to pay additional amounts with respect to such
Non-Excluded Taxes pursuant to Section 3.7(a)) or Other Taxes arising in
connection with payments made under this Agreement (including, without
limitation, any Non-Excluded Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 3.7) paid by such Agent or Lender or any of
their respective Affiliates and any liability (including penalties, additions to
tax interest and expenses) arising therefrom or with respect thereto, whether or
not such Non-Excluded Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within ten days from the date
the Administrative Agent or any Lender or any of their respective Affiliates
makes written demand therefor.
(e) Each Non-U.S. Lender shall deliver to the Borrower
and the Administrative Agent (or, in the case of a Participant, to the Lender
from which the related participation shall have been purchased) two copies of
either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case
of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a statement substantially in the form of Exhibit F and a Form W-8BEN,
or any subsequent versions thereof or successors thereto, properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement and the other Loan Documents. Such forms shall be delivered
by each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall
42
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrower (or any
other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this paragraph, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this paragraph that
such Non-U.S. Lender is not legally able to deliver.
(f) A Lender that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the reasonable written request of
the Borrower, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate, provided that such Lender is legally entitled to complete,
execute and deliver such documentation and in such Lender's judgment such
completion, execution or submission would not materially prejudice the legal
position of such Lender.
(g) If any Administrative Agent or any Lender receives a
refund of any Non-Excluded Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 3.7, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 3.7 with respect to
the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Borrower, upon the request of such Agent or
such Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to such Agent or such Lender in the event such Agent or such Lender
is required to repay such refund to such Governmental Authority. This paragraph
shall not be construed to require any Agent or any Lender to make available its
tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.
(h) The agreements in this Section shall survive the
termination of this Agreement and the payment of the Term Loans and all other
amounts payable hereunder.
3.8. Indemnity. The Borrower agrees to indemnify each
Lender and to hold each Lender harmless from any cost, liability, obligation,
loss or expense that such Lender may sustain or incur as a consequence of (a)
default by the Borrower in making a borrowing of or continuation of the Term
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (b) default by the Borrower in making any
prepayment of the Term Loans after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of the Term Loans on a day that is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest that would have accrued on the
amount so prepaid, or not so borrowed or continued, for the period from the date
of such prepayment or of such failure to borrow or continue to the last day of
such Interest
43
Period (or, in the case of a failure to borrow or continue, the Interest Period
that would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Term Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount of
interest (as reasonably determined by such Lender) that would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. A certificate as
to any amounts payable pursuant to this Section submitted to the Borrower by any
Lender shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Term Loans and
all other amounts payable hereunder.
3.9. Change of Lending Office. Each Lender agrees that,
upon the occurrence of any event giving rise to the operation of Section 3.6 or
3.7(a) with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Term Loans affected by such event with
the object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
or postpone any of the obligations of the Borrower or the rights of any Lender
pursuant to Section 3.6 or 3.7(a).
3.10. Replacement of Lenders. The Borrower shall be
permitted to replace any Lender that requests reimbursement for amounts owing
pursuant to Section 3.6 or 3.7(a); provided that (i) such replacement does not
conflict with any Requirement of Law, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) prior to any
such replacement, such Lender shall have taken no action under Section 3.9 so as
to eliminate the continued need for payment of amounts owing pursuant to Section
3.6 or 3.7(a), (iv) the replacement financial institution shall purchase, at
par, all Term Loans and other amounts owing to such replaced Lender on or prior
to the date of replacement, (v) the Borrower shall be liable to such replaced
Lender under Section 3.8 if any Term Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent or each of the Lenders,
(vii) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 10.6 (provided that the Borrower shall
be obligated to pay the registration and processing fee referred to therein),
(viii) until such time as such replacement shall be consummated, the Borrower
shall pay all additional amounts (if any) required pursuant to Section 3.6 or
3.7(a), as the case may be, and (ix) any such replacement shall not be deemed to
be a waiver of any rights that the Borrower, the Administrative Agent or any
other Lender shall have against the replaced Lender.
3.11. Evidence of Debt. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Lender resulting from each Term Loan of
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.
(b) The Administrative Agent, on behalf of the Borrower,
shall maintain the Register pursuant to Section 10.6(d), and a subaccount
therein for each Lender, in which shall be recorded (i) the amount of each Term
Loan made hereunder and any Note evidencing such Xxxx
00
Xxxx, (xx) the amount of any principal or interest due and payable or to become
due and payable from the Borrower to each Lender hereunder and (iii) both the
amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender's share thereof.
(c) The entries made in the Register and the accounts of
each Lender maintained pursuant to Section 3.11(a) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain the
Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Term Loans made to the Borrower by such Lender in accordance with the terms of
this Agreement.
(d) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower substantially in the form of
Exhibit G, evidencing any Term Loans, as the case may be, of such Lender.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to make the Term Loans, the Borrower hereby represents and
warrants to each Agent and each Lender that:
4.1. Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of Holdings and its consolidated Subsidiaries as at
June 30, 2003 (including the notes thereto) (the "Pro Forma Balance Sheet"),
copies of which have heretofore been furnished to each Lender, has been prepared
giving effect (as if such events had occurred on such date) to (i) the
borrowings to be made under the Revolving Credit Agreement, the Senior Notes to
be issued and the Term Loans to be made hereunder on the Closing Date and the
use of proceeds thereof and (ii) the payment of fees and expenses in connection
with the foregoing. The Pro Forma Balance Sheet has been prepared based on the
best information available to Holdings as of the date of delivery thereof, and
presents fairly on a pro forma basis the estimated financial position of
Holdings and its consolidated Subsidiaries as at June 30, 2003, assuming that
the events specified in the preceding sentence had actually occurred at such
date.
(b) The audited consolidated balance sheets of Holdings
and its Subsidiaries as at December 31, 2002, December 31, 2001, and December
31, 2000, and the related consolidated statements of income and of cash flows
for the fiscal years ended on such dates, reported on by and accompanied by an
unqualified report from Ernst & Young LLP, present fairly the consolidated
financial condition of Holdings and its Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The unaudited consolidated balance sheet of
Holdings and its Subsidiaries as at June 30, 2003, and the related unaudited
consolidated statements of income and cash flows for the six-month period ended
on such date, present fairly the consolidated financial condition of Holdings
and its Subsidiaries as at such date, and the consolidated results of its
operations and its consolidated cash flows for the six-month period then ended
(subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto,
45
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein, and subject, in the case of interim financial statements,
to normal year-end audit adjustments and the absence of footnotes). Other than
pursuant to the Loan Documents, the Revolving Credit Agreement and the Senior
Note Indenture, no Group Member has any material Guarantee Obligations,
contingent liabilities or liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, in each case, that are not reflected in the most recent financial
statements referred to in this paragraph. During the period from June 30, 2003,
to and including the date hereof there has been no disposition by any Group
Member of any material part of its business or property.
4.2. No Change. Since December 31, 2002, there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.3. Corporate Existence; Compliance with Law. Each Group
Member (a) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (b) has the power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation or foreign limited liability company and in good standing
under the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification and (d) is
in compliance with all Requirements of Law except, in the case of clauses (c)
and (d), to the extent that the failure to be so qualified or to be in good
standing or the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.4. Power; Authorization; Enforceable Obligations. Each
Loan Party has the power and authority to make, deliver and perform the Loan
Documents to which it is a party and, in the case of the Borrower, to obtain
extensions of credit hereunder. Each Loan Party has taken all necessary
organizational action to authorize the execution, delivery and performance of
the Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the extensions of credit on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the Recapitalization and the extensions of credit hereunder
or in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i)
consents, authorizations, filings and notices described in Schedule 4.4, which
consents, authorizations, filings and notices have been obtained or made and are
in full force and effect and (ii) the filings and recordations referred to in
Section 4.19. Each Loan Document has been duly executed and delivered on behalf
of each Loan Party party thereto. This Agreement constitutes, and each other
Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
46
4.5. No Contractual or Legal Bar. The execution, delivery
and performance of this Agreement and the other Loan Documents, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or any material Contractual Obligation of any Group Member and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any such Requirement of Law or any
such Contractual Obligation (other than the Liens created by the Security
Documents). No Requirement of Law or Contractual Obligation applicable to the
Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
4.6. Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against any Group Member or
against any of their respective properties or revenues (a) with respect to any
of the Loan Documents or any of the transactions contemplated hereby or thereby,
or (b) that would reasonably be expected to have a Material Adverse Effect.
Attached hereto as Schedule 4.6 is a schedule of all existing material
litigation affecting any Group Member.
4.7. No Default. No Group Member is in default under or
with respect to any of its Contractual Obligations in any respect that could
reasonably be expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
4.8. Ownership of Property; Liens. Each Group Member has
title in fee simple to, or a valid leasehold interest in, all its real property,
and good and marketable title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by Section 6.10.
4.9. Intellectual Property. Each Group Member owns, or is
licensed to use, all material Intellectual Property used to conduct, or
necessary for the conduct of, its business as currently conducted; no claim has
been asserted and is pending by any Person challenging or questioning the use or
ownership of, or right to use, any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does the Borrower know of any
valid basis for any such claim which claim, if resolved adversely to the
Borrower or any Group Member could reasonably be expected to have a Material
Adverse Effect; and the use of Intellectual Property by each Group Member does
not infringe on the Intellectual Property rights of any Person or defame any
Person to the extent that such infringement or defamation could, in the
aggregate, reasonably be expected to have a Material Adverse Effect, or give any
third party the right to an accounting or share of profits (other than pursuant
to license agreements in the ordinary course of business). None of the
Intellectual Property used by any Group Member in its business as currently
conducted or proposed to be conducted, or licensed by any Group Member to any
third party is subject to any statutory termination rights or statutory
reversionary rights which rights can be exercised prior to the year 2010 where
such statutory termination or statutory reversion, or a notice thereof, could
reasonably be expected to have a Material Adverse Effect.
4.10. Taxes. Each Group Member has filed or caused to be
filed all Federal, state and other material tax returns that are required to be
filed and has paid all taxes shown to be due and payable on said returns or on
any material assessments made against it or any of its property and all other
material taxes, fees or other charges imposed on it or any of its property by
47
any Governmental Authority (other than any taxes the amount or validity of which
are currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of Holdings, the Borrower or its Subsidiaries, as the case may be); the
contents of all such material tax returns are correct and complete in all
material respects; no tax Lien has been filed, and, to the knowledge of the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge. No Group Member (i) intends the Term Loans or any other transaction
contemplated hereby to be a "reportable transaction" (within the meaning of
Treasury Regulation 1.6011-4) or (ii) is aware of any facts or events that would
result in such treatment.
4.11. Federal Regulations. No part of the proceeds of any
Term Loans, and no other extensions of credit hereunder, will be used for
"buying" or "carrying" any "margin stock" within the respective meanings of each
of the quoted terms under Regulation U as now and from time to time hereafter in
effect or for any purpose that violates the provisions of the Regulations of the
Board. If requested by any Lender or the Administrative Agent, the Borrower will
furnish to the Administrative Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G-3 or FR Form U-1 as
applicable, referred to in Regulation U.
4.12. Labor Matters. Except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against any Group Member pending or, to the
knowledge of the Borrower, threatened; (b) hours worked by and payment made to
employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the relevant Group Member.
4.13. ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither the Borrower nor any Commonly
Controlled Entity would become subject to any material liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent. Except to the extent required under
Section 4980B of the Code or Title I, subtitle B, Part 6 of ERISA, no Plan
provides health or welfare benefits, through the purchase of insurance or
otherwise, for any retired or former
48
employee of the Borrower or a Commonly Controlled Entity, which, individually or
in the aggregate, would have a Material Adverse Effect.
4.14. Investment Company Act; Other Regulations. No Loan
Party is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15. Subsidiaries. (a) Except as disclosed to the
Administrative Agent by the Borrower in writing from time to time after the
Closing Date, and subject to Section 4.15(b), (i) Schedule 4.15(a) sets forth
the name and jurisdiction of formation of each Subsidiary and, as to each such
Subsidiary, the percentage of each class of Capital Stock owned by any Group
Member and (ii) there are no outstanding subscriptions, options, warrants,
calls, rights or other agreements or commitments (other than stock options
granted to employees or directors and directors' qualifying shares) of any
nature relating to any Capital Stock of the Borrower or any Subsidiary, except
as created by the Loan Documents.
(b) At or prior the Closing Date, (i) each of Xxxxxxx
Communications, LLC, XxxxXxxx.xxx Holdings, LLC, and XX.xxx Holdings, LLC will
have been merged into The Coriolis Group, LLC, (ii) Xxxxxxxx.xxx, LLC, will have
been merged into Educational Design, LLC (which will have been renamed Triumph
Learning, LLC), (iii) Audio Adventures, LLC will have been merged into Recorded
Xxxxx, XXX, (iv) Newbridge Educational Publishing, LLC will have been merged
into Sundance Publishing, LLC (which will have been renamed Sundance/Newbridge
Educational Publishing, LLC), and (v) each of Oakstone Wellness Publishing, LLC
and Educational Reviews Holding, LLC will have been merged into Oakstone
Publishing, LLC.
4.16. Use of Proceeds. The proceeds of the Term Loans shall
be used to finance a portion of the Recapitalization and to pay related fees and
expenses.
4.17. Environmental Matters. Except as, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or
operated by any Group Member (the "Properties") do not contain, and to the
knowledge of the Borrower have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under circumstances that
constitute or constituted a violation of, or could give rise to liability under,
any Environmental Law;
(b) no Group Member has received or is aware of any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding either environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the business operated
by any Group Member (the "Business"), nor does the Borrower have knowledge or
reason to believe that any such notice will be received or is being threatened;
(c) Materials of Environmental Concern have not been
transported or disposed of by any Group Member in violation of, or in a manner
or to a location that could give
49
rise to liability under, any Environmental Law, nor has any Group Member or, to
the knowledge of the Borrower, any other person, generated, treated, stored or
disposed of any Materials of Environmental Concern at, on or under any of the
Properties in violation of, or in a manner that could give rise to liability
under, any applicable Environmental Law;
(d) no judicial proceeding or governmental or
administrative action is pending or, to the knowledge of the Borrower,
threatened, under any Environmental Law to which any Group Member is or, to the
knowledge of the Borrower, will be named as a party, nor is any Group Member a
party to otherwise subject to any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law;
(e) there has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or arising from or
related to the operations of any Group Member in connection with the Properties
or otherwise in connection with the Business, in violation of or in amounts or
in a manner that could give rise to liability under Environmental Laws;
(f) the Properties and all operations of Group Members at
the Properties are in compliance, and have, during the period such operations
have been conducted at such Properties by such Group Members, been in
compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the Business arising from or
related to the operations of any Group Member; and
(g) no Group Member has assumed any liability of any
other Person under Environmental Laws.
4.18. Accuracy of Information, etc. No statement or
information contained in the offering memorandum, dated August 7, 2003, relating
to the offering and sale of the Senior Notes, the Revolving Credit Agreement,
this Agreement, any other Loan Document or any other document, certificate or
statement executed and delivered in connection with this Agreement or any other
Loan Document by any Loan Party, contained as of the date such statement,
information, document or certificate was so furnished, any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements contained herein or therein not misleading. The pro forma financial
information delivered pursuant to Section 5.1(c) hereof are based upon good
faith estimates and assumptions believed by management of the Borrower to be
reasonable at the time made. As of the date hereof, the representations and
warranties contained in the Loan Documents are true and correct in all material
respects. There is no fact known to any Loan Party that could reasonably be
expected to have a Material Adverse Effect that has not been expressly disclosed
herein, in the other Loan Documents or in any other documents, certificates and
statements furnished to the Administrative Agent and the Lenders for use in
connection with the transactions contemplated hereby and by the other Loan
Documents.
4.19. Security Documents. (a) Each of the Guarantee and
Collateral Agreement and the Debenture is effective to create in favor of the
Collateral Trustee, for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral described therein
50
and proceeds thereof. The Guarantee and Collateral Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Loan Parties in such Collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral Agreement) (i) in
the case of certificated Pledged Stock (as defined in the Guarantee and
Collateral Agreement), when certificates representing such Pledged Stock are
delivered to the Collateral Trustee together with appropriate instruments of
transfer endorsed in blank, (ii) in the case of any Deposit Accounts (as defined
in the Guarantee and Collateral Agreement) and uncertificated Pledged Stock,
upon delivery of the control agreements required by the Guarantee and Collateral
Agreement and (iii) in the case of any other Collateral, when the financing
statements and other filings specified in Schedule 3(a) of the Guarantee and
Collateral Agreement in appropriate form are filed in the offices specified on
Schedule 3(a) of the Guarantee and Collateral Agreement. The Debenture shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the UK Loan Party in the Collateral described therein and the
proceeds thereof, as security for the Secured Obligations (as defined in the
Debenture), subject to registration thereof at the Registrar of Companies for
England and Wales.
(b) The Charge Over Shares is effective to create in
favor of the Collateral Trustee, for the benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral described
therein and proceeds thereof. When certificates representing such Capital Stock
are delivered to the Collateral Trustee together with appropriate instruments of
transfer endorsed in blank, the Liens granted thereunder shall constitute fully
perfected Liens on, and security interests in, all right, title and interest of
Recorded Xxxxx, XXX in such Collateral and the proceeds thereof, as security for
the Secured Obligations (as defined in such Charge Over Shares).
(c) Each of the Mortgages is effective to create in favor
of the Collateral Trustee, for the benefit of the Secured Parties, a legal,
valid and enforceable Lien on the Mortgaged Properties described therein and
proceeds thereof, and when the Mortgages are filed or recorded, as applicable,
in the offices specified on Schedule 4.19(c), each such Mortgage shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in the Mortgaged Properties and the proceeds
thereof, as security for the Obligations (as defined in the relevant Mortgage).
Schedule 1.1(a) lists, as of the Closing Date, each registered copyrighted work,
material copyright license, patent, copyright, trademark and patent application,
patent license, registered trademark, registered service xxxx, trademark
license, service xxxx license, and trade secret license owned or held by the
Borrower or any of its Subsidiaries. Schedule 1.1(b) lists, as of the Closing
Date, each parcel of owned real property located in the United States and held
by the Borrower or any of its Subsidiaries. Schedule 1.1(c) lists, as of the
Closing Date, each parcel of real property located in the United States and
leased by the Borrower or any of its Subsidiaries
4.20. Solvency. Each Loan Party is, and after giving effect
to the incurrence of all Indebtedness and obligations being incurred in
connection herewith and in connection with the Recapitalization will continue to
be, Solvent.
4.21. Regulation H. No Real Property Mortgage encumbers
improved real property that is located in an area that has been identified by
the Secretary of Housing and Urban
51
Development as an area having special flood hazards and in which flood insurance
has been made available under the National Flood Insurance Act of 1968.
4.22. Certain Documents. The Borrower has delivered to the
Administrative Agent a complete and correct copy of the Senior Note Indenture
and the Revolving Credit Agreement, including any amendments, supplements or
modifications with respect to any of the foregoing.
4.23. Financial Assistance. Neither the execution, delivery
or performance of any of the Loan Documents nor the incurrence of the
obligations and liabilities thereunder by XX Xxxxx Limited constitutes or will
constitute unlawful financial assistance for the purposes of sections 151 to 158
(inclusive) of the Companies Xxx 0000 of England and Wales.
SECTION 5. CONDITIONS PRECEDENT
5.1. Conditions to Extension of Credit. The effectiveness
of this agreement and the agreement of each Lender to make the extension of
credit requested to be made by it is subject to the satisfaction, prior to or
concurrently with the making of such extension of credit on the Closing Date, of
the following conditions precedent to the satisfaction of each Agent and each
Lender:
(a) Term Loan Agreement; Guarantee and Collateral
Agreement, etc. The Administrative Agent shall have received (i) this Agreement,
or, in the case of the Lenders, an Addendum, executed and delivered by each
Agent, the Borrower and each Person that is a Lender as of the Closing Date,
(ii) the Guarantee and Collateral Agreement, executed and delivered by the
Borrower and each Guarantor, (iii) the Charge Over Shares, duly executed and
delivered by Recorded Xxxxx, XXX pledging 100% of the Capital Stock of the UK
Loan Party, (iv) the Debenture duly executed and delivered by the UK Loan Party,
(v) the Collateral Trust Agreement, executed by each party thereto other than
the Administrative Agent, (vi) an Acknowledgment and Consent in the form
attached to the Guarantee and Collateral Agreement, executed and delivered by
each Issuer (as defined therein), if any, that is not a Loan Party, (vii) a
Subordinated Intercompany Note executed by Holdings, the Borrower, and each of
its Subsidiaries, and (viii) a Control Agreement (A) pertaining to each
Securities Account and each Deposit Account of any Loan Party pledged to the
Collateral Trustee pursuant to the Guarantee and Collateral Agreement, executed
and delivered by each such Loan Party and (B) pertaining to any uncertificated
securities of the Borrower or any of its Subsidiaries, executed by the Borrower
or such Subsidiary.
(b) Concurrent Transactions, etc.
(i) The following transactions shall have been
consummated, in each case on terms and conditions reasonably
satisfactory to each Agent and each Lender:
(A) the Borrower shall have executed and
delivered the Revolving Credit Agreement on terms and
conditions satisfactory to each of the Lenders and the
conditions to the initial loan thereunder shall have been
satisfied;
52
(B) the Borrower shall have received at least
$140,000,000 in gross cash proceeds (before fees and expenses)
from the issuance of the Senior Notes on terms and conditions
satisfactory to each of the Lenders; and
(C) (1) The Administrative Agent shall have
received satisfactory evidence that the Existing Credit
Facility shall have been terminated, all amounts thereunder
shall have been paid in full, and all commitments and
reimbursement obligations thereunder shall have been
terminated and (2) satisfactory arrangements shall have been
made for the termination of all Liens granted in connection
therewith, in each case on terms and conditions satisfactory
to each of the Lenders.
(ii) The capital and ownership structure of the Borrower
and its Subsidiaries shall be satisfactory to each of the Lenders after
giving effect to the Recapitalization.
(iii) All outstanding Indebtedness of the Borrower and its
Subsidiaries prior to the consummation of the Recapitalization shall be
repaid in full, other than Indebtedness of the Borrower and its
Subsidiaries not in excess of $1,000,000, and no change of control
rights under any indebtedness permitted to remain outstanding pursuant
to this Section 5.1(b)(iii) shall be triggered by the consummation of
the Recapitalization.
(c) Pro Forma Balance Sheet; Financial Statements. The
Lenders shall have received (i) the Pro Forma Balance Sheet, (ii) audited
consolidated financial statements of Holdings and its Subsidiaries for the 2002,
2001 and 2000 fiscal years and (iii) unaudited interim consolidated financial
statements of Holdings and its Subsidiaries for each fiscal month and quarterly
period ended subsequent to the date of the latest applicable financial
statements delivered pursuant to clause (ii) of this paragraph as to which such
financial statements are available, in the case of clauses (ii) and (iii)
prepared in accordance with U.S. GAAP (subject, in the case of interim financial
statements, to year-end adjustments and the absence of footnotes), and in the
case of clause (ii) prepared in accordance with Regulation S-X, except as
otherwise agreed to by the Lenders.
(d) Approvals. All governmental and third party approvals
necessary, or in the discretion of the Administrative Agent or Lenders,
advisable, in connection with the Recapitalization (including the transactions
contemplated hereby) and the continuing operations of the Group Members shall
have been obtained and be in full force and effect.
(e) Lien Searches. The Administrative Agent shall have
received the results of recent UCC, title and judgment lien search in each of
the jurisdictions where the Loan Parties or their assets are located, lien
searches of the records of the U.S. Copyright Office, U.S. Patent and Trademark
Office and such foreign equivalent offices as the Administrative Agent or the
Lenders deem appropriate, and each other jurisdiction where the Administrative
Agent or the Lenders reasonably determines that it is prudent to perform such
search, and such search shall reveal no title defects or liens on any of the
assets of the Loan Parties except for title defects or liens permitted by
Section 6.10 or resolved or discharged on or prior to the Closing Date pursuant
to documentation satisfactory to the Administrative Agent or each of the
Lenders.
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(f) Environmental Reports. With respect to each item of
real property owned by any Group Member, the Administrative Agent shall have
received a copy of an environmental site assessment report conforming to the
standards of the ASTM "Standard Practice for Environmental Site Assessments:
Phase I Environmental Site Assessment Process" (ASTM 1527-00) or similar report
and other documentation, in form and substance satisfactory to the
Administrative Agent or each of the Lenders, sufficient to establish that the
property does not contain identifiable environmental conditions that are likely
to cause a Material Adverse Effect. With respect to each item of real property
leased by any Group Member, the Administrative Agent shall have received
sufficient documentation (which may include, by way of example, copies of leases
and prior environmental site assessment reports) to establish either that the
property is not likely to contain identifiable environmental conditions or that
any such existing environmental conditions are not likely to cause a Material
Adverse Effect.
(g) Fees. The Lenders and the Agents shall have received
all fees required to be paid, and all expenses for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), on or
before the Closing Date.
(h) Closing Certificate. The Administrative Agent shall
have received a certificate of each Loan Party, dated the Closing Date,
substantially in the form of Exhibit B, with appropriate insertions and
attachments including the certificate of formation of each Loan Party that is an
entity certified by the relevant authority of the jurisdiction of organization
of such Loan Party, and a long form good standing certificate for each Loan
Party from its jurisdiction of organization. In the case of the certificate of
Recorded Xxxxx, XXX required above, such insertions and attachments shall also
include (i) a certified copy of an executed shareholder resolution amending the
articles of association of the UK Loan Party to remove any restrictions on the
transferability of the shares of the UK Loan Party upon the enforcement of the
security interests in respect thereof granted pursuant to the terms of the
Charge Over Shares and (ii) written confirmation that the UK Loan Party will act
as agent for Recorded Xxxxx, XXX for acceptance of process in respect of any
legal proceedings instituted in England in respect of such Charge Over Shares.
(i) Legal Opinions. The Administrative Agent and the
Lenders shall have received the following executed legal opinions:
(i) the legal opinion of Xxxxxxx Procter LLP, counsel to
the Borrower and its Subsidiaries, substantially in the form of Exhibit
E-1;
(ii) the legal opinion of local counsel in each of
Maryland (substantially in the form of Exhibit E-2) and England
(substantially in the form of Exhibit E-3) and of such other special
and local counsel as may be required by the Administrative Agent or a
Lender.
Each such legal opinion shall cover such other matters
incident to the transactions contemplated by this Agreement as the
Administrative Agent or a Lender may reasonably require.
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(j) Pledged Stock; Stock Powers; Pledged Notes. The
Collateral Trustee shall have received (i) the certificates representing the
shares of Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement and the Charge Over Shares, together with an undated (and, in the case
of the UK Loan Party, stamped) instrument of transfer for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof and (ii)
each promissory note (if any) pledged to the Collateral Trustee pursuant to the
Guarantee and Collateral Agreement endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank) by the pledgor thereof.
(k) Filings, Registrations and Recordings. Each document
(including any Uniform Commercial Code financing statement) required by, or
comprising, the Security Documents or under law or reasonably requested by the
Administrative Agent or the Lenders to be filed, registered or recorded in order
to create in favor of the Collateral Trustee, for the benefit of the Secured
Parties, a perfected Lien on the Collateral described therein, shall be in
proper form for filing, registration or recordation and delivered to the
Administrative Agent, as applicable.
(l) Mortgages, etc.
(i) The Administrative Agent shall have received a
Mortgage and a UCC-1 financing statement with respect to each Mortgaged
Property, executed and delivered by a duly authorized officer of each
party thereto.
(ii) The Administrative Agent shall have received, and the
title insurance company issuing the policy referred to in clause (iii)
below (the "Title Insurance Company") shall have received, maps or
plats of an as-built survey of the sites of the Mortgaged Real
Properties certified to the Administrative Agent and the Title
Insurance Company in a manner satisfactory to the Administrative Agent
or the Lenders and the Title Insurance Company, dated a date
satisfactory to the Administrative Agent or the Lenders and the Title
Insurance Company by an independent professional licensed land surveyor
satisfactory to the Administrative Agent or the Lenders and the Title
Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by
the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality of
the foregoing, there shall be surveyed and shown on such maps, plats or
surveys the following: (A) the locations on such sites of all the
buildings, structures and other improvements and the established
building setback lines; (B) the lines of streets abutting the sites and
width thereof; (C) all access and other easements appurtenant to the
sites; (D) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the site,
whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (E) any encroachments on any adjoining
property by the building structures and improvements on the sites; (F)
if the site is described as being on a filed map, a legend relating the
survey to said map; and (G) the flood zone designations, if any, in
which the Mortgaged Real Properties are located.
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(iii) The Administrative Agent shall have received in
respect of each Mortgaged Real Property a mortgagee's title insurance
policy (or policies) or marked up unconditional binder for such
insurance. Each such policy shall (A) be in an amount satisfactory to
the Lenders; (B) be issued at ordinary rates; (C) insure that the Real
Property Mortgage insured thereby creates a valid first Lien on such
Mortgaged Real Property free and clear of all defects and encumbrances,
except as permitted by the Lenders in their reasonable discretion; (D)
name the Collateral Trustee for the benefit of the Secured Parties as
the insured thereunder; (E) be in the form of ALTA Loan Policy - 1970
(Amended 10/17/70 and 10/17/84) (or equivalent policies); (F) contain
such endorsements and affirmative coverage as the Lenders may
reasonably request; and (G) be issued by title companies satisfactory
to the Lenders (including any such title companies acting as
co-insurers or reinsurers, at the option of the Lenders). The
Administrative Agent shall have received evidence satisfactory to the
Lenders that all premiums in respect of each such policy, all charges
for mortgage recording tax, all fees and expenses in connection with
recording the Mortgages and UCC-1 financing statements and all related
expenses, if any, have been paid.
(iv) The Administrative Agent shall have received a copy
of all recorded documents referred to, or listed as exceptions to title
in, the title policy or policies referred to in clause (iii) above and
a copy of all other material documents affecting the Mortgaged
Properties.
(m) Solvency Certificate. The Administrative Agent shall
have received a solvency certificate from the chief financial officer of the
Borrower substantially in the form of Exhibit J.
(n) Insurance. The Administrative Agent shall have
received insurance certificates satisfying the requirements of Section 5.3 of
the Guarantee and Collateral Agreement.
(o) Absence of Changes. The Lenders shall be satisfied
that there shall not have occurred or become known to it any Material Adverse
Change.
(p) No Default. Both before and after giving effect to
such extension of credit and the application of proceeds thereof (but if any
Default or Event of Default of the nature referred to in Section 8.1(e) shall
have occurred, without giving effect to the application, directly or indirectly,
of the proceeds of such extension of credit, if such proceeds are to be applied,
directly or indirectly (including if the making of such extension of credit
shall free up other funds for such purpose) to the payment of any amount in
respect of other Indebtedness), no Default or Event of Default shall have
occurred and be continuing.
(q) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to the Loan
Documents or any purchase agreement or similar document relating to the Senior
Notes or the Revolving Credit Agreement shall be true and correct on and as of
the Closing Date as if made on and as of the Closing Date (unless such
representations and warranties specifically refer to a certain date, in which
case such representations and warranties shall have been true and correct on and
as of such date) after
56
giving effect to the extension of credit requested to be made on the Closing
Date and the application of proceeds thereof (but if any Default or Event of
Default of the nature referred to in Section 8.1(e) shall have occurred, without
giving effect to the application, directly or indirectly, of the proceeds of
such extension of credit, if such proceeds are to be applied, directly or
indirectly (including if the making of such extension of credit shall free up
other funds for such purpose) to the payment of any amount in respect of other
Indebtedness).
(r) No Conflict with Senior Notes and Revolving Credit
Agreement. The extensions of credit requested by the Borrower shall be permitted
by the terms of the Senior Note Indenture and the Revolving Credit Agreement.
(s) Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of any Loan Party shall be reasonably
satisfactory in form and substance to the Administrative Agent or each of the
Lenders, and the Administrative Agent shall have received all information,
approvals, opinions, documents or instruments as the Administrative Agent or the
Lenders may reasonably request.
SECTION 6. COVENANTS
6.1. Reports. (a) Whether or not required by the rules
and regulations of the SEC, so long as any Term Loan Obligations are
outstanding, the Borrower will furnish to the Administrative Agent (for delivery
to each Lender), within the time periods specified in the SEC's rules and
regulations:
(i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms
10-Q and 10-K if the Borrower were required to file such forms,
including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual
information only, a report on the annual financial statements by the
Borrower certified independent accountants; and
(ii) all current reports that would be required to be
filed with the SEC on Form 8-K if the Borrower were required to file
such reports.
(b) The Borrower will post the reports referred to in the
preceding paragraph on its website within the time periods that would apply if
the Borrower were required to file those reports with the SEC.
(c) If the Borrower has designated any of its
Subsidiaries as Unrestricted Subsidiaries and the aggregate total assets of such
Unrestricted Subsidiaries exceeds $1.0 million, then the quarterly and annual
financial information required by the preceding paragraph will include a
reasonably detailed presentation, either on the face of the financial statements
or in the footnotes thereto, and in Management's Discussion and Analysis of
Financial Condition and Results of Operations, of the financial condition and
results of operations of the Borrower and its Restricted Subsidiaries separate
from the financial condition and results of operations of the Unrestricted
Subsidiaries of the Borrower.
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(d) Notwithstanding the foregoing, if Holdings is a
Guarantor, holds no material assets other than cash, Cash Equivalents and the
Capital Stock of the Borrower (and performs the related incidental activities
associated with such ownership) and complies with the requirements of Rule 3-10
of Regulation S-X promulgated by the SEC (or any successor provision), the
reports, information and other documents required pursuant to this Section 6.1
may, at the option of the Borrower, be those of Holdings rather than the
Borrower.
6.2. Compliance Certificate. (a) The Borrower shall
deliver to the Administrative Agent, within 90 days after the end of each fiscal
year, an Officers' Certificate stating that a review of the activities of the
Borrower and its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Borrower has kept, observed, performed and fulfilled its obligations under
this Agreement, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Borrower has kept,
observed, performed and fulfilled each and every covenant contained in this
Agreement and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Agreement (or, if a Default or Event of
Default has occurred, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action the Borrower is taking or proposes
to take with respect thereto) and that to the best of his or her knowledge no
event has occurred and remains in existence by reason of which payments on
account of the principal of or interest, if any, on the Term Loans is prohibited
or if such event has occurred, a description of the event and what action the
Borrower is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 6.1 above shall be
accompanied by a written statement of the Borrower's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Borrower has violated any provisions of Article 6 or Article 7 hereof or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) So long as any of the Term Loan Obligations are
outstanding, the Borrower will deliver to the Administrative Agent, forthwith
upon any Officer becoming aware of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and what action the
Borrower is taking or proposes to take with respect thereto.
6.3. Taxes. The Borrower will pay, and will cause each of
its Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Lenders.
6.4. Stay, Extension and Usury Laws. The Borrower
covenants (to the extent that it may lawfully do so) that it will not, nor cause
any Guarantor to, at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension
58
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Agreement; and the Borrower and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waive all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Administrative Agent, but will suffer and permit
the execution of every such power as though no such law has been enacted.
6.5. Restricted Payments. (a) The Borrower will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly:
(i) declare or pay any dividend or make any other payment
or distribution on account of the Borrower's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the
Borrower or any of its Restricted Subsidiaries) or to the direct or
indirect holders of the Borrower's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Borrower and other than dividends or
distributions payable to the Borrower or a Restricted Subsidiary of the
Borrower);
(ii) purchase, redeem or otherwise acquire or retire for
value (including without limitation, in connection with any merger or
consolidation involving the Borrower) any Equity Interests of the
Borrower or any direct or indirect parent of the Borrower;
(iii) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any
Indebtedness of the Borrower or any Guarantor that is contractually
subordinated to the Term Loans or to the Guarantor Obligations (as
defined under the Guarantee and Collateral Agreement) for the benefit
of the Secured Parties (excluding any intercompany Indebtedness between
or among the Borrower and any of its Restricted Subsidiaries), except a
payment of interest or principal at the Stated Maturity thereof; or
(iv) make any Restricted Investment (all such payments and
other actions set forth in these clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such
Restricted Payment:
(i) no Default or Event of Default has occurred and is
continuing or would occur as a consequence of such Restricted Payment;
and
(ii) the Debt to Cash Flow Ratio for the Borrower's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
Restricted Payment is made would have been no greater than 5.0 to 1,
determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if such Restricted Payment had been
made at the beginning of such four-quarter period; and
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(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Borrower and its
Restricted Subsidiaries after the date of this Agreement (excluding
Restricted Payments permitted by clauses (ii), (iii), (iv), (vi),
(vii), (viii) and (ix) of paragraph (b) below), is less than the sum,
without duplication of:
(A) 50% of the Consolidated Net Income of the
Borrower for the period (taken as one accounting period) from
the beginning of the first calendar month commencing after the
date of this Agreement to the end of the Borrower's most
recently ended calendar month for which internal financial
statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit); plus
(B) 100% of the aggregate net proceeds
(including the Fair Market Value of property other than cash
or Cash Equivalents) received by the Borrower since the date
of this Agreement as a contribution to its equity capital or
from the issue or sale of Equity Interests of the Borrower
(other than Disqualified Stock) or from the issue or sale of
convertible or exchangeable Disqualified Stock or convertible
or exchangeable debt securities of the Borrower that have been
converted into or exchanged for such Equity Interests (other
than Equity Interests (or Disqualified Stock or debt
securities) sold to a Subsidiary of the Borrower); plus
(C) to the extent that any Restricted Investment
that was made after the date of this Agreement is sold for
cash or otherwise liquidated or repaid for cash, the lesser of
(1) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (2) the
initial amount of such Restricted Investment; plus
(D) to the extent that any Unrestricted
Subsidiary of the Borrower designated as such after the date
of this Agreement is redesignated as a Restricted Subsidiary
after the date of this Agreement, the lesser of (1) the Fair
Market Value of the Borrower's Investment in such Subsidiary
as of the date of such redesignation or (2) such Fair Market
Value as of the date on which such Subsidiary was originally
designated as an Unrestricted Subsidiary after the date of
this Agreement; plus
(E) 50% of any dividends received by the
Borrower or a Restricted Subsidiary of the Borrower after the
date of this Agreement from an Unrestricted Subsidiary of the
Borrower, to the extent that such dividends were not otherwise
included in Consolidated Net Income of the Borrower for such
period.
(b) The provisions of Section 6.5(a) will not prohibit:
(i) the payment of any dividend within 60 days after the
date of declaration of the dividend, if at the date of declaration the
dividend payment would have complied with the provisions of this
Agreement;
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(ii) the making of any Restricted Payment in exchange for,
or out of the net cash proceeds of the substantially concurrent sale
(other than to a Subsidiary of the Borrower) of, Equity Interests of
the Borrower (other than Disqualified Stock) or from the substantially
concurrent contribution of common equity capital to the Borrower;
provided that the amount of any such net cash proceeds that are
utilized for any such Restricted Payment will be excluded from clause
(iii)(B) of the preceding paragraph;
(iii) the defeasance, redemption, repurchase or other
acquisition of Indebtedness of the Borrower or any Guarantor that is
contractually subordinated to the Term Loans or to the Guarantor
Obligations (as defined under the Guarantee and Collateral Agreement)
for the benefit of the Secured Parties with the net cash proceeds from
a substantially concurrent incurrence of Permitted Refinancing
Indebtedness;
(iv) the payment of any dividend (or, in the case of any
partnership or limited liability company, any similar distribution) by
a Restricted Subsidiary of the Borrower to the holders of its Equity
Interests on a pro rata basis;
(v) so long as no Default has occurred and is continuing
or would be caused thereby, the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of
Holdings, the Borrower or any Restricted Subsidiary of the Borrower
held by any current or former officer, director or employee of
Holdings, the Borrower or any Restricted Subsidiary of the Borrower
pursuant to any equity subscription agreement, stock option agreement,
shareholders' agreement or similar agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests may not exceed the sum of (A) $1.0 million in
any calendar year (with unused amounts in any calendar year being
available to be so utilized in the immediately succeeding calendar
year) and (B) the net cash proceeds to the Borrower from any issuance
or reissuance of Equity Interests of the Borrower or any Restricted
Subsidiary (other than Disqualified Stock) to members of management
(which are excluded from the calculation set forth in clause (iii)(B)
of the preceding paragraph) and (C) the net cash proceeds to the
Borrower of any "key man" life insurance proceeds;
(vi) the repurchase of Equity Interests deemed to occur
upon the exercise of stock options;
(vii) the declaration and payment of regularly scheduled or
accrued dividends to holders of any class or series of Disqualified
Stock of the Borrower or any Restricted Subsidiary of the Borrower
issued on or after the date of this Agreement in accordance with the
Debt to Cash Flow Ratio test described in Section 6.7 hereof;
(viii) the payment of dividends to Holdings to be used by
Holdings to pay (A) franchise taxes and other fees, taxes and expenses
required to maintain its corporate existence and (B) for general
corporate and overhead expenses (including salaries and other
compensation of employees and professional expenses) incurred by
Holdings in the ordinary course of its business; provided, however,
that such dividends shall not exceed $500,000 in any calendar year;
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(ix) for so long as the Borrower is a member of a group
filing a consolidated or combined tax return with Holdings, payments to
Holdings in respect of an allocable portion of the tax liabilities of
such group that is attributable to the Borrower and its Subsidiaries
("Tax Payments"); provided, however, that (A) the Tax Payments shall
not exceed the lesser of (1) the amount of the relevant tax (including
any penalties and interest) that the Borrower would owe if the Borrower
were filing a separate tax return (or a separate consolidated or
combined return with its Subsidiaries that are members of the
consolidated or combined group), taking into account any carryovers and
carrybacks of tax attributes (such as net operating losses) of the
Borrower and such Subsidiaries from other taxable years and (2) the net
amount of the relevant tax that Holdings actually owes to the
appropriate taxing authority, and (B) any Tax Payments received from
the Borrower shall be paid over to the appropriate taxing authority
within 30 days of Holdings' receipt of such Tax Payments or refunded to
the Borrower; and
(x) other Restricted Payments in an aggregate amount not
to exceed $10.0 million since the date of this Agreement.
The amount of all Restricted Payments (other than cash) will
be the Fair Market Value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Borrower or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The Fair Market Value of any assets or securities that are required to be valued
by this Section 6.5 will be determined by the Board of Directors of the Borrower
whose resolution with respect thereto shall be delivered to the Administrative
Agent. The Board of Directors' determination must be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if the fair market value exceeds $10.0 million. Not later than
the date of making any Restricted Payment, the Borrower will deliver to the
Administrative Agent an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this Section 6.5 were computed, together with a copy of any fairness
opinion or appraisal required by this Agreement.
6.6. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
(a) The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(i) pay dividends or make any other distributions on its
Capital Stock to the Borrower or any of its Restricted Subsidiaries, or
with respect to any other interest or participation in, or measured by,
its profits, or pay any indebtedness owed to the Borrower or any of its
Restricted Subsidiaries;
(ii) make loans or advances to the Borrower or any of its
Restricted Subsidiaries; or
(iii) sell, lease or transfer any of its properties or
assets to the Borrower or any of its Restricted Subsidiaries.
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(b) The restrictions in Section 6.6(a) will not apply to
encumbrances or restrictions existing under or by reason of:
(i) agreements governing Existing Indebtedness and Credit
Facilities as in effect on the date of this Agreement and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of those
agreements, provided that the amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings are no more restrictive, taken as a whole, with respect to
such dividend and other payment restrictions than those contained in
those agreements, as in effect on the date of this Agreement;
(ii) this Agreement, the Notes and the Guarantee and
Collateral Agreement;
(iii) applicable law, rule, regulation or order;
(iv) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Borrower or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred or such Capital Stock was
issued in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the
case of Indebtedness, such Indebtedness was permitted by the terms of
this Agreement to be incurred;
(v) customary non-assignment provisions in contracts,
licenses and other agreements entered into in the ordinary course of
business;
(vi) purchase money obligations for property acquired in
the ordinary course of business and Capital Lease Obligations that
impose restrictions on the property purchased or leased of the nature
described in clause (iii) of Section 6.6(a);
(vii) contracts for the sale of assets, including, without
limitation, any agreement for the sale or other disposition of the
assets or Capital Stock of a Restricted Subsidiary that restricts
distributions by that Restricted Subsidiary pending such sale or other
disposition;
(viii) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness, at the time such Indebtedness was incurred,
are not materially more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being
refinanced;
(ix) Liens securing Indebtedness otherwise permitted to be
incurred under the provisions of Section 6.10 hereof that limit the
right of the debtor to dispose of the assets subject to such Liens;
(x) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements, assets
sale agreements, sale-leaseback agreements,
63
stock sale agreements and other similar agreements entered into in the
ordinary course of business; and
(xi) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary
course of business.
6.7. Incurrence of Indebtedness and Issuance of Preferred
Stock.
(a) The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt), and the Borrower will not issue any
Disqualified Stock and will not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that the Borrower and
the Guarantors may incur Indebtedness (including Acquired Debt) or issue
Disqualified Stock or preferred stock if the Debt to Cash Flow Ratio for the
Borrower's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or such preferred
stock, as the case may be, is issued would have been no greater than 5.25 to 1,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Stock or the preferred stock had been issued, as the case may be,
at the beginning of such four-quarter period.
(b) The provisions of Section 6.7(a) will not prohibit
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Borrower and any Guarantor of
Indebtedness on the date hereof under this Agreement less the aggregate
amount of all repayments, optional or mandatory, of the principal
amount outstanding under this Agreement (other than repayments that are
concurrently refunded or refinanced);
(ii) the incurrence by the Borrower and its Restricted
Subsidiaries of the Existing Indebtedness;
(iii) the incurrence by the Borrower and the Guarantors of
Indebtedness represented by the Senior Notes and the related guarantees
of the Senior Notes to be issued on the date of this Agreement and the
Exchange Notes and the related guarantees of the Exchange Notes to be
issued pursuant to the Registration Rights Agreement;
(iv) the incurrence by the Borrower or any of its
Restricted Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to refund,
refinance, replace, defease or discharge Indebtedness (other than
intercompany Indebtedness) that was permitted by this Agreement to be
incurred under Section 6.7(a) or clauses (ii), (iii) or (iv) of this
Section 6.7(b);
(v) the incurrence by the Borrower or any of its
Restricted Subsidiaries of intercompany Indebtedness between or among
the Borrower and any of its Restricted Subsidiaries; provided, however,
that:
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(A) if the Borrower or any Guarantor is the
obligor on such Indebtedness and the payee is not the Borrower
or a Guarantor, such Indebtedness must be expressly
subordinated to the prior payment in full in cash of all
Obligations then due with respect to the Term Loans, in the
case of the Borrower, or the Guarantee and the Collateral
Trust Agreement, in the case of a Guarantor; and
(B) (i) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being
held by a Person other than the Borrower or a Restricted
Subsidiary of the Borrower and (ii) any sale or other transfer
of any such Indebtedness to a Person that is not either the
Borrower or a Restricted Subsidiary of the Borrower, will be
deemed, in each case, to constitute an incurrence of such
Indebtedness by the Borrower or such Restricted Subsidiary, as
the case may be, that was not permitted by this clause (v);
(vi) the issuance by any of the Borrower's Restricted
Subsidiaries to the Borrower or to any of its Restricted Subsidiaries
of shares of preferred stock; provided, however, that:
(A) any subsequent issuance or transfer of
Equity Interests that results in any such preferred stock
being held by a Person other than the Borrower or a Restricted
Subsidiary of the Borrower; and
(B) any sale or other transfer of any such
preferred stock to a Person that is not either the Borrower or
a Restricted Subsidiary of the Borrower,
will be deemed, in each case, to constitute an issuance of such preferred stock
by such Restricted Subsidiary that was not permitted by this clause (vi);
(vii) the incurrence by the Borrower or any of its
Restricted Subsidiaries of Hedging Obligations in the ordinary course
of business;
(viii) the guarantee by the Borrower or any of the
Guarantors of Indebtedness of the Borrower or a Restricted Subsidiary
of the Borrower that was permitted to be incurred by another provision
of this covenant; provided that if the Indebtedness being guaranteed is
subordinated to the Term Loans, then the guarantee shall be
subordinated to the same extent as the Indebtedness guaranteed;
(ix) the incurrence by the Borrower or any of its
Restricted Subsidiaries of Indebtedness in respect of workers'
compensation claims, health, disability or other employee benefits,
property, casualty or liability insurance, or self-insurance or other
reimbursement-type obligations, bankers' acceptances, performance and
surety bonds and the like in the ordinary course of business;
(x) the incurrence by the Borrower or any of its
Restricted Subsidiaries of Indebtedness arising from the honoring by a
bank or other financial institution of a check, draft or similar
instrument inadvertently drawn against insufficient funds, so long as
such Indebtedness is covered within two Business Days;
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(xi) Indebtedness consisting of customary indemnification,
adjustments of purchase price or similar obligations, in each case,
incurred or assumed in connection with the acquisition of any business
or assets or otherwise in the ordinary course of business; and
(xii) the incurrence by the Borrower or any Guarantor of
additional Indebtedness hereunder in an aggregate principal amount
that, when aggregated with the principal amount of all other
Indebtedness then outstanding and incurred pursuant to this clause
(xii), does not at any one time outstanding exceed $30.0 million.
The Borrower will not incur, and will not permit any Guarantor
to incur, any Indebtedness (including Permitted Debt) that is contractually
subordinated in right of payment to any other Indebtedness of the Borrower or
such Guarantor unless such Indebtedness is also contractually subordinated in
right of payment to the Term Loans and the Guarantor Obligations (as defined
under the Guarantee and Collateral Agreement) for the benefit of the Secured
Parties on substantially identical terms; provided, however, that no
Indebtedness of the Borrower shall be deemed to be contractually subordinated in
right of payment to any other Indebtedness of the Borrower solely by virtue of
being unsecured or by virtue of being secured on a first or junior Lien basis.
The accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for purposes of this Section 6.7; provided, in
each such case, that the amount thereof is included in Consolidated Interest
Expense of the Borrower as accrued. Notwithstanding any other provision of this
Section 6.7, the maximum amount of Indebtedness that the Borrower or any
Restricted Subsidiary may incur pursuant to this Section 6.7 shall not be deemed
to be exceeded solely as a result of fluctuations in exchange rates or currency
values.
The amount of any Indebtedness outstanding as of any date will
be:
(i) the accreted value of the Indebtedness, in the case
of any Indebtedness issued with original issue discount;
(ii) the principal amount of the Indebtedness, in the case
of any other Indebtedness; and
(iii) in respect of Indebtedness of another Person secured
by a Lien on the assets of the specified Person, the lesser of:
(A) the Fair Market Value of such asset at the
date of determination; and
(B) the amount of the Indebtedness of the other
Person.
6.8. Asset Sales.
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(a) The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:
(i) the Borrower (or the Restricted Subsidiary, as the
case may be) receives consideration at the time of the Asset Sale at
least equal to the Fair Market Value of the assets or Equity Interests
issued or sold or otherwise disposed of; and
(ii) at least 75% of the consideration received in the
Asset Sale by the Borrower or such Restricted Subsidiary is in the form
of cash or Cash Equivalents. For purposes of this provision, each of
the following will be deemed to be cash:
(A) any liabilities, as shown on the Borrower's
most recent consolidated balance sheet, of the Borrower or any
Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Term
Loans or the Guarantor Obligations (as defined under the
Guarantee and Collateral Agreement) for the benefit of the
Secured Parties) that are assumed by the transferee of any
such assets and for which the Borrower and all Restricted
Subsidiaries of the Borrower have been released by all
creditors in writing;
(B) any securities, notes or other obligations
received by the Borrower or any such Restricted Subsidiary
from such transferee that are contemporaneously, subject to
ordinary settlement periods, converted by the Borrower or such
Restricted Subsidiary into cash, to the extent of the cash
received in that conversion; and
(C) any stock or assets of the kind referred to
in clauses (ii) or (iv) of the next paragraph of this Section
6.8.
The 75% limitation referred to in clause (ii) above will not
apply to any Asset Sale in which the cash or Cash Equivalents portion of the
consideration received therefrom, determined in accordance with the preceding
provision, is equal to or greater than what the after-tax proceeds would have
been had such Asset Sale complied with the aforementioned 75% limitation.
(b) Within 365 days after the receipt of any Net Proceeds
from an Asset Sale, the Borrower (or the applicable Restricted Subsidiary, as
the case may be) may apply such Net Proceeds at its option:
(i) to repay Indebtedness and other Obligations under any
Credit Facilities and, if the Indebtedness repaid is revolving credit
Indebtedness, to correspondingly reduce commitments with respect
thereto;
(ii) to acquire all or substantially all of the assets of,
or any Capital Stock of, another Permitted Business, if, after giving
effect to any such acquisition of Capital Stock, the Permitted Business
is or becomes a Restricted Subsidiary of the Borrower;
(iii) to make a capital expenditure; or
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(iv) to acquire other assets that are not classified as
current assets under GAAP and that are used or useful in a Permitted
Business.
(c) Pending the final application of any Net Proceeds,
the Borrower may temporarily reduce revolving credit borrowings or otherwise
invest the Net Proceeds in any manner that is not prohibited by this Agreement.
(d) Any Net Proceeds from Asset Sales that are not
applied or invested as provided in clause (b) of this Section 6.8 will
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $10.0 million the Borrower will make an Asset Sale Offer to all Lenders
and all holders of other Indebtedness (including, without limitation, the Senior
Notes and the Exchange Notes) that is pari passu with the Term Loans containing
provisions similar to those set forth in this Agreement with respect to offers
to prepay, purchase or redeem with the proceeds of sales of assets in accordance
with Section 3.2 hereof to prepay the maximum principal amount of the Term Loans
and such other pari passu Indebtedness that may be prepaid, purchased or
redeemed, as applicable, out of the Excess Proceeds. The offer price in any
Asset Sale Offer will be equal to 100% of principal amount plus accrued and
unpaid interest, if any, to the date of prepayment, purchase or redemption, as
applicable, and will be payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Borrower may use such Excess Proceeds
for any purpose not otherwise prohibited by this Agreement. If the aggregate
principal amount of the Term Loans and such other pari passu Indebtedness
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
Borrower shall select the Term Loans and such other pari passu Indebtedness to
be prepaid, purchased or redeemed, as applicable, on a pro rata basis based on
the principal amount of the Term Loans and such other pari passu Indebtedness
tendered Upon completion of each Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.
6.9. Transactions with Affiliates.
(a) The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Borrower (each an "Affiliate Transaction"),
unless:
(i) the Affiliate Transaction is on terms that are no
less favorable to the Borrower or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by
the Borrower or such Restricted Subsidiary with an unrelated Person;
and
(ii) the Borrower delivers to the Administrative Agent:
(A) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $2.5 million, a resolution of the
Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with
clause (i) of this
68
Section 6.9 and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the
Board of Directors; and
(B) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $10.0 million, an opinion as to the
fairness to the Borrower or such Subsidiary of such Affiliate
Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national
standing.
(b) The following items will not be deemed to be
Affiliate Transactions and, therefore, will not be subject to the provisions of
Section 6.9:
(i) any employment agreement, employee benefit plan,
officer and director indemnification agreement or any similar
arrangement entered into by the Borrower or any of its Restricted
Subsidiaries in the ordinary course of business;
(ii) transactions between or among the Borrower and/or its
Restricted Subsidiaries;
(iii) transactions with a Person (other than an
Unrestricted Subsidiary of the Borrower) that is an Affiliate of the
Borrower solely because the Borrower owns, directly or through a
Restricted Subsidiary, an Equity Interest in, or controls, such Person;
(iv) loans, advances, payment of reasonable fees,
indemnification of directors, or similar arrangements to or with
officers, directors, employees and consultants who are not otherwise
Affiliates of the Borrower;
(v) any issuance of Equity Interests (other than
Disqualified Stock) of the Borrower to Affiliates of the Borrower; and
(vi) Restricted Payments and Permitted Investments that
are permitted by Section 6.5 hereof.
6.10. Liens. The Borrower will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien of any kind on any asset now owned or hereafter
acquired, except Permitted Liens.
6.11. Business Activities. The Borrower will not, and will
not permit any of its Restricted Subsidiaries to, engage in any business other
than Permitted Businesses, except to such extent as would not be material to the
Borrower and its Restricted Subsidiaries taken as a whole.
6.12. Corporate Existence. Subject to Article 7 hereof, the
Borrower shall do or cause to be done all things necessary to preserve and keep
in full force and effect:
(a) its corporate existence, and the corporate,
partnership or other existence of each of its Subsidiaries, in accordance with
the respective organizational documents (as the same may be amended from time to
time) of the Borrower or any such Subsidiary; and
69
(b) the rights (charter and statutory), licenses and
franchises of the Borrower and its Subsidiaries; provided, however, that the
Borrower shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Subsidiaries, if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Borrower and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Lenders.
6.13. Offer to Prepay Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the
Borrower will make an offer (a "Change of Control Offer") to each Lender to
prepay all or any part (equal to $1,000 or an integral multiple of $1,000) of
each Lender's Term Loans at 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, on the Term Loans prepaid, to the date of
prepayment (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Borrower will mail a notice to the Administrative Agent
(for delivery to each Lender) describing the transaction or transactions that
constitute the Change of Control and stating:
(i) that the Change of Control Offer is being made
pursuant to this Section 6.13 and that all Term Loans for which payment
is requested and not rescinded will be accepted for payment;
(ii) the purchase price and the purchase date, which shall
be no earlier than 30 days and no later than 60 days from the date such
notice is mailed (the "Change of Control Payment Date");
(iii) that any Term Loans for which prepayment is not
requested will continue to accrue interest;
(iv) that, unless the Borrower defaults in the payment of
the Change of Control Payment, all Term Loans for which payment is
requested pursuant to the Change of Control Offer will cease to accrue
interest after the Change of Control Payment Date;
(v) that Lenders requesting that their Term Loans be
prepaid pursuant to a Change of Control Offer will be required to
surrender any Notes with other customary documents as the Borrower may
reasonably request, to the Administrative Agent prior to the close of
business on the third Business Day preceding the Change of Control
Payment Date;
(vi) that Lenders will be entitled to withdraw their
request if the Administrative Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Lender, the principal amount of Term
Loans for which prepayment is requested and a statement that such
Lender is withdrawing his request to have such Term Loans prepaid.
(b) On the Change of Control Payment Date, the Borrower
will:
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(i) transfer to the Administrative Agent in immediately
available funds an amount equal to the Change of Control Payment in
respect of all Term Loans or portions thereof for which prepayment has
been requested; and
(ii) deliver or cause to be delivered to the
Administrative Agent an Officers' Certificate stating the aggregate
principal amount of Term Loans or portions thereof being prepaid by the
Borrower.
(c) The Administrative Agent shall promptly mail to each
Lender so requesting the Change of Control Payment for such Term Loans.
(d) The provisions described above that require the
Borrower to make a Change of Control Offer following a Change of Control shall
be applicable whether or not any other provisions of this Agreement are
applicable.
(e) The Borrower shall not be required to make a Change
of Control Offer upon a Change of Control if (i) a third party makes the Change
of Control Offer in the manner, at the times and otherwise in compliance with
the requirements set forth in this Agreement applicable to a Change of Control
Offer made by the Borrower and prepays all Term Loans not withdrawn under the
Change of Control Offer or (ii) notice of voluntary prepayment has been given in
accordance with Section 3.1 unless and until there is a default in payment of
the applicable prepayment price.
6.14. Limitation on Sale and Leaseback Transactions. The
Borrower will not, and will not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided that the Borrower or any
Restricted Subsidiary may enter into a sale and leaseback transaction if:
(a) the Borrower or that Restricted Subsidiary, as
applicable, could have (i) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction and (ii)
incurred a Lien to secure such Indebtedness pursuant to the provisions of
Section 6.10 hereof;
(b) the gross cash proceeds of that sale and leaseback
transaction are at least equal to the Fair Market Value, as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Administrative Agent, of the property that is the subject of
that sale and leaseback transaction; and
(c) the transfer of assets in that sale and leaseback
transaction is permitted by, and the Borrower applies the proceeds of such
transaction in compliance with, Section 6.8 hereof.
6.15. Payments for Consent. The Borrower will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or
cause to be paid any consideration to or for the benefit of any Lender for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Agreement or any other Loan Document unless such
consideration is offered to be paid and is paid to all Lenders that consent,
waive or agree to
71
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
6.16. Additional Guarantees. If the Borrower or any of its
Restricted Subsidiaries acquires or creates another Domestic Subsidiary after
the date of this Agreement, then that newly acquired or created Domestic
Subsidiary will become a Guarantor and execute an Assumption Agreement (as such
term is defined in the Guarantee and Collateral Agreement) and a Collateral
Trust Joinder (as such term is defined in the Collateral Trust Agreement) and
deliver an Opinion of Counsel to the Administrative Agent within ten Business
Days of the date on which it was acquired or created; provided that any Domestic
Subsidiary that constitutes an Immaterial Subsidiary need not become a Guarantor
until such time as it ceases to be an Immaterial Subsidiary.
6.17. Designation of Restricted and Unrestricted
Subsidiaries. The Board of Directors may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if that designation would not cause a Default. If
a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the
aggregate Fair Market Value of all outstanding Investments owned by the Borrower
and its Restricted Subsidiaries in the Subsidiary designated as Unrestricted
will be deemed to be an Investment made as of the time of the designation and
will reduce the amount available for Restricted Payments under Section 6.5
hereof or under one or more clauses of the definition of Permitted Investments,
as determined by the Borrower. That designation will only be permitted if the
Investment would be permitted at that time and if the Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. The Board of
Directors may redesignate any Unrestricted Subsidiary to be a Restricted
Subsidiary if that redesignation would not cause a Default.
6.18. Further Assurances. For so long as the Term
Commitments remain in effect or any Term Loan Obligations are outstanding, the
Borrower shall, and shall cause each of its Subsidiaries to, from time to time
execute and deliver, or cause to be executed and delivered, such additional
instruments, certificates or documents, and take all such actions, as the
Administrative Agent or the Lenders may reasonably request for the purposes of
implementing or effectuating the provisions of this Agreement and the other Loan
Documents, or of more fully perfecting or renewing the rights of the Collateral
Trustee and the Secured Parties with respect to the Collateral (or with respect
to any additions thereto or replacements or proceeds thereof or with respect to
any other property or assets hereafter acquired by the borrower or any
Subsidiary which may be deemed to be part of the Collateral) pursuant hereto or
thereto. Upon the exercise by the Collateral Trustee or any Secured Party of any
power, right, privilege or remedy pursuant to this Agreement or the other Loan
Documents which requires any consent, approval, recording qualification or
authorization of any Governmental Authority, the Borrower will execute and
deliver, or will cause the execution and delivery of, all applications,
certifications, instruments and other documents and papers that the Collateral
Trustee or such Secured Parties may be required to obtain from the Borrower or
any of its Subsidiaries for such governmental consent, approval, recording,
qualification or authorization.
6.19. Additional Collateral. If the Borrower or any of
its Subsidiaries pledges additional assets, property or any other collateral
(the "Additional Collateral") in favor of the Collateral Trustee for the benefit
of the Secured Parties (as defined under the Revolving Credit
72
Agreement) to secure the Obligations (as defined under the Revolving Credit
Agreement), then the Borrower shall, and shall cause its Subsidiaries to, take
all actions necessary or advisable to grant to the Collateral Trustee, for the
benefit of the Secured Parties hereunder, a perfected security interest in such
Additional Collateral (subject to Permitted Liens) to secure the Obligations
hereunder at such time, including, without limitation, all of the actions
specified under Section 6.10 of the Revolving Collateral Agreement, as
applicable.
SECTION 7. SUCCESSORS
7.1. Merger, Consolidation, or Sale of Assets.
(a) The Borrower may not, directly or indirectly,
consolidate or merge with or into another Person (whether or not the Borrower is
the surviving corporation), or sell, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of the Borrower
and its Restricted Subsidiaries taken as a whole, in one or more related
transactions, to another Person; unless:
(i) either:
(A) the Borrower is the surviving corporation;
or
(B) the Person formed by or surviving any such
consolidation or merger (if other than the Borrower) or to
which such sale, assignment, transfer, conveyance or other
disposition has been made is a corporation organized or
existing under the laws of the United States, any state of the
United States or the District of Columbia;
(ii) the Person formed by or surviving any such
consolidation or merger (if other than the Borrower) or the Person to
which such sale, assignment, transfer, conveyance or other disposition
has been made assumes all the obligations of the Borrower under this
Agreement and the other Loan Documents pursuant to agreements
reasonably satisfactory to the Administrative Agent or each of the
Lenders;
(iii) immediately after such transaction, no Default or
Event of Default exists; and
(iv) the Borrower or the Person formed by or surviving any
such consolidation or merger (if other than the Borrower), or to which
such sale, assignment, transfer, conveyance or other disposition has
been made will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the same
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Debt to Cash Flow Ratio test set forth in Section 6.7(a) hereof.
(b) In addition, the Borrower may not, directly or
indirectly, lease all or substantially all of its properties or assets, in one
or more related transactions, to any other Person.
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(c) This Section 7.1 will not apply to: (i) a merger of
the Borrower with an Affiliate solely for the purpose of reincorporating the
Borrower in another jurisdiction; or (ii) any merger or consolidation, or any
sale, transfer, assignment, conveyance, lease or other disposition of assets
between or among the Borrower and its Restricted Subsidiaries that are
Guarantors.
7.2. Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, assignment, transfer, conveyance or other
disposition of all or substantially all of the assets of the Borrower in a
transaction that is subject to, and that complies with the provisions of,
Section 7.1 hereof, the successor corporation formed by such consolidation or
into or with which the Borrower is merged or to which such sale, assignment,
transfer, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, conveyance or other disposition, the provisions of this Agreement
referring to the "Borrower" shall refer instead to the successor corporation and
not to the Borrower), and may exercise every right and power of the Borrower
under this Agreement with the same effect as if such successor Person had been
named as the Borrower herein; provided, however, that the predecessor Borrower
shall not be relieved from the obligation to pay the principal of and interest
on the Term Loans except in the case of a sale of all of the Borrower's assets
in a transaction that is subject to, and that complies with the provisions of,
Section 7.1 hereof.
SECTION 8. DEFAULTS AND REMEDIES
8.1. Events of Default. Each of the following is an "Event
of Default":
(a) the Borrower defaults in the payment when due of
interest on, the Term Loans, and such default continues for a period of 30 days;
(b) the Borrower defaults in the payment when due at
maturity, upon prepayment or otherwise of the principal of, or premium, if any,
on the Term Loans;
(c) the Borrower or any of its Restricted Subsidiaries
fails to comply with the provisions of Sections 6.5, 6.7, 6.8, 6.13 or 7.1
hereof, and such failure continues for a period of 30 days after notice to the
Borrower by the Administrative Agent or the Lenders holding at least 25% in
aggregate principal amount of the Term Loans then outstanding;
(d) Holdings, the Borrower or any of its Restricted
Subsidiaries fails to observe or perform any other covenant, representation,
warranty or other agreement in this Agreement or the Notes, and such failure
continues for 60 days after notice to the Borrower by the Administrative Agent
or the Lenders holding at least 25% in aggregate principal amount of the Term
Loans then outstanding;
(e) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by Holdings, the Borrower or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by
Holdings, the Borrower or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of this
Agreement, if that default:
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(i) is caused by a failure to pay principal of, or
interest or premium, if any, on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default"); or
(ii) results in the acceleration of such Indebtedness
prior to its express maturity,
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has
been so accelerated, aggregates $20.0 million or more;
(f) a final judgment or final judgments for the payment
of money are entered by a court or courts of competent jurisdiction against
Holdings, the Borrower or any of its Restricted Subsidiaries, (other than any
such judgments that are fully covered by insurance, subject to ordinary
deductibles) which judgment or judgments are not paid, discharged or stayed for
a period of 60 days after such judgment becomes final; provided that the
aggregate amount of all such undischarged judgments exceeds $20.0 million;
(g) any of the Security Documents shall cease, for any
reason, to be in full force and effect (except in accordance with the terms
hereof and thereof), or any Loan Party or any Affiliate of any Loan Party shall
so assert, or any Lien created by any of the Security Documents for the benefit
of the Secured Parties shall cease to be enforceable and of the same effect and
priority purported to be created thereby (except in accordance with the terms
hereof and thereof) or any Loan Party or Affiliate of any Loan Party shall so
assert, or the guarantee contained in Section 2 of the Guarantee and Collateral
Agreement shall cease, for any reason, to be in full force and effect as to any
Guarantor (except in accordance with the terms hereof and thereof) or any Loan
Party or any Affiliate of any Loan Party shall so assert;
(h) Holdings, the Borrower or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary,
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against
it in an involuntary case,
(iii) consents to the appointment of a custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due;
or
(i) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
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(i) is for relief against Holdings, the Borrower or any
of its Restricted Subsidiaries that is a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken together, would constitute
a Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of Holdings, the Borrower or any
of its Restricted Subsidiaries that is a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken together, would constitute
a Significant Subsidiary or for all or substantially all of the
property of Holdings, the Borrower or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary; or
(iii) orders the liquidation of Holdings, the Borrower or
any of its Restricted Subsidiaries that is a Significant Subsidiary or
any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
8.2. Acceleration. (a) In the case of an Event of
Default specified in clause (h) or (i) of Section 8.1 hereof, with respect to
Holdings, the Borrower or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Term Loans
will become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, the Administrative Agent or the
Lenders holding at least 25% in principal amount of the then outstanding Term
Loans may declare all the Term Loans to be due and payable immediately. Upon any
such declaration, the Term Loans shall become due and payable immediately. If an
Event of Default occurs by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Borrower with the intention of avoiding
payment of the premium that the Borrower would have had to pay if the Borrower
then had elected to optionally prepay the Term Loans pursuant to Section 3.1(b),
then, upon acceleration of the Term Loans, an equivalent premium shall also
become and be immediately due and payable, anything in this Agreement to the
contrary notwithstanding.
(b) In case an Event of Default occurs and is continuing,
the Administrative Agent will be under no obligation to exercise any of the
rights or powers under this Agreement at the request or direction of any Lenders
unless such Lenders have offered to the Administrative Agent reasonable
indemnity or security against any loss, liability or expense.
(c) The Required Lenders by written notice to the
Administrative Agent may, on behalf of all of the Lenders, rescind an
acceleration or waive any existing Default or Event of Default and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium, if any, that has become due solely because of the acceleration) have
been cured or waived.
(d) Upon becoming aware of any Default or Event of
Default, the Borrower is required to deliver to the Administrative Agent a
statement specifying such Default or Event of Default
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8.3. Other Remedies. (a) If an Event of Default occurs and
is continuing, the Administrative Agent may pursue any available remedy to
collect the payment of principal and premium, if any, and interest on the Term
Loans or to enforce the performance of any provision of the Notes or this
Agreement.
(b) The Administrative Agent may maintain a proceeding
even if it does not possess any of the Term Loans or does not produce any of
them in the proceeding. A delay or omission by the Administrative Agent or any
Lender in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
8.4. Waiver of Past Defaults. The Required Lenders by
notice to the Administrative Agent may on behalf of the Lenders waive an
existing Default or Event of Default and its consequences hereunder, except a
continuing Default or Event of Default in the payment of the principal of,
premium, if any, or interest on, the Term Loans (including in connection with an
offer to prepay); provided, however, that the Required Lenders may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Agreement; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
8.5. Control by Majority. The Required Lenders may direct
the time, method and place of conducting any proceeding for exercising any
remedy available to the Administrative Agent or exercising any trust or power
conferred on it. However, the Administrative Agent may refuse to follow any
direction that conflicts with law or this Agreement that the Administrative
Agent determines may be unduly prejudicial to the rights of other Lenders or
that may involve the Administrative Agent in personal liability.
8.6. Limitation on Suits. Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, a Lender
may pursue a remedy with respect to this Agreement or the Notes only if:
(a) such Lender has previously given the Administrative
Agent notice that an Event of Default is continuing;
(b) Lenders holding at least 25% in aggregate principal
amount of the outstanding Term Loans have requested the Administrative Agent to
pursue the remedy;
(c) such Lenders have offered the Administrative Agent
reasonable security or indemnity against any loss, liability or expense;
(d) the Administrative Agent has not complied with such
request within 60 days after the receipt thereof and the offer of security or
indemnity; and
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(e) Lenders holding a majority in aggregate principal
amount of the outstanding Term Loans have not given the Administrative Agent a
direction inconsistent with such request within such 60-day period.
8.7. Rights of Lenders to Receive Payment. Notwithstanding
any other provision of this Agreement, the right of any Lender to receive
payment of principal, premium, if any, and interest on the Term Loans, on or
after the respective due dates expressed in the Term Loans (including in
connection with an offer to prepay), or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Lender.
8.8. Collection Suit by Administrative Agent. If an Event
of Default specified in Section 8.1(i) or (ii) occurs and is continuing, the
Administrative Agent is authorized to recover judgment in its own name and as
trustee of an express trust against the Borrower for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Term Loans
and interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Administrative Agent, its agents and counsel.
8.9. Priorities. If the Administrative Agent collects any
money pursuant to this Article 8, it shall pay out the money in the following
order:
First: to the Administrative Agent, its agents and attorneys
for amounts due under Section 10.5 hereof, including payment of all
compensation, expenses and liabilities incurred, and all advances made,
by the Administrative Agent and the costs and expenses of collection;
Second: to the Lenders for all amounts payable under the Term
Loan Agreement, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Term Loans; and
Third: to the Borrower or to such party as a court of
competent jurisdiction shall direct.
The Administrative Agent may fix a record date and payment
date for any payment to the Lenders of Term Loans pursuant to this Section 8.9.
8.10. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Agreement or in any suit against
the Administrative Agent for any action taken or omitted by it as a
Administrative Agent, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit, and
the court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 8.10 does not apply to a suit by the Administrative Agent, a suit
by a Lender pursuant to Section 8.7 hereof, or a suit by Lenders holding more
than 10% in principal amount of the then outstanding Term Loans.
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SECTION 9. THE AGENTS
9.1. Appointment. Each Lender hereby irrevocably
designates and appoints each Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes such Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to such Agent by
the terms of this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto. Each Lender hereby authorizes
the Administrative Agent to enter into the Collateral Trust Agreement
substantially in the form attached hereto as Exhibit K. Notwithstanding any
provision to the contrary elsewhere in this Agreement, no Agent shall have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
9.2. Delegation of Duties. Each Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Agent shall be responsible
for the negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care.
9.3. Exculpatory Provisions. Neither any Agent nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4. Reliance by Agents. Each Agent shall be entitled to
rely, and shall be fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including
counsel to Holdings or the Borrower), independent accountants and other experts
selected by such Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been
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filed with the Administrative Agent. Each Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The Agents shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all Lenders), and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Term Loans.
9.5. Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender, Holdings or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders or any other instructing group of Lenders specified by this Agreement);
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
9.6. Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Term Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
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9.7. Indemnification. The Lenders agree to indemnify each
Agent (for purposes hereof, including the Collateral Trustee in its capacity as
such under the Collateral Trust Agreement) in its capacity as such (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to their respective Aggregate Exposure
Percentages in effect on the date on which indemnification is sought under this
Section (or, if indemnification is sought after the date upon which the Term
Commitments shall have terminated and the Term Loans shall have been paid in
full, ratably in accordance with such Aggregate Exposure Percentages immediately
prior to such date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever that may at any time (whether before or
after the payment of the Term Loans) be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of, the Term
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein (other than the Senior Note
Indenture and the Revolving Credit Agreement) or the transactions contemplated
hereby or thereby or any action taken or omitted by such Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
that are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from such Agent's gross negligence or willful
misconduct. The agreements in this Section shall survive the payment of the Term
Loans and all other amounts payable hereunder.
9.8. Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent.
With respect to its Term Loans made or renewed by it, each Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
9.9. Successor Administrative Agent. The Administrative
Agent may resign as Administrative Agent upon 10 days' notice to the Lenders and
the Borrower. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default shall have occurred and be
continuing) be subject to approval by the Borrower (which approval shall not be
unreasonably withheld or delayed), whereupon such successor agent shall succeed
to the rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Term Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that is 30
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as
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to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement and the other Loan Documents.
9.10. Agents Generally. Except as expressly set forth
herein, no Agent shall have any duties or responsibilities hereunder in its
capacity as such.
9.11. The Lead Arranger. The Lead Arranger, in its capacity
as such, shall have no duties or responsibilities, and shall incur no liability,
under this Agreement and other Loan Documents.
9.12. Withholding Tax. (a) To the extent required by any
applicable law, the Administrative Agent may withhold from any interest payment
to any Lender an amount equivalent to any applicable withholding tax. If the
forms or other documentation required by Section 3.7(f) are not delivered to the
Administrative Agent, then the Administrative Agent may withhold from any
interest payment to any Lender not providing such forms or other documentation
the maximum amount of the applicable withholding tax. Nothing in this Section
9.12 shall relieve the Borrower of its obligation with respect to Non-Excluded
Taxes and Other Taxes provided in Section 3.7.
(b) If the Internal Revenue Service or any authority of
the United States or any other jurisdiction asserts a claim that the
Administrative Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not delivered, was
not properly executed, or because such Lender failed to notify the
Administrative Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason),
such Lender shall indemnify the Administrative Agent fully for all amounts paid,
directly or indirectly, by the Administrative Agent as tax or otherwise,
including penalties and interest, together with all expenses incurred, including
legal expenses, allocated staff costs and any out of pocket expenses.
(c) If any Lender sells, assigns, grants a participation
in, or otherwise transfers its rights under this Agreement, the purchaser,
assignee, participant or transferee, as applicable, shall comply with and be
bound by the terms of Sections 3.7(f) and 9.12.
SECTION 10. MISCELLANEOUS
10.1. Amendments and Waivers. Neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and each Loan Party party to the relevant
Loan Document may, or, with the written consent of the Required Lenders, the
Administrative Agent and each Loan Party party to the relevant Loan Document
may, from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (b) waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment,
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supplement or modification shall (i) forgive the principal amount or extend any
scheduled date of payment of any Term Loan, reduce the stated rate of any
interest, fee, premium or other amount payable hereunder (except in connection
with the waiver of applicability of any post-default increase in interest rates,
which waiver shall be effective with the consent of the Required Lenders) or
extend the scheduled date of any payment thereof, in each case without the
written consent of each Lender directly affected thereby; (ii) eliminate or
reduce the voting rights of any Lender under this Section 10.1 without the
written consent of such Lender; (iii) reduce any percentage specified in the
definition of Required Lenders, consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents, release the Collateral Trustee's Lien on a material portion of
the Collateral (except as otherwise permitted by the Loan Documents), add any
consent requirement necessary to effect an assignment or participation pursuant
to Section 10.6, or (except as otherwise provided in this Agreement), release
any Guarantor from its obligations under the Guarantee and Collateral Agreement
(except as permitted by this Agreement), or amend, modify or waive any provision
of Section 3.5, in each case without the written consent of all Lenders; or (iv)
amend, modify or waive any provision of Section 8 without the written consent of
each Agent adversely affected thereby. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Agents and all future holders
of the Term Loans. In the case of any waiver, the Loan Parties, the Lenders and
the Agents shall be restored to their former position and rights hereunder and
under the other Loan Documents, and any Default or Event of Default waived shall
be deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
Notwithstanding the foregoing, this Agreement may be amended
(or amended and restated) with the written consent of the Required Lenders, the
Administrative Agent and the Borrower (a) to add one or more additional credit
facilities to this Agreement and to permit the extensions of credit from time to
time outstanding thereunder and the accrued interest and fees in respect thereof
to share ratably in the benefits of this Agreement and the other Loan Documents
with the Term Loans and the accrued interest and fees in respect thereof and (b)
to include appropriately the Lenders holding such credit facilities in any
determination of the Required Lenders.
10.2. Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case the Borrower and the Agents, and as
set forth in an administrative questionnaire delivered to the Administrative
Agent in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:
The Borrower: Haights Cross Operating Company
00 Xxx Xxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
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with a copy to: Xxxxxxx Procter LLP
00 Xxxxx Xxxxxx, Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, P.C.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Administrative Agent: Bear Xxxxxxx Corporate Lending Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
provided that any notice, request or demand to or upon any Agent or the Lenders
shall not be effective until received.
Notices and other communications to the Lenders hereunder may
be delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.
10.3. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of any Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4. Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Term Loans and other extensions of credit hereunder.
10.5. Payment of Expenses and Taxes. The Borrower agrees
(a) to pay or reimburse each Agent for all its out-of-pocket costs and expenses
incurred in connection with the
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development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including
the reasonable fees and disbursements of one primary counsel, who shall be
Xxxxxx & Xxxxxxx LLP (and such other local and special counsel as are reasonably
retained), to such Agents and search, filing and recording fees and expenses,
with statements with respect to the foregoing to be submitted to the Borrower
prior to the Closing Date (in the case of amounts to be paid on the Closing
Date) and from time to time thereafter on a quarterly basis or such other
periodic basis as such Agent shall deem appropriate, (b) to pay or reimburse
each Lender and each Agent for all its costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
other Loan Documents and any such other documents prepared in connection
herewith or therewith, including the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and to such Agent, (c) to pay, indemnify, and hold each Lender and Agent
harmless from any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, that may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents prepared in connection herewith or
therewith, and (d) to pay, indemnify, and hold each Lender and Agent and their
respective officers, directors, employees, affiliates, agents and controlling
persons (each, an "Indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including any
of the foregoing relating to the use of proceeds of the Term Loans or the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of any Group Member or any of the Properties and
the reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against any Loan Party under any Loan
Document (all the foregoing in this clause (d), collectively, the "Indemnified
Liabilities"), provided, that the Borrower shall have no obligation hereunder to
any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee. Without limiting the foregoing, and to
the extent permitted by applicable law, the Borrower agrees not to assert and to
cause its Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee. All amounts due under this Section 10.5 shall
be payable not later than 10 days after written demand therefor. Statements
payable by the Borrower pursuant to this Section 10.5 shall be submitted to the
person and at the address of the Borrower set forth in Section 10.2, or to such
other Person or address as may be hereafter designated by the Borrower in a
written notice to the Administrative Agent. The agreements in this Section 10.5
shall survive repayment of the Term Loans and all other amounts payable
hereunder.
85
10.6. Successors and Assigns; Participations and
Assignments. (a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that (i) neither the Borrower nor any Guarantor
may assign or otherwise transfer any of its rights or obligations hereunder or
under any other Loan Document without the prior written consent of each Lender
(and any attempted assignment or transfer without such consent shall be null and
void) except as permitted by Section 7.1 hereof and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section.
(b) (i) Subject to the conditions set forth in paragraph
(b)(ii) below, any Lender may assign to one or more assignees (each, an
"Assignee") all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Term Commitments and the
Term Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of
the Borrower shall be required for (x) an assignment to a
Lender, an affiliate of a Lender, an Approved Fund or, if an
Event of Default has occurred and is continuing, any other
Person, or (y) any assignment by the Administrative Agent (or
its affiliates); and
(B) the Administrative Agent, provided that no
consent of the Administrative Agent shall be required for (x)
an assignment to an Assignee that is a Lender immediately
prior to giving effect to such assignment, or (y) any
assignment by the Administrative Agent (or its respective
affiliates).
(ii) Assignments shall be subject to the following
additional conditions:
(A) except in the case of an assignment to a
Lender, an affiliate of a Lender or an Approved Fund or an
assignment of the entire remaining amount of the assigning
Lender's Term Commitments or Term Loans under this Agreement,
the amount of the Term Commitments or Term Loans of the
assigning Lender subject to each such assignment (determined
as of the date the Assignment and Assumption with respect to
such assignment is delivered to the Administrative Agent)
shall not be less than $1,000,000, and, after giving effect to
such assignment, the remaining Term Loans and Term Commitments
of such assigning Lender shall not be less than $1,000,000, in
each case, unless each of the Borrower and the Administrative
Agent otherwise consent (each such consent not to be
unreasonably withheld), provided that (1) no such consent of
the Borrower shall be required if an Event of Default has
occurred and is continuing and (2) such amounts shall be
aggregated in respect of each Lender and its affiliates or
Approved Funds, if any;
(B) the Assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an administrative
questionnaire; and
(C) in the case of an assignment by a Lender to
a CLO that is administered or managed by such Lender or an
affiliate of such Lender, the
86
assigning Lender shall retain the sole right to approve any
amendment, modification or waiver of any provision of this
Agreement and the other Loan Documents, provided that the
Assignment and Assumption between such Lender and such CLO may
provide that such Lender will not, without the consent of such
CLO, agree to any amendment, modification or waiver that (1)
requires the consent of each Lender directly affected thereby
pursuant to the proviso to the second sentence of Section 10.1
and (2) directly affects such CLO.
(iii) Subject to acceptance and recording thereof pursuant
to paragraph (b)(iv) below, from and after the effective date specified
in each Assignment and Assumption the Assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of
an Assignment and Assumption covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Sections 3.6, 3.7, 3.8 and 10.5). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not
comply with this Section 10.6 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights
and obligations in accordance with paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as
an agent of the Borrower, shall maintain at one of its offices a copy
of each Assignment and Assumption delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Term
Commitments of, and principal amount of the Term Loans owing to, each
Lender pursuant to the terms hereof from time to time (the "Register").
In the absence of manifest error, the entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant
to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall
be available for inspection by the Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an Assignee, the
Assignee's completed administrative questionnaire (unless the Assignee
shall already be a Lender hereunder) and any written consent to such
assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and
record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(c) (i) Any Lender may, without the consent of the
Borrower or the Administrative Agent, sell participations to one or more banks
or other entities (a "Participant") in all or a portion of such Lender's rights
and obligations under this Agreement (including all or a portion of its Term
Commitments and the Term Loans owing to it); provided that (A) such
87
Lender's obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement may provide that such Lender
will not, without the consent of the Participant, agree to any amendment,
modification or waiver that (1) requires the consent of each Lender directly
affected thereby pursuant to the proviso to the second sentence of Section 10.1
and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.6, 3.7, 3.8 and 10.5 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.7(b) as though it were a Lender, provided
such Participant shall be subject to Section 10.7(a) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any
greater payment under Section 3.6 or 3.7 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. Any Participant that is a Non-U.S.
Lender shall not be entitled to the benefits of Section 3.7 unless such
Participant complies with Section 3.7(e).
(d) Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or Assignee for such Lender
as a party hereto.
(e) The Borrower, upon receipt of written notice from the
relevant Lender, agrees to issue Notes to any Lender requiring Notes to
facilitate transactions of the type described in paragraph (d) above.
(f) Notwithstanding the foregoing, any Conduit Lender may
assign any or all of the Term Loans it may have funded hereunder to its
designating Lender without the consent of the Borrower or the Administrative
Agent and without regard to the limitations set forth in Section 10.6(b). Each
of the Borrower, each Lender and the Administrative Agent hereby confirms that
it will not institute against a Conduit Lender or join any other Person in
instituting against a Conduit Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any state bankruptcy or
similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however,
that each Lender designating any Conduit Lender hereby agrees to indemnify, save
and hold harmless each other party hereto for any loss, cost, damage or expense
arising out of its inability to institute such a proceeding against such Conduit
Lender during such period of forbearance.
88
10.7. Adjustments; Set-off. (a) Except to the extent that
this Agreement expressly provides for payments to be allocated to a particular
Lender or to the Lenders, if any Lender (a "Benefitted Lender") shall receive
any payment of all or part of the Term Loan Obligations owing to it, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred to in Sections
8.1(h) and 8.1(i), or otherwise), in a greater proportion than any such payment
to or collateral received by any other Lender, if any, in respect of the Term
Loan Obligations owing to such other Lender, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of the Term Loan Obligations owing to each such other Lender, or shall
provide such other Lenders with the benefits of any such collateral, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise), to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.
10.8. Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Borrower and the Administrative Agent.
10.9. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10. Integration. This Agreement and the other Loan
Documents represent the entire agreement of the Borrower, the Agents and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by any Agent or any Lender
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Loan Documents.
89
10.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12. Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States for the Southern District of
New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 10.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or consequential
damages.
10.13. Acknowledgments. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) no Agent or Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between the Agents and
Lenders, on one hand, and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.
10.14. Releases of Guarantees and Liens. (a) Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby
90
irrevocably authorized by each Lender (without requirement of notice to or
consent of any Lender except as expressly required by Section 10.1) to take any
action requested by the Borrower having the effect of releasing any Collateral
or Guarantee Obligations (i) to the extent necessary to permit consummation of
any transaction not prohibited by any Loan Document or that has been consented
to in accordance with Section 10.1 or (ii) under the circumstances described in
paragraph (b) below.
(b) At such time as the Term Loans and the other
obligations under the Loan Documents (other than Hedging Obligations) shall have
been paid in full, the Term Commitments have been terminated, the Collateral
shall be released from the Liens created by the Security Documents, and the
Security Documents and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Loan Party under
the Security Documents shall terminate, all without delivery of any instrument
or performance of any act by any Person.
10.15. Confidentiality. Each Agent and each Lender agrees to
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or any Lender
from disclosing any such information (a) to any Agent, any other Lender or any
Affiliate of a Lender, (b) subject to an agreement to comply with the provisions
of this Section, to any actual or prospective Transferee or any direct or
indirect counterparty with respect to Hedging Obligations (or any professional
advisor to such counterparty) or any pledgee of any security interest pledged
pursuant to Section 10.6(d) hereof, (c) to its employees, directors, agents,
attorneys, accountants and other professional advisors or those of any of its
affiliates, (d) upon the request or demand of any Governmental Authority, (e) in
response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (f) if requested or
required to do so in connection with any litigation or similar proceeding, (g)
that has been publicly disclosed, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender, or (i) in
connection with the exercise of any remedy hereunder or under any other Loan
Document. Notwithstanding any other express or implied agreement, arrangement or
understanding to the contrary, each of the parties hereto hereby agrees that
each party hereto (and each of its employees, representatives or agents) are
permitted to disclose to any and all persons, without limitation, the tax
treatment and tax structure of the Term Loans and the other transactions
contemplated hereby, and all materials of any kind (including opinions or other
tax analyses) that are provided to the Loan Parties or the Lenders, the Lead
Arranger or the Agents related to such tax treatment and tax aspects. To the
extent not inconsistent with the immediately preceding sentence, this
authorization does not extend to disclosure of any other information or any
other term or detail not related to the tax treatment or tax aspects of the Term
Loans or the other transactions contemplated hereby.
10.16. WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
91
10.17. Delivery of Addenda. Each initial Lender shall become
a party to this Agreement by delivering to the Administrative Agent an Addendum
duly executed by such Lender.
10.18. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement must include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary to enable him
or her to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
HAIGHTS CROSS OPERATING COMPANY
By:_________________________________________
Name:
Title:
BEAR, XXXXXXX & CO. INC., as Lead Arranger
By:_________________________________________
Name:
Title:
BEAR XXXXXXX CORPORATE LENDING INC., as
Administrative Agent
By:_________________________________________
Name:
Title:
Schedule 1.1
MORTGAGED PROPERTY
(a) INTELLECTUAL PROPERTY
(i) COPYRIGHTS
Please see attached.
(ii) TRADEMARKS
OWNER: HAIGHTS CROSS OPERATING COMPANY
Application/ Application/
Trademark Registration No. Registration Date
--------- ---------------- -----------------
HAIGHTS CROSS COMMUNICATIONS (AND DESIGN) 76-156,130 October 27, 2000
HAIGHTS CROSS COMMUNICATIONS 76-135,490 September 26, 2000
HAIGHTS CROSS 76-135,489 September 26, 2000
Design only 2,729,861 June 24, 2003
OWNER: OAKSTONE PUBLISHING LLC
Application/ Application/
Trademark Registration No. Registration Date
--------- ---------------- -----------------
OAKSTONE 76-137618 September 29, 2000
TOPPERFORMANCE 2250060 June 1, 1999
TOPTOPICS 2143130 March 10, 1998
TOPDOLLAR 2145063 March 17, 1998
TOPHEALTH 1911330 August 15, 1995
OWNER: RECORDED XXXXX, XXX
Application/ Application/
Trademark Registration No. Registration Date
--------- ---------------- -----------------
GRIOT AUDIO 2487622 September 11, 2001
GRIOT AUDIO and Design 2490872 September 18, 2001
Design Only 2242577 May 4, 1999
Schedule 1.1 continued
OWNER: SUNDANCE/NEWBRIDGE EDUCATIONAL PUBLISHING, LLC
The following Trademarks were formerly owned by Sundance Publishing, LLC:
Application/ Application/
Trademark Registration No. Registration Date
--------- ---------------- -----------------
LITTLE READERTWIN TEXTS 76/376018 February 27, 2002
Design Only (Class 9) 76/448558 September 11, 2002
Design Only (Class 16) 2736468 July 15, 2003
TWIN TEXTS 2692730 March 4, 2003
SECOND CHANCE READING 2489133 September 11, 2001
ALPHAKIDS and Design 2216549 January 5, 1999
LIFT LITERATURE IS FOR THINKING and Design 2225675 February 23, 1999
NOVEL IDEAS 2231963 March 16, 1999
CHAPTER BY CHAPTER and Design 2228067 March 2, 1999
LEAP (Stylized) 1347689 July 9, 1985
The following Trademarks were formerly owned by Newbridge Educational
Publishing, LLC:
Application/ Application/
Trademark Registration No. Registration Date
--------- ---------------- -----------------
NEWBRIDGE DESCUBRIMIENTOS 2504156 November 6, 2001
NEWBRIDGE LITTLE BOOKS FOR LITTLE HANDS 2459684 June 12, 2001
NEWBRIDGE DISCOVERY LINKS 2354616 June 6, 2000
NEWBRIDGE DISCOVERY STATION 2402572 November 7, 2000
NEWBRIDGE 1735677 November 24, 1992
NEWBRIDGE 1757761 Xxxxx 0, 0000
XXXXXXXXX 1799967 October 19, 1993
OWNER: CHELSEA HOUSE PUBLISHERS, LLC
Application/ Application/
Trademark Registration No. Registration Date
--------- ---------------- -----------------
CHELSEA CLUBHOUSE and Design 76/384252 March 14, 2002
CHELSEA HOUSE PUBLISHERS and Design 76/384251 March 14, 2002
CHELSEA CLUBHOUSE 2710069 April 22, 2003
CHELSEA HOUSE PUBLISHERS 2502040 October 30, 2001
CHELSEA HOUSE 2500342 October 23, 2001
Schedule 1.1 continued
OWNER: TRIUMPH LEARNING, LLC
The following Trademarks were formerly owned by Xxxxxxxx.xxx, LLC:
Application/ Application/
Trademark Registration No. Registration Date
--------- ---------------- -----------------
IMPROVING SCORES. IMPROVING SCHOOLS.
IMPROVING LIVES 76/407792 May 14, 2002
TRIUMPH LEARNING IMPROVING SCORES, IMPROVING
SCHOOLS, IMPROVING LIVES and Design 76/408415 May 15, 2002
TRIUMPH LEARNING 76/231372 March 27, 2001
TRIUMPH LEARNING SYSTEMS 76/260832 May 18, 2001
TRIUMPH LEARNING 2707945 April 15, 2003
OWNER: THE CORIOLIS GROUP, LLC
Application/ Application/
Trademark Registration No. Registration Date
--------- ---------------- -----------------
CORIOLIS 2577658 June 11, 2002
Design Only (Cl. 16) 2581264 June 18, 2002
Design Only (Cl. 9) 2571032 May 21, 2002
CORIOLISOPEN 75/687714 April 21, 1999
CORIOLIS 2509502 November 20, 2001
(iii) PATENTS
None
(b) REAL PROPERTY
000 Xxxxxxxx Xxxx, Xxxxxx Xxxxxxxxx, Xxxxxxxx 00000
Schedule 1.1 continued
(c) LEASED REAL PROPERTY
00 Xxx Xxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx, XX
000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX
000 Xxxxxx Xxxxxxxxx, Xxxxxx, XX
0000 Xxxxxx Xxxx, Xxxxxxxx, XX
0000 Xxxxxxxxx Xxxx, Xxxxxx, XX
000 Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxxx, XX
000 X. 00xx Xxxxxx, Xxx Xxxx, XX
0000 Xxxxxx Xxxxxx Xxxx, Xxxxxxxxxx, XX
000 Xxxxxxxx Xxxx, Xxxxxx Xxxxxxxxx, XX
000 X. 00xx Xxxxxx, Xxx Xxxx, XX
00-00 X. 00xx Xxxxxx, Xxx Xxxx, XX
Xxxxx 0/0/0 Xxxxxxxx Xxxxx, Xxxxxx Xxxxxxx
Xxx Xxxxxx Xxxx, Xxxxxxxxxxxx, XX
Schedule 4.4
CONSENTS, AUTHORIZATIONS, FILINGS AND NOTICES
1. Consents given pursuant to a Charter Amendment and Securities
Redemption Agreement, dated as of June 27, 2003, by and among Haights
Cross Communications, Inc., Haights Cross Operating Company and the
other parties named therein.
2. Consents given pursuant to an Indenture Amendment and Securities
Redemption Agreement, dated as of June 27, 2003, by and among Haights
Cross Operating Company and the parties named therein.
3. Consent of Common Stockholders of Haights Cross Communications, Inc. to
an Amendment to the Investors Agreement, dated as of December 10, 1999,
by and among Haights Cross Communications, Inc. and the stockholders
named therein.
4. Consent of Investors' Designee of the Board of Directors of Haights
Cross Communications, Inc. and Haights Cross Operating Company, dated
August 7, 2003, pursuant to the Investors Agreement, dated December 10,
1999, as amended.
5. Payoff Letter relating to the payoff on the date hereof of the existing
senior secured credit facility with CSFB and CIBC and related UCC-3
Termination Statements.
Schedule 4.6
MATERIAL LITIGATION
None
Schedule 4.15(a)
SUBSIDIARIES
% OF EQUITY INTERESTS OWNED
ENTITY JURISDICTION OF ORGANIZATION BY GROUP MEMBERS
------ ---------------------------- ---------------------------
Sundance/Newbridge
Educational Publishing, LLC Delaware 100%
Triumph Learning, LLC Delaware 100%
Recorded Xxxxx, XXX Delaware 100%
X X Xxxxx Limited UK 100%
Oakstone Publishing, LLC Delaware 100%
Chelsea House Publishers, LLC Delaware 100%
The Coriolis Group, LLC Delaware 100%
Schedule 4.19(c)
MORTGAGE FILING JURISDICTIONS
See Schedule 3(a) of the Guarantee and Collateral Agreement incorporated herein
by reference.
