EXECUTION COPY
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LODGENET ENTERTAINMENT CORPORATION
$100,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF DECEMBER 19, 1996
WITH
NATIONAL WESTMINSTER BANK PLC,
AS AGENT AND ISSUING BANK,
NATIONAL WESTMINSTER BANK OF CANADA,
AS ISSUING BANK,
AND
THE BANKS PARTY HERETO
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TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS.......................................................1
ARTICLE 2. COMMITMENTS; LOANS...............................................20
Section 2.1 Loans.....................................................20
Section 2.2 Notices Relating to Loans.................................20
Section 2.3 Disbursement of Loan Proceeds.............................21
Section 2.4 Notes.....................................................21
Section 2.5 Commitment Reduction; Repayment of Loans..................22
Section 2.6 Interest..................................................23
Section 2.7 Fees......................................................24
Section 2.8 Changes in Commitment; Prepayments........................25
Section 2.9 Use of Proceeds of Loans..................................26
Section 2.10 Computations..............................................26
Section 2.11 Minimum Amounts of Borrowings, Conversions, Prepayments
and Interest Periods......................................26
Section 2.12 Time and Method of Payments...............................27
Section 2.13 Lending Offices...........................................27
Section 2.14 Several Obligations.......................................27
Section 2.16 Letters of Credit.........................................27
Section 2.17 Financing Documents.......................................33
Section 2.18 Pro Rata Treatment Among Banks............................33
Section 2.19 Non-Receipt of Funds by the Agent.........................34
Section 2.20 Sharing of Payments and Set-Off Among Banks...............34
Section 2.21 Conversions of Loans......................................35
Section 2.22 Additional Costs; Capital Requirements....................35
Section 2.23 Limitation on Types of Loans..............................36
Section 2.24 Illegality................................................37
Section 2.25 Certain Conversions pursuant to Sections 2.22 and 2.24....37
Section 2.26 Alternate Lending Installation............................38
Section 2.27 Indemnification...........................................38
ARTICLE 3. REPRESENTATIONS AND WARRANTIES...................................39
Section 3.1 Organization..............................................39
Section 3.2 Power, Authority, Consents................................39
Section 3.3 No Violation of Law or Agreements.........................40
Section 3.4 Due Execution, Validity, Enforceability...................40
Section 3.5 Properties, Liens.........................................40
Section 3.6 Litigation................................................40
Section 3.7 No Defaults, Compliance With Laws.........................41
Section 3.8 Burdensome Documents......................................41
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PAGE
Section 3.9 Financial Statements; Projections.........................41
Section 3.10 Tax Returns...............................................42
Section 3.11 Intellectual Property.....................................42
Section 3.12 Regulation U..............................................42
Section 3.13 Name Changes, Mergers, Acquisitions.......................42
Section 3.14 Full Disclosure...........................................42
Section 3.15 Licenses and Approvals....................................43
Section 3.16 Labor Disputes; Collective Bargaining Agreements;
Employee Grievances.......................................43
Section 3.17 Condition of Assets.......................................43
Section 3.18 ERISA.....................................................44
Section 3.19 Material Agreements.......................................44
Section 3.20 Collateral Documents......................................44
Section 3.21 Solvency..................................................45
ARTICLE 4. CONDITIONS TO THE LOANS..........................................45
Section 4.1 Conditions to Initial Loans...............................45
Section 4.2 Conditions to Subsequent Loans and L/Cs...................48
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS
AND OTHER INFORMATION............................................48
Section 5.1 Annual Financial Statements...............................48
Section 5.2 Quarterly Financial Statements49
Section 5.3 Projections...............................................49
Section 5.4 Compliance Information....................................49
Section 5.5 No Default Certificate....................................49
Section 5.6 Accountants' Reports......................................50
Section 5.7 Copies of Documents.......................................50
Section 5.8 Notices of Defaults.......................................50
Section 5.9 XXXXX Notices and Requests................................50
Section 5.10 Additional Information; Guest-Pay Rooms...................51
ARTICLE 6. AFFIRMATIVE COVENANTS............................................52
Section 6.1 Books and Records.........................................52
Section 6.2 Inspections and Audits....................................52
Section 6.3 Maintenance and Repairs...................................52
Section 6.4 Continuance of Business...................................52
Section 6.5 Copies of Corporate Documents.............................53
Section 6.6 Perform Obligations.......................................53
Section 6.7 Notice of Litigation......................................53
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PAGE
Section 6.8 Insurance.................................................53
Section 6.9 Financial Covenants.......................................53
Section 6.10 Notice of Certain Events..................................55
Section 6.11 Comply with ERISA.........................................55
Section 6.12 Environmental Compliance..................................55
Section 6.13 Further Assurances........................................55
ARTICLE 7. NEGATIVE COVENANTS...............................................57
Section 7.1 Indebtedness..............................................57
Section 7.2 Liens.....................................................58
Section 7.3 Guaranties................................................59
Section 7.4 Xxxxxxx, Acquisitions.....................................60
Section 7.5 Redemptions; Distributions................................60
Section 7.6 Stock Issuances...........................................61
Section 7.7 Changes in Business; Asset Dispositions...................61
Section 7.8 Prepayments and Repayments of Indebtedness................61
Section 7.9 Investments...............................................62
Section 7.10 Fiscal Year...............................................64
Section 7.11 ERISA Obligations.........................................64
Section 7.12 Amendments of Documents...................................65
Section 7.13 Capital Expenditures......................................65
Section 7.14 Rental Obligations........................................66
Section 7.15 Use of Cash...............................................66
Section 7.16 Management Fees...........................................66
Section 7.17 Transactions with Affiliates..............................66
Section 7.18 Hazardous Material........................................67
ARTICLE 8. EVENTS OF DEFAULT................................................67
Section 8.1 Payments..................................................67
Section 8.2 Certain Covenants.........................................67
Section 8.3 Other Covenants...........................................68
Section 8.4 Other Defaults............................................68
Section 8.5 Representations and Warranties............................68
Section 8.6 Bankruptcy................................................69
Section 8.7 Judgments.................................................69
Section 8.8 ERISA.....................................................69
Section 8.9 Change of Control.........................................69
Section 8.10 Collateral................................................70
ARTICLE 9. THE AGENT........................................................70
Section 9.1 Appointment, Powers and Immunities........................70
Section 9.2 Reliance by Agent.........................................70
Section 9.3 Events of Default.........................................71
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PAGE
Section 9.4 Rights as a Bank..........................................71
Section 9.5 Indemnification...........................................71
Section 9.6 Non-Reliance on Agent and other Banks.....................71
Section 9.7 Failure to Act............................................72
Section 9.8 Resignation or Removal of Agent...........................72
Section 9.9 Sharing of Payments.......................................72
Section 9.10 Collateral Matters........................................73
ARTICLE 10. MISCELLANEOUS PROVISIONS........................................74
Section 10.1 Fees and Expenses; Indemnity..............................74
Section 10.2 Taxes.....................................................75
Section 10.3 Payments..................................................75
Section 10.4 Survival of Agreements and Representations; Construction..76
Section 10.5 Lien on and Set-off of Deposits...........................76
Section 10.6 Amendments and Waivers; Entire Agreement..................76
Section 10.7 Remedies Cumulative; Counterclaims........................77
Section 10.8 Additional Actions........................................77
Section 10.9 Notices...................................................77
Section 10.10 Counterparts..............................................79
Section 10.11 Severability..............................................79
Section 10.12 Successors and Assigns....................................79
Section 10.13 GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF TRIAL BY JURY...................................80
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PAGE
EXHIBITS
A Commitments and Percentages
B Promissory Note
C Assignment and Assumption Agreement
D ResNet Guaranty
E LodgeNet Canada Guaranty
F Security Agreement
G Pledge Agreement
H Patent and Trademark Security Agreement
I Borrower U.S. Legal Opinion
SCHEDULES
3.1 Organization and Capitalization
3.5 Real Estate
3.6 Litigation
3.11 Intellectual Property
3.13 Name Changes, Mergers
3.19 Material Agreements
7.1 Outstanding Indebtedness
7.2 Permitted Liens
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 19, 1996 by
and among LODGENET ENTERTAINMENT CORPORATION, a Delaware corporation (the
"BORROWER"), the Banks that from time to time become a party to this Agreement
(individually, a "BANK" and collectively, the "BANKS"), NATIONAL WESTMINSTER
BANK PLC, a United Kingdom public limited company, as Agent for the Banks (in
such capacity, together with its successors in such capacity, the "AGENT"), and
NATIONAL WESTMINSTER BANK OF CANADA, as an "ISSUING BANK" (as hereinafter
defined).
W I T N E S S E T H:
WHEREAS, the Borrower, the Agent and certain of the Banks entered into that
certain Loan Agreement dated as of March 11, 1996 (the "Original Loan
Agreement") pursuant to which certain loans and letter of credit obligations are
currently outstanding; and
WHEREAS, the Borrower wishes to obtain an increased, secured revolving loan
and letter of credit facility from the Banks in the aggregate principal amount
of up to One Hundred Million Dollars ($100,000,000), subject to adjustment, in
order to finance capital expenditures and provide for the ongoing working
capital requirements of the Borrower, and the Banks are willing to make such
increased facility available to the Borrower on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
ADDITIONAL COSTS: as defined in subsection 2.22(b) hereof.
AFFECTED LOANS: as defined in Section 2.25 hereof.
AFFECTED TYPE: as defined in Section 2.25 hereof.
AFFILIATE: as to any Person, any other Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), PROVIDED THAT, in any
event: (i) any Person that owns directly or indirectly 5% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 5% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person; and
(ii) each director and officer of the Borrower shall be deemed to be an
Affiliate of the Borrower.
AGENCY FEES: as defined in subsection 2.7(b) hereof.
ANNUAL OPERATING CASH FLOW: as at any date of determination thereof,
as to the Borrower and its Restricted Subsidiaries, the Operating Cash Flow for
the immediately preceding four consecutive full fiscal quarters (or, for
purposes of calculating Interest Coverage compliance in subsection 6.9(b) hereof
for fiscal 1997, such shorter fiscal period as may be appropriate) for which the
Agent has received financial statements in compliance with Section 5.1 or
Section 5.2 hereof (or, if as at any date of determination the Agent shall not
yet have received financial statements delivered in compliance with Section 5.1
or Section 5.2 hereof, then the Operating Cash Flow for such immediately
preceding four consecutive full fiscal quarters (or such shorter period) shall
be determined by the Agent in its sole judgment based, in the Agent's
discretion, on such financial information as it shall have requested and
received from the Borrower).
ANNUALIZED OPERATING CASH FLOW: as at any date of determination
thereof, as to the Borrower and its Restricted Subsidiaries, the product of (a)
Operating Cash Flow for the immediately preceding two consecutive full fiscal
quarters for which the Agent has received financial statements in compliance
with Section 5.1 or Section 5.2 hereof (or, if as at any date of determination
the Agent shall not yet have received financial statements delivered in
compliance with Section 5.1 or Section 5.2 hereof, then the Operating Cash Flow
for such immediately preceding two consecutive full fiscal quarters shall be
determined by the Agent in its sole judgment based, in the Agent's discretion,
on such financial information as it shall have requested and received from the
Borrower), multiplied by (b) two (2).
APPLICABLE BASE RATE MARGIN: with respect to Base Rate Loans, one
percent (1.00%), subject to adjustment in accordance with subsection 2.6(b)
hereof.
APPLICABLE EURODOLLAR RATE MARGIN: with respect to Eurodollar Rate
Loans, two percent (2.00%), subject to adjustment in accordance with subsection
2.6(b) hereof.
APPLICABLE LENDING OFFICE: with respect to each Bank, with respect to
each type of Loan, the Lending Office as designated for such type of Loan below
its name on the signature pages hereof or such other office of such Bank or of
an affiliate of such Bank as such Bank may from time to time specify to the
Agent and the Borrower as the office at which its Loans of such type are to be
made and maintained.
APPLICATION DOCUMENTS: as defined in subsection 2.16(b) hereof.
ASSET DISPOSITION: any conveyance, sale, lease, assignment, transfer
or other disposition of property, assets or business of the Borrower or any
Subsidiary of the Borrower in a single transaction or a series of related
transactions (other than in the ordinary course of business).
ASSIGNMENT AND ASSUMPTION AGREEMENT: an agreement in the form of
Exhibit C hereto.
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BANK DEFAULT: (i) the refusal (which has not been retracted) of a Bank
to make available its portion of any incurrence of Loans or to fund its portion
of any unreimbursed payment under Section 2.16 hereof or (ii) a Bank having
notified the Agent and/or the Borrower that it does not intend to comply with
its obligations under Section 2.1 or Section 2.16 hereof, in the case of either
(i) or (ii) as a result of the appointment of a receiver or conservator with
respect to such Bank at the direction or request of any regulatory agency or
authority.
BASE MAXIMUM CAPITAL EXPENDITURES AMOUNT: as defined in Section 7.13
hereof.
BASE RATE: as of any date of determination, the higher of (i) the
interest rate established from time to time by NatWest Plc as its "prime rate"
at the Principal U.S. Office and (ii) the Federal Funds Rate plus one-half
percent (0.50%). Notwithstanding the foregoing, the Borrower acknowledges that
NatWest Plc may regularly make domestic commercial loans at rates of interest
less than the rate of interest referred to in the preceding sentence. Each
change in any interest rate provided for herein based upon the "prime rate"
resulting from a change in the "prime rate" shall take effect at the time of
such change in the "prime rate."
BASE RATE LOANS: Loans that earn interest at a rate based upon the
Base Rate.
BENEFICIARY DOCUMENTS: as defined in subsection 2.16(d) hereof.
BORROWING NOTICE: as defined in Section 2.2 hereof.
BUSINESS DAY: any day other than Saturday, Sunday or any other day on
which commercial banks in New York City are authorized or required to close
under the laws of the State of New York.
CAPITAL EXPENDITURES: for any period, the aggregate amount of all
payments made during such period by any Person directly or indirectly for the
purpose of acquiring, constructing or maintaining fixed assets, real property or
equipment that, in accordance with generally accepted accounting principles,
would be added as a debit to the fixed asset account of such Person, including,
without limitation, all amounts paid or payable during such period with respect
to Capitalized Lease Obligations and interest that are required to be
capitalized in accordance with generally accepted accounting principles.
CAPITALIZED LEASE: any lease the obligations to pay rent or other
amounts under which constitute Capitalized Lease Obligations.
CAPITALIZED LEASE OBLIGATIONS: as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under generally accepted accounting principles and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles.
3
CASH: as to any Person, such Person's cash and cash equivalents, as
defined in accordance with generally accepted accounting principles consistently
applied.
CERCLA: the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601, et seq.
CLOSING DATE: the date on which all conditions precedent set forth in
Section 4.1 hereof are satisfied or waived, but in any event no later than
December 31, 1996.
CODE: the Internal Revenue Code of 1986, as it may be amended from
time to time.
COLLATERAL: the property covered by the Security Agreement, the Patent
and Trademark Security Agreement, the Pledge Agreement and the other Collateral
Documents, and any other property, real or personal, tangible or intangible, now
existing or hereafter acquired that may at any time be or become subject to a
security interest or Lien in favor of the Agent on behalf of itself, the Banks
and the Issuing Banks, to secure the Obligations.
COLLATERAL DOCUMENTS: the Pledge Agreement, the Security Agreement,
the Patent and Trademark Security Agreement and each of the security agreements,
mortgages and other instruments and documents executed and delivered pursuant to
any of the foregoing or pursuant to Section 6.13 hereof.
COMMITMENT: as to each Bank, the amount set forth opposite such
Bank's name on Annex A hereto under the caption "Commitment" as such amount may
be subject to increase or reduction in accordance with the terms hereof.
COMMITMENT FEE: as defined in subsection 2.7(a) hereof.
COMMITMENT FEE PERCENTAGE : one-half of one percent (0.50%); PROVIDED,
HOWEVER, that at any time that the Applicable Base Rate Margin and the
Applicable Eurodollar Rate Margin are determined by reference to the table
contained in subsection 2.6(b) hereof, the Commitment Fee Percentage shall equal
the applicable percentage set forth below the caption "Commitment Fee
Percentage" in such table at such time.
COMMITMENT TERMINATION DATE: the earliest of (i) December 31, 2002
and (ii) the date on which the Commitments are terminated in full or reduced to
zero pursuant to subsection 2.8(b) hereof.
COMPLIANCE CERTIFICATE: a certificate executed by the president,
chief financial officer or chief operating officer of the Borrower to the effect
that: (i) as of the effective date of the certificate, no Default or Event of
Default under this Agreement exists or would exist after giving effect to the
action intended to be taken by the Borrower as described in such certificate;
(ii) the representations and warranties contained in Article 3 hereof are true
and with the same effect as though such representations and warranties were made
on the date of such certificate, except to the extent such representations and
warranties expressly relate to an earlier date; and (iii) since
4
September 30, 1996, there has not occurred any event or circumstance (including
litigation developments) that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
CONTROLLED GROUP: all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414(b), 414(c) or 414(m) of the Code and Section 4001(a)(2) of ERISA.
CREDIT PERIOD: the period commencing on the date of this Agreement
and ending on the Commitment Termination Date.
DEBT INSTRUMENT: as defined in subsection 8.4(a) hereof.
DEFAULTING BANK: any Bank with respect to which a Bank Default is in
effect.
DEFAULT: an event which with notice or lapse of time, or both, would
constitute an Event of Default.
DEFINED CONTRIBUTION PLAN: a plan which is not covered by Title IV of
ERISA or subject to the minimum funding standards of Section 412 of the Code and
which provides for an individual account for each participant and for benefits
based solely on the amount contributed to the participant's account, and any
income, expenses, gains and losses, and any forfeitures of accounts of other
participants which may be allocated to such participant's account.
DISPOSAL: the discharge, deposit, injection, dumping, spilling,
leaking or placing of any hazardous materials into or on any land or water so
that such hazardous materials or constituent thereof may enter the environment
or be emitted into the air or discharged into any waters, including ground
waters.
DOLLARS AND $: lawful money of the United States of America.
DOCUMENTARY L/C: any L/C which is issued for the benefit of a
supplier of system components and/or inventory for whose account such L/C is
issued in order to support payment of the purchase price of such inventory.
EMPLOYEE BENEFIT PLAN: any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of Borrower or
any of its ERISA Affiliates or (b) has at any time within the preceding six (6)
years been maintained for employees of any Loan Party or any current or former
ERISA Affiliate.
ENVIRONMENTAL LAWS AND REGULATIONS: all federal, state and local
environmental, health and safety laws, regulations, ordinances, orders,
judgments and decrees applicable to the Borrower or any other Loan Party, or any
of their respective assets or properties.
5
ENVIRONMENTAL LIABILITY: any liability under any applicable
Environmental Laws and Regulations for any disposal, release or threatened
release of a Hazardous Substance pollutant or contaminant as those terms are
defined under CERCLA, and any liability which would require a removal, remedial
or response action, as those terms are defined under CERCLA, by any person or
any environmental regulatory body having jurisdiction over the Borrower or any
other Loan Party and/or any liability arising under any Environmental Laws and
Regulations for the Borrower's or any other Loan Party's failure to comply with
such laws and regulations, including without limitation, the failure to comply
with or obtain any applicable environmental permit.
ENVIRONMENTAL PROCEEDING: any judgment, action, proceeding or
investigation pending before any court or governmental authority, with respect
to the Borrower or any other Loan Party and arising under or relating to any
Environmental Laws and Regulations.
ERISA: the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time, and the regulations promulgated thereunder.
ERISA AFFILIATE: with respect to any Loan Party, any corporation,
person or trade or business which is a member of a group which is under common
control with any Loan Party, who together with any Loan Party, is treated as a
single employer within the meaning of Sections 414(b) - (o) of the Code and, if
applicable, Sections 4001(a)(14) and (b) of ERISA.
EURODOLLAR BUSINESS DAY: a Business Day on which dealings in Dollar
deposits are carried out in the Eurodollar interbank market.
EURODOLLAR LOANS: Loans the interest on which is determined on the
basis of the Eurodollar Rate.
EURODOLLAR RATE: for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Agent to be equal to the sum of: (a) the rate
per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) quoted by
the Reference Bank at approximately 10:00 a.m. New York time (or as soon
thereafter as practicable) two (2) Eurodollar Business Days prior to the first
day of such Interest Period for the offering by the Reference Bank to leading
banks in the Eurodollar interbank market of Dollar deposits having a term
comparable to such Interest Period and in an amount comparable to the principal
amount of the Eurodollar Loan to be made by the Banks to which such Interest
Period relates; divided by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period. The Agent shall use its best efforts
to advise the Borrower of the Eurodollar Rate as soon as practicable after each
change in the Eurodollar Rate; PROVIDED, HOWEVER, that the failure of the Agent
to so advise the Borrower on any one or more occasions shall not affect the
rights of the Banks or the Agent or the obligations of the Borrower hereunder.
EVENT OF DEFAULT: as defined in Article 8 hereof.
EVENT OF LOSS: with respect to any property, (a) any loss, destruction
or damage of such property or (b) any condemnation, seizure or taking, by
exercise of the power of eminent
6
domain or otherwise, of such property, or confiscation of such property or the
requisition of the use of such property.
EXCESS CASH FLOW: for any period, an amount equal to, for the
Borrower and its Restricted Subsidiaries: (i) the amount of the Operating Cash
Flow for such period PLUS cash or cash equivalents actually received by the
Borrower from or in respect of Investments or Subsidiaries which are not
Restricted Subsidiaries; (ii) MINUS, without duplication, the sum of: (a) all
Capital Expenditures incurred during such period, (b) all payments of principal
on Permitted Debt (other than payments of principal on the Loans pursuant to
subsection 2.8(c) hereof) and interest on Indebtedness for money borrowed
incurred in accordance with Section 7.1 hereof that were or are due and payable
during such period, (c) all reasonable and customary fees and costs actually
paid during such period in connection with the incurrence directly by the
Borrower or any Subsidiary of Indebtedness for money borrowed permitted pursuant
to Section 7.1 hereof or, to the extent permitted hereunder, the issuance of
equity securities of the Borrower pursuant to a public offering or private
placement of such securities, (d) cash used for Investments permitted pursuant
to and in accordance with subsection 7.9(e) hereof, and (e) $500,000.
FEDERAL FUNDS RATE: for any day, the weighted average of the rates on
overnight federal funds transactions with member banks of the Federal Reserve
System arranged by federal funds brokers as published by the Federal Reserve
Bank of New York for such day, or if such day is not a Business Day, for the
next preceding Business Day (or, if such rate is not so published for any such
day, the average rate charged to the Agent on such day on such transactions as
reasonably determined by the Agent).
FEE(S): as defined in subsection 2.7(d) hereof.
FINANCIAL STATEMENTS: with respect to the Borrower: (i) its unaudited
consolidated Balance Sheet as at September 30, 1996, together with the related
unaudited consolidated Statement of Operations and Statement of Cash Flows for
the fiscal period then ended, and (ii) its audited consolidated Balance Sheet as
at December 31, 1995, together with the related audited consolidated Statement
of Operations and Statement of Cash Flows for the fiscal year then ended.
GUARANTIES: the ResNet Guaranty, the LodgeNet Canada Guaranty and any
other guaranty of the Obligations delivered pursuant to subsection 7.9(e)(iv) or
6.13(g) hereof.
GUARANTOR(S): ResNet, LodgeNet Canada and any other Subsidiary of the
Borrower required, or designated by the Borrower, to deliver a guaranty of the
Obligations pursuant to subsection 7.9(e)(iv) or 6.13(g) hereof.
GUEST-PAY ROOMS: at any time of determination, the aggregate number
of guest rooms of all lodging, hospital, cruise line and related properties, (i)
which have a firm contract with the Borrower or any Subsidiary for the provision
of in-room television entertainment and/or information services which are
provided to the guests of such property for a charge and (ii) against which the
Borrower or such Subsidiary has not, in accordance with its ordinary business
practice, chosen to exercise any remedies for non-payment under such contract.
7
HAZARDOUS MATERIALS: any toxic chemical, Hazardous Substances,
contaminants or pollutants, medical wastes, infectious wastes, or hazardous
wastes.
HAZARDOUS SUBSTANCE: as set forth in Section 101(14) of CERCLA or
state or local law.
HAZARDOUS WASTE: as set forth in the Resource Conservation and
Recovery Act, 42 U.S.C. Section 9603(5), and the Environmental Protection
Agency's implementing regulations, or state or local law.
INDEBTEDNESS: with respect to any Person, without duplication, all:
(i) liabilities or obligations, direct and contingent, with respect to money
borrowed, including, without limitation (a) contingent liabilities of any kind
for which the Borrower or any Subsidiary incurs or becomes responsible for in
connection with any Investment made pursuant to subsection 7.9(e) hereof, (b)
that portion of Capitalized Lease Obligations of such Person that, in accordance
with generally accepted accounting principles, should be classified as a
liability on the balance sheet of such Person, (c) the deferred purchase price
of assets or services which in accordance with generally accepted accounting
principles would be shown on the liability side of the balance sheet of such
Person, and (d) all obligations of such Person to pay a specified purchase price
for goods or services whether or not delivered or accepted, i.e., take-or-pay
and similar obligations; (ii) liabilities or obligations of others for which
such Person is directly or indirectly liable, by way of guaranty (whether by
direct guaranty, suretyship, discount, endorsement, take-or-pay agreement,
agreement to purchase or advance or keep in funds or other agreement having the
effect of a guaranty) or otherwise; (iii) liabilities or obligations secured by
Liens on any assets of such Person, whether or not such liabilities or
obligations shall have been assumed by it; (iv) liabilities or obligations of
such Person, direct or contingent, with respect to letters of credit issued for
the account of such Person and bankers acceptances created for such Person and
(v) net obligations of such Person under any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
futures contract, interest rate option contract or any other agreement or
arrangement designed to protect such Person against fluctuations in interest
rates or exchange rates.
INTEREST COVERAGE: as at any date, for the immediately preceding
fiscal period, the ratio determined by dividing (a) Annual Operating Cash Flow
PLUS Rentals by (b) Interest Expense on all Indebtedness of the Borrower and its
Restricted Subsidiaries on a consolidated basis (excluding for this purpose the
TCI Convertible Debt) PLUS Rentals PLUS Preferred Stock Dividends.
INTEREST EXPENSE: as to any Person as at any date, with respect to any
Indebtedness of such Person, the sum of all (a) interest and all amortization of
debt discount and expense (including, without limitation, interest that is
imputed in accordance with generally accepted accounting principles on
Capitalized Lease Obligations that are included in Indebtedness) and (b)
commitment fees, commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net costs
under Interest Rate Contracts, in each case that were due and payable relating
to such Indebtedness during the immediately preceding four consecutive full
fiscal quarters (or, for purposes of calculating Interest Coverage compliance in
subsection 6.9(b) hereof for fiscal 1997, such shorter fiscal period as may be
appropriate) for which
8
the Agent has received financial statements in compliance with Sections 5.1 and
5.2 hereof (or, if as at any date of determination the Agent shall not yet have
received financial statements delivered in compliance with Section 5.1 or
Section 5.2 hereof, then Interest Expense for such immediately preceding four
consecutive full fiscal quarters (or such shorter period) shall be determined by
the Agent in its sole judgment based, in the Agent's discretion, on such
financial information as it shall have requested and received from the
Borrower).
INTEREST PERIOD: with respect to any Eurodollar Loan, each period
commencing on the date such Loan is made or converted from a Loan or Loans of
another type, or the last day of the next preceding Interest Period with respect
to such Loan, and ending on the same day in the first, second, third or sixth
calendar month thereafter (or such longer period which each of the Banks shall
have notified the Agent is available at any time) as the Borrower may select as
provided in Section 2.2 hereof, except that each such Interest Period that
commences on the last Eurodollar Business Day of a calendar month (or on any day
for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Eurodollar Business Day of the
appropriate subsequent calendar month;
Notwithstanding the foregoing: (i) each Interest Period that would otherwise
end on a day that is not a Business Day shall end on the next succeeding
Business Day (or, in the case of an Interest Period for Eurodollar Loans, if
such next succeeding Eurodollar Business Day falls in the next succeeding
calendar month, on the next preceding Eurodollar Business Day); (ii) no more
than five (5) Interest Periods for Eurodollar Loans shall be in effect at the
same time; (iii) no Interest Period for any type of Loan shall end later than
the Commitment Termination Date; and (iv) notwithstanding clause (iii) above, no
Interest Period shall have a duration of less than one (1) month (in the case of
Eurodollar Loans). In the event that the Borrower fails to select the duration
of any Interest Period for any Loan within the time period and otherwise as
provided in Section 2.2 hereof, such Loans will be automatically converted into
a Base Rate Loan on the last day of the preceding Interest Period for such Loan.
INTEREST RATE CONTRACTS: interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements, interest rate insurance or any
other agreements or arrangements designed to provide protection against
fluctuation in interest rates or exchange rates, in each case, in form and
substance satisfactory to the Agent and, in each case, with counterparties
satisfactory to the Agent.
INVESTMENT: by any Person:
(a) the amount paid or committed to be paid, or the value of property
or services contributed or committed to be contributed, by such Person for or in
connection with the acquisition by such Person of any stock, bonds, notes,
debentures, partnership or other ownership interests or other securities of any
other Person; and
(b) the amount of any advance, loan or extension of credit by such
Person, to any other Person, or guaranty or other similar obligation of such
Person with respect to any Indebtedness of such other Person, and (without
duplication) any amount committed to be advanced, loaned, or
9
extended by such Person to any other Person, or any amount the payment of which
is committed to be assured by a guaranty or similar obligation by such Person
for the benefit of, such other Person.
IRS: Internal Revenue Service.
ISSUING BANK: as defined in subsection 2.16(a) hereof.
LATEST BALANCE SHEET: as defined in subsection 3.9(a) hereof.
L/C(S): (i) any standby letter of credit or documentary letter of
credit issued by the Issuing Banks pursuant to Section 2.16 hereof and (ii) each
existing letter of credit issued pursuant to the Original Loan Agreement
outstanding on the date hereof, in each case, as amended, supplemented or
modified from time to time.
L/C DRAWING AVAILABILITY: as of any date of determination, the sum of
the aggregate maximum amount then available to be drawn under all L/Cs but
excluding the aggregate amount of any Unreimbursed Drawings then outstanding and
excluding that portion of L/Cs for which portion demands for drawings have been
made but not yet paid by the Issuing Bank.
L/C FEES: as defined in subsection 2.7(c) hereof.
L/C ISSUANCE REQUEST: as defined in subsection 2.16(b) hereof.
L/C OBLIGATIONS: as of any date of determination, all the existing
liabilities (including all fees) of the Borrower to the Issuing Banks and the
Banks and the Agent in respect of all L/Cs, whether such liability is contingent
or fixed and shall be computed to include the sum of the aggregate maximum
amount then available to be drawn under all L/Cs and the aggregate amount of any
Unreimbursed Drawings then outstanding.
LEASES: leases and subleases (other than Capitalized Leases),
licenses for the use of real property, easements, rights-of-entry, grants, and
other attachment rights and similar instruments under which the Borrower or its
Subsidiaries has the right to use real or personal property or rights of way.
LETTER AGREEMENT(S): as defined in subsection 2.7(b) hereof.
LICENSES: as defined in Section 3.15 hereof.
LIEN: any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement, any
lease in the nature of any of the foregoing, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction (excluding precautionary filings by lessors).
10
LOAN(S): as defined in Section 2.1 hereof. Loans of different types
made or converted from Loans of other types on the same day (or of the same type
but having different Interest Periods) shall be deemed to be separate Loans for
all purposes of this Agreement.
LOAN DOCUMENTS: this Agreement, the Notes, the Guaranties, the
Collateral Documents, the L/C(s), the Letter Agreements(s), Interest Rate
Contracts to which any Bank is a party and all other documents executed and
delivered in connection herewith or therewith, including all amendments,
modifications and supplements of or to all such documents.
LOAN PARTY: the Borrower, its Subsidiaries (including the Guarantors)
or any other Person (other than the Banks, the Issuing Banks and the Agent)
which now or hereafter executes and delivers to any Bank or the Agent any Loan
Document.
LODGENET CANADA: LodgeNet Entertainment (Canada) Corporation, a
Canadian corporation and a Wholly-Owned Subsidiary of the Borrower.
MAJORITY BANKS: (i) at any time while no Loans are outstanding
hereunder, Non-Defaulting Banks having at least 60% of the aggregate amount of
the Commitments, and (ii) at any time while Loans are outstanding hereunder,
Non-Defaulting Banks holding at least 60% of the outstanding aggregate principal
amount of the Loans and Net L/C Obligations hereunder.
MANAGEMENT: as defined in Section 8.9 hereof.
MANAGEMENT FEES: for any period, all fees, emoluments or similar
compensation paid or incurred by any Person (other than any such fees,
emoluments or similar compensation paid to or incurred and payable to the
Borrower or any of its Subsidiaries) in respect of services rendered in
connection with the management or supervision of the management of such Person,
or any construction, operation or maintenance associated with the business of
the Borrower or its Subsidiaries, other than salaries, bonuses and other
compensation paid to any full-time executive employee in respect of such
full-time employment.
MANDATORY L/C BORROWING: as defined in subsection 2.16(c) hereof.
MATERIAL ADVERSE EFFECT: (a) a materially adverse effect on the
business, properties, assets, operations, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, (b) material
impairment of the ability of the Borrower or any Loan Party to perform any of
its obligations under any Loan Document to which it is a party, or (c) material
impairment of the rights or benefits available to the Banks, the Issuing Banks
or the Agent under any Loan Document.
MAXIMUM L/C AMOUNT: the sum of Five Million Dollars ($5,000,000) as
the same shall and/or may be reduced pursuant to Sections 2.2 and 2.8 hereof.
MULTIEMPLOYER PLAN: a "multiemployer plan" as defined in Section
4001(a)(3) or ERISA to which any Loan Party or any ERISA Affiliate is making, or
is accruing an obligation to
11
make, contributions or has made, or been obligated to make, contributions within
the preceding six (6) years.
NATWEST CANADA: National Westminster Bank of Canada, in its capacity
as an Issuing Bank hereunder.
NATWEST PLC: National Westminster Bank Plc, New York branch, in its
capacity as a Bank hereunder.
NET L/C OBLIGATIONS: the L/C Obligations exclusive of Unreimbursed
Drawings which have been repaid with the proceeds of and simultaneously with the
incurrence of Loans.
NEW TYPE LOANS: as defined in Section 2.25 hereof.
NON-DEFAULTING BANK: each Bank other than a Defaulting Bank.
NOTE(S): as defined in Section 2.4 hereof.
OBLIGATIONS: collectively, all of the Loans, Indebtedness,
liabilities and obligations of the Borrower to the Banks, the Issuing Banks and
the Agent arising out of this Agreement or the Loan Documents, whether now
existing or hereafter arising, whether or not currently contemplated, including,
without limitation, the L/C Obligations and, to the extent provided by any Bank
or its Affiliate, obligations under any Interest Rate Contract or any currency
hedging agreement.
OPERATING CASH FLOW: for any period, the consolidated net income of
any Person during such period (a) PLUS, but only to the extent such items shall
have been deducted in determining such net income, the sum of (i) all interest,
fees and costs paid or accrued during such period on Indebtedness, including,
without limitation, interest that is imputed in accordance with generally
accepted accounting principles on Capitalized Lease Obligations that are
included in Indebtedness, (ii) depreciation and amortization of assets, (iii)
all income taxes, to the extent not paid or not currently payable and (iv)
extraordinary non-operating losses and (b) MINUS the sum of (i) extraordinary
gains, (ii) income derived from other than the consolidated operations of such
Person and (iii) to the extent not already deducted in determining such net
income, all corporate overhead expenses of such Person; all of the above items
exclusive of minority interests (except to the extent of cash or cash
equivalents in respect thereof actually received by the Borrower in such
period); as to all of the foregoing, as determined in accordance with generally
accepted accounting principles, consistently applied; PROVIDED, that,
notwithstanding any of the foregoing, except to the extent of cash or cash
equivalents actually received on an unconditional basis, any direct or indirect
Subsidiary the distribution of whose earnings and proceeds the Borrower does not
maintain the ability to direct in the ordinary course of business shall not be
considered for purposes of calculating Operating Cash Flow; and, PROVIDED,
FURTHER, that, notwithstanding any of the foregoing, regardless of the receipt
of any proceeds or any other distributions therefrom, there shall not be
considered in calculating Operating Cash Flow any Subsidiary which is not a
Guarantor hereunder. For the purpose hereof, the amount of Operating Cash Flow
(as defined above) of ResNet to be included in the calculation of the Operating
Cash Flow of the Borrower shall be determined as follows: (a) FIRST,
12
by calculating the LESSER of (i) the total Operating Cash Flow of ResNet and
(ii) the quotient obtained by dividing (y) the amount of the then-current
obligation of ResNet for payment of Guaranteed Obligations under the ResNet
Guaranty by (z) the then-applicable multiple listed under the caption "Maximum
Total Leverage" in subsection 6.9(a) hereof; (b) THEREAFTER, if the amount
calculated under clause (a)(i) above shall be greater than the amount under
clause (a)(ii) above (such difference being the "Excess ResNet Operating Cash
Flow"), then there shall also be added to such clause (a)(ii) amount the product
obtained by multiplying the percentage representing the Borrower's equity
ownership in ResNet times the amount of Excess ResNet Operating Cash Flow.
ORIGINAL LOAN AGREEMENT: as defined in the first recital to this
Agreement.
PATENT AND TRADEMARK SECURITY AGREEMENT: the Patent and Trademark
Security Agreement of even date herewith, substantially in the form of Exhibit H
hereto, among the Borrower, the Subsidiaries party thereto and the Agent, on
behalf of itself, the Banks and the Issuing Banks, as the same may be, from time
to time, amended, modified or supplemented.
PAYOR: as defined in Section 2.19 hereof.
PBGC: Pension Benefit Guaranty Corporation.
PENSION PLAN: at any time an employee pension benefit plan that is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is maintained either: (i) by the Borrower or any
ERISA Affiliate for employees of the Borrower, or by the Borrower for any ERISA
Affiliate, or (ii) pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
the Borrower or any ERISA Affiliate is then making or accruing an obligation to
make contributions or has within the preceding five (5) plan years made
contributions.
PERCENTAGE: with respect to any Bank, a fraction (expressed as a
percentage) the numerator of which is the Commitment of such Bank at such time
and the denominator of which is the Total Commitment at such time (for purposes
of computation after any termination of the Total Commitment, without giving
effect to any such termination of the Total Commitment).
PERMITTED DEBT: Indebtedness (i) which is not secured by any Lien,
(ii) which contains terms, covenants and conditions satisfactory to the Agent
and the Majority Banks, and (iii) as to its incurrence, no Default or Event of
Default has occurred and is continuing either immediately before or after giving
effect thereto.
PERMITTED INTERCOMPANY DEBT: Indebtedness of ResNet or ResNet LLC for
money borrowed from the Borrower or ResNet, as the case may be, (i) which is
evidenced by a promissory note of ResNet or ResNet LLC to the Borrower or
ResNet, as the case may be, (ii) which represents senior, unsubordinated
Indebtedness of ResNet or ResNet LLC, and (iii) the repayment of which is not
restricted in any manner by any covenant, agreement or other restriction binding
upon or affecting ResNet or ResNet LLC.
13
PERMITTED LIENS: as to any Person: (i) pledges or deposits by such
Person under workers' compensation laws, unemployment insurance laws, social
security laws, or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Indebtedness of such
Person), or leases to which such Person is a party, or deposits to secure public
or statutory obligations of such Person or deposits of Cash or United States
Government Bonds to secure surety, appeal, performance or other similar bonds to
which such Person is a party, or deposits as security for contested taxes or
import duties or for the payment of rent; (ii) Liens imposed by law, such as
carriers', landlords', warehousemen's, materialmen's and mechanics' liens, or
Liens arising out of judgments or awards against such Person with respect to
which such Person at the time shall currently be prosecuting an appeal or
proceedings for review; (iii) Liens for taxes not yet subject to penalties for
non-payment and Liens for taxes the payment of which is being contested as
permitted by Section 6.6 hereof; (iv) minor survey exceptions, minor
encumbrances, easements or reservations of, or rights of, others for rights of
way, highways and railroad crossings, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real properties; and (v) Liens incidental to the conduct of the
business of such Person or to the ownership of such Person's property that were
not incurred in connection with Indebtedness of such Person, all of which Xxxxx
referred to in the preceding clause (v) do not in the aggregate materially
detract from the value of the properties to which they relate or materially
impair their use in the operation of the business taken as a whole of such
Person, and as to all the foregoing only to the extent arising and continuing in
the ordinary course of business.
PERSON: an individual, a corporation, a limited liability company, a
partnership, a joint venture, a trust or unincorporated organization, a joint
stock company or other similar organization, a government or any political
subdivision thereof, a court, or any other legal entity, whether acting in an
individual, fiduciary or other capacity.
PLAN: at any time an employee pension benefit plan that is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either: (i) maintained by the Borrower or any member of the
Controlled Group for employees of the Borrower, or by the Borrower for any other
member of such Controlled Group, or (ii) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which the Borrower or any member of the Controlled
Group is then making or accruing an obligation to make contributions or has
within the preceding five plan years made contributions.
PLEDGE AGREEMENT: the Pledge Agreement of even date herewith,
substantially in the form of Exhibit G hereto, between the Borrower and the
Agent, on behalf of itself, the Banks and the Issuing Banks, pledging all
Subsidiaries' capital stock owned by the Borrower and all intercompany notes
owing to or held by the Borrower, as the same may be, from time to time,
amended, modified or supplemented.
POST-DEFAULT RATE: (i) in respect of any Loans a rate per annum equal
to: (x) if such Loans are Base Rate Loans, two percent (2%) above the Base Rate
as in effect from time to time plus the Applicable Base Rate Margin (but in no
event less than the interest rate in effect on the due
14
date), or (y) if such Loans are Eurodollar Loans, two percent (2%) above the
rate of interest in effect thereon at the time of the Event of Default that
resulted in the Post-Default Rate being instituted until the end of the then
current Interest Period therefor and, thereafter, two percent (2%) above the
Base Rate as in effect from time to time plus the Applicable Base Rate Margin
(but in no event less than the interest rate in effect on the due date); and
(ii) in respect of other amounts payable by the Borrower hereunder (including
interest to the extent permitted by law) not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during the period
commencing on the due date until such other amounts are paid in full equal to
two percent (2%) above the Base Rate as in effect from time to time plus the
Applicable Base Rate Margin (but in no event less than the interest rate in
effect on the due date).
PREFERRED STOCK DIVIDENDS: as defined in subsection 7.5(b) hereof for
payments made during the immediately preceding four consecutive full fiscal
quarters (or, for purposes of calculating Interest Coverage compliance in
subsection 6.9(b) hereof for fiscal 1997, such shorter fiscal period as may be
appropriate) for which the Agent has received financial statements in compliance
with Sections 5.1 and 5.2 hereof (or, if as at any date of determination the
Agent shall not yet have received financial statements delivered in compliance
with Section 5.1 or Section 5.2 hereof, then Preferred Stock Dividends for such
immediately preceding four consecutive full fiscal quarters (or such shorter
period) shall be determined by the Agent in its sole judgment based, in the
Agent's discretion, on such financial information as it shall have requested and
received from the Borrower).
PRINCIPAL U.S. OFFICE: the principal U.S. office of NatWest Plc
presently located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
PROJECTIONS: with respect to the Borrower, its forecasted
consolidated Balance Sheet and related forecasted consolidated Statement of
Operations and Statement of Cash Flows for the period from the date hereof
through December 31, 2002, as updated on an annual basis pursuant hereto, all
prepared on a basis consistent with the Financial Statements, together with
appropriate supporting details and a statement of underlying assumptions.
PURCHASE MONEY SECURITY INTEREST: as defined in subsection 7.2(b)
hereof.
QUARTERLY DATES: the last day of each of March, June, September and
December, the first of which shall be the first such day after the date of this
Agreement, PROVIDED THAT, if any such date is not a Eurodollar Business Day, the
relevant Quarterly Date shall be the next succeeding Eurodollar Business Day
(or, if the next succeeding Eurodollar Business Day falls in the next succeeding
calendar month, then on the next preceding Eurodollar Business Day).
REFERENCE BANK: (i) for purposes of determining the Eurodollar Rate,
the non-United States office or offices or international banking facility or
facilities of NatWest Plc as NatWest Plc may from time to time select and (ii)
for all other purposes hereunder, the Principal U.S. Office.
15
REGULATION D: Regulation D of the Board of Governors of the Federal
Reserve System, as the same may be amended or supplemented from time to time.
REGULATORY CHANGE: as to any Bank, any change after the date of this
Agreement in United States federal, state or foreign laws or regulations
(including Regulation D and the laws or regulations that designate any
assessment rate relating to certificates of deposit or otherwise) or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks, including such Bank, of or under any
United States federal, state or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
RELEASE: as set forth in Section 101(22) of CERCLA or state or local
law.
RENTALS: for the Borrower and its Restricted Subsidiaries on a
consolidated basis, as of the date of any determination thereof, all fixed
payments (including as such all payments which the lessee is obligated to make
to the lessors on termination of the lease or surrender of the property) payable
by a Person, as lessee or sublessee under a lease of real or personal property,
during the immediately preceding four consecutive full fiscal quarters (or, for
purposes of calculating Interest Coverage compliance in subsection 6.9(b) hereof
for fiscal 1997, such shorter fiscal period as may be appropriate) for which the
Agent has received financial statements in compliance with Sections 5.1 and 5.2
hereof (or, if as at any date of determination the Agent shall not yet have
received financial statements delivered in compliance with Section 5.1 or
Section 5.2 hereof, then Rentals for such immediately preceding four consecutive
full fiscal quarters (or such shorter period) shall be determined by the Agent
in its sole judgment based, in the Agent's discretion, on such financial
information as it shall have requested and received from the Borrower), but
shall be exclusive of any amounts required to be paid by a Person (whether or
not designated as rents or additional rents) on account of maintenance, repairs,
insurance, taxes and similar charges.
REQUIRED PAYMENT: as defined in Section 2.19 hereof.
RESERVE REQUIREMENT: for any Eurodollar Loans for any quarterly
period (or, as the case may be, shorter period) as to which interest is payable
hereunder, the maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
period under Regulation D by member banks of the Federal Reserve System in New
York City with deposits exceeding One Billion Dollars against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against: (i) any category of liabilities that includes
deposits by references to which the Eurodollar Rate for Eurodollar Loans is to
be determined, or (ii) any category of extensions of credit or other assets that
include Eurodollar Loans.
RESNET: ResNet Communications, Inc., a Delaware corporation and
Subsidiary of the Borrower, including ResNet Communications, LLC, a Delaware
limited liability company and Subsidiary of ResNet Communications, Inc. ("ResNet
LLC").
16
RESTRICTED PAYMENTS: (i) any dividend or other distribution, direct
or indirect, on account of any shares of any class of stock of the Borrower now
or hereafter outstanding, except a dividend or distribution payable solely in
shares of stock of the Borrower which are not shares of preferred stock; (ii)
any redemption, retirement, purchase or other acquisition, direct or indirect,
of any shares of any class of stock of the Borrower in respect of such shares
now or hereafter outstanding, or of any warrants, rights or options to acquire
any such shares, except to the extent that the consideration therefor consists
of shares of stock of the Borrower; (iii) any other distributions whatsoever, or
any loans or advances, to any holder of shares of any class of stock of the
Borrower now or hereafter outstanding, or of any warrants, rights or options to
acquire any such shares; and (iv) any fees or expenses paid to any shareholder
or Affiliate (other than directors, officers and full-time employees) of the
Borrower for management services provided to the Borrower or any Subsidiary.
RESTRICTED SUBSIDIARY: each Subsidiary of the Borrower which is or
becomes a Guarantor hereunder.
SEC: the Securities and Exchange Commission or any entity succeeding
to any of its principal functions.
SECURITY AGREEMENT: the Security Agreement of even date herewith,
substantially in the form of Exhibit F hereto, among the Borrower, the
Subsidiaries party thereto and the Agent, on behalf of itself, the Banks and the
Issuing Banks, as the same may be, from time to time, amended, modified or
supplemented.
SENIOR 1995 NOTES: those certain 11.5% Senior Notes due July 15, 2005
of the Borrower in an aggregate outstanding principal amount of $30,000,000, as
amended or otherwise modified as permitted hereby.
SENIOR 1995 NOTE AGREEMENT: that certain Securities Purchase Agreement
dated as of August 9, 1995 by and among the Borrower and the holders of the
Senior 1995 Notes, as amended by Amendment No. 1 thereto dated December 19,
1996, as further amended or otherwise modified as permitted hereby.
SENIOR 1996 NOTES: those certain 10.25% Senior Notes due December 15,
2006 of the Borrower in an aggregate outstanding principal amount of
$150,000,000, as amended or otherwise modified as permitted hereby.
SENIOR 1996 NOTE INDENTURE: that certain Indenture between the
Borrower and Marine Midland Bank, as Trustee, relating to the Senior 1996 Notes,
as amended or otherwise modified as permitted hereby.
SENIOR NOTE DOCUMENTS: collectively, the Senior 1995 Notes, the
Senior 1995 Note Agreement, the Senior 1996 Notes, the Senior 1996 Note
Indenture and each other agreement, instrument or other document executed in
connection therewith.
17
SOLVENT: as to any Person at any time, that (i) the fair value of the
property of such Person is greater than the amount of such Person's liabilities
(including disputed, contingent and unliquidated liabilities) as such value is
established and liabilities evaluated for purposes of Section 101(31) of the
Federal Bankruptcy Reform Act of 1978 and, in the alternative, for purposes of
the New York Uniform Fraudulent Transfer Act; (ii) the present fair saleable
value of the property of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (iii) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(iv) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (v) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital.
STANDBY L/C: any L/C which is not a Documentary L/C.
SUBSIDIARY: with respect to any Person, any corporation, partnership,
limited liability company or joint venture whether now existing or hereafter
organized or acquired: (i) in the case of a corporation, of which a majority of
the securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person, or (ii) in the case of a partnership, limited
liability company or joint venture in which such Person is a general partner,
managing member or joint venturer or of which a majority of the partnership,
membership or other ownership interests are at the time owned by such Person
and/or one or more of its Subsidiaries. Unless the context otherwise requires,
references in this Agreement to "Subsidiary" or the "Subsidiaries" shall be
deemed to be references to a Subsidiary or Subsidiaries of the Borrower.
Notwithstanding anything herein to the contrary, ResNet and ResNet LLC shall
each be deemed to be a Subsidiary of the Borrower so long as (i) in the case of
ResNet, the Borrower owns 50% of ResNet's outstanding capital stock and retains
the right to elect a majority of ResNet's board of directors, and (ii) in the
case of ResNet LLC, the Borrower directly or indirectly owns over 50% of all
members' interests and is the managing member.
SUBSTANTIAL PORTION: assets of the Borrower and its Subsidiaries
which (a) represent more than fifteen percent (15%) 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 end of the
fiscal quarter immediately preceding the date on which such determination is
made or (b) are responsible for more than fifteen percent (15%) of the Operating
Cash Flow of the Borrower and its Subsidiaries for the consecutive full twelve
(12) month period ending as of the end of the fiscal quarter immediately
preceding the date on which such determination is made.
TCI CONVERTIBLE DEBT: that certain Indebtedness of ResNet in an
aggregate principal amount of up to $34,603,947 incurred pursuant to that
certain Subordinated Convertible Term Loan Agreement dated as of October 21,
1996 between ResNet and TCI Digital Satellite Entertainment, Inc.
18
TERMINATION EVENT: any one of the following:
(a) a "Reportable Event" described in Section 4043 of ERISA and the
regulations issued thereunder;
(b) the withdrawal of any Loan Party or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f)
of ERISA; or
(c) the termination of a Pension Plan, the filing of a notice of
intent to terminate a Pension Plan or the treatment of a Pension Plan amendment
as a termination under Section 4041 of ERISA;
(d) the institution of proceedings to terminate a Pension Plan by the
PBGC;
(e) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan;
(f) the partial or complete withdrawal of any Loan Party or any ERISA
Affiliate from a Multiemployer Plan;
(g) the imposition of a Lien pursuant to Section 412 of the Code or
Section 302 of ERISA;
(h) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or
(i) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
TOTAL COMMITMENT: the aggregate obligation of the Banks to make Loans
hereunder and issue or participate in the issuance of L/Cs hereunder not
exceeding One Hundred Million Dollars ($100,000,000), as the same shall and/or
may be increased or reduced from time to time pursuant to Article 2 hereof.
TOTAL DEBT: the aggregate outstanding principal balance of all
Indebtedness of the Borrower and its Restricted Subsidiaries on a consolidated
basis, including without limitation, all Permitted Debt (but excluding for this
purpose the TCI Convertible Debt); PROVIDED, HOWEVER, that during the period
from the date hereof through June 30, 1997, Total Debt shall be calculated net
of the total amount of cash (or other Investments permitted by subsection 7.9(a)
hereof) then held by the Borrower up to a maximum of $25,000,000. Total Debt
shall be determined by the Agent, in its reasonable judgment, based upon its
review of a certificate of the Borrower delivered to the Agent which shall set
forth, in reasonable detail, such calculation of Total Debt, along with such
financial information as the Agent shall have requested and received from the
Borrower or, in the absence of such certificate, such other pertinent financial
information as the Agent in its sole discretion shall deem appropriate.
TOTAL LEVERAGE: as at any date, the ratio determined by dividing (a)
Total Debt PLUS the amount of any outstanding preferred stock of the Borrower
providing for the payment of cash dividends, by (b) Annualized Operating Cash
Flow.
UCC: the Uniform Commercial Code as in effect in the State of New
York.
19
UNREIMBURSED DRAWINGS: as defined in subsection 2.16(c) hereof.
UNUSED COMMITMENT: as at any date, for each Bank, the difference, if
any, between: (i) the amount of such Bank's Commitment as in effect on such
date, minus (ii) the sum of the then aggregate outstanding principal amount of
all Loans made by such Bank and such Bank's Percentage of the Net L/C
Obligations at such time.
WHOLLY-OWNED SUBSIDIARY: as to any Person: (i) any corporation 100% of
whose capital stock (other than directors' qualifying shares) is at the time
owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person
and (ii) any partnership, association, joint venture or other entity in which
such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a
100% equity interest at such time, and in each case where there exists no
restriction on the right or ability of such Person to receive dividend payments
or other cash flow from such corporation or other entity.
Any accounting terms used in this Agreement that are not specifically defined
herein shall have the meanings customarily given to them in accordance with
generally accepted accounting principles as in effect on the date of this
Agreement, except that references in Article 5 to such principles shall be
deemed to refer to such principles as in effect on the date of the financial
statements delivered pursuant thereto.
ARTICLE 2. COMMITMENTS; LOANS.
SECTION 2.1 LOANS. Each Bank hereby severally agrees, on the terms
and subject to the conditions of this Agreement, to make loans (individually a
"LOAN" and, collectively, the "LOANS") to the Borrower during the Credit Period
to and including the Commitment Termination Date in an aggregate principal
amount at any one time outstanding up to, but not exceeding, the Commitment of
such Bank as then in effect; PROVIDED, HOWEVER, that no Loan shall be made
hereunder if, after giving effect to the making of such Loan, the sum of the
aggregate amount of all Loans and the Net L/C Obligations then outstanding would
exceed the Total Commitment. Subject to the terms of this Agreement, during the
Credit Period the Borrower may borrow, repay (PROVIDED THAT repayment of
Eurodollar Loans shall be subject to the provisions of Section 2.27 hereof) and
reborrow up to the amount of the Total Commitment (after giving effect to the
mandatory and voluntary increases and reductions required and permitted herein)
by means of Base Rate Loans or Eurodollar Loans, and during such period and
thereafter until the date of the payment in full of all of the Loans, the
Borrower may convert Loans of one type into Loans of another type (as provided
in Section 2.21 hereof).
SECTION 2.2 NOTICES RELATING TO LOANS. The Borrower shall give the
Agent written or telephonic (followed by same day telecopy) notice of any
increase or termination or reduction of the Commitments, each borrowing
(excluding borrowings of Mandatory L/C Borrowings), conversion and prepayment of
each Loan and of the duration of each Interest Period applicable to each
Eurodollar Loan (in each case, a "BORROWING NOTICE"). Each such written notice
shall be irrevocable and shall be effective only if received by the Agent not
later than 11 a.m., New York City time, on the date that is:
20
(a) In the case of an election to apply to increase the
Commitments pursuant to subsection 2.8(a) hereof, forty-five (45) Business Days
prior to the proposed effective date of such increase;
(b) In the case of each notice of termination or reduction and
each notice of borrowing or prepayment of, or conversion into, Base Rate Loans,
one (1) Business Days prior to the date of the related termination, reduction,
borrowing, prepayment or conversion; and
(c) In the case of each notice of borrowing or prepayment of, or
conversion into, Eurodollar Loans, or the duration of an Interest Period for
Eurodollar Loans, three (3) Eurodollar Business Days prior to the date of the
related borrowing, prepayment, or conversion or the first day of such Interest
Period.
Each such notice of increase or termination or reduction shall specify the
amount thereof. Each such notice of borrowing, conversion or prepayment shall
specify the amount (subject to Section 2.1 hereof) and type of Loans to be
borrowed, converted or prepaid (and, in the case of a conversion, the type of
Loans to result from such conversion), the date of borrowing, conversion or
prepayment (which shall be: (x) a Business Day in the case of each borrowing or
prepayment of Base Rate Loans, and (y) a Eurodollar Business Day in the case of
each borrowing or prepayment of Eurodollar Loans and each conversion of or into
a Eurodollar Loan). Each such notice of the duration of an Interest Period
shall specify the Loans to which such Interest Period is to relate. The Agent
shall notify the Banks of the content of each such Borrowing Notice promptly
after its receipt thereof.
SECTION 2.3 DISBURSEMENT OF LOAN PROCEEDS. The Borrower shall give
the Agent notice of each borrowing hereunder as provided in Section 2.2 hereof.
Not later than 11:00 a.m., New York City time, on the date specified for each
borrowing hereunder, each Bank shall transfer to the Agent, by wire transfer or
otherwise, but in any event in immediately available funds, the amount of the
Loan to be made by it on such date, and the Agent, upon its receipt thereof,
shall disburse such sum to the Borrower by depositing the amount thereof in an
account of the Borrower designated by the Borrower maintained with the Agent.
SECTION 2.4 NOTES.
(a) The Loans made by each Bank shall be evidenced by a single
promissory note of the Borrower in substantially the form of Exhibit B hereto
(each, a "NOTE" and collectively, the "NOTES"). Each Note shall be dated the
date of the initial borrowing of the Loans under this Agreement, shall be
payable to the order of such Bank in a principal amount equal to such Bank's
Commitment as originally in effect, and shall otherwise be duly completed. The
Notes shall be payable as provided in this Article 2.
(b) Each Bank shall enter on a schedule attached to its Note or
in its internal records a notation with respect to each Loan made hereunder of:
(i) the date and principal amount thereof, (ii) each payment and prepayment of
principal thereof, (iii) whether the interest rate is initially to be determined
in accordance with subsection 2.6(a)(i) or 2.6(a)(ii) hereof, and (iv) the
21
Interest Period, if applicable. The failure of any Bank to make any such
notation shall not limit or otherwise affect the obligation of the Borrower to
repay the Loans in accordance with their respective terms as set forth herein.
SECTION 2.5 COMMITMENT REDUCTION; REPAYMENT OF LOANS.
(a) The Total Commitment shall be successively and permanently
reduced on each December 31 during the Credit Period commencing on December 31,
1998 and ending on December 31, 2002 in the respective amounts obtained by
multiplying (i) the amount of the Total Commitment on December 31, 1998 times
(ii) the percentage set forth below applicable to each such date (such
reductions to be applied, pursuant to Section 2.18 hereof, PRO RATA among the
Banks with respect to the amount of each Bank's Commitment), and the Borrower
shall repay outstanding Loans in an amount sufficient so that the aggregate
outstanding principal amount of Loans and Net L/C Obligations on each such date
shall not exceed the Total Commitment after giving effect to such reduction:
Percentage by Which
Total Commitment at
Commitment Reduction/ December 31, 1998
Payment Date Shall be Reduced
-------------------- --------------------
December 31, 1998 15%
December 31, 1999 20%
December 31, 2000 20%
December 31, 2001 20%
December 31, 2002 25%
(b) The Loans: (i) shall be repaid as and when necessary to
cause the aggregate principal amount of the Loans and Net L/C Obligations
outstanding not to exceed each Bank's Commitment, as increased or reduced
pursuant to Section 2.8 hereof, and (ii) may be repaid at any time and from time
to time, in whole or in part, without premium or penalty, upon prior written
notice to the Agent as provided in Section 2.2 hereof, in integral multiples of
$500,000, and any amount so repaid may, subject to the terms and conditions
hereof, including the borrowing limitation imposed by the Commitments, be
reborrowed hereunder during the Credit Period; PROVIDED, HOWEVER, that: (A)
repayment of Eurodollar Loans on any day other than the last day of an Interest
Period for such Loans shall be subject to the provisions of Section 2.27 hereof,
and (B) all repayments of Loans or any portion thereof shall be made together
with payment of all interest accrued on the amount repaid through the date of
such repayment.
(c) Except as set forth in Sections 2.22, 2.23 and 2.25 hereof,
all payments and repayments made pursuant to the terms hereof shall be applied
first to Base Rate Loans, and shall be applied to Eurodollar Loans only to the
extent any such payment exceeds the principal amount of Base Rate Loans
outstanding at the time of such payment.
(d) The Borrower may request a Eurodollar Loan only if
compliance with the Commitment reduction schedule set forth above in subsection
2.5(a) hereof (with the payments
22
provided for therein being applied in accordance with subsection 2.5(c) hereof)
would not result in any portion of the principal amount of such Eurodollar Loan
being paid prior to the last day of the Interest Period applicable thereto.
SECTION 2.6 INTEREST. (a) The Borrower shall pay to the Agent for
the account of each Bank interest on the unpaid principal amount of each Loan
made by such Bank for the period commencing on the date of such Loan until such
Loan shall be paid in full, at the following rates per annum:
(i) During such periods that such Loan is a Base Rate
Loan, the Base Rate plus the Applicable Base Rate Margin; and
(ii) During such periods that such Loan is a Eurodollar
Loan, for each Interest Period relating thereto, the Eurodollar Rate for such
Loan for such Interest Period plus the Applicable Eurodollar Rate Margin.
(b) So long as no Default or Event of Default shall have
occurred and be continuing, on each occasion that, as of the last day of any
fiscal quarter ending on or after March 31, 1997, the Borrower's Total Leverage
on such date shall fall within one of the categories set forth in the table
below, the Applicable Base Rate Margin and the Applicable Eurodollar Rate Margin
in respect of Base Rate Loans and Eurodollar Loans, respectively, and the
Commitment Fee Percentage shall be automatically changed, if necessary, to
reflect the percentages indicated for such category on the table below, with any
such change to be effective on and after the date of delivery to the Agent of
the certificate described in Section 5.5 hereof relating to such fiscal quarter:
Applicable Applicable Commitment
Base Rate Eurodollar Fee
Total Leverage Margin Rate Margin Percentage
-------------- ---------- ----------- ----------
5.00 to 1 or higher 1.00% 2.00% 0.500%
Lower than 5.00 to 1 0.75% 1.75% 0.500%
Lower than 4.50 to 1 0.50% 1.50% 0.375%
Lower than 4.00 to 1 0.25% 1.25% 0.250%
In the event that any condition that gives rise to any change in a Total
Leverage category pursuant to the first sentence of this subsection 2.6(b) is no
longer satisfied as of the end of any subsequent fiscal quarter, on and after
the date of delivery to the Agent of the certificate described in Section 5.5
hereof relating to such subsequent fiscal quarter, the Applicable Base Rate
Margin, the Applicable Eurodollar Rate Margin and the Commitment Fee Percentage
shall be automatically changed to reflect the Total Leverage category indicated
by such certificate. Notwithstanding the foregoing, at any time during which
the Borrower has failed to deliver the certificate described in Section 5.5
hereof with respect to a fiscal quarter in accordance with the provisions
thereof, or at any time that a Default or Event of Default shall have occurred
and be continuing, the Applicable Base Rate Margin, the Applicable Eurodollar
Rate Margin and the Commitment Fee Percentage shall be determined by reference
to the definition of such terms, without any adjustment pursuant
23
to this subsection 2.6(b), until such time as the Borrower shall deliver such
certificate in accordance with the provisions of Section 5.5 hereof or such
Default or Event of Default shall be cured or waived.
(c) Notwithstanding the foregoing, whenever an Event of Default
has occurred and is continuing, the Borrower shall pay interest on any Loan, and
on any other amount payable by the Borrower hereunder (to the extent permitted
by law) for the period commencing on the occurrence of such Event of Default
until such Event of Default has been cured or waived as acknowledged in writing
by the Agent at the applicable Post-Default Rate.
(d) Except as provided in the next sentence, accrued interest on
each Loan shall be payable: (i) in the case of a Base Rate Loan, quarterly on
the Quarterly Dates, (ii) in the case of a Eurodollar Loan, on the last day of
each Interest Period for such Loan (and, if such Interest Period exceeds three
months' duration, quarterly, commencing on the first quarterly anniversary of
the first day of such Interest Period), and (iii) in the case of any Loan, upon
the payment or prepayment thereof or the conversion thereof into a Loan of
another type (but only on the principal so paid, prepaid or converted).
Interest that is payable at the Post-Default Rate shall be payable from time to
time on demand of the Agent or any Bank. Promptly after the establishment of
any interest rate provided for herein or any change therein, the Agent will
notify the Banks and the Borrower thereof, PROVIDED THAT the failure of the
Agent to so notify the Borrower or the Banks shall not affect the obligations of
the Borrower hereunder or under any of the Notes in any respect.
(e) Anything in this Agreement or any of the Notes to the
contrary notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to the limitation that payments of interest shall not
be required to be made to any Bank to the extent that such Bank's receipt
thereof would not be permissible under the law or laws applicable to such Bank
limiting rates of interest that may be charged or collected by such Bank. Any
such payments of interest that are not made as a result of the limitation
referred to in the preceding sentence shall be made by the Borrower to such Bank
on the earliest interest payment date or dates on which the receipt thereof
would be permissible under the laws applicable to such Bank limiting rates of
interest that may be charged or collected by such Bank. Such deferred interest
shall not bear interest.
SECTION 2.7 FEES. (a) The Borrower shall pay to the Agent for
the account of each Bank a commitment fee (the "COMMITMENT FEE") equal to the
Commitment Fee Percentage per annum in effect from time to time on the average
daily amount of such Bank's Unused Commitment, for the period from the date
hereof to and including the earlier of the date such Bank's Commitment is
terminated or the Commitment Termination Date. The accrued Commitment Fee shall
be payable quarterly on the Quarterly Dates and on the earlier of the date the
Commitments are terminated or the Commitment Termination Date, and, in the event
the Borrower reduces the Commitment as provided in subsection 2.8(b) hereof, on
the effective date of such reduction.
(b) Simultaneously with the execution and delivery of this
Agreement and from time to time thereafter, the Borrower shall pay to the Agent
the fees (collectively, the "AGENCY FEES") specified in that certain letter
agreement dated as of the date hereof between the Borrower
24
and the Agent and in any other letter agreement executed between the Borrower
and the Agent after the date hereof (the "LETTER AGREEMENTS").
(c) (i) The Borrower shall pay to the Agent for the benefit of
the Banks, PRO RATA according to their respective Percentages, non-refundable
letter of credit fees as follows: on the maximum amount of each L/C available
from time to time to be drawn under such outstanding L/Cs, a fee, for the period
from and including the date of issuance of such L/C to and including the
termination thereof, computed at a rate per annum equal to the Applicable
Eurodollar Rate Margin from time to time used to determine the interest rate on
Eurodollar Loans pursuant to subsection 2.6(b) hereof, payable in arrears on the
Quarterly Dates and on the date of termination thereof.
(ii) In addition to the foregoing fees described in the
preceding subsection (i), the Borrower shall pay on demand to the Issuing Bank
(as defined in Section 2.16 below), exclusively for the account of the Issuing
Bank, a fee for the period from and including the date of issuance of such
Issuing Bank's L/C to and including the termination thereof, computed at the
rate of one-quarter percent (.25%) per annum on the face amount of such L/C,
payable in arrears on the Quarterly Dates and on the date of termination thereof
and, in addition, such standard fees, charges and expenses as are customarily
charged or incurred by the Issuing Bank from time to time in connection with the
issuance, amendment, transfer, administration, cancellation or payment under any
or all L/Cs. The fees referred to in subsections 2.7(c)(i) and (ii) are
hereinafter sometimes referred to individually as an "L/C FEE" and collectively
as the "L/C FEES".
(d) The Commitment Fee, the Agency Fees and the L/C Fees are
hereinafter sometimes referred to individually as a "FEE" and collectively as
the "FEES".
SECTION 2.8 CHANGES IN COMMITMENT; PREPAYMENTS.
(a) The Borrower shall be permitted to make application(s) at any
time on or before December 31, 1998 to increase the Total Commitment (but not
the Commitment of any Bank without such Bank's agreement) in a principal amount
of not less than $25,000,000 per application (and in an integral multiple of
$500,000), and not more than $75,000,000 in aggregate principal amount for all
such applications, which increases in the Total Commitment may be effectuated,
if at all, by an increase in the Commitment(s) of NatWest Plc or the
then-existing Banks, and/or by the addition of new Banks; PROVIDED THAT (i) the
Borrower shall give notice of such application(s) to the Agent as provided in
Section 2.2 hereof and (ii) the Borrower shall have delivered to the Agent a
Compliance Certificate dated as of the date of such proposed increase, and the
matters certified therein, including without limitation, the absence of any
Default or Event of Default or Material Adverse Effect, both before and after
giving effect to such increase, shall be true as of such date.
(b) The Borrower shall be entitled to terminate or reduce the
Commitments, PROVIDED THAT the Borrower shall give notice of such termination or
reduction to the Agent as provided in Section 2.2 hereof and that any partial
reduction of the Commitments shall be in an aggregate amount equal to $500,000
or an integral multiple thereof. Any such termination or reduction shall be
permanent and irrevocable.
25
(c) Commencing on May 31, 2000 and continuing on May 31 of each
fiscal year of the Borrower thereafter, the Borrower shall prepay any Loans, and
the Total Commitment shall be permanently and irrevocably reduced, by an amount
equal to fifty percent (50%) of the Borrower's Excess Cash Flow for the
immediately preceding fiscal year if at December 31 of such preceding fiscal
year Total Leverage was greater than 4.00 to 1. Simultaneously with the
delivery of the Borrower's financial statements pursuant to Section 5.1 hereof,
for each of the Borrower's fiscal years beginning with the Borrower's 1998
fiscal year, the Borrower shall provide the Agent with a schedule setting forth
the computation of Excess Cash Flow, and Total Leverage at December 31, for such
fiscal year to which such financial statements relate.
(d) The Borrower shall prepay any Loans, and the Total
Commitment shall be permanently and irrevocably reduced, by an amount equal to
one hundred percent (100%) of the aggregate net proceeds in excess of $500,000
realized in any fiscal year by the Borrower and its Subsidiaries from any and
all Asset Dispositions and Events of Loss constituting less than a Substantial
Portion, to the extent that such aggregate net proceeds are not reinvested by
the Borrower in substantially similar assets within 180 days from the date of
such disposition; PROVIDED, HOWEVER, that in any event, if the Borrower and its
Subsidiaries realize in any fiscal year aggregate net proceeds from an Event of
Loss in excess of a Substantial Portion, the Borrower shall prepay any Loans,
and the Total Commitment shall be irrevocably and permanently reduced, by an
amount equal to such amount in excess of a Substantial Portion.
(e) The Borrower shall repay the Loans, together with all
accrued interest on the amount so repaid, as and when necessary to cause the
aggregate principal amount of the Loans and Net L/C Obligations outstanding at
any time not to exceed the Total Commitment.
(f) All prepayments of the Loans shall be made together with
payment of all interest accrued on the amount prepaid, but without premium or
penalty (but subject to the provisions of Section 2.27 hereof).
SECTION 2.9 USE OF PROCEEDS OF LOANS. The proceeds of the Loans
hereunder may be used by the Borrower solely to provide funds for (a) to the
extent permitted hereunder, Capital Expenditures incurred in connection with the
Borrower's "Business Strategy" as described in that certain common stock
offering prospectus of the Borrower dated May 23, 1996 previously delivered to
the Banks (the "Prospectus") and (b) the Borrower's general corporate and
ongoing working capital needs.
SECTION 2.10 COMPUTATIONS. Interest on all Base Rate Loans shall be
computed on the basis of a year of 365 days and actual days elapsed (including
the first day but excluding the last) occurring in the period for which payable.
Interest on all Eurodollar Loans, Unreimbursed Drawings and each Fee shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last) occurring in the period for which payable.
SECTION 2.11 MINIMUM AMOUNTS OF BORROWINGS, CONVERSIONS, PREPAYMENTS
AND INTEREST PERIODS. Except for borrowings, conversions and prepayments that
exhaust the full remaining amount of the Commitments (in the case of borrowings)
or result in the conversion or
26
prepayment of all Loans of a particular type (in the case of conversions or
prepayments) or conversions made pursuant to Section 2.21, subsection 2.22(b) or
Section 2.24 hereof, and except for Mandatory L/C Borrowings and mandatory
prepayments of the Loans pursuant hereto, each borrowing from the Banks, each
conversion of Loans of one type into Loans of another type and each prepayment
of principal of Loans hereunder shall be in an amount at least equal to $500,000
in the case of Base Rate Loans and $1,000,000 in the case of Eurodollar Loans or
an integral multiple thereof (borrowings, conversions and prepayments of
different types of Loans at the same time hereunder to be deemed separate
borrowings, conversions and prepayments for purposes of the foregoing, one for
each type).
SECTION 2.12 TIME AND METHOD OF PAYMENTS. All payments of
principal, interest, Fees and other amounts (including indemnities) payable by
the Borrower hereunder shall be made in Dollars, in immediately available funds,
to the Agent at the Principal U.S. Office not later than 11:00 a.m., New York
City time, on the date on which such payment shall become due (and the Agent or
any Bank for whose account any such payment is to be made may, but shall not be
obligated to, debit the amount of any such payment that is not made by such time
to any ordinary deposit account of the Borrower with the Agent or such Bank, as
the case may be). Additional provisions relating to payments are set forth in
Section 10.3 hereof. Each payment received by the Agent hereunder for the
account of a Bank shall be paid promptly to such Bank, in like funds, for the
account of such Bank's Applicable Lending Office for the Loan in respect of
which such payment is made.
SECTION 2.13 LENDING OFFICES. The Loans of each type made by each
Bank shall be made and maintained at such Bank's Applicable Lending Office for
Loans of such type.
SECTION 2.14 SEVERAL OBLIGATIONS. The failure of any Bank to make
any Loan to be made by it on the date specified therefor shall not relieve the
other Banks of their respective obligations to make their Loans on such date,
but no Bank shall be responsible for the failure of the other Banks to make
Loans to be made by such other Banks.
SECTION 2.15 GUARANTIES. The due payment and performance of the
Obligations shall be guaranteed by the execution and delivery to the Agent, on
behalf of itself, the Banks and the Issuing Banks, simultaneously with the
execution and delivery of this Agreement, by ResNet of a guaranty substantially
in the form of Exhibit D hereto (the "ResNet Guaranty") and by LodgeNet Canada
of a guaranty substantially in the form of Exhibit E hereto (the "LodgeNet
Canada Guaranty").
SECTION 2.16 LETTERS OF CREDIT.
(a) AMOUNT AND EXPIRATION.
(i) Subject to the terms and conditions of this
Agreement, the Borrower may request that NatWest Plc in its individual capacity
(in the case of Standby L/Cs) or NatWest Canada in its individual capacity (in
the case of Documentary L/Cs) issue one or more L/Cs (in such capacity, each of
NatWest Plc and NatWest Canada is herein referred to as "THE ISSUING
27
BANK" and collectively as "THE ISSUING BANKS") for the account of the Borrower,
PROVIDED, HOWEVER, that no L/C shall be issued if, after giving effect to the
issuance of such L/C (i) the aggregate amount of all Net L/C Obligations and the
aggregate amount of all Loans then outstanding would exceed the Total Commitment
at such time, or (ii) the aggregate amount of all L/C Obligations then
outstanding would exceed the Maximum L/C Amount. Subject to the foregoing, the
Borrower may request the issuance of L/Cs under this Section 2.16, repay any
drawings thereunder and request the issuance of additional L/Cs under this
Section 2.16. For all purposes of this Agreement, reference to the "issue" or
"issuance" of any L/C or any L/C being "issued" shall include the amendment,
supplement or modification of any L/C, including, without limitation, any
increase in the amount thereof, or any extension or renewal thereof.
(ii) No L/C shall have an expiration date later than
the earlier of (A) three hundred sixty-five (365) days after the date of
issuance thereof, or (B) the date which is thirty (30) days prior to the
Commitment Termination Date. No L/C may by its terms be automatically
renewable, unless consented to in writing by the Agent and the Issuing Bank in
the exercise of their sole discretion, subject to the foregoing restriction
regarding expiration dates, and no L/C may be denominated or drawable other than
in United States dollars.
(b) NOTICE AND ISSUANCE.
(i) The Borrower shall give notice to the Issuing Bank
and to the Agent of a request for issuance of any L/C not less than three (3)
Business Days prior to the proposed issuance date (which prescribed time period
may be waived at the option of the Issuing Bank and the Agent in the exercise of
their sole discretion). Each such notice (an "L/C ISSUANCE REQUEST") shall
specify: (A) the requested date of such issuance (which shall be a Business
Day); (B) the maximum amount of such L/C; (C) the expiration date of such L/C;
(D) the purpose of such L/C; (E) the name and address of the beneficiary of such
L/C; and (F) the required documents under any such L/C and, if requested by the
Issuing Bank, the form of such L/C (which shall be acceptable to both of the
Issuing Bank and the Agent in their respective sole discretion). The making of
each L/C Issuance Request shall be deemed to be a representation and warranty by
the Borrower that such L/C may be issued in accordance with and will not violate
the terms of subsection 2.16(a) hereof. Each L/C Issuance Request shall be
accompanied by the Issuing Bank's customary Standby or Documentary L/C
application and other standard documents as may be required by the Issuing Bank
(the "APPLICATION DOCUMENTS") each duly completed and executed and delivered by
the Borrower.
(ii) Upon acceptance of the form of the proposed L/C by
the Issuing Bank and the Agent and upon fulfillment of the conditions set forth
above in this subsection 2.16(b) and applicable conditions in Article 4 hereof,
the Issuing Bank shall issue such Standby L/C or Documentary L/C. Each
Documentary L/C shall be issued upon such other terms and conditions as may be
approved by both the Issuing Bank and the Agent (in their sole discretion) which
are not inconsistent with this Agreement.
(iii) Notwithstanding the foregoing, the Issuing Bank
shall be under no obligation to issue any L/C if at the time of such issuance:
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(A) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or restrain the
Issuing Bank from issuing such L/C or any requirement of law applicable to the
Issuing Bank or any request or directive (whether or not having the force of
law) from any governmental authority with jurisdiction over the Issuing Bank
shall prohibit, or request that the Issuing Bank refrain from, the issuance of
letters of credit generally or such L/C in particular or shall impose upon the
Issuing Bank with respect to such L/C any requirement (for which the Issuing
Bank is not otherwise compensated) not in effect on the date hereof, or any
unreimbursed loss, cost or expense which was not applicable, in effect or known
to the Issuing Bank as of the date hereof and which the Issuing Bank in good
xxxxx xxxxx material to it; or
(B) the Issuing Bank shall have received notice from
any Bank prior to the issuance of such L/C that one or more of the applicable
conditions specified in this Section 2.16 or 4.2 are not then satisfied, or that
the issuance of such L/C would violate subsection 2.16(a) above.
(iv) The Issuing Bank shall promptly give written
notice to each of the other Banks of the information specified in subsections
2.16(b)(i)(A) through (E) above.
(C) REIMBURSEMENT OBLIGATIONS.
(i) The Borrower shall be obligated to reimburse the
Agent, for the account of the Issuing Bank, in immediately available funds at
the Principal U.S. Office, on the day of each payment under an L/C by the
Issuing Bank for drafts drawn and all amounts paid or disbursed under each such
L/C (all such amounts so drawn, paid or disbursed until reimbursed are
hereinafter referred to as "UNREIMBURSED DRAWINGS"); PROVIDED that if any such
Unreimbursed Drawings are not so reimbursed on the date of any drafts drawn, the
Borrower's reimbursement obligation in respect of such Unreimbursed Drawings
shall be funded on such date with the borrowing of Loans (each such borrowing a
"MANDATORY L/C BORROWING") in the full amount of the Unreimbursed Drawings from
all Banks PRO RATA based on each Bank's Percentage. The Issuing Bank shall
promptly notify the Agent of the amount of any Unreimbursed Drawings and the
Agent shall promptly notify the Banks of the amount of each such Mandatory L/C
Borrowing not later than 12:00 noon (New York City time) on the date on which
such Mandatory L/C Borrowing is to be made. Each such Bank hereby irrevocably
agrees to make Loans pursuant to each Mandatory L/C Borrowing in the amount, and
not later than 5:00 p.m. (New York City time) on the date, and in the manner
specified in the preceding sentence, for immediate payment to the Issuing Bank,
notwithstanding (i) that the amount of the Mandatory L/C Borrowing may not
comply with the minimum amount for borrowings otherwise required hereunder,
(ii) whether any conditions specified in Article 4 are then satisfied,
(iii) whether a Default or an Event of Default then exists, (iv) the date of
such Mandatory L/C Borrowing and (v) any reduction in the Total Commitment after
any such L/C was issued. In the event that the Agent delivers the
above-described notice to any Bank later than 12:00 noon (New York City time) on
the date of the required Mandatory L/C Borrowing, then such Bank shall not be
obligated to effect such Mandatory L/C Borrowing until the next succeeding
Business Day (but not later than 5:00 p.m. (New York City time)).
29
(ii) Notwithstanding the foregoing, in the event that
at any time when a draft is drawn under an L/C, there are not sufficient funds
in any account of the Borrower with the Issuing Bank (or with the Agent for the
account of the Issuing Bank) or sufficient availability to permit creation of
Loans sufficient to fund payment of the drafts, any funds advanced by the
Issuing Bank (or by the Agent on behalf of the Issuing Bank) and the other Banks
in payment thereof shall be due and payable immediately and shall bear interest
until paid in full at the Post-Default Rate, such interest to be payable on
demand. In the event of any conflict, discrepancy or any omission of terms
provided herein between the terms established by the Issuing Bank in its
Application Documents or otherwise and this Loan Agreement, the terms provided
herein shall prevail. The obligations of the Banks in respect of any funds so
advanced or to be advanced by the Issuing Bank (or by the Agent on behalf of the
Issuing Bank) under this subsection (c) shall be as more particularly described
in subsections 2.16(e)(ii) and (iii) hereof.
(d) GENERAL UNCONDITIONAL OBLIGATIONS.
The obligations of the Borrower under this Agreement and the
Application Documents and any other agreement, instrument or document relating
to reimbursement or payment of L/C Obligations shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and the Application Documents, under all circumstances
whatsoever, including, without limitation, the following circumstances, whether
relating to any one or more L/Cs:
(i) any agreement between the Borrower and any
beneficiary or any agreement or instrument relating thereto (the "BENEFICIARY
DOCUMENTS") proving to be forged, fraudulent, invalid, unenforceable or
insufficient in any respect;
(ii) any amendment or waiver of or any consent to
departure from all or any of the Beneficiary Documents;
(iii) the existence of any claim, set off, defense or
other rights which the Borrower may have at any time against any beneficiary or
any transferee of any L/C (or any persons or entities for whom any beneficiary
or any such transferee may be acting), the Issuing Bank, any other Bank, the
Agent or any other person or entity, whether in connection with the Agreement,
the Beneficiary Documents or any unrelated transaction;
(iv) any demand presented under any L/C (or any
endorsement thereon) proving to be forged, fraudulent, invalid, unenforceable or
insufficient in any respect or any statement therein being inaccurate in any
respect whatsoever;
(v) payment by the Issuing Bank under any L/C against
presentation of a demand which does not comply with the terms of such L/C,
including, without limitation, the circumstances referred to in clause (iv)
above or the failure of any document to bear reference or to bear adequate
reference to such L/C;
30
(vi) the use to which any L/C may be put or any acts or
omission of any beneficiary in connection therewith; or
(vii) any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing.
(e) PARTICIPATIONS BY XXXXX.
(i) On the date of issuance of each L/C the Issuing
Bank shall be deemed irrevocably and unconditionally to have sold and
transferred to each Bank (excluding, for all purposes of this subsection (e),
NatWest Plc as the Issuing Bank, which shall retain a portion equal to its PRO
RATA share of the Total Commitment, but for such purposes not so excluding
NatWest Canada as the Issuing Bank, which shall have no Commitment) without
recourse or warranty, and each Bank shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, an undivided
interest and participation, to the extent of such Bank's PRO RATA share of the
Total Commitment in effect on the date of such issuance, in such L/C, each
substitute letter of credit, each drawing made thereunder, the related
Application Documents and all L/C Obligations relating to such L/C and all Loan
Documents securing, guaranteeing, supporting, or otherwise benefitting the
payment of such L/C Obligation. The Issuing Bank shall furnish to any Bank,
upon request, copies of any L/C and any Application Documents as may be
requested by such Bank.
(ii) In the event that any reimbursement obligation
under subsection 2.16(c) hereof is not paid to the Issuing Bank with respect to
any L/C in full immediately or by a Mandatory L/C Borrowing from all the Banks
PRO RATA pursuant to paragraph 2.16(c)(i), the Issuing Bank shall promptly
notify the Agent to that effect, and the Agent shall promptly notify the Banks
of the amount of such reimbursement obligation and each such Bank shall
immediately pay to the Agent, for immediate payment to the Issuing Bank, in
lawful money of the United States and in immediately available funds, an amount
equal to such Bank's ratable portion of the amount of such unpaid reimbursement
obligation.
(iii) The obligation of each Bank to make Loans in
respect of each Mandatory L/C Borrowing and to make payments under the preceding
subsection (ii) shall be absolute and unconditional and irrevocable and not
subject to any qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement under all
circumstances and shall not be subject to any conditions set forth in Article 4
hereof or otherwise affected by any circumstance including, without limitation,
(A) the occurrence or continuance of a Default or Event of Default; (B) any
adverse change in the business condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party; (C) any breach of this
Agreement or any Application Documents or other Loan Documents by the Borrower,
any other Loan Party or Bank; (D) any set-off, counterclaim, recoupment, defense
or other right which such Bank or the Borrower may have at any time against the
Issuing Bank, any other Bank, any Loan Party, or any beneficiary named in any
L/C in connection herewith or otherwise; (E) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent or
forged; (F) any lack of validity or enforcement of this Agreement or any of the
Loan Documents; (G) the surrender or
31
impairment of any security for the performance or observance of any of the terms
of any of the Loan Documents; or (H) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. The Borrower agrees
that any Bank purchasing a participation in any L/C from the Issuing Bank
hereunder may, to the fullest extent permitted by law, exercise all of its
rights of payment with respect to such participation as fully as if such Bank
were the direct creditor of such Borrower in the amount of such participation.
(iv) Promptly after the Issuing Bank (or the Agent
acting on behalf of the Issuing Bank) receives a payment on account of a
reimbursement obligation with respect to any L/C as to which any other Bank has
funded its participation pursuant to subsection 2.16(e)(ii) above, the Issuing
Bank (or the Agent acting on behalf of the Issuing Bank) shall promptly pay to
the Agent, and the Agent shall promptly pay to each Bank which funded its
participation therein, in lawful money of the United States and in the kind of
funds so received, an amount equal to such Bank's ratable share thereof.
(v) If any payment received on account of any
reimbursement obligation with respect to an L/C and distributed to a Bank as a
participant under subsection 2.16(e)(iv) is thereafter recovered from the
Issuing Bank in connection with any bankruptcy or insolvency proceeding relating
to the Borrower or otherwise, each Bank which received such distribution shall,
upon demand by the Agent, repay to the Issuing Bank such Bank's ratable share of
the amount so recovered together with an amount equal to such Bank's ratable
share (according to the proportion of (i) the amount of such Bank's required
repayment to (ii) the total amount so recovered) of any interest or other amount
paid or payable by the Issuing Bank in respect of the total amount so recovered.
(f) NON-LIABILITY.
The Borrower assumes all risks of the acts or omissions of
any beneficiary or transferee of any L/C with respect to its use of such L/C.
Neither the Agent, the Issuing Bank nor any other Bank, nor any of their
respective officers or directors, shall be liable or responsible for: (A) the
use that may be made of any L/C or any acts or omissions of any beneficiary or
transferee in connection therewith; (B) the validity, sufficiency or genuineness
of documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent or forged; (C)
payment by the Issuing Bank against presentation of documents that do not comply
with the terms of an L/C, including failure of any documents to bear any
reference or adequate reference to an L/C, EXCEPT that the Borrower shall have a
claim against the Issuing Bank, and such Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused solely by (1) the Issuing
Bank's willful misconduct or gross negligence in determining whether documents
presented under any L/C comply with the terms of the L/C or (2) the Issuing
Bank's willful failure to make lawful payment under an L/C after the
presentation to it of a draft and documents and/or certificates strictly
complying with the terms and conditions of the L/C; (D) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they are in cipher; (E) for
errors in interpretation of technical terms; (F) for any loss or delay in the
transmission or otherwise of any document required
32
in order to make a drawing under any such Letter of Credit or of the proceeds
thereof; and (G) for any consequence arising from causes beyond the control of
such Issuing Bank, including, without limitation, any government acts. None of
the above shall affect, impair, or prevent the vesting of any of such Issuing
Bank's rights or powers hereunder. In furtherance and not in limitation of the
foregoing, the Issuing Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary. The Uniform Customs and Practice for
Documentary Credits as most recently published by the International Chamber of
Commerce shall be deemed a part of this Section 2.16 as if incorporated herein
in all respects and shall apply to the L/Cs.
(g) INDEMNIFICATION.
In addition to amounts payable as elsewhere provided in this
Agreement, without duplication, the Borrower agrees to indemnify and save
harmless the Agent and each Bank including the Issuing Bank, from and against
any and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees and allocated costs of internal
counsel) which such Agent or Bank may incur or be subject to as a consequence,
direct or indirect, of the issuance of any L/C or any action or proceeding
relating to a court order, injunction, or other process or decree restraining or
seeking to restrain the Issuing Bank or the Agent from paying any amount under
any applicable L/C or the failure of the Issuing Bank to honor a drawing under
an L/C as a result of any act or omission, whether rightful or wrongful of any
present or future DE JURE or DE FACTO government or governmental authority,
except that no such Person shall be entitled to indemnification for matters
caused solely by such Person's gross negligence or willful misconduct. Without
modifying the foregoing, and anything contained herein to the contrary
notwithstanding, the Borrower shall cause each L/C issued for its account to be
canceled and returned to the Issuing Bank on or before the Commitment
Termination Date.
SECTION 2.17 FINANCING DOCUMENTS. The Borrower shall deliver to the
Agent, upon the execution thereof, true and complete copies of (i) each material
document relating to any equity financing or Permitted Debt not previously
delivered hereunder and (ii) each amendment or other modification to any of the
Senior Note Documents, each of the foregoing certified as such in a certificate
executed by the president, chief financial officer or chief operating officer of
the Borrower.
SECTION 2.18 PRO RATA TREATMENT AMONG BANKS. Except as otherwise
provided herein: (i) each borrowing from the Banks under Section 2.1 hereof
will be made from the Banks and each payment of each Fee shall be made for the
account of the Banks PRO RATA according to their respective Unused Commitments;
(ii) each partial reduction of the Total Commitment shall be applied to the
Commitments of the Banks PRO RATA according to each Bank's respective
Commitment; (iii) each conversion of Loans of a particular type under Section
2.21 hereof (other than conversions provided for by Section 2.24 or 2.25 hereof)
will be made PRO RATA among the Banks holding Loans of such type according to
the respective principal amounts of such Loans held by such Xxxxx; (iv) each
payment and prepayment of principal of or interest on Loans of a particular type
will be made to the Agent for the account of the Banks holding Loans of such
type PRO RATA in accordance with the respective unpaid principal amounts of such
Loans held by such Banks; and (v) Interest
33
Periods for Eurodollar Loans shall be allocated among the Banks holding
Eurodollar Loans PRO RATA according to the respective principal amounts of
Eurodollar Loans held by such Banks; PROVIDED, HOWEVER, that notwithstanding
anything to the contrary contained in this Agreement (including the provisions
of this Section 2.18 and Section 2.20 hereafter), differing payments may be made
to Non-Defaulting Banks as opposed to Defaulting Banks and no Defaulting Bank
shall be entitled to receive PRO RATA payments or repayments of Loans or other
amounts hereunder unless and until it shall become a Non-Defaulting Bank.
SECTION 2.19 NON-RECEIPT OF FUNDS BY THE AGENT. Unless the
Agent shall have been notified by a Bank or the Borrower (the "PAYOR") prior to
the date on which such Bank is to make payment to the Agent of the proceeds of a
Loan to be made by it hereunder or the Borrower is to make a payment to the
Agent for the account of one or more of the Banks, as the case may be (such
payment being herein called the "REQUIRED PAYMENT"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Agent, the Agent may assume that the Required Payment has been
made and may, in reliance upon such assumption (but shall not be required to),
make the amount thereof available to the intended recipient on such date and, if
the Payor has not in fact made the Required Payment to the Agent, the recipient
of such payment shall, on demand, repay to the Agent the amount made available
to it 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 the Federal
Funds Rate for such day (when the recipient is a Bank) or equal to the rate of
interest applicable to such Loan (when the recipient is the Borrower).
SECTION 2.20 SHARING OF PAYMENTS AND SET-OFF AMONG BANKS. The
Borrower hereby agrees that, in addition to (and without limitation of) any
right of set-off, banker's lien or counterclaim a Bank may otherwise have, each
Bank shall be entitled, at its option, to offset balances held by it at any of
its offices against any principal of or interest on any of its Loans hereunder,
or any Fee payable to it, that is not paid when due (regardless of whether such
balances are then due to the Borrower), in which case it shall promptly notify
the Borrower and the Agent thereof, PROVIDED THAT its failure to give such
notice shall not affect the validity thereof. If a Bank shall effect payment of
any principal of or interest on Loans held by it under this Agreement through
the exercise of any right of set-off, banker's lien, counterclaim or similar
right, it shall promptly purchase from the other Banks participations in the
Loans held by the other Banks in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all the Banks shall
share the benefit of such payment PRO RATA in accordance with the unpaid
principal and interest on the Loans held by each of them. To such end all the
Banks shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. The Borrower agrees that any Bank so purchasing a participation in
the Loans held by the other Banks may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Bank were a direct holder of Loans in the amount of such
participation. Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Borrower.
34
SECTION 2.21 CONVERSIONS OF LOANS. The Borrower shall have the
right to convert Loans of one type into Loans of another type from time to time,
PROVIDED THAT: (i) the Borrower shall give the Agent notice of each such
conversion as provided in Section 2.2 hereof; (ii) Eurodollar Loans may be
converted only on the last day of an Interest Period for such Loans; and (iii)
except as required by Sections 2.22 or 2.25 hereof, no Base Rate Loan may be
converted into a Eurodollar Loan if on the proposed date of conversion a Default
or an Event of Default exists. The Agent shall use its best efforts to notify
the Borrower of the effectiveness of such conversion, and the new interest rate
to which the converted Loans are subject, as soon as practicable after the
conversion; PROVIDED, HOWEVER, that any failure to give such notice shall not
affect the Borrower's obligations, or the Agent's or the Banks' rights and
remedies, hereunder in any way whatsoever.
SECTION 2.22 ADDITIONAL COSTS; CAPITAL REQUIREMENTS. (a) In the
event that any existing or future law or regulation, guideline or interpretation
thereof by any court or administrative or governmental authority charged with
the administration thereof, or compliance by any Bank with any request or
directive (whether or not having the force of law) of any such authority shall
impose, modify or deem applicable or result in the application of, any capital
maintenance, capital ratio or similar requirement against loan or letter of
credit commitments made by any Bank hereunder, or against letters of credit or
guaranties issued by or participations therein of, or assets held by or deposits
in or for the account of, any Bank or any corporation controlling such Bank or
impose on any Bank any other condition regarding this Agreement or any L/C or
participation therein or the issuance or acquisition of or participation in such
Bank's Commitment including in relation to L/Cs or similar contingent
obligations or the obligation of any Bank or the Borrower hereunder with respect
to such Commitment and the result of any event referred to above is to impose
upon any Bank or increase any capital requirement applicable as a result of the
making or maintenance of, such Bank's Commitment or issuing, maintaining or
participating in L/Cs or L/C Obligations or the obligation of the Borrower
hereunder with respect to such Commitment (which imposition of capital
requirements may be determined by each Bank's reasonable allocation of the
aggregate of such capital increases or impositions), then, upon demand made by
such Bank as promptly as practicable after it obtains knowledge that such law,
regulation, guideline, interpretation, request or directive exists and
determines to make such demand, the Borrower shall immediately pay to such Bank
from time to time as specified by such Bank additional commitment fees which
shall be sufficient to compensate such Bank for such imposition of or increase
in capital requirements together with interest on each such amount from the date
demanded until payment in full thereof at the Post-Default Rate. A certificate
setting forth in reasonable detail the amount necessary to compensate such Bank
as a result of an imposition of or increase in capital requirements submitted by
such Bank to the Borrower shall be conclusive, absent manifest error, as to the
amount thereof. For purposes of this Section 2.22, all references to any "Bank"
shall be deemed to include any participant in such Bank's Commitment.
(b) In the event that any Regulatory Change shall: (i) change
the basis of taxation of any amounts payable to any Bank under this Agreement or
the Notes or in respect of any Loans or L/C Obligations or L/Cs (other than
taxes imposed on the overall net income of such Bank for any such Loans by the
United States of America or the jurisdiction in which such Bank has its
principal office); or (ii) impose or modify any reserve, Federal Deposit
Insurance Corporation premium or assessment, special deposit or similar
requirements relating to any extensions of credit,
35
letters of credit or guarantees issued by or participations therein of or other
assets of, or any deposits with or other liabilities of, such Bank; or (iii)
impose any other conditions affecting this Agreement in respect of Loans or L/C
Obligations or L/Cs (or any of such extensions of credit, letters of credit,
guarantees, participations, assets, deposits or liabilities); and the result of
any event referred to in clause (i), (ii) or (iii) above shall be to (i)
increase such Bank's costs of making or maintaining, participating in or
acquiring any Loans or L/Cs or L/C Obligations or its Commitment or reduce any
amount receivable by such Bank hereunder in respect of any of the foregoing or
(ii) reduce the rate of return on such Bank's capital or assets as a consequence
of its commitments or obligations hereunder to a level below that which the Bank
could have achieved (taking into consideration such Bank's policies with respect
to capital adequacy) but for the occurrence of any such event (such increases in
costs and reductions in amounts receivable are hereinafter referred to as
"ADDITIONAL COSTS"), then, upon demand made by such Bank as promptly as
practicable after it obtains knowledge that such a Regulatory Change exists and
determines to make such demand (a copy of which demand shall be delivered to the
Agent), the Borrower shall pay to such Bank from time to time as specified by
such Bank, additional commitment fees or other amounts which shall be sufficient
to compensate such Bank for such Additional Costs from the date of such change,
together with interest on each such amount from the date demanded until payment
in full thereof at the Post-Default Rate. All references to any "Bank" shall be
deemed to include any participant in such Bank's Commitment.
(c) Each Bank, if any, that is not organized under the laws of
the United States of America or any State agrees (i) prior to the first payment
to such Bank of any amounts due to such Bank under the Loan Documents, upon
request by Xxxxxxxx, to execute and deliver to Borrower and the Agent completed
counterparts of IRS Form W-8, 1001, or 4224 (or any successor thereto or
substitute therefor), as applicable, and (ii) thereafter, upon request by
Xxxxxxxx from time to time in order to maintain the effectiveness and accuracy
of such tax forms and otherwise to comply with United States tax laws, to
execute and deliver to the Agent and Borrower additional or supplemental tax
forms with respect to amounts due to such Bank under the Loan Documents.
(d) Determinations by any Bank for purposes of this Section 2.22
of the effect of any Regulatory Change on its costs of making or maintaining
Loans or L/Cs or L/C Obligations or on amounts receivable by it in respect of
Loans or L/Cs or L/C Obligations, and of the additional amounts required to
compensate such Bank in respect of any Additional Costs, shall be set forth in
writing in reasonable detail and shall be conclusive, absent manifest error.
SECTION 2.23 LIMITATION ON TYPES OF LOANS. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of an interest
rate for any Eurodollar Loans for any Interest Period therefor, the Agent
determines (which determination shall be conclusive):
(a) by reason of any event affecting the money markets in the
United States of America or the Eurodollar interbank market, quotations of
interest rates for the relevant deposits are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining the rate of
interest for such Loans under this Agreement; or
36
(b) the rate of interest referred to in the definition of
"Eurodollar Rate" upon the basis of which the rate of interest on any Eurodollar
Loans for such period is determined, does not accurately reflect the cost to the
Banks of making or maintaining such Loans for such period,
then the Agent shall give the Borrower and each Bank prompt notice thereof (and
shall thereafter give the Borrower and each Bank prompt notice of the cessation,
if any, of such condition), and so long as such condition remains in effect, the
Banks shall be under no obligation to make Loans of such type or to convert
Loans of any other type into Loans of such type and the Borrower shall, on the
last day(s) of the then current Interest Period(s) for the outstanding Loans of
the affected type either prepay such Loans in accordance with Section 2.8 hereof
or convert such Loans into Loans of another type in accordance with Section 2.21
hereof.
SECTION 2.24 ILLEGALITY. Notwithstanding any other provision in
this Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to: (i) honor its obligation to make Eurodollar Loans
hereunder, or (ii) maintain Eurodollar Loans hereunder, then such Bank shall
promptly notify the Borrower thereof (with a copy to the Agent), describing such
illegality in reasonable detail (and shall thereafter promptly notify the
Borrower and the Agent of the cessation, if any, of such illegality), and such
Bank's obligation to make Eurodollar Loans and to convert other types of Loans
into Eurodollar Loans hereunder shall, upon written notice given by such Bank to
the Borrower, be suspended until such time as such Bank may again make and
maintain Eurodollar Loans and such Bank's outstanding Eurodollar Loans shall be
converted into Base Rate Loans (as shall be designated in a notice from the
Borrower to the Agent pursuant to Section 2.2 hereof) in accordance with
Sections 2.21 and 2.25 hereof.
SECTION 2.25 CERTAIN CONVERSIONS PURSUANT TO SECTIONS 2.22 AND 2.24.
If the Loans of any Bank of a particular type (Loans of such type are
hereinafter referred to as "AFFECTED LOANS" and such type is hereinafter
referred to as the "AFFECTED TYPE") are to be converted pursuant to Section 2.22
or 2.24 hereof, such Bank's Affected Loans shall be converted into Base Rate
Loans, or Eurodollar Loans of another type, as the case may be (the "NEW TYPE
LOANS") on the last day(s) of the then current Interest Period(s) for the
Affected Loans (or, in the case of a conversion required by subsection 2.22(b)
or Section 2.24 hereof, on such earlier date as such Bank may specify to the
Borrower with a copy to the Agent) and, until such Bank gives notice as provided
below that the circumstances specified in Section 2.22 or 2.24 hereof that gave
rise to such conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so
converted, all payments and prepayments of principal that would otherwise be
applied to such Affected Loans shall be applied instead to its New Type Loans;
(b) all Loans that would otherwise be made by such Bank as Loans
of the Affected Type shall be made instead as New Type Loans and all Loans of
such Bank that would otherwise be converted into Loans of the Affected Type
shall be converted instead into (or shall remain as) New Type Loans; and
37
(c) if Loans of any of the Banks other than such Bank that are
the same type as the Affected Type are subsequently converted into Loans of
another type (which type is other than New Type Loans), then such Bank's New
Type Loans shall be automatically converted on the conversion date into Loans of
such other type to the extent necessary so that, after giving effect thereto,
all Loans held by such Bank and the Banks whose Loans are so converted are held
PRO RATA (as to principal amounts, types and, to the extent applicable, Interest
Periods) in accordance with their respective Commitments.
SECTION 2.26 ALTERNATE LENDING INSTALLATION. Each Bank agrees that
as promptly as practicable after it becomes aware of an event or the existence
of a condition that would entitle it to exercise any rights under Sections 2.22
or 2.24 hereof, such Bank shall use commercially reasonable efforts to make,
fund or maintain the affected Loans of such Bank through a different lending
installation of such Bank if (i) as a result thereof, the additional monies
which would otherwise be required to be paid in respect of such Loans would be
materially reduced or the illegality or other adverse circumstances which would
otherwise affect such Loans would cease to exist or the increased cost which
would otherwise be required to be paid in respect of such Loans would be
materially reduced and (ii) the making, funding or maintaining of such Loans
through such other lending installation would not, in the judgement of such
Bank, adversely affect such Loans or such Bank. The Borrower hereby agrees to
pay all reasonable expenses incurred by each Bank in utilizing a different
lending installation pursuant to this Section 2.26.
SECTION 2.27 INDEMNIFICATION. The Borrower shall pay to the Agent
for the account of each Bank, upon the request of such Bank through the Agent,
such amount or amounts as shall compensate such Bank for any loss (including
loss of profit), cost or expense incurred by such Bank (as reasonably determined
by such Bank) as a result of:
(a) any payment or prepayment or conversion of a Eurodollar Loan
held by such Bank on a date other than the last day of an Interest Period for
such Eurodollar Loan; or
(b) any failure by the Borrower to borrow a Eurodollar Loan held
by such Bank on the date for such borrowing specified in the relevant Borrowing
Notice under Section 2.2 hereof, such compensation to include, without
limitation, an amount equal to: (i) any loss or expense suffered by such Bank
during the period from the date of receipt of such early payment or prepayment
or the date of such conversion to the last day of such Interest Period if the
rate of interest obtainable by such Bank upon the redeployment of an amount of
funds equal to such Bank's PRO RATA share of such payment, prepayment or
conversion or failure to borrow or convert is less than the rate of interest
applicable to such Eurodollar Loan for such Interest Period, or (ii) any loss or
expense suffered by such Bank in liquidating Eurodollar deposits prior to
maturity that correspond to such Bank's PRO RATA share of such payment,
prepayment, conversion, failure to borrow or failure to convert. The
determination by each such Bank of the amount of any such loss or expense, when
set forth in a written notice to the Borrower, containing such Bank's
calculation thereof in reasonable detail, shall be presumed correct, in the
absence of manifest error.
38
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Banks and the Agent
that:
SECTION 3.1 ORGANIZATION. (a) Each of the Borrower and each
Subsidiary and each other Loan Party is duly organized and validly existing
under the laws of its jurisdiction of organization and has the power to own its
assets and to transact the business in which it is presently engaged and in
which it proposes to be engaged. Schedule 3.1 hereto accurately and completely
lists, as to each of the Borrower and each Subsidiary and each other Loan Party:
(i) the jurisdiction of incorporation or organization of each such entity, and
the type of legal entity that each of them is, (ii) as to each of them that is a
corporation, the classes and number of authorized and outstanding shares of
capital stock of each such corporation, (iii) as to each of them that is a legal
entity other than a corporation (but not a natural person), the type and amount
of equity interests authorized and outstanding of each such entity, and the
owners of such equity interests, and (iv) the business in which each of such
entities is engaged. All of the foregoing shares or other equity interests that
are issued and outstanding have been duly and validly issued and are fully paid
and non-assessable. The Borrower owns, beneficially and of record, all of the
outstanding shares of each class of stock of the Subsidiaries as shown on
Schedule 3.1. Except as set forth on Schedule 3.1, there are no outstanding
warrants, options, contracts or commitments of any kind entitling any Person to
purchase or otherwise acquire any shares of capital stock or other equity
interests of the Borrower (other than warrants and options now or hereafter
granted to employees and/or directors of the Borrower in the ordinary course of
its business) or any Subsidiary or any other Loan Party nor are there
outstanding any securities that are convertible into or exchangeable for any
shares of capital stock or other equity interests of the Borrower or any
Subsidiary or any other Loan Party. Except as set forth on Schedule 3.1,
neither the Borrower nor any Subsidiary nor any other Loan Party has any
Subsidiary.
(b) Each of the Borrower and each Subsidiary and each other Loan
Party is in good standing in its jurisdiction of organization and in each
jurisdiction in which it is qualified to do business, except where the failure
to be in good standing could not have a material adverse effect on the business,
operations, financial condition or properties of the Borrower or any Subsidiary
or any other Loan Party; and none of such Persons is aware of any jurisdiction
in which it is qualified to do business but not in good standing. There are no
jurisdictions in which the character of the properties owned or leased by the
Borrower or any Subsidiary or any other Loan Party or in which the transaction
of business of the Borrower or any Subsidiary or any other Loan Party requires
the Borrower or any Subsidiary or any other Loan Party to qualify to do
business, other than those jurisdictions in which such Person is qualified to do
business.
SECTION 3.2 POWER, AUTHORITY, CONSENTS. The Borrower and each
other Loan Party has the power to execute, deliver and perform the Loan
Documents to be executed by it. The Borrower has the power to borrow hereunder
and has taken all necessary corporate action to authorize the borrowing
hereunder on the terms and conditions of this Agreement. The Borrower and each
other Loan Party has taken all necessary action, corporate or otherwise, to
authorize the execution, delivery and performance of the Loan Documents to be
executed by it. No consent or approval of any Person (including, without
limitation, any stockholder of any corporate Loan Party or any partner in any
partnership Loan Party), no consent or approval of any landlord or mortgagee,
39
no waiver of any Lien or right of distraint or other similar right and no
consent, license, certificate of need, approval, authorization or declaration of
any governmental authority, bureau or agency, is or will be required in
connection with the execution, delivery or performance by the Borrower or any
other Loan Party, or the validity, enforcement or priority, of the Loan
Documents.
SECTION 3.3 NO VIOLATION OF LAW OR AGREEMENTS. The execution
and delivery by the Borrower and each other Loan Party of each Loan Document to
which it is a party and performance by it hereunder and thereunder, will not
violate any provision of law and will not, conflict with or result in a breach
of any order, writ, injunction, ordinance, resolution, decree, or other similar
document or instrument of any court or governmental authority, bureau or agency,
domestic or foreign, or any certificate of incorporation or by-laws of the
Borrower or any other corporate Loan Party or partnership agreement or other
organizational document or instrument of any Loan Party that is not a
corporation, or create (with or without the giving of notice or lapse of time,
or both) a default under or breach of any agreement, bond, note or indenture to
which the Borrower or any other Loan Party is a party, or by which any of them
is bound or any of their respective properties or assets is affected, or result
in the imposition of any Lien of any nature whatsoever upon any of the
properties or assets owned by or used in connection with the business of the
Borrower or any other Loan Party (other than the Liens contemplated by the
Collateral Documents). Any borrowing under this Agreement will not result in
any violation of any debt incurrence test or other applicable covenant under the
Senior Note Documents.
SECTION 3.4 DUE EXECUTION, VALIDITY, ENFORCEABILITY. This
Agreement and each other Loan Document to which any Loan Party is a party has
been duly executed and delivered by the Loan Party that is a party thereto and
each constitutes the valid and legally binding obligation of the Borrower or
such other Loan Party that is a party thereto, enforceable in accordance with
its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws, now or hereafter
in effect, relating to or affecting the enforcement of creditors' rights
generally and except that the remedy of specific performance and other equitable
remedies are subject to judicial discretion.
SECTION 3.5 PROPERTIES, LIENS. The real estate listed on Schedule
3.5 (together with the addresses thereof) constitutes all of the real property
owned, leased, subleased or used by any Loan Party. Each Loan Party owns good
and marketable fee simple title to all of its owned real estate, and valid and
marketable leasehold interests in all of its leased real estate, all as
described on Schedule 3.5. Schedule 3.5 further describes any real estate with
respect to which any Loan Party is a lessor, sublessor or assignor. Each Loan
Party also has good and marketable title to, or valid leasehold interests in,
all of its personal properties and assets. None of the properties and assets of
any Loan Party are subject to any Liens other than Permitted Liens and other
security interests permitted under the Loan Documents. Schedule 3.5 also
describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any real estate owned or leased by the Borrower
or any Loan Party.
SECTION 3.6 LITIGATION. Except as set forth on Schedule 3.6
hereto, there are no outstanding judgments, actions or proceedings, including,
without limitation, any Environmental Proceeding, pending before any court or
governmental authority, bureau or agency, with respect to
40
or, to the best of the Borrower's knowledge, threatened against or affecting the
Borrower or any Subsidiary or any other Loan Party, involving, in the case of
any court proceeding, a claim in excess of $2,500,000, nor, to the best of the
Borrower's knowledge, is there any reasonable basis for the institution of any
such action or proceeding that is probable of assertion, nor are there any such
actions or proceedings in which the Borrower or any Subsidiary or any other Loan
Party is a plaintiff or complainant.
SECTION 3.7 NO DEFAULTS, COMPLIANCE WITH LAWS. Neither the
Borrower nor any Subsidiary nor any other Loan Party is in default under any
agreement, resolution, decree, bond, note, indenture, order or judgment to which
it is a party or by which it is bound, or any other agreement or other
instrument by which any of the properties or assets owned by it or used in the
conduct of its business is affected, which default could have a material adverse
effect on the business, operations, financial condition or properties of the
Borrower or any Subsidiary or any other Loan Party or on the ability of the
Borrower or any other Loan Party to perform its obligations under the Loan
Documents to which it is a party. The Borrower and each Subsidiary has complied
and is in compliance in all respects with all applicable laws, ordinances and
regulations, resolutions, ordinances, decrees and other similar documents and
instruments of all courts and governmental authorities, bureaus and agencies,
domestic and foreign, including, without limitation, all applicable provisions
of the Americans with Disabilities Act (42 U.S.C. Section 12101-12213) and the
regulations issued thereunder, and all applicable Environmental Laws and
Regulations, non-compliance with which could have a material adverse effect on
the business, operations, financial condition or properties of the Borrower or
any Subsidiary or on the ability of the Borrower or any Subsidiary to perform
its obligations under the Loan Documents to which it is a party.
SECTION 3.8 BURDENSOME DOCUMENTS. Neither the Borrower nor any of
the other Loan Parties is a party to or bound by, nor are any of the properties
or assets owned by the Borrower or any other Loan Party used in the conduct of
their respective businesses affected by, any agreement, ordinance, resolution,
decree, bond, note, indenture, order or judgment, including, without limitation,
any of the foregoing relating to any Environmental Liability, that materially
and adversely affects their respective businesses, assets or conditions,
financial or otherwise.
SECTION 3.9 FINANCIAL STATEMENTS; PROJECTIONS.
(a) Each of the Financial Statements is correct and complete and
presents fairly the consolidated financial position of the Borrower and its
Subsidiaries, and each other entity to which it relates, as at its date, and has
been prepared in accordance with generally accepted accounting principles.
Neither the Borrower nor any of the Subsidiaries, nor any other entity to which
any of the Financial Statements relates, has any material obligation, liability
or commitment, direct or contingent (including, without limitation, any
Environmental Liability), that is not reflected in the Financial Statements.
There has occurred no Material Adverse Effect since the date of the latest
balance sheet included in the Financial Statements (the "LATEST BALANCE SHEET").
The Borrower's fiscal year is the twelve-month period ending on December 31 in
each year.
(b) The Projections have been prepared on the basis of
information and accompanying assumptions that the Borrower believes to be
reasonable and reflect as of the date
41
thereof the Borrower's good faith projections, after reasonable analysis, of the
matters set forth therein, based on such assumptions, it being understood that
such assumptions may be incorrect and unanticipated events and circumstances may
affect the Projections; accordingly, the Borrower's actual financial performance
and operating results may vary and such variations may be material.
SECTION 3.10 TAX RETURNS. Each of the Borrower and the Subsidiaries
has filed all federal, state and local tax returns required to be filed by it
and has not failed to pay any taxes, or interest and penalties relating thereto,
on or before the due dates thereof. Except to the extent that reserves therefor
are reflected in the Financial Statements: (i) there are no material federal,
state or local tax liabilities of the Borrower or any Subsidiary due or to
become due for any tax year ended on or prior to the date of the Latest Balance
Sheet relating to such entity, whether incurred in respect of or measured by the
income of such entity, that are not properly reflected in the Latest Balance
Sheet relating to such entity, and (ii) there are no material claims pending or,
to the knowledge of the Borrower, proposed or threatened against any of the
Borrower or any Subsidiary for past federal, state or local taxes, except those,
if any, as to which proper reserves are reflected in the Financial Statements.
SECTION 3.11 INTELLECTUAL PROPERTY. Each of the Borrower and the
Subsidiaries possesses all patents, trademarks, service marks, trade names, and
copyrights, and rights with respect to the foregoing, necessary to conduct its
business as now conducted and as proposed to be conducted, without any conflict
with the patents, trademarks, service marks, trade names, and copyrights and
rights with respect to the foregoing, of any other Person, and each of such
patents, trademarks, service marks, trade names, copyrights and rights with
respect thereto, together with any pending applications therefor, are listed on
Schedule 3.11 hereto.
SECTION 3.12 REGULATION U. No part of the proceeds received by the
Borrower or any Subsidiary from the Loans will be used directly or indirectly
for: (a) any purpose other than as set forth in Section 2.9 hereof, or (b) the
purpose of purchasing or carrying, or for payment in full or in part of
Indebtedness that was incurred for the purposes of purchasing or carrying, any
"margin stock", as such term is defined in Section 221.3 of Regulation U of the
Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II, Part
221.
SECTION 3.13 NAME CHANGES, MERGERS, ACQUISITIONS. Except as set
forth on Schedule 3.13 hereto, neither the Borrower nor any of the Subsidiaries
nor any other Loan Party has within the six-year period immediately preceding
the date of this Agreement changed its name, been the surviving entity of a
merger or consolidation, or acquired all or substantially all of the assets of
any Person.
SECTION 3.14 FULL DISCLOSURE. None of the Financial Statements, the
Prospectus, Xxxxxxxx's Annual Report on Form 10-K dated March 27, 1996 relating
to the fiscal year ended December 31, 1995 filed by the Borrower with the SEC
and previously delivered to the Banks (the "1995 10-K Report"), Xxxxxxxx's
Quarterly Report on Form 10-Q dated November 7, 1996 relating to the period
ending September 30, 1996 filed by the Borrower with the SEC and previously
delivered to the Banks (the "Third Quarter 10-Q Report"), the Projections, nor
any certificate, opinion, or any other statement made or furnished in writing to
the Agent or any Bank by or on
42
behalf of the Borrower or any of the Subsidiaries or any other Loan Party in
connection with this Agreement or the transactions contemplated herein, contains
any untrue statement of a material fact, or omits to state a material fact
necessary in order to make the statements contained therein or herein not
misleading, as of the date such statement was made. There is no fact known to
the Borrower that has, or would in the now foreseeable future have, a material
adverse effect on the business, prospects or condition, financial or otherwise,
of the Borrower or any of the Subsidiaries or any other Loan Party, which fact
has not been set forth herein, in the Financial Statements, the Prospectus, the
1995 10-K Report, the Third Quarter 10-Q Report, the Projections, or any
certificate, opinion or other written statement so made or furnished to the
Agent or the Banks.
SECTION 3.15 LICENSES AND APPROVALS. The Borrower and each of the
Subsidiaries has all requisite power and authority and necessary licenses,
permits and governmental authorizations, including, without limitation,
licenses, permits and authorizations arising under or relating to Environmental
Laws and Regulations, to own and operate its properties and to carry on its
business as now conducted (collectively, the "LICENSES"). No event has occurred
that: (i) results in, or after notice or lapse of time or both would result in,
revocation or termination of any License, or (ii) materially and adversely
affects or in the future may (so far as the Borrower can now reasonably foresee)
materially adversely affect any of the rights of the Borrower or any of the
Subsidiaries under any License. The Borrower has no reason to believe (other
than in connection with there being no legal assurance thereof) that any License
will not be renewed in the ordinary course.
SECTION 3.16 LABOR DISPUTES; COLLECTIVE BARGAINING AGREEMENTS;
EMPLOYEE GRIEVANCES. (a) There are no collective bargaining agreements or other
labor contracts covering the Borrower or any Subsidiary; (b) no such collective
bargaining agreement or other labor contract will expire during the term of this
Agreement; (c) no union or other labor organization is seeking to organize, or
to be recognized as bargaining representative for, a bargaining unit of
employees of the Borrower or any Subsidiary; (d) there is no pending or
threatened strike, work stoppage, material unfair labor practice claim or
charge, arbitration or other material labor dispute against or affecting the
Borrower or any Subsidiary or their representative employees; (e) there has not
been, during the five (5) year period prior to the date hereof, a strike, work
stoppage, material unfair labor practice claim or charge, arbitration or other
material labor dispute against or affecting the Borrower or any Subsidiary or
any of their representative employees, and (f) there are no actions, suits,
charges, demands, claims, counterclaims or proceedings pending or, to the best
of the Borrower's knowledge, threatened against the Borrower or any of the
Subsidiaries, by or on behalf of, or with, its employees, other than employee
grievances arising in the ordinary course of business that are not, in the
aggregate, material.
SECTION 3.17 CONDITION OF ASSETS. The Collateral and all of the
assets and properties of the Borrower and its Subsidiaries that are reasonably
necessary for the operation of its business, are in good working condition,
ordinary wear and tear excepted, and are able to serve the function for which
they are currently being used.
43
SECTION 3.18 ERISA. (a) No Employee Benefit Plan is maintained
or has ever been maintained by any Loan Party or any ERISA Affiliate, nor has
any Loan Party or any ERISA Affiliate ever contributed to a Multiemployer Plan.
(b) There are no agreements which will provide payments to any
officer, employee, shareholder or highly compensated individual which will be
"parachute payments" under 280G of the Code that are nondeductible to any Loan
Party and which will be subject to tax under Section 4999 of the Code for which
any Loan Party will have a material withholding liability.
SECTION 3.19 MATERIAL AGREEMENTS. All of the agreements, contracts
and leases of the Borrower and its Subsidiaries with lodging industry,
residential and other customers relating to the provision of the Borrower's
video and video-related services (guest-pay, free-to-guest, right-of-entry and
other) are freely assignable by the Borrower or its Subsidiaries, except as
listed on Schedule 3.19 hereto. Xxxxxxxx has previously provided true and
correct copies of a representative sample of such contracts to the Agent,
including copies of any such contracts which are not freely assignable by the
Borrower or its Subsidiaries. Also set forth on Schedule 3.19 hereto is an
accurate and complete list of the following agreements, documents or instruments
to which the Borrower or any of its Subsidiaries is subject: (a) all material
master agreements with studios and other program providers, (b) any lease of
equipment having a remaining term of one year or longer and requiring aggregate
rental and other payments in excess of $50,000 per annum; and (c) all material
licenses and permits held by the Borrower or its Subsidiaries.
SECTION 3.20 COLLATERAL DOCUMENTS. (a) The Pledge Agreement is
effective to create in favor of the Agent, for the benefit of itself, the Banks
and the Issuing Banks, a legal, valid and enforceable security interest in the
Pledged Collateral (as defined in the Pledge Agreement) and, when the Pledged
Collateral is delivered to the Agent, the Pledge Agreement shall constitute a
fully perfected first priority Lien on, and security interest in, all right,
title and interest of the pledgor thereunder in such Pledged Collateral, in each
case prior and superior in right to any other Person.
(b) The Security Agreement is effective to create in favor of
the Agent, for the benefit of itself, the Banks and the Issuing Banks, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Security Agreement) and, when financing statements in appropriate form are filed
in the offices specified therein, the Security Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the grantors thereunder in such Collateral, in each case prior and superior
in right to any other Person, other than with respect to Permitted Liens and
other security interests permitted by the Loan Documents.
(c) When the Patent and Trademark Security Agreement is filed in
the United States Patent and Trademark Office, said Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in the Intellectual Property Collateral (as
defined in said Security Agreement) in which a security interest may be
perfected by filing, recording or registering a security agreement, financing
statement or analogous document in the United States Patent and Trademark
Office, in each case prior and superior in right to any other Person (it being
understood that subsequent recordings in the United
44
States Patent and Trademark Office may be necessary to perfect a lien on
registered patents, trademarks and applications therefor acquired by the Loan
Parties after the date hereof).
SECTION 3.21 SOLVENCY. The Borrower (individually, and on a
consolidated basis) and each of its Subsidiaries is Solvent on the date hereof
and will be Solvent after giving effect to the transactions contemplated by the
Loan Documents and the Senior Note Documents.
ARTICLE 4. CONDITIONS TO THE LOANS.
SECTION 4.1 CONDITIONS TO INITIAL LOANS. The obligation of each
Bank to make the initial Loan to be made by it hereunder shall be subject to the
fulfillment (to the satisfaction of the Agent and the Banks) of the following
conditions precedent on or prior to the Closing Date:
(a) LOAN DOCUMENTS. This Agreement shall have been executed by
the Borrower, the Agent, the Issuing Banks and each of the Banks; the Notes
shall have been executed by the Borrower; ResNet and LodgeNet Canada shall each
have executed its Guaranty; and each other Loan Document shall have been
executed by the parties thereto.
(b) COLLATERAL. The Borrower and the Subsidiaries shall have
executed and delivered the Collateral Documents, in appropriate form for
recording where necessary, together with:
(i) acknowledgment copies of all UCC-1 financing
statements filed, registered or recorded to perfect the security interests of
the Agent for the benefit of the Banks, or other evidence satisfactory to the
Agent that there has been filed, registered or recorded all financing statements
and other filings, registrations and recordings necessary and advisable to
perfect the Liens of the Agent for the benefit of the Banks in accordance with
applicable law;
(ii) written advice relating to such Lien and judgment
searches as the Agent shall have requested of the Borrower and its Subsidiaries,
and such termination statements or other documents as may be necessary to
confirm that the Collateral is subject to no other Liens in favor of any Persons
(other than Permitted Liens and any other security interests permitted under the
Loan Documents);
(iii) all certificates and instruments representing the
Pledged Collateral and undated stock transfer powers executed in blank;
(iv) evidence that all other actions necessary or, in
the opinion of the Agent and its counsel, desirable to perfect and protect the
first priority security interest created by the Collateral Documents (subject to
Permitted Liens and any other security interests permitted under the Loan
Documents), and to enhance the Agent's ability to preserve and protect its
interest in and access to the Collateral, have been taken;
45
(v) standard lenders payable endorsements with respect
to the insurance policies or other instruments or documents evidencing insurance
coverage on the properties of the Borrower and its Subsidiaries in accordance
with Section 6.8 hereof; and
(vi) funds sufficient to pay any filing or recording
tax or fees in connection with any and all UCC-1 financing statements and any
other filings or actions taken in regard to the Collateral.
(c) SENIOR NOTE REFINANCING. (i) the Senior 1996 Notes in an
aggregate principal amount of not less than $150,000,000 shall have been issued
on terms and conditions acceptable to the Agent; (ii) the Borrower's 9.95% and
10.35% Senior Notes due August 1, 2003 shall have been repaid in full, and the
Agent shall have received evidence that all indebtedness, obligations and
liabilities in connection therewith have been discharged at an aggregate cost to
the Borrower not exceeding $33,000,000; (iii) Amendment No. 1 to the Securities
Purchase Agreement relating to the Senior 1995 Notes shall have been executed
and delivered by the parties thereto; and (iv) the Notes hereunder shall be
outstanding and there shall not have occurred (and consummation of the
transactions contemplated hereby, including the issuance of the Senior 1996
Notes, shall not cause) any event of default or event, which, with notice or
lapse of time, or both, would constitute an event of default under the Senior
1995 Note Agreement or any other Senior Note Document.
(d) PAYMENT OF FEES. The Borrower shall have paid to the Agent
the Agency Fees due on the Closing Date and shall have executed and delivered to
the Agent the Letter Agreement.
(e) LEGAL OPINIONS. Xxxx X. Xxxxxxxx, Vice President, General
Counsel and Secretary of the Borrower, and Pillsbury Madison & Sutro LLP,
counsel to the Borrower and ResNet, shall have delivered their opinions to the
Agent substantially in the composite form of Exhibit I hereto; Xxxx X. Xxxxx,
LL.M. & Associates, special counsel to LodgeNet Canada, shall have delivered its
opinion in form and substance satisfactory to the Agent.
(f) FINANCIALS AND SENIOR NOTE DOCUMENTS. The Agent shall have
received true and complete copies of the following, each certified as such in a
certificate executed by the president, chief financial officer or chief
operating officer of the Borrower:
(i) The Financial Statements and the Projections; and
(ii) The Senior Note Documents, each as amended and in
effect on the date hereof.
(g) CORPORATE ORGANIZATION, AUTHORIZATION, GOOD STANDING. The
Agent shall have received copies of the following:
(i) Any consents, approvals and waivers referred to in
Section 3.2 hereof;
46
(ii) The certificate of incorporation of the Borrower
and of ResNet, each certified by the Secretary of State of Delaware; the
certificate of incorporation of LodgeNet Canada, certified by its corporate
secretary;
(iii) The by-laws of the Borrower, ResNet and LodgeNet
Canada certified by their respective corporate secretaries;
(iv) All corporate action taken by the Borrower, ResNet
and LodgeNet Canada to authorize the execution, delivery and performance of each
of the Loan Documents to which it is a party and the transactions contemplated
thereby, certified by their respective corporate secretaries;
(v) Good standing certificates, as of dates not more
than fifteen (15) days prior to the Closing Date, with respect to the Borrower,
from the States of Delaware, South Dakota, California, Texas, Florida, New York,
Illinois, Hawaii, Ohio, Washington, Georgia, Nevada, Arizona, Louisiana,
Colorado, Virginia, Michigan, Pennsylvania, North Carolina, Minnesota,
Wisconsin, South Carolina and New Jersey; with respect to ResNet, from the
States of Arizona, California, Colorado, Delaware, Florida, Illinois, Michigan,
Missouri, New Jersey, New York, South Dakota, Tennessee, Texas and Virginia; and
(vi) Incumbency certificates (with specimen signatures)
with respect to officers of the Borrower, ResNet and LodgeNet Canada.
(h) OFFICER'S CERTIFICATE. (i) The Borrower shall have
complied and shall then be in compliance with all of the terms, covenants and
conditions of this Agreement;
(ii) There shall exist no Default or Event of Default
hereunder;
(iii) The representations and warranties contained in
Article 3 hereof shall be true and correct on the Closing Date;
(iv) Since December 31, 1995, there has not occurred
any event or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect; and
(v) The Borrower (individually, and on a consolidated
basis) and each of its Subsidiaries shall be Solvent on the Closing Date and
will continue to be Solvent after giving effect to the transactions contemplated
hereby;
and the Agent shall have received a certificate of the chief financial officer
dated the Closing Date certifying, INTER ALIA, that the conditions set forth in
this subsection 4.1(h) are satisfied on such date.
(i) EXCHANGE OF NOTES. The Loans represented by the Notes
outstanding under the Original Loan Agreement (the "Original Notes") shall be
repaid, and the Original Notes shall be exchanged for Notes hereunder in
substantially the form of Exhibit B hereto.
47
(j) OTHER DOCUMENTS. The Agent shall have received such other
certificates, opinions, approvals, documents or other evidence of compliance
with the conditions set forth in this Section 4.1 as the Agent and its counsel
may request.
SECTION 4.2 CONDITIONS TO SUBSEQUENT LOANS AND L/CS. The
obligation of each Bank to make each Loan subsequent to its initial Loan and the
obligation of the Issuing Bank to issue each L/C shall be subject to the
fulfillment (to the satisfaction of the Agent) of the following conditions
precedent:
(a) In respect of each Loan, the Agent shall have received a
Borrowing Notice in accordance with Section 2.2 hereof.
(b) In respect of each requested L/C, the Issuing Bank and the
Agent shall have received a Notice of Issuance in accordance with Section 2.16
hereof, together with all other documents required to be delivered in connection
with a Notice of Issuance and all Application Documents, and the Issuing Bank
shall have been paid any and all fees then due in accordance with the terms of
Section 2.16 hereof.
(c) The Agent shall have received a Compliance Certificate dated
the date of such Loan or L/C (as the case may be) and effective as of such date,
and the matters certified therein, including, without limitation, the absence of
any Default or Event of Default, shall be true as of such date.
(d) Neither the Agent nor any Bank nor an Issuing Bank shall
have received from the Borrower any notice that any Collateral Document will no
longer secure on a first priority basis (subject to Permitted Liens and other
security interests permitted under the Loan Documents) future advances or future
Loans to be made or extended under this Agreement.
(e) All legal matters incident to such Loan or L/C (as the case
may be) shall be satisfactory to counsel for the Agent.
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER
INFORMATION.
While the Commitments are outstanding, and, in the event any Loan or
any L/C Obligation remains outstanding, so long as the Borrower is indebted to
the Banks or the Agent and until payment in full of the Notes and full and
complete performance of all of its other obligations arising hereunder, the
Borrower shall deliver to each Bank:
SECTION 5.1 ANNUAL FINANCIAL STATEMENTS. Annually, as soon as
available, but in any event within ninety (90) days after the last day of each
of its fiscal years, a consolidated and consolidating balance sheet of the
Borrower and the Subsidiaries as at such last day of the fiscal year, and
consolidated and consolidating statements of income and retained earnings and
statements of cash flow, for such fiscal year, each prepared in accordance with
generally accepted accounting principles consistently applied, in reasonable
detail, and, as to the consolidated statements, certified
48
without qualification by Xxxxxx Xxxxxxxx & Co. or another firm of independent
certified public accountants satisfactory to the Agent, or certified, as to the
consolidating statements, by the chief financial officer of the Borrower, as
fairly presenting the financial position and the results of operations of the
Borrower and the Subsidiaries as at and for the year ending on its date and as
having been prepared in accordance with generally accepted accounting
principles.
SECTION 5.2 QUARTERLY FINANCIAL STATEMENTS. As soon as available,
but in any event within forty-five (45) days after the end of the Borrower's
first three fiscal quarterly periods (and for purposes of calculating the
financial ratios in Section 6.9 hereof, for the immediately preceding two or
four consecutive full fiscal quarters (including fiscal quarters ending prior to
the date of this Agreement) necessary to such calculations), a consolidated and
consolidating balance sheet of the Borrower and the Subsidiaries as of the last
day of such quarter and consolidated and consolidating statements of income and
retained earnings and statements of cash flow, for such quarter, and on a
comparative basis figures for the corresponding period of the immediately
preceding fiscal year, all in reasonable detail, each such statement to be
certified in a certificate of the president, chief financial officer or chief
operating officer of the Borrower as accurately presenting the financial
position and the results of operations of the Borrower and the Subsidiaries as
at its date and for such quarter and as having been prepared in accordance with
generally accepted accounting principles consistently applied (subject to
non-material, year-end audit adjustments in accordance with generally accepted
accounting principles).
SECTION 5.3 PROJECTIONS. Annually, as soon as available, but in
any event within ninety (90) days after the last day of each of its fiscal
years, a forecasted consolidated balance sheet and related forecasted
consolidated statement of operations and statement of cash flows of the Borrower
for the period from the first day of the Borrower's then current fiscal year
through December 31, 2002, all prepared on a basis consistent with the Financial
Statements, together with appropriate supporting details and a statement of
underlying assumptions.
SECTION 5.4 COMPLIANCE INFORMATION. Promptly after a written
request therefor, such other financial data or information evidencing compliance
with the requirements of this Agreement, the Notes, the Collateral Documents and
the other Loan Documents, as any Bank may reasonably request from time to time.
SECTION 5.5 NO DEFAULT CERTIFICATE. At the same time as it
delivers the financial statements required under the provisions of Sections 5.1
and 5.2 hereof, a certificate of the president, chief financial officer or chief
operating officer of the Borrower to the effect that no Event of Default
hereunder and that no default under any other agreement to which the Borrower or
any of its Subsidiaries is a party or by which it is bound, or by which, to the
best knowledge of the Borrower or any Subsidiary, any of its properties or
assets, taken as a whole, may be materially affected, and no event which, with
the giving of notice or the lapse of time, or both, would constitute such an
Event of Default or default, exists, or, if such cannot be so certified,
specifying in reasonable detail the exceptions, if any, to such statement. Such
certificate shall be accompanied by a detailed calculation indicating compliance
with the covenants contained in Sections 6.9, 7.13 and 7.14 hereof.
49
SECTION 5.6 ACCOUNTANTS' REPORTS. Promptly upon receipt thereof,
copies of all reports submitted to the Borrower or any of its Subsidiaries by
its independent accountants in connection with any annual or interim audit or
review of the books of the Borrower or its Subsidiaries made by such
accountants, including, without limitation, any report addressing whether a
Default or an Event of Default had occurred hereunder.
SECTION 5.7 COPIES OF DOCUMENTS. Promptly upon their becoming
available, copies of any: (i) financial statements, projections, non-routine
reports, notices (other than routine correspondence), requests for waivers and
proxy statements, in each case delivered by the Borrower or any of its
Subsidiaries to any holder of Indebtedness of the Borrower other than the Banks;
(ii) correspondence or notices received by the Borrower from any federal, state
or local governmental authority that regulates the operations of the Borrower or
any of its Subsidiaries, relating to an actual or threatened change or
development that would be materially adverse to the Borrower or any Subsidiary;
(iii) registration statements and any amendments and supplements thereto, and
any regular and periodic reports, if any, filed by the Borrower or any of its
Subsidiaries with any securities exchange or with the SEC (or any governmental
authority succeeding to any or all of the functions of the SEC); (iv) letters of
comment or correspondence sent to the Borrower or any of its Subsidiaries by any
such securities exchange or the SEC in relation to the Borrower or any of its
Subsidiaries and its affairs, except to the extent sent in the ordinary course
of business with respect to routine filings; and (v) any appraisals received by
the Borrower or any of its Subsidiaries with respect to material properties or
assets of the Borrower or its Subsidiaries.
SECTION 5.8 NOTICES OF DEFAULTS. Promptly, notice of the
occurrence of any Default or Event of Default, or any event that would
constitute or cause a material adverse change in the condition, financial or
otherwise, or the operations of the Borrower or any of its Subsidiaries.
SECTION 5.9 ERISA NOTICES AND REQUESTS. Notice of each of the
following within ten (10) days after such event or occurrence:
(a) any Loan Party or ERISA Affiliate knowing or having reason
to know that a Termination Event has occurred or that a Defined Contribution
Plan has been terminated or partially terminated, together with a written
statement by the appropriate chief financial officer setting forth the details
of such event;
(b) the filing of a request for a funding waiver by any Loan
Party or ERISA Affiliate with respect to any Pension Plan, and a copy of such
request and all communications received by any Loan Party or ERISA Affiliate
with respect to such request;
(c) receipt by any Loan Party or ERISA Affiliate of a notice of
the PBGC's intent to terminate a Pension Plan, and a copy of such notice;
(d) the failure of any Loan Party or ERISA Affiliate to make a
required installment or payment under Section 302 of ERISA or Section 412 of the
Code by the applicable due date thereof, together with a written notice of such
failure;
50
(e) any Loan Party or ERISA Affiliate knowing or having reason
to know that a prohibited transaction (as defined in Section 406 of ERISA or
Section 4975 of the Code) has occurred with respect to any Employee Benefit
Plan, and a written statement by the appropriate chief financial officer setting
forth the details of such transaction and the action taken with respect thereto;
(f) any increase in the benefits of any existing Employee
Benefit Plan or the establishment of any new Employee Benefit Plan or the
commencement of contributions to any Employee Benefit Plan to which any Loan
Party or ERISA Affiliate had not theretofore been contributing, together with a
written notice of such occurrence;
(g) receipt by any Loan Party or ERISA Affiliate of any
favorable or unfavorable determination letter from the IRS regarding the
qualification of a Pension Plan under Section 401(a) of the Code, together with
a copy of such letter;
(h) the filing of an annual report (Form 5500 series), including
Schedule B thereto, filed by any Loan Party or ERISA Affiliate with respect to
an Employee Benefit Plan, together with a copy of such report;
(i) receipt by any Loan Party or ERISA Affiliate of an actuarial
report for any Pension Plan, together with a copy of such report;
(j) receipt by any Loan Party or ERISA Affiliate of all
correspondence with the PBGC, the Secretary of Labor of the United States of
America or any representative of the IRS with respect to any Employee Benefit
Plans, relating to an actual or threatened change or development which would be
materially adverse to the Borrower or any ERISA Affiliate; and
(k) receipt by any Loan Party or ERISA Affiliate of any
correspondence from a Multiemployer Plan with respect to withdrawal liability.
SECTION 5.10 ADDITIONAL INFORMATION; GUEST-PAY ROOMS. Such other
information regarding the business, affairs and condition of the Borrower and
its Subsidiaries as the Agent or the Majority Banks may from time to time
reasonably request, including, without limitation, as soon as available, but in
any event not later than forty-five (45) days after the end of the first three
fiscal quarters of the Borrower and not later than ninety (90) days after the
end of the last fiscal quarter of the Borrower, a report, certified by the
president, chief financial officer or chief operating officer of the Borrower as
having been prepared personally by him or under his personal supervision and to
be substantially true and complete, of (i) the number of Guest-Pay Rooms served
by the Borrower and its Subsidiaries and (ii) the number of residential units
served by ResNet (on a state-by-state basis) as of the last day of such fiscal
quarter, together with such other information with respect to xxxxxxxx,
operating costs, Operating Cash Flow or other matters as the Agent or the
Majority Banks may reasonably request from time to time.
51
ARTICLE 6. AFFIRMATIVE COVENANTS.
While the Commitments are outstanding, and, in the event any Loan or
any L/C Obligation remains outstanding, so long as the Borrower is indebted to
the Banks or the Agent, and until payment in full of the Notes and full and
complete performance of all of its other obligations arising hereunder, the
Borrower shall and shall cause each Subsidiary to:
SECTION 6.1 BOOKS AND RECORDS. Keep proper books of record and
account in a manner reasonably satisfactory to the Agent in which full, true and
correct entries shall be made of all dealings or transactions in relation to its
business and activities.
SECTION 6.2 INSPECTIONS AND AUDITS. Permit the Banks to make or
cause to be made (and, after the occurrence of and during the continuance of an
Event of Default, at the Borrower's expense), inspections and audits of any
books, records and papers of the Borrower and each of its Subsidiaries and to
make extracts therefrom and copies thereof, or to make inspections and
examinations of any properties and facilities of the Borrower and its
Subsidiaries (including the Collateral), on reasonable notice, at all such
reasonable times and as often as any Bank may reasonably require, in order to
assure that the Borrower is and will be in compliance with its obligations under
the Loan Documents (including the Collateral Documents) or to evaluate the
Banks' investment in the then outstanding Notes. The Agent and each Bank agrees
to hold in confidence all information, whether furnished to it pursuant to any
such inspection or audit or otherwise under the Loan Documents, that is
indicated as confidential by the Borrower in writing at the time furnished and
not otherwise generally available to the public; PROVIDED, THAT, the Agent and
the Banks shall be permitted to disclose such confidential information (a) among
each other and their respective directors, officers, employees, agents and
Affiliates, (b) to their attorneys and accountants, (c) in connection with the
enforcement of the rights of the Agent or the Banks under the Loan Documents,
(d) in connection with assignments or participations and the solicitation
thereof pursuant to Section 10.13 hereof, provided that each such actual or
prospective assignees or purchaser agrees to be bound by the provisions of this
sentence, and (e) as may otherwise be requested by any regulatory authority
having jurisdiction over the Agent, the Banks or such participant or assignee,
or by any applicable law, rule, regulation or judicial process.
SECTION 6.3 MAINTENANCE AND REPAIRS. Maintain in good repair,
working order and condition, subject to normal wear and tear, all properties and
assets from time to time owned by it and used in or necessary for the operation
of its business (including the Collateral), and make all reasonable repairs,
replacements, additions and improvements thereto, unless any failure to
accomplish any of the foregoing would not and could not be reasonably expected
to, either singly or in the aggregate, have a material adverse effect on the
Collateral or the business, operations or financial condition of the Borrower or
any Subsidiary.
SECTION 6.4 CONTINUANCE OF BUSINESS. Do, or cause to be done, all
things reasonably necessary to preserve and keep in full force and effect its
corporate existence and all permits, rights and privileges necessary for the
proper conduct of its business, comply in all material respects with all
applicable laws, regulations and orders and, except as otherwise permitted
pursuant to and in accordance with Sections 7.4 and 7.7, continue to engage in
the same line of business.
52
SECTION 6.5 COPIES OF CORPORATE DOCUMENTS. Subject to the
prohibitions set forth in Section 7.12 hereof, promptly deliver to the Agent
copies of any amendments or modifications to its and any Subsidiary's
certificate of incorporation and by-laws, certified with respect to the
certificate of incorporation by the Secretary of State of its state of
incorporation and, with respect to the by-laws, by the secretary or assistant
secretary of such corporation.
SECTION 6.6 PERFORM OBLIGATIONS. Pay and discharge all of its
obligations and liabilities, including, without limitation, all taxes,
assessments and governmental charges upon its income and properties when due,
unless and to the extent only that such obligations, liabilities, taxes,
assessments and governmental charges shall be contested in good faith and by
appropriate proceedings and that, to the extent required by generally accepted
accounting principles then in effect, proper and adequate book reserves relating
thereto are established by the Borrower, or, as the case may be, by the
appropriate Subsidiary, and then only to the extent that a bond is filed in
cases where the filing of a bond is necessary to avoid the creation of a Lien
against any of its properties.
SECTION 6.7 NOTICE OF LITIGATION. Promptly notify the Agent in
writing of any litigation, legal proceeding or dispute, other than disputes in
the ordinary course of business or, whether or not in the ordinary course of
business, involving amounts in excess of $2,500,000, affecting the Borrower or
any Subsidiary whether or not fully covered by insurance, and regardless of the
subject matter thereof (excluding, however, any actions relating to workers'
compensation claims or negligence claims relating to use of motor vehicles, if
fully covered by insurance, subject to deductibles).
SECTION 6.8 INSURANCE. (a) (i) In addition to insurance
requirements set forth in the Collateral Documents, maintain with responsible
insurance companies acceptable to the Agent such insurance on such of its
properties, in such amounts and against such risks as is customarily maintained
by similar businesses (provided, that the Borrower and each Subsidiary may in
lieu of maintaining such insurance maintain a system or systems of
self-insurance in accordance with good business practice and as customary for
corporations of established reputation engaged in the same or similar business
and owning and operating similar properties as the Borrower or such Subsidiary),
including workers' compensation insurance, general liability and property and
casualty insurance. All such insurance (except for workers' compensation
insurance) shall name the Agent as loss payee and as additional insured (in the
case of general liability), for the benefit of itself, the Banks and the Issuing
Banks, as their interests may appear. Upon request of the Agent or any Bank,
the Borrower shall furnish the Agent, with sufficient copies for each Bank, at
reasonable intervals (but not more than once per policy year), a certificate of
an officer of the Borrower (and, if requested by the Agent, any insurance broker
of the Borrower) setting forth the nature and extent of all insurance maintained
by the Borrower and its Subsidiaries in accordance with this Section 6.8 or any
Collateral Document (and which, in the case of a certificate of a broker, was
placed through such broker).
(b) Carry all insurance available through the PBGC or any
private insurance companies covering its obligations, if any, to the PBGC.
SECTION 6.9 FINANCIAL COVENANTS. Have or maintain, on a
consolidated basis, at all times:
53
(a) Total Leverage during any fiscal quarter ending in any
period set forth below at not more than the applicable ratio set forth opposite
such period:
During each Fiscal Quarter
Ending in Each of the
Following Periods Maximum Total Leverage
-------------------------- ----------------------
from the Closing Date through
December 31, 1997 5.75 to 1
from January 1, 1998 through
December 31, 1998 5.25 to 1
from January 1, 1999 and
continuing thereafter 4.50 to 1
(b) Interest Coverage for each fiscal period set forth below
(determined as of the last day of such fiscal period) at not less than the
applicable ratio set forth opposite such fiscal period:
Fiscal Period Minimum Interest Coverage
----------------- -------------------------
One fiscal quarter ending
March 31, 1997 1.25 to 1
Two fiscal quarters ending
June 30, 1997 1.50 to 1
Three fiscal quarters ending
September 30, 1997 1.50 to 1
Four fiscal quarters ending
December 31, 1997 1.75 to 1
Four fiscal quarters ending at
each of the following dates:
March 31, June 30, September 30
and December 31 in each of the
fiscal years 1998, 1999, 2000,
2001 and 2002 2.00 to 1
(c) That number of Guest-Pay Rooms as of the end of each fiscal
quarter of the Borrower (i) which is not less than ninety percent (90%) of the
number of Guest Pay Rooms as of the end of the immediately preceding fiscal
quarter of the Borrower and (ii) which is not less than ninety percent (90%) of
the number of Guest Pay Rooms as of the end of the corresponding fiscal quarter
of the Borrower ending in the immediately preceding fiscal year.
54
SECTION 6.10 NOTICE OF CERTAIN EVENTS. (a) Promptly notify the
Agent in writing of the occurrence of any Reportable Event, as defined in
Section 4043 of ERISA, if a notice of such Reportable Event is required under
ERISA to be delivered to the PBGC within 30 days after the occurrence thereof,
together with a description of such Reportable Event and a statement of the
action the Loan Party or the ERISA Affiliate intends to take with respect
thereto, together with a copy of the notice thereof given to the PBGC.
(b) Promptly notify the Agent in writing if any Loan Party or
ERISA Affiliate receives an assessment of withdrawal liability in connection
with a complete or partial withdrawal with respect to any Multiemployer Plan,
together with a statement of the action that such Loan Party or ERISA Affiliate
intends to take with respect thereto.
(c) Promptly notify the Agent in writing if the Borrower or any
other Loan Party receives: (i) any notice of any violation or administrative or
judicial complaint or order having been filed or about to be filed against the
Borrower or such other Loan Party alleging violations of any Environmental Law
and Regulation, or (ii) any notice from any governmental body or any other
Person alleging that the Borrower or such other Loan Party is or may be subject
to any Environmental Liability; and promptly upon receipt thereof, provide the
Agent with a copy of such notice together with a statement of the action the
Borrower or such other Loan Party intends to take with respect thereto.
SECTION 6.11 COMPLY WITH ERISA. Materially comply with all
applicable provisions of ERISA and the Code now or hereafter in effect.
SECTION 6.12 ENVIRONMENTAL COMPLIANCE. Operate all property owned,
operated or leased by it in material compliance with all Environmental Laws and
Regulations, such that no Environmental Liability arises under any Environmental
Laws and Regulations, which would result in a Lien on any property of the
Borrower or any other Loan Party; PROVIDED, HOWEVER, that in the event that any
such claim is made or any such Environmental Liability arises, the Borrower or
such other Loan Party shall (subject to the Borrower's or such Loan Party's
right to contest such claim in good faith and at its own expense by appropriate
legal proceedings, PROVIDED, HOWEVER, that during such contest, the Borrower or
such other Loan Party shall, at the option of the Agent, set aside reserves in
an amount satisfactory to the Agent, assuring the discharge of the Borrower's or
such Loan Party's obligations thereunder and of any additional interest charge,
penalty or expense arising from or incurred as a result of such contest), at its
own cost and expense, in a timely manner, immediately satisfy such claim or
Environmental Liability.
SECTION 6.13 FURTHER ASSURANCES.
(a) DISCLOSURE. The Borrower shall ensure that all written
information, exhibits and reports furnished to the Agent or the Banks do not and
will not contain any untrue statement of a material fact and do not and will not
omit to state any material fact or any fact necessary to make the statements
contained therein not misleading, in light of the circumstances in which made,
and will promptly disclose to the Agent and the Banks and correct any defect or
error that may be discovered therein or in any Loan Document or in the
execution, acknowledgment or recordation thereof.
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(b) PROTECTION OF EXISTING INTERESTS. Promptly upon request by
the Agent or the Majority Banks, the Borrower shall (and shall cause any of its
Subsidiaries to) do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register, any and all such further acts, deeds,
conveyances, security agreements, mortgages, assignments, estoppel certificates,
financing statements and continuations thereof, termination statements, notices
of assignment, transfers, certificates, assurances and other instruments which
the Agent or such Banks, as the case may be, may reasonably require from time to
time in order (i) to carry out more effectively the purposes of this Agreement
or any other Loan Document, (ii) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or interests covered by any
of the Collateral Documents, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agent and the Banks the
rights granted or now or hereafter intended to be granted to the Banks under any
Loan Document or under any other document executed in connection therewith.
(c) HEADQUARTERS PROPERTY. Within 180 days after completion of
construction on the real property constituting Borrower's new chief executive
offices, if the Borrower shall not have refinanced such property with a third
party lender as permitted by subsection 7.1(b) hereof, then the Borrower shall
execute and deliver a mortgage, in form and substance satisfactory to the Agent,
granting the Agent a perfected Lien (subject only to Permitted Liens and other
security interests permitted under the Loan Documents), together with any such
surveys, title insurance policies, environmental reports, appraisals or other
instruments and documents as the Agent may require.
(d) SECURITY INTEREST IN ADDITIONAL COLLATERAL. Promptly, and
in any event within 30 days after the acquisition or construction by the
Borrower, ResNet or any other Restricted Subsidiary of property of the type that
would have constituted Collateral on the date hereof (and also including real
property that is not being held for sale by the Borrower or its Subsidiaries),
in each case in which the Agent does not have a perfected security interest
under the Collateral Documents (other than (x) property of the type covered by
the Pledge Agreement which is provided for in subsection 6.13(e) hereof, (y)
property subject to Liens permitted under subsection 7.2(d) hereof under
agreements which prohibit the creation of additional Liens on such property, or
(z) any other property with a fair market value of less than $500,000
individually; PROVIDED that all such other property collectively shall have a
fair market value of less than $2,500,000), or within 30 days after request by
the Agent with respect to any other property of the Borrower or its Restricted
Subsidiaries deemed material by the Agent or the Majority Banks (the "ADDITIONAL
COLLATERAL"), the Borrower will, and will cause each of its Restricted
Subsidiaries to, take all necessary action, including (i) the amendment or
supplementing of the Security Agreement to subject such Additional Collateral to
the terms thereof, (ii) the filing of appropriate financing statements under the
provisions of the UCC, applicable foreign, domestic or local laws, rules or
regulations in each of the offices where such filing is necessary or
appropriate, and (iii) with respect to real property, the execution of a
mortgage and the providing of environmental reports, title insurance policies,
surveys and appraisals, in order to grant to the Agent a perfected Lien (subject
only to Permitted Liens and other security interests permitted under the Loan
Documents) in such Collateral pursuant to, and to the full extent required by,
the Collateral Documents and this Agreement.
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(e) ADDITIONAL PLEDGE. The Borrower shall, and shall cause each
Restricted Subsidiary to, pursuant to and in accordance with the Pledge
Agreement, pledge and deliver to the Agent for the benefit of itself, the Banks
and the Issuing Banks, all shares of stock, intercompany promissory notes and
other property that would have constituted Collateral under the Pledge Agreement
on the date hereof that are acquired by the Borrower or any Restricted
Subsidiary after the date hereof.
(f) GRANT OF SECURITY BY NEW RESTRICTED SUBSIDIARIES. The
Borrower will cause each Restricted Subsidiary of the Borrower established or
created after the Closing Date to grant to the Agent a first priority Lien
(subject to Permitted Liens and other security interests permitted under the
Loan Documents) on all property (tangible and intangible) of such Restricted
Subsidiary by executing and delivering an appropriate supplement to the Security
Agreement and an appropriate supplement to the Pledge Agreement, or on other
terms satisfactory in form and substance to the Agent. The Borrower shall cause
each such Restricted Subsidiary, at its own expense, to execute, acknowledge and
deliver, or cause the execution, acknowledgment and delivery of, and thereafter
register, file or record in any appropriate governmental office, any documents
or instruments reasonably deemed by the Agent to be necessary or desirable for
the creation and perfection of the foregoing Liens. The Borrower will cause
each of its Restricted Subsidiaries to take all actions requested by the Agent
(including, without limitation, the filing of UCC-1s) in connection with the
granting of such security interests.
(g) ADDITIONAL GUARANTORS. The Borrower will cause (i) each
Wholly-Owned Subsidiary of the Borrower established or created after the Closing
Date, (ii) ResNet LLC or any other Subsidiary of ResNet Communications, Inc.,
and (iii) any other Subsidiary of the Borrower designated by the Borrower as a
Guarantor, to execute an appropriate Guaranty satisfactory in form and substance
to the Agent pursuant to which such Subsidiary shall guarantee the Obligations
of the Borrower hereunder.
ARTICLE 7. NEGATIVE COVENANTS.
So long as any Bank shall have any Commitment hereunder, or any Loan
or any other Obligation shall remain outstanding, unpaid or unsatisfied to the
Banks, the Issuing Banks or the Agent, the Borrower shall not, and shall not
permit any Restricted Subsidiary or any of its other Subsidiaries, to do, agree
to do, or permit to be done, any of the following:
SECTION 7.1 INDEBTEDNESS. As to the Borrower or any Restricted
Subsidiary, create, incur, permit to exist or have outstanding any Indebtedness,
except:
(a) Indebtedness of the Borrower and the Guarantors to the Banks
and the Agent under this Agreement and the Notes;
(b) Indebtedness of the Borrower incurred pursuant to the Senior
1995 Notes and the Senior 1996 Notes;
(c) Permitted Debt and the TCI Convertible Debt;
57
(d) Taxes, assessments and governmental charges, non-interest
bearing accounts payable and accrued liabilities, in any case not more than 120
days past due from the original due date thereof, and non-interest bearing
deferred liabilities other than for borrowed money (e.g., deferred compensation
and deferred taxes), in each case incurred and continuing in the ordinary course
of business;
(e) Indebtedness secured by the security interests referred to
in subsection 7.2(b) hereof and Capitalized Lease Obligations, in an aggregate
amount for such Indebtedness and Capitalized Lease Obligations not exceeding
$5,000,000, and in each case incurred only if, after giving effect thereto, the
limitation on Capital Expenditures set forth in Section 7.13 hereof would not be
breached;
(f) As set forth on Schedule 7.1 hereto;
(g) Indebtedness, not exceeding an amount equal to 5% of the
consolidated assets of the Borrower and its Restricted Subsidiaries taken as a
whole, of Restricted Subsidiaries which are acquired by the Borrower after the
date hereof; PROVIDED, HOWEVER, that such Indebtedness was not created in
anticipation of or in connection with such acquisition;
(h) Indebtedness not to exceed $15,000,000 in the aggregate
incurred by the Borrower in connection with its purchase and construction of
improvements on real property constituting the Borrower's new chief executive
offices; PROVIDED, THAT such Indebtedness shall not exceed the lesser of the
cost or fair market value of such real property and shall not be renewed,
extended or, except in accordance with Section 7.8 hereof, prepaid from the
proceeds of any borrowing by the Borrower or any Subsidiary;
(i) Refinancings of Indebtedness permitted pursuant hereto in
accordance with Section 7.8 hereof; and
(j) Permitted Intercompany Debt, so long as (i) no Default or
Event of Default has occurred and is continuing either before or after giving
effect thereto, (ii) no Material Adverse Effect would result therefrom, and
(iii) during the time such Debt is outstanding, neither ResNet nor ResNet LLC
shall make any distributions on or in respect of its capital stock or membership
interests to any Person other than the Borrower or ResNet; PROVIDED, HOWEVER,
that ResNet LLC may make such distributions as are permitted by subsection
7.5(c) hereof.
SECTION 7.2 LIENS. Create, or assume or permit to exist, any Lien
on any of the properties or assets of the Borrower or any Restricted Subsidiary,
whether now owned or hereafter acquired, except:
(a) Permitted Liens;
(b) Purchase money mortgages or security interests, conditional
sale arrangements and other similar security interests, on motor vehicles and
equipment acquired by the Borrower or any Subsidiary (hereinafter referred to
individually as a "PURCHASE MONEY SECURITY
58
INTEREST") with the proceeds of the Indebtedness referred to in subsection
7.1(e) hereof; PROVIDED, HOWEVER, that:
(i) The transaction in which any Purchase Money
Security Interest is proposed to be created is not then prohibited by this
Agreement;
(ii) Any Purchase Money Security Interest shall attach
only to the property or asset acquired in such transaction and shall not extend
to or cover any other assets or properties of the Borrower or a Subsidiary;
(iii) The Indebtedness secured or covered by any
Purchase Money Security Interest shall not exceed the lesser of the cost or fair
market value of the property or asset acquired and shall not be renewed,
extended or, except in accordance with Section 7.8 hereof, prepaid from the
proceeds of any borrowing by the Borrower or any Subsidiary; and
(iv) Any such Lien shall be created within one hundred
twenty (120) days after the date on which the property or asset to which such
Lien relates is acquired;
(c) The interests of the lessor under any Capitalized Lease
permitted hereunder;
(d) As set forth on Schedule 7.2 hereto;
(e) A mortgage securing the Indebtedness referred to in
subsection 7.1(h) hereof; PROVIDED THAT such mortgage shall attach only to the
real property to which such Indebtedness relates and shall not extend to or
cover any other assets or properties of the Borrower or a Subsidiary; and
(f) Liens securing Indebtedness of newly-acquired Restricted
Subsidiaries; PROVIDED, THAT such Liens (i) existed at the time such Restricted
Subsidiary was acquired, extend only to the property and assets of such
Restricted Subsidiary and were not created in anticipation of or in connection
with such acquisition, (ii) do not exceed 5% of the consolidated assets of the
Borrower and its Restricted Subsidiaries taken as a whole, and (iii) secure
Indebtedness which does not exceed the limitation set forth in subsection 7.1(g)
hereof.
SECTION 7.3 GUARANTIES. As to the Borrower or any Restricted
Subsidiary, assume, endorse, be or become liable for, or guarantee, the
obligations of any Person, except:
(a) as permitted under Sections 7.1 and 7.9 hereof; and
(b) by the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business.
For the purposes hereof, the term "guarantee" or "guaranties" shall include any
agreement, whether such agreement is on a contingency or otherwise, to purchase,
repurchase or otherwise acquire
59
Indebtedness of any other Person, or to purchase, sell or lease, as lessee or
lessor, property or services, in any such case primarily for the purpose of
enabling another person to make payment of Indebtedness, or to make any payment
(whether as an advance, capital contribution, purchase of an equity interest or
otherwise) to assure a minimum equity, asset base, working capital or other
balance sheet or financial condition, in connection with the Indebtedness of
another Person, or to supply funds to or in any manner invest in another Person
in connection with such Xxxxxx's Indebtedness.
SECTION 7.4 MERGERS, ACQUISITIONS. As to the Borrower or any
Restricted Subsidiary, merge or consolidate with any Person (whether or not the
Borrower or any Subsidiary is the surviving entity), or acquire all or
substantially all of the assets or any of the capital stock of any Person;
except, so long as no Default or Event of Default shall have occurred and be
continuing either immediately before or after giving effect thereto and no
Material Adverse Effect would result therefrom, that (a) any Wholly-Owned
Subsidiary of the Borrower may merge with and into the Borrower so long as the
Borrower is the surviving entity, (b) any Wholly-Owned Subsidiary of the
Borrower may merge with and into any other Wholly-Owned Subsidiary of the
Borrower, and (c) any acquisition constituting an Investment made in accordance
with the conditions set forth in subsection 7.9(e) hereof shall be permitted
hereunder.
SECTION 7.5 REDEMPTIONS; DISTRIBUTIONS.
(a) As to the Borrower or any Restricted Subsidiary, make or
become obligated to make, directly or indirectly, any purchase, redemption,
retirement, repayment, prepayment, defeasance, or acquisition, whether by way of
put, call, sinking fund or otherwise, with respect to any shares of any class of
capital stock (or warrants or options with respect thereto) of the Borrower or,
except as permitted in accordance with subsections 7.9(d) or 7.9(e) hereof, any
Subsidiary, now or hereafter outstanding or set apart any sum for any such
purpose; PROVIDED, HOWEVER, that the Borrower may purchase or acquire shares of
capital stock of the Borrower or a Restricted Subsidiary (or options, warrants
or other rights to acquire such capital stock) in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of capital stock of
the Borrower or such Restricted Subsidiary; or
(b) As to the Borrower, declare or pay any dividends or make any
distribution of any kind on the Borrower's outstanding stock, or set aside any
sum for any such purpose, PROVIDED, HOWEVER, that the Borrower may (i) declare
or pay any dividend payable solely in shares of its capital stock and (ii) so
long as no Default or Event of Default has occurred and is continuing, pay
dividends on shares of preferred stock issued after the date of this Agreement
and solely for cash proceeds if such dividends do not exceed an annual amount
equal to ten percent (10%) of such cash proceeds (the "PREFERRED STOCK
DIVIDENDS"); or
(c) As to any Restricted Subsidiary, declare or pay any
dividends or make any distribution of any kind on the outstanding capital stock
(or membership interests, in the case of a limited liability company) of any
Restricted Subsidiary, or set aside any sum for any such purpose, except for
payments or distributions made to the Borrower; PROVIDED, HOWEVER, that ResNet
LLC shall be permitted to pay pro rata dividends or distributions on its
outstanding membership
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interests, including the interests of its minority member(s), for the purpose of
enabling its members to meet their federal, state and local estimated tax
obligations.
SECTION 7.6 STOCK ISSUANCES. As to any Restricted Subsidiary of
the Borrower, not issue any additional shares or any right or option to acquire
any shares, or any security convertible into any shares, of such Restricted
Subsidiary's capital stock, except (a) as permitted under Section 7.5 hereof,
(b) for the purpose of qualifying directors of such Restricted Subsidiary, (c)
for issuances, at the greater of cost or fair value (as determined in good faith
by the Borrower's board of directors), of securities or other ownership
interests in any Restricted Subsidiary of the Borrower constituting an
Investment made after the date of this Agreement in accordance with subsection
7.9(e) hereof, and (d) for issuances of securities in any Restricted Subsidiary
at a price equal to the greater of book value or fair value (as determined in
good faith by the Borrower's board of directors), which issuances do not
exceed, in the aggregate, 40% of the issued and outstanding capital stock of
such Restricted Subsidiary (or 50% of the issued and outstanding capital stock,
in the case of ResNet) and subject to the further condition that no restriction
shall be imposed or permitted to exist on Borrower's right or ability to receive
dividend payments or other cash flow from such Restricted Subsidiary or to
exercise its voting rights as to such Restricted Subsidiary in each case in an
amount or percentage at least proportionate to its ownership interest in such
Restricted Subsidiary; PROVIDED, HOWEVER, that all issuances of securities or
other ownership interests permitted under clauses (c) and (d) above shall not
exceed a Substantial Portion in regard to Restricted Subsidiaries other than
ResNet.
SECTION 7.7 CHANGES IN BUSINESS; ASSET DISPOSITIONS. Make any
material change in its business, or in the nature of its operation, or liquidate
or dissolve itself (or suffer any liquidation or dissolution), or make any Asset
Disposition or sell or transfer (other than in an original issuance) any shares
of stock or any Indebtedness, whether now owned or hereafter acquired, or
discount, sell, pledge, hypothecate or otherwise dispose of accounts receivable;
except (a) (i) the Borrower may dissolve any Subsidiary which is not a
Restricted Subsidiary, provided, that, immediately thereafter, all of the
proceeds thereof are received by the Borrower in proportion to its ownership of
such Subsidiary and (ii) the Borrower and its Subsidiaries may make Asset
Dispositions which, in the aggregate in any fiscal year, do not constitute a
Substantial Portion, PROVIDED, THAT (1) the asset which is the subject of such
Asset Disposition shall not consist of any security or other ownership interest
in a Restricted Subsidiary, (2) no Default or Event of Default shall have
occurred and be continuing either immediately before or after giving effect
thereto, (3) no Material Adverse Effect would result therefrom, (4) the
consideration received therefor is at least equal to the fair market value of
such Assets, (5) the consideration received therefor is at least 75% in cash and
the balance in a promissory note on commercially reasonable terms and not
subordinate to any other Indebtedness of the purchaser thereof and (6) the
aggregate net proceeds thereof are applied as required by subsection 2.8(d)
hereof; and (b) as permitted pursuant to and in accordance with subsection
7.9(e) hereof.
SECTION 7.8 PREPAYMENTS AND REPAYMENTS OF INDEBTEDNESS. As to the
Borrower or any Restricted Subsidiary, make any voluntary or optional
prepayment, repurchase, redemption or defeasance of any Indebtedness for
borrowed money incurred or permitted to exist under the terms of this Agreement,
other than Indebtedness evidenced by the Notes; PROVIDED, HOWEVER, that
61
the Borrower or any Restricted Subsidiary may refinance Indebtedness for money
borrowed incurred pursuant to and in accordance with Section 7.1 hereof, so long
as: (1) except to the extent otherwise permitted pursuant to subsection 7.1(g)
hereof, the principal amount of the proposed Indebtedness shall not exceed the
principal amount of the Indebtedness being refinanced, (2) such refinancing
would not result in the payment of a prepayment penalty or other similar fees in
respect thereof which in the aggregate would exceed $10,000,000, but in any case
payment of such penalty or fees shall be permitted only to the extent such
penalty or fees are payable out of the proceeds of the proposed Indebtedness,
(3) the terms and conditions of the proposed Indebtedness are no less favorable
to the Borrower, its Restricted Subsidiaries or, in the Agent's determination,
the Banks, than the Indebtedness being refinanced, and (4) no Default or Event
of Default shall have occurred and be continuing either immediately before or
after giving effect to such refinancing and no Material Adverse Effect would
result from such refinancing.
SECTION 7.9 INVESTMENTS. Make, or suffer to exist, any Investment
in any Person, including, without limitation, any shareholder, director, officer
or employee of the Borrower or any of its Subsidiaries, except:
(a) Investments in:
(i) obligations issued or guaranteed by the United
States of America;
(ii) certificates of deposit, bankers acceptances and
other "money market instruments" issued by any commercial bank organized under
the laws of the United States or any State thereof or any other country which is
a member of the Organization for Economic Cooperation and Development (provided
that such bank is acting through a branch or agency located in the United
States) and having capital and surplus in an aggregate amount of not less than
$100,000,000 (an "ELIGIBLE BANK");
(iii) open market commercial paper bearing the highest
credit rating issued by Standard & Poor's Corporation or by another nationally
recognized credit rating agency;
(iv) repurchase agreements entered into with any
Eligible Bank relating to United States of America government obligations; and
(v) shares of "money market funds", each having net
assets of not less than $100,000,000;
in each case maturing or being due or payable in full not more than 180 days
after the Borrower's acquisition thereof;
(b) Investments in the form of loans to employees of the
Borrower or any Subsidiary, PROVIDED THAT the outstanding principal amount of
all such loans to any one employee shall at no time exceed $60,000 and that the
aggregate outstanding principal amount of all such loans shall at no time exceed
$250,000;
62
(c) Investments by the Borrower in any Subsidiary and by any
Subsidiary in the Borrower or another Subsidiary as in effect on the date
hereof;
(d) So long as no Default or Event of Default shall have
occurred and be continuing either immediately before or after giving effect to
any such Investment, Investments consisting of Permitted Intercompany Debt or
intercompany Investments between the Borrower and any of its Wholly-Owned
Subsidiaries or between any such Wholly-Owned Subsidiaries and the Borrower or
any other Wholly-Owned Subsidiary; and
(e) (A) Investments in ResNet which consist of Permitted
Intercompany Debt, (B) Investments in Restricted Subsidiaries other than ResNet,
(C) Investments, other than those set forth above, by the Borrower or its
Subsidiaries in other Persons which do not exceed in the aggregate at any time
outstanding an amount equal to 10% of the consolidated assets of the Borrower
and its Restricted Subsidiaries taken as a whole, and (D) non-cash, acquisition
Investments by the Borrower (x) of any entity which has had positive Operating
Cash Flow during the immediately preceding twelve-month period, (y) in which
shares of the Borrower's common stock constitute the sole consideration used in
the acquisition transaction, and (z) the cumulative aggregate amount of shares
of the Borrower's common stock used for such Investments during the Credit
Period does not exceed 20% of the number of Borrower's shares of common stock
outstanding on the date hereof;
PROVIDED, THAT in the case of (B) , (C) and (D) above:
(i) the entire amount of all Indebtedness assumed,
directly or indirectly, by the Borrower or any Subsidiary in connection with
each such Investment shall be permitted under Section 7.1 hereof;
(ii) except to the extent permitted under Section 7.1
hereof, all liabilities associated with any such Investment shall be
non-recourse to the Borrower and its Subsidiaries (other than the Subsidiary in
which any such Investment is being made), and the Borrower and its Subsidiaries
shall have no further obligation to provide funds or otherwise finance such
Investment;
(iii) each such Investment shall be in Persons
incorporated, organized or otherwise formed under the laws of any state of the
United States of America or any province of Canada;
(iv) to the extent any such Investment constitutes, or
otherwise results in the creation of, a direct or indirect Wholly-Owned
Subsidiary of the Borrower, upon the creation of such Subsidiary, such
Subsidiary shall execute and deliver to the Agent an appropriate Guaranty of the
Obligations satisfactory in form and substance to the Agent;
(v) no such Investment shall be of the nature which
would subject the Agent or any Bank to regulatory or third party approval in
connection with the exercise of their rights and remedies under this Agreement,
the Guaranties or any other Loan Document; and
63
(vi) no Default or Event of Default shall have occurred
and be continuing either immediately before or after giving effect to such
Investment and no Material Adverse Effect would result therefrom.
SECTION 7.10 FISCAL YEAR. Change its fiscal year.
SECTION 7.11 ERISA OBLIGATIONS. (a) Permit the occurrence of any
Termination Event, or the occurrence of a termination or partial termination of
a Defined Contribution Plan which would result in a liability to any Loan Party
or ERISA Affiliate in excess of $100,000; or
(b) Permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities by more than $100,000; or
(c) Permit any accumulated deficiency (as defined in Section 302
of ERISA and Section 412 of the Code) with respect to any Pension Plan, whether
or not waived; or
(d) Fail to make any contribution or payment to any
Multiemployer Plan which any Loan Party or ERISA Affiliate may be required to
make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto which results in or is likely to result in a liability in
excess of $100,000; or
(e) Engage, or permit any Loan Party or ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or Section 4975
of the Code, for which a civil penalty pursuant to Section 502(i) of ERISA or a
tax pursuant to Section 4975 of the Code in excess of $100,000 is imposed; or
(f) Engage or permit any Loan Party or ERISA Affiliate to
engage, in any breach of fiduciary duty under Part 4 of Title I of ERISA for
which twenty percent (20%) of the applicable recovery amount imposed under
Section 502(l) of ERISA could exceed $100,000; or
(g) Permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any Employee
Benefit Plan which establishment or amendment could result in liability to any
Loan Party or ERISA Affiliate or increase the obligation of any Loan Party or
ERISA Affiliate to a Multiemployer Plan which liability or increase,
individually or together with all similar liabilities and increases, is material
to any Loan Party or ERISA Affiliate; or
(h) Permit any Loan Party or ERISA Affiliate to be or become
obligated to the PBGC in excess of $100,000 other than in respect of annual
premium payments; or
(i) Fail, or permit any Loan Party or ERISA Affiliate to fail,
to establish, maintain and operate each Employee Benefit Plan in compliance in
all material respects with the provisions of ERISA, the Code and all other
applicable laws and the regulations and interpretations thereof, which action or
omission by such Loan Party or ERISA Affiliate is not curable or resolvable
64
under the Voluntary Compliance Resolutions Program or the Closing Agreement
Program with the IRS (which action is at all times being diligently pursued by
such Loan Party or ERISA Affiliate in good faith by appropriate proceedings) and
would result in a liability to any Loan Party or ERISA Affiliate in excess of
$100,000.
SECTION 7.12 AMENDMENTS OF DOCUMENTS. As to the Borrower or any
Restricted Subsidiary, modify, amend, supplement or terminate, or agree to
modify, amend, supplement or terminate, its certificate of incorporation
(except, with respect to the Borrower or a Restricted Subsidiary and to the
extent permitted hereunder, in connection with the issuance of capital stock of
the Borrower or a Restricted Subsidiary pursuant to a public offering or private
placement of such securities; PROVIDED, THAT reasonably prior to the
effectiveness of any such amendment, the Borrower shall deliver a copy of such
amendment to the Agent) or by-laws; or modify, amend or supplement, or agree to
modify, amend or supplement, any Senior Note Document if the effect of such
amendment, modification or supplement is to increase the principal amount of the
Senior 1995 Notes or the Senior 1996 Notes, increase the interest rate on the
Senior 1995 Notes or the Senior 1996 Notes, change (to earlier dates) the dates
upon which payments of principal or interest are due on the Senior 1995 Notes or
the Senior 1996 Notes, shorten the amortization schedule on the Senior 1995
Notes or the Senior 1996 Notes, alter any default, event of default or condition
thereto with respect to the Senior Note Documents or the remedies applicable
thereto in a manner which would be adverse to the Borrower, its Subsidiaries or,
in the Agent's determination, to the Banks, grant any security interest in favor
of the holders of the Senior 1995 Notes or the Senior 1996 Notes, change the
redemption provisions of the Senior Note Documents in a manner which, in the
Agent's determination, would be adverse to the Banks, or, together with all
other amendments, modifications or supplements made to the Senior Note
Documents, would increase materially the obligations of the Borrower under the
Senior Note Documents or confer additional rights on the holders of the Senior
1995 Notes or the Senior 1996 Notes which would be adverse to the Borrower, its
Subsidiaries or, in the Agent's determination, the Banks.
SECTION 7.13 CAPITAL EXPENDITURES. Make or be or become obligated
to make Capital Expenditures in the aggregate for the Borrower and its
Restricted Subsidiaries during each fiscal year of the Borrower in excess of the
sum of (i) the respective base amounts set forth below opposite each fiscal year
(each, a "Base Maximum Capital Expenditures Amount"), PLUS (ii) the amount of
net cash proceeds received by the Borrower during such fiscal year from the
issuance by the Borrower after January 1, 1997 of capital stock and/or Permitted
Debt, PLUS (iii) the amount of any increase in the Total Commitment effected by
the Borrower during such fiscal year pursuant to an election under subsection
2.8(a) hereof, MINUS (iv) any scheduled reduction pursuant to subsection 2.5(a)
hereof as it relates to all such prior increases:
65
Fiscal Year
Ending Base Maximum Capital
December 31, Expenditures Amount
------------ --------------------
1996 $100,000,000
1997 $130,000,000
1998 $60,000,000
1999 $30,000,000
2000 $35,000,000
2001 $40,000,000
2002 $25,000,000
PROVIDED, HOWEVER, that the amount permitted to be expended in a fiscal year
which is not expended in such fiscal year, shall be permitted to be expended in
the immediately succeeding fiscal year only.
SECTION 7.14 RENTAL OBLIGATIONS. Enter into, or permit to remain in
effect, any Lease (other than Capitalized Leases that are governed by subsection
7.1(e) hereof) if, after giving effect thereto, the aggregate amount of all
Rentals due from the Borrower and its Restricted Subsidiaries thereunder would
exceed $750,000 during any fiscal year.
SECTION 7.15 USE OF CASH. Use, or permit to be used, in any manner
or to any extent, any of the Borrower's Cash for the benefit of any Person,
except: (a) in connection with the payment or prepayment of expenses (other
than Capital Expenditures) incurred for the benefit of the Borrower in the
maintenance and operation of its business, in each case only in the ordinary
course of its business, (b) for Capital Expenditures permitted by Section 7.13
hereof, (c) for the payment (but not prepayment, except to the extent permitted
by this Agreement) of scheduled, required payments of principal and interest on
Indebtedness of the Borrower permitted to exist hereunder, and (d) for uses that
are otherwise specifically permitted by this Agreement.
SECTION 7.16 MANAGEMENT FEES. Pay, or be or become obligated to
pay, any Management Fees to any Person, or any interest on any deferred
obligation therefor, including, without limitation, to any shareholder,
director, officer or employee of the Borrower.
SECTION 7.17 TRANSACTIONS WITH AFFILIATES. Except as expressly
permitted by this Agreement, directly or indirectly: (a) make any Investment in
an Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
assets to an Affiliate; (c) merge into or consolidate with or purchase or
acquire assets from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of any Affiliate (including,
without limitation, guarantees and assumptions of obligations of an Affiliate);
PROVIDED, HOWEVER, that: (i) Investments expressly permitted by Section 7.9
hereof may be made, (ii) any Affiliate who is a natural person may serve as an
employee or director of the Borrower or any Subsidiary and receive reasonable
compensation for his services in such capacity, and (iii) the Borrower or any
Subsidiary may enter into any transaction with an Affiliate providing for the
leasing of property, the rendering or receipt of services or the purchase or
sale of product, inventory and other assets in the ordinary course of business
if the monetary or business consideration arising therefrom would be
substantially as
66
advantageous to the Borrower or a Subsidiary as the monetary or business
consideration that would obtain in a comparable arm's length transaction with a
Person not an Affiliate (and for this purpose, the payment of a Management Fee
by ResNet to the Borrower shall be deemed to be a permitted transaction
hereunder).
SECTION 7.18 HAZARDOUS MATERIAL. (a) Cause or permit: (i) any
Hazardous Material to be placed, held, located or disposed of, on, under or at
any real property of Borrower or any Subsidiary or any part thereof, except for
such Hazardous Materials that are necessary for the Borrower's or any
Subsidiary's or any tenant's operation of its business thereon and which shall
be used, stored, treated and disposed of in compliance with all applicable
Environmental Laws and Regulations or (ii) such real property or any part
thereof to be used as a collection, storage, treatment or disposal site for any
Hazardous Material.
(b) The Borrower and each Subsidiary acknowledges and agrees
that the Agent and the Banks shall have no liability or responsibility for
either:
(i) damage, loss or injury to human health, the
environment or natural resources caused by the presence, disposal, release or
threatened release of Hazardous Materials on any part of such real property; or
(ii) abatement and/or clean-up required under any
applicable Environmental Laws and Regulations for a release, threatened release
or disposal of any Hazardous Materials located at such real property or used by
or in connection with the Borrower's or any Subsidiary's or any such tenant's
business.
ARTICLE 8. EVENTS OF DEFAULT.
If any one or more of the following events ("EVENTS OF DEFAULT") shall
occur and be continuing, the Commitments shall terminate (except for the
obligations of the Banks under Section 2.16 hereof in respect of the purchase of
participations in the L/Cs from the Issuing Bank) and the entire unpaid balance
of the principal of and interest on the Notes outstanding and all other
obligations and Indebtedness of the Borrower to the Banks and the Agent arising
hereunder and under the other Loan Documents shall immediately become due and
payable upon written notice to that effect given to the Borrower by the Agent
(except that in the case of the occurrence of any Event of Default described in
Section 8.6 no such notice shall be required), without presentment or demand for
payment, notice of non-payment, protest or further notice or demand of any kind,
all of which are expressly waived by the Borrower:
SECTION 8.1 PAYMENTS. Failure to (a) make any payment or mandatory
prepayment of principal when due on any Loan or any Note or (b) make any payment
of any interest on any Loan or Note or any Fee or other amount owing under the
Loan Documents within five (5) Business Days of when due; or
SECTION 8.2 CERTAIN COVENANTS. Failure to perform or observe any
of the agreements of the Borrower or any Subsidiary contained in Section 6.9 or
Article 7 hereof; or
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SECTION 8.3 OTHER COVENANTS. (a) Failure by the Borrower to
perform or observe any other term, condition or covenant of this Agreement or of
any of the other Loan Documents to which it is a party, which shall remain
unremedied for a period of thirty (30) days after notice thereof shall have been
given to the Borrower by the Agent; or
(b) Failure by any Loan Party other than the Borrower to perform
or observe any term, condition or covenant of any of the Loan Documents to which
it or he is a party, which shall remain unremedied for a period of thirty (30)
days after notice thereof shall have been given to the Borrower by the Agent; or
SECTION 8.4 OTHER DEFAULTS. (a) Failure to perform or observe
any term, condition or covenant of any bond, note, debenture, loan agreement,
indenture, guaranty, trust agreement, mortgage or similar instrument to which
the Borrower or any Subsidiary is a party or by which it is bound, or by which
any of its properties or assets may be affected including, without limitation,
any Senior Note Document (a "DEBT INSTRUMENT"), so that, as a result of any such
failure to perform, the Indebtedness included therein or secured or covered
thereby may be declared due and payable prior to the date on which such
Indebtedness would otherwise become due and payable; or
(b) Any event or condition referred to in any Debt Instrument
shall occur or fail to occur, so that, as a result thereof, the Indebtedness
included therein or secured or covered thereby may be declared due and payable
prior to the date on which such Indebtedness would otherwise become due and
payable; or
(c) Failure to pay any Indebtedness for borrowed money due at
final maturity or pursuant to demand under any Debt Instrument;
PROVIDED, HOWEVER, that the provisions of this Section 8.4 shall not be
applicable to (i) any Debt Instrument other than a guarantee (as defined in
Section 7.3 hereof) that, on the date this Section 8.4 would otherwise be
applicable thereto, relates to or evidences Indebtedness in a principal amount
of less than $2,500,000 or (ii) Debt Instruments which constitute guaranties (as
defined in Section 7.3 hereof) that, on the date this Section 8.4 would
otherwise be applicable thereto, relate to or evidence, both individually and
collectively, Indebtedness in a principal amount of less than $2,500,000; or
SECTION 8.5 REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made in writing to the Banks or the Agent in any of the Loan Documents
or in connection with the making of the Loans, or any certificate, statement or
report made or delivered in compliance with this Agreement, shall have been
false or misleading in any material respect when made or delivered; or
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SECTION 8.6 BANKRUPTCY.
(a) The Borrower or any Subsidiary shall make an assignment for
the benefit of creditors, file a petition in bankruptcy, be adjudicated
insolvent, petition or apply to any tribunal for the appointment of a receiver,
custodian, or any trustee for it or a substantial part of its assets, or shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or the Borrower or any
Subsidiary shall take any corporate action to authorize any of the foregoing
actions; or there shall have been filed any such petition or application, or any
such proceeding shall have been commenced against it, that remains undismissed
for a period of sixty (60) days or more; or any order for relief shall be
entered in any such proceeding; or the Borrower or any Subsidiary by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or the appointment of a custodian, receiver
or any trustee for it or any substantial part of any of its properties, or shall
suffer any custodianship, receivership or trusteeship to continue undischarged
for a period of sixty (60) days or more; or
(b) The Borrower or any Subsidiary shall generally not pay its
debts as such debts become due; or
(c) The Borrower or any Subsidiary shall have concealed,
removed, or permitted to be concealed or removed, any part of its property, with
intent to hinder, delay or defraud its creditors or any of them or made or
suffered a transfer of any of its property that may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or
SECTION 8.7 JUDGMENTS. Any judgment against the Borrower or any
Subsidiary or any attachment, levy or execution against any of its properties
for any amount in excess of $2,500,000, individually or in the aggregate, shall
remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a
period of thirty (30) days or more; or
SECTION 8.8 ERISA.
(a) The termination of any Plan or the institution by the PBGC
of proceedings for the involuntary termination of any Plan, in either case, by
reason of, or that results or could result in, a "material accumulated funding
deficiency" under Section 412 of the Code; or
(b) Failure by the Borrower to make required contributions, in
accordance with the applicable provisions of ERISA, to each of the Plans
hereafter established or assumed by it; or
SECTION 8.9 CHANGE OF CONTROL. At any time, (i) any Person or
"group" has acquired "beneficial ownership" (as such terms are defined under
Section 13d-3 of and Regulation 13D under the Securities Exchange Act of 1934,
as amended) either directly or indirectly, of more than thirty-seven percent
(37%) of the outstanding shares of stock of the Borrower having the right to
vote for the election of directors of the Borrower under ordinary circumstances
or (ii) more than
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fifty percent (50%) of the Persons constituting the Borrower's board of
directors at the beginning of any consecutive twenty-four (24) month period
shall have been replaced by new directors not nominated for membership on the
board of directors by two-thirds of the directors who were directors at the
beginning of such period.
SECTION 8.10 COLLATERAL.
(a) any Collateral Document shall for any reason cease to be
valid and binding on or enforceable in any material respect against the Borrower
or any Loan Party thereto, or the Borrower or any Loan Party shall so state in
writing or bring an action to limit its obligations or liabilities thereunder;
or
(b) any Collateral Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in the
Collateral purported to be covered thereby or such security interest shall for
any reason cease to be a perfected and first priority security interest subject
only to Permitted Liens and other security interests permitted under the Loan
Documents.
ARTICLE 9. THE AGENT.
SECTION 9.1 APPOINTMENT, XXXXXX AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Loan Documents with such powers as are specifically delegated to
the Agent by the terms of this Agreement and the other Loan Documents together
with such other powers as are reasonably incidental thereto. The Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Loan Documents and shall not be a trustee for any Bank.
The Agent shall not be responsible to the Banks for any recitals, statements,
representations or warranties contained in this Agreement or the other Loan
Documents in any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or the other Loan Documents, or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the other Loan Documents or any other document
referred to or provided for herein or therein or for the collectibility of the
Loans or for any failure by the Borrower or any of the other Loan Parties to
perform any of its obligations hereunder or under the other Loan Documents. The
Agent may employ agents and attorneys-in-fact and shall not be answerable,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or under the other Loan Documents or
in connection herewith or therewith, except for its or their own gross
negligence or willful misconduct.
SECTION 9.2 RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of
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the proper person or persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement or the other Loan
Documents, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or under the other Loan Documents in
accordance with instructions signed by the Majority Banks, and such instructions
of the Majority Banks and any action taken or failure to act pursuant thereto
shall be binding on all of the Banks.
SECTION 9.3 EVENTS OF DEFAULT. The Agent shall not be deemed to
have knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans) unless the Agent has received notice from a
Bank or the Borrower specifying such Default and stating that such notice is a
"Notice of Default". In the event that the Agent receives such a notice of the
occurrence of a Default, the Agent shall give notice thereof to the Banks (and
shall give each Bank notice of each such non-payment). The Agent shall (subject
to Section 9.7 hereof) take such action with respect to such Default as shall be
directed by the Majority Banks.
SECTION 9.4 RIGHTS AS A BANK. With respect to its Commitment and
the Loans made by it, the Agent in its capacity as a Bank hereunder shall have
the same rights and powers hereunder as any other Bank and may exercise the same
as though it were not acting as the Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may (without having to account therefor
to any Bank) accept deposits from, lend money to and generally engage in any
kind of banking, trust or other business with the Borrower or its Affiliates, as
if it were not acting as the Agent, and the Agent may accept fees and other
consideration from the Borrower or its Affiliates, for services in connection
with this Agreement or any of the other Loan Documents or otherwise without
having to account for the same to the Banks.
SECTION 9.5 INDEMNIFICATION. The Banks shall indemnify the Agent
(to the extent not reimbursed by the Borrower under Sections 10.1 and 10.2
hereof), ratably in accordance with the aggregate principal amount of the Loans
made by the Banks (or, if no Loans are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement or any of the other Loan Documents or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated by or referred to herein or therein or the transactions
contemplated hereby and thereby (including, without limitation, the costs and
expenses that the Borrower is obligated to pay under Sections 10.1 and 10.2
hereof, but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or of any such
other documents, PROVIDED THAT no Bank shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
SECTION 9.6 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the
71
Borrower and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or the other Loan Documents. The Agent shall not be
required to keep itself informed as to the performance or observance by the
Borrower of this Agreement or the other Loan Documents or any other document
referred to or provided for herein or therein or to inspect the properties or
books of the Borrower. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder or under the other Loan Documents, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower, that
may come into the possession of the Agent or any of its Affiliates.
SECTION 9.7 FAILURE TO ACT. Except for action expressly required
of the Agent hereunder, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder or thereunder unless it shall be
indemnified to its satisfaction by the Banks against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action.
SECTION 9.8 RESIGNATION OR REMOVAL OF AGENT. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving not less than thirty (30) days' prior written
notice thereof to the Banks and the Borrower, and the Agent may be removed at
any time with or without cause by the Majority Banks. Upon any such resignation
or removal, the Majority Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Majority Banks
and shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Banks, after
consultation with the Borrower, appoint a successor Agent which shall be a bank
with a combined capital and surplus 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 retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article 9 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent.
SECTION 9.9 SHARING OF PAYMENTS.
(a) Prior to any acceleration by the Agent and the Banks of the
Obligations:
(i) in the event that any Bank shall obtain payment in
respect of a Note, or interest thereon, whether voluntarily or involuntarily,
and whether through the exercise of a right of banker's lien, set-off or
counterclaim against the Borrower or any other Loan Party or otherwise, in a
greater proportion than any such payment obtained by any other Bank in respect
of the corresponding Note held by it, then the Bank so receiving such greater
proportionate payment shall purchase for cash from the other Bank or Banks such
portion of each such other Bank's or
72
Banks' Loan as shall be necessary to cause such Bank receiving the proportionate
overpayment to share the excess payment with each Bank; and
(ii) in the event that any Bank shall obtain payment in
respect of any Interest Rate Contract to which such Bank is a party, whether
voluntarily or involuntarily, and whether through the exercise of a right of
banker's lien, set-off or counterclaim against the Borrower or any other Loan
Party or otherwise, such Bank shall be permitted to retain the full amount of
such payment and shall not be required to share such payment with any other
Bank.
(b) Upon or following any acceleration by the Agent and the
Banks of the Obligations, in the event that any Bank shall obtain payment in
respect of a Note, or interest thereon, or in respect of an Interest Rate
Contract to which such Bank is a party, or receive any collateral or proceeds
thereof with respect to any Note or any Interest Rate Contract to which it is a
party, whether voluntarily or involuntarily, and whether through the exercise of
a right of banker's lien, set-off or counterclaim against the Borrower or any
other Loan Party or otherwise, in a greater proportion than any such payment
obtained by any other Bank in respect of the aggregate amount of the
corresponding Note held by such Bank and any Interest Rate Contract to which
such Bank is a party, then the Bank so receiving such greater proportionate
payment or such greater proportionate amount of collateral, shall purchase for
cash from the other Bank or Banks such portion of each such other Bank's or
Banks' Loan, or shall provide the other Banks with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such Bank
receiving the proportionate overpayment to share the excess payment or benefits
of such collateral or proceeds ratably with each Bank. For the purposes of this
subsection 9.9(b), payments on Notes received by each Bank and receipt of
collateral by each Bank shall be in the same proportion as the proportion of:
(A) the sum of: (x) the Obligations owing to such Bank in respect of the Note
held by such Bank, plus (y) the Obligations owing to such Bank in respect of
Interest Rate Contracts to which such Bank is party, if any, to (B) the sum of:
(x) the Obligations owing to all of the Banks in respect of all of the Notes,
plus (y) the Obligations owing to all of the Banks in respect of all Interest
Rate Contracts to which any Bank is a party;
PROVIDED, HOWEVER, that, with respect to subsections 9.9(a)(i) and (b) above, if
all or any portion of such excess payment or benefits is thereafter recovered
from the Bank that received the proportionate overpayment, such purchase of
Loans or payment of benefits, as the case may be, shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.
SECTION 9.10 COLLATERAL MATTERS.
(a) The Agent is authorized on behalf of all the Banks, without
the necessity of any notice to or further consent from the Banks, from time to
time to take any action with respect to any Collateral or the Collateral
Documents which may be necessary to perfect and maintain perfected the security
interest in and Liens upon the Collateral granted pursuant to the Collateral
Documents.
73
(b) The Banks irrevocably authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in full of all
Loans and all other Obligations payable under this Agreement and under any other
Loan Document; (ii) constituting property sold or to be sold or disposed of as
part of or in connection with any Asset Disposition permitted hereunder pursuant
to Section 7.7; (iii) constituting property in which the Borrower or any
Subsidiary of the Borrower owned no interest at the time the Lien was granted or
at any time thereafter; (iv) constituting property leased to the Borrower or any
Subsidiary of the Borrower under a lease which has expired or been terminated in
a transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by the Borrower or such Subsidiary to be, renewed
or extended; (v) consisting of an instrument evidencing Indebtedness or other
debt instrument, if the Indebtedness evidenced thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by the Majority Banks or all
the Banks, as the case may be, as provided in Section 10.6 hereof. Upon request
by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release particular types or items of Collateral pursuant to this
subsection 9.10(b).
ARTICLE 10. MISCELLANEOUS PROVISIONS.
SECTION 10.1 FEES AND EXPENSES; INDEMNITY. The Borrower will
promptly pay all costs of the Agent in preparing the Loan Documents and all
costs and expenses of the issue of the Notes and of the Borrower's and the other
Loan Parties' performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with (including,
without limitation, all costs of filing or recording any assignments, mortgages,
financing statements and other documents and all lien search, appraisal and
environmental review fees and expenses), and the reasonable fees and expenses
and disbursements of counsel to the Agent in connection with the preparation,
execution and delivery, syndication, administration, interpretation and
enforcement of this Agreement, the other Loan Documents and all other
agreements, instruments and documents relating to this transaction, the
consummation of the transactions contemplated by all such documents, the
preservation of all rights of the Banks and the Agent, the negotiation,
preparation, execution and delivery of any amendment, modification or supplement
of or to, or any consent or waiver under, any such document (or any such
instrument that is proposed but not executed and delivered) and with any claim
or action threatened, made or brought against any of the Banks or the Agent
arising out of or relating to any extent to this Agreement, the other Loan
Documents or the transactions contemplated hereby or thereby (other than a claim
or action resulting from the gross negligence, willful misconduct, or
intentional violation of law by the Agent and/or the Banks). In addition, the
Borrower will promptly pay all costs and expenses (including, without
limitation, reasonable fees and disbursements of counsel) suffered or incurred
by each Bank in connection with its enforcement of the payment of the Notes held
by it or any other sum due to it under this Agreement or any of the other Loan
Documents or any of its other rights hereunder or thereunder. In addition to
the foregoing, the Borrower shall indemnify each Bank and the Agent and each of
their respective directors, officers, employees, attorneys, agents and
Affiliates against, and hold each of them harmless from, any loss, liabilities,
damages, claims, costs and expenses (including reasonable attorneys' fees and
disbursements) suffered or incurred by any of them arising out of, resulting
from or in any manner connected with, the execution, delivery and performance of
each of the Loan Documents, the Loans and any and all transactions related to or
consummated in
74
connection with the Loans (other than as a result of the gross negligence,
willful misconduct or intentional violation of law by the Agent and/or the
Banks), including, without limitation, losses, liabilities, damages, claims,
costs and expenses suffered or incurred by any Bank or the Agent or any of their
respective directors, officers, employees, attorneys, agents or Affiliates
arising out of or related to any Environmental Liability or Environmental
Proceeding, or in investigating, preparing for, defending against, or providing
evidence, producing documents or taking any other action in respect of any
commenced or threatened litigation, administrative proceeding or investigation
under any federal securities law or any other statute of any jurisdiction, or
any regulation, or at common law or otherwise against the Agent, the Banks or
any of their officers, directors, affiliates, agents or Affiliates, that is
alleged to arise out of or is based upon: (i) any untrue statement or alleged
untrue statement of any material fact of the Borrower and its affiliates in any
document or schedule filed with the SEC or any other governmental body; (ii) any
omission or alleged omission to state any material fact required to be stated in
such document or schedule, or necessary to make the statements made therein, in
light of the circumstances under which made, not misleading; (iii) any acts,
practices or omission or alleged acts, practices or omissions of the Borrower or
its agents related to the making of any acquisition, purchase of shares or
assets pursuant thereto, financing of such purchases or the consummation of any
other transactions contemplated by any such acquisitions that are alleged to be
in violation of any federal securities law or of any other statute, regulation
or other law of any jurisdiction applicable to the making of any such
acquisition, the purchase of shares or assets pursuant thereto, the financing of
such purchases or the consummation of the other transactions contemplated by any
such acquisition; or (iv) any withdrawals, termination or cancellation of any
such proposed acquisition for any reason whatsoever. The indemnity set forth
herein shall be in addition to any other obligations or liabilities of the
Borrower to the Agent and the Banks hereunder or at common law or otherwise.
The provisions of this Section 10.1 shall survive the payment of the Notes and
the termination of this Agreement.
SECTION 10.2 TAXES. If, under any law in effect on the date of the
closing of any Loan hereunder, or under any retroactive provision of any law
subsequently enacted, it shall be determined that any Federal, state or local
tax is payable in respect of the issuance of any Note, or in connection with the
filing or recording of any assignments, mortgages, financing statements, or
other documents (whether measured by the amount of Indebtedness secured or
otherwise) as contemplated by this Agreement, then the Borrower will pay any
such tax and all interest and penalties, if any, and will indemnify the Banks
and the Agent against and save each of them harmless from any loss or damage
resulting from or arising out of the nonpayment or delay in payment of any such
tax. If any such tax or taxes shall be assessed or levied against any Bank or
any other holder of a Note, such Bank, or such other holder, as the case may be,
may notify the Borrower and make immediate payment thereof, together with
interest or penalties in connection therewith, and shall thereupon be entitled
to and shall receive immediate reimbursement therefor from the Borrower.
Notwithstanding any other provision contained in this Agreement, the covenants
and agreements of the Borrower in this Section 10.2 shall survive payment of the
Notes and the termination of this Agreement.
SECTION 10.3 PAYMENTS. As set forth in Article 2 hereof, all
payments by the Borrower on account of principal, interest, fees and other
charges (including any indemnities) shall
75
be made to the Agent at the Principal U.S. Office of the Agent, in lawful money
of the United States of America in immediately available funds, by wire transfer
or otherwise, not later than 11:00 A.M. New York City time on the date such
payment is due. Any such payment made on such date but after such time shall, if
the amount paid bears interest, be deemed to have been made on, and interest
shall continue to accrue and be payable thereon until, the next succeeding
Business Day. If any payment of principal or interest becomes due on a day
other than a Business Day, such payment may be made on the next succeeding
Business Day and such extension shall be included in computing interest in
connection with such payment. All payments hereunder and under the Notes shall
be made without set-off or counterclaim and in such amounts as may be necessary
in order that all such payments shall not be less than the amounts otherwise
specified to be paid under this Agreement and the Notes (after withholding for
or on account of: (i) any present or future taxes, levies, imposts, duties or
other similar charges of whatever nature imposed by any government or any
political subdivision or taxing authority thereof, other than any tax (except
those referred to in clause (ii) below) on or measured by the net income of the
Bank to which any such payment is due pursuant to applicable federal, state and
local income tax laws, and (ii) deduction of amounts equal to the taxes on or
measured by the net income of such Bank payable by such Bank with respect to the
amount by which the payments required to be made under this sentence exceed the
amounts otherwise specified to be paid in this Agreement and the Notes). Upon
payment in full of any Note, the Bank holding such Note shall mark the Note
"Paid" and return it to the Borrower.
SECTION 10.4 SURVIVAL OF AGREEMENTS AND REPRESENTATIONS;
CONSTRUCTION. All agreements, representations and warranties made herein shall
survive the delivery of this Agreement and the Notes. The headings used in this
Agreement and the table of contents are for convenience only and shall not be
deemed to constitute a part hereof. All uses herein of the masculine gender or
of singular or plural terms shall be deemed to include uses of the feminine or
neuter gender, or plural or singular terms, as the context may require.
SECTION 10.5 LIEN ON AND SET-OFF OF DEPOSITS. As further security
for the due payment and performance of all the Obligations, the Borrower hereby
grants to Agent for the ratable benefit of the Banks a Lien on any and all
deposits or other sums at any time credited by or due from the Agent or any Bank
to the Borrower, whether in regular or special depository accounts or otherwise,
and any and all monies, securities and other collateral of the Borrower, and the
proceeds thereof, now or hereafter held or received by or in transit to any Bank
or the Agent from or for the Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and any such deposits, sums, monies,
securities and other collateral, may at any time after the occurrence and during
the continuance of any Event of Default be set-off, appropriated and applied by
any Bank or the Agent against any of the Obligations, whether or not any of such
Obligations is then due or is secured by any Collateral, all as set forth in and
pursuant to Section 2.20 hereof.
SECTION 10.6 AMENDMENTS AND WAIVERS; ENTIRE AGREEMENT. Any
provision of this Agreement, the Notes or the other Loan Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Borrower and the Majority Banks (and, if the rights or duties of
the Agent are affected thereby, by the Agent); PROVIDED THAT no such amendment
or waiver shall, unless signed by all the Non-Defaulting Banks, (i) increase the
Commitment of any Bank or amend subsection 2.8(a) hereof or subject any Bank to
any additional
76
obligation (it being understood that a waiver of any Default or Event of Default
or of a non-scheduled reduction in the Total Commitment shall not constitute a
change in the terms of any Commitment of any Bank), (ii) reduce the principal of
or rate of interest on any Loan or Fees hereunder (other than as a result of
waiving the applicability of any Post-Default Rate), (iii) amend subsection
2.5(a) hereof or extend the date fixed for any payment of principal of any Loan
pursuant to Article 2 hereof or of interest on any Loan or any Fees hereunder or
for any termination of any Commitment (it being understood that any waiver of
the application of any prepayment of, or the method of application of any
prepayment to the amortization of, the Loans shall not constitute any such
extension), (iv) release any Guarantor or release all or substantially all of
the Collateral (except as expressly permitted by this Agreement and the Loan
Documents), (v) change the definition of Majority Banks or the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans and Net L/C
Obligations which shall be required for the Banks or any of them to take any
action under this Section 10.6 or any other provision of this Agreement or (vi)
amend or modify this Section 10.6. Any waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No consent
to or demand on the Borrower in any case shall, of itself, entitle it to any
other or further notice or demand in similar or other circumstances. This
Agreement, the other Loan Documents and the Letter Agreements embody the entire
agreement and understanding among the Banks, the Agent and the Borrower and
supersede all prior agreements and understandings relating to the subject matter
hereof.
SECTION 10.7 REMEDIES CUMULATIVE; COUNTERCLAIMS. Each and every
right granted to the Agent and the Banks hereunder or under any other document
delivered hereunder or in connection herewith, or allowed it by law or equity,
shall be cumulative and may be exercised from time to time. No failure on the
part of the Agent or any Bank or the holder of any Note to exercise, and no
delay in exercising, any right shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or future exercise
thereof or the exercise of any other right. The due payment and performance of
the Obligations shall be without regard to any counterclaim, right of offset or
any other claim whatsoever that the Borrower may have against any Bank or the
Agent and without regard to any other obligation of any nature whatsoever that
any Bank or the Agent may have to the Borrower, and no such counterclaim or
offset shall be asserted by the Borrower in any action, suit or proceeding
instituted by any Bank or the Agent for payment or performance of the
Obligations.
SECTION 10.8 ADDITIONAL ACTIONS. At any time and from time to time,
upon the request of the Agent, the Borrower shall execute, deliver and
acknowledge or cause to be executed, delivered and acknowledged, such further
documents and instruments and do such other acts and things as the Agent may
reasonably request in order to fully effect the purposes of this Agreement, the
other Loan Documents and any other agreements, instruments and documents
delivered pursuant hereto or in connection with the Loans.
SECTION 10.9 NOTICES. All notices, requests, reports and other
communications pursuant to this Agreement shall be in writing, either by letter
(delivered by hand or commercial messenger service or sent by certified mail,
return receipt requested, except for routine reports delivered in compliance
with Article 5 hereof which may be sent by ordinary first-class mail) or
telegram or telecopy, addressed as follows:
77
(a) If to the Borrower:
LodgeNet Entertainment Corporation
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
Vice President, Finance
Telecopier No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxxx, Esq.
Vice President, General Counsel and Secretary
LodgeNet Entertainment Corporation
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Telecopier No.: (000) 000-0000
(b) If to any Bank:
To its address set forth below its
name on the signature pages hereof,
with a copy to the Agent; and
(c) If to the Agent:
National Westminster Bank Plc, as Agent
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx Xxxxx
Telecopier No.: (000) 000-0000
with a copy (other than in the case
of Borrowing Notices and reports
and other documents delivered in
compliance with Article 5 hereof) to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Telecopier No.: (000) 000-0000
Any notice, request, demand or other communication hereunder shall be deemed to
have been given on: (x) the day on which it is telecopied to such party at its
telecopier number specified above
78
(provided such notice shall be effective only if followed by one of the other
methods of delivery set forth herein) or delivered by receipted hand or such
commercial messenger service to such party at its address specified above, or
(y) on the third Business Day after the day deposited in the mail, postage
prepaid, if sent by mail, or (z) on the day it is delivered to the telegraph
company, addressed as aforesaid, if sent by telegraph. Any party hereto may
change the Person, address or telecopier number to whom or which notices are to
be given hereunder, by notice duly given hereunder; PROVIDED, HOWEVER, that any
such notice shall be deemed to have been given hereunder only when actually
received by the party to which it is addressed.
SECTION 10.10 COUNTERPARTS. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.
SECTION 10.11 SEVERABILITY. The provisions of this Agreement are
severable, and if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision in this Agreement in
any jurisdiction. Each of the covenants, agreements and conditions contained in
this Agreement is independent and compliance by the Borrower with any of them
shall not excuse non-compliance by the Borrower with any other. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.
SECTION 10.12 SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights and obligations under this
Agreement without the prior written consent of all the Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; PROVIDED
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii) or (iv) of Section 10.6 without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Sections 2.22, 2.23,
2.24 and 2.25 hereof with respect to its participating interest. An assignment
or other transfer which is not permitted by subsection (c) or (d) below shall be
given
79
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or
other institutions (each an "Assignee") all, or a proportionate part (comprising
equal percentages of such Bank's Loans and Note(s)) of all, of its rights and
obligations under this Agreement and the other Loan Documents, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit B hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrower, which shall not be unreasonably withheld, and the
Agent; PROVIDED that if (i) an Assignee is an affiliate of such transferor Bank
or was a Bank immediately prior to such assignment or (ii) a Default or Event of
Default has occurred and is continuing, no such consent of the Borrower shall be
required. No assignment pursuant to the immediately preceding sentence shall to
the extent such assignment represents an assignment to an institution other than
one or more Banks hereunder, be in an aggregate amount less than $5,000,000
unless the entire Commitment of the assigning Bank is so assigned. Upon
execution and delivery of such instrument and payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank, the Agent and the Borrower shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee. In connection with any such
assignment, the transferor Bank shall pay to the Agent an administrative fee for
processing such assignment in the amount of $3,000. If the Assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of any United States federal income taxes in
accordance with subsection 2.22(c) hereof.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and any other Loan Document to a Federal Reserve
Bank. No such assignment shall release the transferor Bank from its obligations
hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Sections 2.22,
2.24 or 10.3 hereof than such Bank would have been entitled to receive with
respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Sections 2.22
or 2.24 hereof requiring such Bank to designate a different Applicable Lending
Office under certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.
SECTION 10.13 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF TRIAL
BY JURY. (a) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL OTHER
DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND
THEREWITH, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH,
80
THE LAWS AND DECISIONS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS RULES
PERTAINING TO CONFLICTS OF LAWS.
(b) THE BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS
AGREEMENT, AND EACH OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY COURT OF THE STATE
OF NEW YORK, COUNTY OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK. THE BORROWER, BY THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY ASSENTS AND SUBMITS TO THE PERSONAL
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. THE
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT, SUMMONS,
NOTICE OR OTHER PROCESS RELATING TO ANY SUCH ACTION OR PROCEEDING BY DELIVERY
THEREOF TO IT BY HAND OR BY MAIL IN THE MANNER PROVIDED FOR IN SECTION 10.9
HEREOF. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR
DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS. THE
BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY
DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW
YORK UNLESS SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF
NEW YORK. NOTHING IN THIS SECTION 10.15 SHALL AFFECT OR IMPAIR IN ANY MANNER OR
TO ANY EXTENT THE RIGHT OF ANY BANK TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE BORROWER IN ANY JURISDICTION OR TO SERVE PROCESS IN ANY
MANNER PERMITTED BY LAW.
(c) EACH OF THE BORROWER, THE BANKS AND THE AGENT WAIVES TRIAL
BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE VALIDITY,
PERFECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
[signature page follows]
81
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
LODGENET ENTERTAINMENT
CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxx
Title Vice President - Finance, Treasurer
------------------------------------
NATIONAL WESTMINSTER BANK PLC,
AS AGENT, ISSUING BANK AND AS A BANK
By /s/ Xxxxxxx Xxxxx
---------------------------------------
Title V.P.
------------------------------------
Lending Office for Base Rate and Eurodollar Loans:
000 Xxxxx Xxxxxx
00xx Xxxxx, Xxxxxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Xxxxxxxxx: (000) 000-0000
Telecopier: (000) 000-0000
Address for Notices:
National Westminster Bank Plc
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
82
NATIONAL WESTMINSTER BANK
OF CANADA,
AS AN ISSUING BANK
By /s/ Xxxx Xxxx
-----------------------------------
Title Vice President
--------------------------------
Global Structured Trade Finance
Address for Notices:
National Westminster Bank of Canada
000 Xxx Xxxxxx, Xxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
83
EXHIBITS AND SCHEDULES
EXHIBITS
A Commitments and Percentages
B Promissory Note
C Assignment and Assumption Agreement
D ResNet Guaranty
E LodgeNet Canada Guaranty
F Security Agreement
G Pledge Agreement
H Patent and Trademark Security Agreement
I Borrower U.S. Legal Opinion
SCHEDULES
3.1 Organization and Capitalization
3.5 Real Estate
3.6 Litigation
3.11 Intellectual Property
3.13 Name Changes, Mergers
3.19 Material Agreements
7.1 Outstanding Indebtedness
7.2 Permitted Liens
EXHIBIT A
COMMITMENTS AND PERCENTAGES
BANK COMMITMENT PERCENTAGE
National Westminster Bank Plc $100,000,000 100%
EXHIBIT B
PROMISSORY NOTE
$__________ New York, New York
December __, 1996
FOR VALUE RECEIVED, LODGENET ENTERTAINMENT CORPORATION, a Delaware
corporation (the "BORROWER"), hereby promises to pay to the order
of______________________________(the "BANK") the principal sum of
_______________ DOLLARS ($__________) or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Bank under the Credit
Agreement (defined below), at such rates and on such dates and in such amounts
as are specified in, and in accordance with, the provisions of the Amended and
Restated Credit Agreement dated as of December __, 1996 by and among the
Borrower, the Banks signatory thereto and National Westminster Bank Plc, as
Agent (as it may from time to time be amended, modified and/or supplemented, the
"CREDIT AGREEMENT").
This Note is one of the Notes referred to in, was executed and
delivered pursuant to, and evidences obligations of the Borrower under the
Credit Agreement, to which reference is hereby made for a statement of the terms
and conditions under which the loan evidenced hereby is made and is to be
prepaid and repaid and for a statement of the Agent's and the Banks' remedies
upon the occurrence of an Event of Default (as defined therein). The Credit
Agreement is incorporated herein by reference in its entirety. Capitalized
terms used but not otherwise defined herein are used in this Note as defined in
the Credit Agreement.
All indebtedness outstanding under this Note shall bear interest (computed
in the same manner as interest on this Note prior to the relevant due date) at
the applicable Post-Default Rate (as such term is defined in the Credit
Agreement) for all periods when an Event of Default has occurred and is
continuing, commencing on the occurrence of such Event of Default until such
Event of Default has been cured or waived as acknowledged in writing by the
Agent, and all of such interest shall be payable on demand.
Anything herein to the contrary notwithstanding, the obligation of the
Borrower to make payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to the Bank to the extent
that the Bank's receipt thereof would not be permissible under the law or laws
applicable to the Bank limiting rates of interest which may be charged or
collected by the Bank. Any such payments of interest which are not made as a
result of the limitation referred to in the preceding sentence shall be made by
the Borrower to the Bank on the earliest interest payment date or dates on which
the receipt thereof would be permissible under such laws applicable to the Bank
limiting rates of interest which may be charged or collected by the Bank.
Payments of both principal and interest on this Note are to be made at the
office of the Agent at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or such other
place as the holder hereof shall designate to the Borrower in writing, in lawful
money of the United States of America in immediately available funds.
The Bank is hereby authorized by the Borrower to record on the schedule to
this Note (or on a supplemental schedule thereto) the amount of each Loan made
by the Bank to the Borrower and the amount of each payment or prepayment of
principal of such Loans received by the Bank, it being understood, however, that
failure to make any such notation shall not affect the rights of the Bank or the
obligations of the Borrower hereunder in respect of this Note. The Bank may, at
its option, record such matters in its internal records rather than on such
schedule.
Upon the occurrence of any Event of Default, as defined in the Credit
Agreement, the principal amount of and interest on this Note may be declared due
and payable in the manner and with the effect provided in the Credit Agreement.
The Borrower shall pay costs and expenses of collection, including, without
limitation, attorneys' fees and disbursements in the event that any action, suit
or proceeding is brought by the holder hereof to collect this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS AND DECISIONS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS
RULES PERTAINING TO CONFLICTS OF LAWS.
LODGENET ENTERTAINMENT CORPORATION
By
---------------------------------
Title
------------------------------
2
SCHEDULE TO NOTE
This Note evidences the Loans made under the within described Credit
Agreement, in the principal amounts, and on the dates set forth below, subject
to the payments or prepayments of principal set forth below:
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT PAID BALANCE
DATE MADE LOAN OR PREPAID OUTSTANDING INITIALS
--------- --------- ----------- ----------- --------
EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
Dated ___________
Reference is hereby made to the Amended and Restated Credit Agreement
dated as of December __, 1996 (the "CREDIT AGREEMENT") by and among LodgeNet
Entertainment Corporation, a Delaware corporation (the "BORROWER"), the Banks
signatory thereto (collectively, the "BANKS") and National Westminster Bank Plc
in its capacity as agent for the Banks (in such capacity, the "AGENT").
Capitalized terms used herein that are defined in the Credit Agreement that are
not otherwise defined herein shall have the respective meanings ascribed thereto
in the Credit Agreement.
_______________________________, a __________________ (the "ASSIGNOR")
and _____________________________________, a ________________, (the "ASSIGNEE")
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a __ % interest in and
to all of the Assignor's rights and obligations under the Credit Agreement and
the other Loan Documents as of the Effective Date (as defined below) (including,
without limitation, such percentage interest in the Assignor's Commitment as in
effect on the Effective Date, and the Loans owing to the Assignor on the
Effective Date, and the Note(s) held by the Assignor).
2. The Assignor: (i) represents and warrants that as of the date
hereof its Commitment (without giving effect to assignments thereof that have
not yet become effective) is $__________ and the aggregate outstanding principal
amount of Loans owing to it (without giving effect to assignments thereof that
have not yet become effective) is $__________; (ii) 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; (iii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Credit Agreement or any other instrument or document furnished pursuant
thereto; and (iv) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by the Borrower or any other
Loan Party of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (v) attaches the Note(s)
referred to in paragraph 1 above and requests that the Agent exchange such
Note(s) for new Note(s) as follows: a Note dated the Effective Date (as such
term is defined below) in the principal amount of $ __________ payable to the
order of the Assignee and a Note dated the Effective Date in the principal
amount of $ __________ payable to the order of the Assignor.
3. The Assignee: (i) confirms that it has received a copy of the
Credit Agreement, together with copies of such financial statements and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) appoints and authorizes the Agent to take such
action as its agent on its behalf and to exercise such powers under the Credit
Agreement 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
Credit Agreement are required to be performed by it as a Bank; and (v) specifies
as its addresses for Base Rate Loans and Eurodollar Loans (and address for
notices) the offices set forth beneath its name on the signature pages hereof.
4. The effective date for this Assignment and Assumption Agreement
shall be ________________ (the "EFFECTIVE DATE"). Following the execution of
this Assignment and Assumption Agreement, it will be delivered to the Agent for
acceptance by the Agent and the Borrower.
5. Upon such acceptance, as of the Effective Date: (i) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment and Assumption Agreement, have the rights and obligations of a Bank
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Assumption Agreement, relinquish its rights and be released from
its obligations under the Credit Agreement.
6. Upon such acceptance, from and after the Effective Date, the
Agent shall make all payments under the Credit Agreement and the Note(s) in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and commitment fees with respect thereto) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Credit Agreement and the Note(s) for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Assumption Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
2
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be duly executed on the date first above written.
[NAME OF ASSIGNOR]
By
--------------------------------
Title
-----------------------------
[NAME OF ASSIGNEE]
By
--------------------------------
Title
-----------------------------
Lending Office for Base Rate Loans:
Lending Office for Eurodollar
Loans:
Attention:
Address for Notices:
Attention:
Telephone No.:
Telex No.:
Accepted this ___ day Accepted this ___ day
of ______________, ___ of _____________, ____
NATIONAL WESTMINSTER BANK PLC, LODGENET ENTERTAINMENT
as Agent CORPORATION
By By
--------------------------- ---------------------------
Title Title
------------------------ ------------------------
3
EXHIBIT D
GUARANTY
THIS GUARANTY, made this 19th day of December, 1996 by RESNET
COMMUNICATIONS, INC., a Delaware corporation (the "GUARANTOR"), in favor of
NATIONAL WESTMINSTER BANK PLC, New York branch, as Agent, for the benefit of
itself, the Issuing Banks and the Banks signatory to the hereinafter defined
Credit Agreement (in such capacity, together with its successors in such
capacity, the "AGENT").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of this Guaranty,
LodgeNet Entertainment Corporation, a Delaware corporation (the "BORROWER"), has
entered into an Amended and Restated Credit Agreement dated the date hereof
(such agreement, including all exhibits thereto, as it may from time to time be
amended, modified or supplemented, is hereinafter referred to as the "CREDIT
AGREEMENT") with the Agent and the Banks, pursuant to which the Banks have
agreed to make a revolving loan and letter of credit facility available to the
Borrower in the aggregate principal sum of up to One Hundred Million Dollars
($100,000,000), subject to adjustment, upon and subject to the terms and
conditions of the Credit Agreement (the "FACILITY");
WHEREAS, the Guarantor will derive benefits, both directly and indirectly,
from the Borrower's obtaining the Facility from the Banks pursuant to the Credit
Agreement;
WHEREAS, it is a condition precedent to the obligation of the Banks to
make the Facility available to the Borrower that the Guarantor shall have
executed and delivered this Guaranty; and
WHEREAS, all capitalized terms used herein that are defined in the Credit
Agreement and that are not otherwise defined herein shall have the respective
meanings ascribed thereto therein, unless the context otherwise requires; if at
any time no Agent shall exist under the Credit Agreement, each reference herein
to the Agent shall be deemed to refer to the Majority Banks until such time as a
successor Agent shall be appointed under the Credit Agreement;
NOW, THEREFORE, in order to induce the Agent, the Issuing Banks and the
Banks to execute and deliver the Credit Agreement and to make the Facility
available to the Borrower, and in consideration of the benefits expected to
accrue to the Guarantor by reason thereof, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the Guarantor hereby
represents and warrants to, and covenants and agrees with the Agent, for the
benefit of itself, the Banks and the Issuing Banks, as follows:
1. The Guarantor hereby irrevocably and unconditionally guarantees to the
Agent, for the benefit of itself, the Banks and the Issuing Banks, the punctual
payment of the full amount, when due (whether by demand, acceleration or
otherwise), of: (a) the principal of and interest on, and fees and expenses due
pursuant to, the promissory notes issued by the Borrower pursuant to the Credit
Agreement (hereinafter referred to, together with any and all amendments,
modifications, substitutions and/or replacements thereof and thereto, as the
"NOTES"), and (b) all other
Indebtedness, liabilities and obligations of the Borrower to the Banks, the
Issuing Banks and the Agent, whether under the Credit Agreement or otherwise
created, whether now or hereafter existing, and whether or not currently
contemplated, due or to become due, direct or contingent, joint, several or
independent, secured or unsecured and whether matured or unmatured (all of the
Indebtedness, liabilities and obligations included in clauses (a) and (b) of
this paragraph 1 are hereinafter referred to collectively as the "GUARANTEED
OBLIGATIONS"); subject, however, to the provisions of subparagraph 14(a)(ii)
hereof and subject, further, to the limitation that in no event shall the
obligation of the Guarantor for payment of Guaranteed Obligations exceed
Permitted Intercompany Debt at the time outstanding. This is a guaranty of
payment and not of collection, and is the primary obligation of the Guarantor;
and the Agent, on behalf of itself, the Banks and the Issuing Banks, may enforce
this Guaranty against the Guarantor without any prior enforcement of the
Guaranteed Obligations against the Borrower.
2. All payments made by the Guarantor under or by virtue of this Guaranty
shall be paid to the Agent at its office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 or such other place as the Agent may hereafter designate in writing. The
Guarantor hereby agrees to make all payments under or by virtue of this Guaranty
to the Agent as aforesaid. The Agent shall not be required otherwise to
establish its authority to receive any payment made under or by virtue hereof.
3. The Guarantor hereby waives notice of acceptance of this Guaranty,
notice of the creation, renewal or accrual of any of the Guaranteed Obligations
and notice of any other liability to which this Guaranty may apply, and notice
or proof of reliance by the Agent and/or the Banks upon this Guaranty, and
waives diligence, protest, notice of protest, presentment, demand of payment,
notice of dishonor or nonpayment of any of the Guaranteed Obligations, suit or
taking other action or making any demand against, and any other notice to the
Borrower or any other party liable thereon.
4. So far as the Guarantor is concerned, the Agent, on behalf of itself,
the Banks and the Issuing Banks, may, at any time and from time to time, without
the consent of, or notice to the Guarantor, and without impairing or releasing
any of the obligations of the Guarantor hereunder, upon or without any terms or
conditions and in whole or in part:
(a) modify or change the manner, place or terms of, and/or change or
extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, provided that such modification, change,
extension, renewal or alteration, or the manner in which it was implemented,
does not violate the provisions of the Credit Agreement, and this Guaranty shall
apply to the Guaranteed Obligations as so modified, changed, extended, renewed
or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise
deal with, in any manner and in any order, any property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset or right
with respect thereto;
2
(c) exercise or refrain from exercising any rights against the
Borrower or others (including, without limitation any other guarantor of payment
of the Guaranteed Obligations) or otherwise act or refrain from acting; and when
making any demand hereunder against the Guarantor, the Agent, on behalf of the
Banks, may, but shall be under no obligation to, make a similar demand on any
other guarantor of payment of the Guaranteed Obligations, and any failure by the
Agent or the Banks to make any such demand or to collect any payments from, or
release of any other guarantor of payment of the Guaranteed Obligations shall
not relieve the Guarantor of its obligations and liabilities hereunder, and
shall not release, impair or affect the rights and remedies, express or implied,
or as a matter of law, of the Agent or the Banks against the Guarantor (for the
purposes hereof, "demand" shall include the commencement and continuance of any
legal proceedings);
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and subordinate the payment
of all or any part thereof to the payment of any liability (whether due or not)
of the Borrower to creditors of the Borrower other than the Banks and the
Guarantor;
(e) apply any sums by whomsoever paid or howsoever realized to any of
the Guaranteed Obligations, regardless of what liability or liabilities of the
Borrower remain unpaid; and
(f) amend or otherwise modify the Credit Agreement, consent to or
waive any breach of, or any act, omission or default or Event of Default under
the Credit Agreement, the Notes, or any agreements, instruments or documents
referred to therein or executed and delivered pursuant thereto or in connection
therewith, and this Guaranty shall apply to the Guaranteed Obligations as set
forth in each of such documents as so amended and modified. Any such action,
shall not impair or release any of the obligations of the Guarantor hereunder.
5. No invalidity, irregularity or unenforceability of all or any part of
the Guaranteed Obligations or of any security therefor shall affect, impair or
be a defense to this Guaranty, and this Guaranty shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
the validity, regularity or enforceability of the Credit Agreement, the Notes or
any of the other Guaranteed Obligations or any collateral security therefor or
guaranty thereof or rights of offset with respect thereto at any time or from
time to time held by the Agent or the Banks and without regard to any defense,
offset or counterclaim that may at any time be available to or be asserted by
the Borrower against the Agent or the Banks and that constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Guaranteed Obligations or any part thereof, or of the Guarantor under this
Guaranty, in bankruptcy or in any other instance.
6. Until all of the Guaranteed Obligations have been indefeasibly paid in
full in cash, the Guarantor hereby irrevocably waives, for the benefit of the
Banks, any and all rights that it presently has, or may hereafter have, whether
by virtue of any payment or payments hereunder or otherwise, to be subrogated to
the rights of the Agent or the Banks against the Borrower with respect to any
such indebtedness of the Borrower to the Banks.
3
7. The Guarantor agrees to be bound by, and to comply with all of the
terms, covenants and provisions of, the Credit Agreement to the extent that the
same impose obligations in respect of or grant rights against it as a Guarantor
or otherwise.
8. The Guarantor makes the following representations and warranties,
which shall survive the execution and delivery of this Guaranty:
(a) The Guarantor has examined the Credit Agreement, including the
exhibits and schedules thereto, and all of the representations and warranties
set forth in the Credit Agreement, to the extent the same relate to the
Guarantor, are true and correct.
(b) The Guarantor is a corporation, duly organized, validly existing
and in good standing under the laws of Delaware. The Guarantor has all
requisite power and authority, corporate or otherwise, to execute, deliver and
perform this Guaranty, and has taken all necessary action, corporate or
otherwise, to authorize the execution, delivery and performance of this
Guaranty. This Guaranty has been duly executed and delivered and constitutes
the valid and legally binding obligation of the Guarantor, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or moratorium laws, now or
hereafter in effect, relating to or affecting the enforcement of creditors'
rights generally, and further subject to the discretion of the court in granting
the remedy of specific performance and other equitable remedies.
(c) No consent or approval of any Person (including, without
limitation, stockholders of the Guarantor), no consent or approval of any
landlord or mortgagee, no waiver of any Lien or right of distraint or other
similar right and no consent, license, approval, authorization or declaration
of, any governmental authority, bureau or agency, is or will be required in
connection with the execution, delivery, performance, validity, enforcement or
priority of this Guaranty, or any other agreements, instruments or documents to
be executed or delivered pursuant hereto or thereto.
(d) The execution and delivery of this Guaranty and any other
agreements, instruments or documents to be executed and delivered hereunder, and
performance hereunder and thereunder will not violate any provision of law,
statute, rule or regulation to which the Guarantor is subject or conflict with
or result in a breach of any judgment, decree, writ, injunction, ordinance,
resolution, award, franchise, order, permit or other similar document or
instrument of any court or governmental authority, bureau or agency, domestic or
foreign, or the charter or by-laws of the Guarantor, or create (with or without
the giving of notice or lapse of time, or both) a default under any agreement,
bond, note or indenture to which the Guarantor is a party or by which it is
bound.
9. All notices, requests, demands or other communications hereunder shall
be in writing, either by letter (delivered by hand or commercial messenger
service or sent by certified mail, return receipt requested) or telegram or
telecopy, addressed as follows:
4
(a) if to the Guarantor:
c/o LodgeNet Entertainment Corporation
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx/Xxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
(b) If to the Agent:
National Westminster Bank Plc, as Agent
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telecopier No.: (000) 000-0000
Any notice, request, demand or other communication hereunder shall be deemed to
have been given on the day on which it is telecopied to such party at the
telecopier number specified above or delivered by hand or by such commercial
messenger service to such party at its address specified above, or, if sent by
mail, on the third Business Day after the day deposited in the mail, postage
prepaid, or in the case of telegraphic notice, when delivered to the telegraph
company, addressed as aforesaid. The Agent or the Guarantor may change the
Person, address or telecopier number to whom or which notices are to be given
hereunder, by notice duly given hereunder; PROVIDED, HOWEVER, that any such
notice shall be deemed to have been given hereunder only when actually received
by the party to which it is addressed.
10. No delay on the part of the Agent or the Banks in exercising any of
the options, powers or rights of the Agent or the Banks, and no partial or
single exercise thereof, whether arising hereunder, under the Credit Agreement,
the Notes, or otherwise, shall constitute a waiver thereof or affect any right
hereunder. No waiver of any of such rights and no modification, amendment or
discharge of this Guaranty shall be deemed to be made by the Agent or the Banks
or shall be effective unless the same shall be in a writing executed and
delivered in accordance with the provisions of the Credit Agreement and then
such waiver shall apply only with respect to the specific instance involved and
shall in no way impair the rights of the Agent or the Banks or the obligations
of the Guarantor to the Agent or the Banks in any other respect at any other
time.
11. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE AGENT, THE BANKS
AND THE GUARANTOR HEREUNDER SHALL BE GOVERNED
5
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO ITS RULES PERTAINING TO CONFLICTS OF LAWS. THE GUARANTOR
WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS GUARANTY. IN THE EVENT THE AGENT OR THE
BANKS BRING ANY ACTION OR SUIT IN ANY COURT OF RECORD IN THE STATE OF NEW YORK
TO ENFORCE ANY OR ALL LIABILITIES OF THE GUARANTOR HEREUNDER, SERVICE OF PROCESS
MAY BE MADE UPON THE GUARANTOR BY MAILING A COPY OF THE SUMMONS TO THE GUARANTOR
BY CERTIFIED OR REGISTERED MAIL, AT THE ADDRESS SPECIFIED IN PARAGRAPH 9 HEREOF,
AND THE GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK, COUNTY OF NEW YORK, AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK OVER THE PERSON OF THE GUARANTOR AND HEREBY WAIVES
ANY CLAIM THAT NEW YORK COUNTY OR THE SOUTHERN DISTRICT OF NEW YORK IS AN
INCONVENIENT FORUM. THE GUARANTOR HEREBY WAIVES THE RIGHT TO INTERPOSE
COUNTERCLAIMS OR SET-OFFS OF ANY KIND AND DESCRIPTION IN ANY SUCH ACTION OR SUIT
ARISING HEREUNDER OR IN CONNECTION HEREWITH.
12. If claim is ever made upon the Agent or the Banks for repayment or
recovery of any amount or amounts received by it in payment or on account of any
of the Guaranteed Obligations and it repays all or part of such amount by reason
of any: (a) judgment, decree or order of any court or administrative body
having jurisdiction over it or any of its property, or (b) settlement or
compromise of any such claim effected by it with any such claimant (including
the Borrower), then, and in either such event, the Guarantor agrees that any
such judgment, decree, order, settlement or compromise shall be binding upon the
Guarantor, notwithstanding the cancellation of any instrument evidencing any of
the Guaranteed Obligations, and the Guarantor shall be and remain liable
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by the Agent or the Banks, as
applicable.
13. This Guaranty shall be binding upon the Guarantor and its successors
and assigns, and shall inure to the benefit of the Agent and the Banks and their
respective successors and assigns; PROVIDED, HOWEVER, that the Guarantor shall
not be entitled to assign or delegate any of its rights or obligations under
this Guaranty without the prior written consent of the Majority Banks, and any
purported assignment in the absence of such consent shall be void. This
Guaranty embodies the entire agreement and understanding between the Agent, on
behalf of itself and the Banks, and the Guarantor relating to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof.
14. (a) The provisions of this Guaranty are severable, and in an action
or proceeding involving any state, federal or applicable foreign bankruptcy,
insolvency or other law affecting the rights of creditors generally:
(i) If any clause or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or
6
provision, or part thereof, in such jurisdiction and shall not in any manner
affect such clause or provision in any other jurisdiction, or any other clause
or provision in this Guaranty in any jurisdiction, or any other clause or
provision in this Guaranty in any jurisdiction.
(ii) If the guaranty hereunder by the Guarantor would be held or
determined to be void, invalid or unenforceable on account of the amount of the
Guarantor's aggregate liability under this Guaranty, then, notwithstanding any
other provision of this Guaranty to the contrary, the aggregate amount of such
liability shall, without any further action by any of the Agent, the Banks, the
Guarantor or any other Person, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such action or
proceeding, which (without limiting the generality of the foregoing) may be an
amount that is not greater than the greater of:
(A) the fair consideration actually received by the
Guarantor under the terms of and as a result of the Credit Agreement and any and
all predecessor credit agreements which the Credit Agreement amends and restates
(including, without limiting the generality of the foregoing, and to the extent
not inconsistent with applicable federal, state and applicable foreign laws
affecting the enforceability of guaranties, investments made in, and capital
contributions or advances made to, the Guarantor by the Borrower with the
proceeds of any credit extended under the Credit Agreement whether or not any
such investments, capital contributions or advances were direct or indirect, and
the release of the Guarantor from its obligations under any other guaranty or
collateral security documents, or both) in exchange for its guaranty of the
Obligations; or
(B) the excess of: (1) the amount of the fair saleable
value of the consolidated assets of the Guarantor as of the date of this
Guaranty as determined in accordance with applicable federal, state and
applicable foreign laws governing determinations of the insolvency of debtors as
in effect on the date hereof, over (2) the amount of all consolidated
liabilities of the Guarantor as of the date of this Guaranty, also as determined
on the basis of applicable federal, state and applicable foreign laws governing
the insolvency of debtors as in effect on the date hereof.
(b) If any other guaranty by any one or more other guarantors of the
Guaranteed Obligations is held or determined to be void, invalid or
unenforceable, in whole or in part, such holding or determination shall not
impair or affect the validity and enforceability of:
(i) the guaranty hereunder by the Guarantor, which shall
continue in full force and effect in accordance with its terms; or
(ii) any clause or provision not so held to be void, invalid or
unenforceable.
[signature page follows]
7
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed and delivered on the day and year first above written.
RESNET COMMUNICATIONS, INC.
By
---------------------------------
Title
------------------------------
8
EXHIBIT E
GUARANTY
THIS GUARANTY, made this 19th day of December, 1996 by LODGENET
ENTERTAINMENT (CANADA) CORPORATION, a Canadian corporation (the "GUARANTOR"), in
favor of NATIONAL WESTMINSTER BANK PLC, New York branch, as Agent, for the
benefit of itself, the Issuing Banks and the Banks signatory to the hereinafter
defined Credit Agreement (in such capacity, together with its successors in
such capacity, the "AGENT").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of this Guaranty,
LodgeNet Entertainment Corporation, a Delaware corporation (the "BORROWER"), has
entered into an Amended and Restated Credit Agreement dated the date hereof
(such agreement, including all exhibits thereto, as it may from time to time be
amended, modified or supplemented, is hereinafter referred to as the "CREDIT
AGREEMENT") with the Agent and the Banks, pursuant to which the Banks have
agreed to make a revolving loan and letter of credit facility available to the
Borrower in the aggregate principal sum of up to One Hundred Million Dollars
($100,000,000), subject to adjustment, upon and subject to the terms and
conditions of the Credit Agreement (the "FACILITY");
WHEREAS, the Guarantor will derive benefits, both directly and indirectly,
from the Borrower's obtaining the Facility from the Banks pursuant to the Credit
Agreement;
WHEREAS, it is a condition precedent to the obligation of the Banks to
make the Facility available to the Borrower that the Guarantor shall have
executed and delivered this Guaranty; and
WHEREAS, all capitalized terms used herein that are defined in the Credit
Agreement and that are not otherwise defined herein shall have the respective
meanings ascribed thereto therein, unless the context otherwise requires; if at
any time no Agent shall exist under the Credit Agreement, each reference herein
to the Agent shall be deemed to refer to the Majority Banks until such time as a
successor Agent shall be appointed under the Credit Agreement;
NOW, THEREFORE, in order to induce the Agent, the Issuing Banks and the
Banks to execute and deliver the Credit Agreement and to make the Facility
available to the Borrower, and in consideration of the benefits expected to
accrue to the Guarantor by reason thereof, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the Guarantor hereby
represents and warrants to, and covenants and agrees with the Agent, for the
benefit of itself, the Banks and the Issuing Banks, as follows:
1. The Guarantor hereby irrevocably and unconditionally guarantees to the
Agent, for the benefit of itself, the Banks and the Issuing Banks, the punctual
payment of the full amount, when due (whether by demand, acceleration or
otherwise), of: (a) the principal of and interest on, and fees and expenses due
pursuant to, the promissory notes issued by the Borrower pursuant to the Credit
Agreement (hereinafter referred to, together with any and all amendments,
modifications, substitutions and/or replacements thereof and thereto, as the
"NOTES"), and (b) all other Indebtedness, liabilities and obligations of the
Borrower to the Banks, the Issuing Banks and the
Agent, whether under the Credit Agreement or otherwise created, whether now or
hereafter existing, and whether or not currently contemplated, due or to become
due, direct or contingent, joint, several or independent, secured or unsecured
and whether matured or unmatured (all of the Indebtedness, liabilities and
obligations included in clauses (a) and (b) of this paragraph 1 are hereinafter
referred to collectively as the "GUARANTEED OBLIGATIONS"); subject, however, to
the provisions of subparagraph 14(a)(ii) hereof. This is a guaranty of payment
and not of collection, and is the primary obligation of the Guarantor; and the
Agent, on behalf of itself, the Banks and the Issuing Banks, may enforce this
Guaranty against the Guarantor without any prior enforcement of the Guaranteed
Obligations against the Borrower.
2. All payments made by the Guarantor under or by virtue of this Guaranty
shall be paid to the Agent at its office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 or such other place as the Agent may hereafter designate in writing. The
Guarantor hereby agrees to make all payments under or by virtue of this Guaranty
to the Agent as aforesaid. The Agent shall not be required otherwise to
establish its authority to receive any payment made under or by virtue hereof.
3. The Guarantor hereby waives notice of acceptance of this Guaranty,
notice of the creation, renewal or accrual of any of the Guaranteed Obligations
and notice of any other liability to which this Guaranty may apply, and notice
or proof of reliance by the Agent and/or the Banks upon this Guaranty, and
waives diligence, protest, notice of protest, presentment, demand of payment,
notice of dishonor or nonpayment of any of the Guaranteed Obligations, suit or
taking other action or making any demand against, and any other notice to the
Borrower or any other party liable thereon.
4. So far as the Guarantor is concerned, the Agent, on behalf of itself,
the Banks and the Issuing Banks, may, at any time and from time to time, without
the consent of, or notice to the Guarantor, and without impairing or releasing
any of the obligations of the Guarantor hereunder, upon or without any terms or
conditions and in whole or in part:
(a) modify or change the manner, place or terms of, and/or change or
extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, provided that such modification, change,
extension, renewal or alteration, or the manner in which it was implemented,
does not violate the provisions of the Credit Agreement, and this Guaranty shall
apply to the Guaranteed Obligations as so modified, changed, extended, renewed
or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise
deal with, in any manner and in any order, any property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset or right
with respect thereto;
(c) exercise or refrain from exercising any rights against the
Borrower or others (including, without limitation any other guarantor of payment
of the Guaranteed Obligations) or otherwise act or refrain from acting; and when
making any demand hereunder against the Guarantor, the Agent, on behalf of the
Banks, may, but shall be under no obligation to, make a similar demand
2
on any other guarantor of payment of the Guaranteed Obligations, and any failure
by the Agent or the Banks to make any such demand or to collect any payments
from, or release of any other guarantor of payment of the Guaranteed Obligations
shall not relieve the Guarantor of its obligations and liabilities hereunder,
and shall not release, impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Agent or the Banks against the Guarantor
(for the purposes hereof, "demand" shall include the commencement and
continuance of any legal proceedings);
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and subordinate the payment
of all or any part thereof to the payment of any liability (whether due or not)
of the Borrower to creditors of the Borrower other than the Banks and the
Guarantor;
(e) apply any sums by whomsoever paid or howsoever realized to any of
the Guaranteed Obligations, regardless of what liability or liabilities of the
Borrower remain unpaid; and
(f) amend or otherwise modify the Credit Agreement, consent to or
waive any breach of, or any act, omission or default or Event of Default under
the Credit Agreement, the Notes, or any agreements, instruments or documents
referred to therein or executed and delivered pursuant thereto or in connection
therewith, and this Guaranty shall apply to the Guaranteed Obligations as set
forth in each of such documents as so amended and modified. Any such action,
shall not impair or release any of the obligations of the Guarantor hereunder.
5. No invalidity, irregularity or unenforceability of all or any part of
the Guaranteed Obligations or of any security therefor shall affect, impair or
be a defense to this Guaranty, and this Guaranty shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
the validity, regularity or enforceability of the Credit Agreement, the Notes or
any of the other Guaranteed Obligations or any collateral security therefor or
guaranty thereof or rights of offset with respect thereto at any time or from
time to time held by the Agent or the Banks and without regard to any defense,
offset or counterclaim that may at any time be available to or be asserted by
the Borrower against the Agent or the Banks and that constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Guaranteed Obligations or any part thereof, or of the Guarantor under this
Guaranty, in bankruptcy or in any other instance.
6. Until all of the Guaranteed Obligations have been indefeasibly paid in
full in cash, the Guarantor hereby irrevocably waives, for the benefit of the
Banks, any and all rights that it presently has, or may hereafter have, whether
by virtue of any payment or payments hereunder or otherwise, to be subrogated to
the rights of the Agent or the Banks against the Borrower with respect to any
such indebtedness of the Borrower to the Banks.
7. The Guarantor agrees to be bound by, and to comply with all of the
terms, covenants and provisions of, the Credit Agreement to the extent that the
same impose obligations in respect of or grant rights against it as a Guarantor
or otherwise.
8. The Guarantor makes the following representations and warranties,
which shall survive the execution and delivery of this Guaranty:
3
(a) The Guarantor has examined the Credit Agreement, including the
exhibits and schedules thereto, and all of the representations and warranties
set forth in the Credit Agreement, to the extent the same relate to the
Guarantor, are true and correct.
(b) The Guarantor is a corporation, duly organized, validly existing
and in good standing under the laws of Canada. The Guarantor has all requisite
power and authority, corporate or otherwise, to execute, deliver and perform
this Guaranty, and has taken all necessary action, corporate or otherwise, to
authorize the execution, delivery and performance of this Guaranty. This
Guaranty has been duly executed and delivered and constitutes the valid and
legally binding obligation of the Guarantor, enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or moratorium laws, now or hereafter in effect,
relating to or affecting the enforcement of creditors' rights generally, and
further subject to the discretion of the court in granting the remedy of
specific performance and other equitable remedies.
(c) No consent or approval of any Person (including, without
limitation, stockholders of the Guarantor), no consent or approval of any
landlord or mortgagee, no waiver of any Lien or right of distraint or other
similar right and no consent, license, approval, authorization or declaration
of, any governmental authority, bureau or agency, is or will be required in
connection with the execution, delivery, performance, validity, enforcement or
priority of this Guaranty, or any other agreements, instruments or documents to
be executed or delivered pursuant hereto or thereto.
(d) The execution and delivery of this Guaranty and any other
agreements, instruments or documents to be executed and delivered hereunder, and
performance hereunder and thereunder will not violate any provision of law,
statute, rule or regulation to which the Guarantor is subject or conflict with
or result in a breach of any judgment, decree, writ, injunction, ordinance,
resolution, award, franchise, order, permit or other similar document or
instrument of any court or governmental authority, bureau or agency, domestic or
foreign, or the charter or by-laws of the Guarantor, or create (with or without
the giving of notice or lapse of time, or both) a default under any agreement,
bond, note or indenture to which the Guarantor is a party or by which it is
bound.
9. All notices, requests, demands or other communications hereunder shall
be in writing, either by letter (delivered by hand or commercial messenger
service or sent by certified mail, return receipt requested) or telegram or
telecopy, addressed as follows:
(a) if to the Guarantor:
c/o LodgeNet Entertainment Corporation
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx/Xxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
4
(b) If to the Agent:
National Westminster Bank Plc, as Agent
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telecopier No.: (000) 000-0000
Any notice, request, demand or other communication hereunder shall be deemed to
have been given on the day on which it is telecopied to such party at the
telecopier number specified above or delivered by hand or by such commercial
messenger service to such party at its address specified above, or, if sent by
mail, on the third Business Day after the day deposited in the mail, postage
prepaid, or in the case of telegraphic notice, when delivered to the telegraph
company, addressed as aforesaid. The Agent or the Guarantor may change the
Person, address or telecopier number to whom or which notices are to be given
hereunder, by notice duly given hereunder; PROVIDED, HOWEVER, that any such
notice shall be deemed to have been given hereunder only when actually received
by the party to which it is addressed.
10. No delay on the part of the Agent or the Banks in exercising any of
the options, powers or rights of the Agent or the Banks, and no partial or
single exercise thereof, whether arising hereunder, under the Credit Agreement,
the Notes, or otherwise, shall constitute a waiver thereof or affect any right
hereunder. No waiver of any of such rights and no modification, amendment or
discharge of this Guaranty shall be deemed to be made by the Agent or the Banks
or shall be effective unless the same shall be in a writing executed and
delivered in accordance with the provisions of the Credit Agreement and then
such waiver shall apply only with respect to the specific instance involved and
shall in no way impair the rights of the Agent or the Banks or the obligations
of the Guarantor to the Agent or the Banks in any other respect at any other
time.
11. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE AGENT, THE BANKS
AND THE GUARANTOR HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS RULES
PERTAINING TO CONFLICTS OF LAWS. THE GUARANTOR WAIVES TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS GUARANTY. IN THE EVENT THE AGENT OR THE BANKS BRING ANY ACTION OR SUIT IN
ANY COURT OF RECORD IN THE STATE OF NEW YORK TO ENFORCE ANY OR ALL LIABILITIES
OF THE GUARANTOR HEREUNDER, SERVICE OF PROCESS MAY BE MADE UPON THE GUARANTOR BY
MAILING A
5
COPY OF THE SUMMONS TO THE GUARANTOR BY CERTIFIED OR REGISTERED MAIL, AT THE
ADDRESS SPECIFIED IN PARAGRAPH 9 HEREOF, AND THE GUARANTOR HEREBY CONSENTS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OVER THE
PERSON OF THE GUARANTOR AND HEREBY WAIVES ANY CLAIM THAT NEW YORK COUNTY OR THE
SOUTHERN DISTRICT OF NEW YORK IS AN INCONVENIENT FORUM. THE GUARANTOR HEREBY
WAIVES THE RIGHT TO INTERPOSE COUNTERCLAIMS OR SET-OFFS OF ANY KIND AND
DESCRIPTION IN ANY SUCH ACTION OR SUIT ARISING HEREUNDER OR IN CONNECTION
HEREWITH.
12. If claim is ever made upon the Agent or the Banks for repayment or
recovery of any amount or amounts received by it in payment or on account of any
of the Guaranteed Obligations and it repays all or part of such amount by reason
of any: (a) judgment, decree or order of any court or administrative body
having jurisdiction over it or any of its property, or (b) settlement or
compromise of any such claim effected by it with any such claimant (including
the Borrower), then, and in either such event, the Guarantor agrees that any
such judgment, decree, order, settlement or compromise shall be binding upon the
Guarantor, notwithstanding the cancellation of any instrument evidencing any of
the Guaranteed Obligations, and the Guarantor shall be and remain liable
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by the Agent or the Banks, as
applicable.
13. This Guaranty shall be binding upon the Guarantor and its successors
and assigns, and shall inure to the benefit of the Agent and the Banks and their
respective successors and assigns; PROVIDED, HOWEVER, that the Guarantor shall
not be entitled to assign or delegate any of its rights or obligations under
this Guaranty without the prior written consent of the Majority Banks, and any
purported assignment in the absence of such consent shall be void. This
Guaranty embodies the entire agreement and understanding between the Agent, on
behalf of itself and the Banks, and the Guarantor relating to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof.
14. (a) The provisions of this Guaranty are severable, and in an action
or proceeding involving any state, federal or applicable foreign bankruptcy,
insolvency or other law affecting the rights of creditors generally:
(i) If any clause or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision in this Guaranty in any
jurisdiction, or any other clause or provision in this Guaranty in any
jurisdiction.
(ii) If the guaranty hereunder by the Guarantor would be held or
determined to be void, invalid or unenforceable on account of the amount of the
Guarantor's aggregate liability under this Guaranty, then, notwithstanding any
other provision of this Guaranty to the contrary, the aggregate amount of such
liability shall, without any further action by any of the Agent, the Banks,
6
the Guarantor or any other Person, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such action or
proceeding, which (without limiting the generality of the foregoing) may be an
amount that is not greater than the greater of:
(A) the fair consideration actually received by the
Guarantor under the terms of and as a result of the Credit Agreement and any and
all predecessor credit agreements which the Credit Agreement amends and restates
(including, without limiting the generality of the foregoing, and to the extent
not inconsistent with applicable federal, state and applicable foreign laws
affecting the enforceability of guaranties, investments made in, and capital
contributions or advances made to, the Guarantor by the Borrower with the
proceeds of any credit extended under the Credit Agreement whether or not any
such investments, capital contributions or advances were direct or indirect, and
the release of the Guarantor from its obligations under any other guaranty or
collateral security documents, or both) in exchange for its guaranty of the
Obligations; or
(B) the excess of: (1) the amount of the fair saleable
value of the consolidated assets of the Guarantor as of the date of this
Guaranty as determined in accordance with applicable federal, state and
applicable foreign laws governing determinations of the insolvency of debtors as
in effect on the date hereof, over (2) the amount of all consolidated
liabilities of the Guarantor as of the date of this Guaranty, also as determined
on the basis of applicable federal, state and applicable foreign laws governing
the insolvency of debtors as in effect on the date hereof.
(b) If any other guaranty by any one or more other guarantors of the
Guaranteed Obligations is held or determined to be void, invalid or
unenforceable, in whole or in part, such holding or determination shall not
impair or affect the validity and enforceability of:
(i) the guaranty hereunder by the Guarantor, which shall
continue in full force and effect in accordance with its terms; or
(ii) any clause or provision not so held to be void, invalid or
unenforceable.
[signature page follows]
7
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed and delivered on the day and year first above written.
LODGENET ENTERTAINMENT (CANADA)
CORPORATION
By:
---------------------------------
Title:
------------------------------
8
EXHIBIT F
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT"), dated as of December 19,
1996, is made between NATIONAL WESTMINSTER BANK PLC, a United Kingdom public
limited company, as agent for the Banks and the Issuing Banks (as defined
below) (in such capacity, and together with its successors as agent for the
Banks and the Issuing Banks, the "AGENT"), LODGENET ENTERTAINMENT CORPORATION, a
Delaware corporation (the "BORROWER"), RESNET COMMUNICATIONS, INC., a Delaware
corporation ("RESNET"), LODGENET ENTERTAINMENT (CANADA) CORPORATION, a Canadian
corporation ("LODGENET CANADA", and collectively with the Borrower and ResNet,
the "GRANTORS", and each individually, a "GRANTOR").
RECITALS
WHEREAS, reference is hereby made to that certain Amended and Restated
Credit Agreement dated as of December 19, 1996 by and among the Borrower, the
several financial institutions from time to time party thereto (the "BANKS"),
the Agent (also in its capacity as an Issuing Bank and Bank), and National
Westminster Bank of Canada, as an Issuing Bank (as amended, restated, modified,
renewed, supplemented or extended from time to time, the "CREDIT AGREEMENT").
WHEREAS, it is a condition precedent to each Bank's obligation to make its
initial Loan under the Credit Agreement and for the Issuing Banks to issue
letters of credit that the Borrower enter into this Agreement and grant to the
Agent, for the benefit of itself, the Banks and the Issuing Banks, the security
interests hereinafter provided to secure the obligations of the Borrower
described below.
WHEREAS, ResNet and LodgeNet Canada each is a direct or indirect subsidiary
of the Company and will derive substantial and direct benefits (which benefits
are hereby acknowledged by each such Grantor) from the Loans and the letters of
credit and other benefits to be provided to the Borrower under the Credit
Agreement.
WHEREAS, in order to secure the performance of the obligations of the
Borrower under the Credit Agreement and the other Loan Documents, ResNet and
LodgeNet Canada have executed those certain guaranties dated the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the
"GUARANTIES").
WHEREAS, it is a condition precedent to each Bank's obligation to make its
initial Loan under the Credit Agreement and for the Issuing Banks to issue
letters of credit that ResNet and LodgeNet Canada enter into this Agreement and
grant to the Agent, for the benefit of itself, the Banks and the Issuing Banks,
the security interests hereinafter provided to secure the obligations of
Grantors and the Borrower described below.
Accordingly, the parties hereto agree as follows:
SECTION 1 DEFINITIONS; INTERPRETATION.
(a) TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used in
this Agreement and not otherwise defined herein have the meanings specified in
the Credit Agreement.
(b) CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"ACCOUNTS" means any and all "accounts," as such term is defined in
the UCC, whether now existing or hereafter arising or acquired by any Grantor,
and in any event includes all accounts receivable, contract rights, rights to
payment and other obligations of any kind owed to such Grantor arising out of or
in connection with the sale or lease of merchandise, goods or commodities or the
rendering of services or arising from any other transaction, however evidenced,
and whether or not earned by performance, all guaranties, indemnities and
security with respect to the foregoing, and all letters of credit relating
thereto, in each case whether now existing or hereafter acquired or arising.
"BANK PARTY" means, as the context may require, any Bank (including
any Bank in its capacity as a counterparty to an Interest Rate Contract or
currency hedging agreement), any Issuing Bank or the Agent, and each of their
respective successors, transferees or assigns.
"BOOKS" means all books, records and other written, electronic or
other documentation in whatever form maintained now or hereafter by or for any
Grantor in connection with the ownership of its assets or the conduct of its
business or evidencing or containing information relating to the Collateral,
including: (i) ledgers; (ii) records indicating, summarizing, or evidencing
such Grantor's assets (including Inventory and Rights to Payment), business
operations or financial condition; (iii) computer programs and software;
(iv) computer discs, tapes, files, manuals, spreadsheets; (v) computer printouts
and output of whatever kind; (vi) any other computer prepared or electronically
stored, collected or reported information and equipment of any kind; and
(vii) any and all other rights now or hereafter arising out of any contract or
agreement between such Grantor and any service bureau, computer or data
processing company or other Person charged with preparing or maintaining any of
such Grantor's books or records or with credit reporting, including with regard
to such Xxxxxxx's Accounts.
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
the UCC, whether now existing or hereafter arising or acquired by any Grantor.
"COLLATERAL" has the meaning specified in Section 2.
"CONTRACTS" means all the contracts, undertakings or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Accounts, and including, without limitation, all of each
Grantor's
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right, title and interest in, to and under all of its Leases, contracts,
permits, licenses (to the extent permitted by applicable law or regulation),
franchises, certificates and other agreements including, without limitation, all
film and program license agreements, agreements for the provision of management,
engineering or other similar services and agreements relating to the provision
of video on-demand, network-based video games, basic and premium cable
television programming and other interactive multimedia entertainment and
information services.
"DEPOSIT ACCOUNT" means any demand, time, savings, passbook or like
account now or hereafter maintained by or for the benefit of any Grantor with a
bank, savings and loan association, credit union or like organization (including
the Agent) and all funds and amounts therein, whether or not restricted or
designated for a particular purpose.
"DOCUMENTS" means any and all "documents," as such term is defined in
the UCC, including without limitation all documents of title, bills of lading,
dock warrants, dock receipts, warehouse receipts and other documents of any
Grantor, whether or not negotiable, and includes all other documents which
purport to be issued by a bailee or agent and purport to cover goods in any
bailee's or agent's possession which are either identified or are fungible
portions of an identified mass, including such documents of title made available
to such Grantor for the purpose of ultimate sale or exchange of goods or for the
purpose of loading, unloading, storing, shipping, transshipping, manufacturing,
processing or otherwise dealing with goods in a manner preliminary to their sale
or exchange, in each case whether now existing or hereafter acquired or arising.
"EQUIPMENT" means all "equipment," as such term is defined in the UCC
(other than automobiles, trucks, tractors, rolling stock and other vehicles),
whether now existing or hereafter acquired by any Grantor in all of its forms,
wherever located, and in any event includes any and all machinery, furniture,
equipment, furnishings and fixtures in which such Grantor now or hereafter
acquires any right, and all other goods and tangible personal property (other
than Inventory), including tools, parts and supplies, computer and other
electronic data processing equipment and other office equipment, computer
programs and related data processing software, and all additions, substitutions,
replacements, parts, accessories, and accessions to and for the foregoing, now
owned or hereafter acquired, and including any of the foregoing which are or are
to become fixtures on real property.
"FINANCING STATEMENTS" has the meaning specified in Section 3.
"FIXTURES" shall mean any "fixtures" as such term is defined in the
UCC, whether now owned or hereafter acquired by any Grantor.
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in the UCC, whether now existing or hereafter arising or acquired by any
Grantor, and in any event includes: (i) all tax and other refunds, rebates or
credits of every kind and nature to which such Grantor is now or hereafter may
become entitled; (ii) all goodwill, choses in action and causes of action,
whether legal or equitable, whether in contract or tort and however arising;
(iii) all Intellectual Property Collateral; (iv) all uncertificated securities
and interests in limited and general partnerships; (v) all rights of stoppage in
transit, replevin and reclamation; (vi) all licenses, permits,
-3-
consents, indulgences and rights of whatever kind issued in favor of or
otherwise recognized as belonging to such Grantor by any Governmental Authority;
and (vii) all indemnity agreements, guaranties, insurance policies and other
contractual, equitable and legal rights of whatever kind or nature; in each case
whether now existing or hereafter acquired or arising.
"INSTRUMENTS" means any and all negotiable instruments, certificated
securities and every other writing which evidences a right to the payment of
money, in each case whether now existing or hereafter acquired by any Grantor.
"INTELLECTUAL PROPERTY COLLATERAL" means the following properties and
assets owned or held by any Grantor or in which such Grantor otherwise has any
interest, now existing or hereafter acquired or arising:
(i) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and royalties with
respect to any licenses (including without limitation such patents, patent
applications and patent licenses as described in SCHEDULE E), present or future
infringement thereof, all rights arising therefrom and pertaining thereto and
all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof;
(ii) all copyrights and applications for copyright, domestic or
foreign, together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published and
whether said copyrights are statutory or arise under the common law, and all
other rights and works of authorship, all rights, claims and demands in any way
relating to any such copyrights or works, including royalties and rights to sue
for past, present or future infringement, and all rights of renewal and
extension of copyright;
(iii) all state (including common law), federal and foreign
trademarks, service marks and trade names, and applications for registration of
such trademarks, service marks and trade names, all licenses relating to any of
the foregoing and all income and royalties with respect to any licenses
(including without limitation such marks, names, applications and licenses as
described in SCHEDULE E), whether registered or unregistered and wherever
registered, all rights to sue for past, present or future infringement or
unconsented use thereof, all rights arising therefrom and pertaining thereto and
all reissues, extensions and renewals thereof;
(iv) all trade secrets, confidential information, customer lists,
license rights, advertising materials, operating manuals, methods, processes,
know-how, sales literature, drawings, specifications, blue prints, descriptions,
inventions, name plates and catalogs; and
(v) the entire goodwill of or associated with the businesses now or
hereafter conducted by such Grantor connected with and symbolized by any of the
aforementioned properties and assets.
"INVENTORY" means any "inventory," as such term is defined in the UCC,
wherever located, whether now owned or hereafter acquired by any Grantor, and in
any event includes all goods (including goods in transit) which are held for
sale, lease or other disposition, including those
-4-
held for display or demonstration or out on lease or consignment or to be
furnished under a contract of service, or which are raw materials, work in
process, finished goods or materials used or consumed in such Grantor's
business, and the resulting product or mass, and all repossessed, returned,
rejected, reclaimed and replevied goods, together with all parts, components,
supplies, packing and other materials used or usable in connection with the
manufacture, production, packing, shipping, advertising, selling or furnishing
of such goods; and all other items hereafter acquired by such Grantor by way of
substitution, replacement, return, repossession or otherwise, and all additions
and accessions thereto, and any Document representing or relating to any of the
foregoing at any time.
"INVESTMENT PROPERTY" shall have the meaning ascribed thereto in
Section 9-115 of the UCC in those jurisdictions in which such definition has
been adopted and shall include without limitation (i) all securities, whether
certificated or uncertificated, stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Grantor including
without limitation, the rights of such Grantor to any securities account of such
Grantor and financial assets held by a securities intermediary in such
securities account and any fee, credit balance or other money owing by any
securities intermediary with respect to that account; (iii) all securities
accounts held by any Grantor; (iv) all commodity contracts held by any Grantor
and (v) all commodity accounts held by any Grantor.
"PROCEEDS" means "proceeds," as such term is defined in the UCC, and
in any event, includes whatever is receivable or received from or upon the sale,
lease, license, collection, use, exchange or other disposition, whether
voluntary or involuntary, of any Collateral or other assets of any Grantor, any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to or
for the account of such Grantor from time to time with respect to any of the
Collateral, any and all payments (in any form whatsoever) made or due and
payable to such Grantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral or for or on account
of any damage or injury to or conversion of any Collateral by any Person, any
and all other tangible or intangible property received upon the sale or
disposition of Collateral, and all proceeds of proceeds.
"RIGHTS TO PAYMENT" means all Accounts, and any and all rights and
claims to the payment or receipt of money or other forms of consideration of any
kind in, to and under all Contracts, Chattel Paper, Documents, General
Intangibles, Instruments and Proceeds.
"SECURED OBLIGATIONS" means all Obligations of the Borrower under the
Credit Agreement and all obligations of ResNet and LodgeNet Canada under the
Guaranties and all obligations of each Grantor under each other Loan Document to
which any Grantor is or may become a party, whether for principal, interest,
costs, fees, expenses, indemnities or otherwise, and all obligations of each
Grantor existing under this Agreement, in each case whether now existing or
hereafter arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined.
-5-
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; PROVIDED, HOWEVER, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of New York or by the Personal Property Security Act (the "PPSA") as in effect
in the Canadian provinces of Ontario or British Columbia, the term "UCC" shall
mean the Uniform Commercial Code or the PPSA as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
(c) TERMS DEFINED IN UCC. Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings assigned to
them in the UCC or, if not defined in the UCC, such terms shall have the
meanings assigned to them in the UCC in effect in the State of New York.
(d) AFFILIATES OF BANKS AS SECURED PARTIES. Notwithstanding anything
herein to the contrary, the pledge and security interests granted hereby shall
be deemed to be for the benefit of the Bank Parties and Affiliates of the Banks
that are parties to Interest Rate Contracts and currency hedging agreements with
the Company, and accordingly, references herein to any Bank shall, to such
extent, be deemed to include such Affiliates.
SECTION 2 SECURITY INTEREST.
(a) GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Secured Obligations, and to induce the Agent and the Banks to
enter into the Credit Agreement and to make the Loans as provided therein and
for the Issuing Banks to issue the letters of credit in accordance with the
terms and conditions thereof, each Grantor hereby grants, pledges, assigns,
transfers, hypothecates and sets over to the Agent, for the benefit of itself,
the Banks and the Issuing Banks, a security interest in all of such Grantor's
right, title and interest in, to and under the following property, wherever
located and whether now existing or owned or hereafter acquired or arising
(collectively, the "COLLATERAL"): (i) all Accounts; (ii) all Chattel Paper;
(iii) all Deposit Accounts; (iv) all Documents; (v) all Contracts and General
Intangibles; (vi) all Instruments; (vii) all Books;(viii) all Fixtures;(ix) all
Investment Property;(x) all Equipment;(xi) all Inventory; (xii) all money, cash
or cash equivalents; and (xiii) all products and Proceeds of any and all of the
foregoing.
(b) GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) each Grantor shall remain liable under any Contracts,
agreements and other documents included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by the
Agent of any of the rights hereunder shall not release any Grantor from any of
its duties or obligations under such contracts, agreements and other documents
included in the Collateral, and (iii) neither the Agent nor any other Bank Party
shall have any obligation or liability under any Contracts, agreements and other
documents included in the Collateral by reason of this Agreement, nor shall the
Agent or any other Bank Party be obligated to perform any of the obligations or
duties of any Grantor thereunder
-6-
or to take any action to collect or enforce any such contract, agreement or
other document included in the Collateral hereunder.
(c) CONTINUING SECURITY INTEREST. Each Grantor agrees that this
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with Section 25.
SECTION 3 FINANCING STATEMENTS, ETC. Each Grantor shall execute and
deliver to the Agent concurrently with the execution of this Agreement, and at
any time and from time to time thereafter, all financing statements,
continuation financing statements, termination statements, security agreements,
chattel mortgages, assignments, patent, copyright and trademark collateral
assignments, fixture filings, blocked account agreements, warehouse receipts,
documents of title, affidavits, reports, notices, schedules of account, letters
of authority and all other documents and instruments, in form satisfactory to
the Agent (the "FINANCING STATEMENTS"), and take all other action, as may be
necessary or as the Agent may reasonably request, to perfect and continue
perfected, maintain the priority of or provide notice of the Agent's security
interest in the Collateral and to accomplish the purposes of this Agreement.
SECTION 4 REPRESENTATIONS AND WARRANTIES. In addition to and not in
limitation of the representations and warranties of any Grantor set forth in any
other Loan Document which such Grantor is a party to, each Grantor represents
and warrants to the Agent that:
(a) LOCATION OF CHIEF EXECUTIVE OFFICE AND COLLATERAL. Each
Grantor's chief executive office, corporate office and principal place of
business is located at the address set forth in SCHEDULE A, and all other
locations where such Grantor conducts business or Collateral is kept are set
forth in SCHEDULE A.
(b) LOCATIONS OF BOOKS. All locations where Books pertaining to the
Rights to Payment are kept, including all equipment necessary for accessing such
Books and the names and addresses of all service bureaus, computer or data
processing companies and other Persons keeping any Books or collecting Rights to
Payment for any Grantor, are set forth in SCHEDULE B.
(c) TRADE NAMES AND TRADE STYLES. All trade names and trade styles
under which each Grantor presently conducts its business operations are set
forth in SCHEDULE C, and, except as set forth in SCHEDULE C, such Grantor has
not, at any time during the preceding five (5) years: (i) been known as or used
any other corporate, trade or fictitious name; (ii) changed its name; (iii) been
the surviving or resulting corporation in a merger or consolidation; or
(iv) acquired through asset purchase or otherwise any business of any Person.
(d) OWNERSHIP OF COLLATERAL. Each Grantor is, and, except as
permitted by Section 5(i), will continue to be, the legal and beneficial owner
of the Collateral (or, in the case of after-acquired Collateral, at the time
such Grantor acquires rights in such Collateral, will be the legal and
beneficial owner thereof), and has good, indefeasible and merchantable title to
the Collateral free and clear of any and all Liens other than Permitted Liens.
-7-
(e) ENFORCEABILITY; PRIORITY OF SECURITY INTEREST. (i) This
Agreement creates a valid and continuing security interest which is enforceable
against the Collateral in which each Grantor now has rights and will create a
security interest which is enforceable against the Collateral in which such
Grantor hereafter acquires rights at the time such Grantor acquires any such
rights; and (ii) subject to Permitted Liens, the Agent has a perfected and first
priority security interest in the Collateral in which each Grantor now has
rights, and will have a perfected and first priority security interest in the
Collateral in which such Grantor hereafter acquires rights at the time such
Grantor acquires any such rights, in each case for the Agent's own benefit, the
Banks and the Issuing Banks, and in each case securing the payment and
performance of the Secured Obligations. All action necessary or desirable to
protect and perfect such security interest in the existing Collateral has been
duly taken.
(f) OTHER FINANCING STATEMENTS. Other than (i) financing statements
or similar filings naming the owner of the asset to which such lien relates as
debtor, under the UCC or any comparable law ("UCC FINANCING STATEMENTS")
disclosed to the Agent and filed in connection with the Permitted Liens and
(ii) UCC Financing Statements in favor of the Agent in its capacity as Agent for
the benefit of itself, the Banks and the Issuing Banks under the Credit
Agreement and any other Loan Documents, no effective UCC Financing Statement
naming any Grantor as debtor, assignor, grantor, mortgagor, pledgor or the like
and covering all or any part of the Collateral is on file in any filing or
recording office in any jurisdiction.
(g) RIGHTS TO PAYMENT. (i) The Rights to Payment represent valid,
binding and enforceable obligations of the account debtors or other Persons
obligated thereon, representing undisputed, bona fide transactions completed in
accordance with the terms and provisions contained in any documents related
thereto, and are and will be genuine, free from Liens other than Permitted
Liens, and not subject to any adverse claims, counterclaims, setoffs, defaults,
disputes, defenses, discounts, retainages, holdbacks or conditions precedent of
any kind of character, except to the extent permitted under the Credit Agreement
or to the extent, if any, that such account debtors or other Persons may be
entitled to normal and ordinary course trade discounts, returns, adjustments and
allowances in accordance with Section 5(n), or as otherwise disclosed to the
Agent in writing;
(ii) no Grantor has assigned any of its rights under the Rights to
Payment except as provided in this Agreement or as set forth in the Credit
Agreement or other Loan Documents; and
(iii) no Grantor has knowledge of any fact or circumstance which would
impair the validity or collectibility of any of the Rights to Payment.
(h) CONTRACTS. The Contracts to which such Grantor is a party
included in the Collateral constitute valid and legally binding obligations of
such Grantor and, to the best of such Grantor's knowledge, the other parties
thereto enforceable in accordance with their terms.
(i) INVENTORY. With respect to any Inventory in which the Agent is
granted a security interest pursuant to the terms of this Agreement, (i) such
Inventory is located at the locations set forth on SCHEDULE A hereto, (ii) no
Inventory is now, or shall at any time or times hereafter be stored with a
bailee, warehouseman or similar party (except as disclosed on SCHEDULE
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D) without the Agent's prior written consent, and if the Agent gives such
written consent, the applicable Grantor will concurrently therewith at the
Agent's reasonable request use its best efforts to cause any such bailee,
warehouseman or similar party to issue and deliver to the Agent in form and
substance acceptable to the Agent, warehouse receipts therefor in the Agent's
name, (iii) such Inventory is of good and merchantable quality, free from any
defects, (iv) such Inventory is not subject to any licensing, patent, royalty,
trademark, trade name or copyright agreements with any third parties which would
require any consent of any third party upon sale or disposition of that
Inventory or the payment of any monies to any third party as a precondition of
such sale or other disposition, and (v) the completion of manufacture, sale or
other disposition of such Inventory by the Agent following an Event of Default
will not require the consent of any Person and will not constitute a breach or
default under any contract or agreement to which any Grantor is a party or to
which such Inventory is subject.
(j) INTELLECTUAL PROPERTY. (i) Except as set forth in SCHEDULE E,
each Grantor does not own, possess or use under any licensing arrangement any
patents, copyrights, trademarks, service marks or trade names, nor is there
currently pending before any governmental authority any application for
registration of any patent, copyright, trademark, service mark or trade name;
(ii) all patents, copyrights, trademarks, service marks and trade
names are subsisting and none have been adjudged invalid or unenforceable in
whole or in part;
(iii) all maintenance fees required to be paid on account of any
patents have been timely paid for maintaining such patents in force, and, to
each Grantor's knowledge, each of the patents is valid and enforceable;
(iv) to each Grantor's knowledge after due inquiry, no material
infringement or unauthorized use presently is being made of any Intellectual
Property Collateral by any Person;
(v) each Grantor is the sole and exclusive owner of the Intellectual
Property Collateral identified on SCHEDULE E (other than Intellectual Property
Collateral licensed by such Grantor) and the past, present and contemplated
future use of such Intellectual Property Collateral by such Grantor has not,
does not and will not infringe or violate any right, privilege or license
agreement of or with any other Person; and
(vi) each Grantor either owns, has material rights under, is a party
to, or an assignee of a party to all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
trade names and all other Intellectual Property Collateral necessary to continue
to conduct its business as heretofore conducted.
(k) EQUIPMENT. None of the Equipment or other Collateral is affixed
to real property, except Collateral with respect to which each Grantor has
supplied the Agent with all information and documentation necessary to make all
fixture filings required to perfect and protect the priority of the Agent's
security interest in all such Collateral which may be fixtures as against all
Persons having an interest in the premises to which such property may be
affixed.
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(l) DEPOSIT ACCOUNTS. The names and addresses of all financial
institutions at which each Grantor maintains its Deposit Accounts, and the
account numbers and account names of such Deposit Accounts, are set forth in
SCHEDULE F.
(m) CHATTEL PAPER AND INSTRUMENTS. All action necessary to protect
and perfect the security interest of the Agent in all Instruments and Chattel
Paper (including the delivery of all originals thereof to the Agent and the
legending of all Chattel Paper) has been duly taken.
(n) CORPORATE EXISTENCE AND POWER. Each Grantor (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) has the power and authority to own its
assets, carry on its business, and execute, deliver, and perform its obligations
under this Agreement and any other Loan Document to which it is a party; (iii)
is duly qualified as a foreign corporation, and licensed and in good standing,
under the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification or license
except where the failure to be so qualified or licensed will not have a Material
Adverse Effect; (iv) has all necessary governmental licenses, authorizations,
consents and approvals to own its assets and carry on its business, and in all
material respects is in compliance with all applicable requirements of law.
(o) CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by each Grantor of this Agreement and each other Loan
Document to which it is a party, have been duly authorized by all necessary
corporate action, and do not and will not: (i) contravene the terms of any of
such Grantor's charter documents; (ii) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing any
contractual obligation to which such Grantor is a party or any order,
injunction, writ or decree of any governmental authority to which such Grantor
or its property is subject; or (iii) violate any requirement of law.
(p) GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
governmental authority (except for the filing of the Financing Statements) is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, each Grantor of this Agreement or any other Loan
Document to which it is a party or the transactions contemplated hereby or
thereby.
(q) This Agreement constitutes the legal, valid and binding
obligation of each Grantor enforceable against such Grantor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
SECTION 5 COVENANTS. In addition to and not in limitation of the
covenants of each Grantor set forth in any other Loan Document which such
Grantor is a party to, which are incorporated herein by reference, so long as
any of the Secured Obligations remain unsatisfied or any Bank shall have
outstanding any Commitment or any Loan, or any letter of credit shall be
outstanding and not cash collateralized, or any Bank shall be a counterparty to
any Interest Rate Contract or currency hedging agreement with the Borrower, each
Grantor agrees that:
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(a) DEFENSE OF COLLATERAL. Each Grantor will defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the Agent.
(b) PRESERVATION OF COLLATERAL. Each Grantor shall maintain,
preserve and protect the Collateral which is used or useful in its business in
good working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and remedies and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect, except as permitted by the Credit Agreement.
(c) COMPLIANCE WITH LAWS, ETC. Each Grantor will comply in all
material respects with all requirements of law of any governmental authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act) relating in a material way to the possession, operation,
maintenance and control of the Collateral, except such as may be contested in
good faith or as to which a bona fide dispute may exist.
(d) LOCATION OF BOOKS AND CHIEF EXECUTIVE OFFICE. Each Grantor will:
(i) keep all Books pertaining to the Rights to Payment at the locations set
forth in SCHEDULE B; and (ii) give at least thirty (30) days' prior written
notice to the Agent of (A) any changes in any such location where Books
pertaining to the Rights to Payment are kept, including any change of name or
address of any service bureau, computer or data processing company or other
Person preparing or maintaining any Books or collecting Rights to Payment for
such Grantor or (B) any changes in the location of such Grantor's chief
executive office or principal place of business.
(e) LOCATION OF COLLATERAL. Each Grantor will: (i) keep the
Collateral at the locations set forth in SCHEDULE A or SCHEDULE D and not remove
the Collateral from such locations (other than Collateral in transit between
locations set forth in SCHEDULE A or SCHEDULE D in the ordinary course of
business and disposals of Collateral permitted by subsection (i) below) except
upon at least thirty (30) days' prior written notice of any removal to the
Agent; (ii) give the Agent written notice of the locations where Collateral is
kept within thirty (30) days after the end of each fiscal quarter of such
Grantor; (iii) give the Agent at least thirty (30) days' prior written notice
of any hereinafter acquired or arising Collateral which will be located other
than at the locations set forth in SCHEDULE A or SCHEDULE D; and (iv) give the
Agent at least thirty (30) days' prior written notice of the creation and
maintenance of any Deposit Account not set forth on SCHEDULE F.
(f) CHANGE IN NAME, IDENTITY OR STRUCTURE. Each Grantor will give
the Agent at least thirty (30) days' prior written notice of (i) any change in
name, (ii) any changes in, additions to or other modifications of its trade
names and trade styles set forth in SCHEDULE C, and (iii) any changes in its
identity or structure in any manner which might make any Financing Statement
filed hereunder incorrect or misleading.
(g) MAINTENANCE OF RECORDS. Each Grantor will keep accurate and
complete Books with respect to the Collateral, and at the Agent's request such
Grantor shall legend the Books pertaining to such Collateral with an appropriate
disclosure of the Agent's security interest hereunder.
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(h) DISPOSITION OF COLLATERAL. No Grantor will surrender or lose
possession of (other than to the Agent), sell, lease, rent, or otherwise dispose
of or transfer any of the Collateral or any right or interest therein, except to
the extent permitted by the Credit Agreement.
(i) LIENS. Other than liens in favor of the Agent in its capacity as
Agent under the Credit Agreement and Permitted Liens, each Grantor will keep the
Collateral free of all liens and security interests of any kind.
(j) EXPENSES. Each Grantor will maintain, keep and preserve the
Collateral at its own cost and expense in accordance with its customary business
practices.
(k) LEASED PREMISES. At the Agent's request, each Grantor will use
its best efforts to obtain from each Person from whom such Grantor leases any
premises at which Collateral is at any time present such subordination, waiver,
consent and estoppel agreements as the Agent may reasonably require, in form and
substance reasonably satisfactory to the Agent.
(l) RIGHTS TO PAYMENT. Each Grantor will:
(i) with such frequency as the Agent may reasonably require upon the
occurrence and during the continuance of an Event of Default, furnish to the
Agent (A) master customer listings, including all names and addresses, together
with copies or originals (as requested by the Agent) of documents, customer
statements, repayment histories and present status reports relating to the
Accounts; (B) accurate records and summaries of Accounts, including detailed
agings specifying the name, face value and date of each invoice, and listings of
Accounts that are disputed or have been cancelled; and (C) such other matters
and information relating to the Accounts as the Agent shall from time to time
reasonably request;
(ii) in accordance with its sound business judgment perform and comply
in all material respects with its obligations in respect of the Accounts and
other Rights to Payment;
(iii) upon the request of the Agent (A) at any time, notify all or any
designated portion of the account debtors and other obligors on the Rights to
Payment of the security interest hereunder, and (B) if an Event of Default has
occurred and is continuing, notify the account debtors and other obligors on the
Rights to Payment or any designated portion thereof that payment shall be made
directly to the Agent or to such other Person or location as the Agent shall
specify; and
(iv) establish such lockbox, blocked account or similar arrangements
for the payment of the Accounts and other Rights to Payment as the Agent shall
require.
(m) CONTRACTS. Each Grantor will:
(i) at its sole cost and expense, appear in and defend any action or
proceeding which arises under, grows out of or is in any manner connected with
the obligations, covenants, conditions, duties, agreements or liabilities of
such Grantor under the Contracts included in the Collateral, and which is
material to the operations or financial condition of such Grantor; and
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(ii) comply with, perform and discharge each and every obligation,
covenant, condition, duty and agreement that the Contracts included in the
Collateral provide are to be performed by such Grantor.
(n) DOCUMENTS, ETC. Each Grantor will:
(i) immediately deliver to the Agent, or an agent designated by it,
appropriately endorsed or accompanied by appropriate instruments of transfer or
assignment, all Documents, Instruments and Chattel Paper, and all other Rights
to Payment at any time evidenced by promissory notes, trade acceptances or other
instruments, and
(ii) at the reasonable request of the Agent mark all Documents and
Chattel Paper with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of National
Westminster Bank Plc, as agent, for the benefit of itself and certain other
Banks."
(o) INVENTORY. Each Grantor will:
(i) at such times as the Agent shall reasonably request but in any
event not more than once each fiscal year, prepare and deliver to the Agent a
report of all Inventory, in form and substance satisfactory to the Agent; and
(ii) upon the request of the Agent after an Event of Default has
occurred and is continuing, take a physical listing of the Inventory and
promptly deliver a copy of such physical listing to the Agent.
(p) EQUIPMENT. Each Grantor will:
(i) upon the Agent's reasonable request but in any event not more
than once each fiscal year, prepare and deliver to the Agent a report of each
item of Equipment, in form and substance satisfactory to the Agent; and
(ii) upon the request of the Agent after an Event of Default has
occurred and is continuing, take a physical listing of the Equipment and
promptly delivery a copy of such physical listing to the Agent.
(q) INTELLECTUAL PROPERTY COLLATERAL. Each Grantor will:
(i) not enter into any agreements or transactions (including any
license or royalty agreement) pertaining to any Intellectual Property Collateral
except in the ordinary course of business;
(ii) if reasonably within such Grantor's abilities, not allow or
suffer any Intellectual Property Collateral to become abandoned, nor any
registration thereof to be terminated, forfeited,
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expired or dedicated to the public unless such Intellectual Property Collateral
is no longer useful or necessary to the operation of its business;
(iii) diligently prosecute all applications for patents, copyrights
and trademarks useful and necessary to the operation of its business, and file
and prosecute any and all continuations, continuations-in-part, applications for
reissue, applications for certificate of correction and like matters as shall be
reasonable and appropriate in accordance with prudent business practice, and
promptly and timely pay any and all maintenance, license, registration and other
fees, taxes and expenses incurred in connection with any Intellectual Property
Collateral; and
(iv) provide the Agent on a quarterly basis with a list of all new
applications and registrations for United States and foreign patents,
copyrights, trademarks, service marks or trade names, which such new
applications and registrations shall be subject to the terms and conditions of
the Credit Agreement and this Agreement.
(r) NOTICES, REPORTS AND INFORMATION. Each Grantor will (i) notify
the Agent of any material claim made or asserted against the Collateral by any
Person and of any change in the composition of the Collateral or other event
which could materially adversely affect the value of the Collateral or the
Agent's Lien thereon; (ii) furnish to the Agent such statements and schedules
further identifying and describing the Collateral and such other reports and
other information in connection with the Collateral as the Agent may reasonably
request, all in reasonable detail; and (iii) upon the reasonable request of the
Agent make such demands and requests for information and reports as such Grantor
is entitled to make in respect of the Collateral.
(s) FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any time and from
time to time upon the written consent of the Agent and at the sole expense of
each Grantor, each Grantor shall promptly and duly execute and deliver any and
all such further instruments and documents and take such further actions as the
Agent may deem desirable to obtain the full benefits of this Agreement and of
the rights and powers herein granted, including without limitation (i) using its
best efforts to secure all consents and approvals necessary or appropriate for
the assignment to or for the benefit of the Agent, for the benefit of itself,
the Banks and the Issuing Banks, of any license or contract held by such Grantor
or to which such Grantor has any rights not heretofore assigned, (ii) filing any
financing or continuation statements under the UCC with respect to the Liens and
security interests granted hereunder or under any other Loan Document,
(iii) transferring Collateral to the Agent's possession for the benefit of
itself, the Banks and the Issuing Banks (if such Collateral consists of Chattel
Paper or if a security interest in such Collateral can be perfected only by
possession), and (iv) using its best efforts to obtain waivers of Liens, if any
exist, from landlords and mortgagees. Each Grantor also hereby authorizes the
Agent, for the benefit of itself, the Banks and the Issuing Banks, to file any
such financing or continuation statements without the signature of such Grantor
to the extent permitted by applicable law. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by any
Instrument, such Instruments, other than checks and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory to
the Agent immediately upon such Xxxxxxx's receipt thereof.
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(t) RIGHT OF INSPECTION. The Agent shall have the right to inspect
the Collateral and the corporate, financial and operating records of each
Grantor in accordance with the terms of SECTION 6.2 of the Credit Agreement.
SECTION 6 COLLECTION OF RIGHTS TO PAYMENT. Until the Agent exercises
its rights hereunder to collect Rights to Payment, each Grantor shall endeavor
in the first instance diligently to collect all amounts due or to become due on
or with respect to the Rights to Payment. At the request of the Agent, upon and
after the occurrence of any Event of Default, all remittances received by such
Grantor shall be held in trust for the Agent and, in accordance with the Agent's
instructions, remitted to the Agent or deposited to an account with the Agent in
the form received (with any necessary endorsements or instruments of assignment
or transfer).
SECTION 7 AUTHORIZATION; AGENT APPOINTED ATTORNEY-IN-FACT. Each
Grantor hereby irrevocably constitutes and appoints the Agent, for the benefit
of itself, the Banks and the Issuing Banks, and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of such Grantor and
in the name of such Grantor or in its own name, from time to time in the Agent's
sole discretion for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute and deliver any and all
documents which may be necessary or desirable to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, hereby grants
to the Agent, for the benefit of itself, the Banks and the Issuing Banks, the
power and right, on behalf of such Grantor, without notice to or assent by such
Xxxxxxx, and at any time, to do the following:
(i) sign any of the Financing Statements which must be executed or
filed to perfect or continue perfected, maintain the priority of or provide
notice of the Agent's security interest in the Collateral;
(ii) take possession of and endorse any notes, acceptances, checks,
drafts, money orders or other forms of payment or security and collect any
Proceeds of any Collateral;
(iii) sign and endorse any invoice or bill of lading relating to any
of the Collateral, warehouse or storage receipts, drafts against customers or
other obligors, assignments, notices of assignment, verifications and notices to
customers or other obligors;
(iv) notify the Postal Service authorities to change the address for
delivery of mail addressed to any Grantor to such address as the Agent may
designate and, without limiting the generality of the foregoing, establish with
any Person lockbox or similar arrangements for the payment of the Rights to
Payment;
(v) receive, open and dispose of all mail addressed to any Grantor;
(vi) send requests for verification of Rights to Payment to the
customers or other obligors of any Grantor;
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(vii) contact, or direct any Grantor to contact, all account debtors
and other obligors on the Rights to Payment and instruct such account debtors
and other obligors to make all payments directly to the Agent;
(viii) assert, adjust, sue for, compromise or release any claims under
any policies of insurance;
(ix) exercise dominion and control over, and refuse to permit further
withdrawals from, Deposit Accounts maintained with the Agent;
(x) notify each Person maintaining lockbox or similar arrangements for
the payment of the Rights to Payment to remit all amounts representing
collections on the Rights to Payment directly to the Agent;
(xi) ask, demand, collect, receive and give acquittances and receipts
for any and all Rights to Payment, enforce payment or any other rights in
respect of the Rights to Payment and other Collateral, grant consents, agree to
any amendments, modifications or waivers of the agreements and documents
governing the Rights to Payment and other Collateral, and otherwise file any
claims, take any action or institute, defend, settle or adjust any actions,
suits or proceedings with respect to the Collateral, as the Agent may deem
necessary or desirable to maintain, preserve and protect the Collateral, to
collect the Collateral or to enforce the rights of the Agent with respect to the
Collateral;
(xii) execute any and all applications, documents, papers and
instruments necessary for the Agent to use the Intellectual Property Collateral
and grant or issue any exclusive or non-exclusive license or sublicense with
respect to any Intellectual Property Collateral;
(xiii) execute any and all endorsements, assignments or other
documents and instruments necessary to sell, lease, assign, convey or otherwise
transfer title in or dispose of the Collateral;
(xiv) execute any and all such other documents and instruments, and do
any and all acts and things for and on behalf of each Grantor, which the Agent
may deem necessary or advisable to maintain, protect, realize upon and preserve
the Collateral; and
(xv) execute any and all such other documents and instruments, and do
any and all acts and things for and on behalf of each Grantor, which the Agent
may deem necessary or advisable to maintain, protect, and preserve the Agent's
security interest in the Collateral.
The Agent agrees that, except upon and after the occurrence of an
Event of Default, it shall not exercise the power of attorney, or any rights
granted to the Agent, pursuant to clauses (ii) through (xiv). The foregoing
power of attorney is coupled with an interest and irrevocable so long as any
Bank has outstanding any Commitment or Loan, or any letter of credit remains
outstanding, or the Secured Obligations have not been paid and performed in full
or any Bank is a counterparty to an Interest Rate Contract or a currency hedging
agreement with the Borrower. Each
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Grantor hereby ratifies, to the extent permitted by law, all that the Agent
shall lawfully and in good faith do or cause to be done by virtue of and in
compliance with this Section 7.
SECTION 8 AGENT PERFORMANCE OF GRANTORS' OBLIGATIONS. After an
Event of Default has occurred and is continuing, the Agent may perform or pay
any obligation which each Grantor has agreed to perform or pay under or in
connection with this Agreement, and such Grantor shall reimburse the Agent on
demand for any amounts paid by the Agent pursuant to this Section 8.
SECTION 9 AGENT'S DUTIES. Notwithstanding any provision contained
in this Agreement, but subject to the following sentence, the Agent shall have
no duty to exercise any of the rights, privileges or powers afforded to it and
shall not be responsible to any Grantor or any other Person for any failure to
do so or delay in doing so. Beyond the exercise of reasonable care to assure
the safe custody of Collateral in the Agent's possession and the accounting for
moneys actually received by the Agent hereunder, the Agent shall have no duty or
liability to exercise or preserve any rights, privileges or powers pertaining to
the Collateral.
SECTION 10 REMEDIES. (a) REMEDIES. After an Event of Default has
occurred and is continuing, the Agent shall have, in addition to all other
rights and remedies granted to it in this Agreement, the Credit Agreement or any
other Loan Document, all rights and remedies of a secured party under the UCC
and other applicable laws. Without limiting the generality of the foregoing,
each Grantor agrees that the Agent may:
(i) peaceably and without notice enter any premises of such Grantor,
take possession of any the Collateral, remove or dispose of all or part of the
Collateral on any premises or elsewhere, or, in the case of Equipment, render it
nonfunctional, and otherwise collect, receive, appropriate and realize upon all
or any part of the Collateral, and demand, give receipt for, settle, renew,
extend, exchange, compromise, adjust, or sue for all or any part of the
Collateral, as the Agent may determine;
(ii) require such Grantor to assemble all or any part of the
Collateral and make it available to the Agent at any place and time designated
by the Agent;
(iii) use or transfer any of such Grantor's rights and interests in
any Intellectual Property Collateral, by license, by sublicense (to the extent
permitted by an applicable license) or otherwise, on such conditions and in such
manner as the Agent may determine;
(iv) secure the appointment of a receiver of the Collateral or any
part thereof to the extent and in the manner provided by applicable law;
(v) withdraw (or cause to be withdrawn) any and all funds from Deposit
Accounts;
(vi) sell, resell, lease, use, assign, transfer or otherwise dispose
of any or all of the Collateral in its then condition or following any
commercially reasonable preparation or processing (utilizing in connection
therewith any of such Grantor's assets, without charge or liability to the Agent
therefor) at public or private sale, by one or more contracts, in one or more
parcels, at the
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same or different times, for cash or credit, or for future delivery without
assumption of any credit risk, all as the Agent deems advisable; PROVIDED,
HOWEVER, that such Grantor shall be credited with the net proceeds of sale only
when such proceeds are finally collected by the Agent. The Agent shall have the
right upon any such public sale, and, to the extent permitted by law, upon any
such private sale, to purchase the whole or any part of the Collateral so sold,
free of any right or equity of redemption, which right or equity of redemption
such Grantor hereby releases, to the extent permitted by law. Each such Grantor
hereby agrees that the sending of notice by ordinary mail, postage prepaid, to
the address of such Grantor set forth on the signature page hereto, of the place
and time of any public sale or of the time after which any private sale or other
intended disposition is to be made, shall be deemed reasonable notice thereof if
such notice is sent ten (10) days prior to the date of such sale or other
disposition or the date on or after which such sale or other disposition may
occur, PROVIDED that the Agent may provide such Grantor shorter notice or no
notice, to the extent permitted by the UCC or other applicable law; and
(vii) at its sole option and discretion, be entitled to assume any and
all of the obligations of such Grantor under any of the Contracts included in
the Collateral and to perform any and all acts that such Grantor is required or
entitled to perform thereunder including, without limitation, enforcement of
such Grantor's rights pursuant to the terms thereof.
(b) LICENSE. For the purpose of enabling the Agent to exercise its
rights and remedies under this Section 10, each Grantor hereby grants to the
Agent an irrevocable, non-exclusive and assignable license (exercisable without
payment or royalty or other compensation to such Grantor) to use, license or
sublicense any Intellectual Property Collateral.
(c) PROCEEDS ACCOUNT. To the extent that any of the Secured
Obligations may be contingent, unmatured or unliquidated (including with respect
to undrawn amounts under any letter of credit), at such time as there may exist
an Event of Default, the Agent may, at its election, (i) retain the proceeds of
any sale, collection, disposition or other realization upon the Collateral (or
any portion thereof) in a special purpose non-interest-bearing restricted
deposit account (the "PROCEEDS ACCOUNT") created and maintained by the Agent for
such purpose (which shall constitute a Deposit Account included within the
Collateral hereunder) until such time as the Agent may elect to apply such
proceeds to the Secured Obligations, and each Grantor agrees that such retention
of such proceeds by the Agent shall not be deemed strict foreclosure with
respect thereto; (ii) in any manner elected by the Agent, estimate the
liquidated amount of any such contingent, unmatured or unliquidated claims and
apply the proceeds of the Collateral against such amount; or (iii) otherwise
proceed in any manner permitted by applicable law. Each Grantor agrees that the
Proceeds Account shall be a blocked account and that upon the irrevocable
deposit of funds into the Proceeds Account, such Grantor shall not have any
right of withdrawal with respect to such funds. Accordingly, such Grantor
irrevocably waives until the termination of the security interests granted under
this Agreement in accordance with Section 25 the right to make any withdrawal
from the Proceeds Account and the right to instruct the Agent to honor drafts
against the Proceeds Account.
(d) APPLICATION OF PROCEEDS. Subject to subsection (c) immediately
above, the cash proceeds actually received from the sale or other disposition or
collection of Collateral upon the exercise of any remedy by the Agent under this
SECTION 10, and any other amounts received in
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respect of the Collateral the application of which is not otherwise provided for
herein, shall be distributed to the Banks pro rata and applied as follows:
FIRST: to the payment of the costs and expenses of such sale,
including reasonable compensation to the Agent and its agents and
attorneys, and of any judicial or private proceedings in which such
sale may be made, and of all other expenses, liabilities and advances
made or incurred by the Agent, together with interest on such costs,
expenses and liabilities and on all advances made by the Agent from
the date any such cost, expense or liability is past due or unpaid or
any such advance is made, in each case until paid in full;
SECOND: to the payment of any other fees, costs or other
expenses constituting obligations under the Loan Documents other than
amounts payable under subparagraph "First" above, together with
interest on each such amount at the Post-Default Rate from and after
the date such amount is due, owing or unpaid until paid in full;
THIRD: to the payment of (i) any interest then due, owing or
unpaid in respect of any Loan or any other Secured Obligation; and
(ii) with respect to any Interest Rate Contracts or currency hedging
agreement with the Borrower to which a Bank is a party, the interest
due and owing in respect of any amounts payable thereunder, in each
case together with, to the maximum extent permitted by law, interest
thereon at the Post-Default Rate from the date such amount is due,
owing or unpaid until paid in full to be applied in accordance with
the Credit Agreement;
FOURTH: to the payment of the whole amount of principal then
due, owing or unpaid in respect of any Loan, or any other Secured
Obligation secured by this Agreement, to be applied in accordance with
the Credit Agreement; and
FIFTH: the surplus, if any, to be paid to the applicable Grantor
or whomever lawfully may be entitled to receive such surplus.
Each Grantor shall remain liable to the Agent for any deficiency which exists
after any sale or other disposition or collection of Collateral.
SECTION 11 CERTAIN WAIVERS. Each Grantor waives, to the fullest
extent permitted by law, (i) any right of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling of the Collateral or other collateral or security for the Secured
Obligations; (ii) any right to require the Agent (A) to proceed against any
Person, (B) to exhaust any other collateral or security for any of the Secured
Obligations, (C) to pursue any remedy in the Agent's power, or (D) to make or
give any presentments, demands for performance, notices of nonperformance,
protests, notices of protests or notices of dishonor in connection with any of
the Collateral; and (iii) all claims, damages, and demands against the Agent
arising out of the repossession, retention, sale or application of the proceeds
of any sale of the Collateral.
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SECTION 12 [Intentionally Blank]
SECTION 13 NOTICES. All notices or other communications hereunder to
the Agent shall be given in the manner and to the addresses specified in the
Credit Agreement, and if to a Grantor, as set forth on the signature pages
hereto. All such notices and other communications shall be effective (i) if
delivered by hand or pre-paid courier service, when delivered; (ii) if sent by
mail, upon the earlier of the date of receipt or five (5) Business Days after
deposit in the mail, first class, postage prepaid; (iii) if sent by telex, upon
receipt by the sender of an appropriate answerback; and (iv) if sent by
facsimile transmission, when sent.
SECTION 14 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
the Agent to exercise, and no delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under this Agreement are cumulative
and not exclusive of any rights, remedies, powers and privileges that may
otherwise be available to the Agent.
SECTION 15 COSTS AND EXPENSES; INDEMNIFICATION; OTHER CHARGES.
(a) COSTS AND EXPENSES. Each Grantor agrees to pay on demand:
(i) the reasonable out-of-pocket costs and expenses of the Agent and
any of its Affiliates, and the Agent's reasonable attorney costs, in connection
with the negotiation, preparation, execution, delivery and administration of
this Agreement, and any amendments, modifications or waivers of the terms
thereof, and the custody of the Collateral;
(ii) all title, appraisal (including the allocated costs of internal
appraisal services), survey, audit, consulting, search, recording, filing and
similar costs, fees and expenses incurred or sustained by the Agent or any of
its Affiliates in connection with this Agreement or the Collateral; and
(iii) all costs and expenses of the Agent and its Affiliates,
including attorney costs, in connection with the enforcement or attempted
enforcement of, and preservation of any rights or interests under, this
Agreement, including in any out-of-court workout or other refinancing or
restructuring or in any bankruptcy case, and the protection, sale or collection
of, or other realization upon, any of the Collateral, including all expenses of
taking, collecting, holding, sorting, handling, preparing for sale, selling, or
the like, and other such expenses of sales and collections of Collateral, and
any and all losses, costs and expenses sustained by the Agent as a result of any
failure by such Grantor to perform or observe its obligations contained herein.
(b) INDEMNIFICATION. Each Grantor shall pay, indemnify, and hold the
Agent, each Bank, each Issuing Bank and each of their respective Affiliates,
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"INDEMNIFIED PERSON") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements, of any kind or nature whatsoever with
respect to the execution, delivery,
-20-
enforcement, performance and administration of this Agreement (including
attorney costs), or the transactions contemplated hereby, and with respect to
any investigation, litigation or proceeding (including any insolvency proceeding
or appellate proceeding) related to this Agreement, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"); PROVIDED, that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of such Indemnified
Person.
(c) OTHER CHARGES. Each Grantor agrees to indemnify the Agent, each
Bank and each Issuing Bank against and hold each harmless from any and all
present and future stamp, transfer, or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery, or registration of, or otherwise with
respect to, this Agreement.
(d) INTEREST. Any amounts payable to the Agent, each Bank and each
Issuing Bank under this Section 15 or otherwise under this Agreement if not paid
upon demand shall bear interest from the date of such demand until paid in full
at the Post-Default Rate.
SECTION 16 BINDING EFFECT. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by each Grantor and the Agent, and
their respective successors and assigns, PROVIDED, HOWEVER, that such Grantor
may not assign any of its rights hereunder or interests herein without the
written consent of the Agent and the Majority Banks. Each Grantor acknowledges
that upon any assignment or other transfer by the Agent or any other Bank Party
of any of the Secured Obligations, the Agent or such other Bank Party may
transfer its interest herein, or any part thereof, to the assignee or
transferee, who shall thereupon become vested with all the rights, remedies,
powers, security interests and liens herein granted to the Agent or such other
Bank Party, or the transferred part thereof, subject, however, to the
restrictions contained herein. No Persons other than each of Grantors, the Bank
Parties, the Agent and the respective assignees of the Bank Parties and the
Agent are intended to be benefited hereby or shall have any rights hereunder, as
third-party beneficiaries or otherwise.
SECTION 17 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT
THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
SECTION 18 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE GRANTORS
AND THE AGENT FOR THE BENEFIT OF THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
GRANTOR AND THE AGENT FOR THE BENEFIT OF THE BANKS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
-21-
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE GRANTORS AND THE AGENT
FOR THE BENEFIT OF ITSELF, THE BANKS AND THE ISSUING BANKS EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY NEW YORK LAW.
SECTION 19 WAIVER OF JURY TRIAL. EACH GRANTOR AND THE AGENT FOR THE
BENEFIT OF THE BANKS WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GRANTORS AND THE AGENT FOR THE
BENEFIT OF ITSELF, THE BANKS AND THE ISSUING BANKS EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
SECTION 20 AMENDMENT. This Agreement shall not be amended except by
the written agreement of the parties as provided in the Credit Agreement.
SECTION 21 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only to
the extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction. This Agreement is to be read, construed and applied
together with the Credit Agreement and the other Loan Documents which, taken
together, set forth the complete understanding and agreement of the Agent, the
Banks, the Issuing Banks and each Grantor with respect to the matters referred
to herein and therein.
SECTION 22 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same agreement.
-22-
SECTION 23 INCORPORATION OF PROVISIONS OF THE CREDIT AGREEMENT. To
the extent the Credit Agreement contains provisions of general applicability to
the Loan Documents, including any such provisions contained in Article 10
thereof, such provisions are incorporated herein by this reference.
SECTION 24 NO INCONSISTENT REQUIREMENTS. Each Grantor acknowledges
that this Agreement and the other Loan Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters, and
agrees that all such covenants, terms and provisions are cumulative and all
shall be performed and satisfied in accordance with their respective terms;
PROVIDED, in the event any terms or conditions contained herein conflict with
any term or condition set forth in the Credit Agreement, such term or condition
set forth in the Credit Agreement shall control.
SECTION 25 TERMINATION. Upon termination of the Commitments of the
Banks under the Loan Documents, the surrender of any letters of credit issued by
any Issuing Bank for the account of the Borrower, the termination of all
Interest Rate Contracts and currency hedging agreements with the Borrower to
which any Bank is a counterparty, and payment and performance in full of all
Secured Obligations, this Agreement and the security interests granted under
this Agreement shall terminate and the Agent shall promptly execute and deliver
to each Grantor such documents and instruments reasonably requested by such
Grantor as shall be necessary to evidence termination of this Agreement and of
all security interests given by such Grantor to the Agent hereunder; PROVIDED,
HOWEVER, that the obligations of such Grantor under Section 15 shall survive
such termination.
SECTION 26 LIMITATION ON SECURED OBLIGATIONS. Notwithstanding any
provision herein contained to the contrary, liability hereunder shall be limited
to an amount not to exceed the amount which could be claimed by the Agent and
Banks from each Grantor under this Agreement without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute of common law.
-23-
IN WITNESS WHEREOF, each Grantor has executed this Agreement as of the
day and year first above written.
NATIONAL WESTMINSTER BANK PLC, as Agent
By:_______________________________________
Name:_____________________________________
Title:______________________________________
LODGENET ENTERTAINMENT CORPORATION
By:_______________________________________
Name:_____________________________________
Title:______________________________________
RESNET COMMUNICATIONS, INC.
By:_______________________________________
Name:_____________________________________
Title:______________________________________
LODGENET ENTERTAINMENT (CANADA)
CORPORATION
By:_______________________________________
Name:_____________________________________
Title:______________________________________
SCHEDULE A
LOCATIONS OF CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS, INCLUDING OF COLLATERAL
a. Chief Executive Office and Principal Place of Business:
Borrower: LodgeNet Entertainment Corporation
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
ResNet: ResNet Communications, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
LodgeNet Canada: LodgeNet Entertainment (Canada) Corporation
Suite 0000
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X0X0
b. Other locations where Grantor conducts business or
Collateral is kept:
See attached Exhibit 1.
SCHEDULE B
LOCATIONS OF BOOKS PERTAINING TO RIGHTS TO PAYMENT
Borrower: LodgeNet Entertainment Corporation
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
ResNet: ResNet Communications, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
LodgeNet Canada: LodgeNet Entertainment (Canada) Corporation
Suite 0000
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X0X0
SCHEDULE C
TRADE NAMES AND TRADE STYLES; OTHER CORPORATE, TRADE OR FICTITIOUS NAMES, ETC.
None.
SCHEDULE D
INVENTORY STORED WITH WAREHOUSEMEN OR ON LEASED PREMISES, ETC.
None.
SCHEDULE E
PATENTS, COPYRIGHTS, TRADEMARKS, ETC.
BORROWER TRADEMARK REGISTRATIONS
XXXX XXX. NO.
---- --------
LodgeNet 1,378,457
LodgeNet Entertainment Class 41,
(and Design) Serial No. 74/669,535
LodgeNet Entertainment Class 38,
(and Design) Serial No. 74/669,533
LodgeNet Class 38,
Serial No. 74/669,534
BORROWER TRADEMARK APPLICATIONS
Traveler's TV Mall, Serial No. 74/615,989
TV Mall, filed November 6, 1995
LodgeNet Passport, filed February 15, 1996, Serial No. 75/058,170
ResNet, Serial No. 75/016091
ResNet Communications, filed March 14, 1996, Serial No. 75/072,868
B-LAN, filed October 31, 1996
BORROWER TRADEMARK LICENSES
Name of Agreement Parties Date of Agreement
----------------- ------- -----------------
Technology License Borrower and ResNet January 10, 1996
Agreement
BORROWER PATENTS
U.S. Patent No. Date Issued Title
--------------- ----------- -----
5455619 October 3, 1995 Video Distribution System
Addressing Device for
Identifying Remote
Locations
5,506,572 April 9, 1996 Low Battery Detection
System
4,502,098 February 26, 1985 Circuit Assembly
4,920,432 April 24, 1990 System for Random Access
to an Audio/Video Data
Library with Independent
Selection and Display at
each of a Plurality of
Remote Locations
BORROWER PATENT APPLICATIONS
Serial No. Date Filed Title
---------- ---------- -----
08/288,626 August 10, 1994 System for Collecting and
Processing User Inputs
RESNET TRADEMARK LICENSES
Name of Agreement Parties Date of Agreement
----------------- ------- -----------------
Technology License Borrower and ResNet January 10, 1996
Agreement
SCHEDULE F
DEPOSIT ACCOUNTS
BANK NAME BANK ADDRESS BANK ACCTS
--------- ------------ ----------
Bank of Boston 000 Xxxxxxx Xx. 000-00000
Xxxx Xxx Xxxxxx, XX 00000
Bank of Boston 000 Xxxxxxx Xx.
XXX - Xxxxx Xxxxxx, XX 00000 80-028-0539
Bank of Boston 000 Xxxxxxx Xx.
Xxxxxxx Xxxxxx, XX 00000 512-83906
First National Bank P.O. Box 5186
401K Trust Sioux Falls, SD 57117-5186 301-991-1
First National Bank P.O. Box 5186
Checking Sioux Falls, SD 57117-5186 301-645-4
First National Bank P.O. Box 5186
Golf Classic Sioux Falls, SD 57117-5186 302-002-3
First National Bank P.O. Box 5186
Payroll Sioux Falls, SD 57117-5186 301-862-8
First National Bank P.O. Box 5186
Per Diem Sioux Falls, SD 57117-5186 301-870-8
Xxxxxx Bank P.O. Box 755
CDA Chicago, IL 60690-0755 04-325-397-8
Xxxxxx Bank P.O. Box 755
Lock Box Chicago, IL 60690-0755 325-400-0
Mercantile Bank 8th and Locust P.O. Box 524
Checking St. Louis, MO 63186-0524 100500333-8
EXHIBIT G
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "AGREEMENT"), dated as of December 19,
1996, is made by LODGENET ENTERTAINMENT CORPORATION, a Delaware corporation (the
"PLEDGOR"), in favor of NATIONAL WESTMINSTER BANK PLC, a United Kingdom public
limited company, as agent for the benefit of itself, the Banks and the Issuing
Banks (as defined below) (in such capacity, and together with its successors as
agent for the Banks, the "AGENT").
RECITALS
WHEREAS, the Pledgor is a party to that certain Xxxxxxx and Restated
Credit Agreement dated as of December 19, 1996 by and among the Pledgor, the
several financial institutions from time to time party thereto (the "BANKS"),
the Agent (also in its capacity as an Issuing Bank and Bank) and National
Westminster Bank of Canada, as an Issuing Bank (as amended, restated, modified,
renewed, supplemented or extended from time to time, the "CREDIT AGREEMENT");
and
WHEREAS, it is a condition precedent to each Bank's obligation to make
its initial Loan under the Credit Agreement and for the Issuing Banks to issue
letters of credit that the Pledgor enter into this Agreement and grant to the
Agent, for the benefit of itself, the Banks and the Issuing Banks, the security
interests hereinafter provided to secure the obligations of the Pledgor
described below.
NOW, THEREFORE, to induce the Banks to make Loans under the Credit
Agreement, and in consideration of such extensions of credit as the Banks have
made or may hereafter make to the Pledgor, the Pledgor, intending to be legally
bound hereby, covenants and agrees as follows:
SECTION 1 DEFINITIONS; INTERPRETATIONS.
(a) TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used in
this Agreement and not otherwise defined herein have the meanings specified in
the Credit Agreement.
(b) CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"BANK PARTY" means, as the context may require, any Bank (including
any Bank in its capacity as a counterparty to an Interest Rate Contract or
currency hedging agreement), any Issuing Bank or the Agent, and each of
their respective successors, transferees and assigns.
"BOOK-ENTRY SHARES" means any Pledged Shares evidenced or represented
by a book-entry on the books of a Clearing Corporation.
"CLEARING CORPORATION" means a "clearing corporation", as defined in
Section 8-102(3) of the UCC, at which the Agent and the Pledgor each
maintains a securities account.
"COMMISSION" has the meaning specified in subsection 11(b)(i).
"IRREVOCABLE PROXIES" has the meaning specified in subsection 7(c).
"PLEDGE AGREEMENT SUPPLEMENT" has the meaning specified in subsection
3(b).
"PLEDGED COLLATERAL" has the meaning specified in Section 2.
"PLEDGED NOTES" means all intercompany notes referred to in subsection
(g) of Section 2.
"PLEDGED SHARES" means all shares of capital stock or other equity
securities referred to in subsections (a), (b) and (c) of Section 2.
"PLEDGED SUBSIDIARIES" means, collectively, the Subsidiaries of the
Pledgor listed on SCHEDULE 1 hereto or on any Pledge Agreement Supplement
attached hereto.
"SECURED OBLIGATIONS" means all Obligations (as defined in the Credit
Agreement).
"SECURITIES ACT" has the meaning specified in subsection 11(b)(i).
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; PROVIDED, HOWEVER, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the security interest in any Pledged
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection
or priority and for purposes of definitions related to such provisions.
(c) TERMS DEFINED IN UCC. Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings
assigned to them in the UCC.
(d) AFFILIATES OF BANKS AS SECURED PARTIES. Notwithstanding anything
herein to the contrary, the pledge and security interests granted hereby
shall be deemed to be for the benefit of the Bank Parties and Affiliates of
the Banks that are parties to Interest Rate Contracts or currency hedging
agreements with the Borrower, and accordingly, references herein to any
Bank shall, to such extent, be deemed to include such Affiliates.
-2-
SECTION 2 PLEDGE. As security for the payment, in full in cash when
due, whether at stated maturity, by acceleration or otherwise, and performance
of the Secured Obligations, the Pledgor hereby pledges, assigns, transfers,
hypothecates and sets over to the Agent, for the benefit of itself, the Banks
and the Issuing Banks, and grants to the Agent, for the benefit of itself, the
Banks and the Issuing Banks, a security interest in all of the Pledgor's right,
title and interest in, to and under the following, whether now existing or owned
or hereafter acquired or arising (collectively, the "PLEDGED COLLATERAL"):
(a) all shares of capital stock or other equity securities of the
Pledged Subsidiaries now owned by the Pledgor, as more fully described in
SCHEDULE 1 attached hereto, including, without limitation, any such
securities that are Book-Entry Shares;
(b) all shares of capital stock or other equity securities of any
Pledged Subsidiary hereafter acquired, received or owned by the Pledgor
(whether in connection with any recapitalization, reclassification or
reorganization of the capital of a Pledged Subsidiary or otherwise),
including, without limitation, any such securities that are Book-Entry
Shares;
(c) all shares of capital stock or other equity securities hereafter
acquired, received or owned by the Pledgor of any Person who, after the
date hereof, becomes, as a result of any occurrence, a Pledged Subsidiary,
including, without limitation, any such securities that are Book-Entry
Shares;
(d) all certificates, instruments or other writings representing or
evidencing the Pledged Shares (other than any Book-Entry Shares or any
other Pledged Shares that constitute part of a fungible bulk of securities
in the possession of a Clearing Corporation);
(e) all warrants, options and other rights entitling the Pledgor to
acquire any interest in any Pledged Shares;
(f) all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed or distributable in
respect of or in exchange for any or all of the Pledged Shares;
(g) all now owned or hereafter acquired intercompany notes owing to
the Pledgor by any direct or indirect Subsidiary, together with all other
promissory notes, instruments, debt securities or other property hereafter
delivered to the Pledgor in substitution for or in addition to the Pledged
Notes; and
(h) all cash and non-cash proceeds of the foregoing.
-3-
SECTION 3 DELIVERY OR TRANSFER OF PLEDGED COLLATERAL.
(a) All original certificates, instruments or other writings
representing or evidencing the Pledged Shares (other than certificated
securities that constitute part of a fungible bulk of securities in the
possession of a Clearing Corporation) shall be delivered to the Agent
concurrently with the execution and delivery of this Agreement (or
immediately upon obtaining of any such Pledged Shares hereafter), and shall
be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form
and substance satisfactory to the Agent.
(b) In the event that any Pledged Shares are Book-Entry Shares which
are registered in the name of a Clearing Corporation, concurrently with the
execution and delivery of this Agreement (or immediately upon obtaining any
such Pledged Shares hereafter), the Pledgor shall cause such Clearing
Corporation to make appropriate entries on its books reducing the account
of the Pledgor and increasing the account of the Agent by the number of
such shares pledged or purported to be pledged hereunder.
(c) In the event that any Pledged Shares are certificated securities
that constitute part of a fungible bulk of securities in the custody of a
Clearing Corporation and are registered in such Clearing Corporation's
name, concurrently with the execution and delivery of this Agreement (or
immediately upon obtaining any such Pledged Shares hereafter), the Pledgor
shall cause such Clearing Corporation to make appropriate entries on its
books reducing the account of the Pledgor and increasing the account of the
Agent by the number of such shares pledged or purported to be pledged
hereunder.
(d) All original Pledged Notes outstanding on the date hereof shall
be delivered to the Agent concurrently with the execution and delivery of
this Agreement (or immediately upon obtaining of any such Pledged Notes
hereafter), and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to the Agent.
(e) No later than ten (10) Business Days after obtaining any Pledged
Shares or Pledged Notes hereafter, the Pledgor agrees that it will (i)
deliver to the Agent a duly executed Pledge Agreement Supplement in
substantially the form of SCHEDULE 2 attached hereto (a "PLEDGE AGREEMENT
SUPPLEMENT") identifying such additional Pledged Shares or Pledged Notes,
and (ii) deliver or otherwise cause the transfer of such additional Pledged
Shares or Pledged Notes to the Agent pursuant to subsection (a), (b), (c)
or (d) above, as applicable. The Pledgor hereby authorizes the Agent to
attach each Pledge Agreement Supplement to this Agreement and agrees that
all shares of capital stock, notes or other securities listed thereon shall
for all purposes hereunder constitute Pledged Collateral.
(f) The Agent shall have the right, at any time in its discretion and
without notice to the Pledgor, to transfer to or to register in its name or
the name of any of its nominees any or all of the Pledged Shares, subject
only to the provisions of Section 7(a). In addition, the
-4-
Agent shall have the right at any time to exchange certificates,
instruments or other writings representing or evidencing Pledged Shares for
certificates, instruments or other writings of smaller or larger
denominations. As soon as practicable after the purchase or receipt by the
Pledgor of any Book-Entry Shares, the Pledgor shall cause the issuer
thereof to issue stock certificates with respect to such shares and shall,
no later than ten (10) Business Days after receipt thereof, deliver such
certificates to the Agent in accordance with this Section.
SECTION 4 REPRESENTATIONS AND WARRANTIES. In addition to and not in
limitation of the representations and warranties of the Pledgor set forth in the
Credit Agreement, the Pledgor represents and warrants to the Agent and the other
Bank Parties that:
(a) The Pledgor is the sole record legal and beneficial owner of the
Pledged Collateral. No other Person, except the Agent pursuant to this
Agreement, has any right, title, claim or interest (by way of Lien,
purchase option or otherwise) in or against or to the Pledged Collateral,
except the restrictions relating to the transfer of Pledgor's shares and
membership interests in ResNet and ResNet LLC, respectively, under that
certain Stockholders' Agreement dated as of October 21, 1996 between
Pledgor and TCI Satellite Entertainment, Inc.
(b) The pledge of the Pledged Collateral pursuant to this Agreement
creates in favor of the Agent, for the benefit of itself, the Banks and the
Issuing Banks, a legally valid, binding and enforceable, first priority
perfected, security interest in the Pledged Collateral, securing the
payment of the Secured Obligations. The Pledgor acknowledges that, to the
extent the Pledged Collateral constitutes "instruments" under the UCC, no
filings or recordings (including, without limitation, filings under the
UCC) are necessary to be made under present law in order to perfect,
protect and preserve the security interest of the Agent, for the benefit of
itself, the Banks and the Issuing Banks, in the Pledged Collateral created
or intended to be created by this Agreement.
(c) All Pledged Shares have been duly authorized, validly issued and
fully paid and are non-assessable.
(d) No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any governmental authority is necessary
or required in connection with the execution, delivery or performance by,
or enforcement against, the Pledgor of this Agreement, the exercise by the
Agent of the voting or other rights provided for in this Agreement, or the
remedies in respect of the Pledged Collateral pursuant to this Agreement,
except as may be required in connection with the disposition of the Pledged
Shares by laws affecting the offering and sale of securities generally.
(e) The Pledgor has full power, authority and legal right to pledge
the Pledged Collateral pursuant to this Agreement. There are and will be
no restrictions on the transferability of any Pledged Collateral
transferred or delivered by the Pledgor hereunder to the Agent or with
respect to the foreclosure, transfer or disposition thereof by the Agent,
-5-
except the restrictions relating to the transfer of Xxxxxxx's shares and
membership interests in ResNet and ResNet LLC, respectively, under that
certain Stockholders' Agreement dated as of October 21, 1996 between
Pledgor and TCI Satellite Entertainment, Inc.
(f) The Pledgor has delivered or otherwise caused the transfer to the
Agent, pursuant to subsection 3(a), 3(b), 3(c) or 3(d), as applicable, of
all Pledged Shares and Pledged Notes.
(g) All Pledged Shares are (i) certificated securities represented or
evidenced by certificates, instruments or other writings, the originals of
which are in the possession of the Pledgor (prior to delivery to the Agent
hereunder),(ii) certificated securities that constitute part of a fungible
bulk of securities in the custody of a Clearing Corporation and registered
in such Clearing Corporation's name, or (iii) uncertificated securities
that are Book-Entry Shares registered in the name of a Clearing
Corporation.
(h) As of the date hereof, the Pledgor has no Pledged Subsidiaries
other than those listed on SCHEDULE 1 attached hereto. Set forth on
SCHEDULE 1 attached hereto is a true, compete and accurate list of all
Pledged Shares and Pledged Notes. All the information set forth on
SCHEDULE 1 attached hereto is true, complete and accurate.
(i) None of the Pledged Shares constitutes "margin stock", as such
term is defined in Section 221.2(h) of Regulation U of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II, Part 221.
(j) The Indebtedness represented by the Pledges Notes comprises all
of the Indebtedness owed by any Subsidiary to the Pledgor.
The foregoing representations and warranties shall survive the execution and
delivery of this Agreement and shall be deemed restated automatically at each
such time as any additional Pledged Collateral is delivered hereunder to the
Agent.
SECTION 5 COVENANTS. In addition to and not in limitation of the
covenants of the Pledgor set forth in the Credit Agreement, so long as any of
the Secured Obligations remain unsatisfied or any Bank shall have outstanding
any Commitment or any Loan, or any letter of credit shall be outstanding and not
cash collateralized, or any Bank shall be a counterparty to any Interest Rate
Contract or currency hedging agreement with the Borrower, the Pledgor agrees
that:
(a) The Pledgor, for itself and its successors and assigns, does
hereby irrevocably waive and release all preemptive, first-refusal and
other similar rights of the Pledgor to purchase any or all of the Pledged
Shares upon any sale thereof by the Agent hereunder, whether such right to
purchase arises under any of the Pledgor's charter documents, by agreement,
by operation of law or otherwise.
-6-
(b) The Pledgor warrants and covenants to defend the Agent's security
interest in and to the Pledged Collateral against the claims and demands of
all other Persons at any time claiming the same or any interest therein
adverse to the Agent.
(c) The Pledgor agrees that it will not (i) sell, assign, transfer,
surrender or otherwise dispose of, or grant any option, warrant or other
right or interest with respect to, any of the Pledged Collateral, (ii)
create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the Lien created by this Agreement and
Permitted Liens, or (iii) enter into any shareholder agreement, voting
agreement, voting trust, irrevocable proxies (other than the Irrevocable
Proxies) or any other similar agreement or instrument with respect to any
Pledged Collateral.
(d) The Pledgor shall, no later than ten (10) Business Days after its
acquisition (directly or indirectly) of any Pledged Shares or Pledged Notes
hereafter, pledge such shares or notes hereunder pursuant to subsection
3(e) and deliver or otherwise cause the transfer of such shares to the
Agent in accordance with subsection 3(a), 3(b), 3(c) or 3(d), as
applicable. The Pledgor shall not cause or permit any issuer of Pledged
Shares to issue in favor of any Person other than the Pledgor any shares of
capital stock or other equity securities, except as permitted by the Credit
Agreement.
(e) The Pledgor shall pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Pledged Collateral to the extent
the Pledgor is required to do so under the Credit Agreement.
(f) The Pledgor will deliver promptly to the Agent and the other Bank
Parties all reports and notices received by the Pledgor in respect of any
Pledged Collateral.
(g) At the option of the Agent upon the occurrence and during the
continuance of an Event of Default, the Pledgor shall not demand, sue for
or receive any payments with respect to the Pledged Collateral and in the
event that the Pledgor, as record and beneficial owner of the Pledged
Collateral, shall have received, or shall have become entitled to receive,
any cash dividends or other payments or distributions in the ordinary
course, the Pledgor shall deliver to the Agent, and the Agent shall be
entitled to receive and retain, all such cash payments or other
distributions as additional security for the Secured Obligations.
SECTION 6 FURTHER ASSURANCES. The Pledgor agrees that at any time
and from time to time, at its own cost and expense, it will promptly procure,
execute and deliver all further instruments, documents and agreements, and take
all further action, that may be necessary or desirable, or that the Agent may
request, in order to establish, maintain, preserve, protect and perfect the
Pledged Collateral, any security interest granted or purported to be granted
hereby and the priority of such security interest, or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, the
Pledgor further agrees that it shall, concurrently with the execution of this
Agreement
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and at any time and from time to time thereafter (a) procure, execute and
deliver to the Agent all stock powers, endorsements, financing statements,
assignments and other instruments of transfer requested by the Agent, (b)
deliver to the Agent immediately upon receipt the originals of all Pledged
Shares and Pledged Notes and all certificates, instruments and other writings
evidencing the Pledged Collateral, and (c) cause the Lien of the Agent to be
recorded or registered in the books of any Clearing Corporation requested by
the Agent.
SECTION 7 VOTING RIGHTS; DIVIDENDS.
(a) So long as no Default or Event of Default shall exist or result
therefrom:
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Shares or
any part thereof for any purpose not inconsistent with the terms of
this Agreement or the Credit Agreement.
(ii) The Pledgor shall be entitled to receive and retain any
and all dividends, distributions or cash payments paid in respect of
the Pledged Collateral, in compliance with the terms of the Credit
Agreement, except the following:
(A) dividends and payments paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Pledged Collateral;
(B) dividends, payments and other distributions paid or
payable in cash in respect of any Pledged Shares in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus; and
(C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral;
all of which shall be, and all of which shall be forthwith delivered
to the Agent to hold as, Pledged Collateral and shall, if received by
the Pledgor, be received in trust for the benefit of the Agent, be
segregated from the other property or funds of the Pledgor, and be
forthwith delivered to the Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement and indemnity).
(iii) The Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may request for the purpose of enabling the
Pledgor to exercise the voting and other rights which it is entitled
to exercise pursuant to clause (i) above and to receive the dividends
or distributions which it is authorized to receive and retain pursuant
to clause (ii) above.
-8-
(b) Upon the occurrence and during the continuance of a Default or an
Event of Default:
(i) All rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to Section 7(a)(i) above shall cease upon written notice
thereof from the Agent, and all such rights shall thereupon become
vested in the Agent, for the benefit of itself, the Banks and the
Issuing Banks, who shall thereupon have the sole right to exercise
such voting and other consensual rights.
(ii) All rights of the Pledgor to receive the dividends or
distributions which it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) above shall cease, and all such
rights shall thereupon become vested in the Agent, for the benefit of
itself, the Banks and the Issuing Banks, who shall thereupon have the
sole right to receive and hold as Pledged Collateral such dividends.
(iii) All dividends or distributions which are received by the
Pledgor contrary to the provisions of paragraph (ii) of this Section
7(b) shall be received in trust for the benefit of the Agent, for the
benefit of itself, the Banks and the Issuing Banks, shall be
segregated from other funds of the Pledgor and shall be forthwith paid
over to the Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement or indemnity).
(c) In order to permit the Agent to exercise the voting and other
rights which it may be entitled to exercise pursuant to Section 7(b)(i)
above, and to receive all dividends and distributions which it may be
entitled to receive under Section 7(b)(ii) above, the Pledgor shall at any
time and from time to time upon the written request of the Agent, execute
and deliver such further documents and do such further acts and things as
the Agent may reasonably request in order to effect the purposes of this
Agreement, including, without limitation, delivering to the Agent on the
date hereof or at any time hereafter irrevocable proxies in respect of the
Pledged Shares in the form of SCHEDULE 3 hereto (the "IRREVOCABLE
PROXIES").
SECTION 8 AUTHORIZATION; AGENT APPOINTED ATTORNEY-IN-FACT. The Agent
shall have the right to, in the name of the Pledgor, or in the name of the
Agent, or otherwise, without notice to or assent by the Pledgor, and the Pledgor
hereby constitutes and appoints the Agent (and any of the Agent's officers,
employees or agents designated by the Agent) as the Pledgor's true and lawful
attorney-in-fact, with full power and authority to take any action and execute
any and all endorsements, assignments, documents, instruments or UCC financing
statements which the Agent may deem necessary or desirable to accomplish the
purposes of this Agreement, including, without limitation, (a) upon the
occurrence and during the continuance of an Event of Default, to receive,
endorse and collect all instruments made payable to the Pledgor representing any
dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same, (b) to
perfect or continue perfected, maintain the priority of or provide notice
-9-
of the Agent's security interest in, the Pledged Collateral or (c) upon the
occurrence and during the continuance of an Event of Default, to maintain,
protect, sell, assign, convey or otherwise transfer title in or dispose of the
Pledged Collateral. The foregoing power of attorney is coupled with an interest
and irrevocable so long as any Bank has outstanding any Commitment or Loan, or a
letter of credit remains outstanding, or the Secured Obligations have not been
paid and performed in full or any Bank is a counterparty to an Interest Rate
Contract or currency hedging agreement with the Borrower. The Pledgor hereby
ratifies all that the Agent shall lawfully and in good faith do or cause to be
done by virtue of and in compliance with this Section.
SECTION 9 AGENT PERFORMANCE OF XXXXXXX'S OBLIGATIONS. Upon the
occurrence and during the continuance of an Event of Default, the Agent may
perform or pay any obligation which the Pledgor has agreed to perform or pay
under or in connection with this Agreement, and the Pledgor shall reimburse the
Agent on demand for any amounts paid by the Agent pursuant to Section 16(a).
SECTION 10 NO RESPONSIBILITY FOR CERTAIN ACTIONS. Except for the
safe custody of the Pledged Collateral in their possession pursuant to Section
9-207 of the UCC and the accounting for monies actually received by them,
neither the Agent nor any Bank Party shall have responsibility for
(a) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not the Agent or any Bank Party has or is deemed to have knowledge of such
matters, or (b) taking any necessary steps to preserve any rights against any
parties with respect to any Pledged Collateral. The Agent shall have no duty
with respect to the custody, safekeeping and physical preservation of the
Pledged Collateral in its possession other than as set forth in Section 9-207 of
the UCC.
SECTION 11 REMEDIES IN GENERAL. Upon the occurrence and during the
continuance of an Event of Default:
(a) The Agent may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it under the Credit Agreement or any other Loan Document, all
the rights and remedies of a secured party under the UCC and other
applicable laws, and the Agent may also, without notice except as specified
below, sell the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at
any of the Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Agent may deem commercially
reasonable. The Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to the Pledgor of the time
and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Agent shall not be
obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. The Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned. The Pledgor hereby waives any claims against
the Agent arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale
-10-
was less than the price which might have been obtained at a public sale,
even if the Agent accepts the first offer received and does not offer such
Pledged Collateral to more than one offeree, so long as such sale is
conducted in a commercially reasonable manner and made on commercially
reasonable terms.
(b) If the Agent shall determine to exercise its right to sell all or
any of the Pledged Collateral pursuant to this Section, the Pledgor agrees
that, upon request of the Agent, the Pledgor will, at its own expense:
(i) execute and deliver and cause each issuer of Pledged
Collateral to execute and deliver all such instruments and documents,
and do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Agent, advisable to register such
Pledged Collateral under the provisions of the Securities Act of 1933,
as from time to time amended (the "SECURITIES ACT"), in accordance
with the intended method of distribution thereof, and to cause the
registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law
to be furnished, and to make all amendments and supplements thereto
and to the related prospectus which, in the opinion of the Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission (the "COMMISSION") applicable thereto;
(ii) qualify the Pledged Collateral under the state securities
or "Blue Sky" laws and to obtain all necessary governmental approvals
for the sale of the Pledged Collateral in any state, as requested by
the Agent;
(iii) cause each issuer of the Pledged Collateral to enter into
customary agreements and take such other actions as are required in
order to expedite or facilitate the disposition of such Pledged
Collateral, as Agent or the managing underwriter therefor requests,
and will cause each issuer of Pledged Collateral otherwise to comply
with all applicable rules and regulations of the Commission; and
(iv) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Pledged Collateral or any
part thereof valid and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by the Agent or the Bank Parties
by reason of the failure by the Pledgor to perform any of the covenants
contained in this Section 11(b) and, consequently, agrees that, if the
Pledgor shall fail to perform any of such covenants, the Agent shall be
entitled to specific performance.
(c) The Pledgor recognizes that, by reason of the aforementioned
requirements and certain prohibitions contained in the Securities Act and
applicable state securities laws,
-11-
the Agent may, at its option, elect not to require the Pledgor to register
the offering or sale of all or any part of the Pledged Collateral under the
provisions of the Securities Act and may therefore be compelled, with
respect to any sale of all or any part of the Pledged Collateral, to limit
purchasers to those who will agree, among other things, to acquire such
securities for their own account, for investment, and not with a view to
the distribution or resale thereof. The Pledgor acknowledges and agrees
that any such sale may result in prices and other terms less favorable to
the seller than if such sale were a public sale without such restrictions
and notwithstanding such circumstances, agrees that any such sale shall not
be deemed to have been made in a manner not commercially reasonable solely
by reason of such sale's being conducted in such manner. The Agent shall
be under no obligation to delay the sale of any of the Pledged Collateral
for the period of time necessary to permit the Pledgor to register such
securities for public sale under the Securities Act, or under applicable
state securities laws, even if the Pledgor would agree to do so.
(d) If the Agent determines to exercise its right to sell any or all
of the Pledged Collateral, upon written request, the Pledgor shall, and
shall cause each of its Subsidiaries to, from time to time, furnish to the
Agent all such information as the Agent may reasonably request in order to
determine the number of shares and other instruments included in the
Pledged Collateral which may be sold by the Agent as exempt transactions
under the Securities Act and rules of the Commission thereunder, as the
same are from time to time in effect.
(e) In connection with any disposition of the Pledged Collateral, if
the Agent elects to obtain the advice of an investment banking firm, such
firm shall be selected by the Pledgor from among three (3) nationally known
investment banking firms which are member firms of the New York Stock
Exchange, which three firms shall be proposed by the Agent to the Pledgor
(and may include an Affiliate of any Bank). Such selection by the Pledgor
shall be made within five (5) Business Days after receipt by the Pledgor of
the names of the firms proposed by the Agent. In the absence of such
selection by the Pledgor within such period, the Agent may select any one
of such firms. The Pledgor agrees that the sale or other disposition of
all or any part of the Pledged Collateral in reliance on the advice of the
investment banking firm so selected shall be deemed to be commercially
reasonable under the UCC.
(f) The Pledgor shall indemnify and hold harmless the Agent, the Bank
Parties and any underwriter or financial advisor to the Agent or the Bank
Parties (and the officers, directors, shareholders, employees, attorneys,
and agents of each of them), from and against any and all loss, liability,
claim, damage and expense (including, without limitation, attorney costs)
under the Securities Act, any "Blue Sky" law or otherwise insofar as such
loss, liability, claim, damage or expense arises out of or is based upon
any untrue statement or alleged untrue statements of a material fact
contained in a registration statement or prospectus or on any preliminary
prospectus or any amendment or supplement thereto (collectively, the
"OFFERING DOCUMENTS"), or arises out of or is based upon any omission or
alleged omission to state therein a material fact required to be stated or
necessary to make
-12-
the statements therein not misleading, such indemnification to remain
operative regardless of any investigation made by or on behalf of the
Agent, the Bank Parties or any underwriter or financial advisor or any
other person or entity indemnified hereunder. This indemnification does
not apply to losses, claims, damages, liabilities or expenses that are
caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information furnished in writing to the issuer of
such Pledged Collateral by the Agent or on the Agent's behalf expressly for
use in any of the Offering Documents.
(g) Any and all reasonable expenses which may be charged to or for
the account of the Agent or the Bank Parties hereunder, including brokers'
or underwriters' commissions or discounts, financial advisory fees,
accounting fees, attorney costs, costs of printing and other expenses of
offering, sale, or transfer shall be reimbursed by or charged to the
Pledgor pursuant to Section 16(a).
(h) Any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection from,
or other realization upon all or any part of the Pledged Shares or Pledged
Notes upon the exercise of any remedy by the Agent under this Section 11
shall be distributed to each Bank pro rata and shall be applied by the
Agent as follows:
FIRST: to the payment of the costs and expenses of such sale,
including reasonable compensation to the Agent and its agents and
attorneys, and of any judicial or private proceedings in which such
sale may be made, and of all other expenses, liabilities and advanced
made or incurred by the Agent, together with interest on such costs,
expenses and liabilities and on all advances made by the Agent from
the date any such cost, expense or liability is past due or unpaid or
any such advance is made, in each case until paid in full;
SECOND: to the payment of any other fees, costs or other
expenses constituting obligations under the Loan Documents other than
amounts payable under subparagraph "First" above, together with
interest on each such amount at the Post-Default Rate from and after
the date such amount is due, owing or unpaid until paid in full;
THIRD: to the payment of (i) any interest then due, owing or
unpaid in respect of any Loan or any other Secured Obligation secured
by this Agreement; and (ii) and with respect to any Interest Rate
Contracts or currency hedging agreements with the Borrower to which a
Bank is a party, the interest due and owing in respect of any amounts
payable thereunder, in each case together with, to the maximum extent
permitted by law, interest thereon at the Post-Default Rate from the
date such amount is due, owing or unpaid until paid in full to be
applied in accordance with the Credit Agreement;
-13-
FOURTH: to the payment of the whole amount of principal then
due, owing or unpaid in respect of any Loan, or any other Secured
Obligation secured by this Agreement, to be applied in accordance with
the Credit Agreement; and
FIFTH: the surplus, if any, to be paid to the Pledgor or to
whomever lawfully may be entitled to receive such surplus.
The Pledgor shall remain liable to the Agent for any deficiency which exists
after any sale or other disposition or collection of the Pledged Shares.
SECTION 12 NOTICES. All notices or other communications hereunder
shall be given in the manner and to the addresses as specified, and shall be
effective as provided, in the Credit Agreement.
SECTION 13 AMENDMENTS; WAIVERS. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Pledgor
herefrom, shall in any event be effective unless the same shall be made as
provided in the Credit Agreement. No failure on the part of the Agent or any
Bank Party to exercise, and no delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. Unless otherwise specified in any such waiver or consent, a
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 14 CUMULATIVE REMEDIES. The rights, powers and remedies of
the Agent under this Agreement are cumulative and shall be in addition to all
rights, powers and remedies available to the Agent and the other Bank Parties
pursuant to the Credit Agreement, the other Loan Documents and at law or in
equity, all of which rights, powers and remedies shall be cumulative and may be
exercised successively or concurrently without impairing the Agent's rights
hereunder.
SECTION 15 CERTAIN WAIVERS. The Pledgor waives, to the fullest
extent permitted by law, any right to require the Agent or the Bank Parties (i)
to proceed against any Person, (ii) to exhaust any other collateral or security
for any of the Secured Obligations, (iii) to pursue any remedy in the Agent's or
any of the Bank Parties' power, or (iv) to make or give any presentments,
demands for performance, notices of nonperformance, protests, notices of
protests or notices of dishonor in connection with any of the Pledged
Collateral.
SECTION 16 COSTS AND EXPENSES; INDEMNIFICATION; OTHER CHARGES.
(a) INDEMNIFICATION. The Pledgor shall pay, indemnify, and hold the
Agent, each Bank, each Issuing Bank and each of their respective Affiliates,
officers, directors, employees, counsel, agents and attorneys-in-fact harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements,
of any kind or nature whatsoever in accordance with the terms and conditions of
the Credit Agreement.
-14-
(b) OTHER CHARGES. The Pledgor agrees to indemnify the Agent, each
Bank and each Issuing Bank against and hold each harmless from any and all
present and future stamp, transfer, or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery, or registration of, or otherwise with
respect to, this Agreement.
(c) INTEREST. Any amounts payable to the Agent, each Bank and each
Issuing Bank under this Section 16 or otherwise under this Agreement if not paid
upon demand shall bear interest from the date of such demand until paid in full
at the Post-Default Rate.
SECTION 17 BINDING EFFECT; TRANSFERABILITY; NO THIRD-PARTY
BENEFICIARIES. This Agreement shall be binding upon, inure to the benefit of and
be enforceable by the Pledgor and the Agent, and their respective successors and
assigns, PROVIDED, HOWEVER, that the Pledgor may not assign any of its rights
hereunder or interests herein except as permitted by the terms of the Credit
Agreement. The Pledgor acknowledges that upon any assignment or other transfer
by the Agent or any other Bank Party of any of the Secured Obligations, the
Agent or such other Bank Party may transfer its interest herein, or any part
thereof, to the assignee or transferee, who shall thereupon become vested with
all the rights, remedies, powers, security interests and liens herein granted to
the Agent or such other Bank Party, or the transferred part thereof, subject,
however, to the restrictions contained herein. No Persons other than the
Pledgor, the Bank Parties, the Agent and the respective assignees of the Bank
Parties and the Agent are intended to be benefited hereby or shall have any
rights hereunder, as third-party beneficiaries or otherwise.
SECTION 18 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND THE BANKS
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PLEDGOR AND THE AGENT, FOR THE BENEFIT OF ITSELF, THE
BANKS AND THE ISSUING BANKS, CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
PLEDGOR AND THE AGENT, FOR THE BENEFIT OF ITSELF, THE BANKS AND THE ISSUING
BANKS, IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE PLEDGOR AND
THE AGENT, FOR THE BENEFIT OF ITSELF, THE BANKS AND THE ISSUING BANKS, EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS,
-15-
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
SECTION 19 WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT, FOR THE
BENEFIT OF ITSELF, THE BANKS AND THE ISSUING BANKS, EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE PLEDGOR AND THE AGENT, FOR THE BENEFIT OF ITSELF, THE BANKS AND THE ISSUING
BANKS, EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
SECTION 20 ENTIRE AGREEMENT. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding among the
Pledgor, the Banks, the Agent and each Issuing Bank and supersedes all prior or
contemporaneous agreements and understandings of such Persons, oral or written,
relating to the subject matter hereof and thereof.
SECTION 21 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only to
the extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction.
SECTION 22 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same agreement.
-16-
SECTION 23 INCORPORATION OF PROVISIONS OF THE CREDIT AGREEMENT. To
the extent the Credit Agreement contains provisions of general applicability to
the Loan Documents, including any such provisions contained in Article 10
thereof, such provisions are incorporated herein by this reference.
SECTION 24 NO INCONSISTENT REQUIREMENTS. The Pledgor acknowledges
that this Agreement and the other Loan Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters, and
agrees that all such covenants, terms and provisions are cumulative and all
shall be performed and satisfied in accordance with their respective terms;
PROVIDED, in the event any terms or conditions contained herein conflict with
any term or condition set forth in the Credit Agreement, such term or conditions
set forth in the Credit Agreement shall control.
SECTION 25 CONTINUING SECURITY INTEREST; TERMINATION. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
apply to all past, present and future Secured Obligations, including Secured
Obligations that arise under transactions that continue any Secured Obligation,
increase or decrease any Secured Obligation, or from time to time create new
Secured Obligations after all or any prior Secured Obligations have been
satisfied. Upon termination of the Commitments of the Banks under the Loan
Documents, the surrender of any letters of credit issued by any Issuing Bank for
the account of the Pledgor, the termination of all Interest Rate Contracts and
currency hedging agreements with the Borrower to which any Bank is a
counterparty, and the payment and performance in full of all Loans and all
Secured Obligations, the security interests granted under this Agreement shall
terminate and the Pledgor shall be entitled to the return, upon its request and
at its expense, of such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof. Notwithstanding the foregoing,
the obligations of the Pledgor under Sections 11(f) and 16 shall survive such
termination.
-17-
IN WITNESS WHEREOF, the Pledgor has executed this Agreement as of the
day and year first above written.
LODGENET ENTERTAINMENT CORPORATION
By: ______________________________________
Name: ______________________________________
Title:______________________________________
Accepted:
NATIONAL WESTMINSTER BANK PLC, as Agent
By: ________________________________
Name: ________________________________
Title: ________________________________
SCHEDULE 1
TO
PLEDGE AGREEMENT
I. PLEDGED SHARES
NUMBER
NAME OF NUMBER OF NUMBER OF OF SHARES
PLEDGED JURISDICTION OF CLASS OF SHARES SHARES OWED BY
SUBSIDIARY INCORPORATION STOCK ISSUED OUTSTANDING PLEDGOR
---------- --------------- -------- --------- ----------- ---------
ResNet Delaware Common 1,052,520 1,052,520 1,000,000
Communications,
Inc.
LodgeNet Canada Class A Common 2,175,000 2,175,000 2,175,000
Entertainment
(Canada)
Corporation
II. PLEDGED NOTES
ISSUER ISSUE DATE PRINCIPAL AMOUNT MATURITY DATE
------ ---------- ---------------- -------------
ResNet Communications, Inc. January 10, 1996 see attached Schedule A see attached Schedule A
SCHEDULE A TO SCHEDULE 1 TO PLEDGE AGREEMENT
INTEREST
MATURITY PRINCIPAL AMORTIZATION PRINCIPAL INTEREST PAYMENT INTEREST
LOAN DATE DATE AMOUNT SCHEDULE PAID RATE SCHEDULE PAID
--------- -------- --------- ------------- --------- -------- -------- --------
11/31/96 12/15/06 $237,497 N/A - 0 - 10.25% June 15 and - 0 -
December 15
SCHEDULE 2
TO
PLEDGE AGREEMENT
PLEDGE AGREEMENT SUPPLEMENT
This Pledge Agreement Supplement, dated as of __________, 199__, is
delivered pursuant to Section 3(d) of the Pledge Agreement referred to below.
The undersigned hereby agrees that this Pledge Agreement Supplement may be
attached to the Pledge Agreement, dated as of _____________, 199__ (as amended,
restated, modified, renewed, supplemented or extended from time to time, the
"PLEDGE AGREEMENT"; the terms defined therein and not otherwise defined herein
being used as therein defined), made by the undersigned in favor of National
Westminster Bank Plc, as Agent for the Banks referred to therein, and that the
shares of capital stock, promissory notes or other securities listed on Annex A
to this Pledge Agreement Supplement shall be and become part of the Pledged
Collateral referred to in the Pledge Agreement and shall secure all Secured
Obligations.
The undersigned agrees that the shares of capital stock, promissory notes
and other securities listed below shall for all purposes constitute Pledged
Collateral and shall be subject to the security interest created by the Pledge
Agreement.
The undersigned hereby certifies that the representations and warranties
set forth in Section 4 of the Pledge Agreement are true and correct with respect
to the Pledged Shares listed below on and as of the date hereof.
LODGENET ENTERTAINMENT CORPORATION
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
Accepted:
NATIONAL WESTMINSTER BANK PLC, as Agent
By: ________________________________
Name: ________________________________
Title: ________________________________
ANNEX A
TO
PLEDGE AGREEMENT SUPPLEMENT
I. PLEDGED SHARES
NUMBER
NUMBER
NAME OF NUMBER OF NUMBER OF OF SHARES
PLEDGED JURISDICTION OF CLASS OF SHARES SHARES OWED BY
SUBSIDIARY INCORPORATION STOCK ISSUED OUTSTANDING PLEDGOR
---------- ------------- -------- --------- ----------- ---------
II. PLEDGED NOTES
ISSUER ISSUE DATE PRINCIPAL AMOUNT MATURITY DATE
------ ---------- ---------------- -------------
SCHEDULE 3
TO
PLEDGE AGREEMENT
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby make,
constitute and appoint NATIONAL WESTMINSTER BANK PLC, its successors and
assigns, as Agent (the "AGENT") for the Banks (the "BANKS") and the Issuing
Banks (the "ISSUING BANKS") signatory to the Credit Agreement referred to below,
and each of the Agent's officers and employees, its true and lawful attorneys,
for it and in its name, place and stead, to act as its proxy in respect of all
of the shares of capital stock of ________________________, a __________________
corporation (hereinafter referred to as the "CORPORATION"), that it now or
hereafter may own or hold, including, without limitation, the right, on its
behalf, to demand the call by any proper officer of the Corporation pursuant to
the provisions of the Corporation's Certificate of Incorporation or By-Laws and
as permitted by law of a meeting of the Corporation's shareholders and at any
such meeting of shareholders, annual, general or special, to vote for the
transaction of any and all business that may come before such meeting, or at any
adjournment thereof, including, without limitation, the right to vote for the
sale of all or any part of the assets of the Corporation and/or the liquidation
and dissolution of the Corporation; giving and granting to its said attorneys
full power and authority to do and perform each and every act and thing whether
necessary or desirable to be done in and about the premises, as fully as it
might or could do if personally present with full power of substitution,
appointment and revocation, hereby ratifying and confirming all that its said
attorneys shall do or cause to be done by virtue hereof.
This Proxy is given to the Agent and to its officers and employees in
consideration of (i) the Loans made by the Banks to the undersigned and (ii) the
letters of credit issued by the Issuing Banks to the undersigned, and in order
to carry out the covenant of the undersigned contained in that certain Pledge
Agreement dated December 19, 1996 between the undersigned and the Agent, for the
ratable benefit of the Banks and the Issuing Banks, and this Proxy shall not be
revocable or revoked by the undersigned, shall be binding upon the undersigned
and its successors and assigns until the payment in full of all of the Secured
Obligations (as defined in the aforesaid Pledge Agreement) and may be exercised
only after an Event of Default under the Credit Agreement (as such terms are
defined in the aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this _____ day of _______, 199_.
LODGENET ENTERTAINMENT CORPORATION
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
-21-
EXHIBIT H
PATENT AND TRADEMARK SECURITY AGREEMENT
This PATENT AND TRADEMARK SECURITY AGREEMENT (this "Agreement") is made
this 19th day of December, 1996, by and between LODGENET ENTERTAINMENT
CORPORATION, a Delaware corporation ("BORROWER"), having an office at 000 Xxxx
Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxx 00000, RESNET COMMUNICATIONS, INC., a
Delaware corporation ("RESNET", and together with the Borrower, the "GRANTORS",
and each individually, a "GRANTOR"), having an office at 000 Xxxx Xxxxxx Xxxxx,
Xxxxx Xxxxx, Xxxxx Xxxxxx 00000, and NATIONAL WESTMINSTER BANK PLC, a United
Kingdom public limited company, as Agent for the Banks and the Issuing Banks
referred to below (in such capacity, hereinafter referred to as the "AGENT"),
with a place of business located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000;
W I T N E S S E T H:
WHEREAS:
(A) Borrower has entered into that certain Amended and Restated Credit
Agreement of even date herewith (such agreement, as it may from time to time be
amended, modified and/or supplemented, is hereinafter referred to as the "CREDIT
AGREEMENT") with the several financial institutions from time to time party
thereto (collectively, the "BANKS"), the Agent (also in its capacity as an
Issuing Bank and Bank) and National Westminster Bank of Canada, as an Issuing
Bank, providing for extensions of credit to be made to Borrower by the Banks and
the Issuing Banks;
(B) All of the indebtedness, liabilities and obligations of the
Borrower to the Banks, the Issuing Banks and the Agent, whether now existing or
hereafter arising, and whether or not currently contemplated, under or arising
out of the Credit Agreement and all other instruments and Loan Documents
executed and delivered in connection with any of the foregoing are hereinafter
referred to collectively as the "OBLIGATIONS";
(C) In order to secure the performance of the Obligations, ResNet has
executed that certain Guaranty of even date herewith (as such agreement may from
time to time be amended, modified and/or supplemented, hereinafter referred to
as the "GUARANTY")
(D) Each of Borrower and ResNet has adopted, has used and is using the
service marks and/or trademarks described on Schedule A and Schedule B attached
hereto, respectively, is the owner of the U.S. Patent and Trademark Office
trademark and/or service mark registrations and applications listed on Schedule
A and Schedule B attached hereto, respectively, and is a party to the trademark
and/or service mark licenses, listed on Schedule A and Schedule B attached
hereto, respectively (collectively, the "SERVICE MARKS"), along with the
goodwill of the business associated therewith;
(E) Each of Borrower and ResNet owns the patents and the U.S. Patent
and Trademark Office patent applications listed on Schedule C and Schedule D
attached hereto, respectively, and is a party to the patent licenses, listed on
Schedule C and Schedule D attached hereto, respectively (collectively, the
"PATENTS", and together with the Service Marks, the "INTELLECTUAL PROPERTY
COLLATERAL");
(F) The Obligations and the Guaranty are secured by the grant by the
Grantors to the Agent, for the benefit of itself, the Banks and the Issuing
Banks, of liens on and security interests in the properties and assets of the
Grantors including, without limitation, the Intellectual Property Collateral,
pursuant to that certain Security Agreement of even date herewith (as such
agreement may from time to time be amended, modified and/or supplemented,
hereinafter referred to as the "SECURITY AGREEMENT") between the Grantors, the
other grantor party thereto and the Agent;
(G) It is a condition precedent to the obligations of the Banks and
the Issuing Banks under the Credit Agreement that the Grantors execute and
deliver this Agreement; and
(H) All capitalized terms used herein without definition shall have
the respective meanings ascribed thereto in the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and subject to the terms and conditions set forth in the Security
Agreement, the parties hereto hereby agree as follows:
1. Each Grantor hereby grants unto the Agent, for the benefit of
itself, the Banks and the Issuing Banks, on the terms and conditions contained
in the Security Agreement, which are incorporated herein and made a part hereof,
and as additional security for the Obligations, a security interest and first
Lien upon all of such Grantor's right, title and interest in, to and under (i)
the Service Marks and the goodwill of the business symbolized by the Service
Marks, (ii) all products and proceeds of the Service Marks and the goodwill of
the business symbolized by the Service Marks, including, without limitation, any
claim by such Grantor against third parties for past, present or future (a)
infringement or dilution of any trademark and/or service mark, any trademark
and/or service mark registration, any trademark and/or service mark registration
issued with respect to any trademark and/or service mark application, or any
trademark and/or service mark licensed under any trademark and/or service mark
license or (b) injury to the goodwill associated with any trademark and/or
service mark, any trademark and/or service mark registration, any trademark
and/or service mark registration issued with respect to any trademark and/or
service mark application, or any trademark and/or service mark licensed under
any trademark and/or service mark license, (iii) the Patents and (iv) all
products and proceeds of the Patents, including, without limitation, any claim
by such Grantor against third parties for past, present or future infringement
of any patent, any patent issued pursuant to a patent application and any patent
licensed under any patent license.
-2-
2. Each Grantor shall take all action, under both statutory and
common law, which in its reasonable business judgment, may be necessary or
useful to perfect title to the Intellectual Property Collateral and to maintain
and/or defend the Intellectual Property Collateral including, without
limitation, the defense of the Intellectual Property Collateral, surveillance of
marks or patents owned and/or used by third parties which may be related to the
Intellectual Property Collateral, bringing actions against infringing marks,
patents and uses, and bringing cancellation or opposition proceedings in order
to enforce rights in the Intellectual Property Collateral, all as determined to
be appropriate in such Grantor's reasonable business judgment.
3. This Agreement shall terminate upon written notice from the Agent
to the Grantors that all of the Obligations secured hereby have been fully paid
and performed and, upon such termination, the Agent shall promptly execute and
deliver to the Grantors such release documents or instruments as the Grantors
may reasonably request in furtherance and in evidence of such termination.
4. This Agreement shall be binding upon the Grantors, their
successors and assigns and shall inure to the benefit of the Agent and its
successors and assigns.
5. This Agreement may not be amended or modified except with the
written consent of the Agent.
6. The Grantors will provide any additional documentation to support
or confirm the security interest created under this Agreement as the Agent may
request.
[SIGNATURE PAGE FOLLOWS]
-3-
IN WITNESS WHEREOF, the Grantors and the Agent have caused this Agreement
to be executed by their officers thereunto duly authorized on the day and year
first above written.
LODGENET ENTERTAINMENT CORPORATION
By:_______________________________________
Name:_____________________________________
Title:______________________________________
RESNET COMMUNICATIONS, INC.
By:_______________________________________
Name:_____________________________________
Title:______________________________________
NATIONAL WESTMINSTER BANK PLC, as Agent
By:_______________________________________
Name:_____________________________________
Title:______________________________________
-4-
XXXXXXXX'S ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK)
I, ___________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY that __________________, personally known to
me to be ___________ of LODGENET ENTERTAINMENT CORPORATION, and personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that (s)he
signed and delivered said instrument as ___________ of said corporation, as
his(her) free and voluntary act, and as the free and voluntary act and deed of
said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ____ day of __________, 1996.
___________________________________
NOTARY PUBLIC
My Commission Expires:_____________
RESNET'S ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK)
I, ___________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY that __________________, personally known to
me to be ___________ of RESNET COMMUNICATIONS, INC., and personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that (s)he signed and
delivered said instrument as ___________ of said corporation, as his(her) free
and voluntary act, and as the free and voluntary act and deed of said
corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ____ day of __________, 1996.
___________________________________
NOTARY PUBLIC
My Commission Expires:_____________
NATIONAL WESTMINSTER BANK PLC ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK)
I, _______________, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that _____________, personally known to me to be a
_______________ of NATIONAL WESTMINSTER BANK PLC, and personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that (s)he signed and
delivered said instrument as a ____________ of said corporation, as (her)his
free and voluntary act, and as the free and voluntary act and deed of said
corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ____ day of _________, 1996.
_________________________________
NOTARY PUBLIC
My Commission Expires: _________
SCHEDULE A TO PATENT AND TRADEMARK SECURITY AGREEMENT
BORROWER TRADEMARK REGISTRATIONS
XXXX XXX. NO.
---- --------
LodgeNet 1,378,457
LodgeNet Entertainment Class 41,
(and Design) Serial No. 74/669,535
LodgeNet Entertainment Class 38,
(and Design) Serial No. 74/669,533
LodgeNet Class 38,
Serial No. 74/669,534
BORROWER TRADEMARK APPLICATIONS
Traveler's TV Mall, Serial No. 74/615,989
TV Mall, filed November 6, 1995
LodgeNet Passport, filed February 15, 1996, Serial No. 75/058,170
ResNet, Serial No. 75/016091
ResNet Communications, filed March 14, 1996, Serial No. 75/072,868
B-LAN, filed October 31, 1996
BORROWER TRADEMARK LICENSES
Name of Agreement Parties Date of Agreement
----------------- ------- -----------------
Technology License Borrower and ResNet January 10, 1996
Agreement
-5-
SCHEDULE B TO PATENT AND TRADEMARK SECURITY AGREEMENT
RESNET TRADEMARK REGISTRATIONS
XXXX XXX. NO.
---- --------
None.
RESNET TRADEMARK APPLICATIONS
None.
RESNET TRADEMARK LICENSES
Name of Agreement Parties Date of Agreement
----------------- ------- -----------------
Technology License Borrower and ResNet January 10, 1996
Agreement
SCHEDULE C TO PATENT AND TRADEMARK SECURITY AGREEMENT
BORROWER PATENTS
U.S. Patent No. Date Issued Title
--------------- ----------- -----
5455619 October 3, 1995 Video
Distribution
System Addressing
Device for
Identifying
Remote Locations
5,506,572 April 9, 1996 Low Battery
Detection System
4,502,098 February 26, 1985 Circuit Assembly
4,920,432 April 24, 1990 System for Random
Access to an
Audio/Video Data
Library with
Independent
Selection and
Display at each
of a Plurality of
Remote Locations
BORROWER PATENT APPLICATIONS
Serial No. Date Filed Title
---------- ---------- -----
08/288,626 August 10, 1994 System for
Collecting and
Processing User
Inputs
BORROWER PATENT LICENSES
Name of Agreement Parties Date of Agreement
----------------- ------- -----------------
None.
SCHEDULE D TO PATENT AND TRADEMARK SECURITY AGREEMENT
RESNET PATENTS
U.S. Patent No. Date Issued Title
--------------- ----------- -----
None.
RESNET PATENT APPLICATIONS
Serial No. Date Issued Title
---------- ----------- -----
None.
RESNET PATENT LICENSES
Name of Agreement Parties Date of Agreement
----------------- ------- -----------------
None.
EXHIBIT I
BORROWER U.S. LEGAL OPINION
1. Each of the Borrower and ResNet is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware. Each of the Borrower and ResNet has the requisite corporate power
and authority to own, pledge, mortgage and operate its properties, to lease
any properties it operates under lease, to conduct its business as presently
conducted and to execute and deliver each of the Loan Documents to which it
is a party. Each of the Borrower and ResNet is duly licensed or qualified and
is in good standing as a foreign corporation in each jurisdiction in which
the character of the properties owned or leased by it or the nature of the
business transacted by it makes such licensing or qualification necessary,
except where the failure to qualify or be so licensed would not have a
material adverse effect on the financial condition or business of the
Borrower or ResNet.
2. The execution, delivery and performance of each of the Loan
Documents to which the Borrower or ResNet is a party have been duly
authorized by the Borrower and ResNet (as applicable), and each of the Loan
Documents constitutes the legal, valid and binding obligation of the Borrower
and ResNet (as applicable) enforceable in accordance with its terms.
3. Assuming the proceeds of the loans are used solely for the purposes
set forth in the Credit Agreement, neither the execution and delivery by each
of the Borrower and ResNet of the Loan Documents to which it is a party, nor
the consummation by each of the Borrower and ResNet of the transactions
contemplated thereby: (i) violates any provision of the Borrower's or ResNet's
respective certificates of incorporation or bylaws; (ii) violates any law or
regulation (including any applicable order or decree of any court or
governmental instrumentality known to us) applicable to the Borrower or
ResNet; (iii) results in the breach of, or constitutes a default under, any
indenture, mortgage, deed of trust, lease or other agreement to which the
Borrower or ResNet is a party or by which they or each of their respective
properties are bound; (iv) results in the creation or imposition of any lien
upon any of the property of the Borrower or ResNet under any indenture,
mortgage or other agreement described in clause (iii) above; or (v) requires
the consent or approval of, or any filing or registration with, any
governmental body, agency or authority other than (a) the filing of the
Financing Statements and (b) those which have been obtained.
4. To our knowledge, there are no judgments outstanding against the
Company or ResNet. Except as set forth on Schedule 3.6 of the Credit
Agreement, there is no action, suit or proceeding pending before any court or
any governmental or regulatory authority, against or otherwise involving the
Borrower or its Subsidiaries, or to our knowledge threatened, which, if
adversely determined, would have a material adverse effect upon the
consolidated financial condition or business of the Borrower.
5. To our knowledge, neither the Borrower nor ResNet is in default
with respect to any agreement, resolution, decree, bond, note, indenture,
order or judgment to which it is a party or by which it is bound, or any
other agreement or other instrument by which any of the properties or assets
owned or used by the Borrower or its Subsidiaries in the conduct of their
respective businesses is affected.
6. Neither the Borrower nor ResNet is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, or controlled by such a company.
7. Neither the Borrower nor ResNet is a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" within the meaning of the Public Utility Holding Company Act of
1935, as amended.
8. The provisions of the Security Agreement are sufficient to create
in the Agent's favor a security interest in all right, title and interest of
the Borrower and ResNet in those items and types of Collateral in which a
security interest may be created under Article 9 of the Code. The description
of the Collateral set forth in the Financing Statements is sufficient to
perfect a security interest in the items and types of Collateral in which a
security interest may be perfected by the filing of a financing statement
under the Code. Assuming that the Financing Statements have been filed in the
offices set forth on Schedule __ hereto and have not subsequently been
released, terminated or modified, the Agent's security interest in the
Collateral has been perfected, to the extent such security interest may be
perfected under the Code by the filing of the Financing Statements.
9. Assuming that the Agent has taken and is retaining possession of
the stock certificates evidencing the shares of stock described in the Pledge
Agreement (the "Pledged Stock") and the Agent has taken such Pledged Stock in
good faith without notice (actual or constructive) of any adverse claim
within the meaning of the Code, there has been created under the Pledge
Agreement, and there has been granted to the Agent a valid and perfected
first priority security interest and lien upon the Pledged Stock to the
extent a security interest may be obtained by possession under the Code.
10. Assuming that the Agent has taken delivery of the intercompany
notes that are negotiable instruments within the meaning of Article 3 of the
Code (the "Pledged Notes") in good faith and without notice or knowledge that
any item thereof is overdue or has been dishonored or of any defense against
a claim to any item thereof on the part of any Person, and that such Pledged
Notes have been drawn, issued or endorsed to the Agent as such or to the
order of the Agent as such or to bearer or blank, there has been created
under the Pledge Agreement, and there has been granted to the Agent a valid
and perfected first priority security interest and lien upon the Pledged
Notes.
11. There are no state or local taxes, fees or other charges payable in
connection with the execution or delivery of the Loan Documents or the
recordation, filing or enforcement of the Financing Statements other than
nominal recording fees in the appropriate state or county offices.
12. The interest rates applicable to the obligations of the Borrower
under the Credit Agreement and the Notes do not violate any law, rule or
regulation prescribing a maximum rate of interest.
2
SCHEDULE 3.1
TO
AMENDED AND RESTATED CREDIT AGREEMENT
ORGANIZATION
LODGENET ENTERTAINMENT CORPORATION
(i) State of Incorporation: Delaware
(ii) Capitalization:
(a) Common Stock, $.01 par value
20,000,000 Shares authorized; 11,045,369 Shares outstanding
(b) Preferred Stock, $.01 par value
5,000,000 Shares authorized; none outstanding
(iii) States of Qualification
All fifty (50) states
(iv) Business
Providing video-on-demand, network-based video games, cable
television programming and other interactive entertainment and
information services to the lodging and multi-family residential
dwelling unit markets.
1
RESNET COMMUNICATIONS, INC.
(i) State of Incorporation: Delaware
(ii) Capitalization:
(a) Common Stock, $.01 par value
10,000,000 Shares authorized; 1,052,520 Shares outstanding
(b) Preferred Stock, $.01 par value
5,000,000 Shares authorized; none outstanding
(iii) States of Qualification
Presently qualified in all states other than Connecticut,
Louisiana, Mississippi, Missouri, Montana, and Wisconsin
(iv) Business
Providing video-on-demand, network-based video games, cable
television programming and other interactive entertainment and
information services to the multi-family residential dwelling
unit markets.
2
LODGENET ENTERTAINMENT (CANADA) CORPORATION
(i) Jurisdiction of Incorporation: Canada
(ii) Capitalization:
(a) Common Stock, $1.00 par value
Class A (voting): no maximum authorized; 2,175,000 Shares
outstanding
Class B (voting): no maximum authorized; none outstanding
(iii) Jurisdictions of Qualification
British Columbia
New Brunswick
Nova Scotia
Ontario
Quebec
(iv) Business
Providing video-on-demand, network-based video games, cable
television programming and other interactive entertainment and
information services to the lodging market.
3
SCHEDULE 3.5
TO
AMENDED AND RESTATED CREDIT AGREEMENT
PROPERTIES
PROPERTIES LEASED
1. 000 Xxxx Xxxxxx Xxxxx (Headquarters)
Sioux Falls, SD 57104
2. 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
3. 0000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
4. 000 Xxxx Xxxxxx North (Headquarters of ResNet Communications, Inc.)
Sioux Falls, SD 57104
5. 0000 X. Xxxxxx
Xxxxx Xxxxx, XX 00000
6. 000 X. Xxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
7. 0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
8. 0000 Xxxxx Xxxxxxxx 0 Xxx 0X
Xxxxxxxx, XX 00000
9. 0000 Xxxxxxxx Xxxxx #0
Xxx Xxxxx, XX 00000
10. 000 X. Xxxxxx Xxxxx Xxxx Xxxx 00
Xxxxxxxx Xxxx, XX XXXXXX X0X 0X0
11. 0000 X. 000xx Xxxxxx
Xxxxx Xxxx, XX 00000
12. 000 X Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
13. 000 Xxxxxxxx Xxxxxx
Xxxxx X
Xxxxxxxx, XX 00000-7700
14. 000 X. Xxxxxx Xxxxxx
Xxxxx X
Xxxxxxx, XX 00000
PROPERTIES SUBLEASED, ETC.
None.
PROPERTY OWNED
Approximately 23 acre parcel of land on Maple Lane and Xxxxxx Avenue in
Sioux Falls, South Dakota on which is being constructed the Company's
National Headquarters and Distribution Center.
PURCHASE OPTIONS, ETC.
There are no unexpired purchase options, rights of first refusal or other
similar contractual rights pertaining to any real estate owned or leased
by the Borrower or any Loan Party.
SCHEDULE 3.6
TO
AMENDED AND RESTATED CREDIT AGREEMENT
LITIGATION
On February 16, 1995, On Command Video Corporation filed a lawsuit in
Federal District Court in Northern California asserting patent infringement
by the Company relating to its on-demand video system. The complaint
requests an unspecified amount of damages and injunctive relief. The Company
has carefully reviewed the allegations of infringement and is of the opinion
that the Company does not infringe on the patent and the allegations are
without merit. The company filed an answer and counterclaim to the lawsuit
on April 17, 1995, denying the claims, asserting affirmative defenses and
asserting a counterclaim for declaratory relief. The Company is currently
engaged in litigation with respect to this matter and is continuing to
vigorously defend itself. On February 28, 1996, On Command Video Corporation
filed a related lawsuit in Superior Court of the State of California, County
of San Francisco, alleging interference with prospective economic advantage
and misappropriation of trade secrets. The state court action has been
stayed pending resolution of the federal litigation. The Company believes
that this lawsuit is also groundless and without merit.
SCHEDULE 3.11
TO
AMENDED AND RESTATED CREDIT AGREEMENT
INTELLECTUAL PROPERTY
TRADEMARKS/SERVICE MARKS:
------------------------
1. LodgeNet, Reg. No. 1, 378, 457 (Registered)
2. LodgeNet Entertainment (& Design), Class 41, Serial No. 74/669,535
3. LodgeNet Entertainment (& Design), Class 38, Serial No. 74/669,533
4. LodgeNet, Class 38, Serial No. 74/669,534
5. Traveler's TV Mall, Serial No. 74/615,989 (Applied)
6. TV Mall, filed 11/6/95 (Applied)
7. LodgeNet Passport, filed 2/15/96, Serial No. 75/058,170 (Applied)
8. ResNet, Serial No. 75/016091 (Applied)
9. ResNet Communications, filed 3/14/96, Serial No. 75/072,868 (Applied)
10. B-LAN (Applied 10/31/96)
PATENTS AND PATENTS PENDING:
---------------------------
1. Video Distribution System Addressing Device for Identifying Remote
Locations Patent No. 5455619 (issued 10/3/95)
2. Low Battery Detection System
Patent No. 5506572 (issued 4/9/96)
3. System for Collecting and Processing User Imputs
Application No. 08/288,626 (filed 8/10/94)
4. Circuit Assembly
Patent No. 4502098 (issued 2/2/85)
5. System for Random Access to an Audio/Video Data Library with Independent
Selection and Display at each of a Plurality of Remote Locations Patent
No. 4,920,432 (issued 4/24/90)
Patent/Trademark Lst
December 18, 1996
SCHEDULE 3.13
TO
AMENDED AND RESTATED CREDIT AGREEMENT
NAME CHANGES, MERGERS
October, 1993: LodgeNet Entertainment Corporation, a South Dakota
corporation, merged into LodgeNet Entertainment
Corporation, a Delaware corporation.
October, 1993: LNET, Inc., a Delaware corporation, changed its name to
LodgeNet Entertainment Corporation, a Delaware corporation.
September, 1991: Satellite Movie Company Incorporated, a South Dakota
corporation, changed its name to LodgeNet Entertainment
Corporation, a South Dakota corporation.
SCHEDULE 3.19
TO
AMENDED AND RESTATED CREDIT AGREEMENT
MATERIAL AGREEMENTS
CONTRACTS NOT FREELY ASSIGNABLE
1. Confidential License Agreement for Use of Super Nintendo
Entertainment System with Integrated Hotel Entertainment and Hotel
Guest Related Communications System dated as of March 12, 1993 by
and between the Company and Nintendo of America, Inc.
MASTER AGREEMENTS
1. See attached Exhibit A (Studio Contracts).
EQUIPMENT LEASES
None.
MATERIAL LICENSES AND PERMITS
2. See attached Exhibit B (Programming Agreements).
EXHIBIT A
STUDIO AGREEMENTS
STUDIO AGREEMENTS
STUDIO NAME DATE OF AGREEMENT
COLUMBIA PICTURES PAY TELEVISION 10/16/86
HBO ENTERPRISES 10/5/92
PARAMOUNT PICTURES CORPORATION 7/24/86
SHOWTIME NETWORKS INC 1/18/90(MISSING)
SHOWTIME NETWORKS INC 10/8/94(AMENDMENT)
TWENTIETH CENTURY FOX 5/1/96
UNIVERSAL PAY TELEVISION, INC 5/30/91
XXXX DISNEY PICTURES AND TELEVISION 10/10/90
WARNER BROTHERS, INC. UNDATED(AMENDMENT)
Page 1
EXHIBIT B
INDEX OF
NETWORK/PROGRAMMING AGREEMENTS
-A-
ARTS & ENTERTAINMENT CABLE NETWORK SMATV Affiliate Agreement - June 27, 1989
ARTS & ENTERTAINMENT CABLE NETWORK SMATV Amendment (Extension) - March 1,
1990
ARTS & ENTERTAINMENT CABLE NETWORK SMATV Amendment (Extension) - June 26, 1993
ARTS & ENTERTAINMENT CABLE NETWORK SMATV Amendment (Extension) - October 18,
1995
-B-
BLACK ENTERTAINMENT TELEVISION SMATV Affiliation Agreement - (Unexecuted)
-C-
Residential and Non-Residential Distribution Agreement for CARTOON NETWORK -
(Unexecuted)
CNBC - SEE FINANCIAL NEWS NETWORK
CABLE NEWS NETWORK, INC. SMATV Private Cable Distribution Agreement -
August 5, 1991
Terms and Conditions for Cablecast of CABLE NEWS NETWORK and HEADLINE NEWS -
August 17, 1995
Residential and Non-Residential Distribution Agreement for CABLE NEWS NETWORK
and HEADLINE NEWS - (Unexecuted)
Residential and Non-Residential Distribution Agreement for CABLE NEWS NETWORK
INTERNATIONAL - (Unexecuted)
COUNTRY MUSIC TELEVISION Hotel/Motel Affiliate Agreement - May 17, 1994
1
Affiliation Agreement (SMATV System) between Lodge Net Entertainment and
National Cable Satellite Corporation, d/b/a C-SPAN - November 9, 1995
-D-
The DISNEY CHANNEL Hotel/Motel Distribution Agreement - July 1, 1988
DISNEY CHANNEL letter modifying Subscription Fee - September 30, 1991
DISNEY CHANNEL Letter Agreement amending 1988 Agreement - October 3, 1991
DISNEY CHANNEL Letter Agreement amending 1988 Agreement - October 31, 1991
DISNEY CHANNEL Letter Agreement extending term of 1988 Agreement - April 21,
1993
DISNEY CHANNEL Letter Agreement amending 1988 Agreement - March 30, 1995
DISNEY CHANNEL letter increasing Subscriber Fee - September 15, 1995
-E-
ESPN, Inc. letter discussing volume discount - January 20, 1993
ESPN2 Hotel Affiliation Agreement - August 1, 1993
ESPN, Inc. Hotel Affiliation Agreement - September 1, 1993
ESPN/ESPN2 letter detailing Charter Affiliate Benefits - September 1, 1993
ESPN, Inc. Hospital Affiliation Agreement - April 1, 1994
ESPN, Inc. letter discussing fee increase - September 30, 1994
ESPN, Inc. letter discussing fee increase - September 30, 1994
ESPN, Inc. letter discussing fee increase - December 13, 1995
ESPN, Inc. letter granting temporary authorization to LodgeNet to receive
ESPN and ESPN2 through PrimeStar Partners, L.P. - June 6, 1996
ESPN, Inc. Hotel Affiliation Agreement - September 1, 1996
2
-F-
The FAMILY CHANNEL SMATV Distribution Agreement - August/September 1990
The FAMILY CHANNEL Rate Card Rider B-1 Extension - December 20, 1995
FINANCIAL NEWS NETWORK, INC. Cable Affiliation Agreement - November 28, 1990
CNBC letter increasing CNBC's distribution - May 23, 1995
CNBC - Agreement Term Sheet Among LodgeNet Entertainment Corporation, CNBC,
Inc. and National Broadcasting Company, Inc. - September 16, 1996
-G-
The GOLF CHANNEL Private Cable Affiliation Agreement - September 9, 1996
-H-
HBO-CINEMAX Service Affiliation Agreement for Lodging Industry Distributors -
January 1, 1993
HBO Service Affiliation Agreement - June 1, 1986
HBO Letter Agreement - June 1, 1986
HBO Letter Agreement - January 1, 1989
HBO Letter Agreement - August 1, 1990
HBO Letter Agreement amending 8/1/90 Letter Agreement - August 1, 1990
HBO Letter Agreement - November 2, 1992
HBO letter - December 22, 1995
-J-
JNG (JAPAN NETWORK) Service Affiliation Agreement for Lodging Industry
Distribution - June 29, 1993
Maintenance Agreement (JNG) - June 29, 1993
3
Amendment to JNG Service Affiliation Agreement for Lodging Industry
Distributor -
-L-
SMATV and Non-Residential TVRO Distribution Agreement (LIFETIME Network) -
January 1, 1994
-N-
The NASHVILLE NETWORK Hotel/Motel Affiliate Agreement - August 30, 1990
-P-
License Agreement (Hotel/Motel) (PLAYBOY) January 1, 1988
Satellite Master Antenna Television License Agreement between PLAYBOY Video
Entertainment Group, Inc. and Satellite Movie Company Incorporated - October
20, 1988
-S-
Science Fiction Channel Agreement for Distribution to SMATV Affiliates - Five
Year - SMATV Service Agreement (Southern Satellite Systems, Inc) (WTBS) -
September 1, 1993
-T-
Xxxxxx Network Television, Inc. National Hotel/Motel/Hospital Distribution
Agreement - April 12, 1991
Turner Cable Network Sales, Inc. CABLE NEWS NETWORK INC. SMATV Private Cable
Distribution Agreement - August 5, 1991
Residential and Non-Residential Distribution Agreement for Xxxxxx Classic
Movies - 4/25/95 (Unexecuted)
Residential and Non-Residential Distribution Agreement for Xxxxxx Network
Television - 5/23/95 (Unexecuted)
December 18, 1996 4
8/15/95 Letter from Xxxxx Page of Xxxxxx Network Sales Inc.
Terms and Conditions for Distribution of CABLE NEWS NETWORK and HEADLINE NEWS
- 12/1/95
Terms and Conditions for Distribution of Xxxxxx Network Television - April
13, 1996 - (Unexecuted)
-U-
Cable Affiliation Agreement (Univision) - (Unexecuted)
Agreement for Distribution of the USA Network Service to SMATV Affiliates -
10/12/95
Broadcast Basic Tier/Cable Programming Services SMATV Distributor Satellite
Transmission Service Agreement (United Video/WGN) - November 22, 1995
-W-
The WEATHER CHANNEL Affiliation Agreement SMATV - November 15, 1995
Star Jr. Addendum (The WEATHER CHANNEL)- November 15, 1995
Equipment Agreement (The WEATHER CHANNEL) - November 15, 1995
December 18, 1996 5
SCHEDULE 7.1
TO
AMENDED AND RESTATED CREDIT AGREEMENT
OUTSTANDING INDEBTEDNESS
There is no Indebtedness outstanding, except as provided in subsections (a),
(b), (c), (d), (e), (g), (h), (i), and (j) of Section 7.1 of the Credit
Agreement.
SCHEDULE 7.2
TO
AMENDED AND RESTATED CREDIT AGREEMENT
LIENS
There are no Liens other than those provided for in subsections (a), (b),
(c), (e), and (f) of Section 7.2 of the Credit Agreement.