EXHIBIT 4(a)
LOAN AGREEMENT
BETWEEN
KABLE NEWS COMPANY, INC.,
AN ILLINOIS CORPORATION
AND
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS AGENT
AND ALL LENDERS AS DEFINED HEREIN
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................1
ARTICLE II THE CREDITS...............................................17
2.1. Commitment................................................17
2.2. Required Payments; Termination............................17
2.3. Ratable Loans.............................................17
2.4. Types of Advances.........................................17
2.5. Commitment Fee; Reductions in Aggregate Revolving Loan
Commitment................................................17
2.6. Minimum Amount of Each Advance and Maximum Number of
Outstanding Eurodollar Advances...........................18
2.7. Optional Principal Payments...............................18
2.8. Method of Selecting Types and Interest Periods for New
Advances..................................................18
2.9. Conversion and Continuation of Outstanding Advances.......19
2.10. Changes in Interest Rate, etc.............................19
2.11. Rates Applicable After Default............................20
2.12. Method of Payment.........................................20
2.13. Noteless Agreement; Evidence of Indebtedness..............20
2.14. Telephonic Notices........................................21
2.15. Interest Payment Dates; Interest and Fee Basis............21
2.16. Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions.................................22
2.17. Limitation on Outstanding Amount of Revolving Loan........22
2.18. Installment Loan..........................................22
2.19. Term Loan.................................................22
2.20. Lending Installations.....................................23
2.21. Periodic Funding by Lenders...............................23
2.22. Non-Receipt of Funds by the Agent.........................25
ARTICLE III YIELD PROTECTION TAXES....................................25
3.1. Yield Protection..........................................25
3.2. Changes in Capital Adequacy Regulations...................26
3.3. Availability of Types of Advances.........................26
3.4. Funding Indemnification...................................27
3.5. Taxes.....................................................27
3.6. Lender Statements; Survival of Indemnity..................28
ARTICLE IV CONDITIONS PRECEDENT......................................29
4.1. Initial Advance...........................................29
4.2. Each Advance..............................................31
ARTICLE V REPRESENTATIONS AND WARRANTIES............................32
5.1. Existence and Standing....................................32
5.2. Authorization and Validity................................32
5.3. No Conflict; Government Consent...........................32
5.4. Financial Statements......................................33
5.5. Material Adverse Change...................................33
5.6. Taxes.....................................................33
5.7. Litigation and Contingent Obligations.....................33
5.8. Subsidiaries..............................................34
5.9. ERISA.....................................................34
5.10. Accuracy of Information...................................34
5.11. Regulation U..............................................34
5.12. Material Agreements.......................................34
5.13. Compliance With Laws......................................35
5.14. Ownership of Properties...................................35
5.15. Plan Assets; Prohibited Transactions......................35
5.16. Environmental Matters.....................................35
5.17. Investment Company Act....................................35
5.18. Public Utility Holding Company Act........................36
5.19. Subordinated Indebtedness.................................36
5.20. Post-Retirement Benefits..................................36
5.21. Insurance.................................................36
5.22. Solvency..................................................36
ARTICLE VI COVENANTS.................................................37
6.1. Financial and Other Reporting.............................37
6.2. Use of Proceeds...........................................39
6.3. Notice of Default.........................................39
6.4. Conduct of Business.......................................40
6.5. Taxes.....................................................40
6.6. Insurance.................................................40
6.7. Compliance with Laws......................................40
6.8. Maintenance of Properties.................................40
6.9. Inspection................................................40
6.10. Dividends.................................................41
6.11. Indebtedness..............................................41
6.12. Merger....................................................41
6.13. Sale of Assets............................................42
6.14. Investments and Acquisitions..............................42
6.15. Liens.....................................................43
6.16. Capital Expenditures......................................44
6.17. Affiliates................................................44
6.18. Subordinated Indebtedness.................................44
6.19. Other Agreements..........................................44
6.20. Disposition of Indebtedness of Subsidiary or Parent.......44
6.21. Business Activities.......................................44
6.22. Availability of Revolving Loan Advances to
Fulfillment, Export, Canada and International.............45
6.23. Loans or Advances to Parent and Subsidiary................45
6.24. Financial Covenants.......................................45
6.24.1. Consolidated Current Ratio.......................45
6.24.2. Consolidated Cash Flow Coverage..................45
6.24.3. Consolidated Tangible Net Worth..................46
6.24.4. Ratio of Collections.............................46
6.24.5. Ratio of Returns.................................46
6.25. Lock Box..................................................46
6.26. Year 2000.................................................47
ARTICLE VII DEFAULTS................................ ................47
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES............50
8.1. Acceleration..............................................50
8.2. Amendments................................................50
8.3. Preservation of Rights....................................51
ARTICLE IX GENERAL PROVISIONS........................................51
9.1. Survival of Representations...............................51
9.2. Governmental Regulation...................................51
9.3. Headings..................................................52
9.4. Entire Agreement..........................................52
9.5. Several Obligations; Benefits of this Agreement...........52
9.6. Expenses; Indemnification.................................52
9.7. Numbers of Documents......................................53
9.8. Accounting................................................53
9.9. Severability of Provisions................................53
9.10. Nonliability of Lenders...................................53
9.11. Confidentiality...........................................53
9.12. Nonreliance...............................................54
ARTICLE X THE AGENT.................................................54
10.1. Appointment; Nature of Relationship.......................54
10.2. Powers....................................................54
10.3. General Immunity..........................................55
10.4. No Responsibility for Loans, Recitals, etc................55
10.5. Action on Instructions of Lenders.........................55
10.6. Employment of Agents and Counsel..........................55
10.7. Reliance on Documents; Counsel............................56
10.8. Agent's Reimbursement and Indemnification.................56
10.9. Notice of Default.........................................56
10.10. Rights as a Lender........................................57
10.11. Lender Credit Decision....................................57
10.12. Successor Agent...........................................57
10.13. Agent's Fee...............................................58
10.14. Delegation to Affiliates..................................58
10.15. Execution of Collateral Documents.........................58
10.16. Collateral Releases.......................................58
ARTICLE XI SETOFF; RATABLE PAYMENTS..................................59
11.1. Setoff....................................................59
11.2. Ratable Payments..........................................59
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.........59
12.1. Successors and Assigns....................................59
12.2. Participations............................................60
12.2.1 Permitted Participants; Effect....................60
12.2.2. Voting Rights....................................60
12.2.3. Benefit of Setoff................................60
12.3. Assignments...............................................61
12.3.1. Permitted Assignments............................61
12.3.2. Effect; Effective Date...........................61
12.4. Dissemination of Information..............................62
12.5. Tax Treatment.............................................62
ARTICLE XIII NOTICES...................................................62
13.1. Notices...................................................62
13.2. Change of Address.........................................63
ARTICLE XIV COUNTERPARTS..............................................63
ARTICLE XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL................................................63
15.1. CHOICE OF LAW.............................................63
15.2. CONSENT TO JURISDICTION...................................63
15.3. WAIVER OF JURY TRIAL......................................64
EXHIBIT A FORM OF OPINION...........................................69
EXHIBIT B COMPLIANCE CERTIFICATE....................................70
EXHIBIT C ASSIGNMENT AGREEMENT......................................74
EXHIBIT D LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION............86
EXHIBIT E-1, E-2 & E-3 NOTES........................................87
EXHIBIT F CERTIFICATE OF BORROWER RE: ANNUAL FINANCIAL
STATEMENTS................................................88
EXHIBIT G MONTHLY COMPLIANCE CERTIFICATE............................89
EXHIBIT H MONTHLY COLLATERAL REPORT ACCOUNTS RECEIVABLE
COLLATERAL................................................90
EXHIBIT I ACTUAL COLLECTIONS AND ESTIMATED NET BILLING REPORT.......91
SCHEDULE 1 SUBSIDIARIES AND OTHER INVESTMENTS........................92
SCHEDULE 2 INDEBTEDNESS AND LIENS....................................93
SCHEDULE 3 PERMITTED AFFILIATES IN CONNECTION WITH ELIGIBLE
ACCOUNTS..................................................94
LOAN AGREEMENT
This Agreement, dated as of September 15, 1998, is among KABLE
NEWS COMPANY, INC., an Illinois corporation, as Borrower, the Lenders
and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Account" as defined in the U.C.C.
"Account Debtor" as defined in the U.C.C.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by
which the Borrower or any of its Subsidiaries (i) acquires any going
business or all or substantially all of the assets of any firm,
corporation or limited liability company, or division thereof,
whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most
recent transaction in a series of transactions) at least a majority
(in number of votes) of the securities of a corporation which have
ordinary voting power for the election of directors (other than
securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the
outstanding ownership interests of a partnership or limited
liability company.
"Actual Collections and Estimated Net Billing Report" is defined
in Section 6.1 (xi).
"Advance" means a borrowing hereunder (or conversion or
continuation thereof) consisting of the aggregate amount of the
several Loans made on the same Borrowing Date (or date of conversion
or continuation) by the Lenders to the Borrower of the same Type and,
in the case of Eurodollar Advances, for the same Interest Period.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person if
the controlling Person owns 10% or more of any class of voting
securities (or other ownership interests) of the controlled Person or
possesses, directly or indirectly, the power to direct or cause the
direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means American National Bank and Trust Company of
Chicago in its capacity as contractual representative of the Lenders
pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of
all the Lenders, as reduced from time to time pursuant to the terms
hereof.
"Agreement" means this Loan Agreement, as it may be amended or
modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time, applied in a
manner consistent with that used in preparing the financial
statements referred to in Section 5.4.
"American" means American National Bank and Trust Company of
Chicago.
"Applicable Fee Rate" means, at any time, the percentage rate
per annum at which Commitment Fees are accruing on the unused portion
of the Revolving Loan Commitment at such time as set forth in Section
2.5.
"Applicable Margin" means, with respect to Advances relating to
the Revolving Loan of any Type at any time, the percentage rate per
annum which is applicable at such time with respect to Advances of
such Type as set forth in the Pricing Schedule.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Authorized Officer" means Daniel Friedman, Chairman of the
Board, President and Chief Executive Officer, Bruce Obendorf, Vice
President, Director of Finance or David E. Bakener, Treasurer and
Controller of the Borrower, acting singly.
"Borrower" means Kable News Company, Inc., an Illinois
corporation, and its successors and assigns.
"Borrower Entities" means collectively Borrower, Export
Fulfillment, Canada and International.
"Borrowing Date" means a date on which an Advance is made
hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment
or rate selection of Eurodollar Advances, a day (other than a
Saturday or Sunday) on which banks generally are open in Chicago and
New York for the conduct of substantially all of their commercial
lending activities and on which dealings in United States dollars are
carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of
their commercial lending activities.
"Canada" means Kable News Company of Canada LTD, an Ontario,
Canada corporation.
"Canada Security Agreement" means that certain Security
Agreement dated September 15, 1998 executed by Canada in favor of
Agent for the ratable benefit of the Lenders, as it may be amended or
modified and in effect from time to time.
"Capital Expenditures" means, without duplication, any
expenditures for any purchase or other acquisition of any asset which
would be classified as a fixed or capital asset on a consolidated
balance sheet of the Borrower and its Subsidiaries prepared in
accordance with Agreement Accounting Principles excluding (i)
expenditures of insurance proceeds to rebuild or replace any asset
after a casualty loss and (ii) leasehold improvement expenditures for
which the Borrower or a Subsidiary is reimbursed promptly by the
lessor.
"Capitalized Lease" of a Person means any lease of Property by
such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with Agreement Accounting
Principles.
"Capitalized Lease Obligations" of a Person means the amount of
the obligations of such Person under Capitalized Leases which would
be shown as a liability on a balance sheet of such Person prepared in
accordance with Agreement Accounting Principles.
"Cash Collateral Account" is defined in Section 6.25.
"Cash Equivalent Investments" means (i) short-term obligations
of, or fully guaranteed by, the United States of America, (ii)
commercial paper rated A-1 or better by S&P or P-1 or better by
Moody's, (iii) demand deposit accounts maintained in the ordinary
course of business, and (iv) certificates of deposit issued by and
time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000; provided in
each case that the same provides for payment of both principal and
interest (and not principal alone or interest alone) and is not
subject to any contingency regarding the payment of principal or
interest.
"Change in Control" means (i) Parent shall cease to own, free
and clear of all Liens or other encumbrances, at least one hundred
percent (100%) of the outstanding shares of voting stock of the
Borrower on a fully diluted basis and (ii) Borrower shall cease to
own, free and clear of all Liens or other encumbrances, at least one
hundred percent (100%) of the outstanding shares of voting stock of
Export, Canada, International and Fulfillment.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Collateral Documents" means, collectively, the Kable Security
Agreement, Fulfillment Security Agreement, Export Security Agreement,
Canada Security Agreement, International Security Agreement, the
Trademark Security Agreement and the Stock Pledge Agreement.
"Commitment" means, for each Lender, the obligation of such
Lender to make Loans not exceeding the amount set forth opposite its
signature below or as set forth in any Notice of Assignment relating
to any assignment that has become effective pursuant to Section
12.3.2, as such amount may be modified from time to time pursuant to
the terms hereof.
"Compliance Certificate" is defined in Section 6.1 (ix).
"Consolidated Capital Expenditures" means, with reference to any
period, the Capital Expenditures of the Borrower and its Subsidiaries
calculated on a consolidated basis for such period.
"Consolidated Current Assets" means all current assets of
Borrower and its Subsidiaries calculated on a consolidated basis in
accordance with Agreement Accounting Principles excluding, however,
all intangible assets (including, but not limited to, goodwill and
intellectual property rights such as copyright) and specifically
including cash items in any bank or trust company (on hand and in
transit); customers' Accounts, bills and notes receivable (less such
reserves as may be required by Agreement Accounting Principles);
merchandise inventories and inventories of raw materials and
supplies, of working materials in process and of finished products
(valued at not in excess of the cost or current market value thereof,
whichever is less); readily marketable securities (each maturing
within one year from the date of determination and taken at nor more
than cost or current market value, whichever is lower); and such
other tangible assets as, in accordance with Agreement Accounting
Principles, would be included in current assets, all after deduction
of appropriate reserves; provided, however that in computing Current
Assets there shall be excluded: 1) any notes receivable from the
Parent; and 2) any assets which are assigned, pledged or deposited as
security for or for the purpose of paying any Indebtedness which is
not included in current liabilities.
"Consolidated Cash Flow" means Consolidated Net Income after
taxes for any period plus the aggregate amount of the Borrower's and
its Subsidiary's depreciation, amortization (excluding capitalization
of internal expenses over twelve (12) months or less), taxes and
Consolidated Interest Expense for said period.
"Consolidated Cash Flow Coverage Ratio" means the ratio of
Consolidated Cash Flow to Consolidated Debt Service.
"Consolidated Current Liabilities" means all Indebtedness of
Borrower and its Subsidiaries calculated on a consolidated basis
payable on demand or maturing not more than one year from the date as
of which current liabilities are to be determined, final maturities
and prepayments of Indebtedness and sinking fund payments required to
be made in respect of any Indebtedness within one (1) year after said
date, and all other items (including taxes accrued as estimated)
which in accordance with Agreement Accounting Principles would be
included as current liabilities. The amount owing to the Lenders
under the Revolving Loan shall be deemed a "Current Liability".
"Consolidated Current Ratio" means the ratio of Consolidated
Current Assets to Consolidated Current Liabilities.
"Consolidated Debt Service" means the Consolidated Interest
Expense for any period plus the aggregate principal amount of all
Indebtedness for borrowed money of Borrower and its Subsidiaries
payable or becoming due during said period.
"Consolidated Indebtedness" means at any time the Indebtedness
of the Borrower and its Subsidiaries calculated on a consolidated
basis as of such time.
"Consolidated Interest Expense" means, with reference to any
period, the interest expense of the Borrower and its Subsidiaries
calculated on a consolidated basis for such period.
"Consolidated Net Income" means, with reference to any period,
the net income (or loss) of the Borrower and its Subsidiaries
calculated on a consolidated basis for such period.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its
Subsidiaries determined in accordance with Agreement Accounting
Principles, less their consolidated Intangible Assets, all determined
as of such date. For purposes of this definition "Intangible Assets"
means the amount (to the extent reflected in determining such
consolidated stockholders' equity) of (i) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups
of assets of a going concern business made within twelve months after
the acquisition of such business) subsequent to April 30, 1998 in the
book value of any asset owned by Borrower or a Subsidiary, (ii) all
investments in unconsolidated Subsidiaries and all equity investments
in Persons which are not Subsidiaries, (iii) all unamortized debt
discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible items,
(iv) amounts due from Parent, (v) amounts due from Affiliates, (vi)
all inter-company assets, (vii) amounts due from officers, directors
or employees, (viii) all unamortized acquisition costs and
unamortized signing bonuses, (ix) all prepaid expenses (other than
income taxes), and (x) any other intangible assets as defined in
accordance with the Agreement Accounting Principles.
"Consolidated Rentals" means, with reference to any period, the
Rentals of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes or is contingently liable upon, the
obligation or liability of any other Person, or agrees to maintain
the net worth or working capital or other financial condition of any
other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter,
operating agreement or take-or-pay contract.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses
(whether or not incorporated) under common control which, together
with the Borrower or any of its Subsidiaries, are treated as a single
employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the
corporate base rate of interest announced by American from time to
time, changing when and as said corporate base rate changes.
"Default" means an event described in Article VII.
"Eligible Accounts" means an Account (including credits due from
publishers to any Borrowing Entity as set forth under Item 7 of
Exhibit H attached hereto) owing by a Person to each of the Borrower
Entities which meets the following requirements at the time it comes
into existence and continues to meet the same until it is collected
in full:
(a) it is genuine and in all respects what it purports to
be;
(b) it is created in the ordinary course of each Borrower
Entity's business and arises from: (a) the performance of
services by each Borrower Entity and such services have been
fully performed, acknowledged and accepted by the Account
Debtor; or (b) the sale or lease of goods by each Borrower
Entity, including C.O.D. sales, and such goods have been
completed in accordance with Account Debtor's specifications (if
any) and delivered to and accepted by the Account Debtor, and
each Borrower Entity has possession of, or has delivered to
Lender at Lender's request, shipping and delivery receipts
evidencing such shipment;
(c) in the case of all Fulfillment Services, it is
evidenced by an invoice rendered to the Account Debtor
thereunder and is due and payable no later than forty-five (45)
days after the date of the invoice and is not more than ninety
(90) days past due, and in the case of all Newsstand Services,
it is evidenced by an invoice to the Account Debtor (except for
estimated net billings added to the net account receivables
shown on the Monthly Collateral Report pursuant to Section
6.1(xi)) thereunder and is not unpaid for more than one hundred
twenty (120) days from the date of the invoice;
(d) it is owned by each Borrower Entity, said Borrower
Entity has the right to subject it to a security interest in
favor of Agent for the ratable benefit of all Lenders, and it is
subject to a first priority perfected security interest in favor
of Agent for the ratable benefit of all Lenders, and to no other
claims, Liens security interests or encumbrances whatsoever,
other than Permitted Liens;
(e) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and is not subject
to setoff, counterclaim, credit, allowance or adjustment by the
Account Debtor thereunder (except as recognized under the last
sentence of this definition of Eligible Accounts), or to any
claim by such Account Debtor denying liability thereunder in
whole or in part, and such Account Debtor has not refused to
accept and/or has not returned or offered to return any of the
goods or services which are the subject of such Account;
(f) to the knowledge of any Borrowing Entity, there are no
proceedings or actions which are then threatened or pending
against the Account Debtor which might result in any material
adverse change in its financial condition or in its ability to
pay any Account in full;
(g) it does not arise out of a contract or order which, by
its terms, forbids or makes void or unenforceable the assignment
by each Borrower Entity to Agent of the Account arising with
respect thereto;
(h) the Account Debtor is not a director, officer,
employee, agent, Subsidiary, Parent or Affiliate (except for
those Affiliates listed in Schedule 3 attached hereto) of
Parent, Borrower or any of Borrower's Subsidiaries;
(i) the Account Debtor is a resident or citizen of and is
located within the United States of America, except for Accounts
due and owing to Export or Canada which may be due and owing
from Account Debtors located in Canada;
(j) it is not an Account with respect to which the Account
Debtor is the United States of America or any department, agency
or instrumentality thereof, unless the Borrower assigns its
right to payment of such Account to Agent pursuant to, and in
full compliance with, the Assignment of Claims Act of 1940, as
amended;
(k) it is not an Account with respect to which the Account
Debtor is any state, municipality or any department, agency or
instrumentality thereof, unless the Borrower Entity assigns its
rights to payment of such Account to Agent pursuant to, and in
full compliance with all applicable laws, rules and regulations
relating thereto;
(l) it is not an Account with respect to which the Account
Debtor is located in a state which requires the Borrower Entity,
as a precondition to commencing or maintaining an action in the
courts of that state, either to (A) receive a certificate of
authority to do business and be in good standing in such state,
or (B) file a notice of business activities report or similar
report with such state's taxing authority, unless (x) the
Borrower Entity has taken one of the actions described in
clauses (A) or (B), (y) the failure to take one of the actions
described in either clause (A) or (B) may be cured retroactively
by the Borrower Entity at its election, or (z) the Borrower
Entity has proven, to Agent's satisfaction, that it is exempt
from any such requirements under any such state's laws; and
(m) it is not an Account which, when added to a particular
Account Debtor's other indebtedness to each Borrower Entity
results in all accounts in the aggregate from the particular
Account Debtor exceeding fifty (50%) percent of all Accounts due
to the applicable Borrower Entity.
An Account which is at any time an Eligible Account, but which
subsequently fails to meet any of the foregoing requirements,
shall forthwith cease to be an Eligible Account. Further, with
respect to any Account, if Agent at any time or times hereafter
determines, in its sole and absolute discretion, that the
prospect of payment or performance by the Account Debtor is or
will be impaired, notwithstanding anything to the contrary
contained above, such Account shall no longer be an Eligible
Account. In addition, if at any time more than ten percent
(10%) of the amount of all Accounts owing from any one Account
Debtor of any Borrowing Entity remain unpaid beyond ninety (90)
days from the due date of said invoices in connection with any
Fulfillment Services or remain unpaid beyond one hundred twenty
(120) days from the date of said invoices in connection with any
Newsstand Services, then all Accounts relating to said Account
Debtor shall be considered to be Ineligible Accounts. In
addition, in connection with all Accounts relating to Newsstand
Services to reflect that the Account Debtor, in connection with
same, has the right to return and does return a large volume of
magazines for which each Borrowing Entity has rendered invoices
in connection therewith there shall be deducted from Eligible
Accounts an amount reasonably determined by Borrower to reflect
this future reduction in Eligible Accounts.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and other
governmental restrictions relating to (i) the protection of the
environment, (ii) the effect of the environment on human health,
(iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or
land, or (iv) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any rule or regulation issued
thereunder.
"Eurodollar Advance" means an Advance which bears interest at
the applicable Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Advance for the relevant Interest Period, the applicable London
interbank offered rate for deposits in U.S. dollars appearing on Dow
Jones Markets (Telerate) Page 3750 as of 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, and
having a maturity approximately equal to such Interest Period. If no
London interbank offered rate of such maturity then appears on Dow
Jones Markets (Telerate) Page 3750, then the Eurodollar Base Rate
shall be equal to the London interbank offered rate for deposits in
U.S. dollars maturing immediately before or immediately after such
maturity, whichever is higher, as determined by the Agent from Dow
Jones Markets (Telerate) Page 3750. If Dow Jones Markets (Telerate)
Page 3750 is not available, the applicable Eurodollar Base Rate for
the relevant Interest Period shall be the rate determined by the
Agent to be the rate at which American offers to place deposits in
U.S. dollars with first-class banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period, in the approximate amount of
American's relevant portion of the Eurodollar Advance and having a
maturity approximately equal to such Interest Period.
"Eurodollar Loan" means a Loan which bears interest at the
applicable Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance
for the relevant Interest Period, the sum of (i) the quotient of (a)
the Eurodollar Base Rate applicable to such Interest Period, divided
by (b) one minus the Reserve Requirement (expressed as a decimal)
applicable to such Interest Period, plus the Applicable Margin. The
Eurodollar Rate shall be rounded to the next higher multiple of 1/16
of 1% if the rate is not such a multiple.
"Excluded Taxes" means, in the case of each Lender or applicable
Lending Installation and the Agent, taxes imposed on its overall net
income, and franchise taxes imposed on it, by (i) the jurisdiction
under the laws of which such Lender or the Agent is incorporated or
organized or (ii) the jurisdiction in which the Agent's or such
Lender's principal executive office or such Lender's applicable
Lending Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"Export" means Kable News Export, Ltd., a Delaware corporation.
"Export Security Agreement" means that certain Security
Agreement dated September 15, 1998 executed by Export in favor of
Agent, for the ratable benefit of the Lenders, as it may be amended
or modified and in effect from time to time.
"Facility Termination Date" means September 15, 2001 or any
earlier date on which the Aggregate Commitment is reduced to zero or
otherwise terminated pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an interest
rate per annum equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as
published for such day (or, if such day is not a Business Day, for
the immediately preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations at approximately
10:00 a.m. (Chicago time) on such day on such transactions received
by the Agent from three Federal funds brokers of recognized standing
selected by the Agent in its sole discretion.
"Financial Contract" of a Person means (i) any exchange-traded
or over-the-counter futures, forward, swap or option contract or
other financial instrument with similar characteristics, (ii) any
agreements, devices or arrangements providing for payments related to
fluctuations of interest rates, exchange rates or forward rates,
including, but not limited to, interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options.
"Floating Rate" means, for any day, a rate per annum equal to
(i) the Corporate Base Rate for such day plus (ii) the Applicable
Margin, in each case changing when and as the Corporate Base Rate
changes.
"Floating Rate Advance" means an Advance which bears interest at
the Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the
Floating Rate.
"Fulfillment" means Kable Fulfillment Services of Ohio, Inc., a
Delaware corporation.
"Fulfillment Security Agreement" means that certain Security
Agreement dated September 15, 1998 executed by Fulfillment in favor
of Agent, for the ratable benefit of the Lenders, as it may be
amended or modified and in effect from time to time.
"Fulfillment Services" means all services performed by any
Borrowing Entity for any of its customers relating to product, order
and subscription processing and fulfillment; customer service;
telemarketing and related services.
"Guarantors" means the Parent and Subsidiary Guarantors, and
their successors and assigns.
"Guaranty" means that certain Guaranty dated as of September 15,
1998 executed by the Parent in favor of the Agent, for the ratable
benefit of the Lenders, as it may be amended or modified and in
effect from time to time.
"Indebtedness" of a Person means such Person's (i) obligations
for borrowed money, (ii) obligations representing the deferred
purchase price of Property or services (other than accounts payable
arising in the ordinary course of such Person's business payable on
terms customary in the trade), (iii) obligations, whether or not
assumed, secured by Liens or payable out of the proceeds or
production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances,
or other instruments, (v) obligations of such Person to purchase
securities or other property arising out of or in connection with the
sale of the same or substantially similar securities or property,
(vi) Capitalized Lease Obligations, (vii) obligations in connection
with the issuance of Letters of Credit, (viii) obligations of a
Person in connection with Financial Contracts; (ix) Rate Hedging
Obligations; and (x) any other obligation for borrowed money or other
financial accommodation which in accordance with Agreement Accounting
Principles would be shown as a liability on the consolidated balance
sheet of such Person.
"Interest Period" means, with respect to a Eurodollar Advance, a
period of one, two, three or six months commencing on a Business Day
selected by the Borrower pursuant to this Agreement. Such Interest
Period shall end on the day which corresponds numerically to such
date one, two, three or six months thereafter, provided, however,
that if there is no such numerically corresponding day in such next,
second, third or sixth succeeding month, such Interest Period shall
end on the last Business Day of such next, second, third or sixth
succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the
next succeeding Business Day, provided, however, that if said next
succeeding Business Day falls in a new calendar month, such Interest
Period shall end on the immediately preceding Business Day.
"Installment Loan" as defined in Section 2.18.
"International" means Kable News International, Inc., a Delaware
corporation.
"International Security Agreement" means that certain Security
Agreement dated September 15, 1998 executed by International in favor
of Agent for the ratable benefit of the Lenders, as it may be amended
and modified, and in effect from time to time.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees
made in the ordinary course of business), extension of credit (other
than accounts receivable arising in the ordinary course of business
on terms customary in the trade) or contribution of capital by such
Person; stocks, bonds, mutual funds, partnership interests, notes,
debentures or other securities owned by such Person; any deposit
accounts and certificate of deposit owned by such Person; and
structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.
"Kable Security Agreement" means that certain Security Agreement
dated September 15, 1998 executed by Borrower in favor of Agent, for
the ratable benefit of the Lenders, as it may be amended and modified
and in effect from time to time.
"Lenders" means the lending institutions listed on the signature
pages of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the
Agent, the office, branch, subsidiary or affiliate of such Lender or
the Agent listed on the signature pages hereof or on a Schedule or
otherwise selected by such Lender or the Agent pursuant to Section
3.6.
"Letter of Credit" of a Person means a letter of credit or
similar instrument which is issued upon the application of such
Person or upon which such Person is an account party or for which
such Person is in any way liable.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional
sale, Capitalized Lease or other title retention agreement).
"Loan" means, with respect to a Lender, such Lender's loan made
pursuant to Article II (or any conversion or continuation thereof).
"Loan Documents" means this Agreement and any Notes issued
pursuant to Section 2.13, the Collateral Documents, the Stock Pledge
Agreement, the Subsidiary Guaranties and the Guaranty.
"Material Adverse Effect" means a material adverse effect on (i)
the business, Property, condition (financial or otherwise), results
of operations, or prospects of the Borrower and its Subsidiaries
taken as a whole, (ii) the ability of the Borrower, Parent, Canada,
International, Export and Fulfillment to perform their obligations
under the Loan Documents to which they are a party, or (iii) the
validity or enforceability of any of the Loan Documents or the rights
or remedies of the Agent or the Lenders thereunder.
"Material Indebtedness" is defined in Section 7.5.
"Monthly Collateral Report" is defined in Section 6.1(x).
"Multiemployer Plan" means a Plan maintained pursuant to a
collective bargaining agreement or any other arrangement to which the
Borrower or any member of the Controlled Group is a party to which
more than one employer is obligated to make contributions other than
a Single Employer Plan.
"Net Mark-to-Market Exposure" of a Person means, as of any date
of determination, the excess (if any) of all unrealized losses over
all unrealized profits of such Person arising from Rate Hedging
Agreements. "Unrealized losses" means the fair market value of the
cost to such Person of replacing such Rate Hedging Agreement as of
the date of determination (assuming the Rate Hedging Agreement were
to be terminated as of that date), and "unrealized profits" means the
fair market value of the gain to such Person of replacing such Rate
Hedging Agreement as of the date of determination (assuming such Rate
Hedging Agreement were to be terminated as of that date).
"Newsstand Services" means all services performed by any
Borrowing Entity for any of its customers relating to the single copy
distribution of paperbacks, magazines and related products on behalf
of said customers.
"Non-U.S. Lender" is defined in Section 3.5(iv).
"Note" means any promissory note issued at the request of a
Lender pursuant to Section 2.13 in the form of Exhibit E-1, E-2 or
E-3.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Loans, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, the Agent or any
indemnified party arising under the Loan Documents.
"Other Taxes" is defined in Section 3.5(ii).
"Parent" means AMREP Corporation, an Oklahoma corporation.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the fifteenth (15th) day of the first month
following the end of each calendar quarter.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Person" means any natural person, corporation, firm, joint
venture, partnership, limited liability company, association,
enterprise, trust or other entity or organization, or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Plan" means an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code as to which the Borrower or any member
of the Controlled Group may have any liability.
"Pricing Schedule" means the Schedule attached hereto identified
as such.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other
assets owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Rate Hedging Agreement" means an agreement, device or
arrangement providing for payments which are related to fluctuations
of interest rates, exchange rates or forward rates, including, but
not limited to, dollar-denominated or cross-currency interest rate
exchange agreements, forward currency exchange agreements, interest
rate cap or collar protection agreements, forward rate currency or
interest rate options, puts and warrants.
"Rate Hedging Obligations" of a Person means any and all
obligations of such Person, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all Rate Hedging
Agreements, and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Rate Hedging Agreement.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any
successor thereto or other regulation or official interpretation of
said Board of Governors relating to reserve requirements applicable
to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any
successor or other regulation or official interpretation of said
Board of Governors relating to the extension of credit by banks for
the purpose of purchasing or carrying margin stocks applicable to
member banks of the Federal Reserve System.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such section,
with respect to a Plan, excluding, however, such events as to which
the PBGC has by regulation waived the requirement of Section 4043(a)
of ERISA that it be notified within 30 days of the occurrence of such
event, provided, however, that a failure to meet the minimum funding
standard of Section 412 of the Code and of Section 302 of ERISA shall
be a Reportable Event regardless of the issuance of any such waiver
of the notice requirement in accordance with either Section 4043(a)
of ERISA or Section 412(d) of the Code.
"Reports" is defined in Section 9.6.
"Required Lenders" means Lenders in the aggregate having at
least fifty-one percent (51%) of the Aggregate Commitment or, if the
Aggregate Commitment has been terminated, Lenders in the aggregate
holding at least fifty-one percent (51%) of the aggregate unpaid
principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to an Interest Period,
the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under
Regulation D on Eurocurrency liabilities.
"Revolving Loan" means that portion of the Loans made in
connection with Revolving Loan Commitment.
"Revolving Loan Commitment" means that portion of the Aggregate
Commitment equal to Forty Million Dollars ($40,000,000.00).
"Schedule" refers to a specific schedule to this Agreement,
unless another document is specifically referenced.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Secured Obligations" means, collectively, (i) the Obligations
and (ii) all Rate Hedging Obligations owing to one or more Lenders.
"Single Employer Plan" means a Plan maintained by the Borrower
or any member of the Controlled Group for employees of the Borrower
or any member of the Controlled Group.
"Stock Pledge Agreement" means that certain Stock Pledge
Agreement dated September 15, 1998 executed by Parent in favor of
Agent, for the ratable benefit of the Lenders, as it may be amended
or modified and in effect from time to time.
"Subsidiary Guaranties" means that certain Guaranty dated as of
September 15, 1998 executed by Export, that certain Guaranty dated
September 15, 1998 executed by Fulfillment, that certain Guaranty
dated as of September 15, 1998 executed by Canada and that certain
Guaranty dated September 15, 1998 executed by International.
"Subsidiary Guarantors" means Export, Fulfillment, Canada and
International and their successors and assigns.
"Subordinated Indebtedness" of a Person means any Indebtedness
of such Person the payment of which is subordinated to payment of the
Obligations to the written satisfaction of the Required Lenders.
"Subsidiary" of a Person means (i) any corporation more than 50%
of the outstanding securities having ordinary voting power of which
shall at the time be owned or controlled, directly or indirectly, by
such Person or by one or more of its Subsidiaries or by such Person
and one or more of its Subsidiaries, or (ii) any partnership, limited
liability company, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more
than 10% of the consolidated assets of the Borrower and its
Subsidiaries as would be shown in the consolidated financial
statements of the Borrower and its Subsidiaries as at the beginning
of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of
the consolidated net sales or of the consolidated net income of the
Borrower and its Subsidiaries as reflected in the financial
statements referred to in clause (i) above.
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and any and all
liabilities with respect to the foregoing, but excluding Excluded
Taxes.
"Term Loan" as defined in Section 2.19.
"Trademark Security Agreement" means that certain Trademark
Collateral Assignment and Security Agreement dated September 15, 1998
executed by Borrower in favor of Agent for the ratable benefit of the
Lenders, as it may be amended or modified in effect from time to time.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance in connection with the
Revolving Loan, its nature as a Floating Rate Advance or a Eurodollar
Advance.
"U.C.C." means the Uniform Commercial Code or comparable statute
or successor statute or any successor statute thereto, as in effect
from time to time in the relevant jurisdiction.
"Unfunded Liabilities" means the amount (if any) by which the
present value of all vested and unvested accrued benefits under all
Single Employer Plans exceeds the fair market value of all such Plan
assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plans using PBGC actuarial assumptions
for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary
all of the outstanding voting securities of which shall at the time
be owned or controlled, directly or indirectly, by such Person or one
or more Wholly-Owned Subsidiaries of such Person, or by such Person
and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any
partnership, limited liability company, association, joint venture or
similar business organization 100% of the ownership interests having
ordinary voting power of which shall at the time be so owned or
controlled.
"Year 2000 Issues" means anticipated costs, problems and
uncertainties associated with the inability of certain computer
applications to effectively handle data including dates on and after
January 1, 2000, as such inability affects the business, operations,
and financial condition of the Borrower and its Subsidiaries and of
the Borrower's and its Subsidiaries' material customers, suppliers
and vendors.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Commitment. From and including the date of this Agreement
and prior to the Facility Termination Date, each Lender severally
agrees, on the terms and conditions set forth in this Agreement, to
make Loans to the Borrower from time to time in amounts not to exceed
in the aggregate at any one time outstanding the amount of its
Commitment. Subject to the terms of this Agreement, the Borrower may
borrow, repay and reborrow at any time prior to the Facility
Termination Date amounts in connection with the Revolving Loan, but
not the Installment Loan and Term Loan. The Commitments to lend
hereunder shall expire on the Facility Termination Date.
2.2. Required Payments; Termination. Any outstanding Advances
and all other unpaid Obligations shall be paid in full by the
Borrower on the Facility Termination Date.
2.3. Ratable Loans. Each Advance hereunder shall consist of
Loans made from the several Lenders ratably in proportion to the
ratio that their respective Commitments bear to the Aggregate
Commitment.
2.4. Types of Advances. The Advances in connection with the
Revolving Loan may be Floating Rate Advances or Eurodollar Advances,
or a combination thereof, selected by the Borrower in accordance with
Sections 2.8 and 2.9.
2.5. Commitment Fee; Reductions in Aggregate Revolving Loan
Commitment. The Borrower agrees to pay to the Agent for the account
of each Lender a commitment fee of one-quarter percent (1/4%) per
annum on the daily unused portion of such Lender's Revolving Loan
Commitment from the date hereof to and including the Facility
Termination Date, payable on each Payment Date hereafter and on the
Facility Termination Date. The Borrower may permanently reduce the
aggregate Revolving Loan Commitment in whole, or in part ratably
among the Lenders in integral multiples of $100,000.00, upon at least
five Business Days' written notice to the Agent, which notice shall
specify the amount of any such reduction, provided, however, that the
amount of the aggregate Revolving Loan Commitment may not be reduced
below the aggregate principal amount of the outstanding Advances in
connection with the Revolving Loan. All accrued commitment fees
shall be payable on the effective date of any termination of the
obligations of the Lenders to make Loans hereunder.
2.6. Minimum Amount of Each Advance and Maximum Number of
Outstanding Eurodollar Advances. Each Eurodollar Advance shall be in
the minimum amount of $1,000,000.00 (and in multiples of $100,000.00
if in excess thereof), and each Floating Rate Advance shall be in the
minimum amount of $100,000.00 (and in multiples of $10,000.00 if in
excess thereof), provided, however, that any Floating Rate Advance
may be in the amount of the unused aggregate Revolving Loan
Commitment. In addition, at no time shall there be outstanding more
than four (4) individual Eurodollar Advances.
2.7. Optional Principal Payments. The Borrower may from time to
time pay, without penalty or premium, all outstanding Floating Rate
Advances, or, in a minimum aggregate amount of $100,000.00 or any
integral multiple of $10,000.00 in excess thereof, any portion of the
outstanding Floating Rate Advances upon two Business Days' prior
notice to the Agent. The Borrower may from time to time pay, subject
to the payment of any funding indemnification amounts required by
Section 3.4 but without penalty or premium, all outstanding
Eurodollar Advances, or, in a minimum aggregate amount of
$1,000,000.00 or any integral multiple of $100,000.00 in excess
thereof, any portion of the outstanding Eurodollar Advances upon
three Business Days' prior notice to the Agent.
2.8. Method of Selecting Types and Interest Periods for New
Advances. In connection with all Advances relating to the Revolving
Loan, the Borrower shall select the Type of Advance and, in the case
of each Eurodollar Advance, the Interest Period applicable thereto
from time to time. The Borrower shall give the Agent irrevocable
notice (a "Borrowing Notice") not later than 2:00 p.m. (Chicago time)
on any Borrowing Date of each Floating Rate Advance and two Business
Days before the Borrowing Date for each Eurodollar Advance,
specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest Period
applicable thereto.
The Agent will make the funds received from the Lenders, or provided
by Agent pursuant to Section 2.21, hereof, available to the Borrower
at the Agent's aforesaid address not later than 5:00 p.m. (Chicago
time) on any Borrowing Date.
2.9. Conversion and Continuation of Outstanding Advances.
Floating Rate Advances shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are converted into
Eurodollar Advances pursuant to this Section 2.9 or are repaid in
accordance with Section 2.7. Each Eurodollar Advance shall continue
as a Eurodollar Advance until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Advance shall be
automatically converted into a Floating Rate Advance unless (x) such
Eurodollar Advance is or was repaid in accordance with Section 2.7 or
(y) the Borrower shall have given the Agent a Conversion/Continuation
Notice (as defined below) requesting that, at the end of such
Interest Period, such Eurodollar Advance continue as a Eurodollar
Advance for the same or another Interest Period. Subject to the
terms of Section 2.6, the Borrower may elect from time to time to
convert all or any part of a Floating Rate Advance into a Eurodollar
Advance. The Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a Floating
Rate Advance into a Eurodollar Advance or continuation of a
Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least
three Business Days prior to the date of the requested conversion or
continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued, and
(iii) the amount of such Advance which is to be converted into or
continued as a Eurodollar Advance and the duration of the
Interest Period applicable thereto.
2.10. Changes in Interest Rate, etc. Each Floating Rate Advance
shall bear interest on the outstanding principal amount thereof, for
each day from and including the date such Advance is made or is
automatically converted from a Eurodollar Advance into a Floating
Rate Advance pursuant to Section 2.9, to but excluding the date it is
paid or is converted into a Eurodollar Advance pursuant to Section
2.9 hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect simultaneously
with each change in the Alternate Base Rate. Each Eurodollar Advance
shall bear interest on the outstanding principal amount thereof from
and including the first day of the Interest Period applicable thereto
to (but not including) the last day of such Interest Period at the
interest rate determined by the Agent as applicable to such
Eurodollar Advance based upon the Borrower's selections under Section
2.8 and 2.9 and otherwise in accordance with the terms hereof. No
Interest Period may end after the Facility Termination Date.
2.11. Rates Applicable After Default. Notwithstanding anything
to the contrary contained in Section 2.8 or 2.9, during the
continuance of a Default or Unmatured Default the Required Lenders
may, at their option, by notice to the Borrower (which notice may be
revoked at the option of the Required Lenders notwithstanding any
provision of Section 8.2 requiring unanimous consent of the Lenders
to changes in interest rates), declare that no Advance may be made
as, converted into or continued as a Eurodollar Advance. During the
continuance of a Default the Required Lenders may, at their option,
by notice to the Borrower (which notice may be revoked at the option
of the Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest
rates), declare that (i) each Eurodollar Advance shall bear interest
for the remainder of the applicable Interest Period at the rate
otherwise applicable to such Interest Period plus 3% per annum, (ii)
each Floating Rate Advance shall bear interest at a rate per annum
equal to the Floating Rate in effect from time to time plus 3% per
annum and (iii) interest on the Term Loan and Installment Loan shall
bear interest at a rate per annum equal to the interest rate then in
effect from time to time thereunder plus 3% per annum, provided that,
during the continuance of a Default under Section 7.6 or 7.7, the
interest rates set forth in clauses (i), (ii) and (iii) above shall
be applicable to all Advances without any election or action on the
part of the Agent or any Lender.
2.12. Method of Payment. All payments of the Obligations
hereunder shall be made, without setoff, deduction, or counterclaim,
in immediately available funds to the Agent at the Agent's address
specified pursuant to Article XIII, or at any other Lending
Installation of the Agent specified in writing by the Agent to the
Borrower, by noon (local time) on the date when due and shall be
applied ratably by the Agent among the Lenders. Each payment
delivered to the Agent for the account of any Lender shall be
delivered promptly by the Agent to such Lender in the same type of
funds that the Agent received at its address specified pursuant to
Article XIII or at any Lending Installation specified in a notice
received by the Agent from such Lender. The Agent is hereby
authorized to charge the account of the Borrower maintained with
American for each payment of principal, interest and fees as it
becomes due hereunder.
2.13. Noteless Agreement; Evidence of Indebtedness. (i) Each
Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender from time to
time, including the amounts of principal and interest payable and
paid to such Lender from time to time hereunder.
(ii) The Agent shall also maintain accounts in which it will
record (a) the amount of each Loan made hereunder, the Type thereof
and the Interest Period with respect thereto, (b) the amount of any
principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (c) the amount of any
sum received by the Agent hereunder from the Borrower and each
Lender's share thereof.
(iii) The entries maintained in the accounts maintained
pursuant to paragraphs (i) and (ii) above shall be prima facie
evidence of the existence and amounts of the Obligations therein
recorded; provided, however, that the failure of the Agent or any
Lender to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the
Obligations in accordance with their terms.
(iv) Any Lender may request that its Loans be evidenced by a
promissory note (a "Note"). In such event, the Borrower shall
prepare, execute and deliver to such Lender a Note payable to the
order of such Lender in a form supplied by the Agent. Thereafter,
the Loans evidenced by such Note and interest thereon shall at all
times (including after any assignment pursuant to Section 12.3) be
represented by one or more Notes payable to the order of the payee
named therein or any assignee pursuant to Section 12.3, except to the
extent that any such Lender or assignee subsequently returns any such
Note for cancellation and requests that such Loans once again be
evidenced as described in paragraphs (i) and (ii) above.
2.14. Telephonic Notices. The Borrower hereby authorizes the
Lenders and the Agent to extend, convert or continue Advances, effect
selections of Types of Advances and to transfer funds based on
telephonic notices made by any person or persons the Agent or any
Lender in good faith believes to be acting on behalf of the
Borrower. The Borrower agrees to deliver promptly to the Agent a
written confirmation, if such confirmation is requested by the Agent
or any Lender, of each telephonic notice signed by an Authorized
Officer. If the written confirmation differs in any material respect
from the action taken by the Agent and the Lenders, the records of
the Agent and the Lenders shall govern absent manifest error.
2.15. Interest Payment Dates; Interest and Fee. Interest accrued
on each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof
and at maturity. Interest accrued on each Eurodollar Advance shall
be payable on the last day of its applicable Interest Period, on any
date on which the Eurodollar Advance is prepaid, whether by
acceleration or otherwise, and at maturity. Interest accrued on each
Eurodollar Advance having an Interest Period longer than three months
shall also be payable on the last day of each three-month interval
during such Interest Period. Interest and commitment fees shall be
calculated for actual days elapsed on the basis of a 360-day year.
Interest shall be payable for the day an Advance is made but not for
the day of any payment on the amount paid if payment is received
prior to noon (local time) at the place of payment. If any payment
of principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such
extension of time shall be included in computing interest in
connection with such payment.
2.16. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent
will notify each Lender of the contents of each Aggregate Commitment
reduction notice, Borrowing Notice, Conversion/Continuation Notice,
and repayment notice received by it hereunder. The Agent will notify
each Lender of the interest rate applicable to each Eurodollar
Advance promptly upon determination of such interest rate and will
give each Lender prompt notice of each change in the Corporate Base
Rate.
2.17. Limitation on Outstanding Amount of Revolving Loan. At no
time shall the outstanding amount of the Revolving Loan exceed eighty
percent (80%) of the Eligible Accounts. If, at any time, the
outstanding amount of the Revolving Loan exceeds eighty percent (80%)
of the Eligible Accounts for any reason, including a determination by
Agent that an account is no longer an Eligible Account, Borrower
shall immediately pay to Agent the amount of said excess to be
applied to reduce the then principal balance of the Revolving Loan.
2.18. Installment Loan. In addition to the Revolving Loan,
contemporaneously with the execution of this Agreement, Lenders shall
make an installment loan (the "Installment Loan") to Borrower in the
aggregate principal amount of One Million Two Hundred Thousand
Dollars ($1,200,000.00). The Installment Loan shall be secured by
the Collateral Documents, is specifically included with the
Obligations as defined herein, and shall bear interest at the rate of
the Corporate Base Rate as changing from time to time. Borrower
shall repay the Installment Loan through payments of interest only at
the Corporate Base Rate commencing on the first day of October and on
the first day of each month thereafter together with annual principal
payments of Four Hundred Thousand Dollars ($400,000.00) commencing on
December 31, 1998 and on the last day of each December thereafter
with a final payment of the then full principal balance of the
Installment Loan together with all remaining accrued interest on
October 31, 2000. The Installment Loan may be prepaid at any time
without penalty or premium. Any prepayment shall be applied to the
payments due on the Installment Loan in the inverse order of their
maturity.
2.19. Term Loan. In addition to the Revolving Loan and
Installment Loan, contemporaneously with the execution of this
Agreement, Lenders shall make a term loan (the "Term Loan") to
Borrower in the aggregate principal amount of One Million Five
Hundred Thousand Dollars ($1,500,000.00). The Term Loan shall be
secured by the Collateral Documents, is specifically including within
the Obligations as defined herein, and shall bear interest at the
rate of the Corporate Base Rate as changing from time to time plus
fifty (50) basis points. Borrower shall repay the Term Loan through
payment of quarterly payments of accrued interest plus quarterly
principal payments of One Hundred Twenty Five Thousand Dollars
($125,000.00) commencing on November 30, 1998 and continuing on the
last day of each February, May, August and November thereafter with a
final payment of the then full principal balance of the Term Loan
together with all remaining accrued interest on August 31, 2001. The
Term Loan may be prepaid at any time without penalty or premium. Any
prepayment shall be applied to the payments due on the Term Loan in
the inverse order of their maturity.
2.20. Lending Installations. Each Lender may book its Loans at
any Lending Installation selected by such Lender and may change its
Lending Installation from time to time. All terms of this Agreement
shall apply to any such Lending Installation and the Loans and any
Notes issued hereunder shall be deemed held by each Lender for the
benefit of such Lending Installation. Each Lender may, by written
notice to the Agent and the Borrower in accordance with Article XIII,
designate replacement or additional Lending Installations through
which Loans will be made by it and for whose account Loan payments
are to be made.
2.21. Periodic Funding by Lenders.
(i) Because the Borrower anticipates requesting Advances in
connection with the Revolving Loan on a daily basis and
repaying the Revolving Loan on a daily basis through
collections resulting in the amount of the outstanding
Revolving Loan fluctuating from day to day, and in order to
administer the Revolving Loan in an efficient manner and to
minimize the transfer of funds between the Agent and the
Lenders, the Lenders hereby instruct the Agent, and the
Agent may (but is not obligated to) (A) make available, on
behalf of the Lenders, the full amount of all Advances in
connection with the Revolving Loan requested by the
Borrower (not to exceed $40,000,000.00 in the aggregate at
any one time outstanding) without giving each Lender prior
notice of the proposed Advance relating to the Revolving
Loan, of such Lender's ratable portion thereof and the
other matters covered by the Borrowing Notice and (B) if
the Agent has made any such amounts available as provided
in clause (A), upon repayment of the Revolving Loan by the
Borrower, apply such amounts repaid directly to the amounts
made available by the Agent in accordance with clause (A)
and not yet settled as described below; provided that the
Agent shall not advance funds as described in clause (A)
above if the Agent has actually received prior to such
Advance related to the Revolving Loan a certificate from
the Borrower pursuant to and in accordance with Section 6.2
that an Unmatured Default or Default then exists.
(ii) If the Agent advances the Revolving Loan on behalf of the
Lenders, as provided in paragraph (i), above, the amount of
the outstanding Revolving Loan and each Lender's ratable
portion thereof shall be computed twice a week rather than
daily and shall be adjusted upward or downward on the basis
of the amount of the outstanding Revolving Loan as of 5:00
p.m. (Chicago time) on the Business Day immediately
preceding the date of each computation; provided, however,
that the Agent retains the absolute right at any time or
from time to time to make the above-described adjustments
at intervals more frequent than twice a week.
(iii)The Agent shall deliver to each of the Lenders after the
end of each computation period, or such lesser period or
periods as the Agent shall determine, a summary statement
of the amount of the outstanding Revolving Loan for such
period (such period or periods being hereafter referred to
as a "Settlement Period"). If the summary statement is
sent by the Agent and received by the Lenders prior to
12:30 p.m. (Chicago time) on any Business Day each Lender
shall make the transfers described in the next succeeding
sentence no later than 3:00 p.m. (Chicago time) on the day
such summary statement was sent; and if such summary
statement is sent by the Agent and received by the Lenders
after 12:30 p.m. (Chicago time) on any Business Day, each
Lender shall make such transfers no later than 3:00 p.m.
(Chicago time) on the next succeeding Business Day.
(iv) If in any Settlement Period, the amount of a Lender's
ratable portion of the Revolving Loan is in excess of the
amount of the Revolving Loan actually funded by such
Lender, such Lender shall forthwith (but in no event later
than the time set forth in paragraph (iii), above) transfer
to the Agent by wire transfer in immediately available
funds the amount of such excess; and, on the other hand, if
the amount of a Lender's ratable portion of the Revolving
Loan in any Settlement Period is less than the amount of
the Revolving Loan actually funded by such Lender, the
Agent shall forthwith transfer to such Lender by wire
transfer in immediately available funds the amount of such
difference. The obligation of each of the Lenders to
transfer such funds shall be irrevocable and unconditional
and without recourse to or warranty by the Agent. The
Agent and the Lenders agree to make their respective books
and records at the end of each Settlement Period to reflect
at all times the dollar amount of their respective ratable
portions of the outstanding Revolving Loan.
(v) Because the Agent on behalf of the Lenders may be advancing
and/or may be repaid the Revolving Loan prior to the time
when the Lenders will actually advance and/or be repaid the
Revolving Loan, interest with respect to the Revolving Loan
shall be allocated by the Agent to each Lender (including
the Agent) in accordance with the amount of the Revolving
Loan actually advanced by and repaid to each Lender
(including the Agent) during each Settlement Period and
shall accrue from and including the date such portion of
the Revolving Loan is advanced by the Agent but excluding
the date such portion of the Revolving Loan was repaid by
the Borrower in accordance with this Agreement or actually
settled by the applicable Lender as described in this
Section 2.21.
2.22. Non-Receipt of Funds by the Agent. Unless the Borrower or
a Lender, as the case may be, notifies the Agent prior to the date on
which it is scheduled to make payment to the Agent of (i) in the case
of a Lender, the proceeds of a Loan or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the Agent for
the account of the Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made. The
Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such
assumption. If such Lender or the Borrower, as the case may be, has
not in fact made such payment to the Agent, the recipient of such
payment shall, on demand by the Agent, repay to the Agent the amount
so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount
at a rate per annum equal to (x) in the case of payment by a Lender,
the Federal Funds Effective Rate for such day or (y) in the case of
payment by the Borrower, the interest rate applicable to the relevant
Loan.
ARTICLE III
YIELD PROTECTION; TAXES
3.1. Yield Protection. If, on or after the date of this
Agreement, the adoption of any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any change in the
interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by any Lender or applicable Lending Installation with any
request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(i) subjects any Lender or any applicable Lending Installation
to any Taxes, or changes the basis of taxation of payments
(other than with respect to Excluded Taxes) to any Lender
in respect of its Eurodollar Loans, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest
rate applicable to Eurodollar Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining its
Eurodollar Loans or reduces any amount receivable by any
Lender or any applicable Lending Installation in connection
with its Eurodollar Loans, or requires any Lender or any
applicable Lending Installation to make any payment
calculated by reference to the amount of Eurodollar Loans
held or interest received by it, by an amount deemed
material by such Lender,
and the result of any of the foregoing is to increase the cost to
such Lender or applicable Lending Installation of making or
maintaining its Eurodollar Loans or Commitment or to reduce the
return received by such Lender or applicable Lending Installation in
connection with such Eurodollar Loans or Commitment, in each case by
an amount deemed material by such Lender, then, within 15 days of
demand by such Lender, the Borrower shall pay such Lender such
additional amount or amounts as will compensate such Lender for such
increased cost or reduction in amount received.
3.2. Changes in Capital Adequacy Regulations. If a Lender
determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such Lender or
any corporation controlling such Lender is increased as a result of a
Change, then, within 15 days of demand by such Lender, the Borrower
shall pay such Lender the amount necessary to compensate for any
shortfall in the rate of return on the portion of such increased
capital which such Lender determines is attributable to this
Agreement, its Loans or its Commitment to make Loans hereunder (after
taking into account such Lender's policies as to capital adequacy).
"Change" means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines or (ii) any adoption of or change in
any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which
affects the amount of capital required or expected to be maintained
by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (i)
the risk-based capital guidelines in effect in the United States on
the date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements
and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this
Agreement.
3.3. Availability of Types of Advances. If any Lender
determines that maintenance of its Eurodollar Loans at a suitable
Lending Installation would violate any applicable law, rule,
regulation, or directive, whether or not having the force of law, or
if the Required Lenders determine that (i) deposits of a type and
maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to a Type of Advance
does not accurately reflect the cost of making or maintaining such
Advance, then the Agent shall suspend the availability of the
affected Type of Advance and require any affected Eurodollar Advances
to be repaid or converted to Floating Rate Advances, subject to the
payment of any funding indemnification amounts required by Section
3.4.
3.4. Funding Indemnification. If any payment of a Eurodollar
Advance occurs on a date which is not the last day of the applicable
Interest Period, whether because of acceleration, prepayment or
otherwise, or a Eurodollar Advance is not made on the date specified
by the Borrower for any reason other than default by the Lenders, the
Borrower will indemnify each Lender for any loss or cost incurred by
it resulting therefrom, including, without limitation, any loss or
cost in liquidating or employing deposits acquired to fund or
maintain such Eurodollar Advance.
3.5. Taxes. (i) All payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any Note shall
be made free and clear of and without deduction for any and all
Taxes. If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to any Lender or the
Agent, (a) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable
to additional sums payable under this Section 3.5) such Lender or the
Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (b) the
Borrower shall make such deductions, (c) the Borrower shall pay the
full amount deducted to the relevant authority in accordance with
applicable law and (d) the Borrower shall furnish to the Agent the
original copy of a receipt evidencing payment thereof within 30 days
after such payment is made.
(ii) In addition, the Borrower hereby agrees to pay any present
or future stamp or documentary taxes and any other excise or property
taxes, charges or similar levies which arise from any payment made
hereunder or under any Note or from the execution or delivery of, or
otherwise with respect to, this Agreement or any Note ("Other Taxes").
(iii) The Borrower hereby agrees to indemnify the Agent and
each Lender for the full amount of Taxes of the type contemplated by
clause (i) or Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed on amounts payable under this Section 3.5)
paid by the Agent or such Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto. Payments due under this indemnification shall be made
within 30 days of the date the Agent or such Lender makes demand
therefor pursuant to Section 3.6.
(iv) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof (each a "Non-U.S.
Lender") agrees that it will, not less than ten Business Days after
the date of this Agreement, (i) deliver to each of the Borrower and
the Agent two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, certifying in either case that such Lender
is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes,
and (ii) deliver to each of the Borrower and the Agent a United
States Internal Revenue Form W-8 or W-9, as the case may be, and
certify that it is entitled to an exemption from United States backup
withholding tax. Each Non-U.S. Lender further undertakes to deliver
to each of the Borrower and the Agent (x) renewals or additional
copies of such form (or any successor form) on or before the date
that such form expires or becomes obsolete, and (y) after the
occurrence of any event requiring a change in the most recent forms
so delivered by it, such additional forms or amendments thereto as
may be reasonably requested by the Borrower or the Agent. All forms
or amendments described in the preceding sentence shall certify that
such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form or amendment with respect to
it and such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or withholding of
United States federal income tax.
(v) For any period during which a Non-U.S. Lender has failed to
provide the Borrower with an appropriate form pursuant to clause
(iv), above (unless such failure is due to a change in treaty, law or
regulation, or any change in the interpretation or administration
thereof by any governmental authority, occurring subsequent to the
date on which a form originally was required to be provided), such
Non-U.S. Lender shall not be entitled to indemnification under this
Section 3.5 with respect to Taxes imposed by the United States;
provided that, should a Non-U.S. Lender which is otherwise exempt
from or subject to a reduced rate of withholding tax become subject
to Taxes because of its failure to deliver a form required under
clause (iv), above, the Borrower shall take such steps as such
Non-U.S. Lender shall reasonably request to assist such Non-U.S.
Lender to recover such Taxes.
(vi) Any Lender that is entitled to an exemption from or
reduction of withholding tax with respect to payments under this
Agreement or any Note pursuant to the law of any relevant
jurisdiction or any treaty shall deliver to the Borrower (with a copy
to the Agent), at the time or times prescribed by applicable law,
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.
3.6. Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation, other than the ones shown on the signature pages
hereof, with respect to its Eurodollar Loans to reduce any liability
of the Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to
avoid the unavailability of Eurodollar Advances under Section 3.3, so
long as such designation is not, in the judgment of such Lender,
disadvantageous to such Lender. Each Lender shall deliver a written
statement of such Lender to the Borrower (with a copy to the Agent)
as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5.
Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall
be final, conclusive and binding on the Borrower in the absence of
manifest error. In determining such amount, each Lender may use any
reasonable averaging and attribution methods. Determination of
amounts payable under such Sections in connection with a Eurodollar
Loan shall be calculated as though each Lender funded its Eurodollar
Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the
case or not. Unless otherwise provided herein, the amount specified
in the written statement of any Lender shall be payable on demand
after receipt by the Borrower of such written statement. The
obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5
shall survive payment of the Obligations and termination of this
Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Advance. The Lenders shall not be required to make
the initial Advance hereunder unless the Borrower has furnished to
the Agent with sufficient copies for the Lenders:
(i) Copies of the articles or certificate of incorporation of
the Borrower, each Subsidiary of the Borrower and the
Parent together with all amendments, and a certificate of
good standing, each certified by the appropriate
governmental officer in its jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary
of the Borrower, each Subsidiary of Borrower and the
Parent, of its by-laws and of its Board of Directors'
resolutions and of resolutions or actions of any other body
authorizing the execution of the Loan Documents to which
the Borrower, each Subsidiary of the Borrower and the
Parent is a party.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, each Subsidiary of
Borrower and the Parent, which shall identify by name and
title and bear the signatures of the Authorized Officers
and any other officers of the Borrower, each Subsidiary of
Borrower and the Parent authorized to sign the Loan
Documents to which the Borrower, each Subsidiary of
Borrower and the Parent is a party, upon which certificate
the Agent and the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.
(iv) Certificates of good standing and/or qualification to do
business for the Borrower, each Subsidiary of Borrower and
Parent issued for all jurisdictions wherein said
qualification is necessary as a result of said parties
owning assets or doing business therein.
(v) A certificate, signed by the chief financial officer of the
Borrower, stating that on the initial Borrowing Date no
Default or Unmatured Default has occurred and is continuing.
(vi) A written opinion of the Borrower's counsel, addressed to
the Lenders in substantially the form of Exhibit A.
(vii) Any Notes requested by a Lender pursuant to Section 2.13
payable to the order of each such requesting Lender.
(viii) Written money transfer instructions, in substantially the
form of Exhibit D, addressed to the Agent and signed by an
Authorized Officer, together with such other related money
transfer authorizations as the Agent may have reasonably
requested.
(ix) The executed Kable Security Agreement.
(x) The executed Fulfillment Security Agreement.
(xi) The executed Export Security Agreement.
(xii) The executed Canada Security Agreement.
(xiii) The Executed International Security Agreement.
(xiv) The executed Guaranty.
(xv) The executed Subsidiary Guaranties.
(xvi) The executed Stock Pledge Agreement.
(xvii) The executed Trademark Security Agreement.
(xviii) Delivery of all stock certificates and executed assignments
as required under the Stock Pledge Agreement and the Kable
Security Agreement.
(xix) Executed UCC-1 and UCC-2 financing statements in favor of
Agent for the ratable benefit of all Lenders executed by
Borrower, Fulfillment, Export, Canada and International for
filing and/or recording in all applicable jurisdictions.
(xx) Executed UCC-1 and UCC-2 financing statements executed by
Fulfillment, Export, Canada and International in favor of
Borrower with assignment of same to Agent for the ratable
benefit of all Lenders in connection with the grant of a
security interest by Fulfillment, Export, Canada and
International to Borrower as described in Section 6.22
hereof.
(xxi) An executed Monthly Collateral Report.
(xxii) An executed Actual Collections and Estimated Net Billing
Report.
(xxiii) The insurance certificate described in Section 5.21.
(xxiv) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2. Each. The Lenders shall not be required to make any
Advance (other than an Advance that, after giving effect thereto and
to the application of the proceeds thereof, does not increase the
aggregate amount of outstanding Advances), unless on the applicable
Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V
are true and correct as of such Borrowing Date except to
the extent any such representation or warranty is stated to
relate solely to an earlier date, in which case such
representation or warranty shall have been true and correct
on and as of such earlier date.
(iii) All legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by the Borrower that the
conditions contained in Sections 4.2(i) and (ii) have been
satisfied. Any Lender may require a duly completed compliance
certificate in substantially the form of Exhibit B as a condition to
making an Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Existence and Standing. Each of the Borrower and its
Subsidiaries is a corporation, partnership (in the case of
Subsidiaries only) or limited liability company duly and properly
incorporated or organized, as the case may be, validly existing and
(to the extent such concept applies to such entity) in good standing
under the laws of its jurisdiction of incorporation or organization
and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted, except in such
jurisdictions where failure to obtain said authority would not have a
Material Adverse Effect.
5.2. Authorization and Validity. The Borrower, each Subsidiary
and Parent have the power and authority and legal right to execute
and deliver the Loan Documents to which they are a party and to
perform their obligations thereunder. The execution and delivery by
the Borrower, each Subsidiary and Parent of the Loan Documents to
which they are a party and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings,
and the Loan Documents to which the Borrower, each Subsidiary and the
Parent is a party constitute legal, valid and binding obligations of
the Borrower, each Subsidiary and Parent enforceable against the
Borrower, each Subsidiary and the Parent in accordance with their
terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally and subject also to the availability of equitable
remedies if equitable remedies are sought.
5.3. No Conflict; Government Consent. Neither the execution and
delivery by the Borrower, each Subsidiary or Parent of the Loan
Documents to which it is a party, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions
thereof will violate (i) any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Borrower or any
of its Subsidiaries or Parent, or (ii) the Borrower's, Parent's or
any Subsidiary's articles or certificate of incorporation,
partnership agreement, certificate of partnership, articles or
certificate of organization, by-laws, or operating or other
management agreement, as the case may be, or (iii) the provisions of
any indenture, instrument or agreement to which the Borrower or any
of its Subsidiaries or Parent is a party or is subject, or by which
it, or its Property, is bound, or conflict with or constitute a
default thereunder, or result in, or require, the creation or
imposition of any Lien in, of or on the Property of the Borrower or a
Subsidiary or Parent pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
governmental or public body or authority, or any subdivision thereof,
which has not been obtained by the Borrower or any of its
Subsidiaries or Parent, is required to be obtained by the Borrower or
any of its Subsidiaries or Parent in connection with the execution
and delivery of the Loan Documents, the borrowings under this
Agreement, the payment and performance by the Borrower of the
Obligations or the legality, validity, binding effect or
enforceability of any of the Loan Documents.
5.4. Financial Statements. The April 30, 1998 consolidated
financial statements of the Borrower and its Subsidiaries heretofore
delivered to the Lenders were prepared in accordance with generally
accepted accounting principles in effect on the date such statements
were prepared and fairly present the consolidated financial condition
and operations of the Borrower and its Subsidiaries at such date and
the consolidated results of their operations for the period then
ended.
5.5. Material Adverse Change. Since May 1, 1998 there has been
no change in the business, Property, prospects, condition (financial
or otherwise) or results of operations of the Borrower and its
Subsidiaries which could reasonably be expected to have a Material
Adverse Effect. Parent has disclosed to Agent and Lenders that it
anticipates the possibility of divesting itself of one of its
wholly-owned subsidiaries to-wit AMREP Southwest Inc. ("Southwest").
Agent and Lenders acknowledge that (i) the execution of the present
Agreement creates no security interest in their favor in any stock or
assets of Southwest, (ii) that they have no objection to and consent
to said divestiture by Parent, and (iii) that said divestiture shall
not be deemed to be an event which would have a Material Adverse
Effect under this Agreement on Borrower or Parent.
5.6. Taxes. The Parent, Borrower and its Subsidiaries have
filed all United States federal tax returns and all other tax returns
which are required to be filed and have paid all taxes due pursuant
to said returns or pursuant to any assessment received by the Parent,
Borrower or any of its Subsidiaries, except such taxes, if any, as
are being contested in good faith and as to which adequate reserves
have been provided in accordance with Agreement Accounting Principles
and as to which no Lien exists. The consolidated United States
income tax returns of the group including Parent, Borrower and its
United States Subsidiaries have been audited by the Internal Revenue
Service through the fiscal year ended December 31, 1989. No tax
liens have been filed and no claims (except as disclosed in the most
recent 10-K of the Parent) are being asserted with respect to any
such taxes. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are adequate.
5.7. Litigation and Contingent Obligations. There is no
litigation, arbitration, governmental investigation, proceeding or
inquiry pending or, to the knowledge of any of their officers,
threatened against or affecting the Borrower or any of its
Subsidiaries or Parent which could reasonably be expected to have a
Material Adverse Effect or which seeks to prevent, enjoin or delay
the making of any Loans. Other than any liability incident to any
litigation, arbitration or proceeding which could not reasonably be
expected to have a Material Adverse Effect, the Borrower has no
material contingent obligations not provided for or disclosed in the
financial statements referred to in Section 5.4.
5.8. Subsidiaries. Schedule 1 contains an accurate list of all
Subsidiaries of the Borrower as of the date of this Agreement,
setting forth their respective jurisdictions of organization and the
percentage of their respective capital stock or other ownership
interests owned by the Borrower or other Subsidiaries. All of the
issued and outstanding shares of capital stock or other ownership
interests of such Subsidiaries have been (to the extent such concepts
are relevant with respect to such ownership interests) duly
authorized and issued and are fully paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer
Plans do not in the aggregate exceed $100,000.00. Neither the
Borrower nor any other member of the Controlled Group is a member of
any Multiemployer Plans. Each Plan complies in all material respects
with all applicable requirements of law and regulations, no
Reportable Event has occurred with respect to any Plan, neither the
Borrower nor any other member of the Controlled Group has withdrawn
from any Plan or initiated steps to do so, and no steps have been
taken to reorganize or terminate any Plan.
5.10. Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries or Parent to the
Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents contained any material
misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the
Borrower and its Subsidiaries which are subject to any limitation on
sale, pledge, or other restriction hereunder.
5.12. Material Agreements. Neither the Borrower nor any
Subsidiary nor Parent is a party to any agreement or instrument or
subject to any charter or other corporate restriction which could
reasonably be expected to have a Material Adverse Effect. Neither
the Borrower nor any Subsidiary nor Parent is in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (i) any agreement to which it is
a party, which default could reasonably be expected to have a
Material Adverse Effect or (ii) any agreement or instrument
evidencing or governing Indebtedness.
5.13. Compliance With Laws. The Borrower and its Subsidiaries
have complied with all applicable statutes, rules, regulations,
orders and restrictions of any domestic or foreign government or any
instrumentality or agency thereof having jurisdiction over the
conduct of their respective businesses or the ownership of their
respective Property except for any failure to comply with any of the
foregoing which could not reasonably be expected to have a Material
Adverse Effect.
5.14. Ownership of Properties. Except as set forth on Schedule
2, on the date of this Agreement, the Borrower and its Subsidiaries
will have good title, free of all Liens other than those permitted by
Section 6.15, to all of the Property and assets reflected in the
Borrower's most recent consolidated financial statements provided to
the Agent as owned by the Borrower and its Subsidiaries.
5.15. Plan Assets; Prohibited Transactions. The Borrower is not
an entity deemed to hold "plan assets" within the meaning of 29
C.F.R. Subsection 2510.3-101 of an employee benefit plan (as defined in
Section 3(3) of ERISA) which is subject to Title I of ERISA or any
plan (within the meaning of Section 4975 of the Code), and neither
the execution of this Agreement nor the making of Loans hereunder
gives rise to a prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. In the ordinary course of its
business, the officers of the Borrower consider the effect of
Environmental Laws on the business of the Borrower and its
Subsidiaries, in the course of which they identify and evaluate
potential risks and liabilities accruing to the Borrower due to
Environmental Laws. On the basis of this consideration, the Borrower
has concluded that Environmental Laws cannot reasonably be expected
to have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary has received any notice to the effect that its operations
are not in material compliance with any of the requirements of
applicable Environmental Laws or are the subject of any federal or
state investigation evaluating whether any remedial action is needed
to respond to a release of any toxic or hazardous waste or substance
into the environment, which non-compliance or remedial action could
reasonably be expected to have a Material Adverse Effect.
5.17. Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company
Act of 1940, as amended.
5.18. Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
5.19. Subordinated Indebtedness. The Obligations constitute
senior indebtedness which is entitled to the benefits of the
subordination provisions of all outstanding Subordinated Indebtedness.
5.20. Post-Retirement Benefits. The present value of the
expected cost of post-retirement medical and insurance benefits
payable by the Borrower and its Subsidiaries to its employees and
former employees, as estimated by the Borrower in accordance with
procedures and assumptions deemed reasonable by the Required Lenders,
does not exceed $100,000.00.
5.21. Insurance. The certificate signed by the President or
Chief Financial Officer of the Borrower, that attests to the
existence and adequacy of, and summarizes, the property and casualty
insurance program carried by the Borrower with respect to itself and
its Subsidiaries and that has been furnished by the Borrower to the
Agent and the Lenders, is complete and accurate. This summary
includes the insurer's or insurers' name(s), policy number(s),
expiration date(s), amount(s) of coverage, type(s) of coverage,
exclusion(s), and deductibles. This summary also includes similar
information, and describes any reserves, relating to any
self-insurance program that is in effect.
5.22. Solvency. (i) Immediately after the consummation of the
transactions to occur on the date hereof and immediately following
the making of each Loan, if any, made on the date hereof and after
giving effect to the application of the proceeds of such Loans, (a)
the fair value of the assets of the Borrower and its Subsidiaries on
a consolidated basis, at a fair valuation, will exceed the debts and
liabilities, subordinated, contingent or otherwise, of the Borrower
and its Subsidiaries on a consolidated basis; (b) the present fair
saleable value of the property of the Borrower and its Subsidiaries
on a consolidated basis will be greater than the amount that will be
required to pay the probable liability of the Borrower and its
Subsidiaries on a consolidated basis on their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) the Borrower and
its Subsidiaries on a consolidated basis will be able to pay their
debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) the
Borrower and its Subsidiaries on a consolidated basis will not have
unreasonably small capital with which to conduct the businesses in
which they are engaged as such businesses are now conducted and are
proposed to be conducted after the date hereof.
(ii) The Borrower does not intend to, or to permit any of its
Subsidiaries to, and does not believe that it or any of its
Subsidiaries will, incur debts beyond its ability to pay such debts
as they mature, taking into account the timing of and amounts of cash
to be received by it or any such Subsidiary and the timing of the
amounts of cash to be payable on or in respect of its Indebtedness or
the Indebtedness of any such Subsidiary.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders
shall otherwise consent in writing:
6.1. Financial and Other Reporting. The Borrower will maintain,
for itself and each Subsidiary, a system of accounting established
and administered in accordance with generally accepted accounting
principles, and furnish to the Lenders:
(i) Within ten (10) days after the Parent files its Form 10-K
with the Securities and Exchange Commission but in no event
later than one hundred fifteen (115) days after the end of
each fiscal year, unaudited financial statements of the
Borrower and its Subsidiaries, accompanied by: (a) an audit
opinion from Borrower's independent Certified Public
Accountant ("Accountant") on the Accounts of the Borrower
and its Subsidiaries; (b) a consolidating report that shows
the financial statements of the Borrower and its
Subsidiaries and the financial statements of the Parent and
its Subsidiaries (other than the Borrower and its
Subsidiaries); and (c) a letter addressed to the Lender
from the Accountants stating that they have no knowledge
that anything has occurred which constitutes, or which with
the passage of time or service of notice or both would
constitute, a Default under this Agreement or any other
agreement between the Borrower. its Subsidiaries, Parent
and the Lender or stating that such an event has occurred
and specifying each such event, all as of the close of the
fiscal year with respect to which the financial statement
has been prepared.
(ii) Within twenty (25) days after the end of each month of each
fiscal year of Borrower, the Borrower will supply the Agent
with interim financial statements signed by a financial
officer of the Borrower reflecting the financial condition
of the Borrower and its Subsidiaries as of the end of such
month and the results of the operations of the Borrower and
its Subsidiaries since the beginning of the fiscal year.
(iii) The annual financial statements provided for in this
Article shall be accompanied by a certificate signed by the
Chairman of the Board, the President or an Executive Vice
President of the Borrower stating that a review of the
activities of the Borrower and its Subsidiaries and the
Parent during such period has been made under the
supervision of such individual with a view to determining
that the Borrower, its Subsidiaries and Parent have
observed, performed and fulfilled all of its obligations
under this Agreement and the other Loan Documents, and that
to the best of such individual's knowledge, no event has
occurred which constitutes, or which with the passage of
time or service of notice or both would constitute a
Default, or stating that such an event has occurred and
specifying each such event. The annual financial
statements of the Borrower shall also be accompanied by a
certificate in the form attached hereto as Exhibit F signed
by the Chairman of the Board, the President, an Executive
Vice President or the Treasurer of the Borrower.
(iv) Within three (3) Business Days after the Parent files its
Form 10-K with the Securities and Exchange Commission but
in no event later than one hundred five (105) days after
the close of each fiscal year, a copy of such Form 10-K.
In addition, upon their becoming available, copies of all
regular and periodic reports, if any, which the Borrower or
any of its Subsidiaries or the Parent files with the
Securities and Exchange Commission or any governmental
agency or agencies substituted therefor, or any similar or
corresponding governmental department, commission, board,
bureau or agency, domestic or foreign, or with any
securities exchange; and with copies of all reports, proxy
statements and financial statements delivered or sent by
the Borrower or any of its Subsidiaries or the Parent to
its stockholders.
(v) Together with the financial statements required under
Sections 6.1(i) and (ii), a compliance certificate in
substantially the form of Exhibit B signed by its chief
financial officer showing the calculations necessary to
determine compliance with this Agreement and stating that
no Default or Unmatured Default exists, or if any Default
or Unmatured Default exists, stating the nature and status
thereof.
(vi) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single
Employer Plan, certified as correct by an actuary enrolled
under ERISA.
(vii) As soon as possible and in any event within 10 days after
the Borrower knows that any Reportable Event has occurred
with respect to any Plan, a statement, signed by the chief
financial officer of the Borrower, describing said
Reportable Event and the action which the Borrower proposes
to take with respect thereto.
(viii) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or claim
to the effect that the Borrower or any of its Subsidiaries
is or may be liable to any Person as a result of the
release by the Borrower, any of its Subsidiaries, or any
other Person of any toxic or hazardous waste or substance
into the environment, and (b) any notice alleging any
violation of any federal, state or local environmental,
health or safety law or regulation by the Borrower or any
of its Subsidiaries.
(ix) Within twenty-five (25) days after the end of each month
during the term of this Agreement, the Borrower shall
complete and deliver to the Agent a monthly Compliance
Certificate ("Compliance Certificate") in the form attached
hereto as Exhibit G.
(x) Within twenty-five (25) days after the end of each month
during the term of this Agreement, the Borrower shall
complete and deliver to the Agent a Monthly Collateral
Report ("Monthly Collateral Report") in the form attached
hereto as Exhibit H.
(xi) On or before the third (3rd) Business Day of each month
during the term of this Agreement, the Borrower shall
complete and deliver to the Agent an Actual Collections and
Estimated Net Billing Report ("Actual Collections and
Estimated Net Billing Report") in the form attached hereto
as Exhibit I. Among other things, the Actual Collections
and Estimated Net Billing Report will indicate the
estimated net billings of the Borrower for the current
month on the basis of the "on sale date" of each
publication and such net billings will then be added to
"net account receivables" for the immediately preceding
month.
(xii) In no event later than one hundred fifteen (115) days after
the end of each fiscal year, financial projections for
Borrower and its Subsidiaries for the subsequent fiscal
year in a form and content reasonably acceptable to Agent.
(xiii) Such other information (including non-financial
information) as the Agent or any Lender may from time to
time reasonably request.
6.2. Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Advances for working capital
purposes only, and to repay outstanding Advances. The Borrower will
not, nor will it permit any Subsidiary to, use any of the proceeds of
the Advances to purchase or carry any "margin stock" (as defined in
Regulation U). Borrower shall also be entitled to disburse portions
of any Advance to its Subsidiaries as described in Section 6.22
hereof.
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the
occurrence of any Default or Unmatured Default and of any other
development, financial or otherwise, which could reasonably be
expected to have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause
each Subsidiary to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of
enterprise as it is presently conducted and do all things necessary
to remain duly incorporated or organized, validly existing and (to
the extent such concept applies to such entity) in good standing as a
domestic corporation, partnership or limited liability company in its
jurisdiction of incorporation or organization, as the case may be,
and maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
6.5. Taxes. The Borrower and each United States Subsidiary will
be included in a timely filed complete and correct United States
consolidated federal income tax return filed by the Parent of
Borrower and Borrower will, and will cause each Subsidiary to, timely
file complete and correct applicable foreign, state and local tax
returns required by law and pay when due all taxes, assessments and
governmental charges and levies upon it or its income, profits or
Property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
have been set aside in accordance with Agreement Accounting
Principles.
6.6. Insurance. The Borrower will, and will cause each
Subsidiary to, maintain with financially sound and reputable
insurance companies insurance on all their Property in such amounts
and covering such risks as is consistent with sound business
practice, and the Borrower will furnish to any Lender upon request
full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause
each Subsidiary to, comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be
subject including, without limitation, all Environmental Laws.
6.8. Maintenance of Properties. The Borrower will, and will
cause each Subsidiary to, do all things necessary to maintain,
preserve, protect and keep its Property in good repair, working order
and condition, and make all necessary and proper repairs, renewals
and replacements so that its business carried on in connection
therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each
Subsidiary to, permit the Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, books and
financial records of the Borrower and each Subsidiary, to examine and
make copies of the books of accounts and other financial records of
the Borrower and each Subsidiary, and to discuss the affairs,
finances and accounts of the Borrower and each Subsidiary with, and
to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Agent or any Lender may
designate.
6.10.Dividends. The Borrower will not, nor will it permit any
Subsidiary to, declare or pay any dividends or make any distributions
on its capital stock (other than dividends payable in its own capital
stock) or redeem, repurchase or otherwise acquire or retire any of
its capital stock at any time outstanding, except that any Subsidiary
may declare and pay dividends or make distributions to the Borrower
or to a Wholly-Owned Subsidiary; provided, however, that the Borrower
(a) may pay to the Parent on a quarterly basis an amount not to
exceed fifty percent (50%) of the Borrower's Consolidated Net Income
after provision for income taxes for the preceding fiscal quarter, as
shown on the Borrower's financial statements, provided, however, that
at the end of any fiscal year the aggregate of such quarterly
payments shall not exceed fifty percent (50%) of the Borrower's
Consolidated Net Income after provision for income taxes for such
fiscal year and (b) may pay to Parent on an estimated quarterly basis
an amount not to exceed (x) Borrower's Consolidated Net Income before
provision for income taxes for such period times (y) the then
applicable federal statutory corporate income tax rate. Irrespective
of the foregoing, no dividends shall be paid to the Parent under this
Section 6.10 unless the Borrower is in compliance with all of the
covenants contained in this Agreement, nor may any dividends be paid
if there is existing a Default or an Unmatured Default, or if said
payment of dividends would cause a Default.
6.11. Indebtedness. The Borrower will not, nor will it permit
any Subsidiary to, create, incur or suffer to exist any Indebtedness,
except:
(i) The Loans, and
(ii) Indebtedness not to exceed an outstanding amount in excess
of the amount as set forth in Schedule 2, and
(iii) In addition to the Indebtedness described in 6.11(ii),
secured and unsecured Indebtedness of all Borrowing Entities in an
amount not to exceed outstanding at any time during the term of this
Agreement Six Million and No/100 Dollars ($6,000,000.00) in the
aggregate for all Borrowing Entities owing to any Party other than
Lenders and inter-company Indebtedness.
6.12. Merger. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person,
except that a Subsidiary may merge into the Borrower or a
Wholly-Owned Subsidiary.
6.13. Sale of Assets. The Borrower will not, nor will it permit
any Subsidiary to, lease, sell or otherwise dispose of its Property
to any other Person, except:
(i) Sales of inventory in the ordinary course of business.
(ii) Leases, sales or other dispositions of its Property that,
together with all other Property of the Borrower and its
Subsidiaries previously leased, sold or disposed of (other
than inventory in the ordinary course of business) as
permitted by this Section during the twelve-month period
ending with the month in which any such lease, sale or
other disposition occurs, do not constitute a Substantial
Portion of the Property of the Borrower and its
Subsidiaries.
6.14. Investments and Acquisitions. The Borrower will not, nor
will it permit any Subsidiary to, make or suffer to exist any
Investments (including without limitation, loans and advances to, and
other Investments in, Subsidiaries), or commitments therefor, or to
create any Subsidiary or to become or remain a partner in any
partnership or joint venture, or to make any Acquisition of any
Person, except:
(i) Cash Equivalent Investments;
(ii) Existing Investments in Subsidiaries and other Investments
in existence on the date hereof and described in Schedule 1;
(iii) Loans or advances to employees not exceeding $100,000 in
the aggregate outstanding;
(iv) Loans from Borrower to its Subsidiaries pursuant to Section
6.22 hereof;
(v) Acquisitions which in the aggregate do not exceed the
expenditure of an amount in excess of $3,000,000.00 on an
annual basis, provided following said Acquisitions Borrower
and its Subsidiaries are still in compliance with all the
Financial Covenants described in Section 6.24 hereof;
(vi) Advances to publishers in the ordinary course of the
Borrower's business;
(vii) Loans to publishers evidenced by promissory notes which
shall bear interest on the unpaid principal balance but
which shall not exceed One Million Five Hundred Thousand
Dollars ($1,500,000.00) in the aggregate; and
(viii) Loans or advances to the Parent not exceeding $5,400,000.00
in the aggregate at any time.
6.15. Liens. The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of or
on the Property of the Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance
with Agreement Accounting Principles shall have been set
aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of
obligations not more than 60 days past due or which are
being contested in good faith by appropriate proceedings
and for which adequate reserves shall have been set aside
on its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age
pensions, or other social security or retirement benefits,
or similar legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a
similar character and which do not in any material way
affect the marketability of the same or interfere with the
use thereof in the business of the Borrower or its
Subsidiaries.
(v) (a) Liens existing on the date hereof and described in
Schedule 2 together with any future Liens on the same
property described in Schedule 2 and also (b) Purchase
Money Liens ("Purchase Money Liens") placed on additional
property purchased after the date hereof provided that (x)
in connection with Purchase Money Liens (i) no such Lien
shall extend to any property other than the property at the
time being purchased and (ii) the Indebtedness incurred in
connection with said Lien does not exceed ninety percent
(90%) of the Purchase Price of the property being acquired
unless Agent consents, in writing, to a higher percentage
and (y) the total Indebtedness secured by the Liens
described in (a) and (b) hereof does not exceed the sum of
the aggregate total amount of Indebtedness shown on
Schedule 2 plus Six Million and No/100 Dollars
($6,000,000.00).
(vi) Liens in favor of the Agent, for the benefit of the
Lenders, granted pursuant to any Collateral Document.
(vii) Security interests in favor of American securing
Indebtedness incurred prior to the execution of this
Agreement and which are to be released upon the funding of
the first Advance hereunder.
6.16. Capital Expenditures. The Borrower will not, nor will it
permit any Subsidiary to, expend, or be committed to expend, in
excess of $4,000,000.00 for Capital Expenditures during any one
fiscal year on a non-cumulative basis in the aggregate for the
Borrower and its Subsidiaries.
6.17. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or
make any payment or transfer to, any Affiliate except in the ordinary
course of business and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than the
Borrower or such Subsidiary would obtain in a comparable arms-length
transaction.
6.18. Subordinated Indebtedness. The Borrower will not, and will
not permit any Subsidiary to, make any amendment or modification to
the indenture, note or other agreement evidencing or governing any
Subordinated Indebtedness, or directly or indirectly voluntarily
prepay, defease or in substance defease, purchase, redeem, retire or
otherwise acquire, any Subordinated Indebtedness.
6.19. Other Agreements. The Borrower will not, and will not
permit its Subsidiaries to, enter into or acquiesce in any agreement
which limits or restricts the right of the Borrower or any Subsidiary
to comply with the provisions of this Agreement or which limits or
restricts the rights of the Borrower or any Subsidiary and/or the
Agent, as assignee for the ratable benefit of the Lender, under any
promissory note from the Parent under Section 6.14 or which limits or
restricts the rights of the Parent to comply with any guarantee
delivered or given pursuant hereto.
6.20. Disposition of Indebtedness of Subsidiary or Parent. The
Borrower will not sell, assign, pledge, transfer or otherwise dispose
of or encumber, except as permitted by this Agreement, any
indebtedness owing to it from any of its Subsidiaries or from the
Parent.
6.21. Business Activities. The Borrower will not engage in any
type of business except the businesses in which it was engaged on
April 30, 1998, including, without limitation, the distribution of
paperbacks, magazines and related products; product, order and
subscription processing and fulfillment; customer service;
telemarketing and related services. However, Borrower may become
engaged in the publishing business if such business does not at any time
account for greater than ten percent (10%) of Borrower's revenues on
an annual basis.
6.22. Availability of Revolving Loan Advances to Fulfillment,
Export, Canada and International. Borrower agrees that as additional
consideration for Fulfillment, Export, Canada and International
executing and delivering the Fulfillment Security Agreement, Export
Security Agreement, Canada Security Agreement and International
Security Agreement and the Subsidiary Guaranties that Borrower shall,
when requested by Fulfillment, Export, Canada or International, make
available and loan to Export, Fulfillment, Canada and International
portions of the Advances relating to the Revolving Loan to be used by
Export, Fulfillment, Canada and International for working capital
purposes. Borrower shall keep accurate books and records relating to
all of said loans to Export, Fulfillment, Canada and International
and shall, if requested by Agent, supply to Agent all information
relating to same. Borrower hereby accepts the grant of a security
interest in all the assets of Fulfillment, Export, Canada and
International as set forth in the acknowledgement signed by Export,
Fulfillment, Canada and International attached hereto and by
Borrower's execution hereof assigns same together with all loans made
in connection therewith to Agent for the ratable benefit of all
Lenders to further secure the repayment of the Obligations.
6.23. Loans or Advances to Parent and Subsidiary. The Borrower
will cooperate with the Lenders in enforcing any and all obligations
of the Parent and any Subsidiary to the Borrower pursuant to loans or
advances made to the Parent or any Subsidiary in accordance with
Section 6.14 and in ensuring that the Parent and each Subsidiary
comply with any and all covenants and warranties entered into in
connection with such loans or advances.
6.24. Financial Covenants.
6.24.1. Consolidated Current Ratio. The Borrower will, at
all times, maintain a Consolidated Current Ratio of not less
than 1.00 to 1.00.
6.24.2. Consolidated Cash Flow Coverage. The Borrower
will from the fiscal quarter beginning May, 1998 and at all
times thereafter maintain a Consolidated Cash Flow Coverage
Ratio, measured at the end of each fiscal quarter calculated by
taking the sum of the numerators of the Consolidated Cash Flow
Coverage Ratio for the fiscal quarter then ending and the
immediately three preceding fiscal quarters and dividing such
amount by the sum of the denominators of the Consolidated Cash
Flow Coverage Ratio for the fiscal quarter then ending and the
immediately three preceding fiscal quarters with the resultant
ratio being not less than 1.00 to 1.00.
6.24.3. Consolidated Tangible Net Worth. The Borrower
will, from the date of this Agreement through April 30, 1999
maintain a Consolidated Tangible Net Worth of no less than
$2,800,000.00. Thereafter, as of the end of each subsequent
fiscal year of Borrower said Consolidated Tangible Net Worth
must increase by and be maintained thereafter at an amount equal
to the prior year's Consolidated Tangible Net Worth plus the
greater of (x) $500,000.00 or (y) fifty percent (50%) of the
Consolidated Net Income of Borrower for the applicable fiscal
year.
6.24.4. Ratio of Collections. The Borrower and its
Subsidiaries shall never allow the ratio of (x) the consolidated
collections of amounts relating to all Accounts of Borrower and
its Subsidiaries to (y) all outstanding and due and owing
Accounts of Borrower and its Subsidiaries to be less than
thirteen percent (13%).
6.24.5. Ratio of Returns. The Borrower and its
Subsidiaries will never allow the ratio of (x) consolidated
actual returns, allowances and discounts to (y) consolidated
reserves for returns to average less than sixty-five percent
(65%) for any three (3) month period during the term of this
Agreement.
6.25. Lock Box. The Borrower shall establish a lock box account
with the Agent (herein called the "Cash Collateral Account") in the
Borrower's name and each Borrowing Entity shall direct all Account
Debtors to directly remit all payments on Accounts to same and into
which Cash Collateral Account the Borrower and each Subsidiary will
immediately deposit all payments constituting proceeds of Accounts,
whether in the form of cash or check or some other form of payment.
All payments made to the Cash Collateral Account shall be the
exclusive property of the Agent for the ratable benefit of all the
Lenders and no person other than the Agent shall have a right of
setoff against such Cash Collateral Account. All such payments
received in the Cash Collateral Account shall be applied against the
principal balance of the Revolving Loan (a) on the date that any
check, draft or similar item of payment has been honored and final
settlement thereof has been reflected as available to the Agent, and
(b) in connection with wire transfers on the date received provided
said wire transfer is received by Agent by 12:00 p.m. (Chicago time),
and if received after 12:00 p.m. (Chicago time) on the next Business
Day after receipt.
The Borrower, each of its Subsidiaries and any of their
Affiliates, employees, agents or other persons acting for on in
concert with the Borrower shall (acting as trustee for the Agent)
receive as the sole and exclusive property of the Agent for the
ratable benefit of all Lenders any monies, checks, notes, drafts or
any other payments relating to and/or proceeds of Accounts which come
into the possession or under the control of the Borrower or such
persons. Immediately upon receipt of such funds, the Borrower or
such persons shall cause the same to be deposited in the Cash
Collateral Account or shall deliver the same to the Agent in the
identical form in which such item of payment was received, provided,
however, that the Borrower may deposit proceeds in The Bank of
Montreal in Toronto, Canada and Amcore Bank of Ogle County in Mt.
Morris, Illinois for clearance purposes only, provided that such
proceeds are transmitted to the Borrower's Cash Collateral Account
from time to time, but not less frequently than within one (1) week
of deposit at Amcore Bank of Ogle County and in connection with The
Bank of Montreal, said transmittals shall be not less frequently than
when said deposits held by said bank reach an amount of $100,000.00
or more. The Borrower will indemnify and save harmless the Agent and
all Lenders from and against all liabilities and expenses, including
reasonable attorneys' fees on account of any adverse claim asserted
against the Agent and all Lenders relating to any proceeds received
by the Agent from any obligor on any Account owing to the Borrower or
its Subsidiaries, and such obligation of the Borrower shall continue
in effect after and notwithstanding the termination of this
Agreement, the discharge of the Obligations and the release hereof.
6.26. Year 2000. The Borrower will take all actions reasonably
necessary to assure that the Year 2000 Issues will not have a
Material Adverse Effect on the business, operations or financial
condition of the Borrower or any of its Subsidiaries. Upon the
Agent's request, the Borrower will provide the Agent with a
description of its plan to address Year 2000 issues, including
updates and progress reports. The Borrower will advise the Agent of
any reasonably anticipated Material Adverse Effect on the business,
operations or financial condition of the Borrower or its Subsidiaries
as a result of Year 2000 issues.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or
the Agent under or in connection with this Agreement, any Loan, or
any certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on the
date as of which made.
7.2. Nonpayment of principal of any Loan when due, or nonpayment
of interest upon any Loan or of any commitment fee or other
obligations under any of the Loan Documents within ten days after the
same becomes due.
7.3. The breach by the Borrower of any of the terms or
provisions of Article VI.
7.4. The breach by the Borrower (other than a breach which
constitutes a Default under another Section of this Article VII) of
any of the terms or provisions of this Agreement which is not
remedied within five days after written notice from the Agent or any
Lender.
7.5. Failure of the Borrower or any of its Subsidiaries or any
Guarantor to pay when due any Indebtedness aggregating in excess of
$100,000.00 ("Material Indebtedness"); or the default by the Borrower
or any of its Subsidiaries or any Guarantor in the performance
(beyond the applicable grace period with respect thereto, if any) of
any term, provision or condition contained in any agreement under
which any such Material Indebtedness was created or is governed, or
any other event shall occur or condition exist, the effect of which
default or event is to cause, or to permit the holder or holders of
such Material Indebtedness to cause, such Material Indebtedness to
become due prior to its stated maturity; or any Material Indebtedness
of the Borrower or any of its Subsidiaries or any Guarantor shall be
declared to be due and payable or required to be prepaid or
repurchased (other than by a regularly scheduled payment) prior to
the stated maturity thereof; or the Borrower or any of its
Subsidiaries or any Guarantor shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.
7.6. The Borrower or any of its Subsidiaries or any Guarantor
shall (i) have an order for relief entered with respect to it under
the Federal bankruptcy laws as now or hereafter in effect, (ii) make
an assignment for the benefit of creditors, (iii) apply for, seek,
consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it
or any Substantial Portion of its Property, (iv) institute any
proceeding seeking an order for relief under the Federal bankruptcy
laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors or fail to file an answer or
other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate or partnership
action to authorize or effect any of the foregoing actions set forth
in this Section 7.6 or (vi) fail to contest in good faith any
appointment or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the
Borrower or any of its Subsidiaries, or any Guarantor a receiver,
trustee, examiner, liquidator or similar official shall be appointed
for the Borrower or any of its Subsidiaries or any Guarantor or any
Substantial Portion of its Property, or a proceeding described in
Section 7.6(iv) shall be instituted against the Borrower or any of
its Subsidiaries or any Guarantor and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for
a period of 30 consecutive days.
7.8. Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of, all or
any portion of the Property of the Borrower and its Subsidiaries or
any Guarantor which, when taken together with all other Property of
the Borrower and its Subsidiaries or any Guarantor so condemned,
seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such action
occurs, constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within
30 days to pay, bond or otherwise discharge any judgment or order for
the payment of money in excess of $100,000.00, which is not stayed on
appeal or otherwise being appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $100,000.00 or any Reportable Event shall
occur in connection with any Plan.
7.11. The Borrower or any of its Subsidiaries shall (i) be the
subject of any proceeding or investigation pertaining to the release
by the Borrower, any of its Subsidiaries or any other Person of any
toxic or hazardous waste or substance into the environment, or (ii)
violate any Environmental Law, which, in the case of an event
described in clause (i) or clause (ii), could reasonably be expected
to have a Material Adverse Effect.
7.12. Any Change in Control shall occur.
7.13. The occurrence of any "default", as defined in any Loan
Document (other than this Agreement) or the breach of any of the
terms or provisions of any Loan Document (other than this Agreement),
which default or breach continues beyond any period of grace therein
provided.
7.14. Nonpayment by the Borrower of any Rate Hedging Obligation
when due or the breach by the Borrower of any term, provision or
condition contained in any Rate Hedging Agreement.
7.15. Any Guaranty or Subsidiary Guaranty shall fail to remain in
full force or effect or any action shall be taken to discontinue or
to assert the invalidity or unenforceability of any Guaranty or
Subsidiary Guaranty, or any Guarantor shall fail to comply with any
of the terms or provisions of any Guaranty or Subsidiary Guaranty to
which it is a party, or any Guarantor shall deny that it has any
further liability under any Guaranty or Subsidiary Guaranty to which
it is a party, or shall give notice to such effect.
7.16. Any Collateral Document shall for any reason fail to create
a valid and perfected first priority security interest in any
collateral purported to be covered thereby, except as permitted by
the terms of any Collateral Document, or any Collateral Document
shall fail to remain in full force or effect or any action shall be
taken to discontinue or to assert the invalidity or unenforceability
of any Collateral Document, or the Borrower, Subsidiary of Borrower
or Parent shall fail to comply with any of the terms or provisions of
any Collateral Document.
7.17. The representations and warranties set forth in Section
5.15 (Plan Assets; Prohibited Transactions") shall at any time not be
true and correct.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or
7.7 occurs with respect to the Borrower, the obligations of the
Lenders to make Loans hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any
election or action on the part of the Agent or any Lender. If any
other Default occurs, the Required Lenders (or the Agent with the
consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the
Obligations to be due and payable, or both, whereupon the Obligations
shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower
hereby expressly waives.
If, within 30 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make
Loans hereunder as a result of any Default (other than any Default as
described in Section 7.6 or 7.7 with respect to the Borrower) and
before any judgment or decree for the payment of the Obligations due
shall have been obtained or entered, the Required Lenders (in their
sole discretion) shall so direct, the Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.
8.2. Amendments. Subject to the provisions of this Article
VIII, the Required Lenders (or the Agent with the consent in writing
of the Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the rights
of the Lenders or the Borrower hereunder or waiving any Default
hereunder; provided, however, that no such supplemental agreement
shall, without the consent of all of the Lenders:
(i) Extend the final maturity of any Loan or postpone any
regularly scheduled payment of principal of any Loan or
forgive all or any portion of the principal amount thereof,
or reduce the rate or extend the time of payment of
interest or fees thereon.
(ii) Reduce the percentage specified in the definition of
Required Lenders.
(iii) Extend the Facility Termination Date, or reduce the amount
or extend the payment date for, the mandatory payments
required under Section 2.2, or increase the amount of the
Commitment of any Lender hereunder, or permit the Borrower
to assign its rights under this Agreement.
(iv) Amend this Section 8.2.
(v) Release any guarantor of any Advance or, except as provided
in the Collateral Documents, release all or substantially
all of the Collateral.
(vi) Change the percentage set forth in Section 2.17.
No amendment of any provision of this Agreement relating to the Agent
shall be effective without the written consent of the Agent. The
Agent may waive payment of the fee required under Section 12.3.2
without obtaining the consent of any other party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the
Lenders or the Agent to exercise any right under the Loan Documents
shall impair such right or be construed to be a waiver of any Default
or an acquiescence therein, and the making of a Loan notwithstanding
the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Loan shall not constitute
any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or
the exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by the
Lenders required pursuant to Section 8.2, and then only to the extent
in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Agent and the Lenders until the Obligations
have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive
the making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be
obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or
regulation.
9.3. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Loan Documents.
9.4. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the
Lenders and supersede all prior agreements and understandings among
the Borrower, the Agent and the Lenders relating to the subject
matter thereof.
9.5. Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and not
joint and no Lender shall be the partner or agent of any other
(except to the extent to which the Agent is authorized to act as
such). The failure of any Lender to perform any of its obligations
hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as
to confer any right or benefit upon any Person other than the parties
to this Agreement and their respective successors and assigns.
9.6. Expenses; Indemnification. (i) The Borrower shall
reimburse the Agent for any costs, internal charges and out-of-pocket
expenses (including attorneys' fees and time charges of attorneys for
the Agent, which attorneys may be employees of the Agent) paid or
incurred by the Agent in connection with the preparation,
negotiation, execution, delivery, syndication, review, amendment,
modification, and administration of the Loan Documents. The Borrower
also agrees to reimburse the Agent and the Lenders for any costs,
internal charges and out-of-pocket expenses (including attorneys'
fees and time charges of attorneys for the Agent and the Lenders,
which attorneys may be employees of the Agent or the Lenders) paid or
incurred by the Agent or any Lender in connection with the collection
and enforcement of the Loan Documents. Expenses being reimbursed by
the Borrower under this Section include, without limitation, costs
and expenses incurred in connection with the Reports described in the
following sentence. The Borrower acknowledges that from time to time
American may prepare and may distribute to the Lenders (but shall
have no obligation or duty to prepare or to distribute to the
Lenders) certain audit reports (the "Reports") pertaining to the
Borrower's assets for internal use by American from information
furnished to it by or on behalf of the Borrower, after American has
exercised its rights of inspection pursuant to this Agreement.
(ii) The Borrower hereby further agrees to indemnify the Agent
and each Lender, its directors, officers and employees against all
losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation
or preparation therefor whether or not the Agent or any Lender is a
party thereto) which any of them may pay or incur arising out of or
relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan
hereunder except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the party
seeking indemnification. The obligations of the Borrower under this
Section 9.6 shall survive the termination of this Agreement.
9.7. Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent
with sufficient counterparts so that the Agent may furnish one to
each of the Lenders.
9.8. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement
Accounting Principles.
9.9. Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in
any jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions
in that jurisdiction or the operation, enforceability, or validity of
that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.
9.10. Nonliability of Lenders. The relationship between the
Borrower on the one hand and the Lenders and the Agent on the other
hand shall be solely that of borrower and lender. Neither the Agent
nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of
any matter in connection with any phase of the Borrower's business or
operations. The Borrower agrees that neither the Agent nor any
Lender shall have liability to the Borrower (whether sounding in
tort, contract or otherwise) for losses suffered by the Borrower in
connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment
by a court of competent jurisdiction that such losses resulted from
the gross negligence or willful misconduct of the party from which
recovery is sought. Neither the Agent nor any Lender shall have any
liability with respect to, and the Borrower hereby waives, releases
and agrees not to sue for, any special, indirect or consequential
damages suffered by the Borrower in connection with, arising out of,
or in any way related to the Loan Documents or the transactions
contemplated thereby.
9.11. Confidentiality. Each Lender agrees to hold any
confidential information which it may receive from the Borrower
pursuant to this Agreement in confidence, except for disclosure (i)
to its Affiliates and to other Lenders and their respective
Affiliates, (ii) to legal counsel, accountants, and other
professional advisors to that Lender or to a Transferee, (iii) to
regulatory officials, (iv) to any Person as requested pursuant to or
as required by law, regulation, or legal process, (v) to any Person
in connection with any legal proceeding to which that Lender is a
party, and (vi) permitted by Section 12.4.
9.12. Nonreliance. Each Lender hereby represents that it is not
relying on or looking to any margin stock (as defined in Regulation U
of the Board of Governors of the Federal Reserve System) for the
repayment of the Loans provided for herein.
ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship. The American National
Bank and Trust Company of Chicago is hereby appointed by each of the
Lenders as its contractual representative (herein referred to as the
"Agent") hereunder and under each other Loan Document, and each of
the Lenders irrevocably authorizes the Agent to act as the
contractual representative of such Lender with the rights and duties
expressly set forth herein and in the other Loan Documents. The
Agent agrees to act as such contractual representative upon the
express conditions contained in this Article X. Notwithstanding the
use of the defined term "Agent," it is expressly understood and
agreed that the Agent shall not have any fiduciary responsibilities
to any Lender by reason of this Agreement or any other Loan Document
and that the Agent is merely acting as the contractual representative
of the Lenders with only those duties as are expressly set forth in
this Agreement and the other Loan Documents. In its capacity as the
Lenders' contractual representative, the Agent (i) does not hereby
assume any fiduciary duties to any of the Lenders, (ii) is a
"representative" of the Lenders within the meaning of Section 9-105
of the Uniform Commercial Code and (iii) is acting as an independent
contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Loan Documents.
Each of the Lenders hereby agrees to assert no claim against the
Agent on any agency theory or any other theory of liability for
breach of fiduciary duty, all of which claims each Lender hereby
waives.
10.2. Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent
by the terms of each thereof, together with such powers as are
reasonably incidental thereto. The Agent shall have no implied
duties to the Lenders, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the Loan
Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the
Borrower, the Lenders or any Lender for any action taken or omitted
to be taken by it or them hereunder or under any other Loan Document
or in connection herewith or therewith except to the extent such
action or inaction is determined in a final non-appealable judgment
by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.
10.4. No Responsibility for Loans, Recitals, etc. Neither the
Agent nor any of its directors, officers, agents or employees shall
be responsible for or have any duty to ascertain, inquire into, or
verify (a) any statement, warranty or representation made in
connection with any Loan Document or any borrowing hereunder; (b) the
performance or observance of any of the covenants or agreements of
any obligor under any Loan Document, including, without limitation,
any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article
IV, except receipt of items required to be delivered solely to the
Agent; (d) the existence or possible existence of any Default or
Unmatured Default; (e) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Loan Document or any other
instrument or writing furnished in connection therewith; (f) the
value, sufficiency, creation, perfection or priority of any Lien in
any collateral security; or (g) the financial condition of the
Borrower or any guarantor of any of the Obligations or of any of the
Borrower's or any such guarantor's respective Subsidiaries. The
Agent shall have no duty to disclose to the Lenders information that
is not required to be furnished by the Borrower to the Agent at such
time, but is voluntarily furnished by the Borrower to the Agent
(either in its capacity as Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with
written instructions signed by the Required Lenders (except for acts
of gross negligence or willful misconduct of Agent in carrying out
said written instructions), and such instructions and any action
taken or failure to act pursuant thereto shall be binding on all of
the Lenders. The Lenders hereby acknowledge that the Agent shall be
under no duty to take any discretionary action permitted to be taken
by it pursuant to the provisions of this Agreement or any other Loan
Document unless it shall be requested in writing to do so by the
Required Lenders. The Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by
the Lenders pro rata against any and all liability, cost and expense
that it may incur by reason of taking or continuing to take any such
action.
10.6. Employment of Agents and Counsel. The Agent may execute
any of its duties as Agent hereunder and under any other Loan
Document by or through employees, agents, and attorneys-in-fact and
shall not be answerable to the Lenders, except as to money or
securities received by it or its authorized agents, for the default
or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and
the Lenders and all matters pertaining to the Agent's duties
hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by
it to be genuine and correct and to have been signed or sent by the
proper person or persons, and, in respect to legal matters, upon the
opinion of counsel selected by the Agent, which counsel may be
employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Agent ratably in proportion to
their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to
such termination) (i) for any amounts not reimbursed by the Borrower
for which the Agent is entitled to reimbursement by the Borrower
under the Loan Documents, (ii) for any other expenses incurred by the
Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan
Documents (including, without limitation, for any expenses incurred
by the Agent in connection with any dispute between the Agent and any
Lender or between two or more of the Lenders) and (iii) for any
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or
the transactions contemplated thereby (including, without limitation,
for any such amounts incurred by or asserted against the Agent in
connection with any dispute between the Agent and any Lender or
between two or more of the Lenders), or the enforcement of any of the
terms of the Loan Documents or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent
any of the foregoing is found in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Agent or the gross negligence
or willful misconduct on any agent or attorney-in-fact selected by
Agent pursuant to Section 10.6. The obligations of the Lenders under
this Section 10.8 shall survive payment of the Obligations and
termination of this Agreement.
10.9. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Unmatured
Default hereunder unless the Agent has received written notice from a
Lender or the Borrower referring to this Agreement describing such
Default or Unmatured Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders.
10.10. Rights as a Lender. In the event the Agent is a
Lender, the Agent shall have the same rights and powers hereunder and
under any other Loan Document with respect to its Commitment and its
Loans as any Lender and may exercise the same as though it were not
the Agent, and the term "Lender" or "Lenders" shall, at any time when
the Agent is a Lender, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan
Document, with the Borrower or any of its Subsidiaries in which the
Borrower or such Subsidiary is not restricted hereby from engaging
with any other Person. The Agent, in its individual capacity, is not
obligated to remain a Lender.
10.11. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any
other Lender and based on the financial statements prepared by the
Borrower and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into
this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon
the 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 decisions in taking or not taking action under
this Agreement and the other Loan Documents.
10.12. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower, such
resignation to be effective upon the appointment of a successor Agent
or, if no successor Agent has been appointed, forty-five days after
the retiring Agent gives notice of its intention to resign. The
Agent may be removed at any time with or without cause by written
notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon
any such resignation or removal, the Required Lenders shall have the
right to appoint, on behalf of the Borrower and the Lenders, a
successor Agent. If no successor Agent shall have been so appointed
by the Required Lenders within thirty days after the resigning
Agent's giving notice of its intention to resign, then the resigning
Agent may appoint, on behalf of the Borrower and the Lenders, a
successor Agent. Notwithstanding the previous sentence, the Agent
may at any time without the consent of the Borrower or any Lender,
appoint any of its Affiliates which is a commercial bank as a
successor Agent hereunder. If the Agent has resigned or been removed
and no successor Agent has been appointed, the Lenders may perform
all the duties of the Agent hereunder and the Borrower shall make all
payments in respect of the Obligations to the applicable Lender and
for all other purposes shall deal directly with the Lenders. No
successor Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor
Agent shall be a commercial bank having capital and retained earnings
of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the resigning or removed Agent. Upon the
effectiveness of the resignation or removal of the Agent, the
resigning or removed Agent shall be discharged from its duties and
obligations hereunder and under the Loan Documents. After the
effectiveness of the resignation or removal of an Agent, the
provisions of this Article X shall continue in effect for the benefit
of such Agent in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent hereunder and under the other
Loan Documents. In the event that there is a successor to the Agent
by merger, or the Agent assigns its duties and obligations to an
Affiliate pursuant to this Section 10.12, then the term "Corporate
Base Rate" as used in this Agreement shall mean the prime rate, base
rate or other analogous rate of the new Agent.
10.13. Agent's Fee. The Borrower agrees to pay to Agent, for
its own Account, an annual Agent Fee in advance of $25,000.00. Said
Agent's Fee shall be paid to Agent contemporaneously with the
execution of this Agreement on each annual anniversary date
thereafter.
10.14. Delegation to Affiliates. The Borrower and the
Lenders agree that the Agent may delegate any of its duties under
this Agreement to any of its Affiliates. Any such Affiliate (and
such Affiliate's directors, officers, agents and employees) which
performs duties in connection with this Agreement shall be entitled
to the same benefits of the indemnification, waiver and other
protective provisions to which the Agent is entitled under Articles
IX and X.
10.15. Execution of Collateral Documents. The Lenders hereby
empower and authorize the Agent to execute and deliver to the
Borrower on their behalf any security agreement(s) and all related
financing statements and any financing statements, agreements,
documents or instruments as shall be necessary or appropriate to
effect the purposes of any security agreement(s).
10.16. Collateral Releases. The Lenders hereby empower and
authorize the Agent to execute and deliver to the Borrower on their
behalf any agreements, documents or instruments as shall be necessary
or appropriate to effect any releases of Collateral which shall be
permitted by the terms hereof or of any other Loan Document or which
shall otherwise have been approved by the Required Lenders (or, if
required by the terms of Section 8.2, all of the Lenders) in writing.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any
rights of the Lenders under applicable law, if the Borrower becomes
insolvent, however evidenced, or any Default occurs, any and all
deposits (including all account balances, whether provisional or
final and whether or not collected or available) and any other
Indebtedness at any time held or owing by any Lender or any Affiliate
of any Lender to or for the credit or account of the Borrower may be
offset and applied toward the payment of the Obligations owing to
such Lender, whether or not the Obligations, or any part hereof,
shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments
received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater
proportion than that received by any other Lender, such Lender
agrees, promptly upon demand, to purchase a portion of the Loans held
by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its
Obligations or such amounts which may be subject to setoff, such
Lender agrees, promptly upon demand, to take such action necessary
such that all Lenders share in the benefits of such collateral
ratably in proportion to their Loans. In case any such payment is
disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1.Successors and Assigns. The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of the
Borrower and the Lenders and their respective successors and assigns,
except that (i) the Borrower shall not have the right to assign its
rights or obligations under the Loan Documents and (ii) any
assignment by any Lender must be made in compliance with Section
12.3. Notwithstanding clause (ii) of this Section, any Lender may at
any time, without the consent of the Borrower or the Agent, assign
all or any portion of its rights under this Agreement and any Note to
a Federal Reserve Bank; provided, however, that no such assignment to
a Federal Reserve Bank shall release the transferor Lender from its
obligations hereunder. The Agent may treat the Person which made any
Loan or which holds any Note as the owner thereof for all purposes
hereof unless and until such Person complies with Section 12.3 in the
case of an assignment thereof or, in the case of any other transfer,
a written notice of the transfer is filed with the Agent. Any
assignee or transferee of the rights to any Loan or any Note agrees
by acceptance of such transfer or assignment to be bound by all the
terms and provisions of the Loan Documents. Any request, authority
or consent of any Person, who at the time of making such request or
giving such authority or consent is the owner of the rights to any
Loan (whether or not a Note has been issued in evidence thereof),
shall be conclusive and binding on any subsequent holder, transferee
or assignee of the rights to such Loan.
12.2. Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in
the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan
owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender
under the Loan Documents. In the event of any such sale by a
Lender of participating interests to a Participant, such
Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations,
such Lender shall remain the owner of its Loans and the holder
of any Note issued to it in evidence thereof for all purposes
under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender had
not sold such participating interests, and the Borrower and the
Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations
under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with
respect to any Loan or Commitment in which such Participant has
an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable with respect to any
such Loan or Commitment, extends the Facility Termination Date,
postpones any date fixed for any regularly-scheduled payment of
principal of, or interest or fees on, any such Loan or
Commitment, releases any guarantor of any such Loan or releases
all or substantially all of the collateral, if any, securing any
such Loan.
12.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided
in Section 11.1 in respect of its participating interest in
amounts owing under the Loan Documents to the same extent as if
the amount of its participating interest were owing directly to
it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in Section 11.1
with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of
setoff provided in Section 11.1, agrees to share with each
Lender, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with
Section 11.2 as if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with
applicable law, at any time assign to one or more banks or other
entities ("Purchasers") all or any part of its rights and
obligations under the Loan Documents. Such assignment shall be
substantially in the form of Exhibit C or in such other form as
may be agreed to by the parties thereto. The consent of the
Borrower and the Agent shall be required prior to an assignment
becoming effective with respect to a Purchaser which is not a
Lender or an Affiliate thereof; provided, however, that if a
Default has occurred and is continuing, the consent of the
Borrower shall not be required. Such consent shall not be
unreasonably withheld or delayed. Each such assignment shall
(unless each of the Borrower and the Agent otherwise consents)
be in an amount not less than the lesser of (i) $5,000,000.00 or
(ii) the remaining amount of the assigning Lender's Commitment
(calculated as at the date of such assignment).
12.3.2. Effect; Effective Date. Upon (i) delivery to the
Agent of a notice of assignment, substantially in the form
attached as Exhibit I to Exhibit C (a "Notice of Assignment"),
together with any consents required by Section 12.3.1, and (ii)
payment of a $3,000 fee to the Agent for processing such
assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The
Notice of Assignment shall contain a representation by the
Purchaser to the effect that none of the consideration used to
make the purchase of the Commitment and Loans under the
applicable assignment agreement are "plan assets" as defined
under ERISA and that the rights and interests of the Purchaser
in and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by or on behalf
of the Lenders and shall have all the rights and obligations of
a Lender under the Loan Documents, to the same extent as if it
were an original party hereto, and no further consent or action
by the Borrower, the Lenders or the Agent shall be required to
release the transferor Lender with respect to the percentage of
the Aggregate Commitment and Loans assigned to such Purchaser.
Upon the consummation of any assignment to a Purchaser pursuant
to this Section 12.3.2, the transferor Lender, the Agent and the
Borrower shall, if the transferor Lender or the Purchaser
desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement
Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting their respective
Commitments, as adjusted pursuant to such assignment.
12.4. Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other
Person acquiring an interest in the Loan Documents by operation of
law (each a "Transferee") and any prospective Transferee any and all
information in such Lender's possession concerning the
creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any Reports; provided
that each Transferee and prospective Transferee agrees to be bound by
Section 9.11 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of
any jurisdiction other than the United States or any State thereof,
the transferor Lender shall cause such Transferee, concurrently with
the effectiveness of such transfer, to comply with the provisions of
Section 3.5(iv).
ARTICLE XIII
NOTICES
13.1. Notices. Except as otherwise permitted by Section 2.14
with respect to borrowing notices, all notices, requests and other
communications to any party hereunder shall be in writing (including
electronic transmission, facsimile transmission or similar writing)
and shall be given to such party: (x) in the case of the Borrower or
the Agent, at its address or facsimile number set forth on the
signature pages hereof, (y) in the case of any Lender, at its address
or facsimile number set forth below its signature hereto or (z) in
the case of any party, at such other address or facsimile number as
such party may hereafter specify for the purpose by notice to the
Agent and the Borrower in accordance with the provisions of this
Section 13.1. Each such notice, request or other communication shall
be effective (i) if given by facsimile transmission, when transmitted
to the facsimile number specified in this Section and confirmation of
receipt is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid, or (iii) if given by any other
means, when delivered (or, in the case of electronic transmission,
received) at the address specified in this Section; provided that
notices to the Agent under Article II shall not be effective until
received.
13.2. Change of Address. The Borrower, the Agent and any Lender
may each change the address for service of notice upon it by a notice
in writing to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any
of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been
executed by the Borrower, the Agent and the Lenders and each party
has notified the Agent by facsimile transmission or telephone that it
has taken such action.
ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
15.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS
AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT
ONLY IN A COURT IN CHICAGO, ILLINOIS.
15.3. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
duly executed this Agreement as of the date first above written.
KABLE NEWS COMPANY, INC.,
an Illinois corporation
By:___________________________
Title:________________________
16 South Wesley Avenue
Mt. Morris, Illinois
Attention: President
Telephone: (815)734-4151
FAX: (815)734-5233
Commitments
$21,350,000.00 (50%) AMERICAN NATIONAL BANK AND
-------------- TRUST COMPANY OF CHICAGO,
Individually and as Agent
By:__________________________
Title:_______________________
Chicago, Illinois
Attention: James R. Popp
Telephone: (312)661-6532
FAX: (312)661-3566
$9,607,500.00 (22.5%) HELLER FINANCIAL, INC.
-------------
By:__________________________
Title:_______________________
500 West Monroe
Chicago, Illinois 60661
Attention: Venkat Venkatesan
Telephone: (312) 441-6859
FAX: (312) 441-6199
$5,871,250.00 (13.75%) MERRILL LYNCH BUSINESS
------------- FINANCIAL SERVICES INC.
By:__________________________
Title:_______________________
33 West Monroe Street, 22nd Floor
Chicago, Illinois 60603
Attention: Gary Stewart
Telephone: (312) 269-4423
FAX: (312) 845-9093
$5,871,250.00 (13.75%) FIRST BANK
-------------
By:__________________________
Title:_______________________
4565 West Harrison Street
Hillside, Illinois 60162
Attention: Bill Lavery
Telephone: (708) 236-1680
FAX: (708) 236-1661
$42,700,000.00
===============
CERTIFICATE OF ACKNOWLEDGEMENT AND PLEDGE
The undersigned, wholly-owned subsidiaries of Kable News Company,
Inc., an Illinois corporation ("Borrower") hereby execute the present
certificate and agree to be bound by and honor all covenants,
conditions and terms of the attached Loan Agreement ("Loan
Agreement") applicable to each of the undersigned. In addition, each
of the undersigned, by their execution hereof, hereby grants a
security interest in favor of Borrower in and to all presently
existing and hereafter arising accounts, inventory, equipment,
general intangibles, instruments and chattel paper and the proceeds
of all of the foregoing of each of said companies to secure all
amounts advanced and/or lent to each of said companies pursuant to
Section 6.22 of the Loan Agreement.
KABLE NEWS EXPORT, LTD.
By:_________________________________
Title:_______________________________
KABLE NEWS COMPANY OF CANADA, LTD.
By:_________________________________
Title:_______________________________
KABLE NEWS INTERNATIONAL, INC.
By:_________________________________
Title:_______________________________
KABLE FULFILLMENT SERVICES
OF OHIO, INC.
By:_________________________________
Title:_______________________________
PRICING SCHEDULE
========================================
Applicable Margin
========================================
Eurodollar Rate 275 Basis Points
========================================
Floating Rate 50 Basis Points
========================================
EXHIBIT A
FORM OF OPINION
EXHIBIT B
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that
certain Credit Agreement dated as of ______________ , ____________ (as
amended, modified, renewed or extended from time to time, the
"Agreement") among the ___________________________ (the "Borrower"),
the Lenders party thereto and American National Bank and Trust
Company of Chicago, as Agent for the Lenders. Unless otherwise
defined herein, capitalized terms used in this Compliance Certificate
have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected________________________of the Borrower;
2. I have reviewed the terms of the Agreement and I have made,
or have caused to be made under my supervision, a detailed review of
the transactions and conditions of the Borrower and its Subsidiaries
during the accounting period covered by the attached financial
statements;
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or event
which constitutes a Default or Unmatured Default during or at the end
of the accounting period covered by the attached financial statements
or as of the date of this Certificate, except as set forth below;
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain
covenants of the Agreement, all of which data and computations are
true, complete and correct; and
5. Schedule II attached hereto sets forth the various reports
and deliveries which are required at this time under the Credit
Agreement, the Security Agreement and the other Loan Documents and
the status of compliance.
Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period
during which it has existed and the action which the Borrower has
taken, is taking, or proposes to take with respect to each such
condition or event:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
The foregoing certifications, together with the computations set
forth in Schedule I hereto and the financial statements delivered
with this Certificate in support hereof, are made and delivered this
_______ day of _________________ , _____________.
_______________________________
SCHEDULE I TO COMPLIANCE CERTIFICATE
Compliance as of _________, ______ with
Provisions of _______ and _________ of
the Agreement
SCHEDULE II TO COMPLIANCE CERTIFICATE
Reports and Deliveries Currently Due
EXHIBIT C
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
________________________ (the "Assignor") __________________ and
(the "Assignee") is dated as of ________________, 19_____. The parties
hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended
from time to time is herein called the "Credit Agreement") described
in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized
terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, an interest in and to the Assignor's
rights and obligations under the Credit Agreement such that after
giving effect to such assignment the Assignee shall have purchased
pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and
obligations under the Credit Agreement relating to the facilities
listed in Item 3 of Schedule 1 and the other Loan Documents. The
aggregate Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item
4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment
Agreement (the "Effective Date") shall be the later of the date
specified in Item 5 of Schedule 1 or two Business Days (or such
shorter period agreed to by the Agent) after a Notice of Assignment
substantially in the form of Exhibit "I" attached hereto has been
delivered to the Agent. Such Notice of Assignment must include any
consents required to be delivered to the Agent by Section 12.3.1 of
the Credit Agreement. In no event will the Effective Date occur if
the payments required to be made by the Assignee to the Assignor on
the Effective Date under Sections 4 and 5 hereof are not made on the
proposed Effective Date. The Assignor will notify the Assignee of
the proposed Effective Date no later than the Business Day prior to
the proposed Effective Date. As of the Effective Date, (i) the
Assignee shall have the rights and obligations of a Lender under the
Loan Documents with respect to the rights and obligations assigned to
the Assignee hereunder and (ii) the Assignor shall relinquish its
rights and be released from its corresponding obligations under the
Loan Documents with respect to the rights and obligations assigned to
the Assignee hereunder.
4. PAYMENT OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments of
principal, interest and fees with respect to the interest assigned
hereby. The Assignee shall advance funds directly to the Agent with
respect to all Loans and reimbursement payments made on or after the
Effective Date with respect to the interest assigned hereby. **[In
consideration for the sale and assignment of Loans hereunder, (i) the
Assignee shall pay the Assignor, on the Effective Date, an amount
equal to the principal amount of the portion of all Floating Rate
Loans assigned to the Assignee hereunder and (ii) with respect to
each Fixed Rate Loan made by the Assignor and assigned to the
Assignee hereunder which is outstanding on the Effective Date, (a) on
the last day of the Interest Period therefor or (b) on such earlier
date agreed to by the Assignor and the Assignee or (c) on the date on
which any such Fixed Rate Loan becomes due (by acceleration or
otherwise)(the date as described in the foregoing clauses (a), (b) or
(c) being hereinafter referred to as the "Payment Date"), the
Assignee shall pay the Assignor an amount equal to the principal
amount of the portion of such Fixed Rate Loan assigned to the
Assignee which is outstanding on the Payment Date. If the Assignor
and the Assignee agree that the Payment Date for such Fixed Rate Loan
shall be the Effective Date, they shall agree to the interest rate
applicable to the portion of such Loan assigned hereunder for the
period from the Effective Date to the end of the existing Interest
Period applicable to such Fixed Rate Loan (the "Agreed Interest
Rate") and any interest received by the Assignee in excess of the
Agreed Interest Rate shall be remitted to the Assignor. In the event
interest for the period from the Effective Date to but not including
the Payment Date is not paid by the Borrower with respect to any
Fixed Rate Loan sold by the Assignor to the Assignee hereunder, the
Assignee shall pay to the Assignor interest for such period on the
portion of such Fixed Rate Loan sold by the Assignor to the Assignee
hereunder at the applicable rate provided by the Credit Agreement.
In the event a prepayment of any Fixed Rate Loan which is existing on
the Payment Date and assigned by the Assignor to the Assignee
hereunder occurs after the Payment Date but before the end of the
Interest Period applicable to such Fixed Rate Loan, the Assignee
shall remit to the Assignor the excess of the prepayment penalty paid
with respect to the portion of such Fixed Rate Loan assigned to the
Assignee hereunder over the amount which would have been paid if such
prepayment penalty was calculated based on the Agreed Interest Rate.
The Assignee will also promptly remit to the Assignor (i) any
principal payments received from the Agent with respect to Fixed Rate
Loans prior to the Payment Date and (ii) any amounts of interest on
Loans and fees received from the Agent which relate to the portion of
the Loans assigned to the Assignee hereunder for periods prior to the
Effective Date, in the case of Floating Rate Loans or fees, or the
Payment Date, in the case of Fixed Rate Loans, and not previously
paid by the Assignee to the Assignor.]** In the event that either
party hereto receives any payment to which the other party hereto is
entitled under this Assignment Agreement, then the party receiving
such amount shall promptly remit it to the other party hereto.
**Each Assignor may insert its standard payment provisions in lieu of
the payment terms included in this Exhibit.
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or
commitment fees is made under the Credit Agreement with respect to
the amounts assigned to the Assignee hereunder (other than a payment
of interest or commitment fees for the period prior to the Effective
Date or, in the case of Fixed Rate Loans, the Payment Date, which the
Assignee is obligated to deliver to the Assignor pursuant to Section
4 hereof). The amount of such fee shall be the difference between
(i) the interest or fee, as applicable, paid with respect to the
amounts assigned to the Assignee hereunder and (ii) the interest or
fee, as applicable, which would have been paid with respect to the
amounts assigned to the Assignee hereunder if each interest rate was
_____ of 1% less than the interest rate paid by the Borrower or if the
commitment fee was _____ of 1% less than the commitment fee paid by
the Borrower, as applicable. In addition, the Assignee agrees to
pay _____% of the recordation fee required to be paid to the
Agent in connection with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE
ASSIGNOR'S LIABILITY. The Assignor represents and warrants that it
is the legal and beneficial owner of the interest being assigned by
it hereunder and that such interest is free and clear of any adverse
claim created by the Assignor. It is understood and agreed that the
assignment and assumption hereunder are made without recourse to the
Assignor and that the Assignor makes no other representation or
warranty of any kind to the Assignee. Neither the Assignor nor any
of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectability of any
Loan Document, including without limitation, documents granting the
Assignor and the other Lenders a security interest in assets of the
Borrower or any guarantor, (ii) any representation, warranty or
statement made in or in connection with any of the Loan Documents,
(iii) the financial condition or creditworthiness of the Borrower or
any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any
of the Property, books or records of the Borrower, (vi) the validity,
enforceability, perfection, priority, condition, value or sufficiency
of any collateral securing or purporting to secure the Loans or (vii)
any mistake, error of judgment, or action taken or omitted to be
taken in connection with the Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms
that it has received a copy of the Credit Agreement, together with
copies of the financial statements requested by the Assignee and such
other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment
Agreement, (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based
on such documents and information at it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under the Loan Documents, (iii) appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably
incidental thereto, (iv) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender, (v)
agrees that its payment instructions and notice instructions are as
set forth in the attachment to Schedule 1, (vi) confirms that none of
the funds, monies, assets or other consideration being used to make
the purchase and assumption hereunder are "plan assets" as defined
under ERISA and that its rights, benefits and interests in and under
the Loan Documents will not be "plan assets" under ERISA, **[(vii)
confirms that it is an Eligible Assignee,]** **[and (viii) attaches
the forms prescribed by the Internal Revenue Service of the United
States certifying that the Assignee is entitled to receive payments
under the Loan Documents without deduction or withholding of any
United States federal income taxes]**.**
*to be inserted if required by the Credit Agreement.
**to be inserted if the Assignee is not incorporated under the laws
of the United States, or a state thereof.
8. INDEMNITY. The Assignee agrees to indemnify and hold the
Assignor harmless against any and all losses, costs and expenses
(including, without limitation, reasonable attorneys' fees) and
liabilities incurred by the Assignor in connection with or arising in
any manner from the Assignee's non-performance of the obligations
assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the
Assignee shall have the right pursuant to Section 12.3.1 of the
Credit Agreement to assign the rights which are assigned to the
Assignee hereunder to any entity or person, provided that (i) any
such subsequent assignment does not violate any of the terms and
conditions of the Loan Documents or any law, rule, regulation, order,
writ, judgment, injunction or decree and that any consent required
under the terms of the Loan Documents has been obtained and (ii)
unless the prior written consent of the Assignor is obtained, the
Assignee is not thereby released from its obligations to the Assignor
hereunder, if any remain unsatisfied, including, without limitation,
its obligations under Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in
the Aggregate Commitment occurs between the date of this Assignment
Agreement and the Effective Date, the percentage interest specified
in Item 3 of Schedule 1 shall remain the same, but the dollar amount
purchased shall be recalculated based on the reduced Aggregate
Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the
attached Notice of Assignment embody the entire agreement and
understanding between the parties hereto and supersede all prior
agreements and understandings between the parties hereto relating to
the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed
by the internal law, and not the law of conflicts, of the State of
Illinois.
13. NOTICES. Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement. For the
purpose hereof, the addresses of the parties hereto (until notice of
a change is delivered) shall be the address set forth in the
attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment Agreement by their duly authorized officers as of the date
first above written.
**[NAME OF ASSIGNOR]**
By:___________________________________
Title:________________________________
________________________________
________________________________
**[NAME OF ASSIGNEE]**
By:___________________________________
Title:________________________________
________________________________
________________________________
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
2. Date of Assignment Agreement: , 19
3. Amounts (As of Date of Item 2 above):
Facility Facility Facility Facility
1* 2* 3* 4*
-------- -------- -------- --------
a. Total of Commitments
(Loans)** under
Credit Agreement $ $ $ $
-------- -------- -------- --------
b. Assignee's Percentage
of each Facility purchased
under the Assignment
Agreement*** % % % %
-------- -------- -------- --------
c. Amount of Assigned Share in
each Facility purchased under
the Assignment
Agreement $ $ $ $
-------- -------- -------- --------
4. Assignee's Aggregate (Loan
Amount)** Commitment Amount
Purchased Hereunder: $
-------------
5. Proposed Effective Date: -------------
Accepted and Agreed:
**[NAME OF ASSIGNOR]** **[NAME OF ASSIGNEE]**
By:__________________________ By:_________________________
Title:_______________________ Title:______________________
* Insert specific facility names per Credit Agreement
** If a Commitment has been terminated, insert outstanding Loans in
place of Commitment
*** Percentage taken to 2 decimal places
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
ADMINISTRATIVE INFORMATION SHEET
--------------------------------
Attach Assignor's Administrative Information Sheet, which must
include notice addresses for the Assignor and the Assignee
(Sample form shown below)
ASSIGNOR INFORMATION
--------------------
Contact:
Name:______________________________ Telephone No.:___________________________
Fax No.:___________________________ Telex No.:_______________________________
Answerback:______________________________
Payment Information:
Name & ABA # of Destination Bank:_____________________________________________
_____________________________________________
Account Name & Number for Wire Transfer:______________________________________
______________________________________
Other Instructions:___________________________________________________________
______________________________________________________________________________
Address for Notices for Assignor:
ASSIGNEE INFORMATION
--------------------
Credit Contact:
Name:______________________________ Telephone No.:___________________________
Fax No.:___________________________ Telex No.:_______________________________
Answerback:______________________________
Key Operations Contacts:
Booking Installation:______________ Booking Installation:____________________
Name:______________________________ Name:____________________________________
Telephone No.:_____________________ Telephone No.:___________________________
Fax No.:___________________________ Fax No.:_________________________________
Telex No.:_________________________ Telex No.:_______________________________
Answerback:________________________ Answerback:______________________________
Payment Information:
Name & ABA # of Destination Bank:_____________________________________________
_____________________________________________
Account Name & Number for Wire Transfer:______________________________________
______________________________________
Other Instructions:___________________________________________________________
______________________________________________________________________________
Address for Notices for Assignee:_____________________________________________
_____________________________________________
_____________________________________________
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO ("ANB") INFORMATION
Assignee will be called promptly upon receipt of the signed agreement.
Initial Funding Contact: Subsequent Operations Contact:
- ----------------------- -----------------------------
Name:______________________________ Name:______________________________
Telephone No.:_____________________ Telephone No.:_____________________
Fax No.:___________________________ Fax No.:___________________________
ANB Telex No.:________________________
Initial Funding Standards:
- -------------------------
Libor - Fund 2 days after rates are set.
ANB Wire Instructions:
- ---------------------
Address for Notices for ANB:
- ---------------------------
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
-------------
_____________, 19_____
To: **[NAME OF BORROWER]**
_______________________
_______________________
**[NAME OF AGENT]**
_______________________
_______________________
From: **[NAME OF ASSIGNOR]** (the "Assignor")
**[NAME OF ASSIGNEE]** (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered
to the Borrower and the Agent pursuant to Section 12.3.2 of the Credit
Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of ___________, 19___ (the "Assignment"), pursuant to
which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor the percentage interest specified in Item 3 of
Schedule 1 of all outstandings, rights and obligations under the Credit
Agreement relating to the facilities listed in Item 3 of Schedule 1. The
Effective Date of the Assignment shall be the later of the date specified
in Item 5 of Schedule 1 or two Business Days (or such shorter period as
agreed to by the Agent) after this Notice of Assignment and any consents
and fees required by Sections **[12.3.1 and 12.3.2]** of the Credit
Agreement have been delivered to the Agent, provided that the Effective
Date shall not occur if any condition precedent agreed to by the Assignor
and the Assignee has not been satisfied.
*To be included only if consent must be obtained from the Borrower
pursuant to Section 12.3.1 of the Credit Agreement.
4. The Assignor and the Assignee hereby give to the Borrower and the
Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before the date specified in Item 5 of
Schedule 1 to determine if the Assignment Agreement will become effective
on such date pursuant to Section 3 hereof, and will confer with the Agent
to determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Agent if the Assignment
Agreement does not become effective on any proposed Effective Date as a
result of the failure to satisfy the conditions precedent agreed to by the
Assignor and the Assignee. At the request of the Agent, the Assignor
will give the Agent written confirmation of the satisfaction of the
conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before
the Effective Date the processing fee of $3,000 required by Section 12.3.2
of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and
the Assignee request and direct that the Agent prepare and cause the
Borrower to execute and deliver new Notes or, as appropriate, replacement
notes, to the Assignor and the Assignee. The Assignor and, if applicable,
the Assignee each agree to deliver to the Agent the original Note received
by it from the Borrower upon its receipt of a new Note in the appropriate
amount.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the
purchase pursuant to the Assignment are "plan assets" as defined under
ERISA and that its rights, benefits, and interests in and under the Loan
Documents will not be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the
Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply information with respect
to the Borrower or the Loan Documents to the Assignee until the Assignee
becomes a party to the Credit Agreement.*
*May be eliminated if Assignee is a party to the Credit Agreement prior to
the Effective Date.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By:___________________________ By:______________________________
Title:________________________ Title:___________________________
ACKNOWLEDGED **[AND CONSENTED TO]** ACKNOWLEDGED**[AND CONSENTED TO]**
BY **[NAME OF AGENT]** BY **[NAME OF BORROWER]**
By:___________________________ By:______________________________
Title:________________________ Title:___________________________
**[Attach photocopy of Schedule 1 to Assignment]**
EXHIBIT D
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To: American National Bank and Trust Company of Chicago,
as Agent (the "Agent") under the Loan Agreement
Described Below.
Re: Loan Agreement, dated __________________, _______ (as the
same may be amended or modified, the "Loan Agreement"), among
_______________ (the "Borrower"), the Lenders named therein
and the Agent. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned thereto in the
Loan Agreement.
The Agent is specifically authorized and directed to act upon
the following standing money transfer instructions with respect to
the proceeds of Advances or other extensions of credit from time to
time until receipt by the Agent of a specific written revocation of
such instructions by the Borrower, provided, however, that the Agent
may otherwise transfer funds as hereafter directed in writing by the
Borrower in accordance with Section 13.1 of the Loan Agreement or
based on any telephonic notice made in accordance with Section 2.14
of the Loan Agreement.
Facility Identification Number(s)______________________________________________
Customer/Account Name__________________________________________________________
Transfer Funds To______________________________________________________________
______________________________________________________________
______________________________________________________________
For Account No.________________________________________________________________
Reference/Attention To_________________________________________________________
Authorized Officer (Customer Representative) Date_______________________
___________________________ ___________________________
(Please Print) Signature
Bank Officer Name Date______________________
___________________________ ___________________________
(Please Print) Signature
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
EXHIBIT E-1, E-2 & E-3
NOTES
EXHIBIT F
CERTIFICATE OF BORROWER
RE: ANNUAL FINANCIAL STATEMENTS
EXHIBIT G
MONTHLY COMPLIANCE CERTIFICATE
EXHIBIT H
MONTHLY COLLATERAL REPORT ACCOUNTS RECEIVABLE COLLATERAL
EXHIBIT I
ACTUAL COLLECTIONS AND ESTIMATED NET BILLING REPORT
SCHEDULE 1
SUBSIDIARIES AND OTHER INVESTMENTS
(See Sections 5.8 and 6.14)
Investment Jurisdiction of Owned Amount of Percent
In Organization By Investment Ownership
- ---------- --------------- ------ ---------- ---------
SCHEDULE 2
INDEBTEDNESS AND LIENS
(See Sections 5.14, 6.11 and 6.15)
Maturity
Indebtedness Indebtedness Property and Amount
Incurred By Owed To Encumbered (If Any) of Indebtedness
- ------------ ------------ ------------------- ---------------
SCHEDULE 3
PERMITTED AFFILIATES IN CONNECTION WITH ELIGIBLE ACCOUNTS
Any corporations majority owned or controlled by Nicholas G. Karabots.