Exhibit 10.3
LIBOR TERM NOTE
NEW YORK
Buffalo, New York May 17, 2005 $5,000,000.00
BORROWER: THE PEOPLES PUBLISHING GROUP, INC., A corporation organized under the
laws of the State of Delaware
Address of its chief executive office: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Office of CFO
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, New York banking corporation with
its principal banking office at ▇▇▇ ▇&▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Office of General Counsel
1. DEFINITIONS. As used in this Note, each capitalized term shall have the
meaning specified in the Note or as it appears in initial capitalization.
Additionally, the following terms shall have the indicated meanings:
a. "APPLICABLE RATE" shall mean either the LIBOR Rate or the Base Rate, as
the case may be.
b. "ADJUSTMENT DATE", when applicable, shall mean:
(i) If the Interest Period duration selected below is "one day": the
first day of the applicable Interest Period (or, if such date is not a Business
Day, the immediately preceding Business Day).
(ii) If the Interest Period duration selected below is other than
"one day": two (2) Business Days before the first day of the applicable Interest
Period (each of which shall have a duration as selected below; see LIBOR Rate
definition).
c. "BASE RATE" shall mean the rate of interest announced by the Bank as
its prime rate of interest.
d. "BUSINESS DAY" shall mean any day of the year on which banking
institutions in New York, New York are not authorized or required by law or
other governmental action to close and, to the extent the LIBOR Rate is
applicable, on which dealings are carried on in the London Interbank market.
e. "CONTINUATION DATE" shall mean the last day of each Interest Period.
f. "COST OF FUNDS" shall mean the most recent yield on United States
Treasury Obligations adjusted to constant maturity to match the corresponding
loan term in effect two (2) business days prior to the reset date as published
by the Board of Governors of the Federal Reserve System in the Federal Reserve
Statistical Release H.15 (519), or by such other quoting service, index or
commonly available source utilized by the Bank, plus the "ask" side of the
like-year swap spread in effect two (2) business days prior to the reset date as
set forth in Bloomberg L.P., or such other quoting service, index or commonly
available source utilized by the Bank.
g. "CREDIT AGREEMENT" shall mean the Credit Agreement dated even date
herewith by and between the Borrower and the Bank.
h. "INTEREST PERIOD" shall mean, as to the LIBOR Rate, the period
commencing on the date of this Note or Continuation Date (as the case may be)
and ending on the date that shall be:
(i) If the Interest Period duration selected below is "one day": the
following day; provided, however, that if an Interest Period would
end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day.
(ii) If the Interest Period duration selected below is other than "one
day": the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) of the calendar
month that is one (1), two (2), three (3) or six (6) months
thereafter (as selected below); provided, however, that if an
Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day.
i. "LIBOR" shall mean the rate obtained by dividing (i) the one-day,
one-month, two-month, three-month or six-month interest period London Interbank
Offered Rate (as selected below), fixed by the British Bankers Association for
United States dollar deposits in the London Interbank Eurodollar Market at
approximately 11:00 a.m. London, England time (or as soon thereafter as
practicable) as determined by the Bank from any broker, quoting service or
commonly available source utilized by the Bank by (ii) a percentage equal to
100% minus the stated maximum rate of all reserves required to be maintained
against "Eurocurrency Liabilities" as specified in Regulation D (or against any
other category of liabilities which includes deposits by reference to which the
interest rate on LIBOR Rate loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States' office of a
bank to United States residents) on such date to any member bank of the Federal
Reserve System.
j. "LIBOR RATE" shall mean the interest rate determined on the pricing
grid as follows with an Interest Period duration of one day, one month, two
months, three months or six months:
Total Funded Debt
To EBITDA (as
defined in the LIBOR
Level Credit Agreement Margin
I <1.00 1.75%
II 1.0>2.0 2.00%
III >2.0 2.25%
k. "MATURITY DATE" is the Payment Due Date in May 17, 2012.
l. "PAYMENT DUE DATE", when applicable, shall mean the same day of the
calendar month as the date of this Note (or if there is no numerically
corresponding day in a month, on the last day of such month); provided, however,
if that day is not a Business Day, the Payment Due Day shall be extended to the
next succeeding Business Day unless such next succeeding Business Day would fall
in the next calendar month, in which case such Payment Due Date shall be the
immediately preceding Business Day.
m. "PRINCIPAL AMOUNT" shall mean Five Million Dollars ($5,000,000.00).
2. PAYMENT OF PRINCIPAL, INTEREST AND EXPENSES.
a. PROMISE TO PAY. For value received, and intending to be legally bound,
▇▇▇▇▇▇▇▇ promises to pay to the order of the Bank on the dates set forth below,
the Principal Amount, plus interest as agreed below and all fees and costs
(including without limitation attorneys' fees and disbursements whether for
internal or outside counsel) the Bank incurs in order to collect any amount due
under this Note, to negotiate or document a workout or restructuring, or to
preserve its rights or realize upon any guaranty or other security for the
payment of this Note ("Expenses").
b. INITIAL APPLICABLE RATE. The initial Applicable Rate shall be the LIBOR
Rate (based on the Interest Period duration selected above) in effect on the
date that is:
(i) If the Interest Period duration selected above is "one day": the
date of this Note (or, if such date is not a Business Day, the immediately
preceding Business Day).
(ii) If the Interest Period duration selected above is other than
"one day": two (2) Business Days before the date of this Note.
In either case, the initial Interest Period shall start on the date of this
Note.
c. INTEREST. Interest shall accrue on the outstanding Principal ▇▇▇▇▇▇
calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366) at the Applicable Rate that on each day shall be:
(i) IF THE LIBOR RATE IS THE APPLICABLE RATE. Interest shall accrue
on the Principal Amount from and including the first day of the Interest Period
(with the duration selected above) until, but not including, the last day of
such Interest Period or the day the Principal Amount is paid in full (if
sooner), at a rate per annum equal to the LIBOR Rate determined and in effect on
the applicable Adjustment Date.
(ii) IF THE BASE RATE IS THE APPLICABLE RATE. Interest shall accrue
on the Principal Amount from and including the first date the Base Rate is the
Applicable Rate to but not including, the day such Principal Amount is paid in
full or the Applicable Rate is converted to the LIBOR Rate, at the rate per
annum equal to the Base Rate. Any change in the Base Rate resulting from a
change in the Bank's prime rate shall be effective on the date of such change.
d. PAYMENT SCHEDULE:
Borrower shall pay interest only on this Note until May 16, 2006;
thereafter, Borrower shall pay the outstanding Principal Amount in
seventy-two (72) consecutive monthly installments as follows: (i) if the
Interest Period duration is "one day", starting on the first Payment Due
Date after the date of this Note and on each Payment Due Date
thereafter, or (ii) if the Interest Period duration is other than "one
day", starting on the last day of the Interest Period that commences on
the date of this Note and on last day of each Interest Period
thereafter; in either case, consisting of seventy-one (71) equal
installments of principal each in the amount of $69,444.44 and ONE (1)
FINAL INSTALLMENT on the Maturity Date in an amount equal to the
outstanding Principal Amount at that time together with all other
amounts outstanding hereunder including, without limitation, accrued
interest, costs and Expense (the "Final Installment"); provided,
however, if the Applicable Rate is converted to the Base Rate, Borrower
shall pay the outstanding Principal Amount in consecutive monthly
installments commencing on the first Payment Due Date after the date of
such conversion and on the same Payment Due Date thereafter until
conversion back to the LIBOR Rate (at which time Borrower shall resume
the monthly, bi-monthly, quarterly or semi-annual installments in the
amount set forth above or as otherwise agreed to by the Bank and
Borrower in writing) or the Maturity Date (at which time Borrower shall
pay the Final Installment) with each such installment being equal in an
amount to fully amortize the outstanding Principal Amount of the Note in
full by the Maturity Date or such other date agreed to by the Bank and
Borrower in writing. The determination by the Bank of the foregoing
amount shall, in the absence of manifest error, be conclusive and
binding upon Borrower. In addition, until the outstanding Principal
Amount is paid in full, Borrower shall pay all accrued and unpaid
interest, in amounts which may vary, as follows: (i) if the LIBOR Rate
is the Applicable Rate, on the last day of each Interest Period (except,
however, if the Interest Period duration selected above is "one day", in
which case such interest payments shall be made on the Payment Due Date
for each month, or as otherwise invoiced by the Bank), (ii) if the Base
Rate is the Applicable Rate, on the Payment Due Date for each month, and
(iii) at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
e. MAXIMUM LEGAL RATE. It is the intent of the Bank and Borrower that in
no event shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law (the "Maximum Legal Rate"). If this Note is for a
personal loan of less than $2,500,000 and is secured primarily by a one- to
four-family residence, the interest rate shall not exceed 16%. Solely to the
extent necessary to prevent interest under this Note from exceeding the Maximum
Legal Rate, any amount that would be treated as excessive under a final judicial
interpretation of applicable law shall be deemed to have been a mistake and
automatically canceled, and, if received by the Bank, shall be refunded to
Borrower.
f. DEFAULT RATE. If an Event of Default (defined below) occurs, the
interest rate on the unpaid Principal Amount shall immediately be automatically
increased to 3 percentage points per year above the higher of the LIBOR Rate or
the Base Rate, and any judgment entered hereon or otherwise in connection with
any suit to collect amounts due hereunder shall bear interest at such default
rate.
g. REPAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGE. Payments shall be
made in immediately available United States funds at any banking office of the
Bank. Interest will continue to accrue until payment is actually received. If
payment is not received within five days of its due date, Borrower shall pay a
late charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount
or (c) the Bank's then current late charge as announced from time to time. If
this Note is secured by a one to six-family owner-occupied residence, the late
charge shall equal 2% of the delinquent amount and shall be payable if payment
is not received within fifteen days of its due date. Payments may be applied in
any order in the sole discretion of the Bank but, prior to default, shall be
applied first to past due interest, Expenses, late charges and principal, then
to current interest, Expenses, late charges and principal, and last to remaining
principal.
h. PREPAYMENT.
(i) Subject to the following, during the term of this Note, Borrower
shall have the option of paying the Principal Amount to the Bank in advance of
the Maturity Date, in whole or in part, at any time and from time to time upon
written notice received by the Bank at least three (3) business days prior to
making such payment. If (i) Borrower prepays, in whole or in part, any Principal
Amount when the Applicable Rate is the LIBOR Rate before the end of the Interest
Period, (ii) there occurs an Event of Default or the Applicable Rate is
converted from the LIBOR Rate to the Base Rate before the end of an Interest
Period pursuant to Section 3, then Borrower shall be liable for and shall pay
the Bank, on demand, the higher of $250.00 or the actual amount of the
liabilities, expenses, costs or funding losses that are a direct or indirect
result of such prepayment (based on the entire Principal Amount pre-paid),
failure to draw, early termination of the Interest Period, revocation,
bankruptcy or otherwise. The determination by the Bank of the foregoing amount
shall, in the absence of manifest error, be conclusive and binding upon
Borrower. The provisions of this paragraph shall not be applicable if the
Interest Period duration selected above is "one day".
(ii) Upon making any prepayment of the Principal Amount in whole,
Borrower shall pay to the Bank all interest and Expenses owing pursuant to the
Note and remaining unpaid. Each partial prepayment of the Principal Amount shall
be applied in inverse order of maturity to the principal included in the
installments provided herein.
(iii) In the event the Maturity Date is accelerated following an
Event of Default by Borrower, any tender of payment of the amount necessary to
satisfy the entire indebtedness made after such Event of Default shall be
expressly deemed a voluntary prepayment. In such a case, to the extent permitted
by law, the Bank shall be entitled to the amount necessary to satisfy the entire
indebtedness, plus the appropriate prepayment premium calculated in accordance
with this Section 2(h).
(iv) In the event of a conversion to a fixed rate, subject to the
prepayment premium provided for hereafter in this paragraph, during the term of
this Note, the Borrower shall have the option of paying the Principal Sum to the
Bank in advance of the Maturity Date, in whole or in part, at any time and from
time to time upon written notice received by the Bank at least thirty (30) days
prior to making such prepayment; provided however, that together with such
prepayment, the Borrower shall pay to the Bank, as consideration of the
privilege of making such prepayment, a premium equal to the greater of (a) one
percent (1%) of the Principal Sum prepaid, or (b) an amount equal to the present
value of the difference between (i) the amount of interest that would have
accrued on the Principal Sum during the remaining term of this Note, at the
interest rate set forth in this Note in effect on the
date of prepayment and (ii) the amount of interest that would have accrued on
the Principal Sum during the remaining term of this Note at the Current Market
Rate. Upon making any prepayment of the Principal Sum in whole, the Borrower
shall pay to the Bank all interest and Expense owing pursuant to this Note and
remaining unpaid. Each partial prepayment of the Principal Sum shall be applied
in inverse order of maturity to the principal included in the installments
provided for the paragraph of this Note captioned "Repayment of Principal and
Interest". In the event the Maturity Date of the Note is accelerated following
an Event of Default, any tender payment of the amount necessary to satisfy the
entire indebtedness made after such Event of Default shall be expressly deemed a
voluntary prepayment. In such case, to the extent permitted by law, the Bank
shall be entitled to the amount necessary to satisfy the entire indebtedness,
plus the appropriate prepayment premium calculated in accordance with this
paragraph.
3. CONTINUATIONS AND CONVERSIONS.
a. EXPIRATION OF INTEREST PERIOD. Subject to Section 3(b), upon the
expiration of the first Interest Period and each Interest Period thereafter, on
the Continuation Date the LIBOR Rate will be automatically continued with an
Interest Period of the same duration as the Interest Period duration initially
selected above. Borrower shall have the right on the first anniversary of this
Note to elect a fixed rate equal to the Bank's six year Cost of Funds plus 225
basis points to be set at conversion to an amortizing loan as set forth in
paragraph 2d of this Note.
b. CONVERSION UPON DEFAULT. Unless the Bank shall otherwise consent in
writing, if (i) Borrower has failed to pay when due, in whole or in part, the
indebtedness under the Note (whether upon maturity, acceleration or otherwise),
or (ii) there exists a condition or event which with the passage of time, the
giving of notice or both shall constitute an Event of Default, the Bank, in its
sole discretion, may (i) permit the LIBOR Rate to continue until the last day of
the applicable Interest Period at which time such the Applicable Rate shall
automatically be converted to the Base Rate or (ii) convert the LIBOR Rate to
the Base Rate before the end of the applicable Interest Period. Notwithstanding
the foregoing, upon the occurrence of an Event of Default in Section 5(ix), the
Applicable Rate shall be automatically converted to the Base Rate without
further action by the Bank and Borrower shall have no right to have the
Applicable Rate converted from the Base Rate to the LIBOR Rate. Nothing herein
shall be construed to be a waiver by the Bank to have the Principal Amount
accrue interest at the Default Rate or the right of the Bank to the amounts set
forth in Section 2(h) of this Note, if any.
4. CREDIT AGREEMENT. This Note (i) is the Term Note referred to in the Credit
Agreement, (ii) is subject to the terms and conditions of the Credit Agreement
and the Transaction Documents, as defined in the Credit Agreement, it being
agreed that all the provisions of the Credit Agreement are incorporated herein
by reference, and (iii) without limiting the generality of the immediately
preceding clause (ii), is secured as provided in the Credit Agreement.
5. EVENTS OF DEFAULT; ACCELERATION. Upon the occurrence and during the
continuance of any one or more of the Events of Default, as defined in the
Credit Agreement, all amounts then remaining unpaid on this Note shall become,
or may be declared to be, due and payable all as provided in the Credit
Agreement.
6. RIGHT OF SETOFF. The Bank shall have the right to set off against the amounts
owing under this Note any property held in a deposit or other account with the
Bank or any Affiliate or otherwise owing by the Bank or any Affiliate in any
capacity to Borrower or any guarantor or endorser of this Note. Such set-off
shall be deemed to have been exercised immediately at the time the Bank or such
Affiliate elect to do so.
7. INABILITY TO DETERMINE LIBOR RATES, INCREASED COSTS, ILLEGALITY.
a. INCREASED COSTS. If the Bank shall determine that, due to either (a)
the introduction of any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR) in or
in the interpretation of any requirement of law or (b) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or maintaining any loans
based on LIBOR, then Borrower shall be liable for, and shall from time to time,
upon demand therefor by the Bank and pay to the Bank such additional amounts as
are sufficient to compensate the Bank for such increased costs.
b. INABILITY TO DETERMINE RATES. If the Bank shall determine that for any
reason adequate and reasonable means do not exist for ascertaining LIBOR for the
Interest Period specified above, the Bank will give notice of such determination
to Borrower. Thereafter, the Bank may not maintain the loan hereunder at the
LIBOR Rate until the Bank revokes such notice in writing and, until such
revocation, the Bank may convert the Applicable Rate from the LIBOR Rate to the
Base Rate.
c. ILLEGALITY. If the Bank shall determine that the introduction of any
law (statutory or common), treaty, rule, regulation, guideline or determination
of an arbitrator or of a governmental authority or in the interpretation or
administration thereof, has made it unlawful, or that any central bank or other
governmental authority has asserted that it is unlawful for the Bank to make
loans at based on LIBOR then, on notice thereof by the Bank to Borrower, the
Bank may suspend the maintaining of the loan hereunder at the LIBOR Rate until
the Bank shall have notified Borrower that the circumstances giving rise to such
determination shall no longer exist. If the Bank shall determine that it is
unlawful to maintain the loan hereunder based on LIBOR, the Bank may convert the
Applicable Rate from the LIBOR Rate to the Base Rate.
8. MISCELLANEOUS. This Note, together with any related loan and security
agreements and guaranties, contains the entire agreement between the Bank and
Borrower with respect to the Note, and supersedes every course of dealing, other
conduct, oral agreement and representation previously made by the Bank. All
rights and remedies of the Bank under applicable law and this Note or amendment
of any provision of this Note are cumulative and not exclusive. No single,
partial or delayed exercise by the Bank of any right or remedy shall preclude
the subsequent exercise by the Bank at any time of any right or remedy of the
Bank without notice. No waiver or amendment of any provision of this Note shall
be effective unless made specifically in writing by the Bank. No course of
dealing or other conduct, no oral agreement or representation made by the Bank,
and no usage of trade, shall operate as a waiver of any right or remedy of the
Bank. No waiver of any right or remedy of the Bank shall be effective unless
made specifically in writing by the Bank. ▇▇▇▇▇▇▇▇ agrees that in any legal
proceeding, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Borrower hereby waives
protest, presentment and notice of any kind in connection with this Note.
Singular number includes plural and neuter gender includes masculine and
feminine as appropriate.
9. NOTICES. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Borrower
(at its address on the Bank's records) or to the Bank (at the address on page
one and separately to the Bank officer responsible for ▇▇▇▇▇▇▇▇'s relationship
with the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (e.g.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Borrower and the Bank.
10. JOINT AND SEVERAL. If there is more than one Borrower, each of them shall be
jointly and severally liable for all amounts which become due under this Note
and the term "Borrower" shall include each as well as all of them.
11. GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted by
the Bank and will be deemed to be made in the State of New York. This Note will
be interpreted in accordance with the laws of the State of New York excluding
its conflict of laws rules. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK IN
A COUNTY OR JUDICIAL DISTRICT WHERE THE BANK MAINTAINS A BRANCH, AND CONSENTS
THAT THE BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT BORROWER'S
ADDRESS SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING
CONTAINED IN THIS NOTE WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING
ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER INDIVIDUALLY,
AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN ANY OTHER
COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION. Borrower acknowledges
and agrees that the venue provided above is the most convenient forum for both
the Bank and Borrower. Borrower waives any objection to venue and any objection
based on a more convenient forum in any action instituted under this Note.
12. WAIVER OF JURY TRIAL. Borrower and the Bank hereby knowingly, voluntarily,
and intentionally waive any right to trial by jury ▇▇▇▇▇▇▇▇ and the Bank may
have in any action or proceeding, in law or in equity, in connection with this
note or the transactions related hereto. ▇▇▇▇▇▇▇▇ represents and warrants that
no representative or agent of the Bank has represented, expressly or otherwise,
that the Bank will not, in the event of litigation, seek to enforce this jury
trial waiver. Borrower Acknowledges that the Bank has been induced to enter into
this note by, among other things, the provisions of this Section.
PREAUTHORIZED TRANSFERS FROM DEPOSIT ACCOUNT. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account # 9836813304 with the Bank automatically for any
amount which becomes due under this Note.
ACKNOWLEDGMENT. ▇▇▇▇▇▇▇▇ acknowledges that it has read and understands all the
provisions of this Note, including the GOVERNING LAW, JURISDICTION and WAIVER OF
JURY TRIAL, and has been advised by counsel as necessary or appropriate.
TAX ID/SS # 2199108 THE PEOPLES PUBLISHING GROUP, INC.
_____________________________
Signature of Witness
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________ ----------------------
Printed Name of Witness Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
