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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 333-34-477
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GLOBAL DECISIONS GROUP LLC
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3963605
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
c/o MCCARTHY, CRISANTI & MAFFEI, INC.
590 MADISON AVENUE
NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
212-896-7510
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes No x
--- ---
At June 30, 1998 there were 4,838,710 Limited Liability Company units
of the Registrant outstanding. Of these, 2,095,904 Limited Liability Company
Units are held by non-affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Registration Statement on Form S-4 (Reg.
No. 333-34477) are incorporated by reference into Part IV.
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PART I
Item 1. BUSINESS
Business of Global Decisions Group LLC
Global Decisions Group LLC ("GDG") is a Delaware limited liability company which
was formed in connection with a Plan of Merger and Exchange Agreement dated as
of August 1, 1997 (the "Merger Agreement") by and among MCM Group, Inc., a
Delaware corporation ("MGI"), GDG, GDG Merger Corporation, a Delaware
corporation ("Merger Sub"), the stockholders of Cambridge Energy Research
Associates, Inc., a Massachusetts corporation ("CERA"), and The Goldman Sachs
Group, L.P., a Delaware limited partnership ("Goldman"). On February 11, 1998,
in accordance with the Merger Agreement, McCarthy, Crisanti & Maffei, Inc., a
New York corporation ("MCM, Inc.") entered into a five year revolving credit
agreement with The Chase Manhattan Bank and Bank of America National Trust and
Savings Association (the "Credit Agreement") and on the same date loaned
$25,000,000 to CERA (the "CERA Loan"). CERA used these funds to pay cash
distributions aggregating $21,510,000 to the CERA stockholders, and to purchase
a portion of the limited liability partnership interests in Cambridge Energy
Research Associates Limited Partnership ("CERA L.P.") owned by Goldman for
$2,390,000 (the "CERA Cash Distribution"). The CERA Loan was funded using
available cash and $15,000,000 in loans under the Credit Agreement.
On February 12, 1998, pursuant to the Merger Agreement, MGI merged with Merger
Sub (the "Merger"), a wholly owned subsidiary of GDG which was formed
specifically for the purpose of the Merger. MGI was the surviving corporation
and became a wholly owned subsidiary of GDG. As a result of the Merger, each
share of MGI common stock outstanding immediately prior to the Merger ceased to
be outstanding and was converted into a right to receive limited liability
company unit of GDG ("LLC Units"), as provided in the Merger Agreement. In
addition, on that date, GDG acquired all of the outstanding shares of CERA's
common stock and the remaining limited partnership interests in CERA L.P. (which
interests were immediately transferred to CERA) in exchange for LLC Units and
certain contingent options and rights (the "CERA Acquisition"). As a result,
CERA also became a wholly owned subsidiary of GDG, and CERA L.P. was dissolved
by operation of law, and its assets and liabilities were transferred to CERA.
GDG is a holding company with no substantial business operations. Its primary
assets are the common stock of MGI and CERA. Accordingly, GDG's results of
operations are dependent upon the results of operations of MGI and CERA.
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Business of MGI
Overview
The Company
MGI, through MCM, Inc. and its subsidiaries (collectively, "MCM"), provides
up-to-the-minute information and analysis relating to developments in the U.S.
and international corporate securities, fixed income and currency markets to
over 2,400 institutional clients in over 57 countries. MCM's primary services
include CorporateWatch(R), which is a leading provider of up-to-the-minute
information regarding the new issue corporate securities market; MoneyWatch(R),
which provides on-going analysis of developments in the U.S. Treasury, agency
and money markets; CurrencyWatch(R), which provides analysis of intraday
developments in the foreign exchange markets; YieldWatch(R), which analyzes
intraday developments in the European and Asia Pacific government bond and money
markets; FX OptionWatch(TM), which provides fundamental and technical analysis
of global currency option markets, and KinriWatch(TM), a Japanese language
service that provides fundamental and technical analysis of the Japanese
government bond and money markets. MGI recently introduced two new services:
MTNWatch, which provides comprehensive market news, commentary and analysis of
flows for the European Medium Term Note market; and NihongoWatch, a Japanese
language translation service of MGI's CurrencyWatch(R) and MoneyWatch(R)
services.
MCM, Inc. was established in New York in 1975 and acquired in 1985 by VK/AC
Holding, Inc.'s ("VK/AC") predecessor. In August 1996, there was a spin-off of
MGI by VK/AC to the holders of its common stock (the "Spin-Off").
In 1980, MCM, Inc. entered into an agreement with Bridge-Telerate, formerly Dow
Jones Markets ("DJM") to distribute MoneyWatch(R) on-line, a decision that
reflected the market demand for quicker updates on, and analysis of, Federal
Reserve Board policy bearing on U.S. Treasury, agency and money markets. In
1982, MCM, Inc. launched its second screen-based service, CorporateWatch(R),
which covered new issues of corporate debt and equity in the United States.
MCM, Inc. established an office in London in 1986 as the first step in a
strategy to expand its coverage of the integrating global financial markets.
Also in 1986, MCM, Inc. launched its third screen-based service, YieldWatch(R),
which provides technical analysis and trading recommendations on some of the
major non-U.S. fixed-income markets. In 1987, MCM, Inc. launched
CurrencyWatch(R), which proved very popular in large dealing rooms in London and
continental Europe. In 1988, MCM, Inc. and Fuji Xerox Co., Limited, established
MCM, Inc. Asia Pacific, 85% of which is owned by MCM, Inc., to cover the
principal financial markets in East Asia. In 1991, MCM, Inc. sold its credit
analysis and ratings division to Duff & Phelps Investment Research Co. to
concentrate on its electronic research services business, and in 1992 MCM, Inc.
purchased Fintrend, S.A. (whose name has been changed to McCarthy, Crisanti and
Maffei, S.A.), further expanding its coverage of the currency markets in Europe.
Finally, in recognition of the increasing importance of its London office, MCM,
Inc. established MCM, Inc. Europe in early 1996, where CurrencyWatch(R),
YieldWatch(R) and FX OptionWatch(TM) are managed.
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Having offices staffed with analysts in the major financial centers around the
world has been an essential part of MGI's strategy for the last decade.
Currently, MCM, Inc. and its subsidiaries produce and distribute electronic
information services worldwide, with offices in New York, Boston, London, Paris,
Tokyo, Hong Kong and Singapore.
MGI believes there are attractive growth opportunities in the financial
information services sector of the foreign exchange and global fixed income
markets and that it is well positioned to take advantage of these opportunities.
The Electronic Financial Information Services Industry
The electronic financial information services industry encompasses providers of
a range of real-time financial information delivered through digital feeds to
computer workstation screens of financial market participants that subscribe for
those services. This financial information includes basic data such as market
quotes, financial news and historical information, as well as high-value-added
information such as market and technical analyses, research, commentary and
forecasts. Providers of such high-value-added financial information first
emerged in the late 1970s and early 1980s, primarily in response to the strong
demand for analysis and interpretation of the monetary policy of the Federal
Reserve Board. Because of their independence from underwriters and brokerage
firms and the quality of their services, a small number of these providers
established credibility with the markets in the volatile interest rate
environment of the early 1980s. Their services became, for many clients, the
functional equivalent of a high-quality, inexpensive, in-house research
department. The customers for these higher-value-added services were primarily
the trading and sales desks of institutional participants in the U.S.
fixed-income markets.
Until the mid-1980s, the financial markets were focused primarily on the U.S.
fixed-income markets and Federal Reserve Board policy. Following the peak in the
relative value of the U.S. Dollar in 1985, however, the financial markets became
increasingly interested in non-U.S.-dollar-denominated assets, a trend which
has increased with time. Providers of high-value-added services responded by
offering services to meet this demand. The customer base for these services are
now primarily the trading and sales desks of institutional participants in the
global markets.
Business Strategy
Subscription revenues for MCM's services have grown at a compound annual rate of
14.7% from December 31, 1994 to December 31, 1997, which MCM attributes to the
quality of its research services, the expansion of its coverage of global fixed
income and foreign exchange markets, a shift to a multi-vendor distribution
system and a general increase in demand for financial information services
resulting from increased activity in the global financial markets.
MCM intends to maintain its strong growth in subscription revenues by
strengthening relationships with on-line telecommunications information network
firms such as DJM, Reuters Limited, Bloomberg L.P., ADP Financial Information
Services, and Kabushiki Kaisha Quick (collectively, the "Vendor Distribution
Firms"), increasing market share for its existing services, identifying new
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services to market on the strength of its brand recognition and reputation and
preparing for distribution through the Internet.
- Strengthen Relationships with Vendor Distribution Firms.
Historically, MCM distributed its research services almost
exclusively through DJM. Beginning in late 1993, MCM has pursued a
non-exclusive distribution strategy with DJM and the other Vendor
Distribution Firms, including Reuters, Bloomberg, Bridge, ADP and
Quick. MCM believes that maintaining its historical relationship
with DJM and strengthening its relationship with the other Vendor
Distribution Firms is a key component in expanding revenues and
market share. See "-- Distribution of Services" and "Item 7--
Management's Discussion and Analysis of Financial Condition and
Results of Operations -- MCM Group, Inc." below. However, there can
be no assurance that MCM's strategy will continue to be successful.
- Increase Market Share of Existing Services. In conjunction with its
strategy of increasing market penetration by strengthening its
relationships with Vendor Distribution Firms, MCM will continue to
pursue an aggressive global marketing strategy that includes using
analysts in marketing efforts and sharpening the design and content
of its services. However, there can be no assurance that MCM's
efforts to increase the market share of its primary existing
services will be successful.
- Identify Market Opportunities and Launch New Services. To
capitalize on MCM's global distribution system and coverage, MCM
has actively explored, and intends to continue to identify and
develop, new market opportunities in the continuously evolving
global financial markets and the design and launch of services that
build on MCM's success and reputation in the marketplace. MCM may
consider further strategic acquisitions (in addition to the CERA
acquisition) or further hiring of key personnel as it continues to
pursue opportunities to expand its business.
- Prepare to Expand through the Internet. In preparation for
developments in Internet-related technologies, MCM is evaluating
the distribution of MCM's existing services over the Internet and
the development of new services specifically designed for
distribution over the Internet. However, any such delivery of
services over the Internet will depend on technological
developments in the speed, reliability and security of data
transmission and the emergence of demand for such services.
Services
MGI's primary services are as follows:
- CorporateWatch(R) is the leading provider of up-to-the-minute
information relating to new issues in the corporate securities
market. It is marketed to corporate sales departments, trading
personnel and portfolio managers of financial institutions,
primarily in the United States. CorporateWatch(R) covers the U.S.
fixed income markets (fixed income filings, high-yield markets,
preferred stock issuances, U.S. agencies, fixed-income deals,
private placements, Yankee bonds), structured finance markets
(asset-backed, whole loan issues,
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collateralized mortgage obligations and commercial mortgages) and
international new issues, and provides commentary and analysis on a
number of segments of these various markets.
- CurrencyWatch(R)is made up by two research services that provide
fundamental and technical analysis of intraday developments in the
global foreign exchange markets and is marketed to foreign exchange
dealing operations worldwide. MCM recently split CurrencyWatch(R) into
two separate product offerings CurrencyWatch I and CurrencyWatch II.
Both products cover their respective markets 24 hours a day and provide
foreign exchange dealers around the world with trading recommendations,
technical and fundamental analysis and explanatory text. CurrencyWatch
I focuses on the Core Markets, which are the major industrialized
currencies, effectively the G7, and from January 1999, the Euro. The
CurrencyWatch I product includes a scrolling Bulletin Board with the
latest news on Central Bank activity, acquisitions and EMU-related
developments. CurrencyWatch II provides fundamental and technical
analysis of the global emerging and exotic currencies by combining a
continually updating scrolling Bulletin Board such as that offered by
CurrencyWatch I and regional modules for Asia, Europe/Africa and Latin
America. Each regional module contains calendar, briefing and country
analysis pages.
- YieldWatch(R) is a research service that analyzes intraday
developments in European and Asia Pacific fixed income, cash and
futures markets and is marketed primarily to dealers in non-U.S.
government bonds. YieldWatch(R) provides live commentary and
technical analysis of short-and long-term yield curve spreads,
market commentary and pre-opening market briefings.
- MoneyWatch(R) is a research service that provides ongoing
fundamental and technical analysis of developments in the U.S.
Treasury, agency and money markets, including analysis of economic
data and Federal Reserve Board policies bearing on these markets.
MoneyWatch(R) is marketed to traders, portfolio managers and
certain credit analysts and foreign exchange traders in the United
States and abroad.
- FX OptionWatch(TM) which provides fundamental and technical
analysis of global foreign exchange option markets, was launched in
the first quarter of 1996. FX OptionWatch(TM) targets participants
in the options segment of the foreign exchange markets and was
designed to complement CurrencyWatch(TM). FX OptionWatch(TM)
provides trading recommendations, strategies, moving averages and
technical checkpoints that identify the key issues bearing on
volatility in different currencies.
- KinriWatch(TM), a Japanese language service that provides
fundamental and technical analysis of Japanese government bond and
money markets, was launched in the first quarter of 1996 and was
designed to be responsive to the preferences of the Japanese
markets. Originally available only through Quick, MCM expanded the
distribution of KinriWatch(TM) recently through Reuters and intends
to expand the distribution of KinriWatch(TM) in the near term
through other Vendor Distribution Firms, including Bloomberg and
DJM.
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MCM launched two new services in the past year, which target participants in
identifiable market niches:
- MTNWatch is a real-time service providing comprehensive market
news, commentary and analysis of flows for the European Medium-Term
Note market. MTNWatch includes new issuer pipeline profiles,
program objectives, sales briefings, debt requirements and
transaction coverage. As EMU drives the folding of domestic debt
markets into a single currency credit driven market, MTNWatch will
provide timely information on new credits initiating Euro-MTN
programs.
- NihongoWatch is a Japanese-language translation service of MCM,
Inc.'s CurrencyWatch(R) and MoneyWatch(R) services.
New service launches are inherently uncertain of success, and there can be no
assurance that MCM's strategy to identify new market segments and design and
launch new services will be successful. MCM does not expect to expend material
resources in promoting the launch of these services.
Distribution of Services
The traditional distribution channels for financial information are the Vendor
Distribution Firms, which charge a basic site fee and additional fees based on
the services subscribed for and delivered to each computer screen in a financial
institutional client. For many years most financial information relating to U.S.
dollar-denominated assets was distributed over DJM, which was the first Vendor
Distribution Firm to carry services provided by MCM and its major competitors,
MMS International and Technical Data Corporation. In late 1993, MCM made the
strategic decision to develop non-exclusive distribution relationships with
every major Vendor Distribution Firm. The following chart demonstrates the
estimated number of screens available to it through the Vendor Distribution
Firms.
<TABLE>
<CAPTION>
% OF SCREENS BY GEOGRAPHIC SEGMENT
---------------------------------------
TOTAL
USER SCREENS AMERICAS ASIA PACIFIC EUROPE
------------ -------- ------------ ------
<S> <C> <C> <C> <C>
REUTERS 300,000 32% 19% 49%
DJM 90,000 40% 21% 39%
BLOOMBERG 85,000 52% 14% 34%
BRIDGE 85,000 87% 6% 7%
QUICK 46,000 5% 90% 5%
ADP 87,000 75% 2% 3%
</TABLE>
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- ------------------------------------------
Source: MCM estimates based on publicly available information and
discussions with Vendor Distribution Firms.
MCM is also monitoring developments in the Internet-related industries, a
potentially significant distribution channel in the future that could allow
dial-up retrieval of MCM's services. See "-- Overview -- Business Strategy"
above.
Subscription Agreements
Virtually all of MCM's revenues are derived from subscription agreements with
its customers. Subscription agreements with U.S.-based customers are generally
made directly between those customers and MCM and may be either oral or written
agreements. Oral agreements with U.S.-based clients are generally terminable
upon 90 days' notice without penalty. Written agreements, which represented
approximately 36.6% of MCM's U.S. revenues in 1997, typically have a one-year
term but are not subject to early termination.
Non-U.S.-based clients subscribe by means of service agreements entered into
with the Vendor Distribution Firms, pursuant to which a subscriber can elect to
subscribe to various optional services, including MCM's services. With certain
exceptions, such agreements are written and typically have one- or two-year
terms that renew automatically unless the subscriber provides 90 days' prior
notice of non-renewal.
Marketing
MCM has an experienced team of marketing, sales and client support personnel.
The staff of 44 professionals in the United States, Europe and Asia Pacific is
responsible for securing, expanding and maintaining client relationships,
pricing, promotions and identifying new product opportunities.
Customers
No subscriber accounts for more than 2% of MCM's revenues. Subscribers to MCM's
electronic information services consist almost exclusively of institutional
clientele (e.g., major banks, brokers, dealers, government bond and financial
futures trading operations, foreign exchange trading operations, and treasury
departments of major corporations).
Employees
At June 30, 1998, MCM had 126 full-time employees (including both professional
and support staff). None of these employees is a member of a union.
Competition
MCM competes in the high-value-added segment of the financial information
services industry against both well-established and smaller companies, some of
which may have substantially greater resources
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than MCM and offer a broader array of services. The Vendor Distribution Firms
distribute numerous competing services, including their own or their affiliates'
proprietary services and the services offered by MCM's primary competitors.
Currently, MCM's primary competitors are MMS International, owned by
McGraw-Hill, and Technical Data Corporation, owned by Thomson Corporation.
Competition is based on various factors, including the breadth of coverage,
availability of both fundamental and technical analyses, the frequency and
number of intra-day updates, the range, quality, timeliness and accuracy of
information, the ability to filter, retrieve, manipulate and store information,
the level of fees charged, customer service, the success of marketing and sales
efforts and the subscribers' preference among the Vendor Distribution Firms.
Currently, there are relatively few barriers to entry by new on-line service
providers, although the lack of name recognition and access to a Vendor
Distribution Firm may make entering the business more difficult for potential
competitors.
Competition is expected to increase as technological advancements improve the
speed and reliability of delivery and retrieval of information supplied over the
Internet, which could emerge as an inexpensive distribution alternative to the
high-cost, proprietary networks offered by the Vendor Distribution Firms. At
present, the relatively slow rate of transmission of data providers' systems and
concerns over the security and integrity of data delivered over the Internet
serve as technological impediments to the effectiveness of the Internet as a
distribution channel for services such as those provided by MCM. If
technological advancements enabling faster, more reliable and secure delivery of
digital data occur, the Internet could emerge as a significant distribution
channel for financial information, including the high-value-added services such
as those provided by MCM. Because access to the Internet is inexpensive and
requires relatively inexpensive equipment and software, such technological
advancements could allow the Internet to emerge as an alternative to the Vendor
Distribution Firms and therefore reduce one of the most significant entry
barriers to start-up -- i.e., access to the Vendor Distribution Firms. While MCM
is taking preliminary steps to respond to developments in Internet-related
technologies and industries, there can be no assurance that increased
competition resulting from the emergence of the Internet as an effective,
low-cost distribution channel would not have a material adverse effect on MCM.
Business of CERA
Overview
CERA is a leading international advisory and consulting firm that focuses on the
energy industries, including markets, geopolitics, structure and strategy.
CERA's independent expertise and perspective assist its clients in making
informed strategic, investment and market decisions in the energy industry.
CERA's expertise covers major global and regional energy sectors -- oil, refined
products, natural gas and electricity. CERA delivers services through retainer
advisory services, a series of subscription-based continuous retainer advisory
services, consulting and related services that draw upon its extensive industry
expertise.
CERA's family of retainer advisory services provide a continuous analysis of
energy markets, industry trends and strategies. Each retainer advisory service
focuses on a key energy segment or region, including World Oil, Refined
Products, North American Natural Gas, North American Electric Power,
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European Natural Gas, European Electric Power, Eurasia Energy, Latin American
Energy, California Energy and Asia Pacific Energy. CERA also offers membership
services aimed at specific professional communities. These include the Global
Power Forum and the Oil and Gas Information Technology Strategy Forum, which
provide clients with dialog, interaction and collaboration in matters affecting
the power and oil and gas industries, respectively.
CERA applies its strategic knowledge and in-depth analysis expertise in the
energy industry to provide consulting and advisory services, including strategic
and scenario planning, organizational and market studies, and other focused
consulting activities. In addition, CERA multiclient studies provide assessments
of major energy developments and specific markets.
Industry Background
The energy industry is one of the world's largest industries and is essentially
a global industry. CERA believes that the global energy industry is of important
strategic significance to the international economy and is subject to
significant change and influence relating to, among other things, political
forces, globalization, privatization, environmentalism and competitive
pressures. The industry, including its oil, gas and electric power segments, is
subject to considerable volatility. In addition, CERA expects vast amounts of
capital to be expended in the energy industry, including, for example,
expenditures related to the rehabilitation of the Russian oil industry, ensuring
sufficient energy supplies and infrastructure in Asia to support economic
growth, restructuring the electric power business in the U.S. and overseas, new
technologies and compliance by oil refiners with existing and new environmental
regulations.
The pace of change around the world in both developed and developing countries
and economies makes strategic information of significant value to decision
makers. The increasingly global nature of these trends requires extensive
capabilities and expertise to obtain, assimilate and analyze critical
information and data and to develop insights into the industry's future. In
addition, CERA believes that the ability to integrate economic and political
analyses with global energy expertise is particularly useful.
CERA also believes that there is a need for the efficient development of energy
resources in an environmentally-sensitive manner to support economic growth,
which has been highlighted by the transition of the world's energy industry from
the public to the private sector in formerly state-run economies. The emerging
global private power business is an example, as is the transition in the former
Soviet Union. The trend toward privatization began in Europe in the 1980's with
the deregulation of energy markets and privatization of formerly
state-controlled enterprises. Privatization has also commenced in Latin America
as a source for financial resources and as the need for operating efficiencies
has become apparent. This is creating new companies requiring objective
information and analysis on energy. It is also creating a need among existing
industry participants for enhanced strategic knowledge and information on global
and regional energy markets. CERA believes that the growth of economic activity
in developing countries can only be sustained with access to additional energy
sources.
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CERA believes that these circumstances create a market for strategic information
that will allow businesses to make short- and long-term decisions relating to
the energy industry.
CERA Solution
CERA's products and services provide a continuous analysis of energy markets,
industry trends and strategies. This analysis creates a framework that allows
clients to identify key forces, uncertainties and price movements that may
affect certain fundamentals in key energy sectors and markets around the world.
CERA provides an assessment of the economic and geopolitical factors, as well as
key governmental policies and changes in political attitudes, affecting supply
and demand, prices and investment opportunities in the energy industry.
CERA's retainer advisory membership services provide clients with continuous
analysis of energy markets, industry trends and strategies, covering the key
energy segments and regions around the world. In addition, CERA's applications
and consulting services provide solutions to client specific needs by utilizing
strategic knowledge and in-depth analysis of the energy industry and the factors
affecting such industry. Through its membership forums, CERA promotes dialogue,
interaction and collaboration concerning developments in the energy industry.
CERA's multiclient studies provide assessments of major energy developments and
specific markets. Scenarios developed by CERA's research retainer service
provide clients with an overall framework for anticipating and understanding
change in global and regional business environments.
CERA Strategy
CERA's strategy is to become a leading provider of insights and strategic
knowledge on the global energy market. CERA seeks to do the following:
- Maintain Research and Analysis Excellence. The quality of its
research organization is critical to CERA's ability to provide
value to its customers. CERA seeks to attract, develop and retain
outstanding research professionals with expertise in a broad range
of energy industry disciplines. In order to capture a worldwide
energy industry perspective, CERA has developed a global network of
research analysts.
- Expand Client Base and Maintain High Retention Rates. CERA seeks to
increase the number of retainer advisory memberships. CERA believes
that its current offerings of products and services, and
anticipated new products and services, can continue to be
successfully marketed and sold to new clients, as well as new
constituencies within existing client companies. CERA also seeks to
maintain or improve its 90% client retention rate through continued
implementation of additional retainer advisory services and broad
research coverage. In addition, CERA's research is available via
the World Wide Web. CERA believes that improvements in distribution
technology will enable it to expand constituencies within existing
client organizations as well as to expand its client base. However,
there can be no assurance that CERA will be able to sustain such a
high client retention rate or that CERA's strategy will continue to
be successful. In addition, CERA's pricing strategy may limit the
potential market for CERA's services.
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- Identify and Define New Products. CERA seeks to position itself
ahead of other research and advisory firms by delivering strategic
research and analysis on new and emerging trends in the global
energy industry, including in-depth analysis of key fuels and all
geographical markets for energy. CERA believes that its methodology
and culture allow it to focus on the key fuels and developments in
the energy markets and enable it to expand its product and service
offerings to address these new developments. However, there can be
no assurance that CERA's strategy will be successful.
- Leverage Core Research and Applications. CERA seeks to employ
expertise gained from the research that supports retainer services
to assist clients in specific applications. In addition, CERA
intends to continue to introduce new retainer advisory membership
services that build upon its expertise and an understanding of
needs of the industry. However, there can be no assurance that
CERA's strategy will be successful.
Products and Services
CERA's products and services are as follows:
- retainer advisory membership services
- applications and consulting services
- membership forums
- multiclient studies (including scenario studies)
Each of these products and services is described below.
Retainer Advisory Membership Services. CERA's family of retainer advisory
services provides clients with a continuous analysis of energy markets, industry
trends and strategies. Each retainer advisory service focuses on a key energy
segment or region, including the following: World Oil, Global Refined Products,
North American Natural Gas, North American Electrical Power, European Natural
Gas, European Electric Power, Eurasia Energy, Latin America Energy, California
Energy and Asia Pacific Energy. Members may enroll in one or more retainer
advisory services on an annual or multi-year basis.
CERA retainer clients benefit from written and electronic research, access to
and interaction with CERA experts and peer-level gatherings of industry leaders.
The following retainer membership components are provided:
- CERA Watches -- quarterly or semiannual analyses and forecasts of
near- and medium-term markets, strategies, and critical issues and
trends.
- Private Reports -- in-depth, original thinking on key industry
developments and their implications for investment decision making.
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- Decision Briefs -- reports on current developments and their
implications for decision making.
- Fax or E-mail Alerts -- electronically distributed assessments of
short-term developments and their implications.
- Telephone and Electronic Access -- access to and contact with CERA
experts.
- Client Conference Calls -- convened periodically, as events
warrant, to provide clients with timely multiclient briefings.
- CERA Roundtables -- executive workshop sessions with CERA experts
and industry decision makers.
- On-Site Presentations and Workshops -- one-on-one interactive
sessions to present CERA analysis and discuss the implications for
the client company.
Retainer advisory service member also receive CERA's global overview research,
which is intended to provide a broad, integrative framework concerning economic
and geopolitical trends affecting the energy industries. This global research
includes Global Energy Watch, a semiannual assessment of key strategic energy
trends and interfuel interactions, and reports on the changing dynamic of the
energy business. CERA members may also attend the CERA Executive Conference --
The Global Energy Forum, which is an annual gathering of senior energy decision
makers.
Membership Forums. CERA has established three forums designed to promote
dialogue, interaction and collaboration based on a research agenda, which
includes specific research papers, that is managed and implemented by CERA.
These forums are as follows:
- The Global Power Forum. This forum brings senior decision makers
and ministers from business, government and financial communities
together for regular conferences. These conferences are designed to
promote dialogue and the exchange of views and help participants to
understand developments in the international power industry as well
as regional opportunities and related strategic implications.
- The Oil and Gas Information Technology Strategy Forum. This forum
provides a strategic framework for assessing and benchmarking
challenges and opportunities created by information technology.
Sessions also address the potential impact of information
technology on the structure of oil and gas companies as well as
competitive implications.
- CERA's Former Soviet Union (FSU) Oil Transportation Forum. This
forum creates an ongoing platform to improve cooperation and the
environment for oil transportation in the region. It does this
through focused presentations, interactive discussions, ongoing
monitoring, and senior-level meetings with FSU transportation
decision makers.
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<PAGE> 15
Applications and Consulting Services. CERA provides strategic and scenario
planning services, organizational and market studies, and other focused
consulting activities. Through specific client projects, referred to as
applications, CERA applies its strategic knowledge and in-depth analysis in the
energy industry to assist individual clients with particular needs. Assignments
typically focus on the following areas: scenario planning process and
facilitation; strategy development and implementation; corporate and business
segment strategy options; future skills and competencies; market analysis
(regional or industry); organizational analysis; restructuring and deregulation;
asset valuation; value chain analysis; strategic alliance/partnership
development; company profiling; post-merger strategic alignment and integration;
privatization; country assessment; business environment and scenario
development; implications for the client; expert witness; due diligence and
critical review of strategy and plans; and executive presentations and corporate
facilitation.
Multiclient Studies. Multiclient studies provide assessment of major energy
developments and specific markets. Clients are provided with a cost-effective,
high-value, decision-oriented analysis and a framework for assessing critical
issues. CERA offers these studies as written in-depth reports, participant
workshops and one-on-one company sessions. Examples of multiclient studies
include the following: The Race to Capture Value: The Future of US Northeast Gas
Markets; Transportation Dynamics: Understanding the Future of Oil Flows in the
Former Soviet Union; Natural Gas in Southeast Asia: Scenarios for the Future of
Gas Investment, Infrastructure Development, and the Competitive Dynamics of the
Energy Marketplace; The Future of Central European Energy; and The New Energy
Frontier: The Future of the Western Gas & Power Markets.
Most of CERA's retainer services develop multiclient scenario studies to provide
a long-term framework for anticipating and understanding change in its focus
area. Scenarios assist clients in anticipating and responding to uncertainties
and change in the global and regional business environment. CERA believes that
this approach allows decision makers to explore trends and forces that will
affect their business and to incorporate new ideas and information into their
thinking and strategic processes. Current CERA multiclient scenario studies
include the following: The Future of World Oil Markets: Scenarios to 2010;
Restructuring Refining: Scenarios for Industry Structure and markets to 2010;
North American Natural Gas Markets: Scenarios to 2010; Reshaping the North
American Electric Power Industry: Scenarios to 2010; European Natural Gas:
Scenarios to 2010; and Latin America Energy: Scenarios to 2010.
Research and Analysis
CERA's research and analysis group consists of approximately 71 full-time
employees who provide ongoing research and analysis on the developments,
information and activities in the energy industry. Each of the energy products
and geographical regions covered by CERA is staffed by a team of research
analysts and associates with substantial experience and/or expertise in the
industry area covered by such products or regions.
CERA employs a consistent, disciplined research and analysis methodology across
CERA's full product line, and issues printed or electronically distributes
material using a consistent presentation format. Each energy product and
geographical region has a product line research director who is responsible for
implementing CERA's research and analysis methodology in that product area or
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<PAGE> 16
geographical region. The development methodology consists of an iterative
process of research, analysis, hypothesis and testing. Analysts conduct
extensive primary research, working with CERA's client base and contacting other
sources. These activities are supplemented with searches of numerous trade,
financial and other third party source materials. From this research, analysts
identify significant patterns and trends, develop assumptions, test hypotheses
and arrive at concrete recommendations and conclusions to provide to clients.
CERA conducts its research and analysis on an ongoing basis, continually retests
its underlying assumptions and projected scenarios as developments occur and
highlights to clients material changes to the assumptions, projections,
recommendations and conclusions.
The knowledge and experience of CERA's analysts is critical to the quality of
CERA's products and services. To ensure consistency of positions and analysis
across service and research disciplines, all CERA's distributed research is
reviewed by CERA's Head of Global Research. While varying opinions, debate and
philosophical contention among services and research disciplines are encouraged,
final positions and conclusions are consistent. This practice ensures that the
analytical structure and recommendations presented in CERA's products are not
inconsistent and better enables the various elements of client organizations to
formulate integrated strategies based on coherent information and analysis.
Sales and Marketing
At June 30, 1998, CERA had 44 full-time employees in sales and marketing in
various locations worldwide. CERA's strategy is to optimize and grow resources
and coordinate sales and marketing across product lines and geographical
regions. Responsibilities among CERA's sales and marketing staff are allocated
as follows: sales staff have account-driven responsibility for renewals, new
retainer and application consulting sales within designated industry segments
and regions; marketing and product management staff have accountability for
product planning, development, pricing, promotion, quality control, commercial
database management, sales staff support and other initiatives such as
electronic distribution; and administrative and client services staff handle
processing of new clients, assistance with incoming information requests,
distribution of reports and other literature, written research to clients and
the delivery of corporate marketing materials.
Customers
As of June 30, 1998, CERA had a total retainer base of approximately 515
retainer contracts with various client organizations. Among the client
organizations that CERA serves are the following: integrated oil companies and
national oil companies; independent producers and refiners; pipelines, tanker
and transportation companies; electric and gas utilities and independent power
generators; banks, pension funds, institutional investors and other financial
institutions; manufacturing firms and large energy end-users; government and
regulatory agencies; trading, marketing and distribution firms; oil services and
supply companies; engineering and construction companies; and legal and
accounting firms servicing the energy industry. Three of CERA's customers
accounted, in the aggregate, for approximately 20% and 9% of its total revenues
for the fiscal years ended June 30, 1997 and 1998, respectively.
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<PAGE> 17
Competition
CERA believes that the principal competitive factors in its industry include
independence and quality of research, breadth of product offering, depth of
expertise, relevance and timeliness of information and its efficient delivery,
attention to customer service, effectiveness of sales and marketing, credibility
and reputation, global perspective and orientation, and adaptability to the
evolving information needs of clients. CERA believes that it competes favorably
with respect to each of these factors.
CERA competes in the market for research and information on the global energy
industry. CERA believes that the principal competitors for CERA's business are
the energy practices of the major management consulting firms, independent
energy consulting firms and information providers (such as brokerage firms,
consulting firms, publishing firms and smaller boutique firms specializing in a
particular energy industry sector or region). CERA's competitors include
Petroleum Economics Limited, Petroleum Finance Company and PIRA Energy Group.
There can be no assurance that CERA will be able to continue to compete
successfully against existing or new competitors.
Employees
At June 30, 1998, CERA had 189 full-time employees (including both professional
and support staff). None of these employees is a member of a union.
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<PAGE> 18
Item 2. PROPERTIES
GDG conducts its business through office space located at 590 Madison Avenue,
New York, which MCM, Inc. permits it to use.
MCM, Inc., which is headquartered in New York, New York, conducts its business
through leased office space there and in Boston, London, Paris, Tokyo, Hong Kong
and Singapore. MCM, Inc.'s lease for approximately 29,000 square feet in its New
York headquarters (the "New York Office Lease") expires in 2009. MCM, Inc. also
leases over 14,000 square feet for additional office space for its operations.
MCM, Inc. also intends to enter into a lease for an additional 3,000 square feet
of office space in London. MCM, Inc. also licenses the office space, referred to
above, from Brera Capital Partners LLC, ("Brera") and it permits GDG to use this
office facility. MCM, Inc. believes that these facilities are adequate to serve
its currently anticipated business needs.
Van Kampen American Capital Distributors, Inc., ("Distributors, Inc."),
subleases from MCM, Inc. approximately 6,400 square feet of space in MCM, Inc.'s
New York office. MCM, Inc. and Distributors, Inc. have entered into a sublease
agreement, dated as of January 3, 1995, under which the sublessor is obligated
to pay a proportionate share of rent and expenses payable by MCM, Inc. under the
New York Office Lease, and which may be terminated by either party upon 90 days'
written notice.
CERA, which is headquartered in Cambridge, Massachusetts, conducts its business
through leased office space there and in Paris, France, Oakland, California,
Moscow, Russia, and Washington, D.C. CERA's lease for approximately 22,600
square feet in its Cambridge headquarters expires on June 3, 2000. CERA also
leases over 10,000 square feet of additional office space for its operations.
CERA has entered into a new lease with the landlord of its Cambridge
headquarters with respect to the leasing of additional space by CERA for a
period of five years beginning on January 1, 1998.
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<PAGE> 19
Item 3. LEGAL PROCEEDINGS
Neither GDG nor any of its subsidiaries are involved in any material legal
proceeding, other than routine litigation incidental to their business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No items were submitted to a vote of the security holders of GDG, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended June 30, 1998.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Although the LLC Units issued to the stockholders of MGI in connection with the
Merger (with the exception of LLC Units issued to "affiliates" of MGI and LLC
Units held by "affiliates" of GDG) to the stockholders of MGI are freely
transferable under the Securities Act 1933 (the "Securities Act"), there is no
public market for the LLC Units and it is not expected that there will be a
public market for the LLC Units in the foreseeable future.
In order to effect the CERA Acquisition, on February 12, 1998, the CERA
Stockholders exchanged each outstanding share of Common Stock, par value $.01
per share, and Non-Voting Common Stock, par value $.01 per share, of CERA
(collectively, the "CERA Common Stock") owned by them for 5.17956 LLC Units, the
right to receive from 0.49875 to 2.94851 additional LLC Units upon the
attainment of certain revenue growth rates by CERA (the "CERA Contingent LLC
Units") and a contingent option to purchase 0.37028 additional LLC Units, at a
per Unit exercise price equal to $34.53, upon the attainment of certain revenue
growth rates by CERA (the "Contingent Options") (all such transactions the "CERA
Exchange"). Goldman exchanged the portion of the limited partnership interest in
CERA LP owned by it after the CERA Cash Distribution for 150,000 LLC Units, the
right to receive from 14,444 to 85,389 additional LLC Units upon the attainment
of certain revenue growth rates by CERA (the "Goldman Contingent Options") and a
contingent option to purchase 9,874 additional LLC Units, at a per Unit exercise
price equal to $34.53, upon the attainment of certain revenue growth rates by
CERA (the "Goldman Contingent Options" and together with the CERA Contingent
Options the "Contingent Options") (the "Goldman Exchange"). The CERA Exchange
and the Goldman Exchange are referred to collectively as the "Exchange."
The LLC Units issued to the CERA Stockholders and Goldman in the Exchange, the
Goldman Contingent LLC Units, the Contingent Options and the LLC Units issuable
upon exercise of Contingent Options or upon exercise of the options granted to
Brera (the "Brera Options") and to Edward Jordan (the "Jordan Options") were not
registered under the Securities Act, or under any state securities or "blue-sky"
laws or foreign securities laws. As a result, such LLC Units and Contingent
Options are "restricted securities" for purposes of the federal securities laws
and may be resold only in compliance with the federal and state securities laws
governing "restricted securities."
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<PAGE> 20
In addition, transfer of LLC Units issued in connection with the Merger and the
Exchange and the other transactions contemplated by the Merger Agreement,
including the CERA Contingent LLC Units, the Goldman Contingent LLC Units, the
LLC Units issuable upon exercise of Contingent Options, the Brera Options and
the Jordan Options, are substantially restricted under the Amended and Restated
Limited Liability Company Agreement of GDG, dated February 12, 1998, (the "LLC
Agreement"), and other agreements pursuant to which shares of MGI common stock
or MGI employee options were issued or granted to certain employees of MGI or
pursuant to which LLC Units or options to purchase LLC Units will be or may be
issued or granted to certain employees of or consultants to CERA or MGI and
other persons. The LLC Units are also subject to a holdback provision, the right
of first offer and "take-along" rights and participation rights set forth in the
LLC Agreement. The restrictions on transfer could limit the price that certain
investors might be willing to pay in the future for LLC Units, and could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of GDG.
Dividend Policy; Inability to Declare Dividends
GDG does not expect to declare or pay any dividends or distributions in the
foreseeable future, other than distributions to holders of LLC Units to pay
their taxes, as required by the LLC Agreement. GDG's ability to declare and pay
dividends or distributions is limited by the ability of GDG's subsidiaries to
transfer funds to GDG in the form of cash, loans or advances. An inability of
MGI and CERA to transfer funds to GDG in the form of cash, loans or advances
could prevent GDG from making the distributions required by the LLC Agreement
for the foreseeable future.
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<PAGE> 21
Item 6. SELECTED FINANCIAL DATA
The following tables set forth selected historical financial data of MGI for the
five years ended December 31, 1997 and for the six month periods ended June 30,
1998 and 1997. At a Board of Directors meeting on April 21, 1998, the Boards of
GDG and MGI approved the change of year end for the predecessor company to
GDG:MGI, from December 31 to June 30. The selected historical financial data of
MGI for the five years ended December 31, 1997 were derived from the audited
Consolidated Financial Statements of MGI. The selected historical financial
data of MGI for the six month periods ended June 30, 1998 and 1997 were derived
from the audited Consolidated Financial Statements of MGI and include, in the
opinion of the management of MGI, all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the data for such periods.
The following tables should also be read in conjunction with "Item 7 --
Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the Consolidated Financial Statements of GDG and accompanying
notes thereto included elsewhere in this Form 10K.
<TABLE>
<CAPTION>
MCM GROUP, INC.
Years ended December 31,
---------------------------------------------------------------- Six Months Ended
June 30,
------------------
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ---- ----
January 1 to (unaudited)
February 16 February 17 to
(Predecessor) December 31
(a) (a)
Dollars in Thousands (except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenues $ 2,555 $18,488 $26,596 $31,625 $36,119 $40,227 $19,834 $36,426
Income before
income tax provision 554 2,734 1,420 2,536 5,738 7,467 4,113 2,330
Income tax provision 195 1,354 692 977 2,776 3,544 1,972 1,251
Net income $ 359 $ 1,380 $ 728 $ 1,559 $ 2,962 $ 3,923 $ 2,141 $ 1,079
Income from
continuing operations
per common share $ 0.44 $ 0.23 $ 0.49 $ 0.92 $ 1.18 $ 0.65 $ 0.24
BALANCE SHEET
DATA:
Total assets $25,038 $26,558 $28,432 $34,151 $40,557 $37,542 $96,158
Total liabilities -- -- 4,773 6,555 8,958 7,040 46,446
Redeemable
common stock (b) -- -- -- 800 880 800 1,929
Common stockholders'
equity $22,007 $22,100 $23,659 $26,796 $30,719 $29,702 $47,783
</TABLE>
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GLOBAL DECISIONS GROUP LLC
General
The following is a discussion and analysis of the historical consolidated
results of operations and financial condition of GDG and its subsidiaries and
factors affecting their financial resources for the six months ended June 30,
1998 and the years ended December 31, 1997 and 1996.
The information below should be read in conjunction with the financial
statements and the related notes to the financial statements included in this
Annual Report on Form 10-K. The results for the six-month periods for each year
are not comparable due to the CERA Acquisition on February 12, 1998. CERA's
results are included in the 1998 financial statements from that date to June 30,
1998, but its results are not included in the GDG's results for the
corresponding period in 1997.
MGI and CERA are each wholly owned subsidiaries of GDG (see "--Merger and
Exchange History" below) and are operated as separate though affiliated
businesses.
Merger and Exchange History
GDG was formed in connection with the Merger Agreement. On February 11, 1998, in
accordance with the Merger Agreement, MCM, Inc., the principal direct subsidiary
of MGI, entered into a five year revolving credit agreement with the Credit
Agreement (see "--Liquidity and Capital Resources" below), and on the same date
loaned the CERA Loan, which used the funds to pay cash distributions of
$21,510,000 to the founding CERA stockholders, and to purchase a portion of the
limited liability partnership interests in CERA L.P. owned by the Goldman Sachs
Group, L.P. for $2,390,000. The loan to CERA was funded using available cash and
$15,000,000 in loans under the Credit Agreement. On February 12, 1998, the
Merger took place. MGI was the surviving corporation and became a wholly owned
subsidiary of GDG. As a result of the Merger, each share of MGI common stock
ceased to be outstanding and was converted into rights to receive LLC Units, as
provided in the Merger Agreement. In addition, on that date, GDG acquired all of
the outstanding shares of CERA's common stock and the remaining limited
partnership interests in CERA L.P. (which interests were immediately transferred
to CERA) in exchange for LLC Units and certain contingent options and rights in
the CERA Acquisition. As a result, CERA also became a wholly owned subsidiary of
GDG, and CERA L.P. was dissolved by operation of law, and its assets and
liabilities were transferred to CERA.
The purchase price for CERA was allocated as follows:
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<TABLE>
<CAPTION>
Identifiable intangible assets including
<S> <C> <C>
Customer list $10,673,000 20 year life
Proprietary Software $ 2,009,000 3 year life
Goodwill $32,883,000 20 year life
Transaction Costs $ 5,876,000 20 year life
Deferred Tax Liability $(5,707,000)
-----------
Total Transaction cost $45,734,000
-----------
</TABLE>
MCM GROUP, INC.
MCM provides specialized on-line financial information and analysis relating to
developments in the U.S. and international corporate securities, fixed income
and currency markets. MCM distributes its services almost exclusively through
Vendor Distribution Firms to subscribers in 57 countries. Subscribers to MCM's
electronic information services consist almost exclusively of institutional
clients (e.g., major banks, brokers, dealers, government bond and financial
futures trading operations, foreign exchange trading operations, and treasury
departments of major corporations). In addition to MCM's headquarters in New
York, MCM maintains offices in Boston, London, Paris, Tokyo, Hong Kong, and
Singapore.
At June 30, 1998 nearly half of MCM's research services revenues were
attributable to customers located in the United States. European-based customers
accounted for approximately one third of total revenue and customers based in
Asia accounted for the balance. The CorporateWatch(R) service is responsible
for a substantial portion of MCM's revenue earned in the United States, while
the CurrencyWatch(R) service is responsible for a substantial portion of the
revenue earned in the European and Asian markets.
Revenue from MCM's research services has grown substantially since 1992,
principally as a result of investments made by MCM to expand its distribution
and marketing capabilities and enhance its service offerings throughout the
global financial markets. The substantial increases in revenues have been offset
to some extent by (i) increases in vendor royalties resulting from MCM's
decision in late 1993 to distribute its services on a non-exclusive basis over
various Vendor Distribution Firms and (ii) increases in compensation and
benefits resulting from MCM's hiring of personnel to expand the services offered
by its product lines.
Vendor royalties currently represent MCM's largest expense. Vendor royalties are
commissions paid to Vendor Distribution Firms, mainly DJM. Historically, MCM
provided its services, with limited exceptions exclusively through screens
provided by DJM. In late 1993 MCM exercised its option to discontinue its
exclusive distribution agreement with DJM, and as a result DJM's royalty
increased to a level substantially greater than that in effect while
distribution of MCM's services was made exclusively through DJM. Since moving to
a multi-vendor distribution system, MCM has increased its sales volume and
believes that this strategy will continue to increase revenues to more than
offset the additional vendor royalty costs. However, there can be no assurance
that MCM's strategy will continue to be successful.
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<PAGE> 24
Compensation and benefits costs also have increased as MCM has invested in
additional professional staff to enhance certain product lines, particularly
CurrencyWatch(R), and YieldWatch(R), MCM's two fastest growing services. While
revenues for these two services have grown substantially, the corresponding
additional investment in personnel has kept profit margins on these services
relatively low. MCM believes that if CurrencyWatch(R) and YieldWatch(R) revenues
continue to grow, profit margins may significantly improve, although there can
be no assurance in this regard.
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
Since February 12, 1998 CERA has been under common ownership with MGI (see
"--Merger and Exchange History" above). CERA's core business is research,
analysis and strategic information on energy industry developments and trends,
which is sold, primarily, on a continuous, renewable retainer basis. CERA offers
a number of different retainer advisory services, which are sold, principally,
as annual, renewable contracts. These contracts can vary in price depending on
the level of service and/or the number of advisory services purchased. The
majority of CERA's retainer clients purchase more than one service. Revenue from
retainer advisory services constitutes slightly more than half of CERA's total
revenue in the fiscal year ended June 30, 1998.
The balance of CERA's revenue is derived from custom projects and several
different activities collectively called "retainer related."
Custom projects (also described as retainer applications and consulting) are,
generally, client-specific applications of research data and knowledge derived
from the retainer advisory business. Most projects are priced on a fixed-fee
basis, plus expenses, with a limited number of projects priced on a per-diem
rate basis. The majority of project clients are also (or become) retainer
advisory clients. The revenue is less predictable than retainer advisory
revenue. It also can be more affected, year-to-year, by singular, non-recurring
large projects. The revenue is recognized on a percentage-of-completion basis
over the course of the project. Project revenue constituted slightly less than
one quarter of CERA's revenue for the fiscal year ended June 30, 1998.
Retainer-related revenue encompasses several activities, including
separately-charged presentations and consulting days, individual sales of
research reports, fees for attending CERA events, and major, multi-client
sponsored research studies. These activities are generally connected to the
retainer advisory business with respect to content, staffing and clients. This
revenue represented roughly one-quarter of CERA's total revenue for the fiscal
year ended June 30, 1998.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1998 compared to Six Month's Ended June 30, 1997.
GDG's results for each year are not comparable due to the CERA Acquisition on
February 12, 1998. CERA's results from that date to June 30, 1998 are included
in the information for 1998, but its results are not included in the
corresponding 1997 figures.
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<PAGE> 25
Revenues
Revenue from research services grew from $19.8 million during the first six
months of 1997 to $36.4 million during the same period of 1998. The increase is
primarily due to the inclusion in the current year's results of CERA after the
CERA Acquisition. MCM's revenue grew by 7.1% during the six months ended June
30, 1998, to $21.2 million. CERA contributed an additional $15.2 million of
revenue from its retainer, applications and retainer-related businesses from the
CERA Acquisition date, February 12, 1998, through June 30, 1998. The growth in
MCM's revenues was due primarily to the expansion of MCM's international
marketing initiative and the delivery of research services through multiple
Vendor Distribution Firms.
Expenses
Total Expenses in the first six months of 1998 were $33.9 million, or $17.9
million more than the corresponding period in 1997, an increase of 89%. $16.3
million of this increase resulted from the inclusion of CERA's expenses for the
period from February 12, 1998 to June 30, 1998.
MCM'S costs increased by approximately 16.4%, reflecting higher compensation and
benefits costs, and the hiring of additional analysts and research assistants to
enhance MCM's product lines, as well as from increases in occupancy expense and
in expenses associated with the hiring of additional administrative personnel
and investments in computer system enhancements. MCM formerly had a services
agreement with Van Kampen American Capital, Inc., its former parent, for all
accounting and administrative support functions. MCM has been assuming those
functions internally, which has resulted in the increase in administrative
staffing costs. These increased costs at MCM were partially offset by overall
lower vendor royalties as a percentage of subscription revenues, reflecting
MCM's continuing success in increasing revenues through the distribution of its
services through multiple Vendor Distribution Firms.
CERA's operating costs from February 12, 1998 to June 30, 1998 were $14.6
million, of which $14.2 million were directly related to operations. The balance
was incurred as result of the purchase of LLC Units for distribution to CERA
employees as a part of the Merger and the CERA Acquisition and due to other
merger related costs. In addition, $0.4 million of GDG corporate expenses are
included in the total for the six months.
Interest expense for the six months ended June 30, 1998 was $0.4 million
compared to no interest expense in the corresponding period for the prior year.
This reflects the borrowings under the Credit Agreement of $15.0 million to
finance the CERA Loan.
Amortization expense of $1.4 million for the six months was $1.0 million higher
than for the corresponding period in 1997. This increase is due to the
additional amortization of goodwill and intangible assets associated with the
CERA Acquisition.
Other income decreased from $0.3 million in the 1997 period to $0.25 million in
1998, representing interest income on the cash maintained on MCM's books, after
the spin off from VKAC, until it made the loan to CERA in mid-February 1998.
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Income taxes were $1.3 million for the six months ended June 30, 1998 compared
to $2.0 million for the corresponding period in 1997, primarily as a result of
one time losses incurred by CERA relating to the CERA Acquisition. Although the
tax provision is lower due to the factors mentioned above, the effective tax
rate is higher because the amortization of the CERA Goodwill is not deductible
for tax purposes.
Net Income
GDG reported a net income of $1.1 million for the six months ended June 30,
1998, a decrease of $1.1 million from the net income of the prior year's period.
Net Income decreased as a result of a nonrecurring compensation charge related
to distributing LLC Units to CERA employees, increased interest expense relating
to the financing for the CERA Loan and additional amortization expense related
to the CERA Acquisition.
Year Ended December 31, 1997 versus 1996
Revenues
Revenue from research services grew from $35.9 million in 1996 to $40.2 million
in 1997, an increase of 11.9%. Revenues for all of MGI's major product lines
continued to grow, due primarily to the expansion of MGI's international
customer base and the delivery of research services through multiple Vendor
Distributions Firms to MGI's customers.
Expenses
Total expenses in 1997 were $33.5 million, or $3.1 million more than in 1996, an
increase of 10.2%. Sales, distribution and administrative and administrative
expenses totaled $32.7 million, an increase of 10.6% over 1996. This increase
resulted from substantially higher compensation and benefits costs, reflecting
the hiring of additional analysts and research assistants to enhance MGI's
product lines, as well as from increases in occupancy expense, and expenses
associated with the hiring of additional personnel, fees related to bringing
certain administrative functions previously performed by VKAC in house and
investments in computer system enhancements.
These increased costs were partially offset by lower vendor royalties,
reflecting the continuing success of MGI in increasing revenues through multiple
Vendor Distribution Firms.
Net Income
Net income for 1997 was $3.9 million, an increase of $1.0 million or 32.4% over
1996. Net income grew as a result of increased revenue realized on all of MGI's
major product lines, lower expenses from vendor royalties and increased interest
income earned on higher cash balances resulting from the retention of cash after
the spin-off.
Year Ended December 31, 1996 versus 1995
24
<PAGE> 27
Revenues
Revenue from research services grew from $31.1 million in 1995 to $35.8 million
in 1996, an increase of 15.1%. Revenues for all of MGI's major product lines
continued to grow, due primarily to the expansion of MGI's international
customer base and the delivery of research services through multiple Vendor
Distribution Firms to MGI's customers.
Expenses
Total expenses in 1996 were $30.4 million, or $1.3 million more than in 1995, an
increase of 4.5%. Sales, distribution and administrative expenses totaled $29.6
million, an increase of 4.6% over 1995. This increase resulted from
substantially higher compensation and benefits costs, reflecting the hiring of
additional analysts and research assistants to enhance MGI's product lines, as
well as from increases in occupancy expense and in expenses associated with the
hiring of additional personnel and investments in computer system enhancements.
These increased costs were partially offset by lower vendor royalties,
reflecting the continuing success of MGI in increasing revenues through multiple
Vendor Distribution Firms.
Net Income
Net income for 1996 was $3.0 million, an increase of $1.4 or 87.5% over 1995.
Net income grew as a result of increased revenue realized on all of MGI's major
product lines and lower expenses for vendor royalties.
LIQUIDITY AND CAPITAL RESOURCES
GDG generated cash flow from operations in the amounts of $2.5 million and $3.3
million for the six months ended June 30, 1998 and 1997, respectively. CERA
contributed $0.7 million in cash flow from operations from the date of the CERA
Acquisition to June 30, 1998.
Funds used in investment activities were $27.1 million for the six months ended
June 30, 1998 compared to $0.4 million in the prior year's period. The large
increase in investment was mostly attributable to the CERA Acquisition. In order
to finance the CERA Loan, MCM, Inc. received financing proceeds of $15,000,000
under the Credit Agreement. The Credit Agreement, which also provides for a
$10,000,000 facility to finance future acquisitions and a $5,000,000 working
capital revolving credit facility, expires on February 11, 2003. Repayments of
the term loan under the Credit Agreement are due in $750,000 quarterly
installments from March 31, 1999 through December 31, 1999, and then increase to
$1,000,000 quarterly installments through December 31, 2002. The
weighted-average interest rate on the term loan issued under the Credit
Agreement for the six month period ended June 30, 1998 was 7.03%. In addition to
funding the CERA Acquisition, investments at GDG increased because of the
investment in a new contribution and distribution platform at MCM, (see "Year
2000"). In the six months ended June 30, 1998, MCM had expended approximately
$1.5 million for hardware and software related to this capital project.
25
<PAGE> 28
As of June 30, 1998, MCM, Inc. had no borrowings under the acquisition facility
or the revolving credit facility. Management believes that cash from operations
and the revolving credit facility will be sufficient to meet the GDG's operating
costs, capital investment needs and increased debt service costs associated with
the term loan.
NEW ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the GDG adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income" which establishes
standards for the reporting and display of comprehensive income in
general-purpose financial statements. No presentation of comprehensive income
has been made since the differences from net income are not material.
Effective January 1, 1998, GDG adopted SFAS No. 131 "Disclosures About Segments
of an Enterprise and Related Information" which establishes standards for the
way that public business enterprises report information about operating systems
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. The adoption
did not have a material impact on GDG's disclosure.
YEAR 2000
The issues associated with the "Year 2000" computer dating changes, which are
necessary to permit correct recording of yearly dates for year 2000 and beyond,
principally apply to MCM, which creates and delivers its products to its Vendor
Distribution Firms via a system utilizing specialized software applications. MCM
is currently engaged in a capital project to upgrade the software platform and
network underlying this system. As a consequence of this technological
restructuring, MCM will not incur any Year 2000 specific costs as those issues
are being dealt with in the current implementation of the new contribution and
distribution system.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
26
<PAGE> 29
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
27
<PAGE> 30
GLOBAL DECISIONS GROUP LLC
CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997 AND 1996, AND
FOR THE SIX MONTHS ENDED JUNE 30, 1998
AND YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
28
<PAGE> 31
REPORT OF INDEPENDENT ACCOUNTANTS
September 18, 1998
To the Board of Directors of
Global Decisions Group LLC:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and members' equity and of cash flows present
fairly, in all material respects, the financial position of Global Decisions
Group LLC and Subsidiaries (the successor Company of MCM Group, Inc. see Note 1
to the consolidated financial statements) as of June 30, 1998, December 31, 1997
and 1996, and the results of their operations and their cash flows for the six
months ended June 30, 1998 and the years ended December 31, 1997 and 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
29
<PAGE> 32
REPORT OF INDEPENDENT ACCOUNTANTS
September 18, 1998
To the Board of Directors of
Global Decisions Group LLC:
Our report on the consolidated financial statements of Global Decisions Group
LLC and subsidiaries as of June 30, 1998, and for the six months then ended and
for the years ended December 31, 1997 and 1996, is included on page (open) of
this Form 10-K. In connection with our audits of such financial statements, we
have also audited the related financial statement schedule listed in the index
on page 66 of this Form 10-K for the six months ended June 30, 1998 and
years ended December 31, 1997 and 1996.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
PRICEWATERHOUSECOOPERS LLP
30
<PAGE> 33
Independent Auditors' Report on Supplementary Information
---------------------------------------------------------
The Board of Directors
MCM Group, Inc.
We have audited and reported separately herein on the consolidated statements
of income, changes in stockholder's equity and cash flows of MCM Group, Inc. and
subsidiaries for the year ended December 31, 1995.
Our audit was made for the purpose of forming an opinion on the basic financial
statements of MCM Group, Inc., and subsidiaries taken as a whole. The
supplementary information for 1995 included in Schedule II is presented for the
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic consolidated financial statements
and, in our opinion, is fairly stated in all material respects, in relation to
the basic consolidated financial statements taken as a whole.
KPMG Peat Marwick LLP
Chicago, Illinois
January 26, 1996
31
<PAGE> 34
Independent Auditors' Report
----------------------------
The Board of Directors
MCM Group, Inc.
We have audited the accompanying consolidated statements of income, changes in
stockholder's equity and cash flows of MCM Group, Inc. and subsidiaries for the
year ended December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance and whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and the cash flows
of MCM Group, Inc. and subsidiaries for the year ended December 31, 1995 in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 26, 1996
32
<PAGE> 35
GLOBAL DECISIONS GROUP LLC
Consolidated Balance Sheets
(in 000's except for units and per unit amounts)
<TABLE>
<CAPTION>
June 30, December 31, December 31,
ASSETS: 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 6,723 $ 15,979 $ 9,877
Accounts receivable, net of allowance for doubtful accounts
of $579 in 1998, $307 in 1997, and $200 in 1996 17,203 4,387 4,651
Prepaid expenses and other assets 1,453 397 680
-------- -------- --------
Total current assets 25,379 20,763 15,208
Furniture, equipment and leasehold improvements, net 4,780 1,842 2,046
Intangible assets, net 65,201 15,688 16,467
Other assets 798 2,264 430
-------- -------- --------
Total assets $ 96,158 $ 40,557 $ 34,151
======== ======== ========
LIABILITIES and MEMBERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses $ 5,980 $ 687 $ 643
Accrued vendor commissions 1,568 1,683 1,517
Income taxes payable 941 2,012 314
Interest payable 122 - -
Deferred revenue 11,394 70 55
Bank loans payable 1,124 577 657
Payroll and benefit-related liabilities 4,173 2,405 1,578
-------- -------- --------
Total current liabilities 25,302 7,434 4,764
Long term debt 15,000 - -
Deferred income taxes payable 5,087 456 841
Other liabilities, including minority interest 1,057 1,068 950
-------- -------- --------
Total liabilities 46,446 8,958 6,555
Commitments and contingencies
Redeemable voting LLC units: Voting LLC units 275,530 units
issued and 264,280 outstanding in 1998, and 168,655 and
149,544 units issued and outstanding in
1997 and 1996, respectively, less notes receivable from
members of $885, $885 and $765 in 1998, 1997, and 1996,
respectively (redemption value of redeemable units and
vested options of $5,506, $1,940, and $1,740 in 1998,
1997, and 1996, respectively) 1,929 880 800
Members' equity:
Voting LLC units, 4,563,179, 3,170,054 and 3,170,054, issued
and outstanding in 1998, 1997, and 1996, respectively 38,176 22,182 22,182
Foreign currency translation (9) - -
Undistributed earnings 9,616 8,537 4,614
-------- -------- --------
Total members' equity 47,783 30,719 26,796
-------- -------- --------
Total liabilities and members' equity $ 96,158 $ 40,557 $ 34,151
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
33
<PAGE> 36
GLOBAL DECISIONS GROUP LLC
Consolidated Statements of Income
(in 000's except for units and per unit amounts)
<TABLE>
<CAPTION>
Six Months
Ended Years Ended December 31,
June 30, ------------------------
1998 1997 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 36,426 $ 40,227 $ 35,947 $ 31,110
Expenses:
Vendor commissions 6,423 11,714 11,433 12,643
Compensation and benefits 14,769 12,114 10,340 8,641
Sales, distribution and administrative 11,368 8,895 7,829 7,028
Amortization of intangible assets 1,369 779 779 777
----------- ----------- ----------- -----------
Total expenses 33,929 33,502 30,381 29,089
----------- ----------- ----------- -----------
Operating income 2,497 6,725 5,566 2,021
Interest income 261 696 111 -
Interest expense (415) (9) (13) -
Other income (expense), n et (13) 55 74 515
----------- ----------- ----------- -----------
Income before income taxes 2,330 7,467 5,738 2,536
Income taxes 1,251 3,544 2,776 977
----------- ----------- ----------- -----------
Net income $ 1,079 $ 3,923 $ 2,962 $ 1,559
=========== =========== =========== ===========
Per LLC Unit:
Net income per LLC unit:
Basic $ 0.24 $ 1.18 $ 0.89 $ 0.49
Diluted 0.23 1.18 0.89 0.49
Weighted-average units outstanding:
Basic 4,482,179 3,327,818 3,319,598 3,170,054
Diluted 4,691,505 3,327,818 3,319,598 3,170,054
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
34
<PAGE> 37
GLOBAL DECISIONS GROUP LLC
Consolidated Statements of Members' Equity
(in 000's)
<TABLE>
<CAPTION>
Foreign
Voting Undistributed Currency
LLC Units Earnings Translation Total
--------- -------- ----------- -----
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $ 22,007 $ 93 $ - $ 22,100
Net income - 1,559 - 1,559
-------------- ----------- ------------- -------------
Balance at December 31, 1995 22,007 1,652 - 23,659
Issuance of units for stock of MCM Inc.
and Subsidiaries 175 - - 175
Net income - 2,962 - 2,962
-------------- ----------- ------------- -------------
Balance at December 31, 1996 22,182 4,614 - 26,796
Net income - 3,923 - 3,923
-------------- ----------- ------------- -------------
Balance at December 31, 1997 22,182 8,537 - 30,719
Issuance of units and options
to acquire CERA, Inc. 15,994 - - 15,994
Net income - 1,079 - 1,079
Foreign currency translation - - (9) (9)
-------------- ----------- ------------- -------------
Balance at June 30, 1998 $ 38,176 $ 9,616 $ (9) $ 47,783
============== =========== ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
35
<PAGE> 38
GLOBAL DECISIONS GROUP LLC
Consolidated Statements of Cash Flows
(in 000's)
<TABLE>
<CAPTION>
Six Months
Ended Years Ended December 31,
------------------------
June 30, 1998 1997 1996 1995
------------- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,079 $ 3,923 $ 2,962 $ 1,559
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,795 1,154 1,102 1,078
Grant of LLC units 1,181
Changes in assets and liabilities net of business acquired:
(Increase) decrease in receivables, net (3,843) 264 (1,854) (254)
Decrease (increase) in receivable from affiliates -- -- 4,411 (1,857)
Increase in accounts payable and accrued
expenses 700 59 93 (26)
(Decrease) increase in accrued vendor commissions (115) 166 (149) (153)
(Decrease) increase in income taxes payable (1,071) 1,698 314 --
Increase in payroll and benefit-related liabilities 372 827 1,113 66
(Decrease) increase in deferred income taxes -- (385) 364 93
Decrease in deferred revenue 3,187 -- -- --
(Decrease) increase in other, net (780) (1,433) 14 172
-------- -------- -------- --------
Total adjustments 1,426 2,350 5,408 (881)
Net cash provided by operating activities 2,505 6,273 8,370 678
-------- -------- -------- --------
Cash flows used by investing activities:
Acquisition of CERA Inc., net of cash acquired (25,379) -- -- --
Capital expenditures (1,797) (171) (19) (337)
-------- -------- -------- --------
Net cash used by investing activities (27,176) (171) (19) (337)
Cash flows from financing activities:
Net bank loan issuances (repayments) 547 (80) (72) 86
(Repurchase) issuance of redeemable LLC units, less notes receivable (132) 80 975 --
Issuance of long term debt 15,000 -- -- --
-------- -------- -------- --------
Net cash provided by financing activities 15,415 -- 903 86
Net increase in cash (9,256) 6,102 9,254 427
Cash and cash equivalents at beginning of year 15,979 9,877 623 196
-------- -------- -------- --------
Cash and cash equivalents at end of period $ 6,723 $ 15,979 $ 9,877 $ 623
======== ======== ======== ========
Supplemental information on business acquired:
Fair value of assets acquired $ 57,523
Less: Liabilities assumed (14,175)
LLC units issued (15,394)
Options issued (600)
--------
Cash paid 27,354
Less: Cash acquired (1,975)
--------
Net cash paid $ 25,379
========
Supplementary disclosure of cash flow information:
Cash paid for:
Income taxes $ 1,635 $ 2,231 $ 1,977 $ 528
Interest 293 9 13 22
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
36
<PAGE> 39
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
Global Decisions Group LLC ("GDG"), a Delaware limited liability
company, was formed by MCM Group, Inc., ("MGI" or the "Predecessor
Company") and McCarthy, Crisanti & Maffei, Inc. ("MCM") on June 30,
1997, for the purpose of effecting the Merger, as discussed in Note 2,
whereby a wholly owned subsidiary of GDG was merged into MGI on
February 12, 1998, with MGI as the surviving corporation. Pursuant to
this Merger each outstanding share of MGI common stock was converted
into the right to receive limited liability company units of GDG.
Therefore, the Merger has been accounted for in a manner similar to the
pooling-of-interest method due to the common ownership of MGI and GDG.
MGI, a Delaware corporation, was incorporated on August 21, 1996 as a
wholly owned subsidiary of VK/AC Holding, Inc. ("Holding"). On that
date, Holding was a majority owned subsidiary of The Clayton & Dubilier
Private Equity Fund IV Limited Partnership ("C&D Fund IV"), which is
managed by Clayton Dubilier & Rice, Inc. Prior to August 31, 1996, MCM
was a wholly owned subsidiary of Holding. On August 31, 1996, Holding's
ownership interest in MCM was transferred to MGI. On August 31, 1996,
100% of the outstanding Class A common stock of MGI was distributed to
the stockholders of record of Holding as a dividend on their shares of
Holding's common stock. Upon the distribution, MGI became a majority
owned subsidiary of C&D Fund IV. The transfer of 100% of the MCM common
stock to MGI has been accounted for in a manner similar to the
pooling-of-interests method due to the common ownership of MGI and
Holding by C&D Fund IV following the distribution.
The consolidated financial statements presented herein for the years
ended December 31, 1997, 1996 and 1995, represent the Predecessor
Company's financial position, results of operations, and cash flows
prior to the Merger, and reflect the adjustments which were made to
record the Merger. On February 12, 1998, GDG acquired all of the
outstanding common stock of Cambridge Energy Research Associates, Inc.
("CERA"), as discussed in Note 2. Accordingly, the financial statements
of the Predecessor Company for the years ended December 31, 1997, 1996
and 1995, are not comparable in all material respects with the
financial statements subsequent to the date of the Merger.
The financial statements include the accounts of GDG, MGI, CERA and MCM
and its subsidiaries (collectively, "the Company") and reflect the
exchange of MGI common stock for GDG units in the Merger. All material
intercompany accounts and transactions have been eliminated in
consolidation.
37
<PAGE> 40
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. MERGER AND EXCHANGE TRANSACTION:
On August 1, 1997, MGI entered into the Plan of Merger and Exchange
Agreement (the "Merger Agreement") by and among MGI, GDG, the
stockholders of CERA and The Goldman Sachs Group, L.P. ("Goldman"). On
February 12, 1998, in accordance with the Merger Agreement, GDG Merger
Corporation, a wholly owned subsidiary of GDG, which was formed
specifically for the purpose of the Merger, was merged into MGI (the
"Merger"). MGI was the surviving corporation and became a wholly owned
subsidiary of GDG. Each share of MGI Class A and Class C common stock
(redeemable - see Note 8 - and non-redeemable) ceased to be outstanding
and was converted into the right to receive 9.55555 limited liability
company units of GDG ("Units"), as provided in the Merger Agreement.
The CERA stockholders exchanged each outstanding share of Common Stock
and Non-Voting Common Stock of CERA for 5.17956 Units, 1,243,125 Units
in total, the contingent right to receive from 0.49875 to 2.94851
additional Units, and a contingent option to purchase 0.37028
additional Units. Goldman exchanged a portion of its limited
partnership interest in Cambridge Energy Research Associates Limited
Partnership ("CERA LP"), which was immediately transferred to CERA, for
150,000 Units, the contingent right to receive from 14,444 to 85,389
additional Units, and a contingent option to purchase 9,874 additional
Units. The contingent rights and the contingent options are subject to
the attainment of certain revenue growth rates by CERA. Any additional
Units or options granted, when the contingencies are resolved, will be
accounted for as additional cost of the acquired assets and amortized
over the remaining life of the assets.
On February 11, 1998, MCM entered into a five year revolving credit
agreement with Chase Manhattan Bank and Bank of America National Trust
and Savings Association which provides for a $30,000,000 facility. In
accordance with the Merger Agreement, on February 12, 1998, MCM loaned
$25,000,000 to CERA. CERA used these funds to distribute $21,510,000 to
its stockholders and to purchase a portion of the limited partnership
interest in CERA LP from Goldman for $2,390,000.
As a result of these transactions, CERA became a wholly owned
subsidiary of GDG, and CERA LP was dissolved and its assets and
liabilities transferred to CERA.
The acquisition of CERA on February 12, 1998, for approximately
$46,000,000 ($16,000,000 in Units and $30,000,000 in cash) has been
accounted for as a purchase in accordance with Accounting Principles
Board Opinion No. 16. Intangibles (principally goodwill) of
approximately $45,700,000 (including the effect of deferred tax
liabilities of $5,700,000 arising from the purchase of identifiable
intangible assets) arising on the acquisition are to be amortized over
their estimated useful lives of five to twenty-five years. The Company
capitalized approximately $6,000,000 of acquisition costs as an
addition to intangible assets. Upon the closing of the transaction,
amortization of such costs commenced.
38
<PAGE> 41
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under the terms of the merger Agreement, on February 23, 1998, CERA
employees were granted an aggregate of 106,875 redeemable Units in
accordance with the CERA LLC Unit Grant Plan. As a result, the Company
recorded a one-time charge of $1,716,000 against earnings, including
employees' related income tax benefits of $535,000. The Company also
granted the employees contingent rights to receive 10,291 to 60,840
Units, and options to purchase 231,500 Units (see Note 8). The
contingent rights are subject to the attainment of certain revenue
growth rates by CERA.
The following unaudited pro forma information presents a summary of
consolidated results of operations of the Company as if the acquisition
of CERA occurred on January 1, 1997.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 1997
<S> <C> <C>
Revenues $40,293,000 $74,147,000
Net income 1,120,000 780,000
Net income per LLC unit - basic $ 0.25 $ 0.23
</TABLE>
The pro forma results are based on various assumptions and are not
necessarily indicative of what would have occurred had the transaction
been consummated on January 1, 1997.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CHANGE OF FISCAL YEAR
On April 21, 1998, the Board of Directors of the Predecessor Company
voted to change MGI's fiscal accounting year to begin July 1 and end
June 30. MGI had been operating under a fiscal year that began January
1 and ended December 31.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
REVENUE RECOGNITION
MCM's research services revenue results from MCM producing and
distributing electronic information services worldwide and is
recognized when the services are provided. The life of the customers'
contract period is generally one year. CERA's retainer-services are
generally billed at the inception of the contract, and revenue is
recognized ratably over the contract term. Revenues from consulting
services are recognized on the percentage-of-completion method. Losses
are recognized when they are known. Amounts billed or collected
relating to future periods are classified as deferred revenue and
recognized as the services are provided.
39
<PAGE> 42
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
VENDOR COMMISSIONS
Vendor commissions are royalties paid to distributors of MCM's on-line
services.
DEPRECIATION
The Company provides for depreciation of equipment using the straight
line method over three years. Leasehold improvements and furniture are
amortized over the lesser of the remaining lives of the leases or their
estimated useful lives using the straight-line method. All fixed assets
are stated at cost and related repair and maintenance charges are
expensed as incurred. When assets are sold, retired or otherwise
disposed of, the applicable costs and accumulated depreciation are
removed from the accounts and the resulting gain or loss is included in
the consolidated statement of income. Accumulated depreciation at June
30, 1998 and December 31, 1997 and 1996, was $3,788,000, $1,434,000 and
$1,027,000, respectively.
AMORTIZATION
Intangible assets, which primarily represent the excess of cost over
fair value of the net assets acquired, are being amortized over five to
twenty-five years on a straight line basis. The Company assesses
impairment of this asset based on several factors, including probable
fair market value, cash flows, and the aggregate value of the business
as a whole. Accumulated amortization at June 30, 1998 and December 31,
1997 and 1996, was $5,163,000, $3,796,000 and $3,015,000, respectively.
TRANSLATION OF FOREIGN CURRENCIES
The monetary assets and liabilities of foreign operations that are
denominated in foreign currencies are converted into U.S. dollars at
year end or historical exchange rates. Income and expense items are
converted into U.S. dollars at average rates of exchange prevailing
during the year. Translation adjustments are reported as a separate
component of members' equity.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the
1998 presentation.
COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," which establishes standards for the reporting and display of
comprehensive income in general-purpose financial
40
<PAGE> 43
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
statements. No presentation of comprehensive income has been made since
the differences from net income are not material.
4. INCOME TAXES:
The Company accounts for income taxes in accordance with the provisions
of SFAS No. 109, "Accounting for Income Taxes." Under this standard,
deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax basis. Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.
Income tax expense (in 000's):
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1998 1997 1996 1995
Current:
<S> <C> <C> <C> <C>
U.S. Federal $ 680 $1,957 $1,521 $ 634
State, local, and foreign 481 1,499 699 250
------ ------ ------ ------
1,161 3,456 2,220 884
------ ------ ------ ------
Deferred:
U.S. Federal 55 75 389 78
State and local 35 13 167 15
------ ------ ------ ------
90 88 556 93
------ ------ ------ ------
Total $1,251 $3,544 $2,776 $ 977
====== ====== ====== ======
</TABLE>
The deferred income tax liabilities shown on the consolidated balance
sheets at June 30, 1998 and December 31, 1997 and 1996, are due
primarily to temporary differences between tax and book amortization of
the excess of cost over fair value of net assets acquired.
The provision for income taxes is different from that which would be
computed by applying the statutory federal income tax rate to income
before taxes. The principal reasons for the differences for the six
months ended June 30, 1998 and years ended December 31, 1997, 1996 and
1995, are set forth in the table below.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, 1998 ------------------------
1997 1996 1995
------------- ---- ---- ----
<S> <C> <C> <C> <C>
Federal statutory rate 34.0% 34.0% 34.0% 35.0%
State taxes, net of federal income
tax benefit 9.1 10.0 12.0 7.4
Nondeductible goodwill 10.3 -- -- --
Foreign and other, net 0.3 3.4 2.4 (3.9)
---- ---- ---- ----
Effective rate 53.7% 47.4% 48.4% 38.5%
==== ==== ==== ====
</TABLE>
41
<PAGE> 44
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. PROFIT SHARING:
MCM administers a profit sharing plan qualified under the Internal
Revenue Code for all employees, as well as a non-qualified plan for
highly compensated employees who wish to defer additional income. MCM's
contribution expense for these plans was $201,000, $350,000, $273,000
and $196,000 for the six months ended June 30, 1998 and years ended
December 31, 1997, 1996 and 1995, respectively.
CERA also maintains a profit sharing plan for all employees. During the
period from February 12, 1998 (date of acquisition) through June 30,
1998 CERA's contribution expense for this plan was $190,000.
6. COMMITMENTS AND CONTINGENCIES:
Rent expense for operating leases was $1,089,000, $1,420,000,
$1,387,000, and $1,290,000, net of sublease income of approximately
$108,000, $216,000, $216,000 and $227,000 from an affiliate of Holding,
for the six months ended June 30, 1998 and the years ended December 31,
1997, 1996 and 1995, respectively. Future minimum lease commitments
under non-cancelable long-term leases are:
<TABLE>
<CAPTION>
YEAR (000'S)
<S> <C>
1999 $ 3,029
2000 2,838
2001 2,727
2002 2,664
2003 1,934
2004 through 2018 9,557
-------
$22,749
=======
</TABLE>
In the ordinary course of business, certain claims arise against the
Company. Management believes such claims are without merit and will
vigorously defend its position. In the opinion of management, based on
the information currently available, the ultimate resolution of these
claims will not have a material adverse affect on the Company's
financial position or the results of its operations.
7. REDEEMABLE UNITS:
The Company issued 106,875, 19,111 and 166,267 Units in 1998, 1997 and
1996, respectively, to members of management, other key employees and
directors of the Company (the "Management Investors"). The Company
agreed to repurchase these Units outstanding and the exercisable
portion of any options for these Units held (see Note 8) at fair market
value under certain defined conditions, such as death, disability,
retirement at normal retirement age, or termination of employment
without cause. This repurchase right
42
<PAGE> 45
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
terminates upon the consummation of an initial equity public offering.
Fair market value is periodically estimated by the Company's board of
directors considering, among other factors, the value as determined by
an independent appraisal. In connection with the aforementioned
redemption features, the Company has classified, outside of members'
equity, an amount representing the initial fair value of the redeemable
Units, less notes receivable of $885,000 from the Management Investors.
These Units and exercisable options have not been marked to market
because the events of redemption are considered remote.
During 1998, the Company repurchased 11,250 redeemable Units from a
former employee. The Company has recorded the cost of those Units as a
reduction of the redeemable Unit amount presented on the balance sheet.
There were no redemptions prior to 1998.
8. UNIT OPTION PLANS:
OPTIONS ISSUED UNDER THE STOCK OPTION PLAN
Options to purchase 385,070 Units have been granted to the Management
Investors pursuant to the MCM Group, Inc. Stock Option Plan (the "Stock
Option Plan"). Under the terms of the Merger Agreement, the options
outstanding under the Stock Option Plan for the Predecessor Company's
Class C Common Stock were automatically converted into options to
receive Units at the closing date. One half of the options issued under
the Stock Option Plan were Service Options which will vest over a
period of time up to five years, 20% on each anniversary of the option
grant date subject to continued employment with the Company or a
subsidiary and accelerated vesting in the event of death or a change in
control of the Company. The other options issued under the Stock Option
Plan were Performance Options which will vest three years from the date
of grant subject to continued employment with the Company and the
achievement of certain financial performance objectives by MCM and
vesting in the event of death or change in control of the Company. All
of the Performance Options become exercisable nine years from the grant
date regardless of the achievement of the financial performance
objectives. The Service Options and the Performance Options expire on
the tenth anniversary of the grant date.
43
<PAGE> 46
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following summarizes activity in the Stock Option Plan for the six
months ended June 30, 1998, and years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
UNITS EXERCISE PRICE
<S> <C> <C>
Balance, January 1, 1996 -- --
Service Options Granted 180,973 $ 12.75
Performance Options Granted 180,973 12.75
-------- ---------
Balance, December 31, 1996 361,946 $ 12.75
======== =========
Service Options Granted 23,124 12.75
Performance Options Granted 23,124 12.75
-------- ---------
Balance, December 31, 1997 408,194 $ 12.75
======== =========
Service Options Forfeited (11,562) $ 12.75
Performance Options Forfeited (11,562) 12.75
-------- ---------
Balance, June 30, 1998 385,070 $ 12.75
======== =========
</TABLE>
The range of exercise prices was from $10.47 to $15.03 per Unit.
As of June 30, 1998, 33,803 options were exercisable, 83,185 Units were
available for future grants, and the average contractual life remaining
was 8.38 years.
OPTIONS ISSUED UNDER THE SPECIAL STOCK OPTION PLAN
The Company's Special Stock Option Plan (the "Plan") provided for the
grant of stock options for the Predecessor Company's Class A Common
Stock on August 31, 1996, to certain current and former employees of
Holding. The options were awarded in connection with the transfer of
the ownership of MCM from Holding to MGI. Under the terms of the Merger
Agreement, the options outstanding under the Plan at the closing date
were automatically converted into options to receive Units.
As of June 30, 1998, options to purchase 459,717 Units at a weighted
average exercise price of $10.47 were outstanding, and were fully
vested and exercisable upon issuance.
As of June 30, 1998, no Units were available for future grants and the
average contractual life remaining was 3.17 years.
OPTIONS ISSUED UNDER THE CERA, INC. LLC UNIT OPTION PLAN
Options to purchase 231,500 Units were granted to employees and
directors of CERA pursuant to the CERA, Inc. LLC Unit Option Plan (the
"CERA Option Plan"). The options issued under the CERA Option Plan were
Service Options which will vest over a period of time up to five years,
20% on each anniversary of the option grant date subject to continued
employment with CERA and accelerated vesting in the event of death or a
change in control of the Company. The Service Options expire on the
tenth anniversary of the grant date.
44
<PAGE> 47
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following summarizes activity in the CERA Option Plan for the six
months ended June 30, 1998:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
UNITS EXERCISE PRICE
<S> <C> <C>
Balance, January 1, 1998 -- --
Service Options Granted 231,500 $ 18.31
Service Options Forfeited (17,000) 18.31
-------- ---------
Balance, June 30, 1998 214,500 $ 18.31
======== =========
</TABLE>
At June 30, 1998, no options were exercisable and 248,199 Units were
available for future grants, and the average contractual life remaining
was 9.67 years.
Pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company has opted to apply Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" and related
interpretations in accounting for its unit option plans. No
compensation cost has been recognized for the Company's unit option
plans. If compensation cost for the Company's stock option plans had
been determined based on the fair value method as defined by SFAS No.
123, the Company's pro forma net income for 1997 and 1996 would have
approximated $3,763,000 and $2,084,000 respectively, and the basic
earnings per Unit would have approximated $1.13 and $.63, respectively.
The weighted average fair value of options granted in 1998, 1997 and
1996 was $0, $2.05 and $2.62, respectively, per Unit. The fair value is
based on the minimum value method with the following assumptions for
1998, 1997 and 1996: risk-free interest rates of 5.51%, 6.26% and
6.24%, respectively, no dividend yield, and a weighted average expected
life of the options of 3 years for all years.
9. DEBT:
As discussed in Note 2, MCM entered into a five year revolving credit
agreement with Chase Manhattan Bank and Bank of America National Trust
and Savings Association (the "Agreement") which provides a $30,000,000
facility comprising $25,000,000 of term loans and a $5,000,000 working
capital revolving credit facility expiring on February 11, 2003. As of
June 30, 1998, $15,000,000 of the credit facility was utilized as a
term loan. Repayments of the term loan are to be made as follows,
$3,000,000 in 1999 and $4,000,000 in each of the three years ended
December 31, 2002.
45
<PAGE> 48
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The credit agreement requires that GDG comply with certain covenants
including the maintenance of certain ratios, and levels of EBITDA and
net worth. In addition, GDG is subject to certain limitations on
indebtedness, sales of assets, capital expenditures and restricted
payments such as dividend payments and capital stock repurchases.
Loans under this Agreement are collateralized by the assets of MCM, a
pledge of all the capital stock of MCM's domestic subsidiaries, a
pledge of 65% of the capital stock of MCM's foreign subsidiaries, and
unconditional guarantees of GDG, MGI and its subsidiaries.
The weighted-average interest rate for the period ended June 30, 1998
was 7.03%.
Based on the borrowing rates currently available to the Company for a
credit facility with similar terms and maturities, the fair value of
the debt at June 30, 1998, is approximately $15,000,000.
A subsidiary maintains credit facilities in Japanese yen, which provide
financing availability approximating $1,000,000, with variable interest
rates. The average interest rate during the six months ended June 30,
1998 and the years ended December 31, 1997 and 1996 was 1.31%,
1.80% and 1.875% respectively. The Company is not required to pay any
commitment fees.
10. PER UNIT AMOUNTS:
In December 1997, the Company adopted SFAS No. 128, "Earnings Per
Share," which modifies the standards for computing and presenting
earnings per share (EPS) and requires the dual presentation of a basic
EPS and a diluted EPS on the face of the income statement. All prior
years presented have been restated to reflect this adoption.
<TABLE>
<CAPTION>
1998
----
<S> <C>
Net income $1,079,000
Weighted-average units outstanding - basic 4,482,179
Stock options 209,326
----------
Weighted-average units outstanding - diluted 4,691,505
Diluted earnings per unit $ 0.23
</TABLE>
Options outstanding at December 31, 1997 and 1996, as shown in Note 8,
were excluded from the diluted earnings per Unit calculation because
the options' exercise prices were greater than the average fair value
during 1997 and 1996.
46
<PAGE> 49
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. DISCLOSURE OF SEGMENTS:
Effective January 1, 1998, the Company adopted SFAS No. 131
"Disclosures About Segments of an Enterprise and Related Information"
which establishes standards for the way that public business
enterprises report information about operating segments in annual
financial statements and requires that those enterprises report
selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas, and
major customers. MCM and CERA provide services globally in 57 countries
and represent the Company's strategic business units.
MCM and its subsidiaries are providers of specialized on-line financial
information and analysis relating to domestic and international debt
and currency markets. MCM distributes its products primarily through
on-line telecommunications information networks to institutional
clients around the world. In addition to its headquarters in New York,
MCM has offices in Boston, London, Paris, Tokyo, Hong Kong and
Singapore.
CERA is an international advisory and consulting firm that focuses on
the energy industries, including markets geopolitics, structure and
strategy. CERA delivers services through retainer advisory services, a
series of subscription-based continuous retainer advisory services,
consulting, applications, and related services that draw upon its
industry expertise. In addition to its headquarters in Cambridge,
Massachusetts, CERA has offices in Paris, Oakland, Oslo, Moscow, and
Washington, D.C.
The accounting policies for these reportable segments are the same as
those described for the consolidated entity. The Company evaluates the
performance of its segments based on revenue and income from
operations. There are no intersegment revenues; however, the Company
charges a management fee to each of its operating segments.
The table below presents information about the reported segments for
the year ended June 30, 1998. As discussed in Note 2, the Company
acquired CERA in 1998, and, accordingly, segment data has only been
presented for 1998. Amounts in thousands:
<TABLE>
<CAPTION>
MGI CERA ADJUSTMENTS TOTAL
--- ---- ----------- -----
<S> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1998:
Revenue $ 21,195 $ 15,231 $ - $ 36,426
Depreciation and amortization 586 1,209 - 1,795
Segment operating income 2,527 (30) - 2,497
Interest income 869 41 (649)(a) 261
Interest expense 415 683 (683)(a) 415
Income (loss) before taxes 2,979 (649) - 2,330
Income taxes 1,228 23 - 1,251
Assets at June 30, 1998 57,219 69,033 (30,094)(b) 96,158
</TABLE>
(a) Primarily the elimination of interest on intercompany debt between
CERA and MGI.
(b) Primarily the elimination of the intercompany debt between MGI and
CERA.
47
<PAGE> 50
GLOBAL DECISIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company provides research and consulting services to various
customers in foreign countries. For the six months ended June 30, 1998,
and the years ended December 31, 1997, 1996 and 1995, such revenues
amounted to $17,107,000, $19,744,000, $17,388,000 and $15,612,000,
respectively. Outside the United States, no single country would be
deemed material for separate disclosure.
The Company has no single customer representing greater than 10 percent
of its revenues.
12. TRANSITION PERIOD COMPARATIVE DATA:
The following table presents certain financial information for the six
months ended June 30, 1998 and 1997, respectively. As discussed in Note
2, the Company acquired CERA in 1998, and, as a result, the financial
information of the Predecessor Company is not comparable. Amounts in
thousands, except units and per-unit amounts:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1998 1997
(UNAUDITED)
<S> <C> <C>
Revenues $ 36,426 $ 19,834
Operating income 2,497 3,800
Income before income taxes 2,330 4,115
Income taxes 1,251 1,972
Net income 1,079 2,143
Net income per LLC Unit:
Basic $ 0.24 $ 0.65
Diluted 0.23 0.65
Weighted-average units outstanding:
Basic 4,482,179 3,319,548
Diluted 4,691,505 3,319,548
</TABLE>
48
<PAGE> 51
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the names, ages and positions of the executive
officers and members of the Board of Directors of GDG, MGI and CERA as of June
30, 1998. The Boards of Directors of the three companies are comprised of the
same individuals.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Alberto Cribiore........................................ 52 Director; President, GDG
Gordon McMahon.......................................... 45 Director; Vice President and Secretary,
GDG
David D. Nixon.......................................... 51 Director; Vice President, GDG; President,
Chief Executive Officer, Treasurer and
Assistant Secretary, MGI
Richard J. Schnall...................................... 28 Treasurer, GDG
Chauncey G. Morgan...................................... 34 Chief Financial Officer, GDG; Senior Vice
President and Chief Financial Officer, MGI
Donald J. Gogel......................................... 49 Director; Vice President, GDG
J. Christopher Jackson.................................. 46 Vice President, GDG; Secretary, MGI
Daniel H. Yergin........................................ 51 Director; President, CERA
Philippe A. Michelon.................................... 60 Managing Director - Operations, CERA
James P. Rosenfield..................................... 41 Managing Director - Head of Business
Development, CERA
Joseph A. Stanislaw..................................... 48 Director; Managing Director - Head of
Global Research, CERA
</TABLE>
49
<PAGE> 52
<TABLE>
<CAPTION>
<S> <C> <C>
Daniel H. Lucking, Jr................................... 51 Senior Director and Chief Financial
Officer, CERA
Malcolm A. Cook......................................... 50 Executive Vice President, MGI
Lauretta F. Gell........................................ 35 Executive Vice President, MGI
Anthony Napolitano...................................... 45 Executive Vice President, MGI
Bruce M. Kamich......................................... 47 Senior Vice President, MGI
Max C. Chapman.......................................... 55 Director
Wallace Mathai-Davis.................................... 54 Director
Dennis J. McDonnell..................................... 55 Director
Peter Derow............................................. 58 Director
Martin D. Payson........................................ 62 Director
Edward G. Jordan........................................ 69 Director
</TABLE>
The business experience of each of the current executive officers and the
members of the Board of Directors of GDG, MGI and CERA is set forth below.
ALBERTO CRIBIORE, DIRECTOR; PRESIDENT, GDG -- Mr. Cribiore has been President
and a director of GDG since its inception in June 1997. Mr. Cribiore has been
Chairman of the Boards of Directors of MGI and MCM since August 1996.
Mr. Cribiore is also currently the Managing Principal of Brera. Mr. Cribiore was
a principal of Clayton, Dubilier & Rice, Inc. ("CD&R") from 1985 to March 1997
and was a President of CD&R from 1995 to March 1997. Mr. Cribiore was also a
general partner of Clayton & Dubilier Associates IV Limited Partnership, a
Connecticut limited partnership and the general partner of C&D Fund IV
("Associates IV"), the majority LLC Unit holder of GDG, until March 31, 1997,
and retains an equity interest in Associates IV. In December 1995 and October
1995, respectively, Mr. Cribiore became a director of Riverwood Holding, Inc.
and RIC Holding, Inc., and in March 1996 he became a director of Riverwood
International Corporation.
GORDON MCMAHON, DIRECTOR; VICE PRESIDENT AND SECRETARY, GDG -- Mr. McMahon has
been a director of CERA since the Merger in February of this year. Mr. McMahon
has been Vice President, Secretary and a director of GDG since its inception in
June 1997. Mr. McMahon has been a director of MGI and MCM since April 1997. Mr.
McMahon is a principal of Brera. Mr. McMahon was a professional employee of CD&R
from May 1996 to March 1997. Prior to joining CD&R, Mr. McMahon was a limited
partner of Goldman Sachs from 1993 to 1996 and a general partner of Goldman
Sachs from 1984 to 1993. Mr. McMahon is also a director of Automation, Inc. and
a member of the Advisory Board of Affordable Residential Communities, L.P.
50
<PAGE> 53
DAVID D. NIXON, DIRECTOR; VICE PRESIDENT, GDG; PRESIDENT, CHIEF EXECUTIVE
OFFICER, TREASURER AND ASSISTANT SECRETARY, MGI -- Mr. Nixon has been a director
of GDG, MGI and CERA since the Merger in February of this year. Mr. Nixon has
been Vice President of GDG since its inception in June 1997. Mr. Nixon started
at MCM in September 1985 as Senior Vice President and became President in 1991.
In 1991 he left this position to serve as Executive Vice President at Fitch
Investor Services. He returned to MCM in May 1995 to be the President, Chief
Operating Officer and Director, and was appointed President and Chief Executive
Officer, Treasurer and Assistant Secretary of MGI and MCM in August 1996.
RICHARD J. SCHNALL, TREASURER, GDG -- Mr. Schnall has served as Treasurer of GDG
since its inception in June 1997. Since June 1996, Mr. Schnall has been a
professional employee of CD&R. He was formerly with Smith Barney, Donaldson,
Lufkin & Jenrette and McKinsey & Co. Mr. Schnall is a graduate of the University
of Pennsylvania and the Harvard Business School.
CHAUNCEY G. MORGAN, CHIEF FINANCIAL OFFICER, GDG; SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER, MGI -- Mr. Morgan has been Chief Financial Officer of
GDG since the Merger in February of this year. Mr. Morgan joined MCM in 1997 as
a Senior Vice President to MCM and MGI. Mr. Morgan has worldwide responsibility
for MCM's finance, accounting, budgeting, tax and treasury functions. He
previously served as a Director of Business Development and Assistant Treasurer
in the Finance Department of News Corporation.
DONALD J. GOGEL, DIRECTOR; VICE PRESIDENT, GDG -- Mr. Gogel has been a director
of CERA since the Merger in February of this year. Mr. Gogel has been Vice
President and a director of GDG since its inception in June 1997. Mr. Gogel has
been a director of MGI and MCM since August 1996. Mr. Gogel is currently
President of CD&R and has been a principal of CD&R since he joined the firm in
1989. He is a general partner of Associates IV. Mr. Gogel is also a director of
A.P.S., Inc. and its parent APS Holding, Inc., and Alliant Foodservice, Inc. and
its parent CDRF Holding, Inc., each of which is a corporation in which C&D Fund
IV has invested. Mr. Gogel also serves as a director of TurboChef, Inc. and
Kinko's, Inc.
J. CHRISTOPHER JACKSON, VICE PRESIDENT, GDG; SECRETARY, MGI -- Mr. Jackson has
served as Vice-President of GDG since December, 1997 and as Secretary of MGI and
MCM since August 1996. Mr. Jackson serves as Senior Vice President and General
Counsel of Hansberger Global Investors, Inc. in Fort Lauderdale, Florida. He
previously worked for Van Kampen American Capital, Inc. Mr. Jackson received a
B.A. Degree in Economics from Illinois Wesleyan University, his M.A. in
Economics from Northern Illinois University and his J.D. from the University of
Tulsa.
DANIEL H. YERGIN, DIRECTOR; PRESIDENT, CERA -- Dr. Yergin has been a director of
GDG and MGI since the Merger in February of this year. Dr. Yergin, a co-founder
of CERA, has been President and a director of CERA since 1983. Dr. Yergin
received the 1992 Pulitzer Prize for General Nonfiction for his work The Prize:
The Epic Quest for Oil, Money & Power. He was formerly a professor at the
Harvard Business School and the Kennedy School of Government at Harvard
University. Dr. Yergin is a graduate of Yale University and received his Ph.D.
in international relations from The University of Cambridge in England. Dr.
Yergin was a Marshall scholar. He is the co-author, with Thane Gustafson, of
Russia 2010 and, with Dr. Stanislaw, of the forthcoming The
51
<PAGE> 54
Commanding Heights: The Battle Between Government and Markets that is Remaking
the Modern World.
PHILIPPE A. MICHELON, MANAGING DIRECTOR - OPERATIONS, CERA -- Mr. Michelon has
been a Managing Director of CERA since 1993. Mr. Michelon was formerly Corporate
Vice President of SRI International (previously Stanford Research Institute) and
Executive Director of its Process Industries Division. Mr. Michelon received a
B.S., summa cum laude, in chemical engineering from INSA, Lyons, holds an M.S.
in chemical engineering from ENSPM, Paris, and holds an M.B.A. from the
University of Pittsburgh.
JAMES P. ROSENFIELD, MANAGING DIRECTOR - HEAD OF BUSINESS DEVELOPMENT, CERA --
Mr. Rosenfield, a co-founder of CERA, has been a Managing Director and a
director of CERA since 1983. Mr. Rosenfield is responsible for CERA's worldwide
business development, new products and services and commercial operations. Mr.
Rosenfield attended Harvard College and holds an M.B.A. from Boston University.
JOSEPH A. STANISLAW, DIRECTOR; MANAGING DIRECTOR AND HEAD OF GLOBAL RESEARCH -
CERA -- Dr. Stanislaw has been a director of GDG and MGI since the Merger in
February of this year. Dr. Stanislaw, a co-founder of CERA, has been a Managing
Director and a director of CERA since 1983. Dr. Stanislaw was formerly Senior
Oil Economist at the International Energy Agency. He was also a professor at
Cambridge University. Dr. Stanislaw is a graduate of Harvard College and
received a Ph.D. in economics from Edinburgh University. He is the co-author,
with Dr. Yergin, of the forthcoming The Commanding Heights: The Battle Between
Government and Markets that is Remaking the Modern World.
DANIEL H. LUCKING, JR., SENIOR DIRECTOR AND CHIEF FINANCIAL OFFICER, CERA -- Mr.
Lucking has been Senior Director and Chief Financial Officer of CERA since 1992.
He previously was Vice President, Corporate Controller of the Forum Corporation
and prior to that, a Manager with Arthur Andersen & Co. Mr. Lucking is a
graduate of the College of the Holy Cross.
MALCOLM A. COOK, EXECUTIVE VICE PRESIDENT, MGI -- Mr. Cook started with MCM in
February 1986 as Vice President and was elected Senior Vice President of MGI in
August 1996. Mr. Cook is also the Managing Director of MCM Europe and President,
Director General of MCM S.A., with overall responsibility for European
operations.
LAURETTA F. GELL, EXECUTIVE VICE PRESIDENT, MGI -- Ms. Gell joined MCM in 1987
and was elected Senior Vice President of MGI in August 1996. Ms. Gell has
primary responsibility for CurrencyWatch,(R) YieldWatch(R) and OptionWatch(R).
ANTHONY NAPOLITANO, EXECUTIVE VICE PRESIDENT, MGI -- Mr. Napolitano joined MCM
as a market analyst in 1985 and was elected Senior Vice President of MGI in
August 1996. Mr. Napolitano has primary responsibility for CorporateWatch(R).
52
<PAGE> 55
BRUCE M. KAMICH, SENIOR VICE PRESIDENT, MGI -- Mr. Kamich joined MCM as a
technical analyst in 1985. He was elected Senior Vice President of MGI in August
1996. Mr. Kamich oversees TradeWatch(R) and co-manages MoneyWatch(R).
MAX C. CHAPMAN, DIRECTOR -- Mr. Chapman has been a director of GDG and CERA
since the Merger in February of this year and a director of MGI since August
1996. He has been Co-Chairman of Nomura Securities International, Inc. and
Nomura Holding America Inc. since 1989, Chief Executive Officer since 1992, and
director of The Nomura Securities Co., Ltd. since 1990. Mr. Chapman is also a
member of the Board of Directors of the American Stock Exchange; a Trustee of
the Endowment Fund and Investment Fund of the University of North Carolina at
Chapel Hill; a member of the Bond Club; a Director of the Futures Industry
Association; and in May 1989, was elected to the Board of Directors of
O'Sullivan Corporation, an American Stock Exchange Company, and has served as a
director of the Chicago Mercantile Exchange. Mr. Chapman received his B.A. from
the University of North Carolina and an M.B.A. from Columbia University.
WALLACE MATHAI-DAVIS, DIRECTOR -- Mr. Mathai-Davis has been a director of GDG
and CERA since the Merger in February of this year and a director of MGI since
December 1996. Mr. Mathai-Davis is the Corporate Secretary and Chief Financial
Officer, a Managing Director, shareholder and a member of the Management
Committee of OFFITBANK. He joined OFFITBANK in 1986. Mr. Mathai-Davis graduated
with a B.A. maxima cum laude from the University of Notre Dame in 1966. He holds
both an M.A. (1972) and a Ph.D. (1974) from Princeton University. He is a member
of the New York Academy of Sciences. Currently he is the Treasurer of the Board
of Trustees of The Cathedral of St. John the Divine and a Director of the Public
Education Association.
DENNIS J. MCDONNELL, DIRECTOR -- Mr. McDonnell has been a director of GDG and
CERA since the Merger in February of this year and a director of MGI since
August 1996. Mr. McDonnell has been a director of VK/AC and VKAC, Inc. since
February 1993 and has been an Executive Vice President of VK/AC and VKAC, Inc.
since December 1993. Mr. McDonnell has been with VK/AC since 1983 and, from the
acquisition of MCM in 1985 until August 1996, served as Chairman of the Board of
MCM. Mr. McDonnell received his M.A. degree in Economic Theory for UCLA and his
B.S. degree in Economics from Loyola University of Chicago. Mr. McDonnell serves
on the Investment Advisers Committee of the Investment Company Institute.
PETER A. DEROW, DIRECTOR -- Mr. Derow has been a director of GDG, MGI and CERA
since April 1998. He also serves as a director and advisor to a number of
private corporations and non-profit organizations. From 1988 to 1997, he served
as President and Chief Executive of Institutional Investor, Inc., prior to which
he was President and Chief Executive of the CBS, Inc. Publishing Group and
Newsweek, Inc. Mr. Derow served as a director of both CBS, Inc. and the
Washington Post Company. Mr. Derow received both his AB and MBA degrees from
Harvard University.
MARTIN D. PAYSON, DIRECTOR -- Mr. Payson has been a director of GDG and CERA
since the Merger in February of this year and continues to serve as a director
of MGI and MCM. Mr. Payson has had a distinguished business career, most
recently serving as Vice President of Time Warner Inc. He serves on the board
of directors of several corporations and non-profit organizations and brings
53
<PAGE> 56
significant expertise to MGI. Mr. Payson received his AB degree from Cornell and
his LL.B. degree Cum Laude from New York University School of Law.
EDWARD G. JORDAN, DIRECTOR -- Mr. Jordan has been a director of GDG, MGI and
CERA since the Merger in February of this year. Mr. Jordan had previously served
as a director of and consultant to CERA until June 1997. From 1975 to 1980, he
was Chairman and Chief Executive Officer of Consolidated Rail Corporation
("Conrail"). After leaving Conrail, Mr. Jordan was Dean of the Graduate School
of Business Administration at Cornell University and President of the American
College. Mr. Jordan presently serves as a director of ARA Services, the Budd
Company, Pittston Company, ACME Steel, and Mission Research Corp. and as a
member of the U.S. National Planning Association. Mr. Jordan received his B.A.
from the University of California at Berkeley and his M.B.A. from Stanford
University's Graduate School of Business.
Each officer of GDG, MGI and CERA serves at the discretion of the Board of
Directors of GDG, MGI and CERA, respectively. There are no family relationships
among any of the directors and executive officers of GDG, MGI or CERA.
BOARD COMPENSATION
The current directors of GDG do not receive any direct compensation from GDG.
MGI and CERA pay or cause to be paid to their non-employee directors who are not
C&D Fund IV Nominees $15,000 per annum and $1,000 per meeting of the Board
attended and will reimburse such directors (or cause them to be reimbursed) for
their out-of-pocket expenses incurred in attending meetings. In addition, the
non-employee directors may participate in either the CERA Option Plan or the MGI
Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of GDG does not have, and it is not currently expected
that it will have, a compensation committee. The Board of Directors of each of
MGI and CERA has a Compensation Committee, which will make recommendations
concerning salaries and incentive compensation for employees of and consultants
to MGI and CERA, respectively, and will administer and grant Units, options for
Units and awards pursuant to MGI's and CERA's, respectively, equity incentive
plans.
Compliance with Section 16(a) of the Exchange Act. Not applicable.
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<PAGE> 57
Item 11. EXECUTIVE COMPENSATION
As discussed in the Business, GDG has no operations which are separate from
those of its subsidiaries, MGI and CERA. Therefore, the following table sets
forth the compensation for the fiscal year ended June 30, 1998 of MGI's
President and Chief Executive Officer, CERA's President and the four other most
highly compensated executive officers of GDG and its subsidiaries whose annual
cash compensation for such fiscal year exceeded $100,000 (collectively, the
"Named Executives"):
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
All Other
Name and Principal Position Year Salary(1) Bonus Compensation
- --------------------------- ---- --------- ----- ------------
<S> <C> <C> <C> <C>
David D. Nixon ................ 1998 $262,500 $375,000 $ 74,823(2)
President and CEO, MGI
Daniel H. Yergin .............. 1998 $336,191 -- $ 35,286(3)
President, CERA
Malcolm A. Cook ............... 1998 $199,579(4) $195,503 $ 19,958(5)
Executive Vice President, MGI
Philippe A. Michelon .......... 1998 $300,000 $ 50,000 $376,448(3)
Managing Director - Operations,
CERA
Anthony Napolitano ............ 1998 $134,000 $206,614 $ 39,950(2)
Executive Vice President, MGI
Joseph A Stanislaw ............ 1998 $320,000 -- $ 85,038(3)
Managing Director and Head of
Global Research, CERA
James P. Rosenfield ........... 1998 $320,000 -- $ 28,549(3)
Managing Director - Head of
Business Development, CERA
</TABLE>
(1) Amounts include salary deferral contributions by Messrs. Nixon, Cook and
Napolitano to MGI's qualified and nonqualified profit sharing plans.
(2) Amounts shown are for profit sharing contributions and book entry credits
to MGI's nonqualified profit sharing plans for 1998.
(3) Amounts include the dollar value of insurance premiums paid by CERA and
401(k) matching contributions. Such amounts also include, in the case of
Mr. Stanislaw, a cost of living adjustment and
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<PAGE> 58
governmental fees due to his overseas assignment and, in the case of Mr.
Michelon, a grant of LLC Units and additional cash compensation at the
time of the Merger.
(4) Amounts shown have been converted from British pounds into U.S. dollars
based on an exchange ratio of 1.65 U.S. dollars for each British pound.
(5) Amounts include book entries for certain U.K. retirement obligations.
56
<PAGE> 59
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding option grants by
GDG to each of the Named Executives during the fiscal year ended June 30, 1998:
<TABLE>
<CAPTION>
Potential Realizable
Value of Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
--------------------------------------------------------- ------------------------------
Number of % of Total
Securities Options
Underlying Granted Exercise
Options to Employees in or Base Expiration
Name Granted Fiscal Year Price Date 5% 10%
---- ------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
David D. Nixon........ -- -- N/A N/A -- --
Daniel H. Yergin ..... -- -- N/A N/A -- --
Malcolm A. Cook ...... -- -- N/A N/A -- --
Philippe A. Michelon.. 17,000 6.5 $18.31 2/12/08 $195,756 $496,084
Anthony Napolitano.... -- -- N/A N/A -- --
Joseph A Stanislaw.... -- -- N/A N/A -- --
James P. Rosenfield... -- -- N/A N/A -- --
</TABLE>
57
<PAGE> 60
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of June 30, 1998, the beneficial owners of
more than 5% of GDG's LLC Units.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- -----
<S> <C> <C>
Daniel H. Yergin 497,238 LLC Units 9.2%
Joseph A. Stanislaw 362,181 LLC Units 6.7%
James P. Rosenfield 362,181 LLC Units 6.7%
The Clayton and Dubilier Private Equity 2,742,806(1) LLC Units 51.0%
Fund IV Limited Partnership
</TABLE>
Security Ownership of Management
The following table sets forth, as of June 30, 1998, the number of LLC Units
beneficially owned by all directors of GDG, the named executive officers of GDG
and the directors and executive officers as a group:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- -----
<S> <C> <C>
Alberto Cribiore (1)(2) ------------------- ----
Max C. Chapman 1,300 LLC Units *
Peter Derow ------------------- ----
Wallace Mathai-Davis 7,167 LLC Units *
Donald G. Gogel(1) ------------------- ----
Edward Jordan 14,132(3) LLC Units *
Dennis J. McDonnell 19,732 LLC Units *
Gordon McMahon 1,300 LLC Units *
David D. Nixon 34,604(3) LLC Units *
</TABLE>
58
<PAGE> 61
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- -----
<S> <C> <C>
Martin D. Payson 9,556 LLC Units *
Joseph Stanislaw 362,181 LLC Units 6.7%
Daniel H. Yergin 497,238 LLC Units 9.2%
Anthony Napolitano 20,770(3) LLC Units *
Malcolm A. Cook 20,770(3) LLC Units *
Philippe A. Michelon 11,250 LLC Units *
James P. Rosenfield 362,181 LLC Units 6.7%
Directors and Executive Officers 1,362,181 LLC Units 25.3%
as a group
</TABLE>
(1) B. Charles Ames, William A. Barbe, Donald J. Gogel, Leon J.
Hendrix, Jr., Hubbard C. Howe, Andrall E. Pearson and Joseph L.
Rice, III may be deemed to share beneficial ownership of the LLC
Units owned of record by C&D Fund IV by virtue of their status as
general partners of Associates IV, but each expressly disclaims
such beneficial ownership of the LLC Units owned by C&D Fund IV.
Messrs. Ames, Barbe, Gogel, Hendrix, Howe, Pearson and Rice share
investment and voting power with respect to securities owned by C&D
Fund IV. Mr. Cribiore has withdrawn as a general partner of
Associates IV, effective as of March 31, 1997, but retains his
economic interest in Associates IV with respect to investments by
C&D Fund IV while Mr. Cribiore was a partner of Associates IV,
including his indirect interest in the LLC Units owned of record by
C&D Fund IV.
(2) Mr. Cribiore may be deemed to share beneficial ownership of the LLC
Units which Brera will have the right to acquire upon exercise of
the Brera Options by virtue of his status as a principal of Brera,
but he expressly disclaims such beneficial ownership of the
securities owned by Brera. For purposes of this table, the LLC
Units have been allocated to Mr. Cribiore. Mr. Cribiore has
investment and voting power with respect to securities owned by
Brera.
(3) Includes LLC Units that the individuals have a right to acquire
upon exercise of currently exercisable LLC Unit Options.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Edward Jordan 11,132 Anthony Napolitano 4,048
David Nixon 6,937 Malcolm Cook 4,048
</TABLE>
* Indicates less than 1%.
59
<PAGE> 62
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
C&D Fund IV, GDG's largest LLC Unit holder, is a private investment fund managed
by CD&R. Amounts contributed to C&D Fund IV by its limited partners are invested
at the discretion of Associates IV, in equity or equity-related securities of
entities formed to effect leveraged buy-out transactions and in the equity of
corporations and other entities where the infusion of capital coupled with the
provision of managerial assistance by CD&R can be expected to generate returns
on the investments comparable to returns historically achieved in leveraged
buy-out transactions. Associates IV is the general partner of C&D Fund IV.
Donald J. Gogel, President and a shareholder of CD&R and a general partner of
Associates IV, serves as a director of MGI, MCM, Inc., CERA and GDG.
CD&R provides managerial and financial advisory services to MGI and to CERA,
pursuant to a Consulting Agreement, dated as of August 31, 1996 (as amended, the
"Consulting Agreement"), among CD&R, MGI, MCM, Inc. and CERA. Under the
Consulting Agreement, CD&R is entitled to receive an annual fee of $150,000,
together with reimbursement of out-of-pocket expenses.
Pursuant to the Cribiore Services Agreement, in exchange for a fee equal to the
sum of the amount of any management fee paid to CD&R under the Consulting
Agreement (for so long as Mr. Cribiore serves as the Chairman of the Board of
each of MGI and MCM, Inc.) and certain other amounts, Brera has been providing
the services of Mr. Cribiore to assist CD&R in providing managerial and
financial consulting services under the Consulting Agreement, among other
matters. Brera has made and may continue to make other Brera employees,
including Mr. McMahon, available to assist Mr. Cribiore in providing such
services. In addition to the assistance provided pursuant to the Cribiore
Services Agreement, Brera provided financial advisory services to MCM with
respect to the structuring and negotiation of the Merger and related
transactions, including the financing thereof and certain executive compensation
arrangements. The Brera Options were granted to Brera in return for such
financial advisory services. Mr. Cribiore is managing principal of Brera and Mr.
McMahon is principal of Brera.
CD&R, C&D Fund IV, MGI and CERA are parties to an indemnification agreement,
pursuant to which MGI and CERA have agreed to indemnify CD&R, C&D Fund IV,
Associates IV and their respective directors, officers, partners, employees,
agents and controlling persons against certain liabilities arising under the
federal securities laws, other laws regulating the business of MGI and CERA and
certain other claims and liabilities.
Messrs. Yergin, Rosenfield, Stanislaw and I. C. Bupp and Mr. Raymond Vernon, a
director of CERA until June 1997, entered into an indemnification agreement,
pursuant to which Messrs. Yergin, Rosenfield, Stanislaw and Bupp agreed to
indemnify Mr. Vernon against all expenses, judgments, fines and penalties
incurred by Mr. Vernon in the event that he was or is a party, or is threatened
to be made a party, to certain actions by reason of the fact that he is or was a
director or officer of CERA or any its affiliates. The agreement also contains
certain provisions which set forth the procedures for obtaining indemnification.
The term of the agreement shall terminate no earlier than three years after the
date on which Mr. Vernon ceased to be a director or officer of CERA and any of
its affiliates.
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<PAGE> 63
Messrs. Yergin, Rosenfield, Stanislaw and Bupp and Mr. Edward G. Jordan, a
director of CERA until June 1997, entered into an indemnification agreement,
pursuant to which Messrs. Yergin, Rosenfield, Stanislaw and Bupp agreed to
indemnify Mr. Jordan against all expenses, judgments, fines and penalties
incurred by Mr. Jordan in the event that he was or is a party, or is threatened
to be made a party, to certain actions by reason of the fact that he is or was a
director or officer of CERA or any its affiliates. The agreement also contains
certain provisions which set forth the procedures for obtaining indemnification.
The term of the agreement shall terminate no earlier than three years after the
date on which Mr. Jordan ceased to be a director or officer of CERA and any of
its affiliates.
CERA made loans to certain of its executive officers in amounts in excess of
$60,000 since the beginning of CERA's last fiscal year. In December 1997, CERA
made loans to Messrs. Yergin, Rosenfield and Stanislaw in the amount of
$150,000, $50,000 and $150,000, respectively. In January 1998, CERA made loans
to Messrs. Yergin, Rosenfield and Stanislaw in the amount of $375,000, $250,000
and $292,000, respectively. Each of Messrs. Yergin, Rosenfield and Stanislaw is
an executive officer of CERA. The largest aggregate amount of indebtedness to
CERA outstanding at any time since the beginning of CERA's last fiscal year was
$525,000, $300,000 and $442,000 for Messrs. Yergin, Rosenfield and Stanislaw,
respectively. These loans were made by CERA to these executive officers in order
to provide such individuals with the funds necessary to satisfy their income tax
liabilities. Each of the loans was evidenced by a short-term demand note and
bore interest at the rate of the lowest short-term applicable federal rate as
determined under Section 1274 of the Code. All of these loans were repaid by
Messrs. Yergin, Rosenfield and Stanislaw in February, 1998.
GDG conducts its business through office space located at 590 Madison
Avenue, New York, which MCM, Inc. permits it to use. MCM, Inc. licenses this
office space from Brera pursuant to a license agreement dated August 10, 1998.
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<PAGE> 64
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
2.1*** Plan of Merger and Exchange Agreement dated as of August 1, 1997,
among MCM Group, Inc., Global Decisions Group LLC, GDG Merger
Corporation, certain stockholders of Cambridge Energy Research
Associates, Inc., and The Goldman Sachs Group, L.P.
3.1*** Certificate of Formation of Global Decisions Group LLC.
3.2*** Limited Liability Company Agreement of Global Decisions Group
LLC, dated June 13, 1997.
3.3*** Form of Amended and Restated Limited Liability Company Agreement
of Global Decisions Group LLC.
4.1*** Form of Bailment Agreement between Global Decisions Group LLC, as
bailee thereunder, and each of the holders of Units.
10.1*** Secured Grid Note between Cambridge Trust Company and Cambridge
Energy Research Associates Limited Partnership, dated March 25,
1997.
10.2*** Inventory and Accounts Receivable Security Agreement between
Cambridge Trust Company and Cambridge Energy Research Associates
Limited Partnership, dated December 11, 1995.
10.3*** Lease agreement between the Trustees of KSA Realty Trust and
Cambridge Energy Research Associates Limited Partnership, dated
July 27, 1995 as amended by letter agreement dated September 26,
1995 and First Amendment to Lease dated September 26, 1995.
10.4*** Advisory Agreement between Cambridge Energy Research Associates
Limited Partnership and The Goldman Sachs Group, L.P., dated
November 30, 1994.
10.5*** Form of Employment Agreement to be entered into between CERA and
each of Daniel H. Yergin, James P. Rosenfield and Joseph A.
Stanislaw.
</TABLE>
62
<PAGE> 65
Exhibit No. Description
- ----------- -----------
10.6*** Letter Agreement between Philippe A. Michelon and CERA dated July 2,
1993, as amended by letter agreement dated February 24, 1995.
10.7*** Severance agreement between Daniel H. Lucking, Jr. and CERA dated
September 21, 1994, as amended.
10.8*** Registration and Participation Agreement, dated as of August 31,
1996, among MGI and each of the MGI stockholders a party thereto.
10.9*** Interim Services Agreement, dated as of August 31, 1996, among VK/AC
Holding, Inc., Van Kampen American Capital Inc., MGI and MCM.
10.10*** Tax Sharing Agreement, dated as of August 31, 1996, among VK/AC
Holding, Inc., MGI and MCM.
10.11*** Indemnification Agreement, dated as of August 31, 1996, among MGI,
MCM, CD&R, and C&D Fund IV.
10.12*** Consulting Agreement, dated as of August 31, 1996, among MGI, MCM
and CD&R.
10.13*** Indemnification Agreement, dated as of August 31, 1996, made by MCM
in favor of VK/AC and Morgan Stanley Group Inc.
10.14*** Employment Agreement, dated as of August 31, 1996, among MGI, MCM,
and David D. Nixon.
10.15*** Service Agreement between MCM Europe, MGI and Malcolm Alan Cook.
10.16*** Employment Agreement, dated as of August 31, 1996, among MGI, MCM
and Anthony Napolitano.
10.17*** Service Agreement between MCM Europe, MGI and Lauretta F. Gell.
10.18*** Optional Service Delivery Agreement, dated as of January 1, 1992,
between MCM and Telerate Systems Incorporated.
10.19*** Letter Agreement, dated November 11, 1996, between Dow Jones
Telerate and MCM.
10.20*** Optional Service Delivery Agreement, dated May 1, 1991, between
Telerate Systems Incorporated and Fintrend S.A.
10.21*** Optional Service Delivery Agreement, dated July 1, 1993, between
Reuters Limited and MCM.
10.22*** Direct Feed Delivery Agreement, dated July 1, 1993, between Reuters
Limited and MCM.
10.23*** Amendment, dated as of October 31, 1995, between Reuters Limited and
MCM.
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<PAGE> 66
Exhibit
No. Description
- -------- -----------
10.24*** Optional Service Delivery Agreement, dated July 1, 1993, between MCM
and Knight-Ridder Financial, Inc.
10.25*** Optional Service Delivery Agreement, dated August 18, 1993, between
MCM and Bloomberg L.P.
10.26*** Optional Service Delivery Agreement, dated February 28, 1995,
between MCM and MVIs Corporation, d/b/a Market Vision.
10.27*** Optional Service Delivery Agreement, dated April 1, 1996, between
ADP Financial Information Services, Inc. ("ADP") and MCM.
10.28*** Letter Agreement, dated April 10, 1997, between ADP and MCM,
amending the Optional Service Delivery Agreement, dated April 1,
1996, between ADP and MCM.
10.29*** Agreement to Supply Information, dated July 1, 1995, between MCM
Asia Pacific and Kabushiki Kaisha Quick.
10.30*** Service Agreement, dated as of June 1, 1993, by and between MCM and
KIS.
10.31*** Amendment to Services Agreement, dated as of July 1, 1995, by and
between MCM and KIS.
10.32*** Amendment to Service Agreement, dated as of August 16, 1996, by and
between MCM and KIS.
10.33*** Software License Agreement, dated as of June 1, 1993, by and between
MCM and KIS.
10.34*** Option Agreement, dated as of June 1, 1993, by and between MCM and
KIS.
10.35*** Lease, dated as of December 7, 1993, between The Chase Manhattan
Bank and MCM.
10.36.1*** Form of CERA LLC Unit Grant Plan to be adopted upon consummation of
the Merger and the Exchange.
10.36.2*** Form of CERA LLC Unit Grant Agreement entered into with each of the
participants in the CERA LLC Unit Grant Plan.
10.37*** Form of CERA LLC Unit Option Plan to be adopted upon consummation of
the Merger and the Exchange.
10.38*** Form of Contingent Option Agreement between Global Decisions Group
LLC and Stockholders.
10.39*** MGI Special Stock Option Plan.
10.40*** MGI Stock Option Plan.
10.41*** MCM Group, Inc. LLC Unit Option Plan.
10.42*** Form of Option Agreement to be entered into between Brera Capital
Partners, LLC and MGI.
10.43*** Form of Option Agreement to be entered into between Edward Jordan
and CERA.
10.44*** Consulting Agreement, dated as of October 1, 1997, among MGI, CERA
and Peter Derow.
10.45 License Agreement between Brera Capital Partners LLC and McCarthy,
Crisanti & Maffei, Inc. dated August 10, 1998.
10.46 Lease Agreement between the Trustees of KSA Realty Trust and
Cambridge Energy Research Associates, Inc. dated November 17, 1997.
10.47 Credit Agreement, dated February 12, 1998, among McCarthy, Crisanti
& Maffei, Inc., Global Decisions Group LLC and certain lenders
listed therein and the Chase Manhattan Bank.
10.48 Guarantee and Collateral Agreement, dated February 11, 1998 among
MCM, MGI, the Parent and the Chase Manhattan Bank.
10.49 Trademark Security Agreement, dated February 11, 1998, among MGI,
the Parent and the Chase Manhattan Bank.
10.50 CERA Revolving Note, dated February 11, 1998.
10.51 CERA Demand Term Note, dated February 11, 1998.
16*** Letter of KPMG Peat Marwick LLP concerning change in certifying
accountant.
21.1*** Subsidiaries of the Registrant.
64
<PAGE> 67
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
27 Financial Data Schedule.
</TABLE>
- --------------------
*** Incorporated by reference to the relevant exhibit to GDG's Registration
Statement filed with the Securities and Exchange Commission (the "SEC")
on January 29, 1998, File No. 333-34477
FINANCIAL STATEMENTS
See Item 8, beginning on page 27.
REPORTS ON FORM 8-K
No report on Form 8-K has been filed by GDG during the last quarter of the
period covered by this report.
65
<PAGE> 68
GLOBAL DECISIONS GROUP LLC
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the six months ended June 30, 1998, and the years ended December 31, 1997,
1996 and 1995 (in 000's)
<TABLE>
<CAPTION>
BALANCE ADDITIONS
BEGINNING CHARGED TO CHARGED BALANCE
OF COSTS & TO OTHER AT END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
----------- ------ -------- -------- ---------- -------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
For the six months ended June 30, 1998 $ 307 $ - $ 300* $ (28)** $ 579
For the years ended December 31, 200 300 - (193)** 307
1997 159 275 - (234)** 200
1996 70 157 - (68)** 159
1995
</TABLE>
* Amount attributable to the purchase of CERA, Inc.
** Amounts written off as uncollectable payments or recoveries.
66
<PAGE> 69
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York as of the 12th day of October, 1998.
GLOBAL DECISIONS GROUP LLC
By: /s/ Gordon McMahon
--------------------------------
Gordon McMahon
Vice President and Secretary
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Alberto Cribiore Director and President October 12, 1998
- ---------------------------- (Principal Executive Officer)
Alberto Cribiore
/s/ Chauncey Morgan Chief Financial Officer October 12, 1998
- ---------------------------- (Principal Financial Officer)
Chauncey Morgan
/s/ Richard J. Schnall Treasurer October 12, 1998
- ---------------------------- (Principal Financial Officer)
Richard J. Schnall
/s/ Gordon McMahon Director and Vice President, October 12, 1998
- ---------------------------- and Secretary
Gordon McMahon
/s/ David Nixon Director and Vice President October 12, 1998
- ----------------------------
David Nixon
</TABLE>
67
<PAGE> 70
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Donald J. Gogel Director and Vice President October 12, 1998
- ----------------------------
Donald J. Gogel
/s/ Peter Derow Director October 12, 1998
- ----------------------------
Peter Derow
/s/ Martin D. Payson Director October 12, 1998
- ----------------------------
Martin D. Payson
/s/ Wallace Mathai-Davis Director October 12, 1998
- ----------------------------
Wallace Mathai-Davis
/s/ Dennis McDonnell Director October 12, 1998
- ----------------------------
Dennis J. McDonnell
</TABLE>
68
<PAGE> 71
EXHIBIT INDEX
-------------
Exhibit
No. Description
- -------- -----------
10.45 License Agreement between Brera Capital Partners LLC and McCarthy,
Crisanti & Maffei, Inc. dated August 10, 1998.
10.46 Lease Agreement between the Trustees of KSA Realty Trust and
Cambridge Energy Research Associates, Inc. dated November 17, 1997.
10.47 Credit Agreement, dated February 12, 1998, among McCarthy, Crisanti
& Maffei, Inc., Global Decisions Group LLC and certain lenders
listed therein and the Chase Manhattan Bank.
10.48 Guarantee and Collateral Agreement, dated February 11, 1998 among
MCM, MGI, the Parent and the Chase Manhattan Bank.
10.49 Trademark Security Agreement, dated February 11, 1998, among MGI,
the Parent and the Chase Manhattan Bank.
10.50 CERA Revolving Note, dated February 11, 1998.
10.51 CERA Demand Term Note, dated February 11, 1998.
27 Financial Data Schedule.
<PAGE> 1
EXHIBIT 10.45
BRERA CAPITAL PARTNERS, LLC
590 Madison Avenue
New York, New York 10022
August 10, 1998, but
effective as of October 1, 1997
McCarthy, Crisanti & Maffei, Inc.
590 Madison Avenue
New York, New York 10022
Dear Sirs:
Reference is made to a Lease dated as of March 1, 1997, as amended by
Amendment dated July 21, 1997 (collectively, the "Prime Lease") between 590
Madison Avenue Associates, L.P. (the "Prime Landlord"), as Landlord, and Brera
Capital Partners, LLC ("Brera"), as Tenant, in respect of premises in the
building (the "Building") located at 590 Madison Avenue, New York, New York,
consisting of a portion of the 18th floor more particularly described therein
(the "Premises"). We have given you a true copy of the Prime Lease and you
acknowledge receipt thereof.
You have requested the right to share occupancy of the Premises with Brera
on a license basis and we have agreed, subject to the terms of this agreement
("Agreement"). Accordingly, it is appropriate that we each execute this
Agreement to set forth our understandings and our respective rights and
obligations with respect to the Premises and the Prime Lease, as follows:
1. Commencing and effective as of October 1, 1997 (the "Commencement
Date"), McCarthy, Crisanti & Maffei, Inc. ("MCM") is entitled to occupy that
portion of the Premises shown cross-hatched on the floor plan annexed hereto as
Exhibit A (the "Floor Plan"), and Brera will be entitled to occupy the balance
of the Premises, subject to the following sentence. The reception area and
conference rooms shall be under the direction and control of Brera, but MCM may
make reasonable use thereof in common with Brera. Subject to the consent of the
Prime Landlord, to the extent required, Brera, MCM and each Affiliate (as
hereinafter defined) of MCM occupying any portion of the Premises, may maintain
its respective firm name on the entry door to the Premises and, in addition,
Brera will request the Prime Landlord to cause the Building Directory to
reflect all such firm names, it being expressly agreed, however, that the
failure or refusal of the Prime Landlord to consent to such signage or to cause
the Building Directory to so reflect
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such names shall not be a default of Brera or provide MCM with any claim or
right of offset hereunder.
2. MCM will occupy and use its area within the Premises only for
executive and administrative offices and for no other purposes.
3. The term of this Agreement and MCM's right to share occupancy of the
Premises pursuant hereto (hereinafter, the "Term") shall commence as of the
Commencement Date (subject to the provisions of Paragraph 24 hereof) and shall
end and expire on April 30, 2000 unless sooner terminated as provided in
Paragraph 17 or Paragraph 21 below. MCM shall have no right or option to renew
or extend the Term for periods after April 30, 2000.
4. Effective from and after the Commencement Date, MCM shall make license
payments to Brera at (i) the rate of $3,133.50 per month from the Commencement
Date through January 31, 1998, and (b) at the rate of $6,267.00 per month during
the balance of the Term of this Agreement. MCM will make payments to Brera
within five (5) days after Brera has delivered to MCM the Prime Landlord's
consent referred to in Paragraph 24 hereof for the period from the Commencement
Date through the end of the then current month, and thereafter on the first day
of each and every month during the Term.
5. Monies payable under this Agreement shall be paid to Brera, without
notice or demand, in lawful money of the United States of America, at the
address of Brera set forth above or at such other address as may be designated
by Brera from time to time. Except as set forth in Section 15 below, there shall
be no abatement of, deduction from, or counterclaim or setoff against the
payments provided for herein.
6. MCM acknowledges that it has inspected the Premises and the personal
property located therein (the "Personalty"), knows the condition thereof and
agrees to accept the same "AS IS" on the Commencement Date, in the condition in
which they exist as of the Commencement Date. MCM further acknowledges that
Brera has made no representations or warranties whatsoever with respect to the
Premises or the Personalty, and agrees that Brera has no obligation to alter or
repair the Premises or the Personalty or to prepare the same in any way for
MCM's occupancy or use. MCM will purchase and install any additional furniture
and furnishings it may require for its offices (other than Peter Derow's
office), all of which furniture and furnishings will be selected by Brera to
match or be consistent with Brera's existing furniture and furnishings. Upon the
termination of this Agreement or the Term hereof, Brera shall have the right at
its election to purchase all such furniture and furnishings from MCM at the
depreciated book value thereof as reflected on MCM's books.
7. Except as otherwise provided below, MCM shall be entitled, during the
Term of this Agreement to receive all services, utilities, repairs and
facilities to be provided by the Prime Landlord under the Prime Lease, subject
to the
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provisions of the Prime Lease relating to the furnishing of such services,
utilities, repairs and facilities. However, Brera shall have no responsibility
or liability of any kind whatsoever for any default of or by the Prime Landlord
under the Prime Lease or for the furnishing to MCM of any services of any kind
whatsoever which the Prime Landlord is required to furnish to the Premises under
the Prime Lease. Brera agrees that in the event it shall receive notice from MCM
that any of the services to which MCM is entitled are not being furnished or are
improperly being furnished, Brera will use reasonable efforts (not including
litigation) to cause the Prime Landlord to cause such services to be resumed or
properly furnished. In addition to the monthly license fee set forth in Section
4 hereof, MCM hereby agrees to pay to Brera within ten (10) days after demand
therefor twenty percent (20%) of all of the costs and expenses related to the
aforementioned services payable by Brera as tenant under the Prime Lease with
respect to such utilities, repairs and facilities, together with the same
percentage of all tax and operating escalation payments and charges for
electricity payable by Brera as tenant under the Prime Lease which accrue during
the Term.
8. Each of Brera and MCM shall provide, at its own sole cost and
expense, its own personnel employed at the Premises, except that Brera shall
provide a receptionist who will act as such for both parties. MCM will, within
ten (10) days after demand therefor, pay to Brera a share of the receptionist's
salary and benefits reasonably determined by Brera, together with MCM's fair and
reasonable share of other variable office expenses (telephone, fax, copying,
postage, etc.), and, if Brera shall provide insurance coverage pursuant to
Paragraph 13 hereof, a fair and reasonable share of the premiums for such
insurance.
9. Each of Brera and MCM will utilize the Premises in such manner as
not to interfere with the other's use of the Premises. Each of Brera and MCM
shall be entitled to use its respective area at all times that it is entitled to
occupy the Premises.
10. Brera agrees that it will not amend, modify or alter the Prime
Lease in any respect which would have a materially adverse impact on MCM without
MCM's written consent, which consent MCM agrees shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, MCM understands and agrees
that Brera may at some future time enter into an agreement with the Prime
Landlord terminating the Prime Lease prior to the stated expiration date
thereof, and in such event this Agreement shall terminate simultaneously with
the termination of the Prime Lease, as provided in Paragraph 21 hereof. Brera
will use reasonable efforts to give MCM as much advance notice of such
termination as is practical under the circumstances.
11. (a) MCM agrees not to do or permit to be done any act or thing
or neglect to take any action which act or thing or neglect will constitute or
cause a breach or violation of any of the terms, covenants, conditions or
provisions of the Prime Lease or which will make Brera liable for any damages,
claims, fines, costs or penalties under the Prime Lease. MCM agrees to indemnify
and hold harmless the
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Prime Landlord and Brera from and against all loss, liability, obligation,
damage, penalty, cost, charge and expense of any kind whatsoever (including,
but not limited to, reasonable attorneys' fees and disbursements) (any or all
of which being hereinafter referred to as "Damages"), whensoever asserted or
occurring, which the Prime Landlord and/or Brera may incur or pay out, or which
may be asserted against the Prime Landlord and/or Brera (a) by reason of any
failure by MCM to perform or comply with any of the terms, covenants,
conditions and provisions of this Agreement, (b) by reason of any breach or
violation by MCM of the terms, covenants, conditions and provisions of the
Prime Lease (other than the obligation to pay rent or additional rent
thereunder), (c) by reason of any work or thing of whatsoever kind done in, on
or about the Premises by MCM's employees, contractors, agents, licensees or
invitees (including, but not limited to, construction, alterations, repairs or
similar acts of any kind whatsoever, and whether or not authorized by this
Agreement), (d) by reason of any negligence or willful act or omission by MCM
or any of MCM's employees, contractors, agents, licensees or invitees or (e) by
reason of any injuries to persons or property occurring in, on or about the
Premises to the extent such injuries are due to MCM's wrongful acts or
omissions; provided, however, that nothing herein shall obligate MCM to
indemnify the Prime Landlord or Brera for Damages caused by the wrongful acts,
omissions or negligence of the Prime Landlord or Brera or its or Brera's
employees, contractors, agents, licensees or invitees. If any action or
proceeding shall be brought against Brera or the Prime Landlord by reason of any
claim covered by the indemnification set forth above, MCM, upon notice from
Brera, agrees to resist or defend such action or proceeding and to employ
counsel therefor reasonably satisfactory to Brera. MCM shall pay to Brera within
ten (10) days after demand therefor all sums which may be owing to Brera and/or
the Prime Landlord by reason of the provisions of this Paragraph 11.
(b) Brera agrees to indemnify and hold harmless MCM and each
affiliate of MCM occupying any portion of the Premises (collectively, the "MCM
Parties") for Damages which any of the MCM Parties may incur or pay out, or
which may be asserted against any of the MCM Parties (a) by reason of any
failure of Brera to perform or comply with any of the terms of this Agreement,
(b) by reason of any breach or violation by Brera of the terms, covenants,
conditions and provisions of the Prime Lease (other than the obligation to
obtain Prime Landlord's consent to this Agreement), (c) by reason of any work
or thing of whatsoever kind done in, on or about the Premises by Brera's
employees, contractors, agents, licensees (other than the MCM Parties) or
invitees (including, but not limited to, construction, alterations, repairs or
similar acts of any kind whatsoever, and whether or not authorized by this
Agreement), (d) by reason of any negligence or willful act or omission by Brera
or any of Brera's employees, contractors, agents, licensees or invitees or (e)
by reason of any injuries to persons or property occurring in, on or about the
Premises to the extent such injuries are due to Brera's wrongful acts or
omissions; provided, however, that nothing herein shall obligate Brera to
indemnify any of the MCM Parties for Damages caused by the wrongful acts,
omissions or negligence of the Prime Landlord or any of the MCM Parties or the
Prime Landlord's or an MCM Party's employees, contractors, agents, licensees or
invitees. If any action or
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proceeding shall be brought against any of the MCM Parties by reason of any
claim covered by the indemnification set forth above, Brera, upon notice from
MCM, agrees to resist or defend such action or proceeding and to employ counsel
therefor reasonably satisfactory to MCM. Brera shall pay to MCM within ten (10)
days after demand therefor all sums which may be owing to any MCM Party by
reason of the provisions of this Paragraph 11.
(c) The obligations of MCM and Brera under this Paragraph 11 shall
survive the expiration or earlier termination of this Agreement.
12. (a) MCM shall make no alterations, decorations, installations,
additions or improvements (collectively, "Alterations") in the Premises without
the prior written consent of Brera and, if required under the Prime Lease, the
consent of the Prime Landlord, which consent Brera shall not unreasonably
withhold provided MCM complies with all applicable provisions of the Prime
Lease. MCM agrees to indemnify and hold Brera harmless from and against any and
all Damages which Brera may incur or pay out to the Prime Landlord with respect
to any Alterations performed by MCM or on MCM's behalf in the Premises. Brera
similarly agrees to indemnify and hold MCM harmless from and against any and
all Damages which MCM may incur or pay out to the Prime Landlord with respect
to Alterations performed by Brera or on Brera's behalf in the Premises.
(b) Brera has consented, subject to approval by the Prime Landlord,
to the Alterations heretofore performed by MCM in the Premises in contemplation
of its shared occupancy of the Premises. MCM shall pay the entire cost of such
Alterations, including all fees of architects and other so-called "soft costs,"
and MCM shall also pay for the removal of such Alterations and the restoration
of the Premises necessitated by such removal upon any refusal of consent
thereto by the Prime Landlord and/or upon the expiration or sooner termination
of the Prime Lease, if required under the terms of the Prime Lease. Such
obligation shall survive the expiration of the Term or other termination of
this Agreement.
13. MCM shall obtain and maintain in full force and effect during the
Term of this Agreement at its own cost and expense, to protect Brera, the Prime
Landlord, any superior lessor or superior mortgagee under the Prime Lease, and
any of Brera's or their respective agents, as insureds, a policy of
comprehensive commercial general public liability insurance with respect to the
Premises and other insurance pursuant to the Prime Lease for the Personalty
located in the Premises, in each instance in accordance with such terms and in
such amounts as reasonably required by or as specified in the Prime Lease, as
applicable. Alternatively, if available and mutually agreeable, Brera will
obtain coverage for MCM under Brera's policies.
14. Each of Brera and MCM shall look first to any insurance in its favor
prior to making any claim against the other for recovery for loss or damage
resulting from fire or other casualty. To the extent that such insurance is in
force and collectible and to the extent permitted by law, each of Brera and MCM
hereby
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releases and waives all right of recovery against the other and against the
Prime Landlord or any one claiming through or under either of Brera and MCM by
way of subrogation or otherwise. The foregoing release and waiver shall be in
force only if the respective insurance policies of Brera and MCM provide that
such release or waiver does not invalidate the insurance. Each of Brera and MCM
agrees to use its reasonable efforts to include in its applicable insurance
policy such provision.
15. Notwithstanding any contrary provisions of this Agreement or law, MCM
shall have no right to an abatement of the payment obligation provided for
herein by reason of a casualty or condemnation or failure of services affecting
the Premises unless Brera receives an abatement with respect to its rental
obligation under the Prime Lease. In furtherance of the foregoing, Brera agrees
to use commercially reasonable efforts to obtain any abatement to which it is
entitled under the Prime Lease by reason of the occurrence of any casualty or
condemnation or failure of services affecting the Premises.
16. Supplementing the provisions of Paragraph 7 above, MCM agrees to pay
to Brera, as additional payment hereunder, within ten (10) days after demand
therefor, all amounts payable by Brera to the Prime Landlord for any special
cleaning, overtime HVAC or other supplemental services ordered by MCM.
17. In the event that MCM shall default in the payment when due of any
payment provided for in this Agreement or in the event MCM shall otherwise
default in the performance of any other term of this Agreement on its part to
be performed and, in such latter event, shall fail to remedy such default by
the date which is the earlier of five (5) days prior to the time for curing
thereof pursuant to the Prime Lease, or longer period, to the extent permitted
under the Prime Lease, if MCM has commenced and is diligently pursuing cure
after notice from Brera to MCM specifying in what manner MCM has defaulted,
Brera shall have the right, without further notice, to terminate the license
hereby granted and re-enter the portion of the Premises occupied by MCM
hereunder either by force or otherwise, and dispossess MCM or any occupant
claiming from or under you, by summary proceedings or otherwise, and remove
MCM's effects and hold the Premises as if this Agreement had not been made, and
MCM hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end. Notwithstanding any such action, MCM
shall remain liable for all Damages suffered or incurred by Brera due to MCM's
default, including, without limitation, all costs of securing possession of the
Premises.
18. All notices, requests, demands, elections, consents, approvals and
other communications hereunder ("Notices") must be in writing and addressed to
a party as follows (or to any other address which such party may designate by
Notice):
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If to Brera: Brera Capital Partners, LLC
590 Madison Avenue
New York, New York 10022
Attention: Ernest Rubenstein
If to MCM: McCarthy, Crisanti & Maffei, Inc.
1 Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: David D. Nixon
Any notice required by this Agreement to be given or made within a
specified period of time, or on or before a date certain, shall be deemed duly
given or made only if sent by hand, evidenced by written receipt, by reputable
overnight courier, or by certified mail, return receipt requested, and postage
and registry fees prepaid. A Notice sent by certified mail (as above) shall be
deemed given three (3) days after the date of mailing. All other Notices shall
be deemed given when received.
19. On the expiration of the Term or any earlier termination of this
Agreement, MCM shall quit and surrender that portion of the Premises which MCM
occupies, together with all of Brera's Personalty located therein, to Brera,
broom-clean and in good order, condition and repair, except for ordinary wear
and tear, and with respect to the Prime Lease, in accordance with the
applicable provisions of the Prime Lease. If the Premises are not surrendered
upon the expiration of the Term or any earlier termination of this Agreement,
MCM agrees to indemnify and hold harmless Brera from and against all Damages
resulting from MCM's delay in so surrendering the Premises and, at Brera's
option, MCM shall be deemed to be occupying the Premises as a licensee from
month to month, at a monthly license fee equal to two (2) times the fixed
license fee and all additional charges payable hereunder on account of the
Premises during the last month of the Term of this Agreement and subject to all
of the other terms of this Agreement insofar as the same are applicable to a
month-to-month licensed occupancy. The obligations of MCM under this Paragraph
19 shall survive the expiration of the Term or other termination of this
Agreement.
20. This Agreement is subject and subordinate in all respects to the
Prime Lease, and to all terms and provisions thereof. Neither this Agreement
nor the license rights hereby granted shall be assigned, sublet, sublicensed,
mortgaged, pledged, encumbered or otherwise transferred by MCM, by operation of
law or otherwise, and neither the Premises, nor any part thereof, nor any of
MCM's personal property in the Premises shall be encumbered or sublet or used
or occupied or permitted to be used or occupied, or utilized for desk space or
for mailing privileges by anyone other than MCM and Brera, except that MCM may
permit any
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entity controlled by, controlling or under common control with it (each such
entity, an "Affiliate") to use and occupy such portions of the Premises as MCM
is permitted to use and occupy hereunder.
21. In the event of and upon the termination, cancellation or surrender of
the Prime Lease pursuant to the terms and provisions thereof or otherwise, this
Agreement shall automatically cease and terminate.
22. The parties agree that there is no broker, finder or similar person
entitled to a commission, fee or other compensation in connection with this
Agreement.
23. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York without regard to the conflict of
law provisions of such State. This Agreement contains the entire agreement and
understanding between Brera and MCM with respect to the Premises and all prior
negotiations and agreements are merged in this Agreement. This Agreement may not
be modified or amended or any term or provision hereof waived or discharged
except in a writing signed by the party against whom such amendment,
modification, waiver or discharge is sought to be enforced.
24. Notwithstanding anything to the contrary contained in Paragraph 2
above, in the event the Prime Landlord shall refuse to consent to the sharing of
occupancy contemplated by this Agreement, Brera shall have the right to declare
this Agreement null and void effective from and after such date of refusal of
consent, in which event MCM shall make payment to Brera within five (5) days
thereafter of all license payments due in respect of the period from the
Commencement Date through said date of termination, and neither party hereto
shall have any further obligation to the other hereunder or in connection with
the transaction contemplated hereby, other than with respect to obligations
which shall have theretofore accrued hereunder.
25. The terms, covenants and conditions contained in this Agreement whether
so expressed or not shall be binding upon and inure to the benefit of and be
enforceable by the parties to this Agreement and their respective successors and
assigns, except that no violation of the provisions of Paragraph 20 hereof shall
operate to vest any rights in any successor or assign of MCM.
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Please indicate your acceptance of this Agreement as of the date on the
first page hereof by signing a copy of this letter in the place indicated below
and by returning the same to the undersigned.
Very truly yours,
BRERA CAPITAL PARTNERS, LLC
By: /s/ Ernest Rubenstein
----------------------------------
Name: Ernest Rubenstein
Title: Member
Accepted and agreed to:
McCARTHY, CRISANTI & MAFFEI, INC.
By: /s/ David Nixon
--------------------------------
Name: David Nixon
Title: President and Chief
Executive Officer
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Exhibit 10.46
Execution
Cambridge, Massachusetts
DATE OF LEASE EXECUTION: NOVEMBER 17, 1997 (To be completed by Landlord)
ARTICLE I
REFERENCE DATA
1.1 SUBJECTS REFERRED TO:
Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this Section 1.1:
LANDLORD: Richard L. Friedman, John L. Hall, II, J.
William Richardson and Marvin I. Droz
TRUSTEES OF KSA REALTY TRUST, under
Declaration of Trust dated June 11, 1982 and
recorded with the Middlesex South Registry
of Deeds in Book 14635, Page 542.
MANAGING AGENT: CH & S Limited Partnership
LANDLORD'S & MANAGING c/o Carpenter & Company, Inc.
AGENT'S ADDRESS: 20 University Road
Cambridge, MA 02138
LANDLORD'S
REPRESENTATIVE: Gary J. Gianino
TENANT: Cambridge Energy Research Associates
Limited Partnership, a Delaware limited
partnership
TENANT'S ADDRESS (FOR
NOTICE AND BILLING): 20 University Road
Cambridge, Massachusetts 02138
TENANT'S REPRESENTATIVE: Alice Barsoomian
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BUILDING ADDRESS: 20 University Road
Cambridge, Massachusetts 02138
TENANT'S SPACE: Approximately 44,830 rentable square feet, of
which 21,515 rentable square feet are located on
the sixth floor, 21,515 rentable square feet are
located on the seventh floor and 1,800 rentable
square feet are located on the eighth floor, all
in the Office Component of the Charles Square
Site, all as shown on the floor plans attached
hereto as EXHIBIT A-2.
TOTAL RENTABLE FLOOR
AREA OF THE OFFICE
COMPONENT: 109,295 rentable square feet
COMMENCEMENT DATE: The earlier of (a) the date of Tenant's occupancy
of all or any portion of the Premises for the
conduct of its business or (b) the date that is
the later of (i) sixty (60) days after the
Delivery Date (as defined in Section 2.2) and (ii)
March 1, 1997. Promptly after the Commencement
Date has been determined, Landlord and Tenant
shall execute a certificate memorializing the
same.
SCHEDULED DELIVERY DATE: January 2, 1998
TERM EXPIRATION DATE: The date that is the last day of the sixtieth
(60th) full calendar month after the Commencement
Date, subject to Tenant's right to extend the Term
under Section 2.3 or terminate this Lease under
Section 2.4.
TERM: The period from the Delivery Date to the Term
Expiration Date, subject to Tenant's right to
extend the Term under Section 2.3 or terminate
this Lease under Section 2.4.
EXTENSION OPTION: One (1) option to extend the Term for a period of
five (5) years, exercisable pursuant to the
provisions of Section 2.3 of this Lease.
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ANNUAL BASE RENT: First six months
of Lease Year 1
(and any partial
calendar month after
the Commencement
Date): $873,000 per annum, $72,800
per month (i.e., $29.12 per
rentable square foot per
annum for 30,000 rentable
square feet of the Premises)
Second six months
of Lease Year 1: $1,122,450 per annum,
$93,537.50 per month (i.e.
$30.00 per rentable square
foot per annum for 37,415
rentable square feet of the
Premises)
Lease Year 2: $1,344,900 per annum,
$112,075 per month (i.e.
$30.00 per rentable square
foot per annum for the entire
Premises)
Lease Year 3: $1,389,730 per annum,
$115,810.83 per month (i.e.,
$31.00 per rentable square
foot per annum for the entire
Premises)
Lease Years 4
and 5: $1,434,560 per annum,
$119,546.67 per month (i.e.
$32.00 per rentable square
foot per annum for the
entire Premises).
Notwithstanding the fact that Annual Base Rent during Lease Year 1 is calculated
based upon a portion of the entire Premises, Tenant shall have the right during
Lease Year 1 to occupy the entire Premises.
ANNUAL OPERATING COST Actual Landlord's Operating Costs (as
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FOR 1997: defined in Section 4.2) for calendar year 1997
ANNUAL REAL ESTATE
TAXES FOR 1997: Actual real estate taxes for calendar year 1997
ANNUAL ESTIMATED COST OF $1.20 per annum per rentable square foot in
ELECTRICAL SERVICE TO Tenant's Space (i.e., $53,796 per annum, $4,483
TENANT'S SPACE FOR 1997: per month)
PERMITTED USES: General Office use consistent with the operation
of a first class office building and no other use.
PUBLIC LIABILITY BODILY INJURY: $1,000,000 per occurrence/
INSURANCE: $3,000,000 in the general aggregate
PROPERTY DAMAGE: $500,000
1.2 EXHIBITS.
The exhibits listed below in this Section 1.2 are incorporated in this
Lease by reference and are to be construed as part of this Lease:
EXHIBIT A Plan of Charles Square Site.
EXHIBIT A-1 Legal Description of Charles Square Site.
EXHIBIT A-2 Plan Showing Tenant's Space.
EXHIBIT B Landlord's Services.
EXHIBIT C Rules and Regulations.
1.3 TABLE OF CONTENTS
ARTICLE I
REFERENCE DATA ......................................................... 1
ARTICLE II
PREMISES AND TERM ...................................................... 9
2.1 PREMISES ......................................................... 9
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2.2 TERM ............................................................. 11
2.3 OPTION TO EXTEND TERM ............................................ 11
2.3.1 EXTENSION OPTION ........................................ 11
2.3.2 EXTENSION RENT .......................................... 11
2.3.3 PROCEDURE FOR ESTABLISHING EXTENSION RENT ............... 12
2.3.4 CONDITIONS PRECEDENT TO EXTENSION OPTION ................ 15
2.4 TENANT TERMINATION ............................................... 15
ARTICLE III
CONSTRUCTION ........................................................... 16
3.1 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION .................... 16
3.2 REPRESENTATIVES .................................................. 17
ARTICLE IV
RENT ................................................................... 17
4.1 RENT ............................................................. 17
4.2 OPERATING COSTS; ESCALATION ...................................... 18
4.3 REAL ESTATE TAXES; ESCALATION .................................... 21
4.4 ESTIMATED ESCALATION PAYMENTS .................................... 23
4.5 CHANGE OF FISCAL YEAR ............................................ 25
4.6 PAYMENTS ......................................................... 25
ARTICLE V
LANDLORD'S COVENANTS .................................................. 26
5.1 LANDLORD'S COVENANTS DURING THE TERM ............................. 26
5.1.1 BUILDING SERVICES ....................................... 26
5.1.2 ADDITIONAL BUILDING SERVICES ............................ 27
5.1.3 REPAIRS ................................................. 27
5.1.4 QUIET ENJOYMENT ......................................... 27
5.1.5 SIGNAGE ................................................. 28
5.1.6 HOTEL CONFERENCE ROOMS .................................. 28
5.1.7 SECURITY ................................................ 28
5.2 INTERRUPTIONS .................................................... 28
5.3 RECOVERY OF TENANT'S COSTS ....................................... 29
5.4 LANDLORD'S INSURANCE ............................................. 30
ARTICLE VI
TENANT'S COVENANTS ..................................................... 30
6.1 TENANT'S COVENANTS DURING THE TERM ............................... 30
6.1.1 TENANT'S PAYMENTS ....................................... 30
6.1.2 REPAIRS AND YIELDING UP ................................. 31
6.1.3 OCCUPANCY AND USE ....................................... 31
6.1.4 RULES AND REGULATIONS.. ................................. 32
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6.1.5 SAFETY APPLIANCES ....................................... 32
6.1.6 ASSIGNMENT AND SUBLETTING ............................... 32
6.1.7 INDEMNITY. .............................................. 33
6.1.8 TENANT'S LIABILITY INSURANCE ............................ 34
6.1.9 TENANT'S WORKER'S COMPENSATION INSURANCE ................ 34
6.1.10 LANDLORD'S RIGHT OF ENTRY ............................... 34
6.1.11 LOADING ................................................. 35
6.1.12 LANDLORD'S COSTS ........................................ 35
6.1.13 TENANT'S PROPERTY ....................................... 35
6.1.14 LABOR OR MATERIALMEN'S LIENS ............................ 36
6.1.15 CHANGES OR ADDITIONS .................................... 36
6.1.16 HOLDOVER. ............................................... 37
ARTICLE VII
CASUALTY AND TAKING .................................................... 37
7.1 CASUALTY AND TAKING .............................................. 37
7.2 RESERVATION OF AWARD ............................................. 39
ARTICLE VIII
RIGHTS OF MORTGAGEE .................................................... 40
8.1 PRIORITY OF LEASE ................................................ 40
8.2 RIGHTS OF MORTGAGE HOLDERS; LIMITATION OF MORTGAGEE'S LIABILITY .. 41
8.3 MORTGAGEE'S ELECTION ............................................. 43
8.4 NO PREPAYMENT OR MODIFICATION, ETC ............................... 43
8.5 NO RELEASE OR TERMINATION ........................................ 44
8.6 CONTINUING OFFER ................................................. 44
8.7 MORTGAGEE'S APPROVAL ............................................. 45
ARTICLE IX
DEFAULT ................................................................ 46
9.1 EVENTS OF DEFAULT ................................................ 46
9.2 TENANT'S OBLIGATIONS AFTER TERMINATION. .......................... 47
ARTICLE X
MISCELLANEOUS .......................................................... 49
10.1 NOTICE OF LEASE .................................................. 49
10.2 CONSTRUCTION ON ADJACENT PREMISES; EXPANSION ..................... 49
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10.3 NOTICES FROM ONE PARTY TO THE OTHER .............................. 50
10.4 BIND AND INURE ................................................... 50
10.5 NO SURRENDER ..................................................... 51
10.6 NO WAIVER, ETC ................................................... 51
10.7 NO ACCORD AND SATISFACTION ....................................... 52
10.8 CUMULATIVE REMEDIES .............................................. 52
10.9 LANDLORD'S RIGHT TO CURE ......................................... 53
10.10 ESTOPPEL CERTIFICATE ............................................. 53
10.11 WAIVER OF SUBROGATION ............................................ 54
10.12 ACTS OF GOD ...................................................... 55
10.13 BROKERAGE ........................................................ 55
10.14 SUBMISSION NOT AN OFFER .......................................... 56
10.15 LANDLORD REMEDIES ................................................ 56
10.16 APPLICABLE LAW AND CONSTRUCTION .................................. 57
10.17 LIMITATION OF LANDLORD'S LIABILITY ............................... 58
10.18 PARKING .......................................................... 58
ARTICLE XI
LEASEHOLD IMPROVEMENTS; TENANT ALLOWANCE ............................... 59
11.1 PLANS FOR LEASEHOLD IMPROVEMENTS ................................. 59
11.2 CONSTRUCTION BY TENANT ........................................... 61
11.3 TENANT ALLOWANCE ................................................. 62
11.4 LANDLORD'S RIGHT TO TERMINATE LEASE PRIOR TO COMMENCEMENT DATE ... 63
ARTICLE XII
RIGHT OF FIRST OFFER ................................................... 63
12.1 RIGHT OF FIRST OFFER ............................................. 63
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1.4 DEFINITIONS.
Certain terms used in this Lease are defined hereinafter in those Sections
in which the same are first mentioned. For convenience, certain other terms are
defined in this Section 1.4 as follows:
1.4.1 The term "Building" shall mean the office building comprising the
Office Component and shown on EXHIBIT A.
1.4.2 The term "Charles Square Site" shall mean the entire area shown on
EXHIBIT A (as the same may be expanded), as more particularly described on
EXHIBIT A-1, which is leased by Landlord herein pursuant to the Ground Lease.
1.4.3 The term "Ground Lease" shall mean the ground lease from EMI
Cambridge Limited Partnership as ground lessor to Landlord as ground lessee
dated as of December 16, 1985, as amended.
1.4.4 The term "Office Component" shall mean the building, consisting of
approximately 109,295 rentable square feet, located at the Building Address and
devoted to office and related uses.
1.4.5 The term "rentable area" shall mean the area within demising walls,
measured from the glass line to the center line of demising partitions, together
with a pro rata share of the floor area of common facilities, which pro rata
share shall be the ratio of the floor area of Tenant Space to the total floor
area of the Office Component.
1.4.6 The term "Lease Year" shall mean the period of twelve consecutive
calendar months beginning on the first day of the first full calendar month
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commencing on or after the Commencement Date and each successive period of
twelve consecutive calendar months thereafter.
ARTICLE II
PREMISES AND TERM
2.1 PREMISES.
Subject to and with the benefit of the provisions of this Lease and the
Ground Lease relating to the Charles Square Site, Landlord hereby leases to
Tenant, and Tenant leases from Landlord, Tenant's Space in the Building,
together with the telephone system and existing hard cable wiring presently in
Tenant's Space, excluding exterior faces of exterior walls. Tenant's Space, with
such exclusions and together with the Appurtenant Rights (as hereinafter
defined), is hereinafter referred to as the "Premises."
As of the date of this Lease, Tenant occupies space on the third and fourth
floors of the Building under a lease dated as of July 27, 1995, as amended by
First Amendment to Lease dated as of September 26, 1995 and a side letter
agreement dated as of September 26, 1995 (said lease, as so amended, to be
referred to hereinafter as the "Existing Lease"). Landlord shall use diligent
efforts to deliver the Premises to Tenant on or before the Scheduled Delivery
Date, in broom clean condition, free of tenants and occupants, but otherwise
as-is, without representation or warranty. If Landlord fails to deliver the
Premises to Tenant on or before the Scheduled Delivery Date, this Lease shall
nevertheless continue in full force and effect and Landlord shall continue to
use diligent efforts so to deliver the Premises to
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Tenant. The Existing Lease shall terminate on the Commencement Date hereunder.
Landlord represents and warrants to Tenant that the term of the lease of the
current lessee of the Premises expires on December 31, 1997.
Tenant shall have, as appurtenant to the Premises, the right (the
"Appurtenant Rights") to use in common with others entitled thereto: (a) the
driveways, service roads, ramps, sidewalks and walkways necessary for access to
the Charles Square Site and the Building, (b) the stairways, elevators, hallways
and lobbies necessary for access to Tenant's Space, (c) the restrooms located
outside of Tenant's Space on the sixth, seventh and eighth floors of the Office
Component, (d) the heating, ventilating, air-conditioning and other fixtures,
equipment and systems serving Tenant's Space in common with other portions of
the Charles Square Site, and (e) such other common areas and facilities of the
Charles Square Site as Landlord may provide or designate from time to time
(collectively, the "Common Areas").
Landlord reserves the right from time to time, with reasonable advance
notice to Tenant except in the case of an emergency in which case no notice
shall be required, without material interference with Tenant's use and enjoyment
of the Premises or access thereto, (a) to install, repair, replace, use,
maintain and relocate for service to the Premises and to other parts of the
Building or either, building service fixtures and equipment wherever located in
the Building and (b) to alter or relocate any other common facilities; provided,
however, Landlord shall not reduce the rentable area of the Premises and shall
use reasonable efforts to perform such activities at times other than during
Tenant's ordinary business hours.
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2.2 TERM.
To have and to hold for a period (the "Term") commencing on the date of
delivery of the Premises to Tenant in broom-clean condition, free of tenants and
occupants (the "Delivery Date") and continuing until the Term Expiration Date,
unless sooner terminated as provided in Section 2.4, Section 7.1 or in ARTICLE
IX, or extended as provided in Section 2.3. All of the terms and conditions of
this Lease, other than provisions relating to rent, shall apply during the
period between the Delivery Date and the Commencement Date.
2.3 OPTION TO EXTEND TERM.
2.3.1 EXTENSION OPTION. Tenant shall have one (1) right and option to
extend the Term (the "Extension Option") with respect to all (but not just a
portion of) the Premises for one period of five (5) years (such period being
herein referred to as the "Extension Period"), exercisable by notice to Landlord
given not later than six (6) months prior to the expiration of the initial Term;
provided, however, that if Tenant fails to give timely notice to Landlord of
Tenant's exercise of the Extension Option, Tenant shall be deemed to have waived
its Extension Option rights. The word "Term" as used in this Lease includes the
Term, as extended, where the context so requires.
2.3.2 EXTENSION RENT. All of the terms, provisions, covenants, and
conditions of this Lease shall continue to apply during the Extension Period,
except that the Annual Base Rent shall be the fair market rent being paid in the
vicinity of the Premises in Cambridge, Massachusetts, for leases with five-year
terms commencing
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as of the beginning of the Extension Period, for space comparable to the
Premises, used for the Permitted Uses and with rights and obligations comparable
to those of Tenant under this Lease (the "Extension Rent").
2.3.3 PROCEDURE FOR ESTABLISHING, EXTENSION RENT. At least 150 days before
the end of the initial Term (the "Rent Notice Deadline"), Landlord shall give to
Tenant written notice (an "Extension Rent Notice") of the Extension Rent, as
calculated by Landlord. If Landlord fails so to notify Tenant at least 120 days
before the expiration of the Initial Term, Tenant shall have the right to give
written notice (also an "Extension Rent Notice") to Landlord of the Extension
Rent, as calculated by Tenant. If either Tenant or Landlord wishes to dispute
the other party's calculation of the Extension Rent, either party may give
written notice (a "Dispute Notice") to the other party within 30 days after
receiving such other party's Extension Rent Notice. Any Dispute Notice shall set
forth the Extension Rent, as calculated by the disputing party. If Landlord and
Tenant are unable to resolve any such dispute within seven days after such
Dispute Notice is given, such dispute shall be resolved according to the
following procedures.
2.3.3.1 At any time after such seven-day period, Landlord and
Tenant each shall have the right, by written notice (a "Notice of Arbitration")
to the other, to demand arbitration of the calculation of the Extension Rent.
The party demanding arbitration shall appoint an arbitrator in the Notice of
Arbitration. With seven days after the Notice of Arbitration is given, the other
party shall by notice to the other party appoint a second arbitrator. If the
second arbitrator shall not have
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been appointed within such seven-day period, the position taken by the party
demanding arbitration shall be deemed to be the correct calculation of the
Extension Rent.
2.3.3.2 Within seven days after the designation of the second
arbitrator, Landlord and Tenant shall submit their respective positions with
respect to the calculation of the Extension Rent to the two arbitrators.
Thereafter, the two arbitrators shall conduct such hearings and investigations
as they deem appropriate and shall, within fourteen days after the designation
of the second arbitrator, determine the correct calculation of the Extension
Rent. The arbitrators, or either of them, shall give notice of such resolution
(or notice of their inability to reach agreement, as the case may be) to the
parties within said fourteen-day period, and the agreement, if any, of the two
arbitrators shall be binding upon the parties to this Lease.
2.3.3.3 If the two arbitrators are unable to reach an agreement
within such fourteen-day period, the two arbitrators shall, within fourteen days
after the designation of the second arbitrator, designate a third arbitrator. If
the two arbitrators shall fail to agree upon the designation of a third
arbitrator within said fourteen-day period, then they or either of them shall
give notice of such failure to agree to Landlord and Tenant within such
fourteen-day period and, if Landlord and Tenant fail to agree upon the selection
of such third arbitrator within seven days after the arbitrators give such
notice, then either party on behalf of both may apply to the president of the
Greater Boston Real Estate Board or, on his or her failure, refusal or
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inability to act, to a court of competent jurisdiction, for the designation of
such third arbitrator.
2.3.3.4 Within seven business days after the designation of the
third arbitrator, the parties shall submit their respective positions with
respect to the calculation of the Extension Rent to the third arbitrator.
Thereafter, the third arbitrator shall conduct such hearings and investigations
as he or she may deem appropriate and shall, within fourteen days after the date
of the designation of the third arbitrator, determine the correct calculation of
the Extension Rent. Within such fourteen day period, the third arbitrator shall
give notice of such resolution to Landlord and Tenant and the third arbitrator's
determination shall be binding upon Landlord and Tenant.
2.3.3.5 All arbitrators shall be qualified real estate
professionals who shall have had at least ten years of experience appraising
first-class buildings substantially similar to the Office Component in the
Greater Boston area. Landlord and Tenant shall each be entitled to present
evidence to the arbitrators in support of their respective positions. The
arbitrators shall not make any determination inconsistent with the terms of this
Lease. The arbitrators shall not have the power to add to, modify or change any
of the provisions of this Lease. The determination of the arbitrator(s), as
provided above, shall be conclusive and shall have the same force as a judgment
in a court of competent jurisdiction. Judgment on the determination made by the
arbitrator(s) under the foregoing provisions may be entered in any court of
competent jurisdiction.
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2.3.3.6 Each party shall pay the fees, costs and expenses of the
arbitrator appointed by such party and of the attorneys and expert witnesses of
such party and one-half of the other fees, costs and expenses of arbitration
properly incurred under this Lease.
2.3.3.7 None of the foregoing shall be construed so as to extend
the date by which Tenant must exercise its extension option or entitle Tenant to
revoke its exercise of such option if exercised.
2.3.4 CONDITIONS PRECEDENT TO EXTENSION OPTION. Notwithstanding any
contrary provision of this Section 2.3 or any other provision of this Lease, the
Extension Option and any exercise by Tenant of the Extension Option shall be
void and of no force or effect unless on the date Tenant notifies Landlord that
it is exercising the Extension Option and on the date of commencement of the
Extension Period (i) this Lease is in full force and effect; and (ii) Tenant is
not in default of any of its obligations under this Lease after the giving of
any required notice and the expiration of any applicable grace period.
2.4 TENANT TERMINATION OPTION.
2.4.1 Tenant shall have the right and option, exercisable by notice
delivered to Landlord at any time during the first thirty (30) full calendar
months of the Term, to terminate this Lease, such termination to be effective on
the date that is the last day of the thirty-sixth (36th) full calendar month of
the Term (the "Termination Date"), provided that (a) at the time of Tenant's
exercise there exists no default by Tenant under this Lease which continues
after the giving of any required notice and
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the expiration of any applicable grace period, and (b) Tenant delivers to
Landlord with its exercise notice a certified check payable to Landlord in an
amount equal to the sum of (i) $225,000 and (ii) six (6) months' of Annual Base
Rent and additional rent for the Premises in effect at the time of such
exercise. Said termination payment shall not relieve Tenant of its obligation to
pay rent hereunder for the remaining six months of the Term. If Tenant delivers
such notice and makes such payment to Landlord, this Lease and all of the
obligations of Landlord and Tenant shall terminate as of the Termination Date as
if such date were the date of the original expiration of the Term of this Lease.
ARTICLE III
CONSTRUCTION
3.1 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION.
All construction work required or permitted by this Lease shall be done in
a good and workmanlike manner and in compliance with all applicable laws and all
lawful ordinances, regulations and orders of governmental authority and insurers
of the Building. Landlord may inspect the work of the Tenant at reasonable times
and promptly shall give notice of observed defects. Landlord will not approve
any construction, alterations, or additions requiring unusual expense to readapt
the Premises to normal office use on lease termination or increasing the cost of
construction, insurance or taxes on the Building or of Landlord's services
called for by Section 5.1 of this Lease unless Tenant first gives assurances
acceptable to Landlord that such readaptation will be made prior to such
termination without
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expense to Landlord and makes provisions acceptable to Landlord for payment of
such increased cost. Landlord will also disapprove any alterations or additions
requested by Tenant which in Landlord's reasonable opinion would be harmful to
the Building or its tenants. All changes and additions shall be part of the
Building except Tenant's trade fixtures, equipment and personal property and
such items as by writing at the time of approval the parties agree either shall
be removed by Tenant on termination of this Lease or shall be removed or left at
Tenant's election.
3.2 REPRESENTATIVES.
Each party authorizes the other to rely in connection with their respective
rights and obligations under this ARTICLE III upon approval and other actions on
the party's behalf by Landlord's Representative in the case of Landlord or
Tenant's Representative in the case of Tenant or by any person designated in
substitution or addition by notice to the party relying.
ARTICLE IV
RENT
4.1 RENT.
Commencing on the Commencement Date, Tenant shall pay to Landlord rent at
an annual rate equal to the Annual Base Rent, without any offset or reduction,
which rent shall be paid in equal installments of 1/12th of the Annual Base
Rent, in advance on the first day of each calendar month included in the Term,
but for any portion of a calendar month at the beginning or end of the Term, the
monthly
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installment shall be prorated based on the number of days in such calendar month
falling within the Term.
4.2 OPERATING COSTS; ESCALATION.
Tenant shall pay to Landlord, as additional rent, Operating Cost Escalation
(as defined below), if any, on or before the thirtieth day following receipt by
Tenant of Landlord's Statement (as defined below). Within 120 days after the
end of Landlord's fiscal year ending during the Term and after Lease
termination, Landlord shall render a statement ("Landlord's Statement") in
reasonable detail and according to generally accepted accounting practices
certified by Landlord and showing for the preceding fiscal year or fraction
thereof, as the case may be, Landlord's Operating Costs. As used in this Lease,
"Landlord's Operating Costs" shall mean all of Landlord's costs and expenses
paid in operating, managing, repairing, replacing and maintaining the Office.
Component or the Charles Square Site generally.
EXCLUDING (notwithstanding any provision of this Lease to the contrary) the
interest and amortization of principal and other charges relating to mortgages
for the Building and the Charles Square Site or leasehold interests therein; the
cost of special services rendered to tenants (including Tenant) for which a
special charge is made; leasehold improvements which are made in connection with
the preparation of any portion of the Charles Square Site for occupancy by a new
tenant or which are not provided generally for the benefit of tenants of the
Charles Square Site; costs, expenses or charges properly chargeable to a
particular tenant; efforts to lease portions of the Charles Square Site or to
procure tenants for the Charles Square Site,
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including advertising and leasing commissions and attorneys' fees; depreciation
of any component of the Charles Square Site; repairs and replacements arising
out of a fire or other casualty occurring at the Charles Square Site; fees,
fines or penalties arising out of Landlord's breach of any obligations
(contractual or at law), including attorneys' fees; costs associated with vacant
space; wages and benefits of any employee, contractor or agent, except to the
extent included below; services which benefit only the Hotel Component or Retail
Component, as defined in the Ground Lease, of the Charles Square Site, without
any direct benefit to the Office Component; fees for licenses, permits or
inspections which are not part of routine maintenance, do not benefit Tenant or
tenants of the Office Component generally or result from the negligence of
Landlord or any other tenant; environmental compliance, testing or remediation;
compliance by Landlord with laws existing as of the date of this Lease,
including without limitation the Americans with Disabilities Act; sculpture,
paintings and other works of art; capital improvements (as defined under
generally accepted accounting principles), except to the extent included below;
and repairs necessary to cure defects in the construction of the Charles Square
Site.
BUT INCLUDING, without limitation: expenses of any proceedings for
abatement of real estate taxes and assessments with respect to any fiscal year
or fraction of a fiscal year; premiums for insurance covering the Office
Component or the Charles Square Site generally; compensation and all fringe
benefits, worker's compensation insurance premiums and payroll taxes paid by
Landlord to, for or with respect to Carpenter & Company's Vice-President for
Finance and Development and all persons
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at or below the level of building manager engaged in the operating, maintaining
or cleaning of the Building and the Charles Square Site, but in all cases
adjusted so that the percentage of such wages and benefits allocated to the
Charles Square Site equals the percentage of such person's working time for
Landlord devoted to the Charles Square Site; all utility charges not billed
directly to tenants by Landlord or the utility; payments to independent
contractors under service contracts for cleaning, operating, managing,
maintaining and repairing the Building and the Charles Square Site; management
fees (which payments may be to affiliates of Landlord) provided such fees do not
exceed market rates; rent paid by the managing agent or imputed cost equal to
the loss of rent by Landlord for making available to the managing agent space
for a Building office on the ground floor or above (provided that the rent, or
the imputed cost, is comparable to the rent charged for similar space in the
Building); costs of new capital improvements (as opposed to replacements of
existing capital items) made to (a) reduce operating expenses, (b) comply with
laws enacted after the date hereof or (c) maintaining the Office Component as a
first-class office building, provided such costs shall be amortized over the
useful life of the improvement in question utilizing a commercially reasonable
discount rate; and all other reasonable and necessary expenses paid in
connection with the cleaning, operating, managing, maintaining and repairing of
the Building and the Charles Square Site, or either. With respect to Landlord's
Operating Costs relating to the Charles Square Site (or any part thereof other
than solely to the Office Component), Landlord shall allocate to the Office
Component a portion of such costs and expenses which shall be reasonable
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and which shall take into consideration the benefits received by the Office
Component with respect to such expenses. Any operating costs which were incurred
for the sole benefit or necessity of the Office Component shall be allocated
solely to the Office Component.
"Operating Cost Escalation" for any fiscal year or fraction thereof shall
be equal to the difference, if any, between
(a) the product of Landlord's Operating Costs for such fiscal year or
fraction thereof and a fraction, the numerator of which shall be the rentable
area of Tenant's Space and the denominator of which shall be one-half of the
Total Rentable Floor Area of the Office Component plus one-half of the average
number of such square feet as are occupied during such fiscal year or fraction
thereof, and
(b) the product of the Annual Operating Costs for 1997 and a fraction, the
numerator of which shall be the rentable area of Tenant's Space and the
denominator of which shall be the Total Rentable Floor Area of the Office
Component.
4.3 REAL ESTATE TAXES; ESCALATION
The term "real estate taxes" as used above shall mean for any fiscal year
or portion thereof all taxes of every kind and nature and installments and
interest on assessments for public betterments or public improvements assessed
by any governmental authority on the Charles Square Site, the Building and
improvements, or both, which the Landlord shall become obligated to pay in such
fiscal year or portion thereof because of or in connection with the ownership,
leasing and operation of the Charles Square Site, the Building and improvements,
or both, subject to the
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following: There shall be excluded from such taxes all income taxes, personal
property taxes, excess profits taxes, excise taxes, franchise taxes and estate,
succession, inheritance and transfer taxes, provided, however, that if at any
time during the Term the present system of ad valorem taxation of real property
shall be changed so that in lieu of the whole or any part of the ad valorem tax
on real property, there shall be assessed on Landlord a capital levy or other
tax on the gross rents received with respect to the Charles Square Site, the
Building and improvements, or both, or a federal, state, county, municipal or
other local income, franchise, excise, single business or similar tax,
assessment, levy or charge (distinct from any now in effect) measured by or
based, in whole or in part, upon any such gross rents, then any and all of such
taxes, assessments, levies or charges, to the extent so measured or based, shall
be deemed to be included within the term "real estate taxes."
In the case of real estate taxes becoming due and payable in any tax year
during the Lease Term, a portion of the real estate taxes shall be allocated to
the Office Component in accordance with the allocation for the Office Component
for the real estate taxes set forth in the invoice for real estate taxes or an
advisory letter from the tax assessor for the City of Cambridge which
establishes the allocation of real estate taxes among the various components of
the Charles Square Site. In the event the invoice for the real estate taxes does
not specify the portion of the total real estate taxes attributable to the
Office Component and the Landlord, after due diligence, cannot obtain a current
advisory letter from said tax assessor, the allocation for the
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Office Component will be determined by Landlord acting in its reasonable
discretion, and, if appropriate, will be based on the then most recent advisory
letter. The amount so allocated is hereinafter "Office Component Taxes."
Tenant shall pay to Landlord, as additional rent, Real Estate Tax
Escalation (as defined below), if any, on or before the thirtieth day following
receipt by Tenant of a statement from Landlord showing the amount of Real Estate
Tax Escalation ("Landlord's Tax Statement").
"Real Estate Tax Escalation" shall be equal to the difference, if any,
between
(a) the product of Office Component Taxes and a fraction, the numerator of
which shall be the rentable area of Tenant's Space and the denominator of which
shall be one-half of the Total Rentable Floor Area of the Office Component plus
one-half of the average number of such square feet of rentable area as are
occupied in the Office Component during such fiscal year or fraction thereof and
(b) the product of the Annual Real Estate Taxes For 1997 and a fraction,
the numerator of which shall be the rentable area of Tenant's Space and the
denominator of which shall be the Total Rentable Floor Area of the Office
Component.
4.4 ESTIMATED ESCALATION PAYMENTS.
If, with respect to any fiscal year or fraction thereof during the Term,
Landlord reasonably estimates that Tenant shall be obligated to pay Operating
Cost Escalation or Real Estate Tax Escalation, then Tenant shall pay, as
additional rent, on the first day of each month of such fiscal year and each
ensuing fiscal year thereafter, "Estimated Monthly Escalation Payments" equal to
1/12th of the sum of the
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Operating Cost Escalation and Real Estate Tax Escalation for the respective
fiscal year set forth on the most recent reasonable written estimate provided by
Landlord to Tenant (the "Estimate"). In the event of an overpayment or
underpayment by Tenant on account of Operating Cost Escalation or Real Estate
Tax Escalation, an appropriate adjustment shall be made, (i) for Operating Cost
Escalation, within 30 days after Landlord's Statement is delivered to Tenant and
(ii) for Real Estate Tax Escalation, within 30 days after Landlord's Tax
Statement is delivered to Tenant. If such adjustment arises out of an
overpayment by Tenant, Tenant shall receive such adjustment as a credit against
payments of rent or additional rent due under this Lease or, upon the expiration
or termination of this Lease, by a payment from Landlord to Tenant. Landlord may
adjust such Estimated Monthly Escalation Payment from time to time and at any
time during a fiscal year by delivering an updated Estimate to Tenant, and
Tenant shall pay, as additional rent, on the first day of each month following
receipt of Landlord's notice thereof, the adjusted Estimated Monthly Escalation
Payment.
Notwithstanding any other provision of this Section 4.4, if the Term
expires or is terminated as of a date other than the last day of a fiscal year,
then for such fraction of a fiscal year at the end of the Term, Tenant's last
payment to Landlord under Sections 4.2 and 4.3 shall be made on the basis of
Landlord's best estimate of the items otherwise includable in Landlord's
Statement and Landlord's Tax Statement and shall be made on or before the later
of (a) 10 days after Landlord delivers such estimate to Tenant or (b) the last
day of the Term, with an appropriate payment or
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refund to be made upon submission of Landlord's Statement or Landlord's Tax
Statement, as applicable.
4.5 CHANGE OF FISCAL YEAR
Landlord shall have the right from time to time to change the periods of
accounting under this Lease to any annual period other than the initial fiscal
year and, upon any such change, all items referred to in this Section 4.5 shall
be appropriately apportioned. In all Landlord's Statements and Landlord's Tax
Statements rendered under, this Section 4.5, amounts for periods partially
within and partially without the accounting periods shall be appropriately
apportioned and any items which are not determinable at the time of such
Statements shall be included therein on the basis of Landlord's reasonable
estimate and, with respect thereto, Landlord shall render promptly after such
determination is possible a supplemental Landlord's Statement or Landlord's Tax
Statement, and appropriate adjustment shall be made according thereto. All
Landlord's Statements and Landlord's Tax Statements shall be prepared on an
accrual basis of accounting.
4.6 PAYMENTS.
All payments of Annual Base Rent and additional rent shall be made to
Managing Agent, or to such other person as Landlord may from time to time
designate in writing to Tenant. If any installment of Annual Base Rent or
additional rent or on account of leasehold improvements is paid more than five
days after the due date thereof, at Landlord's election, it shall bear interest
from the due date to the date paid at a rate equal to the average prime
commercial rate from time to time
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established by the three largest national banks in Boston, Massachusetts from
such due date, but in no event less than an annual rate equal to 14% percent,
which interest shall be immediately due and payable as further additional rent.
4.7 TENANT'S RIGHT TO AUDIT LANDLORD'S BOOKS.
Within 30 days after delivery of Landlord's statement of Landlord's
Operating Costs, upon the prior written request of Tenant, Tenant shall be
permitted to examine, in the office of Landlord's Managing Agent, the books and
records ("Books") relating to the calculation of Operating Cost Escalation and
Real Estate Tax Escalation, and have conducted (by an accountant of its
selection reasonably approved by Landlord) an audit of Landlord's Statement and
Landlord's Operating Costs. Landlord shall make all Books readily available for
such examination. Any such audit shall be done at Tenant's expense. To the
extent any such audit discloses a discrepancy in Landlord's Statement, after
Landlord's verification of such discrepancy, Landlord shall adjust Landlord's
Statement and the Estimated Monthly Escalation Payment accordingly.
ARTICLE V
LANDLORD'S COVENANTS
5.1 LANDLORD'S COVENANTS DURING THE TERM.
Landlord covenants during the Term:
5.1.1 BUILDING SERVICES - To furnish, through Landlord's employees or
independent contractors, the services listed in EXHIBIT B, but the use of
freight
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elevators shall be scheduled through Landlord's Representative with reasonable
advance notice;
5.1.2 ADDITIONAL BUILDING SERVICES - To furnish, through Landlord's
employees or independent contractors, reasonable additional Building operation
services upon reasonable advance request of Tenant at equitable rates from time
to time established by Landlord to be paid by Tenant, but Landlord shall not
impose an additional charge on Tenant for heat, ventilation and air conditioning
after normal business hours;
5.1.3 REPAIRS - Except as otherwise provided in ARTICLE VII of this Lease,
to perform such maintenance, to make such repairs to the Common Areas, roof,
exterior walls, floor slabs, other structural components, the heating,
ventilation, air conditioning and other mechanical systems and the other common
facilities of the Building as may be necessary to keep them in good condition
and working order; to keep all exterior driveways, service roads, ramps,
sidewalks and walkways on the Charles Square Site free of ice and snow; and to
comply with all laws, regulations and orders of governmental authorities
applicable to the Building or the Charles Square Site generally (as
distinguished from laws, regulations and orders applicable to Tenant's use of
the Premises); and
5.1.4 QUIET ENJOYMENT - That Tenant, upon paying the rent and performing
its obligations hereunder, shall peacefully and quietly have, hold and enjoy the
Premises throughout the Term, with access 24 hours per day, 7 days per week, 52
weeks per year, without any manner of hindrance or molestation (including
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transmission of noise, other than noise customarily associated with office
premises, from other parts of the Building) from Landlord or anyone claiming
under Landlord, subject however to all the terms and provisions hereof, and to
the terms of the Ground Lease.
5.1.5 SIGNAGE. Subject to Landlord's prior written approval, Tenant shall
have the right, at its sole cost and expense, to place appropriate custom
signage on the entry doors to the Premises. Landlord, at its sole cost and
expense, shall include Tenant's name on the lobby directory.
5.1.6 HOTEL CONFERENCE ROOMS. Tenant shall be entitled to contract with
the Charles Square Hotel for use of conference rooms and guest rooms at
preferred corporate rates.
5.1.7 SECURITY. Landlord shall provide security for the Building,
including without limitation monitoring by security officers at all times,
patrols by security officers after normal business hours and a card-key access
system for after-hours entry into the building which records the card number for
later review.
5.2 INTERRUPTIONS.
Landlord shall not be liable to Tenant for any compensation or reduction of
rent by reason of inconvenience or annoyance or for loss of business arising
from power losses or shortages or from the necessity of Landlord's entering the
Premises for any of the purposes in this Lease authorized or for repairing the
Premises or any portion of the Building or Lot. In case Landlord is prevented or
delayed from making any repairs, alterations or improvements, or furnishing any
service or
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performing any other covenant or duty to be performed on Landlord's part, by
reason of any cause reasonably beyond Landlord's control, Landlord shall not be
liable to Tenant therefor, nor, except as expressly otherwise provided in
ARTICLE VII, shall Tenant be entitled to any abatement or reduction of rent by
reason thereof, nor shall the same give rise to a claim in Tenant's favor that
such failure constitutes actual or constructive, total or partial, eviction from
the Premises. Landlord shall use reasonable efforts to avoid inconvenience to
Tenant arising from interruptions in services and to restore such services and
make related repairs as expeditiously as is practicable.
Landlord reserves the right to stop any service or utility system when
necessary by reason of accident or emergency or until necessary repairs have
been completed. Except in case of emergency repairs, Landlord will give Tenant
reasonable advance notice of any contemplated stoppage and will use reasonable
efforts to avoid unnecessary inconvenience to Tenant by reason thereof.
Landlord also reserves the right to institute such policies, programs and
measures as may be necessary, required or expedient for the conservation or
preservation of energy or energy services or as may be necessary or required to
comply with applicable codes, rules, regulations or standards.
5.3 RECOVERY OF TENANT'S COSTS.
In the event (i) Tenant successfully enforces against Landlord its rights
under this Lease or (ii) Tenant is sued by Landlord or joined in a suit against
Landlord and it is found that Tenant is not liable and Landlord is liable,
Landlord shall pay Tenant
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all of its reasonable costs and expenses, including without limitation
reasonable attorneys' fees, incurred by or imposed upon Tenant in connection
with such enforcement or suit.
5.4 LANDLORD'S INSURANCE.
Landlord shall maintain, with responsible companies qualified to do
business in Massachusetts, fire and other casualty insurance covering all
buildings and improvements on the Charles Square Site, in amounts not less than
100 percent of the replacement cost of such buildings and improvements, with
extended coverage endorsements.
ARTICLE VI
TENANT'S COVENANTS
6.1 TENANT'S COVENANTS DURING THE TERM.
Tenant covenants during the Term and such further time as Tenant occupies
any part of the Premises:
6.1.1 TENANT'S PAYMENTS - To pay when due (a) all Annual Base Rent and
additional rent, (b) all taxes which may be imposed on Tenant's personal
property in the Premises (including, without limitation, Tenant's fixtures and
equipment) regardless to whomever assessed, (c) the Annual Estimated Cost of
Electrical Service to Tenant's Space and all other charges by public utilities
for telephone and other utility services (including service inspections
therefor) rendered to the Premises not otherwise required hereunder to be
furnished by Landlord without charge and not consumed in connection with any
services required to be furnished by Landlord
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without charge and (d) as additional rent, all charges of Landlord for services
rendered pursuant to Section 5.1.2 hereof;
6.1.2 REPAIRS AND YIELDING UP - Except as otherwise provided in ARTICLE
VII and Section 5.1.3 of this Lease, to keep the Premises in good order, repair
and condition, reasonable wear and tear and damage by fire, casualty or eminent
domain only excepted; and at the expiration or termination of this Lease
peaceably to yield up the Premises and all changes and additions therein in such
order, repair and condition, first removing all goods and effects of Tenant and
any items, the removal of which is required by agreement or specified herein to
be removed at Tenant's election and which Tenant elects to remove, and repairing
all damage caused by such removal and restoring the Premises and leaving them
clean and neat;
6.1.3 OCCUPANCY AND USE - Continuously from the Commencement Date, to use
and occupy the Premises only for the Permitted Uses; not to injure or deface the
Premises, Building, or the Charles Square Site; and not to permit in the
Premises any use thereof which is offensive, contrary to law or ordinances
(including, without limitation, City of Cambridge anti-smoking ordinances), or
which creates a nuisance or invalidates or increases the premiums for any
insurance on the Building or its contents (the Landlord representing and
warranting to Tenant that the use of the Premises for the Permitted Uses shall
not by itself invalidate or increase the premiums for any insurance) or liable
to render necessary any alteration or addition to the Building;
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6.1.4 RULES AND REGULATIONS - To comply with the Rules and Regulations set
forth in EXHIBIT C and all other reasonable Rules and Regulations hereafter made
by Landlord, of which Tenant has been given notice, which Rules and Regulations
shall be applicable to all office tenants in the Building, for the care and use
of the Building and the Charles Square Site, it being understood that Landlord
shall not be liable to Tenant for the failure of other tenants of the Building
to conform to such Rules and Regulations;
6.1.5 SAFETY APPLIANCES - To keep the Premises equipped with all safety
appliances required by law or ordinance or any other regulation of any public
authority because of any use made by Tenant and to procure all licenses and
permits so required because of such use and, if requested by Landlord, to do any
work so required because of such use, it being understood that the foregoing
provisions shall not be construed to broaden in any way Tenant's Permitted Uses;
6.1.6 ASSIGNMENT AND SUBLETTING - Not without the prior written consent of
Landlord to assign this Lease, to make any sublease, or to permit occupancy of
the Premises or any part thereof by anyone other than Tenant, provided, however,
that with respect to any proposed assignment or subletting after Lease Year 1,
so long as (a) the proposed subtenant or assignee is a reputable person or
entity which satisfies Landlord's reasonable financial review for a subtenant or
assignee of the space in question, (b) Tenant remains liable in the Lease, and
(c) Tenant gives Landlord reasonable advance notice of such sublease or
assignment, Landlord's consent shall not be unreasonably withheld, delayed or
conditioned; as additional rent to
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reimburse Landlord promptly for reasonable legal and other expenses incurred by
Landlord in connection with any request by Tenant for consent to assignment or
subletting; no assignment or subletting shall affect the continuing primary
liability of Tenant (which, following assignment, shall be joint and several
with the assignee); no consent to any of the foregoing in a specific instance
shall operate as a waiver in any subsequent instance. Notwithstanding any
provision of this Lease to the contrary, Tenant shall have the right to assign
this Lease or sublet any portion of the Premises to any business organization
controlled by, controlling, or under common control with Tenant or which is the
successor to Tenant by merger or through the sale of all or substantially all of
Tenant's assets (an "Affiliate"), provided Tenant demonstrates to Landlord's
reasonable satisfaction that the creditworthiness of the Affiliate is at least
equal to the greater of Tenant's creditworthiness (a) on the date hereof or (b)
on the date of such assignment or sublease.
Notwithstanding the foregoing provisions of this Section 6.1.6, Tenant
covenants not to enter into any sublease the rental of which is based in whole
or in part on the net revenues, net income or profits derived by any tenant
within the meaning of Section 856(d)(2)(A) of the Internal Revenue Code of 1954,
as amended.
6.1.7 INDEMNITY - To defend, with counsel reasonably acceptable to
Landlord, save harmless and indemnify Landlord from any liability for injury,
loss, accident or damage to any person or property and from any claims, actions,
proceedings and expenses and costs in connection therewith (including, without
implied limitation, counsel's reasonable fees): (i) arising from the omission,
fault, willful act, negligence
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or other misconduct of Tenant or from any use made or thing done or occurring on
the Premises not due to the negligence or willful misconduct of Landlord or (ii)
resulting from the failure of Tenant to perform and discharge its covenants and
obligations under this Lease;
6.1.8 TENANT'S LIABILITY INSURANCE - To maintain public liability
insurance on the Premises in amounts which shall, at the beginning of the Term,
be at least equal to the limits set forth in Section 1.1 of this Lease, and from
time to time during the Term, shall be for such higher limits, if any, as are to
Tenant's actual knowledge customarily carried in the area in which the Premises
are located on property similar to the Premises and used for similar purposes
and to furnish Landlord with certificates thereof;
6.1.9 TENANT'S WORKER'S COMPENSATION INSURANCE - To keep all of Tenant's
employees working in the Premises covered by worker's compensation insurance in
statutory amounts and to furnish Landlord with certificates thereof;
6.1.10 LANDLORD'S RIGHT OF ENTRY- To permit Landlord and Landlord's agents
entry upon reasonable advance notice to Tenant, except in the case of emergency
in which case no notice shall be required, to examine the Premises at reasonable
times and, if Landlord shall so elect, to make repairs or replacements
(provided, however, Landlord shall use reasonable efforts to prevent material
adverse effects on Tenant's use and enjoyment of the Premises); to remove, at
Tenant's expense, any changes, additions, signs, curtains, blinds, shades or the
like not consented to in writing; and to show the Premises to prospective
tenants during the 12 months preceding
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expiration of the Term or the Extension Period (as applicable) and to
prospective purchasers and mortgagees at all reasonable times;
6.1.11 LOADING - Not to place a load upon the Premises exceeding an average
rate of 50 pounds of live load per square foot of floor area; and not to move
any safe, vault or other heavy equipment in, about or out of the Premises except
in such manner and at such times as Landlord shall in each instance approve;
Tenant's business machines and mechanical equipment which cause vibration or
noise that may be transmitted to the Building structure or to any other leased
space in the Building shall be placed and maintained by Tenant in settings of
cork, rubber, spring or other types of vibration eliminators sufficient to
eliminate such vibration or noise;
6.1.12 LANDLORD'S COSTS - In case Landlord shall be made party to any
litigation commenced by or against Tenant or by or against any parties in
possession of the Premises or any part thereof claiming under Tenant, which is
not exempted from Tenant's indemnity by the terms of Section 6.1.7, to pay, as
additional rent, all costs including, without implied limitation, counsel's
reasonable fees incurred by or imposed upon Landlord in connection with such
litigation and, as additional rent, also to pay all such costs and fees incurred
by Landlord in connection with the successful enforcement by Landlord of any
obligations of Tenant under this Lease;
6.1.13 TENANT'S PROPERTY - All the furnishings, fixtures, equipment,
effects and property of every kind, nature and description of Tenant and of all
persons claiming by, through or under Tenant which, during the continuance of
this Lease or any occupancy of the Premises by Tenant or anyone claiming under
Tenant, may be on
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the Premises or elsewhere in the Building or on the Charles Square Site shall be
at the sole risk and hazard of Tenant and, if the whole or any part thereof
shall be destroyed or damaged by fire, water or otherwise, by the leakage or
bursting of water pipes, steam pipes or other pipes, by theft or from any other
cause, no part of said loss or damage is to be charged to or to be borne by
Landlord unless due to the gross negligence or other similar misconduct of
Landlord;
6.1.14 LABOR OR MATERIALMEN'S LIENS - To pay promptly when due the entire
cost of any work done on the Premises by Tenant, its agents, employees or
independent contractors; not to cause or permit any liens for labor or materials
performed or furnished in connection therewith to attach to the Premises; and
immediately to discharge Coy payment, bond or other method) any such liens which
may so attach;
6.1.15 CHANGES OR ADDITIONS - Not to make any non-structural changes or
alterations to the Premises without Landlord's prior written consent, which
consent shall not be unreasonably withheld; not to make any structural changes
or additions to the Premises without Landlord's prior written consent, provided
that Tenant shall reimburse Landlord for all reasonable costs incurred by
Landlord in reviewing Tenant's proposed changes or additions, and provided
further that, in order to protect the functional integrity of the Building, all
such changes and additions shall be performed by contractors selected from a
list of approved contractors prepared by Landlord from time to time; and
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6.1.16 HOLDOVER - To pay to Landlord 150% of the total of the Annual Base
Rent and additional rent then applicable for each month or portion thereof
Tenant shall retain possession of the Premises or any part thereof after the
termination of this Lease, whether by lapse of time or otherwise, and also to
pay all damages sustained by Landlord on account thereof, consequential and
otherwise; the provisions of this subsection shall not operate as a waiver by
Landlord of any right of re-entry provided in this Lease.
ARTICLE VII
CASUALTY AND TAKING
7.1 CASUALTY AND TAKING.
In case during the Term all or any substantial part of the Premises,
Building or the Charles Square Site, or any one or more of them, are (i) damaged
materially by fire or any other cause or by action of public or other authority
in consequence thereof or (ii) taken by eminent domain or Landlord receives
compensable damage by reason of anything lawfully done in pursuance of public or
other authority and as a consequence all or any substantial part of the
Premises, Building or Charles Square Site are damaged materially, this Lease
shall terminate at Landlord's election, which may be made, notwithstanding
Landlord's entire interest may have been divested, notice to Tenant within 30
days after the occurrence of the event giving rise to the by election to
terminate, which notice shall specify the effective date of termination which
shall be not less than 30 nor more than 60 days after the date of notice of such
termination and a just proportion of the Annual Base Rent and additional rent
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according to the nature and extent of the injury and the effect on Tenant's use
and enjoyment of the Premises shall be abated from and after the occurrence of
the event giving rise to the election to terminate. If in any such case the
Premises, Building or the Charles Square Site, are rendered unfit for use and
occupation and the Lease is not so terminated, Landlord shall use due diligence
to put the Premises, Building or the Charles Square Site, or, in case of a
taking, what may remain thereof (excluding any items installed or paid for by
Tenant which Tenant may be required or permitted to remove) into substantially
the same condition that existed before such fire, casualty or taking to the
extent permitted by the net award of insurance or damages available to Landlord,
and a just proportion of the Annual Base Rent and additional rent according to
the nature and extent of the injury shall be abated until the Premises, Building
or the Charles Square Site, or such remainder shall have been put by Landlord in
such condition; and in case of a taking which permanently reduces the area of
the Premises, Building or Lot, a just proportion of the Annual Base Rent and
additional rent shall be abated according to the nature and extent of the injury
and the effect on Tenant's use and enjoyment of the Premises for the remainder
of the Term and an appropriate adjustment shall be made to the Annual Operating
Expenses. If in any such case the Lease is not so terminated and the Premises,
Building or the Charles Square Site (or in the case of a taking, at least 90
percent thereof) have not been put into proper condition for use and occupation
within one year after the damage or taking occurs, or, in the reasonable
judgment of Landlord's architect expressed within 60 days of such fire, casualty
or taking, are not capable of
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being put into such condition within one year, this Lease shall terminate at
Tenant's election, which may be made by notice to Landlord within ten (10) days
after expiration of such year or within ten (10) days after notice that the
damage cannot reasonably be repaired within one year, as the case may be, and
shall be effective on the date such notice is given and all of Tenant's
obligations hereunder shall then cease except to pay rent accrued prior to the
termination, as such rent shall have been reduced pursuant to this Section on
account of the damage or taking.
7.2 RESERVATION OF AWARD.
Landlord reserves to itself any and all rights to receive awards made for
damages to the Premises, Building or the Charles Square Site and the leasehold
hereby created, or any one or more of them, accruing by reason of exercise of
eminent domain or by reason of anything lawfully done in pursuance of public or
other authority. Tenant hereby releases and assigns to Landlord all Tenant's
rights to such awards and covenants to deliver such further assignments and
assurances thereof as Landlord may from time to time request and hereby
irrevocably designates and appoints Landlord as its attorney in fact to execute
and deliver in Tenant's name and behalf all such further assignments thereof. It
is agreed and understood, however, that Landlord does not reserve to itself, and
Tenant does not assign to Landlord, any damages payable for (i) trade fixtures,
equipment and personal property installed by Tenant, or anybody claiming under
Tenant, at the Premises or (ii) relocation or business interruption expenses or
damages of a similar nature recoverable by Tenant from such authority in a
separate action.
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ARTICLE VIII
RIGHTS OF MORTGAGEE
8.1 PRIORITY OF LEASE.
This Lease is and shall continue to be subject and subordinate to any
presently existing mortgage, ground lease or deed of trust of record covering
the Lot or Building or both (the "mortgaged premises"), provided that Landlord
shall use diligent efforts to obtain on Tenant's behalf a nondisturbance
agreement from the holders of any such mortgages, deeds of trust or ground
leases within sixty (60) days after the date hereof (which nondisturbance
agreement may be in the standard form used by such holders). The holder of any
such presently existing mortgage or deed of trust or lessor under any such
ground lease shall have the election to subordinate the same to the rights and
interests of Tenant under this Lease exercisable by filing with the appropriate
recording office a notice of such election, whereupon the Tenant's rights and
interests hereunder shall have priority over such mortgage, ground lease or deed
of trust.
Unless the option provided for in the next following sentence shall be
exercised, this Lease shall be superior to and shall not be subordinate to, any
mortgage, deed of trust or other voluntary lien hereafter placed on the
mortgaged premises. The holder of any such mortgage, deed of trust or other
voluntary lien shall have the option to subordinate this Lease to the same,
provided that such holder enters into a nondisturbance and attornment agreement
with Tenant, under which the holder will agree to recognize the rights of Tenant
under this Lease and to
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accept Tenant as tenant of the Premises under the terms and conditions of this
Lease in the event of acquisition of title by such holder through foreclosure
proceedings or otherwise and Tenant will agree to recognize the holder of such
mortgage or lessor under such ground lease as Landlord in such event, which
agreement shah be made to expressly bind and inure to the benefit of the
successors and assigns of Tenant and of the holder or ground lessor and upon
anyone purchasing the mortgaged premises at any foreclosure sale. Any such
mortgage or ground lease to which this Lease shall be subordinated may contain
such terms, provisions and conditions as the holder or ground lessor deems usual
or customary.
8.2 RIGHTS OF MORTGAGE HOLDERS; LIMITATION OF MORTGAGEE'S LIABILITY.
The word "mortgage" as used herein includes mortgages, deeds of trust or
other similar instruments evidencing other voluntary liens or encumbrances and
modifications, consolidations, extensions, renewals, replacements and
substitutes thereof. The word "holder" shall mean a mortgage and any subsequent
holder or holders of a mortgage. Until the holder of a mortgage shall enter and
take possession of the Premises for the purpose of foreclosure, such holder
shall have only such rights of Landlord as are necessary to preserve the
integrity of this Lease as security. Upon entry and taking possession of the
Premises for the purpose of foreclosure, such holder shall have all the rights
of Landlord. Notwithstanding any other provision of this Lease to the contrary,
including without limitation Section 10.4, no such holder of a mortgage or
ground lessor shall be liable either as
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mortgagee or as assignee to perform, or be liable in damages for failure to
perform, any of the obligations of Landlord unless and until such holder or
ground lessor shall enter and take possession of the Premises for the purpose of
foreclosure, and such holder or ground lessor shah not in any event be liable to
perform or for failure to perform the obligations of Landlord under Article III
of this Lease. Upon entry for the purpose of foreclosure, such holder or ground
lessor shall be liable to perform all of the obligations of Landlord (except for
the obligations under Article III of this Lease), subject to and with the
benefit of the provisions of Section 10.4 of this Lease, provided that a
discontinuance of any foreclosure proceeding shall be deemed a conveyance under
said provisions to the owner of the equity of the Premises.
No holder of a mortgage on or ground lessor of Landlord's interest in the
Premises s hall (i) be bound by any modification of this Lease not made as
expressly provided for in this Lease or by any previous prepayment of more than
one month's rent, unless such modification or prepayment shall have been
expressly approved in writing by the holder of the superior mortgage or ground
lessor of the ground lease through or by reason of which the holder or ground
lessor shall have succeeded to the fights of Landlord; or (ii) be liable for the
performance of Landlord's covenants and agreements contained in this Lease
except to the extent of the holder's or ground lessor's ownership in the
Premises, and no other property of such holder shall be subject to levy,
attachment, execution or other enforcement procedure for the satisfaction of
Tenant's remedies.
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8.3 MORTGAGEE'S ELECTION.
Notwithstanding any other provision to the contrary contained in this
Lease, if prior to substantial completion of Landlord's obligations under
ARTICLE XI and Section 2.1.1, any holder of a first mortgage on the mortgaged
premises or ground lessor under a ground lease enters and takes possession
thereof for the purpose of foreclosing the mortgage or terminating the ground
lease, such holder or ground lessor may elect, by written notice given to Tenant
and Landlord at any time within 90 days after such entry and taking of
possession, not to perform Landlord's obligations under ARTICLE XI and/or
Section 2.1.1 and, in such event, such holder or ground lessor and all persons
claiming under it shall be relieved of all obligations to perform, and all
liability for failure to perform, said Landlord's obligations under ARTICLE XI
and/or Section 2.1.1, and Tenant may terminate this Lease and all its
obligations hereunder by written notice to Landlord and such holder or ground
lessor given within 30 days after the day on which such holder or ground lessor
shall have given its notice as aforesaid.
8.4 NO PREPAYMENT OR MODIFICATION, ETC.
Tenant shall not pay Annual Base Rent, additional rent or any other charge
more than 10 days prior to the due dates thereof. No prepayment of Annual Base
Rent, additional rent or other charge, no assignment of this Lease and no
agreement to modify so as to reduce the rent, change the Term or otherwise
materially change the rights of Landlord under this Lease, or to relieve Tenant
or any Guarantor of any
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obligations or liability under this Lease, shall be valid unless consented to in
writing by Landlord's mortgagees or ground lessors of record, if any.
8.5 NO RELEASE OR TERMINATION.
No act or failure to act on the part of Landlord which would entitle Tenant
under the terms of this Lease, or by law, to be relieved of Tenant's obligations
hereunder or to terminate this Lease, shall result in a release or termination
of such obligations or a termination of this Lease unless (i). Tenant shall have
first given written notice of Landlord's act or failure to act to Landlord's
mortgagees or ground lessors of record, if any (provided Tenant has received
written notice of the identity and address of such mortgagees or ground
lessors), specifying the act or failure to act on the part of Landlord which
could or would give basis to Tenant's fights and (ii) such mortgagees or ground
lessors, after receipt of such notice, have failed or refused to correct or
cure the condition complained of within a reasonable time thereafter, but
nothing contained in this Section 8.5 shall be deemed to impose any obligation
on any such mortgagee or ground lessor to correct or cure any such condition.
"Reasonable time" as used above means and includes a reasonable time to obtain
possession of the mortgaged premises, if the mortgagee or ground lessor elects
to do so, and a reasonable time to correct or cure the condition if such
condition is determined to exist.
8.6 CONTINUING OFFER.
The covenants and agreements contained in this Lease with respect to the
rights, powers and benefits of a mortgagee or ground lessor (particularly,
without
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limitation thereby, the covenants and agreements contained in this ARTICLE VIII)
constitute a continuing offer to any person, corporation or other entity, which
by accepting or requiring an assignment of this Lease or by entry or foreclosure
assumes the obligations herein set forth with respect to such mortgagee or
ground lessor; such mortgagee and ground lessor are each hereby constituted a
party to this Lease as an obligee hereunder to the same extent as though its
name was written hereon as such; and such mortgagee or ground lessor shall be
entitled to enforce such provisions in its own name. Tenant agrees on request of
Landlord to execute and deliver from time to time any agreement which may
reasonably be deemed necessary to implement the provisions of this ARTICLE VIII.
8.7 MORTGAGEE'S APPROVAL.
Landlord's and Tenant's obligations to perform their covenants and
agreements under this Lease are subject to the condition precedent that this
Lease approved by the current mortgagee of the Charles Square Site (Aetna Life
and be Casualty Company) and the lessor under the Ground Lease. Landlord shall
use diligent efforts to obtain such approvals. Unless Landlord notifies Tenant
within 45 days after the date hereof that the Lease has been disapproved, the
condition set forth in this Section 8.7 shall be deemed satisfied.
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ARTICLE IX
DEFAULT
9.1 EVENTS OF DEFAULT.
If any default by Tenant continues after notice, in case of the failure to
make payments of Annual Base Rent, additional rent, or any other monetary
obligation to Landlord, for more than 10 days or, in the case of any other
failure by Tenant to perform its obligations under this Lease, for more than 30
days and such additional time, if any, as is reasonably necessary to cure the
default if the default is of such a nature that it cannot reasonably be cured in
30 days and Tenant diligently endeavors to cure such default; or if Tenant
becomes insolvent, files a petition under any chapter of the U.S. Bankruptcy
Code, 11 U.S.C. 101 et seq., as it may be amended (or any similar petition under
any insolvency law of any jurisdiction), or if such petition is filed against
Tenant and is not dismissed within 60 days; or if Tenant proposes any
dissolution, liquidation, composition, financial reorganization or
recapitalization with creditors, makes an assignment or trust mortgage for the
benefit of creditors, or if a receiver, trustee, custodian or similar agent is
appointed or takes possession with respect to any property of Tenant and is not
dismissed within 60 days; or if the leasehold hereby created is taken on
execution or other process of law in any action against Tenant; then, and in any
such case, Landlord and the agents and servants of Landlord may, in addition to
and not in derogation of any remedies for any preceding breach of covenant,
immediately or at any time thereafter while such default continues and without
further notice exercise any and all remedies permitted
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by state or federal law. Tenant hereby waives all statutory rights (including,
without limitation, rights of redemption, if any) to the extent such rights may
be lawfully waived and Landlord, without notice to Tenant but no earlier than
the expiration of the applicable cure period, may store Tenant's effects and
those of any person claiming through or under Tenant at the expense and risk of
Tenant and, if Landlord so elects, may sell such effects at public auction or
private sale and apply the net proceeds to the payment of all sums due to
Landlord from Tenant, if any, and pay over the balance, if any, to Tenant.
9.2 TENANT'S OBLIGATIONS AFTER TERMINATION.
In the event that this Lease is terminated under any of the provisions
contained in Section 9.1 of this Lease or shall be otherwise lawfully terminated
for breach of any obligation of Tenant, Tenant covenants to pay forthwith to
Landlord, as liquidated damages, the present value of the excess of the total
rent reserved for the residue of the Term over the rental value of the Premises
for said residue of the Term, calculated using a commercially reasonable
discount rate. In calculating the rent reserved, there shah be included, in
addition to the Annual Base Rent and all additional rent, the value of all other
consideration agreed to be paid or performed by Tenant for said residue. Until
Landlord demands such liquidated damages, Tenant further covenants after any
such termination to pay punctually to Landlord all the sums and perform all the
obligations which Tenant covenants in this Lease to pay and to perform in the
same manner and to the same extent and at the same time as if this Lease had not
been terminated. In calculating the amounts to be paid by Tenant
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under the next foregoing covenant, Tenant shall be credited with the net
proceeds of any rents obtained by Landlord by reletting the Premises, after
deducting all Landlord's expenses in connection with such reletting, including,
without implied limitation, all repossession costs, brokerage commissions, fees
for legal services and expenses of preparing the Premises for such reletting, it
being agreed by Tenant that Landlord may (i) relet the Premises or any part or
parts thereof for a term or terms which may at Landlord's option be equal to or
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant such concessions and free rent as Landlord in
its sole judgment considers advisable or necessary to relet the same and (ii)
make such alterations, repairs and decorations in the Premises as Landlord in
its sole judgment considers advisable or necessary to relet the same, and no
action of Landlord in accordance with the foregoing or failure to relet or to
collect rent under reletting shall operate or be construed to release or reduce
Tenant's liability as aforesaid; provided, however, that if Landlord uses or
permits any person or entity in control of, under common control with or
controlled by Landlord to use the Premises during any part of the balance of the
Term or Extended Term, no less than the fair rental value of the Premises during
such period of use shall be credited against all sums due from Tenant.
Nothing contained in this Lease shall, however, limit or prejudice the
right of Landlord to prove and obtain in proceedings for bankruptcy or
insolvency by reason of the termination of this Lease an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in
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which, the damages are to be proved, whether or not the amount be greater, equal
to or less than the amount of the loss or damages referred to above.
ARTICLE X
MISCELLANEOUS
10.1 NOTICE OF LEASE.
Upon request of either party, both parties shall execute and deliver, after
the Term begins, a short form of this Lease in form appropriate for recording or
registration and, if this Lease is terminated before the Term expires, an
instrument in such form acknowledging the date of termination.
10.2 CONSTRUCTION ON ADJACENT PREMISES; EXPANSION.
If any excavation, alteration, addition, repair, or other building
operation shall be about to be made or shall be made on the Premises, the
Building or the Lot or on any premises adjoining the Lot, Tenant shall permit
Landlord, its agents, employees, licensees and contractors, with reasonable
advance notice to Tenant, except in the case of emergency, in which case no
notice shall be required, to enter the Premises and to shore the foundations
and/or walls thereof, and to erect scaffolding and/or protective barricades
around and about the Premises (but not so as to preclude entry thereto) and to
do any act or thing necessary for the safety or preservation of the Premises;
provided, however, Landlord shall not materially interfere with Tenant's use and
enjoyment of the Premises. Tenant's obligations under this Lease shall not be
affected by any such construction or excavation work or any such shoring-up so
long as Landlord does not materially interfere with Tenant's use and enjoyment
of
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the Premises. Provided Landlord does not interfere with Tenant's use and
enjoyment of the Premises, Landlord shall not be liable for any inconvenience,
disturbance, loss of business or any other annoyance arising from any such
construction, excavation shoring-up, scaffolding or barricades, but Landlord
shall use its best efforts so that such work will cause such little
inconvenience, annoyance and disturbance to Tenant as possible.
10.3 NOTICES FROM ONE PARTY TO THE OTHER.
All notices required or permitted hereunder shall be in writing and
addressed, if to the Tenant, at Tenant's Address or such other address as Tenant
shall have last designated by notice in writing to Landlord, with a copy to
Testa, Hurwitz & Thibeault LLP, High Street Tower, 125 High Street, Boston,
Massachusetts 02110, Attention: Real Estate Department, and, if to Landlord, at
Landlord's Address or such other address as Landlord shall have last designated
by notice in writing to Tenant, with a copy by like means to Paul Jakubowski,
Esq., Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109. Any
notice shall be deemed duly given three days after being mailed to such address
postage prepaid, registered or certified mail, return receipt requested, or when
delivered to such address by hand.
10.4 BIND AND INURE.
The obligations of this Lease shall run with the land and this Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Landlord named herein and
each successive owner of the Charles Square Site shall be liable only for the
obligations accruing
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during the period of its ownership. The obligations of Landlord shall be binding
upon the assets of Landlord which comprise the Charles Square Site but not upon
other assets of Landlord. No individual partner, trustee, stockholder, officer,
director, employee or beneficiary of Landlord shall be personally liable under
this Lease and Tenant shall look solely to Landlord's interest in the Charles
Square Site in pursuit of its remedies upon an event of default hereunder, and
the general assets of the individual partners, trustees, stockholders, officers,
employees or beneficiaries of Landlord shah not be subject to levy, execution or
other enforcement procedure for the satisfaction of the remedies of Tenant, upon
an event of default hereunder.
10.5 NO SURRENDER.
The delivery of keys to any employee of Landlord or to Landlord's agent or
any employee thereof shall not operate as a termination of this Lease or a
surrender of the Premises.
10.6 NO WAIVER, ETC.
The failure of Landlord or of Tenant to seek redress for violation of, or
to insist upon the strict performance of, any covenant or condition of this
Lease or any of the Rules and Regulations referred to in Section 6.1.4 of this
Lease, whether heretofore or hereafter adopted by Landlord, shall not be deemed
a waiver of such violation nor prevent a subsequent act, which would have
originally constituted a violation, from having all the force and effect of an
original violation, nor shall the failure of Landlord to enforce any of said
Rules and Regulations against any other tenant in the Building be deemed a
waiver of any such Rules or Regulations. The
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receipt by Landlord of Annual Base Rent or additional rent with knowledge of the
breach of any covenant of this Lease shall not be deemed a waiver of such breach
by Landlord, unless such waiver be in writing and signed by Landlord. No consent
or waiver, express or implied, by Landlord or Tenant to or of any breach of any
agreement or duty shall be construed as a waiver or consent to or of any other
breach of the same or any other agreement or duty.
10.7 NO ACCORD AND SATISFACTION.
No acceptance by Landlord of a lesser sum than the Annual Base Rent and
additional rent then due shall be deemed to be other than on account of the
earliest installment of such rent due, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as rent be deemed as
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such installment or
pursue any other remedy in this Lease provided.
10.8 CUMULATIVE REMEDIES.
The specific remedies to which Landlord may resort under the terms of this
Lease are cumulative and are not intended to be exclusive of any other remedies
or means of redress to which it may be lawfully entitled in case of any breach
or threatened breach by Tenant of any provisions of this Lease. In addition to
the other remedies provided in this Lease, Landlord and Tenant each shall be
entitled to the restraint by injunction of the violation or attempted or
threatened violation of any of
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the covenants, conditions or provisions of this Lease or to a decree compelling
specific performance of any such covenants, conditions or provisions.
10.9 LANDLORD'S RIGHT TO CURE.
If Tenant shall at any time default in the performance of any obligation
under this Lease and such default should continue after notice and the
expiration of the applicable grace period, Landlord shall have the right, but
shall not be obligated, to enter upon the Premises and to perform such
obligation, notwithstanding the fact that no specific provision for such
substituted performance by Landlord is made in this Lease with respect to such
default. In performing such obligation, Landlord may make any payment of money
or perform any other act. All sums so paid by Landlord (together with interest
at the rate of four percent per annum in excess of the then average prime
commercial rate of interest being charged by the three largest national banks in
Boston, Massachusetts), and all necessary incidental costs and expenses in
connection with the performance of any such act by Landlord, shall be deemed to
be additional rent under this Lease and shall be payable to Landlord immediately
on demand. Landlord may exercise the foregoing rights without waiving any other
of its rights or releasing Tenant from any of its obligations under this Lease.
10.10 ESTOPPEL CERTIFICATE.
Tenant agrees, from time to time upon not less than 15 days' prior written
request by Landlord, to execute, acknowledge and deliver to Landlord a statement
in writing certifying, to the extent true, that this Lease is unmodified and in
full force
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and effect; that, to Tenant's knowledge, Tenant has no defenses, offsets or
counterclaims against its obligations to pay the Annual Base Rent and additional
rent and to perform its other covenants under this Lease; that, to Tenant's
knowledge, there are no uncured defaults of Landlord or Tenant under this Lease
(or, if there have been any modifications, that this Lease is in full force and
effect as modified and stating the modifications and, if there are any defenses,
offsets, counterclaims, or defaults of which Tenant has knowledge, setting them
forth in reasonable detail); and the dates to which the Annual Base Rent,
additional rent and other charges have been paid. Any such statement delivered
pursuant to this Section 10.10 shall be in a form reasonably acceptable to and
may be relied upon by any prospective purchaser or mortgagee of premises which
include the Premises or any prospective assignee of any such mortgagee.
10.11 WAIVER OF SUBROGATION.
Any insurance carried by either party with respect to the Premises and
property therein or occurrences thereon shall include a clause or endorsement
denying to the insurer rights of subrogation against the other party to the
extent fights have been waived by the insured prior to occurrences of injury or
loss. Each party, notwithstanding any provisions of this Lease to the contrary,
hereby waives any fights of recovery against the other for injury or loss due to
hazards covered by insurance containing such clause or endorsement to the extent
of the indemnification received thereunder.
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10.12 ACTS OF GOD.
In any case where either party hereto is required to do any act, delays
caused by or resulting from Acts of God, war, civil commotion, fire, flood or
other casualty, labor difficulties, shortages of labor, materials or equipment,
government regulations, unusually severe weather or other causes beyond such
party's reasonable control shall not be counted in determining the time during
which work shall be completed, whether such time be designated by a fixed date,
a fixed time or a "reasonable time", and such time shall be deemed to be
extended by the period of such delay. Notwithstanding anything herein contained,
however, the provisions of this Section 10.12 shall not be applicable to
Tenant's obligation to pay rent under the provisions of Article IV, or its
obligations to pay any other sums, monies, costs, charges or expenses required
to be paid by the Tenant hereunder or to Tenant's right to terminate this Lease
pursuant to Section 7.1.
10.13 BROKERAGE.
Landlord and Tenant represent and warrant that they have dealt with no
broker in connection with this transaction other than Carpenter and Company and
Landlord agrees to defend, indemnify and save Tenant harmless from and against
any and all cost, expense or liability for any compensation, commissions or
charges claimed by any broker or agent other than Carpenter and Company with
respect to Tenant's dealings in connection with this Lease.
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10.14 SUBMISSION NOT AN OFFER.
The submission of a draft of this Lease or a summary of some or all of its
provisions does not constitute an offer to lease or demise the Premises, it
being understood and agreed that neither Landlord nor Tenant shall be legally
bound with respect to the leasing of the Premises unless and until this Lease
has been executed by both Landlord and Tenant and a fully executed copy has been
delivered to each of them.
10.15 LANDLORD REMEDIES.
In addition to Landlord's other remedies, Landlord shall have the right,
during the Term of this Lease, to impose upon Tenant a fine of fifty dollars
($50.00) per day for each and every violation by Tenant of reasonable rules and
regulations of Landlord, as such may be promulgated from time to time or for
breach of the terms of this Lease. Such fine may be imposed no sooner than one
(1) business day following written notice by Landlord to Tenant of the breach of
the rules or regulations or terms of this Lease, unless such breach by Tenant of
the rules and regulations or the terms of this Lease cannot be cured within such
one (1) business day period, in which case such fine may be imposed no sooner
than thirty (30) days following written notice by Landlord to Tenant of the
breach of the rules or regulations or the terms of this Lease, provided however,
that if Tenant does not commence to cure such breach of the rules and
regulations or terms of this Lease upon receipt of notice from Landlord and
diligently pursue the curing of the same
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during such thirty (30) day period, such fine may be imposed during such thirty
(30) day period.
10.16 APPLICABLE LAW AND CONSTRUCTION.
This Lease shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts. If any term, covenant, condition or
provision of this Lease or the application thereof to any person or
circumstances shall be declared invalid or unenforceable by the final ruling of
a court of competent jurisdiction having final review, the remaining terms,
covenants, conditions and provisions of this Lease and their application to
persons or circumstances shall not be affected thereby and shall continue to be
enforced and recognized as valid agreements of the parties, and in the place of
such invalid or unenforceable provision, there shall be substituted a like, but
valid and enforceable provision which comports to the findings of the aforesaid
court and most nearly accomplishes the original intention of the parties.
There are no oral or written agreements between Landlord and Tenant
affecting this Lease. This Lease may be amended, and the provisions hereof may
be waived or modified, only by instruments in writing executed by Landlord and
Tenant.
The titles of the several Articles and Sections contained herein are for
convenience only and shah not be considered in construing this Lease.
Unless repugnant to the context, the words Landlord and Tenant appearing
in this Lease shall be construed to mean those named above and their
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respective heirs, executors, administrators, successors and assigns, and those
claiming through or under them respectively. If there be more than one tenant,
the obligations imposed by this Lease upon Tenant shall be joint and several.
10.17 LIMITATION OF LANDLORD'S LIABILITY.
Tenant agrees in all events to look solely to Landlord's interest in the
Charles Square Site for satisfaction of any claim against Landlord hereunder and
Tenant agrees that Tenant shall have no other recourse against Landlord, nor
shall Tenant have any recourse against (i) any other property or assets of
Landlord or (ii) the partners, trustees, beneficiaries, shareholders, employees,
officers, directors, agents or principals of Landlord or any of their property
or assets.
10.18 PARKING.
Tenant and its employees, agents, contractors and invitees shall have the
right to use, on a non-exclusive basis, a number of parking spaces in the
parking garage on the Charles Square Site equal to two (2) parking spaces for
every 1,000 square feet of rentable area in Tenant's Space from time to time.
Tenant shall pay a monthly charge to Landlord on account of each parking space
so used in any month, which charge shall be equal to the then current market
rates. In addition, Landlord will provide Tenant with thirty (30) tandem parking
spaces at an initial rate of $90 per month per parking space during Lease Years
1 and 2, with increases thereafter at the same percentage as any increases in
standard parking rates in the parking garage. Tenant and its employees, agents,
contractors and invitees shall have access to said parking garage from the hours
of 6:00 A.M. to 1:00 A.M. only. Tenant shall not permit its
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employees who have parking passes for the parking garage to share passes with
others who do not have passes, nor shall Tenant allow its employees to leave
vehicles in the parking garage over weekends or while they are traveling, it
being understood and agreed by Tenant that the parking garage is to be used for
purposes of daily commuting only.
ARTICLE XI
LEASEHOLD IMPROVEMENTS; TENANT ALLOWANCE
11.1 PLANS FOR LEASEHOLD IMPROVEMENTS
11.1.1 Tenant, at Tenant's sole cost and expense, shall cause to be
prepared and delivered to Landlord for Landlord's approval two sets of
preliminary plans and specifications ("preliminary plans ") for the renovations
and improvements to Tenant's Initial Space prepared by a registered architect.
11.1.2 Following Landlord's approval of the preliminary plans, Tenant, at
Tenant's sole cost and expense, shall cause to be prepared and delivered for
Landlord's approval four sets of working drawings and specifications ("working
drawings") for the renovations and improvements to Tenant's Initial Space
prepared by a registered architect in conformity with the approved preliminary
plans and with Landlord's reasonable requirements and shall make any revisions
reasonably requested by Landlord and shah obtain Landlord's approval on or
before October 31, 1997; provided, however, that Landlord shall review the
working drawings and respond to Tenant within three business days of receipt of
said drawings and shall
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not unreasonably withhold its approval of the working drawings. Landlord shall
evidence its approval by causing one set of such working drawings to be
initialed on its behalf and returned to the Tenant. Before beginning
construction of Leasehold Improvements in the Expansion Space, Tenant shall
cause to be prepared and delivered to Landlord four sets of working drawings for
the Expansion Space prepared by a registered architect and shall make any
revisions reasonably requested by Landlord and shall obtain Landlord's approval;
provided, however, Landlord shall review the working drawings and respond to
Tenant within three business days of receiving the working drawings and shall
not unreasonably withhold its approval of the working drawings. Landlord will
not approve any construction, alterations or additions requiring unusual expense
to readapt the Premises for office use on lease termination or unusually
increasing the cost of construction, insurance or taxes on the Office Component
or of Landlord's services unless Tenant first gives assurances acceptable to
Landlord that such readaptation will be made prior to such termination without
expense to Landlord and makes provisions acceptable to Landlord for payment of
such increased cost. Landlord will also disapprove any alterations or additions
requested by Tenant which will in Landlord's reasonable opinion be harmful to
the Office Component or other tenants. All changes and additions shall be part
of the Premises upon termination of the Lease unless Landlord and Tenant agree
otherwise in writing at the time of approval of such changes or additions.
11.1.3 After Landlord's approval of the working drawings, no change shall
be made thereto except as provided in this Section 11.1.3:
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(i) No change may be made by either party without the prior
written consent of the other (which shall not be
unreasonably withheld or delayed).
(ii) All architectural services necessitated shall be rendered by
Tenant's architect at the expense of the party requesting
the change; and
(iii) All construction work necessitated by any change shall be
performed by Tenant's contractor; if the change was
requested by Landlord, Tenant's Allowance (as hereinafter
defined) shall be adjusted to reflect any increase in the
cost of the Leasehold Improvements (as defined below)
resulting therefrom.
11.2 CONSTRUCTION BY TENANT.
All work described in the working drawings (the "Leasehold Improvements")
shall be performed by Tenant's general contractor, the identity of which must be
approved by Landlord, which approval shall not be unreasonably withheld. The
construction of the Leasehold Improvements shah be coordinated with any work
being performed by Landlord in such manner as to maintain harmonious labor
relations and not to damage or, in Landlord's reasonable opinion, unreasonably
interfere with operations of or require the making of any structural changes to
the Office Component. Before commencing construction of the Leasehold
Improvements, Tenant at its own expense shall provide any necessary appropriate
riders for fire and extended coverage and comprehensive general public liability
and property damage insurance covering the risks during the course of such work
and certificates showing that necessary Workmen's Compensation and Employer's
Liability Insurance has been taken out to protect all employees engaged in the
work during the course of such
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construction. The provisions of Sections 3.1 and 6.1.7 of this Lease shall apply
to any work done by Tenant or any agent, employee, invitee or visitor of Tenant
under this Section.
11.3 TENANT ALLOWANCE.
Tenant shall be entitled to an allowance for construction of the Leasehold
Improvements in an amount not to exceed $450,000, to be requisitioned, if at
all, within eighteen (18) months after the date hereof. Such allowance shall be
paid as follows:
(a) Up to $100,000 of the allowance shall be paid by Landlord to Tenant
(or, at Tenant's election made by notice to Landlord, to Tenant's contractor or
architect directly) after the date hereof but prior to substantial completion of
the Leasehold Improvements, for costs and expenses of the Leasehold Improvements
incurred by Tenant, as evidenced by invoices and other supporting documentation
reasonably acceptable to Landlord, within ten (10) days after request therefor
by Tenant;
(b) Within ten (10) days after substantial completion of the Leasehold
Improvements in the Premises, delivery to Landlord of a certificate of occupancy
for the Premises and first occupancy by Tenant of at least 30,000 rentable
square feet of the Premises, Landlord shall reimburse Tenant (or, at Tenant's
election made by notice to Landlord, shall pay directly to Tenant's contractor)
for Tenant's costs and expenses of the Leasehold Improvements in the Premises
(as evidenced by invoices and other supporting documentation reasonably
acceptable to Landlord), up to a
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maximum (when combined with the portion of the allowance disbursed under clause
(a) above) of $450,000.
Landlord shall have no obligation to disburse any portion of the allowance
not claimed by Tenant within eighteen (18) months after the date hereof.
11.4 LANDLORD'S RIGHT TO TERMINATE LEASE PRIOR TO COMMENCEMENT DATE.
If during the period between the date of execution of this Lease and the
Commencement Date, Tenant shall fail to comply with any requirements of this
Article XI, and if such failure shall continue for more than ten (10) days after
written notice from Landlord specifying the failure and if within said ten (10)
day period Tenant has not commenced diligently to correct the failure, then
Landlord may, at its option, cancel and terminate this Lease on the date stated
in said notice. Upon such cancellation neither party shall have any continuing
liability to the other hereunder except that Tenant shall repay to Landlord
immediately upon demand by Landlord therefor all payments made by Landlord to
Tenant, if any, as part of the tenant allowance and each party shall remain
responsible according to the terms and provisions of the Lease for its acts or
neglects occurring prior to such cancellation.
ARTICLE XII
RIGHT OF FIRST OFFER
12.1 RIGHT OF FIRST OFFER.
Landlord hereby grants to Tenant a right of first offer to lease (the
"Offer Right") space on the fifth (5th) floor of Office Component (the "Offer
Space") if such
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Offer Space becomes available for occupancy before the fourth (4th) anniversary
of the Commencement Date (or before the end of the initial Term, in the event
Tenant has validly exercised its extension option under Section 2.3). The term
of any lease of Offer Space leased pursuant to this Section shall end on the
last day of the Term of this Lease; provided, that if less than three (3) years
remain in the Term from the date the Offer Space is to be delivered to Tenant,
the Term shall be extended automatically to the date that is three (3) years
after the date of such delivery, and the Annual Base Rent applicable to the
original Premises during the portion of such extended Term after the Term
Expiration Date shall be at a rate equal to the greater of (a) the Annual Base
Rent in effect at the end of the Term or (b) the rate set forth in the Proposed
Terms (defined below).
If Landlord desires to lease the Offer Space, Landlord shall first send
Tenant notice of the specific terms and conditions, including, without
limitation, the applicable annual base rent and the length of term, upon which
Landlord desires to lease such Offer Space (the "Proposed Terms".) Tenant shall
have five (5) business days subsequent to receipt by Tenant of such notice from
Landlord (the "Offer Date") in which to exercise its option to lease the Offer
Space on the Proposed Terms.
Within five (5) business days after the Offer Date, Tenant shall by notice
to Landlord accept or reject the offer on the Proposed Terms (failure of Tenant
to respond within such five business day period shall be deemed a rejection of
the offer). In the event Tenant does not accept the offer on the Proposed Terms,
Landlord shall be free for a period up to six (6) months to lease such Offer
Space to
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any third party on substantially the same terms and conditions as set forth in
the Proposed Terms; provided, however, that Landlord shall be entitled to
include in any lease to any such third party, in addition to the Proposed Terms,
commercially reasonable provisions relating to allowances for tenant
improvements. In the event Landlord has not within such six-month period signed
a commitment to lease the applicable Offer Space to a third party on
substantially the same terms and conditions as are contained in the Proposed
Terms, Tenant's rights under this Section shall again be effective with respect
to such Offer Space. Notwithstanding the foregoing, Tenant's right to accept any
offer hereunder and to lease any Offer Space is subject to the additional
conditions precedent that at the time Tenant exercises its right to lease any
such Offer Space and at the time the lease for any such Offer Space commences
(i) Tenant shall not be in default under this Lease beyond applicable grace or
cure periods, and (ii) Tenant shah not have sublet any portion of the Premises
or assigned this Lease pursuant to Section 6.1.6 hereof.
The rights of Tenant under this Section are expressly subordinate to, and
shall not apply to any extension, expansion or first offer or first refusal
rights granted to other tenants of the Office Component prior to the date
hereof. The rights of Tenant set forth in this Section shall not be binding upon
any institution or mortgagee which acquires title to the Building or any portion
thereof through foreclosure by sale or deed in lieu thereof, or to anyone
claiming by, through or under such institution or mortgagee.
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Any person dealing with the Offer Space may, without further inquiry, rely
upon a representation in a certificate of Landlord or its successor in title as
to whether or not the provisions of this Section have been satisfied. Time is of
the essence with respect to this Section.
EXECUTED as a sealed instrument in two or more counterparts on the day and
year first above written.
LANDLORD:
TRUSTEES OF KSA REALTY TRUST
By: /s/ ??????? ??????????
------------------------------------------
, as Trustee
of KSA Realty Trust and for
Co-Trustees, but not individually
By: /s/ J. William Richardson
------------------------------------------
J. William Richardson, as Trustee
of KSA Realty Trust and for
Co-Trustees, but not individually
TENANT:
CAMBRIDGE ENERGY RESEARCH
ASSOCIATES LIMITED PARTNERSHIP
By: CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
------------------------------------------
General Partner
By: /s/ Daniel H. Lucking, Jr.
------------------------------------------
Name: Daniel H. Lucking, Jr.
Title: Chief Financial Officer
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CHARLES SQUARE
SITE PLAN
[SITE PLAN GRAPHIC]
EXHIBIT A
<PAGE> 68
EXHIBIT A-1
Three parcels of land in Cambridge, Middlesex County, Massachusetts, shown
as Lots A, C and D on a plan entitled: "Plan of Property owned by The Trustees
of KSA Realty Trust, University Road and Bennett Street, Cambridge,
Massachusetts", prepared by Cullinan Engineering Co., Inc., dated May 6, 1983
and recorded with Middlesex South Registry of Deeds on July 8, 1983, as Plan
No. 749 (the "Subdivision Plan"), said Lots A, C and D together bounded and
described as follows:
NORTHEASTERLY by Bennett Street by two lines, measuring respectively 17.20
feet and 340.67 feet;
SOUTHEASTERLY by land now or formerly of the Metropolitan District
Commission as shown on the Subdivision Plan, by two lines,
measuring respectively, 11.05 feet and 336.17 feet;
SOUTHWESTERLY by Lot B as shown on the Subdivision Plan, 376.77 feet;
SOUTHERLY again by said Lot B, by two lines measuring 37.96 feet and
4.98 feet; and
NORTHWESTERLY by University Road, 327.29 feet.
Said Lots A, C and D together contain 127,507 square feet, more or less,
according to the Subdivision Plan.
Together with the benefit of a Declaration of Covenants, Easements and
Restrictions dated June 30, 1983, and recorded with said Deeds in Book 15104,
Page 94, as affected by an Amendment to Declaration of Covenants, Easements,
Restrictions and Approval of As-Built Plans dated January 16, 1985, and recorded
with said Deeds in Book 16002, Page 60, together with Plan No. 146 and by an
Approval and Amendment of As-Built Plans Pursuant to Declaration of Covenants,
Easements and Restrictions dated July 9, 1985, and recorded with said Deeds in
Book 16279, Page 524, together with Plan No. 882.
Together with the benefit of the provisions of a Quitclaim Deed from the
Commonwealth of Massachusetts to Richard L. Friedman et al, Trustees of KSA
Realty Trust dated June 14, 1982 and recorded with said Deeds in Book 14635,
Page 550, the provisions of which are incorporated herein by this reference, as
affected by a Certificate of Completion recorded with said Deeds in Book 16002,
Page 72 and by a Final Certificate of Completion recorded with said Deeds in
Book 16352, Page 349.
Together with the benefit of a Grant of Electric Service Easement from
Trustees of KSA Realty Trust to Cambridge Electric Light Company dated June 30,
1983 and recorded with said Deeds on July 8 1983 in Book 15104, Page 89.
<PAGE> 69
EXHIBIT A-2 Level 6
[LEVEL 6 FLOOR PLAN]
<PAGE> 70
EXHIBIT A-2 Level 7
[LEVEL 7 FLOOR PLAN]
<PAGE> 71
EXHIBIT A-2 Level 8
[LEVEL 8 FLOOR PLAN]
<PAGE> 72
EXHIBIT B
LANDLORD'S SERVICES
I. CLEANING
A. General
1. All cleaning work will be performed between 8 a.m. and 12
midnight, Monday through Friday, unless otherwise necessary for
stripping, waxing, etc.
2. Abnormal waste removal (e.g., computer installation paper, bulk
packaging, wood or cardboard crates, refuse from cafeteria
operation, etc.) shall be Tenant's responsibility.
B. Daily Operations (5 times per week)
1. Tenant Areas
a. Empty and clean all waste receptacles; wash receptacles as
necessary.
b. Vacuum all rugs and carpeted areas.
c. Empty, damp-wipe and dry all ashtrays.
2. Lavatories
a. Sweep and wash floors with disinfectant.
b. Wash both sides of toilet seats with disinfectant.
c. Wash all mirrors, basins, bowls and urinals.
d. Spot clean toilet partitions.
e. Empty and disinfect sanitary napkin disposal receptacles.
f. Refill toilet tissue, napkin dispensers towel, soap and
sanitary napkin dispensers.
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3. Public Areas
a. Wipe down entrance doors and clean glass (interior and
exterior).
b. Vacuum elevator and hallway carpets and wipe down doors and
walls.
c. Clean water coolers.
C. Operations as Needed (but not less than every other day)
1. Tenant and Public Areas.
a. Buff all resilient floor areas.
D. Weekly Operations
1. Tenant Areas, Lavatories, Public Areas
A. Hand-dust and wipe clean all horizontal surfaces with
treated cloths to include furniture, office equipment,
windowsills, ledges, chair rails, baseboards, convector
tops, etc., within normal reach.
b. Remove finger marks from private entrance doors, light
switches and doorways.
c. Sweep all stairways.
E. Monthly Operation
1. Tenant and Public Areas
a. Thoroughly vacuum seat cushions on chairs, sofas, etc.
b. Vacuum and dust grillwork.
2. Lavatories
a. Wash down interior walls and toilet partitions.
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F. As Required and, Weather Permitting (but no less than once per year)
1. Entire Building
a. Clean inside of all windows.
b. Clean outside of all windows.
G. Yearly
1. Tenant and Public Areas
a. Strip and wax all resilient tile floor areas.
II HEATING, VENTILATING AND AIR CONDITIONING
1. Heating, ventilating and air conditioning as required to provide
reasonably comfortable temperatures for normal business day occupancy
(excepting holidays); Monday through Friday from 8:00 a.m. to 6:00
p.m. and Saturday from 8:00 a.m. to 1:00 p.m. Heating, ventilating
and air conditioning to be available to Tenant in Tenant's Space 24
hours per day. Common Area lighting to be provided 24 hours per day.
2. Maintenance of any additional or special heating, ventilating and air
conditioning equipment and the associated operating cost will be at
Tenant's expense.
III. WATER
Hot water for lavatory purposes and cold water for drinking, lavatory and
toilet purposes.
IV. ELEVATORS
Elevators for the use of all tenants and the general public for access to
and from all floors of the Building. Programming of elevators (including,
but not limited to, service elevators) shall be as Landlord from time to
time determines best for the Building as a whole.
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<PAGE> 75
V. RELAMPING OF LIGHT FIXTURES
Tenant will reimburse Landlord for the cost of lamps, ballasts and
starters and the cost of replacing same within the Premises.
VI. CAFETERIA AND VENDING INSTALLATIONS
1. Any space to be used primarily for lunchroom or cafeteria
operation shall be Tenant's responsibility to keep clean and
sanitary, it being understood that Landlord's approval of such
use must be first obtained in writing.
2. Vending machines or refreshment service installations by Tenant
must be approved by Landlord in writing and shall be restricted
in use to employees and business callers. All cleaning
necessitated by such installations shall be at Tenant's expense.
VII. ELECTRICITY
A. Landlord, at Landlord's expense, shall furnish electrical energy
required for heating, ventilating and air conditioning used in or for
the benefit of Tenant's Space, in accordance with the provisions of
the Lease of which this Exhibit is a part.
B. Tenant shall pay to Landlord for all electrical energy used in or for
the benefit of Tenant's Space. Tenant initially shall pay an amount
equal to 1/12th of the Annual Estimated Cost of Electrical Service to
Tenant's Space in equal installments in advance on the first day of
each calendar month included in the term.
C. Landlord shall have the right to meter Tenant's actual consumption of
electrical energy. Landlord, may adjust the Estimated Cost of
Electrical Service to Tenant's Space to reflect Tenant's actual
consumption of electrical energy. Such adjustment may be made no
sooner than twelve months from the Commencement Date and no more
frequently than once every twelve months thereafter.
D. Tenant's use of electrical energy in Tenant's Space shall not at any
time exceed the capacity of any of the electrical conductors or
equipment in or otherwise
B-4
<PAGE> 76
serving Tenant's Space. In order to insure that such capacity is not
exceeded and to avert possible adverse effect upon the Building
electric service, Tenant shall not, without prior written notice to
Landlord in each instance, connect to the Building electric
distribution system any fixtures, appliances or equipment which
operate on a voltage in excess of 120 volts nominal or make any
alteration or addition to the electric system of Tenant's Space.
Unless Landlord shall reasonably object to the connection of any such
fixtures, appliances or equipment, all additional risers or other
equipment required therefor shall be provided by Landlord, and the
cost thereof shall be paid by Tenant upon Landlord's demand. In the
event of any such connection, Tenant agrees to an increase in the
Estimated Cost of Electrical Service to Tenant's Space by an amount
which will reflect the cost to Landlord of the additional service to
be furnished by Landlord, such increase to be effective as of the
date of any such connection. If Landlord and Tenant cannot agree
thereon, such amount shall be conclusively determined by a reputable
independent electrical engineer or consulting firm to be selected by
Landlord and paid equally by both parties.
E. If at any time after the date of this Lease, the rates at which
Landlord purchases electrical energy from the public utility
supplying electrical service to the Building, or any charges incurred
or taxes payable by Landlord in connection therewith, shall be
increased or decreased, the Estimated Cost of Electrical Service to
Tenant's Space shall be increased or decreased, as the case may be,
by an amount equal to the estimated increase or decrease, as the case
may be, in Landlord's cost of furnishing the electricity referred to
above as a result of such increase or decrease in rates, charges or
taxes. If Landlord and Tenant cannot agree thereon, such amounts
shall be conclusively determined by a reputable independent
electrical engineer or consulting firm to be selected by Landlord and
paid equally by both parties. Any such increase or decrease shall be
effective as of the date of the increase or decrease in such rate,
charges or taxes.
F. Landlord may, at any time, elect to discontinue the furnishing of
electrical energy. In the event of any such election by Landlord: (1)
Landlord agrees to give reasonable advance notice of any such
discontinuance to
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<PAGE> 77
Tenant; (2) Landlord agrees to permit Tenant to receive electrical
service directly from the public utility supplying service to the
Building and to permit the existing feeders, risers, wiring and other
electrical facilities serving Tenant's Space to be used by Tenant
and/or such public utility for such purpose to the extent they are
suitable and safely capable; (3) Landlord agrees to pay such charges
and costs, if any, as such public utility may impose in connection
with installation of Tenant's meters and to make or, at such public
utility's election, to pay for such other installations as such
public utility may require, as a condition of providing comparable
electrical service to Tenant; (4) Tenant shall no longer be required
to pay the Estimated Cost of Electrical Service to Tenant's Space
then in effect; (5) Tenant shall thereafter pay, directly to the
utility furnishing the same, all charges for electrical services to
the Premises; and (6) electrical service to Tenant's Space shall not
be discontinued as a result of Landlord's election to discontinue the
furnishing of electrical energy.
B-6
<PAGE> 78
EXHIBIT C
RULES AND REGULATIONS
A. The following rules and regulations have been formulated for the salary
and well-being of all tenants of the Building and to insure compliance
with all municipal, insurance and other requirements. Strict adherence to
these rules and regulations is necessary to guarantee that each and every
tenant will enjoy a safe and unannoyed occupancy in the Building in
accordance with its Lease. Any continuing violation of these rules and
regulations by Tenant, after notice from Landlord, shall be deemed to be
an Event of Default under its lease.
B. Landlord may, upon request by any tenant, waive compliance by such Tenant
to any of these rules and regulations, provided that (1) no waiver shall
be effective unless signed by Landlord or Landlord's authorized agent, (2)
any such waiver shall not relieve such tenant from the obligation to
comply with such rule or regulation in the future unless expressly
consented to by Landlord, (3) no waiver granted to any tenant shall
relieve any other tenant from the obligation of complying with the rules
and regulations unless such other tenant has received a similar waiver in
writing from the Landlord, and (4) any such waiver by Landlord shall not
relieve Tenant from any obligation or liability of Tenant to Landlord
pursuant to the Lease for any loss or damage occasioned as a result of
Tenant's failure to comply with any such rule or regulation.
--------------
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors, halls or other parts of the Building not occupied by
any tenant shall not be obstructed or encumbered by any tenant or used for
any purpose other than ingress and egress to and from the Leased Space. If
the Leased Space is situated on the ground floor of the Building, the
tenant thereof shall, at such tenant's own expense, keep the sidewalks and
curb directly in front of the premises clean and free from ice, snow and
debris. Landlord shall have the right to control and operate the public
portions of the Building and the facilities furnished for common use of
the tenants in such manner as Landlord deems best for the
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<PAGE> 79
benefit of the tenants generally. No tenant shall permit the visit to the
Premises of persons in such numbers or under such conditions as to
interfere with the use and enjoyment by other tenants of the entrances,
corridors, elevators and other public portions or facilities of the
Building.
2. No awnings or other projections shall be attached to the outside walls of
the Building without the prior written consent of Landlord. No drapes,
blinds, shades, or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises, without the prior
written consent of Landlord. Such awnings, projections, curtains, blinds,
shades, screens or other fixtures must be of a quality, type, design and
color, and attached in the manner, approved by Landlord. Tenant shall not
hang or shake anything out of any window or open any window at its Leased
Space or in the common area of the Building outside.
3. No showcases or other articles shall be put outside, in front of or
affixed to any part of the exterior of the Building, nor placed in the
halls, corridors or vestibules without the prior written consent of
Landlord. Tenant shall have right to place patio furniture on leased deck
area with prior Landlord architectural approval.
4. The water, toilets and wash closets and other plumbing fixtures shall not
be used for any purposes other than those for which they were constructed,
and no sweepings, rubbish, rags, chemicals, paints, cleaning fluids or
other substances shall be thrown therein. All damages resulting from any
misuse of the fixtures shall be borne by the Tenant who, or whose
servants, employees, agents, visitors or licensees, shall have caused the
same.
5. There shall be no marking, painting, drilling into or in any way defacing
the Building or any part of the Leased Space visible from public areas of
the Building. Tenant shall not construct, maintain, use or operate within
the Leased Space any electrical device, wiring or apparatus in connection
with a loud speaker system or other sound system, except as reasonably
required for its communication system and approved prior to the
installation thereof by Landlord. No such loud speaker or sound system
shall be constructed, maintained, used or operated outside of the Leased
Space.
6. No bicycles, vehicles or animals, birds or pets of any kind shall be
brought into or kept in or about the Leased Space, and no cooking (except
for hot-plate cooking and microwave
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cooking by Tenant's employees for their own consumption, the equipment for
and location of which are first approved by Landlord) shall be done or
permitted by any tenant on the Leased Space. No tenant shall cause or
permit any unusual or objectionable odors to be produced upon or permeate
from the Leased Space.
7. No space in the Building shall be used for manufacturing of goods for sale
in the ordinary course of business, for the storage in bulk of merchandise
or for the sale at auction of merchandise, goods or property of any kind.
Furthermore, the use of the Leased Space by each tenant was approved by
Landlord prior to execution of the Lease and such use may not be changed
without the prior written approval of Landlord.
8. No tenant shall make any unseemly or disturbing noises or disturb or
interfere with occupants of the Building or neighboring buildings or
premises or those having business with them whether by the use of any
musical instrument, radio, talking machine, unmusical noise, whistling,
singing or in any other way. No tenant shall throw anything out of the
doors or windows or down the corridors or stairs.
9. No flammable, combustible, radioactive, infectious, or explosive fluid
chemical or substance shall be brought or kept upon the Leased Space.
10. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanism thereof. The Tenant shall, and shall cause its
employees to, lock the doors to the Leased Space as it and they leave at
the end of each working day and, if after ordinary business hours,
ascertain that the doors of the Building by which it and they leave are
locked securely. Each tenant shall, upon the termination of its tenancy,
restore to the Landlord all keys of stores, offices, storage and toilet
rooms either furnished to, or otherwise procured by, such tenant, and in
the event of the loss of any keys so furnished, such tenant shall pay to
Landlord the cost thereof.
11. Landlord reserves the right to inspect all freight to be brought into the
Building and to exclude from the Building all freight which violates any
of these rules and regulations of the Lease.
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12. No tenant shall pay any employees on the Premises, except those actually
working for such tenant on the Premises.
13. Landlord reserves the right to exclude from the Building at all times any
person who is not known or does not give proper and satisfactory
identification to the Building management, security guard on duty or
security system monitor. Landlord may, at its option, require all persons
admitted to or leaving the Building between the hours of 6:00 p.m. and
8:00 a.m. on Monday through Friday, and at any hour on Saturdays, Sundays
and legal holidays, to register. Each tenant shall be responsible for all
persons for whom it authorizes entry into or exit out of the Building, and
shall be liable to Landlord for all acts or omissions of such persons. The
foregoing rule does not apply to routine retail customers of retail
tenants during customary business hours.
14. The Leased Space shall not, at any time, be used for lodging or sleeping
or for any immoral or illegal purpose.
15. Each tenant, before closing and leaving its premises at any time, shall
see that all windows are closed and all lights turned off.
16. Landlord's employees shall not perform any work or do anything outside of
their regular duties, unless under special instruction from the management
of the Building. The requirements of tenants will be attended to only upon
application to Landlord and any such special requirements shall be billed
to Tenant (and paid with the next installment of rent due) at the schedule
of charges maintained by Landlord from time to time or at such charge as
is agreed upon in advance by Landlord and Tenant.
17. Canvassing, soliciting and peddling in the Building is prohibited and each
tenant shall cooperate to prevent the same.
18. There shall not be any hand trucks used in any leased space, or in the
public halls of the Building, either by any tenant or by jobbers or
others, in the delivery or receipt of merchandise, except those equipped
with rubber tires and side guards. Tenant shall be responsible to Landlord
for any loss or damage resulting from any deliveries of Tenant to the
Building.
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19. Mats, trash or other objects shall not be placed in the public corridors.
20. No one except Landlord and its employees and agents shall be allowed on
the roof of the Building or any basement areas except those leased to a
tenant or otherwise designated for tenant use.
21. No tenant shall place any sign or advertising notice in any part of the
Building except as approved by Landlord, or use any advertising or take
any other action which in Landlord's judgment might tend to affect
adversely the reputation of the Building and its desirability as a
building for retail stores and offices.
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<PAGE> 1
EXHIBIT 10.47
CREDIT AGREEMENT, dated as of February 12, 1998, among GLOBAL DECISIONS
GROUP LLC, a Delaware limited liability company (the "Parent"), McCARTHY,
CRISANTI & MAFFEI, INC., a New York corporation (the "Borrower"), the several
banks and other financial institutions from time to time parties to this
Agreement (collectively, the "Lenders"; individually, a "Lender"), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as documentation agent for the
Lenders hereunder (in such capacity, the "Documentation Agent"), and THE CHASE
MANHATTAN BANK ("Chase"), a New York banking corporation, as administrative and
collateral agent for the Lenders hereunder (in such capacity, the
"Administrative Agent"; together with the Documentation Agent, the "Agents").
W I T N E S S E T H:
WHEREAS, the Parent is a recently formed Delaware limited liability
company organized by the Borrower and MCM Group, Inc., a Delaware corporation
and the parent of the Borrower ("MGI"); and
WHEREAS, MGI has approved the combination of MGI and Cambridge Energy
Research Associates, Inc., a Massachusetts corporation ("CERA"), under the
Parent and related transactions provided for in the Merger Agreement (as
hereinafter defined) (the "Transactions"); and
WHEREAS, the Borrower intends to lend up to $26,400,000 to CERA (as
amended, supplemented or modified from time to time, the "CERA Intercompany Term
Loan"), and CERA will apply a portion of such funds, together with CERA's
available cash, to the extent necessary, to make a distribution to the
stockholders of CERA in an amount equal to approximately $21,510,000 and will
apply the remainder of such funds and available cash to purchase a portion of
The Goldman Sachs Group, L.P.'s limited partnership interest in Cambridge Energy
Research Associates Limited Partnership for a purchase price of $2,390,000; and
WHEREAS, in order to (i) finance the CERA Intercompany Term Loan, (ii) pay
certain fees, taxes and expenses related to the Transactions, (iii) finance
future acquisitions of businesses principally engaged in providing consulting
services or providing information or analytic services (including the
distribution of information through any medium) and (iv) finance the working
capital and other business requirements of the Parent, the Borrower, CERA and
their respective subsidiaries, the Borrower has requested that the Lenders make
the loans and issue and participate in the letters of credit provided for
herein; and
WHEREAS, all the obligations of the Borrower hereunder shall be secured
and guaranteed by, among other things, (i) a perfected first lien on and
security interest in the collateral described in the Security Documents (as
hereinafter defined), (ii) a pledge of all the issued and outstanding capital
stock of the Borrower's direct or indirect domestic subsidiaries, whether now
existing or subsequently organized or acquired, and a pledge of 65% of the
issued and outstanding capital stock of each of the direct foreign subsidiaries
of the Borrower, whether now existing or subsequently organized or acquired, and
(iii) unconditional guarantees by each of the Parent, MGI and such direct or
indirect domestic subsidiaries of the Borrower; and
WHEREAS, such guarantees by the Parent and MGI shall be secured by a
pledge of all of the issued and outstanding capital stock of the Parent's and
MGI's direct subsidiaries (including CERA, MGI and the Borrower);
NOW, THEREFORE, in consideration of the premises and the mutual agreements
<PAGE> 2
2
contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by Chase as its prime rate in effect at its principal office in New
York City (the Prime Rate not being intended to be the lowest rate of interest
charged by Chase in connection with extensions of credit to debtors); "Base CD
Rate" shall mean the sum of (a) the product of (i) the Three-Month Secondary CD
Rate and (ii) a fraction, the numerator of which is one and the denominator of
which is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board of Governors of the Federal Reserve System (the "Board")
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate of deposit
dealers of recognized standing selected by it; and "Federal Funds Effective
Rate" shall mean, for any day, the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based upon
the ABR.
"Acceleration": as defined in Section 9(e).
"Adjustment Date": each date on or after March 31, 1999 that is the second
Business Day following receipt by the Administrative Agent of both (i) the
financial statements required to be delivered pursuant to subsection 7.1(a) or
7.1(b), as applicable, for the most recently completed fiscal period and (ii)
the related compliance certificate required to be delivered pursuant to
subsection 7.2(b) with respect to such fiscal period.
"Administrative Agent": as defined in the preamble hereto.
<PAGE> 3
3
"Affected Eurodollar Loans": as defined in subsection 4.9.
"Affected Eurodollar Rate": as defined in subsection 4.7.
"Affiliate": as to any Person, any other Person (other than a Subsidiary)
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control" of
a Person means the power, directly or indirectly, either to (a) vote 10% or more
of the securities having ordinary voting power for the election of directors of
such Person or (b) direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.
"Agents": as defined in the preamble hereto.
"Aggregate Outstanding Revolving Credit": as to any Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Revolving Credit Lender then
outstanding and (b) such Revolving Credit Lender's Revolving Credit Commitment
Percentage of the L/C Obligations then outstanding and (c) such Revolving Credit
Lender's Revolving Credit Commitment Percentage of the Swing Line Loans then
outstanding.
"Agreement": this Credit Agreement, as amended, supplemented, waived or
otherwise modified from time to time.
"Applicable Margin": during the period from the Effective Date until the
end of the first fiscal quarter (the "First Adjustment Quarter") on or after the
first anniversary thereof, the Applicable Margin shall be equal to (i) 0.25% per
annum with respect to Swing Line Loans, Revolving Credit Loans, Term Loans and
Delayed Draw Term Loans which are ABR Loans and (ii) 1.25% per annum with
respect to Revolving Credit Loans, Term Loans and Delayed Draw Term Loans which
are Eurodollar Loans. The Applicable Margin for Swing Line Loans, Revolving
Credit Loans, Term Loans and Delayed Draw Term Loans will be adjusted on each
Adjustment Date to the applicable rate per annum set forth under the heading
"ABR Applicable Margin" or "Eurodollar Applicable Margin" on Schedule II which
corresponds to the achievement of certain performance criteria determined from
the financial statements and compliance certificate relating to the end of the
fiscal quarter immediately preceding such Adjustment Date; provided that in the
event that the financial statements required to be delivered pursuant to
subsection 7.1(a) or 7.1(b), as applicable, and the related compliance
certificate required to be delivered pursuant to subsection 7.2(b), are not
delivered when due, then
(a) if such financial statements and compliance certificate are
delivered after the date such financial statements and compliance
certificate were required to be delivered (without giving effect to any
applicable cure period) and the Applicable Margin increases from that
previously in effect as a result of the delivery of such financial
statements, then the Applicable Margin in respect of the Swing Line Loans,
Revolving Credit Loans, Term Loans and Delayed Draw Term Loans during the
period from the date upon which such financial statements were required to
be delivered (without giving effect to any applicable cure period) until
the date upon which they actually are delivered shall, except as otherwise
provided in clause (c) below, be the Applicable Margin as so increased;
(b) if such financial statements and compliance certificate are
delivered after the date such financial statements and compliance
certificate were required to be delivered and the Applicable Margin
decreases from that previously in effect as a result of the
<PAGE> 4
4
delivery of such financial statements, then such decrease in the
Applicable Margin shall not become applicable until the date upon which
the financial statements and certificate actually are delivered; and
(c) if such financial statements and compliance certificate are not
delivered prior to the expiration of the applicable cure period, then,
effective upon such expiration, for the period from the date upon which
such financial statements and compliance certificate were required to be
delivered (after the expiration of the applicable cure period) until two
Business Days following the date upon which they actually are delivered,
the Applicable Margin in respect of the Loans shall be (i) .50% per annum
with respect to Swing Line Loans, Revolving Credit Loans, Term Loans and
Delayed Draw Term Loans which are ABR Loans and (ii) 1.50% per annum with
respect to Revolving Credit Loans, Term Loans and Delayed Draw Term Loans
which are Eurodollar Loans (it being understood that the foregoing shall
not limit the rights of the Administrative Agent and the Lenders set forth
in Section 9).
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Asset Sale": any sale, conveyance, transfer, lease or other disposition
(including, without limitation, through a Sale and Leaseback Transaction) (a
"Disposition") by the Parent or any of its Subsidiaries (including the
Borrower), in one or a series of related transactions, of any real or personal,
tangible or intangible, property (including, without limitation, Capital Stock
of the Parent or such Subsidiary) of the Parent or such Subsidiary to any
Person, excluding any such sale or conveyance of any Capital Stock of the Parent
by the Parent or any Subsidiary as part of any transaction or series of
transactions intended to benefit employees or consultants.
"Assignee": as defined in subsection 12.6(c).
"Available Revolving Credit Commitment": as to any Revolving Credit Lender
at any time, an amount equal to the excess, if any, of (a) the amount of such
Revolving Credit Lender's Revolving Credit Commitment at such time over (b) the
sum of (i) the aggregate unpaid principal amount at such time of all Revolving
Credit Loans made by such Revolving Credit Lender and (ii) an amount equal to
such Revolving Credit Lender's Revolving Credit Commitment Percentage of the
aggregate unpaid principal amount at such time of all Swing Line Loans, provided
that for purposes of calculating Available Revolving Credit Commitments pursuant
to subsection 4.5 such amount shall be zero, and (iii) an amount equal to such
Revolving Credit Lender's Revolving Credit Commitment Percentage of the
outstanding L/C Obligations at such time; collectively, as to all the Lenders,
the "Available Revolving Credit Commitments".
"BancAmerica": BancAmerica Robertson Stephens.
"Base CD Rate": as defined in the definition of the term "ABR" in this
subsection 1.1.
"Board": as defined in the definition of the term "ABR" in this subsection
1.1.
"Borrower": as defined in the preamble hereto.
"Borrowing Date": the Effective Date and any Business Day specified in a
notice pursuant to subsection 2.3, 2.5, 2.11 or 3.2 as a date on which the
Borrower requests the Lenders to make Loans hereunder or the Issuing Lender to
issue Letters of Credit hereunder.
<PAGE> 5
5
"Brera": Brera Capital Partners, LLC.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
close, except that, when used in connection with a Eurodollar Loan, "Business
Day" shall mean, any Business Day on which dealings in Dollars between banks may
be carried on in London, England and New York, New York.
"Capital Expenditures": with respect to any Person for any period, the sum
of the aggregate of all expenditures by such Person and its consolidated
Subsidiaries during such period which, in accordance with GAAP, are or should be
included in "capital expenditures".
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests (including, without limitation, LLC units) in a
Person (other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"Cash Equivalents": (a) securities issued or fully guaranteed or insured
by the United States Government or any agency or instrumentality thereof, (b)
time deposits, certificates of deposit or bankers' acceptances of (i) any Lender
or (ii) any commercial bank having capital and surplus in excess of
$1,000,000,000 and the commercial paper of the holding company of which is rated
at least A-2 or the equivalent thereof by Standard & Poor's Ratings Group (a
division of McGraw Hill Inc.) or any successor rating agency ("S&P") or at least
P-2 or the equivalent thereof by Moody's Investors Service, Inc. or any
successor rating agency ("Moody's") (or if at such time neither is issuing
ratings, then a comparable rating of such other nationally recognized rating
agency as shall be approved by the Administrative Agent in its reasonable
judgment), (c) commercial paper rated at least A-2 or the equivalent thereof by
S&P or at least P-2 or the equivalent thereof by Moody's (or if at such time
neither is issuing ratings, then a comparable rating of such other nationally
recognized rating agency as shall be approved by the Administrative Agent in its
reasonable judgment), (d) investments in money market funds complying with the
risk limiting conditions of Rule 2a-7 or any successor rule of the Securities
and Exchange Commission under the Investment Company Act and (e) investments
similar to any of the foregoing denominated in foreign currencies approved by
the board of directors of the Parent or the Borrower.
"C&D Fund IV": The Clayton & Dubilier Private Equity Fund IV Limited
Partnership, a Connecticut limited partnership.
"CD&R": Clayton, Dubilier & Rice, Inc., a Delaware corporation.
"C/D Assessment Rate": for any day as applied to any ABR Loan, the annual
assessment rate in effect on such day which is payable by a member of the Bank
Insurance Fund classified as well-capitalized and within supervisory subgroup
"B" (or a comparable successor assessment risk classification) within the
meaning of 12 C.F.R. Section 327.4 (or any successor provision) to the Federal
Deposit Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the United
States.
"C/D Reserve Percentage": for any day as applied to any ABR Loan, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement for a
Depositary Institution (as defined in
<PAGE> 6
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Regulation D of the Board) in respect of new non-personal time deposits in
Dollars of $100,000 or more having a maturity of 30 days or more.
"CERA": as defined in the recitals hereto.
"CERA Collateral Agreement": as defined in subsection 5.19.
"CERA Intercompany Revolving Credit Loans": as defined in subsection 5.18.
"CERA Intercompany Term Loan": as defined in the recitals hereto.
"CERA Notes": as defined in subsection 5.19.
"CERA Security Documents": the collective reference to the CERA Collateral
Agreement, the CERA Trademark Security Agreement and all other similar security
documents granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of CERA under the CERA Intercompany Term Loan and
the CERA Intercompany Revolving Credit Loans or to secure any guarantee of any
such obligations and liabilities.
"CERA Trademark Security Agreement": as defined in subsection 5.19.
"Change of Control": the occurrence of any of the following events: (i)
CD&R, C&D Fund IV and the Affiliates of C&D Fund IV and CD&R shall in the
aggregate beneficially own shares of Capital Stock having less than 30% of the
total voting power of all outstanding shares of Capital Stock of the Parent,
(ii) any Person or "group" (within the meaning of Section 13(d) or 14(d) of the
Exchange Act) other than CD&R, C&D Fund IV, the Affiliates of C&D Fund IV and
CD&R, Daniel H. Yergin, Joseph A. Stanislaw, James P. Rosenfield and their
respective Affiliates shall have acquired (a) beneficial ownership of more than
20% of the outstanding shares of Capital Stock of the Parent or (b) the power
(whether or not exercised) to elect a majority of the Parent's directors, (iii)
the Parent shall cease to own, directly or indirectly, 100% of the Capital Stock
of MGI or CERA or (iv) MGI shall cease to own, directly or indirectly, 100% of
the Capital Stock of the Borrower.
"Chase": as defined in the preamble hereto.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": all assets of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.
"Collateral Proceeds Account": as defined in the Guarantee and Collateral
Agreement.
"Commercial Letter of Credit": as defined in subsection 3.1(a).
"Commitment Percentage": as to any Lender, the percentage of the aggregate
Revolving Credit Commitments, Term Loan Commitments and Delayed Draw Term Loan
Commitments constituted by such Lender's Revolving Credit Commitments, Term Loan
Commitments and Delayed Draw Term Loan Commitments or following the Effective
Date, the percentage representing a fraction the numerator of which is the sum
of (i) the aggregate principal amount of such Lender's Term Loans and Delayed
Draw Term Loans then outstanding plus (ii) the Revolving Credit Commitment of
such Lender (or, following the termination or expiration of the Revolving Credit
Commitments, the sum of (x) the aggregate principal amount
<PAGE> 7
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of such Lender's Revolving Credit Loans then outstanding plus (y) such Lender's
Revolving Commitment Percentage of all Swing Line Loans then outstanding and L/C
Obligations), and the denominator of which is the sum of (i) the aggregate
principal amount of Term Loans and Delayed Draw Term Loans of all Lenders then
outstanding plus (ii) the aggregate Revolving Credit Commitments of all Lenders
(or, following the termination or expiration of the Revolving Credit
Commitments, the sum of (x) the aggregate principal amount of all Revolving
Credit Loans then outstanding plus (y) the aggregate principal amount of all
Swing Line Loans then outstanding and L/C Obligations then outstanding).
"Commitments": the collective reference to the Revolving Credit
Commitments, the Swing Line Commitment, the Term Loan Commitments, the Delayed
Draw Term Loan Commitments and the L/C Commitment; individually, a "Commitment".
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414(b) or (c) of the Code or, solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Sections 414(m) and (o) of the Code.
"Consolidated EBITDA": for any period, Consolidated Net Income for such
period adjusted to exclude the following items (without duplication) of income
or expense to the extent that such items are included in the calculation of
Consolidated Net Income: (a) Consolidated Interest Expense, (b) any non-cash
expenses and charges, (c) total income tax expense, (d) depreciation expense,
(e) the expense associated with amortization of intangible and other assets
(including amortization or other expense recognition of any costs associated
with asset write-ups in accordance with APB Nos. 16 and 17), (f) non-cash
provisions for reserves for discontinued operations, (g) any gain or loss
associated with the sale or write-down of assets not in the ordinary course of
business, (h) all cash expenses relating to the Transactions and (i) any income
or loss accounted for by the equity method of accounting (except in the case of
income to the extent of the amount of cash dividends or cash distributions paid
to the Parent or any of its Subsidiaries by the entity accounted for by the
equity method of accounting).
"Consolidated Interest Expense": for any period, the sum of (a) interest
expense (accrued and paid or payable in cash for such period, and in any event
excluding any amortization or write-off of financing costs) on Indebtedness of
the Parent and its consolidated Subsidiaries for such period minus (b) interest
income (accrued and received or receivable in cash for such period) of the
Parent and its consolidated Subsidiaries for such period, in each case
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income": for any period, net income of the Parent and
its consolidated Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Worth": as of the date of determination, all items which
in conformity with GAAP would be included under shareholders' equity on a
consolidated balance sheet of the Parent and its Subsidiaries at such date.
"Consolidated Total Debt": as of the date of determination, the aggregate
principal amount of Indebtedness outstanding under this Agreement, Financing
Leases, purchase money Indebtedness and any other Indebtedness for all borrowed
money of the Parent and its Subsidiaries at such date determined on a
consolidated basis.
<PAGE> 8
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"Contingent LLC Units": as defined in the Merger Agreement.
"Contractual Obligation": as to any Person, any provision of any material
security issued by such Person or of any material agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CSI": Chase Securities Inc.
"Default": any of the events specified in Section 9, whether or not any
requirement for the giving of notice (other than, in the case of Section 9(e), a
Default Notice), the lapse of time, or both, or any other condition, has been
satisfied.
"Default Notice": as defined in Section 9(e).
"Delayed Draw Term Loan": as defined in subsection 2.9, collectively, the
"Delayed Draw Term Loans".
"Delayed Draw Term Loan Commitment": as to any Delayed Draw Term Loan
Lender, its obligation to make a Delayed Draw Term Loan to the Borrower pursuant
to subsection 2.9 in an aggregate amount equal to the amount set forth under
such Delayed Draw Term Loan Lender's name in Schedule I opposite the heading
"Delayed Draw Term Loan Commitment", collectively, the "Delayed Draw Term Loan
Commitments".
"Delayed Draw Term Loan Commitment Percentage": as to any Delayed Draw
Term Loan Lender, the percentage of the aggregate Delayed Draw Term Loan
Commitments constituted by its Delayed Draw Term Loan Commitment or, following
the Effective Date, the percentage of the aggregate outstanding Delayed Draw
Term Loans constituted by its Delayed Draw Term Loan.
"Delayed Draw Term Loan Commitment Period": the period from and including
the Effective Date to but not including the date which is eighteen months
thereafter.
"Delayed Draw Term Loan Lenders": any Lenders having a Delayed Draw Term
Loan Commitment hereunder or that hold outstanding Delayed Draw Term Loans.
"Delayed Draw Term Note" and "Delayed Draw Term Notes": as defined in
subsection 2.10.
"Disposition": as defined in the definition of the term "Asset Sale" in
this subsection 1.1.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of the Parent or the Borrower, as
applicable, which is not a Foreign Subsidiary.
"Effective Date": the date on which all the conditions precedent set forth
in subsection 6.1 shall be satisfied or waived.
"Environmental Costs": any and all costs or expenses (including, without
limitation, attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, fines, penalties, damages,
settlement payments, judgments and awards), of whatever kind or nature, known or
unknown, contingent or otherwise, arising out of,
<PAGE> 9
9
or in any way relating to, any violation of, noncompliance with or liability
under any Environmental Laws or any orders, requirements, demands, or
investigations of any person related to any Environmental Laws. Environmental
Costs include any and all of the foregoing, without regard to whether they arise
out of or are related to any past, pending or threatened proceeding of any kind.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, and such requirements of any Governmental Authority properly
promulgated and having the force and effect of law or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as have been, or now or at any relevant time hereafter are, in effect.
"Environmental Permits": any and all permits, licenses, registrations,
notifications, exemptions and any other authorization required under any
Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined by the
Administrative Agent to be the arithmetic mean (rounded to the nearest 1/100th
of 1%) of the offered rates for deposits in Dollars with a term comparable to
such Interest Period that appears on the Telerate British Bankers Assoc.
Interest Settlement Rates Page (as defined below) at approximately 11:00 A.M.,
London time, on the second full Business Day preceding the first day of such
Interest Period; provided, however, that if there shall at any time no longer
exist a Telerate British Bankers Assoc. Interest Settlement Rates Page,
"Eurodollar Base Rate" shall mean, with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the rate at
which Chase is offered deposits in Dollars at approximately 11:00 A.M., London
time, two Business Days prior to the first day of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of Dollars are then being conducted for delivery
on the first day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of its Eurodollar Loan to be
outstanding during such Interest Period. "Telerate British Bankers Assoc.
Interest Settlement Rates Page" shall mean the display designated as Page 3750
on the Dow Jones Markets (or such other page as may replace such page on such
service for the purpose of displaying the rates at which Dollar deposits are
offered by leading banks in the London interbank deposit market).
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):
Eurodollar Base Rate
--------------------------------------
1.00 - Eurodollar Reserve Requirements
"Eurodollar Reserve Requirements": for any day as applied to a Eurodollar
Loan, the aggregate (without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal
<PAGE> 10
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and emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurodollar funding (currently referred to as
"Eurodollar Liabilities" in Regulation D of the Board) maintained by a member
bank of the Federal Reserve System.
"Event of Default": any of the events specified in Section 9, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Exchange Act": the Securities Exchange Act of 1934, as amended from time
to time.
"Extension of Credit": as to any Lender, the making of, or the issuance
of, or participation in, a Loan by such Lender or the issuance of, or
participation in, a Letter of Credit by such Lender.
"Federal Funds Effective Rate": as defined in the definition of the term
"ABR" in this subsection 1.1.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"FIRREA": the Financial Institutions Reform, Recovery and Enforcement Act
of 1989, as amended from time to time.
"First Adjustment Quarter": as defined in the definition of the term
"Applicable Margin" in this subsection 1.1.
"Foreign Subsidiary": any Subsidiary of the Parent or the Borrower, as
applicable, which is organized and existing under the laws of any jurisdiction
outside of the United States of America.
"GAAP": with respect to the covenants contained in subsections 8.1, 8.2
and 8.8 and all defined terms relating thereto (including, without limitation,
the defined term "Consolidated Total Debt"), generally accepted accounting
principles in the United States of America in effect on the Effective Date and,
for all other purposes under this Agreement, generally accepted accounting
principles in the United States of America in effect from time to time.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including, without limitation, the European Union.
"Guarantee": as defined in the definition of "Guarantor".
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by the Parent, MGI, the Borrower, each
Domestic Subsidiary of the Borrower in existence on the Effective Date and the
Administrative Agent, substantially in the form of Exhibit B, as the same may be
amended, supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing person"), any
obligation of
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(a) the guaranteeing person or (b) another Person (including, without
limitation, any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any such obligation of
the guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"Guarantor": any Person which is now or hereafter a party to (a) the
Guarantee and Collateral Agreement or (b) any other guarantee (a "Guarantee")
hereafter delivered to the Administrative Agent guaranteeing the obligations and
liabilities of the Loan Parties hereunder or under any other Loan Documents.
"Indebtedness": of any Person at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (other than trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or created
for the account of such Person, (e) for purposes of subsection 8.2 and Section
9(e) only, all obligations of such Person in respect of interest rate protection
agreements, interest rate futures, interest rate options, interest rate caps and
any other interest rate hedge arrangements (it being agreed that, for the
purposes of Section 9(e), the obligations attributed to such Person in regard to
such interest rate protection agreement or other arrangement at any time shall
be the amount that such Person would be obligated to pay thereunder if such
agreement or other arrangement were terminated at such time), and (f) all
indebtedness or obligations of the types referred to in the preceding clauses
(a) through (e) secured by any Lien on any property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof.
"Insolvency": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
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"Intellectual Property": as defined in subsection 5.9.
"Interest Payment Date": (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is outstanding and,
if such ABR Loan is a Term Loan or Delayed Draw Term Loan, the date of each
payment of principal thereof, (b) as to any Eurodollar Loan having an Interest
Period of three months or less, the last day of such Interest Period, and (c) as
to any Eurodollar Loan having an Interest Period longer than three months, (x)
each day which is three months, or a whole multiple thereof, after the first day
of such Interest Period and (y) the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or conversion
date, as the case may be, with respect to such Eurodollar Loan and ending
three, six, nine or twelve months thereafter, as selected by the Borrower
in its notice of borrowing or notice of conversion, as the case may be,
given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
three, six, nine or twelve months thereafter, as selected by the Borrower
by irrevocable notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current Interest Period
with respect thereto;
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period would otherwise end on a day that is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date (in the case of Revolving Credit Loans, Term Loans and
Delayed Draw Term Loans) shall end on the Termination Date (for all
purposes other than subsection 4.12);
(3) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(4) the Borrower shall select Interest Periods so as not to require
a scheduled payment of any Eurodollar Loan during an Interest Period for
such Loan.
"Investment Company Act": the Investment Company Act of 1940, as amended
from time to time.
"Investments": as defined in subsection 8.9.
"Issuing Lender": Chase or any of its Affiliates, in its capacity as
issuer of any Letter of Credit.
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"L/C Fee Payment Date": with respect to any Letter of Credit, the last day
of each March, June, September and December to occur after the date of issuance
thereof and the first such day to occur on or after the date of expiry thereof.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to subsection 3.5(a).
"L/C Participants": the collective reference to all the Revolving Credit
Lenders other than the Issuing Lender.
"Lenders": as defined in the preamble hereto.
"Letter Agreement": as defined in the Guarantee and Collateral Agreement.
"Letters of Credit": as defined in subsection 3.1(a).
"Leverage Ratio": at any date of determination, the ratio of (a)
Consolidated Total Debt at such date to (b) Consolidated EBITDA for the
four-quarter period ending on such date.
"Lien": any mortgage, pledge, hypothecation, assignment, security deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"LLC Agreement": the Amended and Restated LLC Agreement of Global
Decisions Group LLC, dated as of February 12, 1998.
"LLC Units": units of capital of the Parent representing limited liability
company interests in the Parent.
"Loan": a Revolving Credit Loan, a Term Loan, a Delayed Draw Term Loan or
a Swing Line Loan, as the context shall require; collectively, the "Loans".
"Loan Documents": this Agreement, any Notes, the Applications, the
Guarantees and the Security Documents, each as amended, supplemented, waived or
otherwise modified from time to time.
"Loan Parties": the Parent, MGI, the Borrower and each Subsidiary of the
Borrower which is a party to a Loan Document; individually, a "Loan Party".
"Material Adverse Effect": a material adverse effect on (a) the business,
assets, operations, property, condition (financial or otherwise) or prospects of
the Parent, the Borrower and their Subsidiaries taken as a whole, or (b) the
validity or enforceability as to any Loan Party thereto of this Agreement, any
of the Notes or any of the other Loan Documents, the Transaction Documents or
the rights and remedies of the Administrative Agent and the Lenders under the
Loan Documents or the Transaction Documents taken as a whole.
"Materials of Environmental Concern": any gasoline or petroleum
(including, without
<PAGE> 14
14
limitation, crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances or materials or wastes defined or regulated as
such in or under or which may give rise to liability under any applicable
Environmental Law, including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"Merger Agreement": the Plan of Merger and Exchange Agreement, dated as of
August 1, 1997, by and among MGI, the Parent, GDG Merger Corporation, certain
stockholders named therein and The Goldman Sachs Group, L.P.
"MGI": as defined in the recitals hereto.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": with respect to any Asset Sale, any sale or issuance
of equity securities of the Parent or any of its Subsidiaries, the issuance of
any debt securities or any borrowings by the Parent or any of its Subsidiaries
(other than issuances and borrowings permitted pursuant to subsection 8.2,
except as otherwise specified), an amount equal to the gross proceeds in cash
and Cash Equivalents (including cash payments received by way of deferred
payment of principal pursuant to note, installment receivable, purchase price
adjustment or otherwise, but only when such cash payments are received) of such
Asset Sale, sale, issuance or borrowing, net of (i) reasonable attorneys' fees,
accountants' fees, brokerage, consultant and other customary fees, underwriting
commissions and other reasonable fees, commissions and expenses actually
incurred in connection with such Asset Sale, sale, issuance or borrowing, (ii)
taxes paid or reasonably estimated to be payable as a result thereof, (iii)
appropriate amounts provided or to be provided by the Parent or any of its
Subsidiaries as a reserve, in accordance with GAAP, with respect to any
liabilities associated with such Asset Sale and retained by the Parent or any
such Subsidiary after such Asset Sale and other appropriate amounts to be used
by the Parent or any of its Subsidiaries to discharge or pay on a current basis
any other liabilities associated with such Asset Sale and (iv) in the case of a
sale or Sale and Leaseback Transaction of or involving an asset subject to a
Lien securing any Indebtedness, payments made and installment payments required
to be made to repay such Indebtedness, including, without limitation, payments
in respect of principal, interest and prepayment premiums and penalties.
"Non-Excluded Taxes": as defined in subsection 4.11.
"Notes": the collective reference to the Revolving Credit Notes, the Term
Notes and the Delayed Draw Term Notes.
"Obligations": the unpaid principal of and interest on (including, without
limitation, interest accruing after the maturity of the Loans and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) the Loans and all other obligations and liabilities of the
Borrower to the Administrative Agent or to the Lenders, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any Notes, any other Loan Documents or any Permitted Hedging
Arrangement entered into with a Lender pursuant to subsection 8.14 and any other
document made, delivered or given in connection therewith or herewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent
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15
or to the Lenders that are required to be paid by the Borrower pursuant to the
terms of this Agreement) or otherwise.
"Other Representatives": CSI and BancAmerica, in their capacities as
arrangers of the Commitments hereunder and the Issuing Lender, in its capacity
as such.
"Parent": as defined in the preamble hereto.
"Participants": as defined in subsection 12.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor thereto).
"Permitted Hedging Arrangement": as defined in subsection 8.14.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is covered
by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
an "employer" as defined in Section 3(5) of ERISA.
"Prime Rate": as defined in the definition of the term "ABR" in this
subsection 1.1.
"Pro Forma Balance Sheet": as defined in subsection 5.1(c).
"Pro Forma Date": as defined in subsection 5.1(c).
"Refunded Swing Line Loans": as defined in subsection 2.5(c).
"Register": as defined in subsection 12.6(d).
"Regulation U": Regulation U of the Board as in effect from time to time.
"Reimbursement Obligations": the obligation of the Borrower to reimburse
the Issuing Lender pursuant to subsection 3.5(a) for amounts drawn under Letters
of Credit.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19, .20, .21, .22, .23, .24, .26,
.27 or .28 of PBGC Reg. Section 2615 or any successor regulation thereto.
"Required Lenders": at any time, Lenders the Total Credit Percentages of
which aggregate at least 51%.
"Requirement of Law": as to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and
any law, statute, ordinance, code, decree, treaty, rule or regulation or
determination of an arbitrator or a court or other
<PAGE> 16
16
Governmental Authority, in each case applicable to or binding upon such Person
or any of its material property or to which such Person or any of its material
property is subject, including, without limitation, laws, ordinances and
regulations pertaining to zoning, occupancy and subdivision of real properties;
provided that the foregoing shall not apply to any non-binding recommendation of
any Governmental Authority.
"Responsible Officer": as to any Person, any of the following officers of
such Person: (i) the chief executive officer or the president of such Person
and, with respect to financial matters, the chief financial officer, the senior
vice president - finance, the treasurer or the controller of such Person, (ii)
any vice president of such Person or, with respect to financial matters, any
assistant treasurer or assistant controller of such Person, who has been
designated in writing to the Administrative Agent as a Responsible Officer by
such chief executive officer or president of such Person or, with respect to
financial matters, such chief financial officer of such Person, (iii) with
respect to subsection 7.7 and without limiting the foregoing, the general
counsel of such Person and (iv) with respect to ERISA matters, the senior vice
president - human resources (or substantial equivalent) of such Person.
"Restricted Payment": as defined in subsection 8.7.
"Revolving Credit Commitment": as to any Revolving Credit Lender, its
obligation to make Revolving Credit Loans to, and/or make or participate in
Swing Line Loans made to, and/or issue or participate in Letters of Credit
issued on behalf of, the Borrower in an aggregate amount not to exceed at any
one time outstanding the amount set forth opposite such Revolving Credit
Lender's name in Schedule I under the heading "Revolving Credit Commitment" or,
in the case of any Lender that is an Assignee, the amount of the assigning
Lender's Revolving Credit Commitment assigned to such Assignee pursuant to
subsection 12.6(c) (in each case as such amount may be adjusted from time to
time as provided herein); collectively, as to all the Revolving Credit Lenders,
the "Revolving Credit Commitments".
"Revolving Credit Commitment Percentage": as to any Revolving Credit
Lender, the percentage of the aggregate Revolving Credit Commitments constituted
by its Revolving Credit Commitment (or, if the Revolving Credit Commitments have
terminated or expired, the percentage which (i) the sum of (a) such Lender's
then outstanding Revolving Credit Loans plus (b) such Lender's interests in the
aggregate L/C Obligations and Swing Line Loans then outstanding then constitutes
of (ii) the sum of (a) the aggregate Revolving Credit Loans of all the Revolving
Credit Lenders then outstanding plus (b) the aggregate L/C Obligations and Swing
Line Loans then outstanding).
"Revolving Credit Commitment Period": the period from and including the
Effective Date to but not including the Termination Date, or such earlier date
as the Revolving Credit Commitments shall terminate as provided herein.
"Revolving Credit Lender": any Lender having a Revolving Credit Commitment
hereunder.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 2.2.
"SEC": the Securities and Exchange Commission.
"Securities Act": the Securities Act of 1933, as amended from time to
time.
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"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Trademark Security Agreement and all other similar
security documents hereafter delivered to the Administrative Agent granting a
Lien on any asset or assets of any Person to secure the obligations and
liabilities of the Borrower hereunder, under any Notes and/or under any of the
other Loan Documents or to secure any guarantee of any such obligations and
liabilities, including, without limitation, any security documents executed and
delivered or caused to be delivered to the Administrative Agent pursuant to
subsection 8.13(b) or 8.13(c).
"Set": the collective reference to Eurodollar Loans, the then current
Interest Periods with respect to all of which begin on the same date and end on
the same later date (whether or not such Loans shall originally have been made
on the same day).
"Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvent" and "Solvency": with respect to any Person on a particular date,
the condition that, on such date, (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets 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, (c) 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 (d) 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 an unreasonably
small amount of capital.
"Standby Letter of Credit": as defined in subsection 3.1(a).
"Subsidiary": as to any Person, a corporation, partnership or other entity
of which shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.
"Swing Line Commitment": the Swing Line Lender's obligation to make Swing
Line Loans pursuant to subsection 2.5.
"Swing Line Lender": Chase, in its capacity as provider of Swing Line
Loans.
"Swing Line Loan Participation Certificate": a certificate evidencing a
Revolving Credit Lender's participation in Swing Line Loans pursuant to
subsection 2.5(d) in form and substance reasonably satisfactory to the Swing
Line Lender.
"Swing Line Loans": as defined in subsection 2.5(a).
"Swing Line Note": as defined in subsection 2.5(b).
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"Termination Date": February 12, 2003.
"Term Loan": as defined in subsection 2.6, collectively, the "Term Loans".
"Term Loan Commitment": as to any Term Loan Lender, its obligation to make
a Term Loan to the Borrower pursuant to subsection 2.6 in an aggregate amount
equal to the amount set forth under such Term Loan Lender's name in Schedule I
opposite the heading "Term Loan Commitment", collectively, the "Term Loan
Commitments".
"Term Loan Commitment Percentage": as to any Term Loan Lender, the
percentage of the aggregate Term Loan Commitments constituted by its Term Loan
Commitment or, following the Effective Date, the percentage of the aggregate
outstanding Term Loans constituted by its Term Loan.
"Term Loan Lender": any Lender having a Term Loan Commitment hereunder or
that holds outstanding Term Loans.
"Term Note" and "Term Notes": as defined in subsection 2.7(a).
"Three-Month Secondary CD Rate": as defined in the definition of the term
"ABR" in this subsection 1.1.
"Total Credit Percentage": as to any Lender, the percentage of the
aggregate Revolving Credit Commitments, Term Loan Commitments and Delayed Draw
Term Loan Commitments constituted by such Lender's Revolving Credit Commitment,
Term Loan Commitment and Delayed Draw Term Loan Commitment, or following the
Effective Date, the percentage representing a fraction the numerator of which is
the sum of (i) the aggregate principal amount of such Lender's Term Loans and
Delayed Draw Term Loans then outstanding plus (ii) the Revolving Credit
Commitment of such Lender (or, following the termination or expiration of the
Revolving Credit Commitments, the sum of (x) the aggregate principal amount of
such Lender's Revolving Credit Loans then outstanding plus (y) such Lender's
Revolving Commitment Percentage of all Swing Line Loans and L/C Obligations then
outstanding), and the denominator of which is the sum of (i) the aggregate
principal amount of Term Loans and Delayed Draw Term Loans of all Lenders then
outstanding plus (ii) the aggregate Revolving Credit Commitments of all Lenders
(or, following the termination or expiration of the Revolving Credit
Commitments, the sum of (x) the aggregate principal amount of all Revolving
Credit Loans then outstanding plus (y) the aggregate principal amount of all
Swing Line Loans and L/C Obligations then outstanding).
"Trademark Security Agreement": the collective reference to each Trademark
Security Agreement executed and delivered by the Parent, MGI, the Borrower and
each of its Domestic Subsidiaries, substantially in the form of Exhibit C, as
the same may be amended, supplemented, waived or otherwise modified from time to
time.
"Transaction Documents": the Merger Agreement and all other material
agreements, instruments or certificates executed in connection with the
Transactions, as the same may be amended, supplemented or otherwise modified
from time to time.
"Transactions": as defined in the recitals hereto.
"Transferee": as defined in subsection 12.6(f).
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"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.
"Underfunding": the excess of the present value of all accrued benefits
under a Plan (based on those assumptions used to fund such Plan) over the value
of the assets of such Plan allocable to such accrued benefits.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
"United States Person": as defined in Section 7701(a)(30) of the Code.
"U.S. Tax Compliance Certificate": as defined in subsection 4.11(b).
"Wholly Owned Subsidiary": as to any Person, any Subsidiary of such Person
of which such Person owns, directly or indirectly through one or more Wholly
Owned Subsidiaries, all of the Capital Stock of such Subsidiary other than
directors qualifying shares or shares held by nominees.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any Note, any other Loan Document or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Note and any other Loan Document, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Parent and its Subsidiaries not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions
hereof, each Revolving Credit Lender severally agrees to make revolving credit
loans ("Revolving Credit Loans") to the Borrower from time to time during the
Revolving Credit Commitment Period in an aggregate principal amount at any one
time outstanding which, when added to such Revolving Credit Lender's Revolving
Credit Commitment Percentage of the then outstanding L/C Obligations and the
then outstanding Swing Line Loans, does not exceed the amount of such Lender's
Revolving Credit Commitment then in effect. During the Revolving Credit
Commitment Period, the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may be made from time to time in (i)
Eurodollar Loans,
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(ii) ABR Loans or (iii) a combination thereof, as determined by the Borrower and
notified to the Administrative Agent in accordance with subsections 2.3 and 4.2,
provided that no Revolving Credit Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Termination Date.
2.2 Revolving Credit Notes. The Borrower agrees that, upon the request to
the Administrative Agent by any Revolving Credit Lender made on or prior to the
Effective Date or in connection with any assignment pursuant to subsection
12.6(c), in order to evidence such Lender's Revolving Credit Loans the Borrower
will execute and deliver, on the Effective Date in the case of any such request
made on or prior to the Effective Date and promptly in the case of any such
assignment, to such Lender a promissory note substantially in the form of
Exhibit A-1, with appropriate insertions as to payee, date and principal amount
(each, as amended, supplemented, replaced or otherwise modified from time to
time, a "Revolving Credit Note"), payable to the order of such Lender and in a
principal amount equal to the lesser of (a) the amount set forth under such
Revolving Credit Lender's name on Schedule I opposite the heading "Revolving
Credit Commitment" and (b) the aggregate unpaid principal amount of all
Revolving Credit Loans made by such Lender to the Borrower. Each Revolving
Credit Note shall (x) be dated the Effective Date, (y) be stated to mature on
the Termination Date and (z) provide for the payment of interest in accordance
with subsection 4.1. A Revolving Credit Note may be assigned or otherwise
transferred only by registration of such assignment or transfer in the Register
(and each Revolving Credit Note shall expressly so provide). Any assignment or
transfer of a Revolving Credit Note shall be registered in the Register only
upon surrender for registration of assignment or transfer of the Revolving
Credit Note accompanied by an Assignment and Acceptance duly executed by the
assigning Lender, and thereupon a new Revolving Credit Note shall be issued to
the designated Assignee and the surrendered Revolving Credit Note shall be
returned by the Administrative Agent to the Borrower marked "cancelled". No
assignment of a Revolving Credit Note shall be effective unless it shall have
been recorded in the Register by the Administrative Agent as provided in this
subsection 2.2.
2.3 Procedure for Revolving Credit Borrowing. The Borrower may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:30 P.M. (or prior to 11:00 A.M. in the case of
the initial borrowing hereunder if such initial borrowing is of ABR Loans), New
York City time, at least (a) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Revolving Credit Loans are
to be initially Eurodollar Loans or (b) on the requested Borrowing Date,
otherwise), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, ABR
Loans or a combination thereof and (iv) if the borrowing is to be entirely or
partly of Eurodollar Loans, the respective amounts of each such Type of Loan and
the respective lengths of the initial Interest Periods therefor. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in the
case of ABR Loans, except any ABR Loan to be used solely to pay a like amount of
outstanding Reimbursement Obligations or Swing Line Loans, $200,000 or a whole
multiple of $100,000 in excess thereof (or, if the then Available Revolving
Credit Commitments are less than $200,000, such lesser amount) and (y) in the
case of Eurodollar Loans, $500,000 or a whole multiple of $100,000 in excess
thereof. Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each Revolving Credit Lender thereof. Subject to the
satisfaction of the conditions precedent specified in subsection 6.2, each
Revolving Credit Lender will make the amount of its pro rata share of each
borrowing of Revolving Credit Loans available to the Administrative Agent for
the account of the Borrower identified in such notice at the office of the
Administrative Agent specified in subsection 12.2 prior to 12:30 P.M. (or 11:00
A.M., in the case of the initial
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borrowing hereunder), New York City time, or at such other office of the
Administrative Agent or at such other time as to which the Administrative Agent
shall notify such Revolving Credit Lender and the Borrower reasonably in advance
of the Borrowing Date with respect thereto, on the Borrowing Date requested by
the Borrower and in funds immediately available to the Administrative Agent.
Such borrowing will then be made available to the Borrower identified in the
notice by the Administrative Agent crediting the account of the Borrower on the
books of such office with the aggregate of the amounts made available to the
Administrative Agent by the Revolving Credit Lenders and in like funds as
received by the Administrative Agent.
2.4 Termination or Reduction of Revolving Credit Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent (which will promptly notify the Lenders thereof), to
terminate the Revolving Credit Commitments or, from time to time, to reduce the
amount of the Revolving Credit Commitments; provided that no such termination or
reduction shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans and Swing Line Loans made on the
effective date thereof, the aggregate principal amount of the Revolving Credit
Loans then outstanding, when added to the then outstanding L/C Obligations and
the then outstanding Swing Line Loans, would exceed the Revolving Credit
Commitments then in effect. Any such reduction shall be in an amount equal to
$500,000 or a whole multiple of $100,000 in excess thereof and shall reduce
permanently the Revolving Credit Commitments then in effect.
2.5 Swing Line Commitment. (a) Subject to the terms and conditions hereof,
the Swing Line Lender agrees to make swing line loans (individually, a "Swing
Line Loan"; collectively, the "Swing Line Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding not to exceed $200,000, provided that at no
time may the sum of the then outstanding Swing Line Loans, Revolving Credit
Loans and L/C Obligations exceed the Revolving Credit Commitments then in
effect. Amounts borrowed by the Borrower under this subsection 2.5 may be repaid
and, through but excluding the Termination Date, reborrowed. All Swing Line
Loans shall be made as ABR Loans and shall not be entitled to be converted into
Eurodollar Loans. The Borrower shall give the Swing Line Lender irrevocable
notice (which notice must be received by the Swing Line Lender prior to 12:00
Noon, New York City time) on the requested Borrowing Date specifying (i) the
amount of the requested Swing Line Loan which shall be in a minimum amount of
$50,000 in excess thereof. The proceeds of the Swing Line Loan will be made
available by the Swing Line Lender to the Borrower at the office of the Swing
Line Lender by crediting the account of the Borrower at such office with such
proceeds in Dollars.
(b) The Borrower agrees that, upon the request to the Administrative Agent
by the Swing Line Lender made on or prior to the Effective Date or in connection
with any assignment pursuant to subsection 12.6(c), in order to evidence the
Swing Line Loans the Borrower will execute and deliver, on the Effective Date in
the case of any such request made on or prior to the Effective Date and promptly
in the case of any such assignment, to the Swing Line Lender a promissory note
substantially in the form of Exhibit A-4, with appropriate insertions (as the
same may be amended, supplemented, replaced or otherwise modified from time to
time, the "Swing Line Note"), payable to the order of the Swing Line Lender and
representing the obligation of the Borrower to pay the amount of the Swing Line
Commitment or, if less, the unpaid principal amount of the Swing Line Loans made
to the Borrower, with interest thereon as prescribed in subsection 4.1. The
Swing Line Note shall (i) be dated the Effective Date, (i) be stated to mature
on the Termination Date and (iii) provide for the payment of interest in
accordance with subsection 4.1.
(c) The Swing Line Lender, at any time in its sole and absolute discretion
may, and, at
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any time as there shall be a Swing Line Loan outstanding for more than seven
Business Days, the Swing Line Lender shall, on behalf of the Borrower (which
hereby irrevocably directs and authorizes the Swing Line Lender to act on its
behalf), request each Revolving Credit Lender, including the Swing Line Lender,
to make a Revolving Credit Loan as an ABR Loan in an amount equal to such
Revolving Credit Lender's Revolving Credit Commitment Percentage of the
principal amount of all of the Swing Line Loans (the "Refunded Swing Line
Loans") outstanding on the date such notice is given; provided that the
provisions of this subsection shall not affect the obligations of the Borrower
to prepay Swing Line Loans in accordance with the provisions of subsection
4.4(e). Unless the Revolving Credit Commitments shall have expired or terminated
(in which event the procedures of paragraph (d) of this subsection 2.5 shall
apply), each Revolving Credit Lender will make the proceeds of its Revolving
Credit Loan available to the Administrative Agent for the account of the Swing
Line Lender at the office of the Administrative Agent prior to 12:00 Noon, New
York City time, in funds immediately available on the Business Day next
succeeding the date such notice is given. The proceeds of such Revolving Credit
Loans shall be immediately applied to repay the Refunded Swing Line Loans.
(d) If the Revolving Credit Commitments shall expire or terminate at any
time while Swing Line Loans are outstanding, each Revolving Credit Lender shall,
at the option of the Swing Line Lender exercised reasonably, either (i)
notwithstanding the expiration or termination of the Revolving Credit
Commitments, make a Revolving Credit Loan as an ABR Loan (which Revolving Credit
Loan shall be deemed a "Revolving Credit Loan" for all purposes of this
Agreement and the other Loan Documents) or (ii) purchase an undivided
participating interest in such Swing Line Loans, in either case in an amount
equal to such Revolving Credit Lender's Revolving Credit Commitment Percentage
determined on the date of, and immediately prior to, the expiration or
termination of the Revolving Credit Commitments of the aggregate principal
amount of such Swing Line Loans. Each Revolving Credit Lender will make the
proceeds of any Revolving Credit Loan made pursuant to the immediately preceding
sentence available to the Administrative Agent for the account of the Swing Line
Lender at the office of the Administrative Agent prior to 12:00 Noon, New York
City time, in funds immediately available on the Business Day next succeeding
the date on which the Revolving Credit Commitments expire or terminate. The
proceeds of such Revolving Credit Loans shall be immediately applied to repay
the Swing Line Loans outstanding on the date of termination or expiration of the
Revolving Credit Commitments. In the event that the Revolving Credit Lenders
purchase undivided participating interests pursuant to the first sentence of
this paragraph (d), each Revolving Credit Lender shall immediately transfer to
the Swing Line Lender, in immediately available funds, the amount of its
participation and upon receipt thereof the Swing Line Lender will deliver to
such Revolving Credit Lender a Swing Line Loan Participation Certificate dated
the date of receipt of such funds and in such amount.
(e) Whenever, at any time after the Swing Line Lender has received from
any Revolving Credit Lender such Revolving Credit Lender's participating
interest in a Swing Line Loan, the Swing Line Lender receives any payment on
account thereof, the Swing Line Lender will distribute to such Revolving Credit
Lender its participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Revolving Credit Lender's participating interest was outstanding and funded);
provided, however, that in the event that such payment received by the Swing
Line Lender is required to be returned, such Revolving Credit Lender will return
to the Swing Line Lender any portion thereof previously distributed by the Swing
Line Lender to it.
2.6 Term Loans. Subject to the terms and conditions hereof, each Term Loan
Lender severally agrees to make a term loan (a "Term Loan") on the Effective
Date in the principal
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amount set forth under such Lender's name in Schedule I opposite the heading
"Term Loan Commitment". The Term Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with subsection
2.8 and 4.2. Amounts paid on account of the Term Loans may not be reborrowed.
2.7 Term Notes. (a) The Borrower agrees that, upon the request to the
Administrative Agent by any Term Loan Lender made on or prior to the Effective
Date or in connection with any assignment pursuant to subsection 12.6(c), to
evidence such Lender's Term Loan the Borrower will execute and deliver, on the
Effective Date in the case of any such request made on or prior to the Effective
Date and promptly in the case of any such assignment, to such Lender a
promissory note substantially in the form of Exhibit A-2 (each, as amended,
supplemented, replaced or otherwise modified from time to time, a "Term Note"),
with appropriate insertions therein as to payee, date and principal amount,
payable to the order of such Term Loan Lender and in a principal amount equal to
the lesser of (a) the amount set forth under such Term Loan Lender's name on
Schedule I opposite the heading "Term Loan Commitment" and (b) the then unpaid
principal amount of the Term Loans made by such Term Loan Lender to the
Borrower. Each Term Note shall (i) be dated the Effective Date, (ii) be payable
as provided in subsection 2.7(b) and (iii) provide for the payment of interest
in accordance with subsection 4.1. A Term Note may be assigned or otherwise
transferred only by registration of such assignment or transfer in the Register
(and each Term Note shall expressly so provide). Any assignment or transfer of a
Term Note shall be registered in the Register only upon surrender for
registration of assignment or transfer of the Term Note accompanied by an
Assignment and Acceptance duly executed by the assigning Term Loan Lender, and
thereupon a new Term Note shall be issued to the designated Assignee and the
surrendered Term Note shall be returned by the Administrative Agent to the
Borrower marked "cancelled". No assignment of a Term Note shall be effective
unless it shall have been recorded in the Register by the Administrative Agent
as provided in this subsection 2.7(a).
(b) The Term Loans shall be payable in 16 consecutive quarterly
installments, commencing on March 31, 1999, on the dates and in the aggregate
principal amount set forth below (together with all accrued interest thereon)
opposite the applicable installment date (or, if less, the aggregate amount of
the Term Loans then outstanding):
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
March 31, 1999 $ 750,000
June 30, 1999 $ 750,000
September 30, 1999 $ 750,000
December 31, 1999 $ 750,000
March 31, 2000 $1,000,000
June 30, 2000 $1,000,000
September 30, 2000 $1,000,000
December 31, 2000 $1,000,000
March 31, 2001 $1,000,000
June 30, 2001 $1,000,000
September 30, 2001 $1,000,000
December 31, 2001 $1,000,000
March 31, 2002 $1,000,000
June 30, 2002 $1,000,000
September 30, 2002 $1,000,000
December 31, 2002 $1,000,000
</TABLE>
<PAGE> 24
24
2.8 Procedure for Term Loan Borrowing. The Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:30 P.M. (or prior to 11:00 A.M. in the case of
the initial borrowing hereunder if such initial borrowing is of ABR Loans), New
York City time, at least (a) three Business Days prior to the Effective Date, if
all or any part of the Term Loans are to be initially Eurodollar Loans or (b) on
the Effective Date, otherwise, requesting that the Term Loan Lenders make the
Term Loans on the Effective Date and specifying (i) the amount to be borrowed,
(ii) whether the Term Loans are to be initially Eurodollar Loans, ABR Loans or a
combination thereof, and (iii) if the Term Loans are to be entirely or partly
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Periods therefor. Upon receipt of
such notice the Administrative Agent shall promptly notify each Term Loan Lender
thereof. Each Term Loan Lender will make the amount of its pro rata share of the
Term Loans available to the Administrative Agent for the account of the Borrower
at the office of the Administrative Agent specified in subsection 12.2 prior to
11:00 A.M., New York City time, on the Effective Date in Dollars and in funds
immediately available to the Administrative Agent. The Administrative Agent
shall on such date credit the account of the Borrower on the books of such
office of the Administrative Agent, c/o Loan and Agency Service Group, One Chase
Manhattan Plaza, 8th Floor, New York, New York 10081, with the aggregate of the
amounts made available to the Administrative Agent by the Term Loan Lenders and
in like funds as received by the Administrative Agent.
2.9 Delayed Draw Term Loans. Subject to the terms and conditions hereof,
each Delayed Draw Term Loan Lender severally agrees to make delayed draw term
loans (a "Delayed Draw Term Loan") to the Borrower from time to time during the
Delayed Draw Term Loan Commitment Period in an aggregate principal amount at any
one time outstanding which does not exceed the amount set forth under such
Lender's name in Schedule I opposite the heading "Delayed Draw Term Loan
Commitment". The Delayed Draw Term Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with subsections
2.11 and 4.2. Amounts paid on account of the Delayed Draw Term Loans may not be
reborrowed.
2.10 Delayed Draw Term Notes. (a) The Borrower agrees that, upon the
request to the Administrative Agent by any Delayed Draw Term Loan Lender made on
or prior to the Effective Date or in connection with any assignment pursuant to
subsection 12.6(c), to evidence such Lender's Delayed Draw Term Loan the
Borrower will execute and deliver, on the Effective Date in the case of any such
request made on or prior to the Effective Date and promptly in the case of any
such assignment, to such Lender a promissory note substantially in the form of
Exhibit A-3 (each, as amended, supplemented, replaced or otherwise modified from
time to time, a "Delayed Draw Term Note"), with appropriate insertions therein
as to payee, date and principal amount, payable to the order of such Delayed
Draw Term Loan Lender and in a principal amount equal to the lesser of (a) the
amount set forth under such Delayed Draw Term Loan Lender's name on Schedule I
opposite the heading "Delayed Draw Term Loan Commitment" and (b) the then unpaid
principal amount of the Delayed Draw Term Loans made by such Delayed Draw Term
Loan Lender to the Borrower. Each Delayed Draw Term Note shall (i) be dated the
Effective Date, (ii) be payable as provided in subsection 2.10(b) and (iii)
provide for the payment of interest in accordance with subsection 4.1. A Delayed
Draw Term Note may be assigned or otherwise transferred only by registration of
such assignment or transfer in the Register (and each Delayed Draw Term Note
shall expressly so provide). Any assignment or transfer of a Delayed Draw Term
Note shall be registered in the Register only upon surrender for registration of
assignment or transfer of the Delayed Draw Term Note accompanied by an
Assignment and Acceptance duly executed by the assigning Delayed Draw
<PAGE> 25
25
Term Loan Lender, and thereupon a new Delayed Draw Term Note shall be issued to
the designated Assignee and the surrendered Delayed Draw Term Note shall be
returned by the Administrative Agent to the Borrower marked "cancelled". No
assignment of a Delayed Draw Term Note shall be effective unless it shall have
been recorded in the Register by the Administrative Agent as provided in this
subsection 2.10(a).
(b) The Delayed Draw Term Loans shall be payable in quarterly installments
equal to one-twentieth of the related Delayed Draw Term Loan, commencing on the
quarterly installment date for the Term Loans, as specified in subsection
2.7(b), which is closest to the date twelve months after the date of such
Delayed Draw Term Loan. Notwithstanding the foregoing, the then unpaid principal
amount of the Delayed Draw Term Loans shall be due on the Termination Date.
2.11 Procedure for Delayed Draw Term Loan Borrowing. The Borrower shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 12:30 P.M. (or 11:00 A.M. in the case of
ABR Loans), New York City time, at least (a) three Business Days prior to the
Borrowing Date, if all or any part of the Delayed Draw Term Loans are to be
initially Eurodollar Loans or (b) on the Borrowing Date, otherwise, requesting
that the Delayed Draw Term Loan Lenders make the Delayed Draw Term Loans on the
Borrowing Date and specifying (i) the amount to be borrowed, (ii) whether the
Delayed Draw Term Loans are to be initially Eurodollar Loans, ABR Loans or a
combination thereof, and (iii) if the Delayed Draw Term Loans are to be entirely
or partly Eurodollar Loans, the respective amounts of each such Type of Loan and
the respective lengths of the initial Interest Periods therefor. Upon receipt of
such notice the Administrative Agent shall promptly notify each Delayed Draw
Term Loan Lender thereof. Each Delayed Draw Term Loan Lender will make the
amount of its pro rata share of the Delayed Draw Term Loans available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in subsection 12.2 prior to 11:00 A.M., New York
City time, on the Borrowing Date in Dollars and in funds immediately available
to the Administrative Agent. The Administrative Agent shall on such date credit
the account of the Borrower on the books of such office of the Administrative
Agent, c/o Loan and Agency Service Group, One Chase Manhattan Plaza, 8th Floor,
New York, New York 10081, with the aggregate of the amounts made available to
the Administrative Agent by the Delayed Draw Term Loan Lenders and in like funds
as received by the Administrative Agent.
2.12 Repayment of Loans. (a) The Borrower hereby unconditionally promises
to pay to the Administrative Agent for the account of: (i) each Revolving Credit
Lender, the then unpaid principal amount of each Revolving Credit Loan of such
Lender made to the Borrower, on the Termination Date (or such earlier date on
which the Revolving Credit Loans become due and payable pursuant to Section 9);
(ii) the Swing Line Lender, the then unpaid principal amount of the Swing Line
Loans made to Borrower, on the Termination Date (or such earlier date on which
the Swing Line Loans become due and payable pursuant to Section 9); (iii) each
Term Loan Lender, the amounts specified in subsection 2.7(b) on the dates
specified in subsection 2.7(b) (or such earlier date on which the Term Loans
become due and payable pursuant to Section 9) and (iv) each Delayed Draw Term
Loan Lender, the amounts specified in subsection 2.10(b) on the dates specified
in subsection 2.10(b) (or such earlier date on which the Delayed Draw Term Loans
become due and payable pursuant to Section 9). The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from the date of the making of the Loans until payment in full
thereof at the rates per annum, and on the dates, set forth in subsection 4.1.
(b) Each Lender (including the Swing Line Lender) shall maintain in
accordance with its
<PAGE> 26
26
usual practice an account or accounts evidencing indebtedness of the Borrower to
such Lender resulting from each Loan of such Lender from time to time,
including, without limitation, the amounts of principal and interest payable and
paid to such Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 12.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period, if any, applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 2.12(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in subsection 3.4(a), agrees to issue letters of credit
("Letters of Credit") for the account of the Borrower on any Business Day during
the Revolving Credit Commitment Period in such form as may be approved from time
to time by the Issuing Lender; provided that the Issuing Lender shall not issue
any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed $1,000,000 or (ii) the Aggregate Outstanding Revolving
Credit of all the Revolving Credit Lenders would exceed the Revolving Credit
Commitments of all the Revolving Credit Lenders. Each Letter of Credit shall (i)
be either (x) a standby letter of credit issued to support obligations of the
Borrower or any of its Subsidiaries, contingent or otherwise, which finance the
working capital and business needs of the Borrower and its Subsidiaries incurred
in the ordinary course of business (a "Standby Letter of Credit"), or (y) a
commercial letter of credit in respect of the purchase of goods or services by
the Borrower or any of its Subsidiaries in the ordinary course of business (a
"Commercial Letter of Credit") and (ii) expire on the earlier of (x) one year
after the date of issuance and (y) five Business Days prior to the Termination
Date, provided that a one year Letter of Credit may be renewed for additional
one year periods, but may not be extended beyond five days prior to the
Termination Date.
(b) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.
(c) The Issuing Lender shall not at any time issue any Letter of Credit
hereunder if such issuance would conflict with, or cause the Issuing Lender or
any L/C Participant to exceed any limits imposed by, any applicable Requirement
of Law.
3.2 Procedure for Issuance of Letters of Credit. The Borrower may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender, at its address for notices specified herein,
an Application therefor, completed to the reasonable satisfaction of the Issuing
Lender, and such other certificates, documents and other papers and
<PAGE> 27
27
information as the Issuing Lender may reasonably request. Upon receipt of any
Application, the Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to the Borrower promptly
following the issuance thereof.
3.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay to the
Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit commission with respect to each Letter of
Credit, computed for the period from and including the date of issuance of such
Letter of Credit to the expiration date of such Letter of Credit, computed at a
rate per annum equal to the Applicable Margin then in effect for Eurodollar
Loans that are Revolving Credit Loans calculated on the basis of a 360-day year,
of the aggregate amount available to be drawn under such Letter of Credit,
payable quarterly in arrears on each L/C Fee Payment Date with respect to such
Letter of Credit and on the Termination Date or such earlier date as the
Revolving Credit Commitments shall terminate as provided herein. Such commission
shall be payable to the Administrative Agent for the account of the Revolving
Credit Lenders to be shared ratably among them in accordance with their
respective Revolving Credit Commitment Percentages. The Borrower shall also pay
to the Administrative Agent, for the account of the Issuing Lender, a fee equal
to 1/4 of 1% per annum of the aggregate amount available to be drawn under such
Letter of Credit, payable quarterly in arrears on each L/C Fee Payment Date with
respect to such Letter of Credit and on the Termination Date or such other date
as the Revolving Credit Commitments shall terminate. Such commissions and fees
shall be nonrefundable.
(b) In addition to the foregoing commissions and fees, the Borrower shall
pay or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all
commissions and fees received by the Administrative Agent for their respective
accounts pursuant to this subsection.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's Revolving
Credit Commitment Percentage (determined on the date of issuance of the relevant
Letter of Credit) in the Issuing Lender's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrower in
respect of such Letter or Credit in accordance with subsection 3.5(a), such L/C
Participant shall pay to the Issuing Lender upon demand at the Issuing Lender's
address for notices specified herein an amount equal to such L/C Participant's
Revolving Credit Commitment Percentage of the amount of such draft, or any part
thereof, which is not so
<PAGE> 28
28
reimbursed; provided that nothing in this paragraph shall relieve the Issuing
Lender of any liability resulting from the gross negligence or willful
misconduct of the Issuing Lender, or otherwise affect any defense or other right
that any L/C Participant may have as a result of such gross negligence or
willful misconduct.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender on demand by the Issuing Lender pursuant to subsection 3.4(a) in
respect of any unreimbursed portion of any payment made by the Issuing Lender
under any Letter of Credit is paid to the Issuing Lender within three Business
Days after the date such demand is made, such L/C Participant shall pay to the
Issuing Lender on demand an amount equal to the product of (i) such amount,
times (ii) the daily average Federal Funds Effective Rate during the period from
and including the date such payment is required to the date on which such
payment is immediately available to the Issuing Lender, times (iii) a fraction
the numerator of which is the number of days that elapse during such period and
the denominator of which is 360. If any such amount required to be paid by any
L/C Participant pursuant to subsection 3.4(a) is not in fact made available to
the Issuing Lender by such L/C Participant within three Business Days after the
date such payment is due, the Issuing Lender shall be entitled to recover from
such L/C Participant, on demand, such amount with interest thereon calculated
from such due date at the rate per annum applicable to ABR Loans hereunder. A
certificate of the Issuing Lender submitted to any L/C Participant with respect
to any amounts owing under this subsection (which shall include calculations of
any such amounts in reasonable detail) shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
share of such payment in accordance with subsection 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower in respect of such Letter of Credit or otherwise, including proceeds of
Collateral applied thereto by the Issuing Lender), or any payment of interest on
account thereof, the Issuing Lender will, if such payment is received prior to
1:00 P.M., New York City time, on a Business Day, distribute to such L/C
Participant its pro rata share thereof prior to the end of such Business Day and
otherwise the Issuing Lender will distribute such payment on the next succeeding
Business Day; provided, however, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. (a) The Borrower agrees to
reimburse the Issuing Lender, upon receipt by the Borrower of notice from the
Issuing Lender of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender, for the amount of (i) such draft so paid
and (ii) any taxes, fees, charges or other costs or expenses reasonably incurred
by the Issuing Lender in connection with such payment. Each such payment shall
be made to the Issuing Lender, at its address for notices specified herein in
immediately available funds, on the date on which the Borrower receives such
notice, if received prior to 11:00 A.M., New York City time, on a Business Day
and otherwise on the next succeeding Business Day.
(b) Interest shall be payable on any and all amounts remaining unpaid by
the Borrower under this subsection (i) from the date the draft presented under
the affected Letter of Credit is paid to, but excluding, the date on which the
Borrower is required to pay such amounts pursuant to paragraph (a) above at the
rate which would then be payable on any outstanding ABR Loans that are Revolving
Credit Loans and (ii) thereafter until payment in full at the rate which would
be payable on any outstanding ABR Loans that are Term Loans which were then
<PAGE> 29
29
overdue.
3.6 Obligations Absolute. (a) The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender, any L/C Participant or
any beneficiary of a Letter of Credit, provided that this paragraph shall not
relieve the Issuing Lender or any L/C Participant of any liability resulting
from the gross negligence or willful misconduct of the Issuing Lender or such
L/C Participant, or otherwise affect any defense or other right that the
Borrower may have as a result of any such gross negligence or willful
misconduct.
(b) The Borrower also agrees with the Issuing Lender that the Issuing
Lender and the L/C Participants shall not be responsible for, and the Borrower's
Reimbursement Obligations under subsection 3.5(a) shall not be affected by,
among other things, (i) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (ii) any dispute between or among such
Borrower and any beneficiary of any Letter of Credit or any other party to which
such Letter of Credit may be transferred or (iii) any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee, provided that this paragraph shall not relieve the Issuing Lender or
any L/C Participant of any liability resulting from the gross negligence or
willful misconduct of the Issuing Lender or such L/C Participant, or otherwise
affect any defense or other right that the Borrower may have as a result of any
such gross negligence or willful misconduct.
(c) Neither the Issuing Lender nor any L/C Participant shall be liable for
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by such Person's gross negligence
or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by the Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender or any L/C Participant to the
Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in respect of any Letter of Credit in connection with any
draft presented for payment under such Letter of Credit shall, in addition to
any payment obligation expressly provided for in such Letter of Credit, be
limited to determining that the documents (including each draft) delivered under
such Letter of Credit in connection with such presentment are in conformity with
such Letter of Credit, provided that this paragraph shall not relieve the
Issuing Lender of any liability resulting from the gross negligence or willful
misconduct of the Issuing Lender, or otherwise affect any defense or other right
that the Borrower may have as a result of any such gross negligence or willful
misconduct.
3.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
<PAGE> 30
30
SECTION 4. GENERAL PROVISIONS APPLICABLE
TO LOANS AND LETTERS OF CREDIT
4.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin in effect for such day.
(b) Each ABR Loan shall bear interest for each day that it is outstanding
at a rate per annum equal to the ABR for such day plus the Applicable Margin in
effect for such day.
(c) If all or a portion of (i) the principal amount of any Loan, (ii) any
interest payable thereon or (iii) any commitment fee, letter of credit
commission, letter of credit fee or other amount payable hereunder, including
Reimbursement Obligations, shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum which is (x) in the case of overdue principal, the rate that
would otherwise be applicable thereto pursuant to the relevant foregoing
provisions of this subsection plus 2.00% or (y) in the case of overdue interest,
fees, commissions or other amounts, the rate described in paragraph (b) of this
subsection for Term Loans or Delayed Draw Term Loans which are ABR Loans plus
2.00%, in each case from the date of such non-payment until such amount is paid
in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this subsection
shall be payable from time to time on demand.
(e) It is the intention of the parties hereto to comply strictly with
applicable usury laws; accordingly, it is stipulated and agreed that the
aggregate of all amounts which constitute interest under applicable usury laws,
whether contracted for, charged, taken, reserved, or received, in connection
with the indebtedness evidenced by this Agreement or any Notes, or any other
document relating or referring hereto or thereto, now or hereafter existing,
shall never exceed under any circumstance whatsoever the maximum amount of
interest allowed by applicable usury laws.
4.2 Conversion and Continuation Options. (a) The Borrower may elect from
time to time to convert outstanding Term Loans, Delayed Draw Term Loans and
Revolving Credit Loans from Eurodollar Loans to ABR Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert outstanding Term Loans, Delayed Draw Term
Loans and Revolving Credit Loans from ABR Loans to Eurodollar Loans by giving
the Administrative Agent at least three Business Days' prior irrevocable notice
of such election. Any such notice of conversion to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods therefor.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each affected Lender thereof. All or any part of outstanding Eurodollar Loans
and ABR Loans may be converted as provided herein, provided that (i) (unless the
Required Lenders otherwise consent) no Loan may be converted into a Eurodollar
Loan when any Default or Event of Default has occurred and is continuing and, in
the case of any Default, the Administrative Agent has given notice to the
Borrower that no such conversions may be made and (ii) no Loan may be converted
into a Eurodollar Loan after the date that is one month prior to the Termination
Date.
(b) Any Eurodollar Loan may be continued as such upon the expiration of
the then
<PAGE> 31
31
current Interest Period with respect thereto by the Borrower giving notice to
the Administrative Agent of the length of the next Interest Period to be
applicable to such Loan, determined in accordance with the applicable provisions
of the term "Interest Period" set forth in subsection 1.1, provided that no
Eurodollar Loan may be continued as such (i) (unless the Required Lenders
otherwise consent) when any Default or Event of Default has occurred and is
continuing and, in the case of any Default, the Administrative Agent has given
notice to the Borrower that no such continuations may be made or (ii) after the
date that is one month prior to the Termination Date. Upon receipt of any such
notice of continuation pursuant to this subsection 4.2(b), the Administrative
Agent shall promptly notify each affected Lender thereof.
4.3 Minimum Amounts of Sets. All borrowings, conversions and continuations
of Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans outstanding
comprising each Set shall be equal to $500,000 or a whole multiple of $100,000
in excess thereof and so that there shall not be more than 9 Sets at any one
time outstanding.
4.4 Optional and Mandatory Prepayments and Commitment Reductions. (a) The
Borrower may at any time and from time to time prepay the Loans made to it
(including the Reimbursement Obligations in respect of Letters of Credit issued
for its account) and permanently reduce the Revolving Credit Commitments, in
whole or in part, without premium or penalty, upon at least three Business Days'
irrevocable notice by the Borrower to the Administrative Agent (in the case of
Eurodollar Loans and Reimbursement Obligations) and at least one Business Day's
irrevocable notice by the Borrower to the Administrative Agent (in the case of
ABR Loans other than Swing Line Loans) or same day irrevocable notice by the
Borrower to the Administrative Agent (in the case of Swing Line Loans),
specifying, in the case of any prepayment of Loans or reduction of Revolving
Credit Commitments, the date and amount of prepayment or reduction, as the case
may be, and whether such prepayment is (i) of Term Loans, Delayed Draw Term
Loans, Revolving Credit Loans, Swing Line Loans, or a combination thereof, and
(ii) of Eurodollar Loans, ABR Loans or a combination thereof, and, in each case
if a combination thereof, the principal amount allocable to each and, in the
case of any prepayment of Reimbursement Obligations, the date and amount of
prepayment, the identity of the applicable Letter of Credit or Letters of Credit
and the amount allocable to each of such Reimbursement Obligation. Upon the
receipt of any such notice the Administrative Agent shall promptly notify each
affected Lender thereof. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with (if a Eurodollar Loan is prepaid other than at the end of the Interest
Period applicable thereto) amounts payable, if any, pursuant to subsection 4.12
and, in the case of prepayments of the Term Loans and Delayed Draw Term Loans
only, accrued interest to, but excluding, such date on the amount prepaid.
Partial prepayments of (i) the Term Loans and Delayed Draw Term Loans pursuant
to this subsection shall be applied (x) pro rata (based on outstanding principal
amount) to the Term Loans and the Delayed Draw Term Loans and (y) first, to the
first two installments thereof due on or after the date of such prepayment in
the order of their maturities and second, pro rata to the respective remaining
installments thereof, and (ii) the Revolving Credit Loans and the Reimbursement
Obligations pursuant to this subsection shall (unless the Borrower otherwise
directs) be applied, first, to payment of the Swing Line Loans then outstanding,
second, to payment of the Revolving Credit Loans then outstanding, third, to
payment of any Reimbursement Obligations then outstanding and, last, to cash
collateralize any outstanding L/C Obligation on terms reasonably satisfactory to
the Administrative Agent. Partial prepayments pursuant to this subsection 4.4(a)
shall be in an aggregate principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof. Amounts prepaid on account of Term Loans and Delayed
Draw Term Loans pursuant to this subsection 4.4(a) may
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not be reborrowed.
(b) If subsequent to the Effective Date, the Parent or any of its
Subsidiaries (including the Borrower) shall receive Net Cash Proceeds from any
Asset Sales or dispositions permitted by subsection 8.6(g) or not otherwise
permitted by subsection 8.6 (other than Asset Sales of up to an aggregate
maximum amount equal to $1,000,000), then an amount equal to 100% of the Net
Cash Proceeds thereof shall on the first Business Day after receipt thereof be
applied toward the prepayment of the Loans in accordance with subsection 4.4(f).
(c) If subsequent to the Effective Date, the Parent or any of its
Subsidiaries (including the Borrower) shall issue any of its Capital Stock
(except for (i) such Capital Stock issued as payments made in conjunction with
acquisitions permitted under subsection 8.9 or issued upon the exercise of
options, (ii) the Contingent LLC Units, if any, issued in connection with the
combination of MGI and CERA and (iii) the issuance, directly or through a
Subsidiary, of such Capital Stock to directors or employees of or consultants to
the Parent or any of its Subsidiaries), then an amount equal to 100% of the Net
Cash Proceeds thereof shall be applied toward the prepayment of the Loans in
accordance with subsection 4.4(f).
(d) If, at any time the aggregate principal amount of the Revolving Credit
Loans, Swing Line Loans and L/C Obligations then outstanding exceeds an amount
equal to the aggregate Revolving Credit Commitment on such date, the Borrower
shall first repay the Revolving Credit loans then outstanding; second pay any
Reimbursement Obligations then outstanding and, last, cash collateralize any
outstanding L/C Obligation in an aggregate amount equal to such excess.
(e) The Borrower shall prepay all Swing Line Loans then outstanding
simultaneously with each borrowing of Revolving Credit Loans.
(f) Prepayments pursuant to subsections 4.4(b) and 4.4(c) shall be
applied, first, to prepay Term Loans and Delayed Draw Term Loans then
outstanding, second, to prepay Swing Line Loans then outstanding, third, to
prepay Revolving Credit Loans then outstanding, fourth, to pay any Reimbursement
Obligations then outstanding and, last, to cash collateralize any outstanding
L/C Obligations on terms reasonably satisfactory to the Administrative Agent.
Prepayments of the Term Loans or Delayed Draw Term Loans pursuant to subsections
4.4(b) and 4.4(c) shall be applied (x) pro rata (based on outstanding principal
amount) to the Term Loans and the Delayed Draw Term Loans and (y) first, to the
first four installments thereof due on or after the date of such prepayment in
the order of their maturities and second, pro rata to the respective remaining
installments thereof. Prepayments of the Revolving Credit Loans and the
Reimbursement Obligations pursuant to subsections 4.4(b) and 4.4(c) shall
(unless the Borrower otherwise directs) be applied, first, to payment of the
Revolving Credit Loans then outstanding, second, to payment of any Reimbursement
Obligations then outstanding and, last, to cash collateralize any outstanding
L/C Obligation on terms reasonably satisfactory to the Administrative Agent.
Amounts prepaid on account of Term Loans or Delayed Draw Term Loans pursuant to
subsection 4.4(b) and 4.4(c) may not be reborrowed.
(g) Notwithstanding the foregoing provisions of this subsection 4.4, if at
any time any prepayment of the Loans pursuant to subsection 4.4(b), 4.4(c) or
4.4(d) would result, after giving effect to the procedures set forth in this
Agreement, in the Borrower incurring breakage costs under subsection 4.12 as a
result of Eurodollar Loans being prepaid other than on the last day of an
Interest Period with respect thereto, then, the Borrower may, so long as no
Default or Event of Default shall have occurred and be continuing, in its sole
discretion, initially (x) deposit a portion (up to 100%) of the amounts that
otherwise would have been paid in respect of such Eurodollar Loans with the
Administrative Agent (which deposit must be equal in amount to the
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amount of such Eurodollar Loans not immediately prepaid) to be held as security
for the obligations of the Borrower to make such prepayment pursuant to a cash
collateral agreement to be entered into on terms reasonably satisfactory to the
Administrative Agent, with such cash collateral to be directly applied upon the
first occurrence thereafter of the last day of an Interest Period with respect
to such Eurodollar Loans (or such earlier date or dates as shall be requested by
the Borrower) or (y) make a prepayment of the Revolving Credit Loans in
accordance with subsection 4.4(a) with an amount equal to a portion (up to 100%)
of the amounts that otherwise would have been paid in respect of such Eurodollar
Loans (which prepayment, together with any deposits pursuant to clause (x)
above, must be equal in amount to the amount of such Eurodollar Loans not
immediately prepaid); provided that, notwithstanding anything in this Agreement
to the contrary, the Borrower may not request any Extension of Credit under the
Revolving Credit Commitments that would reduce the aggregate amount of the
Available Revolving Credit Commitments to an amount that is less than the amount
of such prepayment until the related portion of such Eurodollar Loans have been
prepaid upon the first occurrence thereafter of the last day of an Interest
Period with respect to such Eurodollar Loans; provided that, in the case of
either clause (x) or (y), such unpaid Eurodollar Loans shall continue to bear
interest in accordance with subsection 4.1 until such unpaid Eurodollar Loans or
the related portion of such Eurodollar Loans, as the case may be, have or has
been prepaid.
4.5 Commitment Fees. The Borrower agrees to pay to the Administrative
Agent for the account of each Revolving Credit Lender, a commitment fee for the
period from and including the first day of the Revolving Credit Commitment
Period to the Termination Date, computed, initially, at the rate of 1/2 of 1%
per annum on the average daily amount of the Available Revolving Credit
Commitment of such Lender during the period for which payment is made, payable
quarterly in arrears on the last day of each March, June, September and December
and on the Termination Date or such earlier date as the Revolving Credit
Commitments shall terminate as provided herein, commencing on the Effective
Date.
4.6 Computation of Interest and Fees. (a) Interest and commitment fees
(other than interest based on the Prime Rate) shall be calculated on the basis
of a 360-day year for the actual days elapsed; and interest based on the Prime
Rate shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the affected Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR, the Eurodollar Reserve Requirements, the C/D Assessment Rate
or the C/D Reserve Percentage shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the affected Lenders
of the effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower or any Lender,
deliver to the Borrower or such Lender a statement showing in reasonable detail
the calculations used by the Administrative Agent in determining any interest
rate pursuant to subsection 4.1, excluding any Eurodollar Base Rate which is
based upon the Telerate British Bankers Assoc. Interest Settlement Rates Page
and any ABR which is based upon the Prime Rate.
4.7 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period, the Administrative Agent shall have determined (which
determination shall be conclusive and
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binding upon the Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate with respect to any Eurodollar Loan (the "Affected Eurodollar
Rate") for such Interest Period, the Administrative Agent shall give telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as practicable
thereafter. If such notice is given (x) any Eurodollar Loans the rate of
interest applicable to which is based upon the Affected Eurodollar Rate
requested to be made on the first day of such Interest Period shall be made as
ABR Loans (to the extent otherwise permitted by subsection 4.2), (y) any
outstanding Loans that were to have been converted on the first day of such
Interest Period to or continued as Eurodollar Loans the rate of interest
applicable to which is based upon the Affected Eurodollar Rate shall be
converted to or continued as ABR Loans (to the extent otherwise permitted by
subsection 4.2) and (z) any outstanding Eurodollar Loans that were to have been
converted on the first day of such Interest Period to or continued as Eurodollar
Loans the rate of interest applicable to which is based upon the Affected
Eurodollar Rate and that are not otherwise permitted to be converted to or
continued as ABR Loans by subsection 4.2 shall, upon demand by the Revolving
Credit Lenders the Revolving Credit Commitment Percentage of which aggregate at
least 51%, be immediately repaid by the Borrower on the last day of the then
current Interest Period with respect thereto together with accrued interest
thereon or otherwise, at the option of the Borrower, shall remain outstanding
and bear interest at a rate which reflects, as to each of the Revolving Credit
Lenders, such Revolving Credit Lender's cost of funding such Eurodollar Loans,
as reasonably determined by such Revolving Credit Lender, plus the Applicable
Margin hereunder. If any such repayment occurs on a day which is not the last
day of the then current Interest Period with respect to such affected Eurodollar
Loan, the Borrower shall pay to each of the Revolving Credit Lenders such
amounts, if any, as may be required pursuant to subsection 4.12. Until such
notice has been withdrawn by the Administrative Agent, no further Eurodollar
Loans the rate of interest applicable to which is based upon the Affected
Eurodollar Rate shall be made or continued as such, nor shall the Borrower have
the right to convert ABR Loans to Eurodollar Loans the rate of interest
applicable to which is based upon the Affected Eurodollar Rate.
4.8 Pro Rata Treatment and Payments. (a) Each borrowing of Revolving
Credit Loans (other than Swing Line Loans) by the Borrower from the Lenders
hereunder shall be made, each payment by the Borrower on account of any
commitment fee in respect of the Revolving Credit Commitments hereunder shall be
allocated by the Administrative Agent, and any reduction of the Revolving Credit
Commitments of the Lenders shall be allocated by the Administrative Agent, pro
rata according to the relevant Revolving Credit Commitment Percentages of the
Lenders. Each payment (including each prepayment) by the Borrower on account of
principal of and interest on any Revolving Credit Loans shall be allocated by
the Administrative Agent pro rata according to the respective outstanding
principal amounts of such Revolving Credit Loans then held by the Revolving
Credit Lenders. Each payment (including each prepayment) by the Borrower on
account of principal of and interest on any Term Loans or Delayed Draw Term
Loans shall be allocated by the Administrative Agent pro rata according to the
respective outstanding principal amounts of such Term Loans or Delayed Draw Term
Loans then held by the Term Loan Lenders and the Delayed Draw Term Loan Lenders.
All payments (including prepayments) to be made by the Borrower hereunder and
under any Notes, whether on account of principal, interest, fees, Reimbursement
Obligations or otherwise, shall be made without set-off or counterclaim and
shall be made prior to 1:00 P.M., New York City time, on the due date thereof to
the Administrative Agent, for the account of the Lenders holding the relevant
Loans or the L/C Participants, as the case may be, at the Administrative Agent's
office specified in subsection 12.2 in immediately available funds. Payments
received by the Administrative Agent after such time shall be deemed to have
been received on the next Business Day. The Administrative Agent shall
distribute such payments to such Lenders, if any
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such payment is received prior to 1:00 P.M., New York City time, on a Business
Day, in like funds as received prior to the end of such Business Day and
otherwise the Administrative Agent shall distribute such payment to such Lenders
on the next succeeding Business Day. If any payment hereunder (other than
payments on the Eurodollar Loans) becomes due and payable on a day other than a
Business Day, the maturity of such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity of such payment shall be extended to the next
succeeding Business Day (and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension)
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its Revolving Credit Commitment Percentage of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted to
any Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's Revolving Credit
Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the Administrative Agent shall notify the Borrower of the failure of such
Lender to make such amount available to the Administrative Agent and the
Administrative Agent shall also be entitled to recover such amount with interest
thereon at the rate per annum applicable to ABR Loans hereunder on demand, from
the Borrower.
4.9 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the Effective Date shall make it unlawful
for any Lender to make or maintain any Eurodollar Loans as contemplated by this
Agreement ("Affected Eurodollar Loans"), (a) such Lender shall promptly give
written notice of such circumstances to the Borrower and the Administrative
Agent (which notice shall be withdrawn whenever such circumstances no longer
exist), (b) the commitment of such Lender hereunder to make Affected Eurodollar
Loans, continue Affected Eurodollar Loans as such and convert an ABR Loan to an
Affected Eurodollar Loan shall forthwith be cancelled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain such Affected
Eurodollar Loans, such Lender shall then have a commitment only to make an ABR
Loan when an Affected Eurodollar Loan is requested (to the extent otherwise
permitted by subsection 4.2), (c) such Lender's Loans then outstanding as
Affected Eurodollar Loans, if any, shall be converted automatically to ABR Loans
on the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law (to the extent
otherwise permitted by subsection 4.2) and (d) such Lender's Loans then
outstanding as Affected Eurodollar Loans, if any, not otherwise permitted to be
converted to ABR Loans by subsection 4.2 shall, upon notice to the Borrower, be
prepaid with accrued interest thereon on the last day of the then current
Interest Period with respect thereto (or such earlier date as may be required by
any such Requirement of Law). If any such
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conversion or prepayment of an Affected Eurodollar Loan occurs on a day which is
not the last day of the then current Interest Period with respect thereto, the
applicable Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 4.12.
4.10 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Effective Date (or, if later, the
date on which such Lender becomes a Lender):
(i) shall subject such Lender to any tax of any kind whatsoever with
respect to any Letter of Credit, any Application or any Eurodollar Loans
made by it or its obligation to make Eurodollar Loans, or change the basis
of taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by subsection 4.11 (including Non-Excluded
Taxes imposed solely by reason of any failure of such Lender to comply
with its obligations (if any) under subsection 4.11(b)) and changes in
taxes measured by or imposed upon the overall net income, or franchise
taxes, or taxes measured by or imposed upon overall capital or net worth,
or branch taxes (in the case of such capital, net worth or branch taxes,
imposed in lieu of such net income tax), of such Lender or its applicable
lending office, branch, or any affiliate thereof);
(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or
other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office
of such Lender which is not otherwise included in the determination of the
Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition (excluding any tax
of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Administrative Agent, in accordance herewith, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable with
respect to such Eurodollar Loans or Letters of Credit, provided that, in any
such case, the Borrower may elect to convert Eurodollar Loans made by such
Lender hereunder to ABR Loans (to the extent otherwise permitted by subsection
4.2) by giving the Administrative Agent at least one Business Day's notice of
such election, in which case such Borrower shall promptly pay to such Lender,
upon demand, without duplication, amounts theretofore required to be paid to
such Lender pursuant to this subsection 4.10(a) and such amounts, if any, as may
be required pursuant to subsection 4.12. If any Lender becomes entitled to claim
any additional amounts pursuant to this subsection, it shall provide prompt
notice thereof to the Borrower, through the Administrative Agent, certifying (x)
that one of the events described in this paragraph (a) has occurred and
describing in reasonable detail the nature of such event, (y) as to the
increased cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed explanation
of the calculation thereof. Such a certificate as to any additional amounts
payable pursuant to this subsection submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and
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the payment of the Loans and all other amounts payable hereunder.
(b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority, in each case, made
subsequent to the Effective Date (or, if later, the date on which such Lender
becomes a Lender), does or shall have the effect of reducing the rate of return
on such Lender's or such corporation's capital as a consequence of such Lender's
obligations hereunder or under or in respect of any Letter of Credit to a level
below that which such Lender or such corporation could have achieved but for
such change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, within ten Business Days
after submission by such Lender to the Borrower (with a copy to the
Administrative Agent) of a written request therefor certifying (x) that one of
the events described in this paragraph (b) has occurred and describing in
reasonable detail the nature of such event, (y) as to the reduction of the rate
of return on capital resulting from such event and (z) as to the additional
amount or amounts demanded by such Lender or corporation and a reasonably
detailed explanation of the calculation thereof, the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or
corporation for such reduction. Such a certificate as to any additional amounts
payable pursuant to this subsection submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
4.11 Taxes. (a) Except as provided below in this subsection, all payments
made by the Borrower under this Agreement and any Notes shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding taxes measured by
or imposed upon the overall net income of any Lender or its applicable lending
office, or any branch or affiliate thereof, and all franchise taxes, branch
taxes, taxes on doing business or taxes measured by or imposed upon the overall
capital or net worth of any Lender or its applicable lending office, or any
branch or affiliate thereof, in each case imposed: (i) by the jurisdiction under
the laws of which such Lender, applicable lending office, branch or affiliate is
organized or is located, or in which its principal executive office is located,
or any nation within which such jurisdiction is located or any political
subdivision thereof; or (ii) by reason of any connection between the
jurisdiction imposing such tax and such Lender, applicable lending office,
branch or affiliate other than a connection arising solely from such Lender
having executed, delivered or performed its obligations under, or received
payment under or enforced, this Agreement or any Notes. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Administrative Agent or any Lender hereunder or under any Notes, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and any
Notes, provided, however, that the Borrower shall be entitled to deduct and
withhold any Non-Excluded Taxes and shall not be required to increase any such
amounts payable to any Lender with respect to Non-Excluded Taxes (i) that are
attributable to such Lender's failure to comply with the requirements of
paragraph (b) of this subsection or (ii) that are United States withholding
taxes imposed on amounts payable to such Lender at the time the Lender becomes a
party to this Agreement.
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Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as
possible thereafter, the Borrower shall send to the Administrative Agent for its
own account or for the account of such Lender, as the case may be, a certified
copy of an original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure. The agreements in this subsection shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
(b)(1) Each Lender that is not an United States Person or a state thereof
shall:
(X)(i) on or before the date of any payment by the Borrower under this
Agreement or any Notes to such Lender, deliver to the Borrower and the
Administrative Agent (A) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable form,
as the case may be, certifying that it is entitled to a complete exemption
from, or reduced rate of, any United States federal withholding tax and
(B) an Internal Revenue Service Form W-8 or W-9, or successor applicable
form, as the case may be, certifying that it is entitled to an exemption
from United States backup withholding tax;
(ii) deliver to the Borrower and the Administrative Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete such forms or
certifications as may reasonably be requested by the Borrower or the
Administrative Agent; or
(Y) in the case of any such Lender that is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code and that is not entitled to comply
with subparagraph (X) hereof, (i) represent to the Borrower (for the
benefit of the Borrower and the Administrative Agent) that it is not a
bank within the meaning of Section 881(c)(3)(A) of the Code, (ii) agree to
furnish to the Borrower on or before the date of any payment by the
Borrower, with a copy to the Administrative Agent, (A) a certificate
substantially in the form of Exhibit F (any such certificate a "U.S. Tax
Compliance Certificate") and (B) two accurate and complete original signed
copies of Internal Revenue Service Form W-8, or successor applicable form
certifying to such Lender's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax under the provisions
of Section 881(c) of the Code with respect to payments to be made under
this Agreement and any Notes (and to deliver to the Borrower and the
Administrative Agent two further copies of such form on or before the date
it expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form and, if necessary,
obtain any extensions of time reasonably requested by the Borrower or the
Administrative Agent for filing and completing such forms), and (iii)
agree, to the extent legally entitled to do so, upon reasonable request by
the Borrower, to provide to the Borrower (for the benefit of the Borrower
and the Administrative Agent) such other forms as may be reasonably
required in order to establish the legal entitlement of such Lender to an
exemption from withholding with respect to payments under this Agreement
and any Notes, provided that in determining the reasonableness of a
request under this clause (iii) such Lender shall be entitled to consider
the cost (to the extent unreimbursed
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by the Borrower) which would be imposed on such Lender of complying with
such request;
unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Person from duly completing and
delivering any such form with respect to it and such Person so advises the
Borrower and the Administrative Agent. Each Person that shall become a Lender or
a Participant pursuant to subsection 12.6 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms, certifications and
statements required pursuant to this subsection, provided that in the case of a
Participant the obligations of such Participant pursuant to this paragraph (b)
shall be determined as if such Participant were a Lender except that such
Participant shall furnish all such required forms, certifications and statements
to the Lender from which the related participation shall have been purchased.
4.12 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur (other than through such Lender's gross negligence or willful misconduct)
as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment or conversion of
Eurodollar Loans after the Borrower has given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a payment or
prepayment of Eurodollar Loans or the conversion of Eurodollar Loans on a day
which is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or
converted, or not so borrowed, converted or continued, for the period from the
date of such prepayment or conversion or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Eurodollar Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. If any Lender becomes entitled
to claim any amounts under the indemnity contained in this subsection 4.12, it
shall provide prompt notice thereof to the Borrower, through the Administrative
Agent, certifying (x) that one of the events described in clause (a), (b) or (c)
has occurred and describing in reasonable detail the nature of such event, (y)
as to the loss or expense sustained or incurred by such Lender as a consequence
thereof and (z) as to the amount for which such Lender seeks indemnification
hereunder and a reasonably detailed explanation of the calculation thereof. Such
a certificate as to any indemnification pursuant to this subsection submitted by
such Lender, through the Administrative Agent, to the Borrower shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
4.13 Certain Rules Relating to the Payment of Additional Amounts. (a) Upon
the request, and at the expense, of the Borrower, each Lender to which the
Borrower is required to pay any additional amount pursuant to subsection 4.10 or
4.11, and any Participant in respect of whose participation such payment is
required, shall reasonably afford the Borrower the opportunity to contest, and
reasonably cooperate with the Borrower in contesting, the imposition of any
Non-Excluded Tax giving rise to such payment; provided that (i) such Lender
shall not be
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required to afford the Borrower the opportunity to so contest unless the
Borrower shall have confirmed in writing to such Lender its obligation to pay
such amounts pursuant to this Agreement and (ii) the Borrower shall reimburse
such Lender for its reasonable attorneys' and accountants' fees and
disbursements incurred in so cooperating with the Borrower in contesting the
imposition of such Non-Excluded Tax; provided, however that notwithstanding the
foregoing no Lender shall be required to afford the Borrower the opportunity to
contest, or cooperate with the Borrower in contesting, the imposition of any
Non-Excluded Taxes, if such Lender in its sole discretion in good faith
determines that to do so would have an adverse effect on it.
(b) If a Lender changes its applicable lending office (other than pursuant
to paragraph (c) below) and the effect of such change, as of the date of such
change, would be to cause the Borrower to become obligated to pay any additional
amount under subsection 4.10 or 4.11, the Borrower shall not be obligated to pay
such additional amount.
(c) If a condition or an event occurs which would, or would upon the
passage of time or giving of notice, result in the payment of any additional
amount to any Lender by the Borrower pursuant to subsection 4.10 or 4.11, such
Lender shall promptly notify the Borrower and the Administrative Agent and shall
take such steps as may reasonably be available to it to mitigate the effects of
such condition or event (which shall include efforts to rebook the Loans held by
such Lender at another lending office, or through another branch or an
affiliate, of such Lender); provided that such Lender shall not be required to
take any step that, in its reasonable judgment, would be materially
disadvantageous to its business or operations or would require it to incur
additional costs (unless such Borrower agrees to reimburse such Lender for the
reasonable incremental out-of-pocket costs thereof).
(d) If the Borrower shall become obligated to pay additional amounts
pursuant to subsection 4.10 or 4.11 and any affected Lender shall not have
promptly taken steps necessary to avoid the need for payments under subsection
4.10 or 4.11, the Borrower shall have the right, for so long as such obligation
remains, (x) with the assistance of the Administrative Agent, to seek one or
more substitute Lenders reasonably satisfactory to the Administrative Agent and
the Borrower to purchase the affected Loan, in whole or in part, at an aggregate
price no less than such Loan's principal amount plus accrued interest, and
assume the affected obligations under this Agreement, or (y) upon at least four
Business Days irrevocable notice to the Administrative Agent, to prepay the
affected Loan, in whole or in part, subject to subsection 4.12, without premium
or penalty. In the case of the substitution of a Lender, the Borrower, the
Administrative Agent, the affected Lender, and any substitute Lender shall
execute and deliver an appropriately completed Assignment and Acceptance
pursuant to subsection 12.6(c) to effect the assignment of rights to, and the
assumption of obligations by, the substitute Lender; provided that any fees
required to be paid by subsection 12.6(e) in connection with such assignment
shall be paid by the Borrower or the substitute Lender. In the case of a
prepayment of an affected Loan, the amount specified in the notice shall be due
and payable on the date specified therein, together with any accrued interest
to, but excluding, such date on the amount prepaid. In the case of each of the
substitution of a Lender and of the prepayment of an affected Loan, the Borrower
shall first pay the affected Lender any additional amounts owing under
subsections 4.10, 4.11 and 4.12 (as well as any commitment fees and other
amounts then due and owing to such Lender, including, without limitation, any
amounts under this subsection 4.13) prior to such substitution or prepayment.
(e) If the Administrative Agent or any Lender or any Participant receives
a refund directly attributable to costs, including taxes, for which the Borrower
has made additional payments pursuant to subsection 4.10(a) or 4.11(a), the
Administrative Agent or such Lender, as the case may be, shall promptly pay such
refund (together with any interest with respect
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41
thereto received from the relevant taxing authority) to the Borrower, provided,
however, that the Borrower agrees promptly to return such refund (together with
any interest with respect thereto due to the relevant taxing authority) (free of
all Non-Excluded Taxes) to the Administrative Agent or the applicable Lender, as
the case may be, upon receipt of a notice that such refund is required to be
repaid to the relevant taxing authority.
(f) The obligations of a Lender or Participant under this subsection 4.13
shall survive the termination of this Agreement and the payment of the Loans and
all amounts payable hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and each Lender to make the Extensions
of Credit requested to be made by it on the Effective Date and on each Borrowing
Date thereafter, each of the Parent and the Borrower hereby represents and
warrants (in the case of the Borrower, as to itself and its Subsidiaries only),
on the Effective Date (both before and after giving effect to the Transactions),
and on every Borrowing Date thereafter, to the Administrative Agent and each
Lender that:
5.1 Financial Condition. (a) The audited consolidated balance sheets of
each of MGI and its consolidated Subsidiaries as of December 31, 1994, 1995 and
1996 and the audited consolidated statements of earnings, statements of
shareholders' equity and statements of cash flows for the years ended December
31, 1994, 1995 and 1996 have heretofore been furnished to each Lender. The
unaudited interim consolidated financial statements of MGI for the nine-month
period ended September 30, 1997 have heretofore been furnished to the Lenders.
Such financial statements (including the notes thereto) (i) in the case of the
financial statements described in the first sentence of this subsection 5.1(a)
have been audited by KPMG Peat Marwick LLP (with respect to the 1994 and 1995
financial statements) and Coopers & Lybrand, L.L.P. (with respect to the 1996
financial statements), (ii) have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby except for in the
case of unaudited financial statements described in the second sentence of this
subsection 5.1(a), for the absence of footnotes, and (iii) present fairly, in
all material respects, the consolidated financial condition, results of
operations and cash flows of MGI and its consolidated Subsidiaries as of such
dates and for such periods (subject to normal year-end audit adjustments).
During the period from December 31, 1996 to and including the Effective Date,
except as provided in the Transaction Documents, there has been no sale,
transfer or other disposition by MGI and its consolidated Subsidiaries of any
material part of the business or property of MGI and its consolidated
Subsidiaries, in each case taken as a whole, and no purchase or other
acquisition by any of them of any business or property (including any Capital
Stock of any other Person) material in relation to the consolidated financial
condition of MGI and its consolidated Subsidiaries, taken as a whole, in each
case, which is not reflected in the foregoing financial statements or in the
notes thereto or has not otherwise been disclosed in a writing to the Lenders on
or prior to the Effective Date.
(b) The audited consolidated balance sheets of each of CERA and its
consolidated Subsidiaries as of June 30, 1995, 1996 and 1997 and the audited
consolidated statements of earnings, statements of shareholders' equity and
statements of cash flows for the years ended June 30, 1995, 1996 and 1997 have
heretofore been furnished to each Lender. The unaudited interim consolidated
financial statements of CERA for the three-month period ended September 30, 1997
have heretofore been furnished to the Lenders. Such financial statements
(including the notes thereto) (i) in the case of the financial statements
described in the first
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sentence of this subsection 5.1(b) have been audited by KPMG Peat Marwick LLP,
(ii) except for in the case of the unaudited financial statements described in
the second sentence of this subsection 5.1(b), for the absence of footnotes,
have been prepared in accordance with GAAP consistently applied throughout the
periods covered thereby and (iii) present fairly, in all material respects, the
consolidated financial condition, results of operations and cash flows of CERA
and its consolidated Subsidiaries as of such dates and for such periods (subject
to normal year-end audit adjustments). During the period from June 30, 1997 to
and including the Effective Date, except as provided in the Transaction
Documents, there has been no sale, transfer or other disposition by CERA and its
consolidated Subsidiaries of any material part of the business or property of
CERA and its consolidated Subsidiaries, in each case taken as a whole, and no
purchase or other acquisition by any of them of any business or property
(including any Capital Stock of any other Person) material in relation to the
consolidated financial condition of CERA and its consolidated Subsidiaries,
taken as a whole, in each case, which is not reflected in the foregoing
financial statements or in the notes thereto or has not otherwise been disclosed
in a writing to the Lenders on or prior to the Effective Date.
(c) The pro forma condensed combined balance sheet of the Parent, CERA and
the Borrower (the "Pro Forma Balance Sheet"), certified by a Responsible Officer
of the Parent, copies of which have heretofore been furnished to each Lender, is
the balance sheet of the Parent, CERA and the Borrower as of September 30, 1997
(the "Pro Forma Date"), adjusted to give effect (as if such events had occurred
on such date) to the matters referred to therein (including the Transactions and
the financing contemplated hereby). The Pro Forma Balance Sheet was prepared in
accordance with Article 11 (Pro Forma Financial Information) of Regulation S-X
under the Securities Act.
5.2 No Change; Solvent. (a) Since June 30, 1997, there has been no
development or event relating to or affecting any Loan Party which has had or
would be reasonably expected to have a Material Adverse Effect (after giving
effect to the Transactions, including, without limitation, the CERA Distribution
Loan (as defined in the Merger Agreement).
(b) As of the Effective Date, after giving effect to the consummation of
the Transactions, each of the Parent, the Borrower and CERA is Solvent.
5.3 Corporate/Limited Liability Company Existence; Compliance with Law.
Each of the Loan Parties (a) is duly incorporated or organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, (b) has the corporate, limited liability company or other, as the
case may be, power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, except to the extent that the failure
to have such power and authority or legal right would not be reasonably expected
to have a Material Adverse Effect, (c) is duly qualified as a foreign
corporation, limited liability company or other entity, as the case may be, 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, other than in such jurisdictions where the failure to be so
qualified and in good standing would not be reasonably expected to have a
Material Adverse Effect and (d) is in compliance with all Requirements of Law,
except to the extent that the failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
5.4 Corporate/Limited Liability Company Power; Authorization; Enforceable
Obligations. Each Loan Party has the corporate, limited liability company or
other, as the case may be, power and authority, and the legal right, to make,
deliver and perform the Loan Documents and the Transaction Documents to which it
is a party and, in the case of the Borrower, to obtain
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43
Extensions of Credit hereunder, and each such Loan Party has taken all necessary
corporate, limited liability company or other, as the case may be, action to
authorize the execution, delivery and performance of the Loan Documents and the
Transaction Documents to which it is a party and, in the case of the Borrower,
to authorize the Extensions of Credit on the terms and conditions of this
Agreement, any Notes and the Applications. No consent or authorization of,
filing with, notice to or other similar act by or in respect of, any
Governmental Authority or any other Person is required to be obtained or made by
or on behalf of any Loan Party in connection with the execution, delivery,
performance, validity or enforceability of the Loan Documents or the Transaction
Documents to which it is a party or, in the case of the Borrower, with the
Extensions of Credit hereunder, except for (i) consents, authorizations, notices
and filings required to be obtained or made on or prior to the Effective Date
and described in Schedule 5.4, all of which, unless noted in Schedule 5.4, have
been obtained or made on or prior to the Effective Date, (ii) filings to perfect
the Liens created by the Security Documents, (iii) filings pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727 et seq.),
in respect of Accounts Receivable of the Parent, MGI, the Borrower and its
Subsidiaries the obligor in respect of which is the United States of America or
any department, agency or instrumentality thereof and (iv) consents,
authorizations, notices and filings which the failure to obtain or make would
not reasonably be expected to have a Material Adverse Effect. This Agreement has
been duly executed and delivered by the Borrower, and each other Loan Document
and the Transaction Documents to which any Loan Party is a party, has been or
will be duly executed and delivered on behalf of such Loan Party. This Agreement
constitutes a legal, valid and binding obligation of the Borrower and the
Parent, and each other Loan Document and the Transaction Documents to which any
Loan Party is a party as executed and delivered does constitute, or when
executed and delivered, will constitute, a legal, valid and binding obligation
of such Loan Party, enforceable against such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
5.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents and the Transaction Documents by any of the Loan Parties, the
Extensions of Credit hereunder and the use of the proceeds thereof (a) will not
violate any Requirement of Law or Contractual Obligation of such Loan Party in
any respect that would reasonably be expected to have a Material Adverse Effect
and (b) will not result in, or require, the creation or imposition of any Lien
(other than the Liens permitted by subsection 8.3) on any of its properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation.
5.6 No Material Litigation. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Parent or the Borrower, threatened by or against the Parent or
any of its Subsidiaries or against any of their respective properties or
revenues, (a) which is so pending or threatened at any time on or prior to the
Effective Date and relates to any of the Loan Documents or the Transaction
Documents or any of the transactions contemplated hereby or thereby or (b) which
would be reasonably expected to have a Material Adverse Effect.
5.7 No Default. Neither the Parent, the Borrower nor any of their
respective Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which would be reasonably expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
5.8 Ownership of Property; Liens. Each of the Parent, the Borrower and
their
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respective Subsidiaries has good record and marketable title in fee simple to,
or a valid leasehold interest in, all its material real property, and good title
to, or a valid leasehold interest in, all its other material property, and none
of such property is subject to any Lien, except for Liens permitted by
subsection 8.3.
5.9 Intellectual Property. The Parent, MGI, the Borrower and each of their
respective Subsidiaries owns, or has the legal right to use, all United States
trademarks, trademark applications, tradenames, copyrights, technology, know-how
and processes necessary for each of them to conduct its business as currently
conducted (the "Intellectual Property") except for those the failure to own or
have such legal right to use would not be reasonably expected to have a Material
Adverse Effect. Except as provided on Schedule 5.9, no claim has been asserted
and is pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Borrower know of any such claim, and, to the knowledge of
the Borrower the use of such Intellectual Property by the Parent, MGI, the
Borrower and each of their respective Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements which in the
aggregate, would not be reasonably expected to have a Material Adverse Effect.
5.10 Computer Systems. The Parent believes that any reprogramming required
to permit the proper functioning of its computer systems in and following the
year 2000 will be completed prior to January 1, 1999, and that the cost of such
reprogramming will not result in a Default or a Material Adverse Effect. Except
for the reprogramming referred to in the preceding sentence, in the best
judgment of the Parent, the computer and management information systems of the
Parent and its Subsidiaries are adequate for the conduct of their businesses.
5.11 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Parent, the Borrower or any of their Subsidiaries would be
reasonably expected to have a Material Adverse Effect.
5.12 Taxes. To the knowledge of the Parent and the Borrower, each of the
Parent and its Subsidiaries has filed or caused to be filed all United States
federal income tax returns and all other material tax returns which are required
to be filed and has paid (a) all taxes shown to be due and payable on such
returns and (b) all taxes shown to be due and payable on any assessments of
which it has received notice made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority, and no tax Lien has been filed, and no claim is being
asserted, with respect to any such tax, fee or other charge (other than any (i)
taxes, fees or other charges with respect to which the failure to pay, in the
aggregate, would not have a Material Adverse Effect or (ii) taxes, fees or other
charges the amount or validity of which are currently being contested in good
faith by appropriate proceedings diligently conducted and with respect to which
reserves in conformity with GAAP have been provided on the books of the Parent
or its Subsidiaries, as the case may be).
5.13 Federal Regulations. No part of the proceeds of any Extensions of
Credit will be used for any purpose which violates the provisions of the
Regulations of the Board, including, without limitation, Regulation G,
Regulation U, Regulation T or Regulation X of the Board. If requested by any
Lender or the Administrative Agent, the Borrower or the Parent, as the case may
be, will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-1, FR Form U-1
or such other similar form referred to in Regulation G, Regulation U, Regulation
T or Regulation X of the Board, as the case may be.
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5.14 ERISA. During the five year period prior to each date as of which
this representation is made, or deemed made, with respect to any Plan (or, with
respect to (vi) or (viii) below, as of the date such representation is made or
deemed made), none of the following events or conditions, either individually or
in the aggregate, has resulted or is reasonably likely to result in a Material
Adverse Effect: (i) the occurrence of a Reportable Event; (ii) the occurrence of
an "accumulated funding deficiency" (within the meaning of Section 412 of the
Code or Section 302 of ERISA); (iii) the occurrence of any noncompliance with
the applicable provisions of ERISA or the Code; (iv) a termination of a Single
Employer Plan (other than a standard termination pursuant to Section 4041(b) of
ERISA); (v) the creation of a Lien on the property of the Parent or its
Subsidiaries in favor of the PBGC or a Plan; (vi) the existence of any
Underfunding with respect to any Single Employer Plan; (vii) the occurrence of a
complete or partial withdrawal from any Multiemployer Plan by the Borrower or
any Commonly Controlled Entity; (viii) the incurrence of any liability by the
Borrower or any Commonly Controlled Entity under ERISA if, as a result of the
withdrawal by the Borrower or any such Commonly Controlled Entity from any
Multiemployer Plans as of the annual valuation date most closely preceding the
date on which this representation is made or deemed made; or (ix) the
Reorganization or Insolvency of any Multiemployer Plan. There have been no
transactions that resulted or could result in any liability to the Borrower or
any Commonly Controlled Entity under Section 4069 of ERISA or Section 4212(c) of
ERISA.
5.15 Collateral. Except with respect to (i) Liens on equipment
constituting fixtures, (ii) any reserved rights of the United States government
as required under law, (iii) Liens upon Trademarks and Trademark Licenses (as
such terms are defined in the Guarantee and Collateral Agreement) to the extent
that (a) such Liens are not otherwise perfected by the filing of financing
statements under the Uniform Commercial Code or by the filing and acceptance
thereof in the United States Patent and Trademark Office or (b) such Trademarks
and Trademark Licenses are not, individually or in the aggregate, material to
the business of the Parent, MGI, the Borrower and its Subsidiaries taken as a
whole, (iv) Liens on uncertificated securities, (v) Liens on Collateral the
perfection of which requires filings in or other actions under the laws of
jurisdictions outside of the United States of America, any State, territory or
dependency thereof or the District of Columbia (except to the extent that such
filings or other actions have been made or taken), (vi) Liens on contracts or
Accounts Receivable on which the United States of America or any department,
agency, or instrumentality thereof is the obligor, (vii) Liens on Proceeds of
Accounts Receivable, until transferred to or deposited in the Collateral
Proceeds Account (if any), (viii) claims of creditors of Persons receiving goods
included as Collateral for "sale or return" within the meaning of Section 2-326
of the Uniform Commercial Code of the applicable jurisdiction and (ix) Liens on
Investment Property that is not delivered to the Administrative Agent or as to
which the Administrative Agent does not maintain continuous possession, upon
filing of the financing statements delivered to the Administrative Agent by the
Parent, MGI, the Borrower and its Subsidiaries on the Effective Date in the
jurisdictions listed on Schedule 5.15 (which financing statements are in proper
form for filing in such jurisdictions) (and the recording of the Trademark
Security Agreement, and the making of filings after the Effective Date in any
other jurisdiction as may be necessary under any Requirement of Law) and the
delivery to, and continuing possession by, the Administrative Agent of all
Instruments, Chattel Paper and Documents a security interest in which is, or may
be, perfected by possession, the Liens created pursuant to each Security
Document, when executed and delivered, will constitute valid Liens on and, to
the extent provided therein, perfected security interests in the collateral
referred to in such Security Document (but as to the Copyrights and the
Copyright Licenses (as defined in the Guarantee and Collateral Agreement) and
accounts arising therefrom, only to the extent the Uniform Commercial Code of
the relevant jurisdiction, from time to time in effect, is applicable) in favor
of the Administrative Agent for the benefit of the Lenders, which Liens will be
prior to all other Liens of all other Persons, except for
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Liens permitted pursuant to the Loan Documents (including, without limitation,
those permitted to exist pursuant to subsection 8.3), and which Liens are
enforceable as such as against all other Persons (except, with respect to goods
only, buyers in the ordinary course of business to the extent provided in
Section 9-307(1) of the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction and except to the extent that recording of an
assignment or other transfer of title to the Administrative Agent in the United
States Patent and Trademark Office may be necessary for such enforceability),
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law). Notwithstanding any
other provision of this Agreement, capitalized terms which are used in this
subsection 5.15 and not defined in this Agreement are so used as defined in the
applicable Security Document.
5.16 Investment Company Act; Other Regulations. Neither the Parent nor the
Borrower is an "investment company", or a company "controlled" by an entity
required to be registered as an "investment company", within the meaning of the
Investment Company Act. Neither the Parent nor the Borrower is subject to
regulation under any Federal or State statute or regulation which limits its
ability to incur Indebtedness as contemplated hereby.
5.17 Subsidiaries. Schedule 5.17 sets forth all the Subsidiaries of the
Parent at the Effective Date, the jurisdiction of their incorporation or
organization and the direct or indirect ownership interest of the Parent
therein.
5.18 Purpose of Loans. (a) The proceeds of the Term Loans shall be used to
finance the CERA Intercompany Term Loan, to repay the loans made pursuant to the
Letter Agreement and to pay certain fees and expenses related to the
Transactions.
(b) The proceeds of the Delayed Draw Term Loans will be used to finance
future acquisitions of businesses principally engaged in providing consulting
services or providing information or analytic services (including the
distribution of information through any medium); provided that such acquisitions
are not hostile in any manner.
(c) The proceeds of the Revolving Credit Loans shall be used to provide
for the working capital needs and other business requirements of the Parent and
its Subsidiaries resulting from or following the Transactions and to fund
intercompany revolving credit loans of up to $5,000,000 (the "CERA Intercompany
Revolving Credit Loans") to CERA to finance the working capital needs and other
business requirements of CERA and its Subsidiaries (if any) resulting from or
following the Transactions.
5.19 CERA Intercompany Loans. The CERA Intercompany Term Loan and the CERA
Intercompany Revolving Credit Loans will be evidenced by notes (the "CERA
Notes"), substantially in the form of Exhibit D hereto, which will be guaranteed
by the domestic Subsidiaries of CERA (if any). The CERA Notes and the guarantees
thereof will be secured by and supported by first priority security interests
subject to Liens permitted by subsection 8.3 in or mortgages of all receivables,
inventory, equipment, trademarks, copyrights and other tangible and intangible
assets of CERA and each of its domestic Subsidiaries, and by pledges of 100% of
the capital stock of CERA's domestic Subsidiaries (if any) and 65% of the
capital stock of its foreign Subsidiaries (if any) (the "CERA Collateral
Agreement"); in addition, CERA will enter into a trademark security agreement
with respect to the pledge of its trademarks (the "CERA Trademark Security
Agreement").
5.20 Environmental Matters. Other than exceptions to any of the following
that would
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not, individually or in the aggregate, reasonably be expected to give rise to a
Material Adverse Effect:
(i) The Parent, the Borrower and their Subsidiaries: (A) are, and within
the period of all applicable statutes of limitation have been, in
compliance with all applicable Environmental Laws; and (B) hold all
Environmental Permits (each of which is in full force and effect) required
for any of their current operations or for any property owned, leased, or
otherwise operated by any of them and reasonably expect to timely obtain
without material expense all such Environmental Permits required for
planned operations.
(ii) Materials of Environmental Concern have not been transported,
disposed of, emitted, discharged, or otherwise released or threatened to
be released, to or at any real property presently or formerly owned,
leased or operated by the Parent, the Borrower or any of their
Subsidiaries or at any other location, which could reasonably be expected
to (A) give rise to liability of the Parent, the Borrower or any of their
Subsidiaries under any applicable Environmental Law, or (B) interfere with
the Parent's or the Borrower's planned or continued operations, or (C)
impair the fair saleable value of any real property owned or leased by the
Parent or the Borrower or any of their Subsidiaries.
(iii) Neither the Parent, the Borrower nor any of their Subsidiaries has
received any written request for information, or been notified that it is
a potentially responsible party, under the federal Comprehensive
Environmental Response, Compensation, and Liability Act or any similar
Environmental Law, or received any other written request for information
with respect to any Materials of Environmental Concern.
(iv) Neither the Parent, the Borrower nor any of their Subsidiaries has
entered into or agreed to any consent decree, order, or settlement or
other agreement, nor is subject to any judgment, decree, or order or other
agreement, in any judicial, administrative, arbitral, or other forum,
relating to compliance with or liability under any Environmental Law.
5.21 No Material Misstatements. The written information, reports,
financial statements, exhibits and schedules furnished by or on behalf of the
Parent or the Borrower to the Administrative Agent and the Lenders in connection
with the negotiation of any Loan Document or included therein or delivered
pursuant thereto, taken as a whole, did not contain as of the Effective Date any
material misstatement of fact. It is understood that (x) no representation or
warranty is made concerning the forecasts, estimates, pro forma information,
projections and statements as to anticipated future performance or conditions,
and the assumptions on which they were based, contained in any such information,
reports, financial statements, exhibits or schedules, except that as of the date
such forecasts, estimates, pro forma information, projections and statements
were generated, (i) such forecasts, estimates, pro forma information,
projections and statements were based on the good faith assumptions of the
management of the Parent and the Borrower and (ii) such assumptions were
believed by such management to be reasonable and (y) such forecasts, estimates,
pro forma information and statements, and the assumptions on which they were
based, may or may not prove to be correct.
5.22 Delivery of the Transaction Documents. The Administrative Agent has
received for itself and for each Lender a complete photocopy of the Transaction
Documents (including all exhibits, schedules and disclosure letters referred to
therein or delivered pursuant thereto, if any) and all amendments thereto,
waivers relating thereto and other side letters or agreements
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affecting the terms thereof in any material respect.
5.23 Representations and Warranties Contained in the Transaction
Documents. The Transaction Documents will have been duly executed and delivered
by each of the Loan Parties which is a party thereto on or prior to the
Effective Date and, to the knowledge of the Borrower, all other parties thereto,
and are in full force and effect on the Effective Date. As of the Effective
Date, the representations and warranties of the Borrower and the Parent and, to
the knowledge of the Borrower, any of the other parties thereto contained in the
Transaction Documents (after giving effect to any amendments, supplements,
waivers or other modifications of the Transaction Documents on or prior to the
Effective Date) are true and correct in all material respects except as
otherwise disclosed to the Administrative Agent in writing on or prior to the
Effective Date.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Extension of Credit. This Agreement, including,
without limitation, the agreement of each Lender to make the initial Extension
of Credit requested to be made by it, shall become effective on the date on
which the following conditions precedent shall have been satisfied or waived:
(a) Loan Documents. The Administrative Agent shall have received the
following Loan Documents, executed and delivered as required below, with a copy
for each applicable Lender:
(i) this Agreement, executed and delivered by a duly authorized officer of
each of the Borrower and the Parent;
(ii) the Guarantee and Collateral Agreement, executed and delivered by a
duly authorized officer of each of the Parent, MGI, the Borrower and each
of the Domestic Subsidiaries (if any) of the Borrower;
(iii) a Trademark Security Agreement, executed and delivered by a duly
authorized officer of each of the Parent, MGI, the Borrower and each of
the Domestic Subsidiaries (if any) of the Borrower;
(iv) any Notes requested by the Lenders in accordance with subsections
2.2, 2.7 and 2.10, executed by a duly authorized officer of the Borrower;
and
(v) the CERA Notes and the CERA Security Documents, executed and delivered
by a duly authorized officer of CERA and each of its domestic Subsidiaries
(if any).
(b) Corporate/Limited Liability Company Structure. The corporate or
limited liability company, as the case may be, and capital structure of each
Loan Party as a result of the Transactions shall be reasonably satisfactory in
all respects to the Administrative Agent. The Parent shall own all of the
Capital Stock of MGI and CERA.
(c) Transactions. The Transactions shall have been consummated
simultaneously with the closing hereof and pursuant to the Transaction
Documents. Each of the Transaction Documents shall have been executed and
delivered on terms and conditions reasonably satisfactory to the Administrative
Agent and no material provision of the Merger Agreement shall have been waived
or amended, supplemented or otherwise modified (except as may be so reasonably
satisfactory to the Administrative Agent). The sources and uses of funds for the
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Transactions shall be substantially as set forth in the funds flow memorandum
dated February 12, 1998 as provided by the Borrower. The Parent, MGI, the
Borrower and its Subsidiaries have no Indebtedness other than as permitted
pursuant to subsection 8.2.
(d) Fees. The Agents and the Arrangers shall have received, simultaneously
with the consummation of the Transactions, all fees and expenses required, and
as agreed to in writing, to be paid on the Effective Date.
(e) Governmental Approvals. All governmental and third party approvals
(including landlords' and other consents) required to be obtained on or prior to
the Effective Date in connection with the Transactions, the financing
contemplated hereby and the continuing operations of the Parent, MGI, the
Borrower and its Subsidiaries shall have been obtained and be in full force and
effect, and all applicable waiting periods under applicable law shall have
expired without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose material adverse conditions on
the Transactions or the financing thereof.
(f) Financial Statements. The Lenders shall have received (i) reasonably
satisfactory audited consolidated financial statements of each of MGI and CERA
as of December 31, 1996 (with respect to MGI) and as of June 30, 1997 (with
respect to CERA) accompanied by an audit report from Coopers & Lybrand, L.L.P.
(with respect to MGI) and KPMG Peat Marwick LLP (with respect to CERA) or
another accounting firm reasonably satisfactory to the Lenders, (ii) reasonably
satisfactory unaudited interim consolidated financial statements of each of MGI
and CERA for each fiscal quarterly period ended subsequent to the date of the
latest financial statements delivered pursuant to clause (i) of this paragraph
for which such unaudited financial statements are available and (iii) reasonably
satisfactory unaudited monthly financial statements for MGI and CERA for each
fiscal month ended subsequent to the date of the date of quarterly financial
statements delivered pursuant to clause (ii) of this paragraph for which such
unaudited financial statements are available.
(g) Fees and Expenses. The Administrative Agent shall have received
reasonably satisfactory evidence that the fees and expenses to be incurred by
the Borrower in connection with the Transactions and the financing thereof
(including this Agreement) shall not exceed $8,000,000 in the aggregate.
(h) No Material Change. Since the date of the most recent financial
statements provided to the Lenders prior to the date hereof, there shall not
have occurred or become known to any Lender any material adverse condition or
material adverse change in or affecting (i) the business, operations, property,
condition (financial or otherwise) or prospects of the Parent and its
Subsidiaries taken as a whole or (ii) the Transactions contemplated hereby.
(i) Lien Searches. The Administrative Agent shall have received the
results of a recent search by a Person reasonably satisfactory to the
Administrative Agent, of the Uniform Commercial Code, judgment and tax lien
filings which may have been filed with respect to personal property of the
Parent and any of its Subsidiaries in any of the jurisdictions set forth in
Schedule 5.15, and the results of such search shall not reveal any liens other
than liens permitted by subsection 8.3 or liens that shall have been released on
or prior to the Effective Date.
(j) Legal Opinions. The Administrative Agent shall have received, with a
photocopy for each Lender, the following executed legal opinions:
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(i) the executed legal opinion of Debevoise & Plimpton, special New York
counsel to each of the Parent, the Borrower and the other Loan Parties,
substantially in the form of Exhibit E;
(ii) the executed legal opinion of Hale & Dorr, LLP, special counsel to
CERA, in form and substance reasonably satisfactory to the Administrative
Agent; and
(iii) the executed legal opinion of Richards, Layton & Finger, in form and
substance reasonably satisfactory to the Administrative Agent.
(k) Actions to Perfect Liens. The Administrative Agent shall have received
evidence in form and substance reasonably satisfactory to it that all filings,
recordings, registrations and other actions, including, without limitation, the
filing of duly executed financing statements on Form UCC-1 in each jurisdiction
set forth on Schedule 5.15, necessary or, in the reasonable opinion of the
Administrative Agent, advisable to perfect the Liens created by the Security
Documents and the CERA Security Documents shall have been completed or shall be
ready to be completed promptly following the Effective Date, and all agreements,
statements and other documents relating thereto shall be in form and substance
reasonably satisfactory to the Administrative Agent.
(l) Pledged Stock; Stock Powers; Pledged Notes; Endorsements. The
Administrative Agent shall have received:
(i) the certificates representing the Pledged Stock under (and as defined
in) each of the Guarantee and Collateral Agreement and the CERA Collateral
Agreement (if any), together with an undated stock power, as appropriate,
for each such certificate executed in blank by a duly authorized officer
of the pledgor thereof; and
(ii) the promissory notes representing each of the Pledged Notes
(including, without limitation, the CERA Notes) under (and as defined in)
each of the Guarantee and Collateral Agreement and the CERA Collateral
Agreement, duly endorsed as required by the Guarantee and Collateral
Agreement and the CERA Collateral Agreement.
The Loan Parties shall have taken such other action as is reasonably
satisfactory to the Administrative Agent to perfect the security interests
created by the Guarantee and Collateral Agreement and the CERA Collateral
Agreement.
(m) Borrowing Certificate. The Administrative Agent shall have received,
with a photocopy for each Lender, a certificate of the Borrower, dated the
Effective Date, substantially in the form of Exhibit H, with appropriate
insertions and attachments, reasonably satisfactory in form and substance to the
Administrative Agent, executed by a Responsible Officer and the Secretary or any
Assistant Secretary of the Borrower.
(n) Corporate/Limited Liability Company Proceedings of the Loan Parties.
The Administrative Agent shall have received, with a photocopy for each Lender,
a copy of the resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the board of directors of each Loan Party authorizing,
as applicable, (i) the execution, delivery and performance of this Agreement,
any Notes and the other Loan Documents and the Transaction Documents to which it
is or will be a party as of the Effective Date, (ii), in the case of the
Borrower, the Extensions of Credit to the Borrower and (iii) the granting by it
of the Liens to be created pursuant to the Security Documents to which it is or
will be a party as of the Effective Date, certified by the Secretary or an
Assistant Secretary of such Loan Party as of the Effective
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51
Date, which certificate shall be in form and substance reasonably satisfactory
to the Administrative Agent and shall state that the resolutions thereby
certified have not been amended, modified (except as any later resolution may
modify any such earlier resolution), revoked or rescinded and are in full force
and effect.
(o) Incumbency Certificates of the Loan Parties. The Administrative Agent
shall have received, with a photocopy for each Lender, a certificate of each
Loan Party, dated the Effective Date, as to the incumbency and signature of the
officers of such Loan Party executing any Loan Document, reasonably satisfactory
in form and substance to the Administrative Agent, executed by a Responsible
Officer and the Secretary or any Assistant Secretary of such Loan Party.
(p) Governing Documents. The Administrative Agent shall have received,
with a photocopy for each Lender, copies of the certificate or articles of
incorporation or limited liability company agreement, as the case may be, and
by-laws (or other similar governing documents serving the same purpose) of each
Loan Party, certified as of the Effective Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of such Loan Party.
(q) Insurance. The Administrative Agent shall have received evidence in
form and substance reasonably satisfactory to it that all of the requirements of
subsection 7.5 of this Agreement shall have been satisfied.
(r) Management Contracts. The Administrative Agent shall be reasonably
satisfied in all respects with the employment contracts and plans (including,
but not limited to, bonus plans) with the senior management of each of the
Parent, CERA, MGI, the Borrower and their Subsidiaries.
The making of the initial Extensions of Credit by the Lenders hereunder
shall conclusively be deemed to constitute an acknowledgement by the
Administrative Agent and each Lender that each of the conditions precedent set
forth in this subsection 6.1 shall have been satisfied in accordance with its
respective terms or shall have been irrevocably waived by such Person.
6.2 Conditions to Each Other Extension of Credit. The agreement of each
Lender to make any Extension of Credit requested to be made by it on any date
(including, without limitation, the initial Extension of Credit and each Swing
Line Loan) is subject to the satisfaction or waiver of the following conditions
precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party pursuant to this Agreement or any other Loan
Document (or in any amendment, modification or supplement hereto or thereto) to
which it is a party, and each of the representations and warranties contained in
any certificate furnished at any time by or on behalf of any Loan Party pursuant
to this Agreement or any other Loan Document, shall, except to the extent that
they relate to a particular date, be true and correct in all material respects
on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the Extensions of Credit
requested to be made on such date.
(c) Letter of Credit Application. With respect to the issuance of any
Letter of Credit, the Issuing Lender shall have received an Application,
completed to its satisfaction, and such other certificates, documents and other
papers and information as the Issuing Lender may
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reasonably request.
Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such borrowing or such issuance that the conditions contained in
this subsection 6.2 have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Parent hereby agrees that, from and after the Effective Date and so
long as the Revolving Credit Commitments remain in effect, and thereafter until
payment in full of the Loans, all Reimbursement Obligations and any other amount
then due and owing to any Lender or the Administrative Agent hereunder and under
any Note and termination or expiration of all Letters of Credit, the Parent
shall and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:
7.1 Financial Statements. Furnish to the Administrative Agent for delivery
to each Lender (and the Administrative Agent agrees to make and so deliver such
copies):
(a) as soon as available, but in any event not later than the 90th day
following the end of each fiscal year of the Parent ending on or after the
Effective Date, copies of the consolidated and consolidating balance sheets of
the Parent and its consolidated Subsidiaries as at the end of such year and the
related consolidated and consolidating statements of operations, changes in
common stockholders' equity and cash flows for such year, setting forth, in each
case, in comparative form the figures for and as of the end of the previous
year, reported on (in the case of the consolidated statements) without a "going
concern" or like qualification or exception, or qualification arising out of the
scope of the audit, by Coopers & Lybrand, L.L.P. or other independent certified
public accountants of nationally recognized standing not unacceptable to the
Administrative Agent in its reasonable judgment or certified (in the case of the
consolidating statements) by a Responsible Officer of the Parent as being fairly
stated in all material respects;
(b) as soon as available, but in any event not later than the 45th day
following the end of each of the first three quarterly periods of each fiscal
year of the Parent, the unaudited consolidated balance sheet of the Parent and
its consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated and consolidating statements of operations and cash flows
of the Parent and its consolidated Subsidiaries for such quarter and the portion
of the fiscal year through the end of such quarter, setting forth in comparative
form the budgeted figures (as adjusted consistent with past practice) for the
relevant period and the figures for the corresponding period of the previous
fiscal year, certified by a Responsible Officer of the Parent as being fairly
stated in all material respects (subject to normal year-end audit and other
adjustments).
All such financial statements delivered pursuant to subsection 7.1(a) or
(b) to be (and, in the case of any consolidating financial statements delivered
pursuant to subsection 7.1(a) and any financial statements delivered pursuant to
subsection 7.1(b) shall be certified by a Responsible Officer of the Parent as
being) complete and correct in all material respects in conformity with GAAP and
to be (and, in the case of any consolidating financial statements delivered
pursuant to subsection 7.1(a) and any financial statements delivered pursuant to
subsection 7.1(b) shall be certified by a Responsible Officer of the Parent as
being) prepared in reasonable detail in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
that began on or after the Effective Date (except as
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approved by such accountants or officer, as the case may be, and disclosed
therein, and except, in the case of any financial statements delivered pursuant
to subsection 7.1(b), for the absence of certain notes).
7.2 Certificates; Other Information. Furnish to the Administrative Agent
for delivery to each Lender:
(a) concurrently with the delivery of the financial statements referred to
in subsection 7.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
audit necessary therefor no knowledge was obtained of any Default or Event of
Default insofar as the same relates to any financial accounting matters covered
by their audit, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements and reports
referred to in subsections 7.1(a) and (b), a certificate signed by a Responsible
Officer of the Parent (i) stating that, to the best of such Responsible
Officer's knowledge, the Parent and its Subsidiaries during such period have
observed or performed in all material respects all of its covenants and other
agreements, and satisfied in all material respects every condition, contained in
this Agreement, any Notes or the other Loan Documents to which it is a party to
be observed, performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default, except, in each case,
as specified in such certificate, and (ii) setting forth the calculations
required to determine (A) compliance with all covenants set forth in subsection
8.1 (in the case of a certificate furnished with the financial statements
referred to in subsections 7.1(a) and (b)), (B) compliance with the covenant set
forth in subsection 8.8 (in the case of a certificate furnished with the
financial statements referred to in subsection 7.1(a)) and (C) in the case of
any such certificate furnished in respect of any fiscal quarter during which any
Restricted Payment is made under subsection 8.7(b) or (d), compliance with the
terms of said subsection 8.7(b) or (d), as the case may be;
(c) as soon as available, but in any event not later than the 90th day
after the beginning of each fiscal year of the Parent, a copy of the projections
by the Parent of the operating budget and cash flow budget of the Parent and its
Subsidiaries for such fiscal year, such projections to be accompanied by a
certificate of a Responsible Officer of the Parent to the effect that such
Responsible Officer believes such projections to have been prepared on the basis
of reasonable assumptions;
(d) within five Business Days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its public security
holders, and within five Business Days after the same are filed, copies of all
financial statements and periodic reports which the Borrower may file with the
SEC or any successor or analogous Governmental Authority; and
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request, including certificates setting
forth calculations showing that the Parent and the Borrower are in compliance
with subsections 8.2(k), 8.3(j), 8.6(g) and 8.7(a) of this Agreement.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
diligently conducted and reserves in conformity with GAAP with respect thereto
have been provided on the books of the Parent or any of its Subsidiaries, as the
case may be.
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7.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as conducted by the Parent and its
Subsidiaries on the Effective Date, taken as a whole, including, without
limitation, businesses principally engaged in providing consulting services or
providing information or analytic services (including the distribution of
information through any medium), and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct
of the business of the Parent and its Subsidiaries, taken as a whole, except as
otherwise expressly permitted pursuant to subsection 8.5, provided that the
Parent and its Subsidiaries shall not be required to maintain any such rights,
privileges or franchises, if the failure to do so would not reasonably be
expected to have a Material Adverse Effect; and comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
7.5 Maintenance of Property; Insurance. Keep all property and systems
useful and necessary in the business of the Parent and its Subsidiaries, taken
as a whole, in good working order and condition; maintain with financially sound
and reputable insurance companies insurance on all property material to the
business of the Parent and its Subsidiaries, taken as a whole, in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business; and furnish to the Administrative Agent, upon written request,
information in reasonable detail as to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions. Keep proper
books, records and accounts in which full, complete and correct entries in
conformity with GAAP and all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and, to the extent reasonable, make abstracts from any of its books and
records and to discuss the business, operations, properties and financial and
other condition of the Parent and its Subsidiaries with officers and employees
of the Parent and its Subsidiaries and with its independent certified public
accountants, in each case at any reasonable time, upon reasonable notice, and as
often as may reasonably be desired.
7.7 Notices. Promptly give notice to the Administrative Agent and each
Lender of:
(a) as soon as possible after a Responsible Officer of the Parent or
the Borrower knows or reasonably should know thereof, the occurrence of any
Default or Event of Default;
(b) as soon as possible after a Responsible Officer of the Parent or
the Borrower knows or reasonably should know thereof, any (i) default or event
of default under any Contractual Obligation of the Parent or any of its
Subsidiaries, other than as previously disclosed in writing to the Lenders, or
(ii) litigation, investigation or proceeding which may exist at any time between
the Parent or any of its Subsidiaries and any Governmental Authority, which in
either case, would reasonably be expected to have a Material Adverse Effect;
(c) as soon as possible after a Responsible Officer of the Parent or
the Borrower knows or reasonably should know thereof, any litigation or
proceeding to which the Parent or any of its Subsidiaries is a party or by which
the Parent or its Subsidiaries would be bound in which the amount involved (not
covered by insurance) and for which the Parent or any of its Subsidiaries would
reasonably be expected to be responsible exceeds $1,000,000 or more or in which
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injunctive or similar relief against the Parent or any of its Subsidiaries is
sought that would reasonably be expected to have a Material Adverse Effect;
(d) the following events, as soon as reasonably possible and in any
event within 30 days after a Responsible Officer of the Parent or the Borrower
knows or reasonably should know thereof: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Single Employer Plan, a
failure to make any required contribution to a Single Employer Plan or
Multiemployer Plan, the creation of any Lien on the property of the Borrower or
its Subsidiaries in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan; (ii) the
institution of proceedings by the PBGC or the taking of any formal action by the
Borrower or any of its Subsidiaries or any Commonly Controlled Entity or any
Multiemployer Plan which could reasonably be expected to result in the
withdrawal from, or the termination, Reorganization or Insolvency of, any Single
Employer Plan or Multiemployer Plan; provided, however, that no such notice will
be required under clause (i) or (ii) above unless the event giving rise to such
notice, when aggregated with all other such events under clause (i) or (ii)
above, could be reasonably expected to result in liability to the Borrower in an
amount that would exceed $5,000,000; or (iii) the existence of an Underfunding
under a Single Employer Plan sponsored by the Borrower or any of its
Subsidiaries that exceeds 10% of the value of the assets of such Single Employer
Plan, in each case, determined as of the most recent annual valuation date of
such Single Employer Plan on the basis of the actuarial assumptions used to
determine the funding requirements of such Single Employer Plan as of such date;
(e) as soon as possible after a Responsible Officer of the Parent or
the Borrower knows or reasonably should know thereof, any material adverse
change in the business, operations, property, condition (financial or otherwise)
or prospects of the Parent and its Subsidiaries taken as a whole; and
(f) as soon as possible after a Responsible Officer of the Parent or
the Borrower knows or reasonably should know thereof, (i) any release or
discharge by the Parent or any of its Subsidiaries of any Materials of
Environmental Concern required to be reported under applicable Environmental
Laws to any Governmental Authority, unless the Parent reasonably determines that
the total Environmental Costs arising out of such release or discharge are
unlikely to exceed $2,000,000 or to have a Material Adverse Effect; (ii) any
condition, circumstance, occurrence or event not previously disclosed in writing
to the Administrative Agent that could result in liability under applicable
Environmental Laws unless the Parent reasonably determines that the total
Environmental Costs arising out of such condition, circumstance, occurrence or
event are unlikely to exceed $2,000,000 or to have a Material Adverse Effect, or
could result in the imposition of any material lien or other restriction on the
title, ownership or transferability of any facilities and properties owned,
leased or operated by the Parent or any of its Subsidiaries and which would
affect the conduct of the business of the Parent or any of its Subsidiaries in
the ordinary course; and (iii) any proposed action to be taken by the Parent or
any of its Subsidiaries that would reasonably be expected to subject the Parent
or any of its Subsidiaries to any material additional or different requirements
or liabilities under Environmental Laws, unless the Parent reasonably determines
that the total Environmental Costs arising out of such proposed action are
unlikely to exceed $1,500,000 or to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer of the Parent or the Borrower, as applicable
(and, if applicable, the relevant Commonly Controlled Entity or Subsidiary)
setting forth details of the occurrence referred to therein and stating what
action the Parent or the Borrower, as the case may be (or, if
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applicable, the relevant Commonly Controlled Entity or Subsidiary) proposes to
take with respect thereto.
7.8 Environmental Laws. (a) (i) Comply substantially with, and require
substantial compliance by all tenants, subtenants, contractors, and invitees
with, all applicable Environmental Laws; (ii) obtain, comply substantially with
and maintain any and all Environmental Permits necessary for its operations as
conducted and as planned; and (iii) require that all tenants, subtenants,
contractors, and invitees obtain, comply substantially with and maintain any and
all Environmental Permits necessary for their operations as conducted and as
planned, with respect to any property leased or subleased from, or operated by
the Parent or its Subsidiaries.
(b) Conduct and complete or cause to be conducted and completed all
investigations, studies, sampling and testing, and all remedial, removal, and
other actions required under applicable Environmental Laws; and promptly comply
with all orders and directives of all Governmental Authorities regarding
Environmental Laws, (i) except where non-compliance with any such order or
directive would not reasonably be expected to have a Material Adverse Effect or
(ii) other than any such order or directive as to which an appeal or other
appropriate contest is or has been timely and properly taken, is being
diligently pursued in good faith, and as to which appropriate reserves have been
established in accordance with GAAP, and, if the effectiveness of such order or
directive has not been stayed, the pendency of such appeal or other appropriate
contest does not give rise to a Material Adverse Effect.
7.9 After-Acquired Real Property and Fixtures. (a) With respect to any
owned real property or fixtures, in each case with a purchase price or a fair
market value of at least $250,000, in which the Parent, MGI, the Borrower or any
of its Subsidiaries acquires ownership rights at any time after the Effective
Date, promptly grant to the Administrative Agent, for the benefit of the
Lenders, a Lien of record on all such owned real property and fixtures, upon
terms reasonably satisfactory in form and substance to the Administrative Agent
and in accordance with any applicable requirements of any Governmental Authority
(including, without limitation, any required appraisals of such property under
FIRREA); provided that (i) nothing in this subsection 7.9 shall defer or impair
the attachment or perfection of any security interest in any Collateral covered
by any of the Security Documents which would attach or be perfected pursuant to
the terms thereof without action by the Parent, MGI, the Borrower, any of its
Subsidiaries or any other Person and (ii) no such Lien shall be required to be
granted as contemplated by this subsection 7.9 on any owned real property or
fixtures the acquisition of which is financed, or is to be financed within any
time period permitted by subsection 8.2(d), in whole or in part through the
incurrence of Indebtedness permitted by subsection 8.2(d), until such
Indebtedness is repaid in full (and not refinanced as permitted by subsection
8.2(d)) or, as the case may be, the Parent or the Borrower determines not to
proceed with such financing or refinancing. In connection with any such grant to
the Administrative Agent, for the benefit of the Lenders, of a Lien of record on
any such real property in accordance with this subsection, the Parent, the
Borrower or such Subsidiary shall deliver or cause to be delivered to the
Administrative Agent any surveys, title insurance policies, environmental
reports and other documents in connection with such grant of such Lien obtained
by it in connection with the acquisition of such ownership rights in such real
property or as the Administrative Agent shall reasonably request (in light of
the value of such real property and the cost and availability of such surveys,
title insurance policies, environmental reports and other documents and whether
the delivery of such surveys, title surance policies, environmental reports and
other documents would be customary in connection with such grant of such Lien in
similar circumstances).
<PAGE> 57
57
(b) At its own expense, execute, acknowledge and deliver, or cause the
execution, acknowledgement and delivery of, and thereafter register, file or
record in an appropriate governmental office, any document or instrument
reasonably deemed by the Administrative Agent to be necessary or desirable for
the creation, perfection and priority and the continuation of the validity,
perfection and priority of the foregoing Liens or any other Liens created
pursuant to the Security Documents.
SECTION 8. NEGATIVE COVENANTS
The Parent hereby agrees that, from and after the Effective Date and so
long as the Revolving Credit Commitments remain in effect, and thereafter until
payment in full of the Loans, all Reimbursement Obligations and any other amount
then due and owing to any Lender or the Administrative Agent hereunder and under
any Note and termination or expiration of all Letters of Credit, the Parent
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
8.1 Financial Condition Covenants. (a) Minimum Consolidated EBITDA.
Permit the Consolidated EBITDA of the Parent and its Subsidiaries for any period
of four consecutive fiscal quarters of the Parent and its Subsidiaries ending on
the dates set forth below to be less than the amount set forth opposite such
date below:
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
June 30, 1998 $10,000,000
September 30, 1998 $10,000,000
December 31, 1998 $10,000,000
March 31, 1999 $10,000,000
June 30, 1999 $10,500,000
September 30, 1999 $10,500,000
December 31, 1999 $10,500,000
March 31, 2000 $10,500,000
June 30, 2000 $11,000,000
September 30, 2000 $11,000,000
December 31, 2000 $11,000,000
March 31, 2001 $11,000,000
June 30, 2001 $11,500,000
September 30, 2001 $11,500,000
December 31, 2001 $11,500,000
March 31, 2002 $11,500,000
June 30, 2002 $12,000,000
September 30, 2002 $12,000,000
December 31, 2002 $12,000,000
</TABLE>
; provided that the amount set forth above with respect to any given date shall
be increased by 33 1/3% of the amount of any Delayed Draw Term Loans made during
such previous fiscal quarter; and provided, further, that during the first three
fiscal quarters (ended June 30, 1998, September 30, 1998 and December 31, 1998),
Consolidated EBITDA for purposes of this subsection 8.1(a) will be calculated
based upon the Parent's operations after the Effective Date, annualized in the
following manner:
first fiscal quarter: actual figure for such quarter multiplied by four.
<PAGE> 58
58
second fiscal quarter: actual figures for each of first and second fiscal
quarters multiplied by two.
third fiscal quarter: actual figures for each of first, second and third
fiscal quarters multiplied by 4/3.
It is also expressly understood that if an acquisition permitted by subsection
8.9(l) is consummated during any fiscal quarter set forth above, the
Consolidated EBITDA of the Parent and its Subsidiaries for the next three fiscal
quarters for purposes of this subsection 8.1(a) will be annualized in the manner
described above.
(b) Minimum Net Worth. Permit, (i) as of June 30, 1998, the
Consolidated Net Worth of the Parent and its Subsidiaries on such date to be
less than the amount equal to 90% of the Consolidated Net Worth of the Parent
and its Subsidiaries as reported in the June 30, 1998 financial statements and
(ii) thereafter, the Consolidated Net Worth of the Parent and its Subsidiaries
at the end of each succeeding fiscal quarter to be less than the amount
calculated in clause (i) above; provided that at the end of each fiscal year of
the Parent (commencing with the year ended June 30, 1999), the amount
established pursuant to this clause (ii) shall be increased by 25% of the
Parent's Consolidated Net Income for the immediately preceding fiscal year.
(c) Maintenance of Leverage Ratio. Permit, on any date set forth below,
the Leverage Ratio of the Parent and its Subsidiaries on such date to be greater
than the ratio set forth opposite such date below:
<TABLE>
<CAPTION>
Date Ratio
---- -----
<S> <C>
June 30, 1998 2.50 to 1.00
September 30, 1998 2.50 to 1.00
December 31, 1998 2.50 to 1.00
March 31, 1999 2.50 to 1.00
June 30, 1999 2.50 to 1.00
September 30, 1999 2.50 to 1.00
December 31, 1999 2.50 to 1.00
March 31, 2000 2.50 to 1.00
June 30, 2000 2.25 to 1.00
September 30, 2000 2.25 to 1.00
December 31, 2000 2.25 to 1.00
March 31, 2001 2.25 to 1.00
June 30, 2001 2.25 to 1.00
September 30, 2001 2.25 to 1.00
December 31, 2001 2.25 to 1.00
March 31, 2002 2.25 to 1.00
June 30, 2002 2.25 to 1.00
September 30, 2002 2.25 to 1.00
December 31, 2002 2.25 to 1.00
</TABLE>
8.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness (including any Indebtedness of any of their Subsidiaries)
or issue or permit to be outstanding any preferred stock (other than to the
Parent and its Subsidiaries), except:
<PAGE> 59
59
(a) Indebtedness of the Borrower under this Agreement and under any
Notes;
(b) Indebtedness of the Parent to any of its Subsidiaries and of any
Subsidiary (other than CERA and its Subsidiaries) to the Parent or any other
Subsidiary (other than CERA and its Subsidiaries);
(c) Indebtedness of CERA and its Subsidiaries (i) with respect to the
CERA Intercompany Term Loan and the CERA Intercompany Revolving Credit Loans or
(ii) to the Parent for Capital Stock of the Parent issued by the Parent to CERA;
(d) Indebtedness of the Parent and any of its Subsidiaries incurred to
finance or refinance the acquisition of fixed or capital assets (whether
pursuant to a loan, a Financing Lease or otherwise) otherwise permitted pursuant
to this Agreement, and any other Financing Leases, in an aggregate principal
amount not exceeding in the aggregate as to the Parent and its Subsidiaries
$2,000,000 at any one time outstanding, provided that such Indebtedness is
incurred substantially simultaneously with such acquisition or within six months
after such acquisition or in connection with a refinancing thereof;
(e) to the extent that any Indebtedness may be incurred or arise
thereunder, Indebtedness of the Parent and its Subsidiaries under Permitted
Hedging Arrangements;
(f) other Indebtedness outstanding or incurred under facilities in
existence on the Effective Date and listed on Schedule 8.2(f) hereto, and any
refinancings, refundings, renewals or extensions thereof on financial and other
terms, in the reasonable judgment of the Borrower, no more onerous to the Parent
or any of its Subsidiaries in the aggregate than the financial and other terms
of such Indebtedness, provided that the amount of such Indebtedness is not
increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to the premium or other amounts paid, and fees and
expenses incurred, in connection with such refinancing, refunding, renewal or
extension;
(g) Indebtedness of Foreign Subsidiaries of the Parent in aggregate
principal amount at any one time outstanding not exceeding, as to all such
Foreign Subsidiaries, $1,000,000;
(h) to the extent that any Guarantee Obligation permitted under
subsection 8.4 constitutes Indebtedness, such Indebtedness;
(i) Indebtedness of the Parent or any of its Subsidiaries incurred to
finance insurance premiums in the ordinary course of business;
(j) Indebtedness arising from the honoring of a check, draft or similar
instrument against insufficient funds; provided that such Indebtedness is
extinguished within two Business Days of its incurrence;
(k) Indebtedness with respect to subordinated seller paper issued with
respect to acquisitions permitted under subsection 8.9(l) and on terms and
conditions satisfactory to the Required Lenders and in an amount not to exceed
$10,000,000; and
(l) Indebtedness not otherwise permitted by the preceding clauses of
this subsection 8.2 not exceeding $1,000,000 in aggregate principal amount at
any one time outstanding.
With respect to any Indebtedness denominated in a foreign currency, for purposes
of
<PAGE> 60
60
determining compliance with any Dollar-denominated restriction on the Incurrence
of such Indebtedness under this subsection 8.2, the amount of such Indebtedness
shall be calculated based on the currency exchange rate in effect on the date of
the incurrence thereof.
8.3 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes, assessments and similar charges not yet delinquent
or the nonpayment of which in the aggregate would not reasonably be expected to
have a Material Adverse Effect, or which are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves with respect
thereto are maintained on the books of the Parent or its Subsidiaries, as the
case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in good
faith by appropriate proceedings diligently conducted;
(c) Liens of landlords or of mortgagees of landlords arising by
operation of law or pursuant to the terms of real property leases, provided that
the rental payments secured thereby are not yet due and payable;
(d) pledges, deposits or other Liens in connection with workers'
compensation, unemployment insurance, other social security benefits or other
insurance related obligations (including, without limitation, pledges or
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements);
(e) Liens arising by reason of any judgment, decree or order of any
court or other Governmental Authority, if appropriate legal proceedings which
may have been duly initiated for the review of such judgment, decree or order,
are being diligently prosecuted and shall not have been finally terminated or
the period within which such proceedings may be initiated shall not have
expired;
(f) Liens to secure the performance of bids, trade contracts (other
than for borrowed money), obligations for utilities, leases, statutory
obligations, surety and appeal bonds, performance bonds, judgment and like
bonds, replevin and similar bonds and other obligations of a like nature
incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way, restrictions on the
use of property, other similar encumbrances incurred in the ordinary course of
business and minor irregularities of title which do not materially interfere
with the ordinary conduct of the business of the Parent and its Subsidiaries
taken as a whole;
(h) Liens securing or consisting of Indebtedness of the Parent and its
Subsidiaries permitted by subsection 8.2(d) incurred to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be created no
later than the later of the date of such acquisition or the date of the
incurrence or assumption of such Indebtedness, and (ii) such Liens do not at any
time encumber any property other than the property financed by such Indebtedness
and, in the case of Indebtedness assumed in connection with any such
acquisition, the property subject thereto immediately prior to such acquisition;
(i) Liens existing on assets or properties at the time of the
acquisition thereof by the
<PAGE> 61
61
Parent or any of its Subsidiaries which do not materially interfere with the
use, occupancy, operation and maintenance of structures existing on the property
subject thereto or extend to or cover any assets or properties of the Parent or
such Subsidiary other than the assets or property being acquired;
(j) Liens (i) in existence on the Effective Date and listed in Schedule
8.3(j) hereto and other Liens securing Indebtedness of the Parent and its
Subsidiaries permitted by subsection 8.2(f), provided that after the Effective
Date no such Lien is spread to cover any additional property and that the amount
of Indebtedness secured thereby is not increased except as permitted by
subsection 8.2(f), or (ii) not otherwise permitted hereunder, all of which Liens
permitted pursuant to this subsection 8.3(j)(ii) secure obligations not
exceeding (as to the Parent and all its Subsidiaries) $250,000 in aggregate
amount at any time outstanding;
(k) Liens created pursuant to the Security Documents, the CERA Notes or
otherwise securing Indebtedness permitted by subsection 8.2(a) or pursuant to
any agreement referred to in subsection 8.13;
(l) any encumbrance or restriction (including, without limitation, put
and call agreements) with respect to the Capital Stock of any joint venture or
similar arrangement pursuant to the joint venture or similar agreement with
respect to such joint venture or similar arrangement, provided that no such
encumbrance or restriction affects in any way the ability of the Parent or any
of its Subsidiaries to comply with subsection 8.13(b);
(m) Liens on property of any Foreign Subsidiary of the Parent securing
Indebtedness of such Foreign Subsidiary permitted by subsection 8.2(g) or
otherwise permitted under this Agreement; and
(n) Liens on Intellectual Property (as defined in subsection 5.9) and
foreign trademarks, trademark applications, tradenames, copyrights, technology,
know-how and processes to the extent such Liens arise from the granting of
licenses to use such Intellectual Property and foreign trademarks, trademark
applications, tradenames, copyrights, technology, know-how and processes to any
Person in the ordinary course of business of the Parent or any of its
Subsidiaries.
8.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the Effective Date and listed
in Schedule 8.4(a) hereto, and any refinancings, refundings, extensions or
renewals thereof, provided that the amount of such Guarantee Obligation shall
not be increased at the time of such refinancing, refunding, extension or
renewal except to the extent that the amount of Indebtedness in respect of such
Guarantee Obligations is permitted to be increased by subsection 8.2(f);
(b) Guarantee Obligations for performance, appeal, judgment, replevin
and similar bonds and suretyship arrangements, all in the ordinary course of
business;
(c) Reimbursement Obligations in respect of the Letters of Credit;
(d) Guarantee Obligations in respect of third-party loans and advances
to directors, officers or employees of, or consultants to, the Parent or any of
its Subsidiaries (i) for travel and entertainment expenses incurred in the
ordinary course of business, (ii) for relocation expenses incurred in the
ordinary course of business, (iii) in connection with the purchase of Capital
Stock
<PAGE> 62
62
of the Parent and any refinancings, refundings, extensions and renewals thereof
or (iv) for other purposes in an aggregate amount (as to the Parent and all its
Subsidiaries), together with the aggregate amount of all Investments permitted
under subsection 8.9(e)(iv), of up to $500,000 outstanding at any time (without
duplication);
(e) obligations to insurers required in connection with worker's
compensation and other insurance coverage incurred in the ordinary course of
business;
(f) obligations of the Parent and its Subsidiaries under Permitted
Hedging Arrangements;
(g) guarantees made in the ordinary course of its business by the
Parent or any of its Subsidiaries of obligations of the Parent or any of its
Subsidiaries, which obligations are otherwise permitted under this Agreement;
(h) Guarantee Obligations in connection with sales or other
dispositions permitted under subsection 8.6, including guarantees with respect
to leases, indemnification obligations, and guarantees of collectability in
respect of accounts receivable or notes receivable for up to face value;
(i) Guarantee Obligations incurred pursuant to the Guarantees or
otherwise in respect of Indebtedness permitted by subsection 8.2;
(j) Guarantee Obligations in respect of letters of credit issued for
the account of Foreign Subsidiaries, provided that the aggregate amount of such
Guarantee Obligations, taken together with the aggregate amount of other
Indebtedness of Foreign Subsidiaries outstanding pursuant to subsection 8.2(g),
shall not exceed the aggregate amount of such Indebtedness permitted pursuant to
such subsection;
(k) guarantees made in connection with transactions permitted under
subsection 8.9(e);
(l) Guarantee Obligations arising out of customary indemnification
provisions in agreements relating to the purchase and sale of assets (including
Capital Stock) or businesses permitted hereunder; and
(m) Guarantee Obligations incurred in connection with the formation or
operation of joint ventures; provided that the amount of each such Guarantee
Obligation would be permitted to be invested pursuant to subsection 8.9(k) on
the date of the incurrence thereof.
8.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any Subsidiary of the Parent may be merged or consolidated with or
into the Parent (provided that the Parent shall be the continuing or surviving
entity) or with or into any one or more Wholly Owned Subsidiaries of the Parent
(provided that the Wholly Owned Subsidiary or Subsidiaries of the Parent shall
be the continuing or surviving entity);
(b) any Subsidiary of the Parent may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
the Parent or any Wholly Owned Subsidiary of the Parent; and
<PAGE> 63
63
(c) as expressly permitted by subsections 8.6 and 8.13.
8.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, or, in the case of any Subsidiary of the Parent, issue or
sell any shares of such Subsidiary's Capital Stock, to any Person other than the
Parent or any Wholly Owned Subsidiary of the Parent, except:
(a) the sale or other Disposition of obsolete, worn out or surplus
property, whether now owned or hereafter acquired, in the ordinary course of
business;
(b) the sale or other Disposition of any property in the ordinary
course of business;
(c) the sale or discount without recourse of accounts receivable or
notes receivable arising in the ordinary course of business, or the conversion
or exchange of accounts receivable into or for notes receivable, in connection
with the compromise or collection thereof provided that, in the case of any
Foreign Subsidiary of the Parent, any such sale or discount may be with recourse
if such sale or discount is consistent with customary practice in such Foreign
Subsidiary's country of business and the aggregate amount of any such recourse
shall be included in the determination of such Foreign Subsidiary's Indebtedness
for purposes of subsection 8.2(g);
(d) as permitted by subsection 8.5(b) or 8.9(k);
(e) Dispositions of any assets or property by the Parent or any of its
Subsidiaries to the Parent or any Wholly Owned Subsidiary of the Parent (other
than CERA and its Subsidiaries; provided that CERA and its Subsidiaries shall be
permitted to dispose of any assets or property of CERA or such Subsidiary to
CERA or any other Subsidiary of CERA);
(f) the abandonment or other Disposition of trademarks or other
intellectual property that are, in the reasonable judgment of the Parent, no
longer economically practicable to maintain or useful in the conduct of the
business of the Parent and its Subsidiaries taken as a whole; and
(g) Asset Sales by the Parent or any of its Subsidiaries the Net Cash
Proceeds of which do not exceed $1,000,000 in the aggregate after the Effective
Date.
8.7 Limitation on Restricted Payments. Declare or pay any dividend
(other than dividends payable solely in Capital Stock of the Parent or options,
warrants or other rights to purchase Capital Stock of the Parent) on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of the Parent or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution (other than distributions payable
solely in Capital Stock of the Parent or options, warrants or other rights to
purchase Capital Stock of the Parent) in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the Parent (any
such dividend or other payment or distribution, a "Restricted Payment"), except
that:
(a) any Subsidiary of the Parent may purchase Capital Stock of the
Parent in connection with the (i) issuance of Capital Stock of the Parent upon
the exercise of options or (ii) purchase or grant of Capital Stock of the Parent
by or to directors, officers, employees of, or
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64
consultants to, any Subsidiary;
(b) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, the Parent or any of its Subsidiaries may
repurchase Capital Stock of the Parent or options to purchase such Capital Stock
pursuant to buyback provisions of management subscription or option agreements
entered into at the time of or prior to the acquisition of such Capital Stock or
options, as the case may be, by the relevant holders thereof for an aggregate
amount for all such repurchases from the Effective Date of up to $1,500,000
(which amount shall be increased by the amount of any cash realized by the
Parent and its Subsidiaries in sales to officers, employees, directors and
consultants of and to the Parent and its Subsidiaries of any such Capital Stock
or options after the transactions contemplated on the Effective Date);
(c) CERA may make payments required by Section 5.4 of the Merger
Agreement; and
(d) the Parent may pay cash dividends to its members in amounts as
required by Section 9.2 of the LLC Agreement as in effect on the date hereof for
Tax Liability Distributions (as defined in the LLC Agreement) to enable its
members to pay when due current Federal, state and local income taxes, provided
that after giving effect to any such payment no Default or Event of Default
shall have occurred and be continuing and the Parent shall be in pro forma
compliance with its covenants in subsection 8.1 assuming that such cash dividend
payments had been made on the last day of the immediately preceding fiscal
quarter of the Parent.
8.8 Limitation on Capital Expenditures. Make or commit to make any
Capital Expenditures (excluding any expenses incurred in connection with normal
replacement and maintenance programs properly charged to current operations);
provided that the Parent and its Subsidiaries may make Capital Expenditures in
an amount not to exceed, for any test period set forth below, the amount set
forth opposite such test period below:
<TABLE>
<CAPTION>
Test Period Amount
----------- ------
<S> <C>
Effective Date - June 30, 1998 $5,000,000
July 1, 1998 - June 30, 1999 $3,000,000
July 1, 1999 - June 30, 2000 $3,000,000
July 1, 2000 - June 30, 2001 $3,000,000
July 1, 2001 - June 30, 2002 $3,000,000
July 1, 2002 - Termination Date $3,000,000
</TABLE>
provided that (i) any Capital Expenditures permitted to be made during any test
period and not made during such test period may be carried over and expended
during the next succeeding test period only and (ii) Capital Expenditures made
during any fiscal year shall be first deemed made in respect of amounts carried
over from the prior fiscal year and then deemed made in respect of amounts
permitted for such fiscal year.
8.9 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment, in cash or by transfer of assets
or property, in (each an "Investment"), any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in cash and Cash Equivalents;
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65
(c) Investments existing on the Effective Date and described in
Schedule 8.9(c), setting forth the respective amounts of such Investments as of
a recent date;
(d) Investments in notes receivable and other instruments and
securities obtained in connection with transactions permitted by subsection
8.6(c);
(e) loans and advances to officers, directors or employees of or
consultants to the Parent, the Borrower or any of their respective Subsidiaries
(i) in the ordinary course of business for travel and entertainment expenses,
(ii) existing on the Effective Date and described in Schedule 8.9(c), (iii) made
after the Effective Date for relocation expenses in the ordinary course of
business, (iv) in connection with the purchase of Capital Stock of the Parent,
(v) made for other purposes in an aggregate amount (as to the Parent and all its
Subsidiaries), together with the aggregate amount of all Guarantee Obligations
permitted pursuant to subsection 8.4(d), of up to $500,000 outstanding at any
time (without duplication) or (vi) relating to indemnification or reimbursement
of any officers, directors, employees, agents or consultants in respect of
liabilities relating to their serving in any such capacity or as otherwise
specified in subsection 8.10;
(f) Investments by the Parent in its Wholly Owned Subsidiaries, by such
Wholly Owned Subsidiaries in the Parent and in Wholly Owned Subsidiaries of the
Parent and by non-Wholly Owned Subsidiaries in the Parent and in Subsidiaries of
the Parent;
(g) Investments of the Parent and its Subsidiaries under Permitted
Hedging Arrangements;
(h) Investments in the nature of pledges or deposits with respect to
leases or utilities provided to third parties in the ordinary course of business
or otherwise described in subsection 8.3(c), (d) or (f);
(i) Investments representing non-cash consideration received by the
Parent or any of its Subsidiaries in connection with any Asset Sale, provided
that in the case of any Asset Sale permitted under subsection 8.6(g), such
non-cash consideration constitutes not more than 25% of the aggregate
consideration received in connection with such Asset Sale and any such non-cash
consideration received by the Parent, the Borrower or any of their respective
Domestic Subsidiaries is pledged to the Administrative Agent for the benefit of
the Lenders pursuant to the Security Documents (or in the case of CERA and its
Subsidiaries or a new Domestic Subsidiary of the Parent that is not a Subsidiary
of MGI or the Borrower and to whom funds are loaned by the Borrower, the CERA
Security Documents, or documents similar thereto, as the case may be);
(j) Investments representing evidences of Indebtedness, securities or
other property received from another Person by the Parent or any of its
Subsidiaries in connection with any bankruptcy proceeding or other
reorganization of such other Person or as a result of foreclosure, perfection or
enforcement of any Lien or exchange for evidences of Indebtedness, securities or
other property of such other Person held by the Parent or any of its
Subsidiaries; provided that any such securities or other property received by
the Parent, the Borrower or any of their respective Domestic Subsidiaries is
pledged to the Administrative Agent for the benefit of the Lenders pursuant to
the Security Documents;
(k) Investments by the Parent or any of its Subsidiaries in a Person in
connection with a joint venture or similar arrangement in respect of which no
other coinvestor or other Person has
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a greater legal or beneficial ownership interest than the Parent or such
Subsidiary in an aggregate amount not to exceed at any time an amount equal to
$1,000,000, less the amount of any outstanding Guarantee Obligations pursuant to
subsection 8.4(m); and
(l) so long as (x) no Default or Event of Default has occurred and is
continuing at the time of such acquisition or would occur after giving effect to
such acquisition and (y) the Parent would be in pro forma compliance with the
financial covenants set forth in subsections 8.1(a), (b) and (c), as of the date
such acquisition is consummated after giving effect to such acquisition,
acquisitions made with the proceeds of the Delayed Draw Term Loans, Capital
Stock of the Parent, available cash and/or subordinated seller paper of
businesses principally engaged in providing consulting services or providing
information or analytic services (including the distribution of information
through any medium), so long as (i) such acquisition is permitted by subsection
8.5 or (ii) the aggregate cash consideration paid by the Parent and its
Subsidiaries in connection with all such acquisitions made pursuant to this
clause (ii) since after the Effective Date does not exceed at any time an amount
equal to $15,000,000.
8.10 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement and (b) upon
terms no less favorable to the Parent or such Subsidiary, as the case may be,
than it would obtain in a comparable arm's length transaction with a Person
which is not an Affiliate; provided that nothing contained in this subsection
8.10 shall be deemed to prohibit:
(i) the payment of transaction expenses in connection with this
Agreement and the Transactions;
(ii) the Parent or any of its Subsidiaries from entering into, making
payments pursuant to and otherwise performing an indemnification and
contribution agreement in favor of CD&R, C&D Fund IV, Brera, or their
respective Affiliates or any person who is or becomes a director,
officer, agent or employee of or consultant to the Parent or any of its
Subsidiaries, in respect of liabilities (A) arising under the
Securities Act, the Exchange Act and any other applicable securities
laws or otherwise, in connection with any offering of securities by the
Parent or any of its Subsidiaries, (B) incurred to third parties for
any action or failure to act of the Parent or any of its Subsidiaries,
predecessors or successors, (C) arising out of the fact that any
indemnitee was or is a director, officer, agent or employee of or
consultant to the Parent or any of its Subsidiaries, or is or was
serving at the request of any such entity, as a director, officer,
employee or agent of or consultant to another corporation, partnership,
joint venture, trust or enterprise, (D) arising out of the performance
by CD&R or Brera of management consulting or financial advisory
services provided to the Parent or any of its Subsidiaries or (E) to
the fullest extent permitted by Delaware or other applicable state law,
arising out of any breach or alleged breach by such indemnitee of his
or her fiduciary duty as a director, officer or employee of the Parent
or any of its Subsidiaries;
(iii) the Parent or any of its Subsidiaries from performing any
agreements or commitments with or to any Affiliate existing on the
Effective Date and described on Schedule 8.10;
(iv) any transaction permitted under subsection 8.4(d), 8.4(i), 8.5,
8.7, 8.9(c), 8.9(e) or 8.9(k);
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(v) consulting, employment and management or other compensation
arrangements with directors, officers or employees of, or consultants
to, the Parent or any of its Subsidiaries; or
(vi) management agreements with respect to CD&R, Brera or their
respective Affiliates.
For purposes of this subsection 8.10, (A) any transaction with any
Affiliate shall be deemed to have satisfied the standard set forth in clause (b)
of the first sentence hereof if (i) such transaction is approved by a majority
of the Disinterested Directors of the board of directors of the Parent or such
Subsidiary, or (ii) in the event that at the time of any such transaction, there
are no Disinterested Directors serving on the board of directors of the Parent
or such Subsidiary, such transaction shall be approved by a nationally
recognized expert with expertise in appraising the terms and conditions of the
type of transaction for which approval is required, and (B) "Disinterested
Director" shall mean, with respect to any Person and transaction, a member of
the board of directors of such Person who does not have any material direct or
indirect financial interest in or with respect to such transaction.
8.11 Limitation on Changes in Fiscal Year. Beginning with the period
ending June 30, 1998, permit the fiscal year of the Parent or the Borrower to
end on a day other than June 30.
8.12 Limitation on Negative Pledge Clauses. Enter into with any Person
any agreement, other than (a) this Agreement, the other Loan Documents and any
related documents, (b) the CERA Security Documents and documents entered into
pursuant to subsection 8.13(b) and any related documents and (c) any purchase
money mortgages, acquisition agreements, Financing Leases or operating leases of
real property entered into in the ordinary course of business, which prohibits
or limits the ability of the Parent or any of its Subsidiaries to create, incur,
assume or suffer to exist any Lien in favor of the Lenders in respect of
obligations and liabilities under this Agreement, any Notes or any other Loan
Documents upon any of its property, assets or revenues, whether now owned or
hereafter acquired except for any such agreement relating to Indebtedness (i) of
a Foreign Subsidiary of the Parent permitted by subsection 8.2(g) or (ii)
otherwise permitted under this Agreement.
8.13 Limitation on Lines of Business; Creation of Subsidiaries. (a)
Enter into any business, either directly or through any Subsidiary or joint
venture, except for those businesses of the same general type as those in which
the Parent and its Subsidiaries are engaged on the Effective Date or which are
directly related thereto, including, without limitation, businesses principally
engaged in providing consulting services or providing information or analytic
services (including the distribution of information through any medium).
(b) Create any new Subsidiaries of the Parent or the Borrower other
than any new Subsidiary that (i) (in the case of a new Domestic Subsidiary of
the Parent or the Borrower) shall execute and deliver to the Administrative
Agent, as applicable, the Guarantee and Collateral Agreement and other related
security documents and take any necessary steps to perfect the security
interests to be created thereby, (ii) (in the case of a new Domestic Subsidiary
of the Parent that is not a Subsidiary of MGI or the Borrower and to whom funds
are loaned by the Borrower) shall execute and deliver agreements substantially
similar to the CERA Intercompany Term Loan documents or the CERA Intercompany
Revolving Credit Loan documents and the CERA Security Documents, (iii) is a
Subsidiary of the Parent but not of MGI or CERA; provided that the Borrower does
not make any loan, advance or distribution to such Subsidiary or to the Parent
or any other Subsidiary for the purpose of financing the purchase or
establishment of such Subsidiary and to whom the Borrower does not make any
loans, advances or distributions, (iv) is a new Foreign Subsidiary of the Parent
or the Borrower and in
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respect of which 65% of the Capital Stock of such Subsidiary owned by the Parent
or any of its Domestic Subsidiaries is pledged pursuant to the Guarantee and
Collateral Agreement, the CERA Collateral Agreement or an agreement referred to
in clause (ii) above and (v) for which the relevant parent entity (if such
parent entity is the Parent, MGI, the Borrower or a Domestic Subsidiary of the
Parent (other than CERA)) shall execute and deliver to the Administrative Agent
a stock pledge agreement and take any necessary steps to perfect the security
interest to be created thereby (which security interest shall not apply to more
than 65% of such parent entity's ownership interest in any Foreign Subsidiary).
(c) To the extent not prohibited by this Agreement, convey, sell or
otherwise transfer shares of Capital Stock of a Foreign Subsidiary of the
Borrower or MGI to the Borrower or MGI or any Domestic Subsidiary of the
Borrower or MGI unless at the time of such conveyance, sale or transfer (or
promptly thereafter) the Borrower or MGI or such Domestic Subsidiary shall
execute and deliver to the Administrative Agent the Guarantee and Collateral
Agreement (if not already a party thereto) and take any necessary steps to
perfect the security interest to be created thereby (which security interest
shall not apply to (i) more than 65% of the Borrower's or MGI's or such Domestic
Subsidiary's ownership interest in any Foreign Subsidiary of the Borrower or MGI
or (ii) any ownership interest in a non-Wholly Owned Foreign Subsidiary of the
Borrower or MGI to the extent that the grant of such security interest would
violate the terms of any agreements under which the Investment by the Borrower
or MGI or any or its Subsidiaries was made therein).
8.14 Limitations on Currency and Commodity Hedging Transactions. Enter
into, purchase or otherwise acquire agreements or arrangements relating to
currency, commodity or other hedging except, to the extent and only to the
extent that, such agreements or arrangements are entered into, purchased or
otherwise acquired in the ordinary course of business of the Parent or any of
its Subsidiaries with reputable financial institutions and not for purposes of
speculation (any such agreement or arrangement permitted by this subsection, a
"Permitted Hedging Arrangement").
8.15 Limitation on Modification of CERA Notes. Amend, supplement, waive
or otherwise modify any of the provisions of the CERA Notes.
8.16 Limitation on Licensing. License any software or trade names of
the Parent or any of its Subsidiaries outside the ordinary course of business to
any third party without the prior written consent of the Required Lenders.
Notwithstanding the provisions of the foregoing Section 8, the Parent
shall be allowed to consummate an initial public offering of its Capital Stock
and in connection therewith become (by merger or otherwise) a corporation,
provided that all provisions of this Agreement shall continue to apply to the
Parent as a corporation and that at the time of the consummation of such initial
public offering, no Default or Event of Default shall have occurred and be
continuing.
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or any
Reimbursement Obligation when due in accordance with the terms hereof (whether
at stated maturity, by mandatory prepayment or otherwise); or the Borrower shall
fail to pay any interest or fees on any Loan, or any other amount payable
hereunder, within five days after any such interest, fees
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or other amount becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document (or in any amendment, modification or
supplement hereto or thereto) or which is contained in any certificate furnished
at any time by or on behalf of any Loan Party pursuant to this Agreement or any
such other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) Any Loan Party shall default in the observance or performance of
any agreement contained in subsection 7.7(a) or Section 8 of this Agreement,
and, in the case of a default in the observance or performance of its
obligations under subsection 7.7(a) hereof, such default shall have continued
unremedied for a period of two days after a Responsible Officer of the Parent or
the Borrower shall have discovered or should have discovered such default; or
(d) Any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section 9), and
such default shall continue unremedied for a period ending on the earlier of (i)
the date 30 days after a Responsible Officer of the Parent or the Borrower shall
have discovered or should have discovered such default and (ii) the date 15 days
after written notice has been given to the Parent or the Borrower by the
Administrative Agent or the Required Lenders; or
(e) The Parent, the Borrower or any of their Subsidiaries shall (i)
default in (x) any payment of principal of or interest on any Indebtedness
(other than the Loans and the Reimbursement Obligations) in excess of $500,000
or (y) in the payment of any Guarantee Obligation in excess of $500,000, beyond
the period of grace (not to exceed 30 days), if any, provided in the instrument
or agreement under which such Indebtedness or Guarantee Obligation was created;
or (ii) default in the observance or performance of any other agreement or
condition relating to any Indebtedness or Guarantee Obligation referred to in
clause (i) above or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice or lapse of time if required, such Indebtedness to become due
prior to its stated maturity or such Guarantee Obligation to become payable (an
"Acceleration"), and such time shall have lapsed and, if any notice (a "Default
Notice") shall be required to commence a grace period or declare the occurrence
of an event of default before notice of Acceleration may be delivered, such
Default Notice shall have been given; or
(f) (i) Any Loan Party shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or any Loan Party shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Loan Party any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged, unstayed or unbonded for a period of 60 days; or
(iii) there shall be commenced against any Loan Party any case, proceeding or
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other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) any Loan Party shall take any corporate action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any Loan
Party shall be generally unable to, or shall admit in writing its general
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of
either of the Borrower or any Commonly Controlled Entity, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is in the reasonable opinion of the
Administrative Agent likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) either of the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Administrative
Agent is likely to, incur any liability in connection with a withdrawal from, or
the Insolvency or Reorganization of, a Multiemployer Plan, or (vi) any other
event or condition shall occur or exist with respect to a Plan; and in each case
in clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could be reasonably expected to result
in a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Parent or any of its Subsidiaries involving in the aggregate at any time a
liability (net of any insurance or indemnity payments actually received in
respect thereof prior to or within 90 days from the entry thereof, or to be
received in respect thereof in the event any appeal thereof shall be
unsuccessful) of $1,500,000 or more, and all such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within 90 days
from the entry thereof; or
(i) (i) Any of the Security Documents shall cease for any reason to be
in full force and effect (other than pursuant to the terms hereof or thereof),
or any Loan Party which is a party to any of the Security Documents shall so
assert in writing, or (ii) the Lien created by any of the Security Documents
shall cease to be perfected and enforceable in accordance with its terms or of
the same effect as to perfection and priority purported to be created thereby
with respect to any significant portion of the Collateral (other than in
connection with any termination of such Lien in respect of any Collateral as
permitted hereby or by any Security Document), and such failure of such Lien to
be perfected and enforceable with such priority shall have continued unremedied
for a period of 20 days; or
(j) Any Guarantee shall cease for any reason to be in full force and
effect (other than pursuant to the terms hereof or thereof) or any Guarantor
shall so assert in writing; or
(k) Any Loan Document (other than this Agreement, any of the Security
Documents or any Guarantee) shall cease for any reason to be in full force and
effect (other than pursuant to the terms hereof or thereof) or any Loan Party
shall so assert in writing; or
(l) A Change of Control shall have occurred;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii)
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of paragraph 9(f) above with respect to the Borrower, automatically the
Revolving Credit Commitments, the Term Loan Commitments and the Delayed Draw
Term Loan Commitments, if any, shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts then owing under
this Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) and any Notes shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders the Administrative Agent shall, by notice to the
Borrower, declare the Revolving Credit Commitments, the Term Loan Commitments
and the Delayed Draw Term Loan Commitments to be terminated forthwith, whereupon
the Revolving Credit Commitments, the Term Loan Commitments and the Delayed Draw
Term Loan Commitments, if any, shall immediately terminate; and (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) and any Notes to be due and payable forthwith, whereupon the same
shall immediately become due and payable.
With respect to any Letter of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower in respect of such Letter of Credit shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letter of Credit. Such Borrower hereby grants to the Administrative Agent, for
the benefit of the Issuing Lender and the L/C Participants, a security interest
in such cash collateral to secure all obligations of such Borrower in respect of
such Letter of Credit under this Agreement and the other Loan Documents. Such
Borrower shall execute and deliver to the Administrative Agent, for the account
of the Issuing Lender and the L/C Participants, such further documents and
instruments as the Administrative Agent may request to evidence the creation and
perfection of such security interest in such cash collateral account. Amounts
held in such cash collateral account shall be applied by the Administrative
Agent to the payment of drafts drawn under such Letter of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or been
fully drawn upon, if any, shall be applied to repay other obligations of the
Borrower hereunder and under any Notes. After all Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrower hereunder and under any
Notes shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower.
Except as expressly provided above in this Section 9, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 10. THE ADMINISTRATIVE AGENT AND THE OTHER REPRESENTATIVES
10.1 Appointment. Each Lender hereby irrevocably designates and
appoints Chase as the Administrative Agent of such Lender under this Agreement
and the other Loan Documents, and each such Lender irrevocably authorizes Chase,
as the Administrative Agent for such Lender, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly
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delegated to the Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent and the Other Representatives shall not
have any duties or responsibilities, except, in the case of the Administrative
Agent and the Issuing Lender, those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent or the Other Representatives.
10.2 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact, and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact or counsel selected by it with reasonable care.
10.3 Exculpatory Provisions. None of the Administrative Agent or any
Other Representative nor any of their officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by such Person under or in connection with this
Agreement or any other Loan Document (except for the gross negligence or willful
misconduct of such Person or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates) or (ii) responsible in any manner to any of the
Lenders for any recitals, statements, representations or warranties made by the
Parent, the Borrower or any other Loan Party or any officer thereof contained in
this Agreement or any other Loan Document or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any Notes or any other Loan
Document or for any failure of the Parent, the Borrower or any other Loan Party
to perform its obligations hereunder or thereunder. Neither the Administrative
Agent nor any Other Representative shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Parent, the
Borrower or any other Loan Party. Each Lender agrees that, except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder or given to the Administrative Agent for the
account of or with copies for the Lenders, the Administrative Agent and the
Other Representatives shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Parent, the Borrower or any other Loan Party which may come into the
possession of the Administrative Agent and the Other Representatives or any of
their officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.4 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Parent and the Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified as between itself and the
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Lenders in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders and/or such other requisite percentage of the Lenders as is
required pursuant to subsection 12.1 as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and any
Notes and the other Loan Documents in accordance with a request of the Required
Lenders and/or such other requisite percentage of the Lenders as is required
pursuant to subsection 12.1, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders and all future
holders of the Loans.
10.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action reasonably promptly with respect to such Default or Event of Default as
shall be directed by the Required Lenders and/or such other requisite percentage
of the Lenders as is required pursuant to subsection 12.1; provided that unless
and until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
10.6 Acknowledgements and Representations by Lenders. Each Lender
expressly acknowledges that none of the Administrative Agent or the Other
Representatives nor any of their officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Administrative Agent or any Other Representative
hereafter taken, including any review of the affairs of the Parent, the Borrower
or any other Loan Party, shall be deemed to constitute any representation or
warranty by the Administrative Agent or such Other Representative to any Lender.
Each Lender represents to the Administrative Agent, the Other Representatives
and each of the Loan Parties that, independently and without reliance upon the
Administrative Agent, the Other Representatives or any other Lender, and based
on such documents and information as it has deemed appropriate, it has made and
will make its own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of each of the
Parent, the Borrower and the other Loan Parties, it has made its own decision to
make its Loans hereunder and enter into this Agreement and it will make its own
decisions in taking or not taking action under this Agreement and the other Loan
Documents. Each Lender represents to each other party hereto that it is a bank,
savings and loan association or other similar savings institution, insurance
company, investment fund or company or other financial institution which makes
or acquires commercial loans in the ordinary course of its business, that it is
participating hereunder as a Lender for its account and for such commercial
purposes, and that it has the knowledge and experience to be and is capable of
evaluating the merits and risks of being a Lender hereunder. Each Lender
acknowledges and agrees to comply with the provisions of subsection 12.6
applicable to the Lenders hereunder.
10.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent and the Other Representatives in their capacities as such (to the extent
not reimbursed by the Borrower and without limiting the obligation of the
Borrower or any of the other Loan Parties to do so), ratably according to their
respective Total Credit Percentages in effect on the date on which
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indemnification is sought under this subsection (or, if indemnification is
sought after the date upon which the Revolving Credit Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with their Total Credit Percentages immediately prior to such date), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against the Administrative Agent or any Other Representative in any way relating
to or arising out of this Agreement, any of the other Loan Documents or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent or any Other Representative under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
arising from (i) the Administrative Agent's or any Other Representative's gross
negligence or willful misconduct or (ii) claims made or legal proceedings
commenced against the Administrative Agent or any Other Representative by any
securityholder or creditor thereof arising out of and based upon rights afforded
any such securityholder or creditor solely in its capacity as such. The
obligations to indemnify the Issuing Lender and Swing Line Lender shall be
ratable among the Revolving Credit Lenders in accordance with their respective
Revolving Credit Commitments (or, if the Revolving Credit Commitments have been
terminated, the outstanding principal amount of their respective Revolving
Credit Loans and L/C Obligations and their respective participating interests in
the outstanding Letters of Credit and shall be payable only by the Revolving
Credit Lenders). The agreements in this subsection shall survive the payment of
the Loans and all other amounts payable hereunder.
10.8 Administrative Agent and Other Representatives in Their Individual
Capacity. The Administrative Agent, the Other Representatives and their
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Parent, the Borrower or any other Loan Party as though
the Administrative Agent and the Other Representatives were not the
Administrative Agent and the Other Representatives hereunder and under the other
Loan Documents. With respect to Loans made or renewed by them and any Note
issued to them and with respect to any Letter of Credit issued or participated
in by them, the Administrative Agent and the Other Representatives shall have
the same rights and powers under this Agreement and the other Loan Documents as
any Lender and may exercise the same as though they were not the Administrative
Agent or an Other Representative, and the terms "Lender" and "Lenders" shall
include the Administrative Agent in its individual capacity.
10.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent (which shall be a bank) for the Lenders, which
successor agent shall be approved by the Borrower (such approval not to be
unreasonably withheld), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this subsection shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
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10.10 Swing Line Lender. The provisions of this Section 10 shall apply
to the Swing Line Lender in its capacity as such to the same extent that such
provisions apply to the Administrative Agent.
SECTION 11. GUARANTEE
11.1 Guarantee. In order to induce the Lenders, the Issuing Bank, the
Swing Line Lender and the Agents to execute and deliver this Agreement and to
make the Extensions of Credit hereunder, and in consideration thereof:
(a) The Parent hereby unconditionally and irrevocably guarantees to the
Administrative Agent, for the ratable benefit of the Lenders, the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations. The Parent further agrees to pay
any and all expenses (including, without limitation, all reasonable fees and
disbursements of counsel) which may be paid or incurred by the Administrative
Agent or by the Lenders in enforcing, or obtaining advice of counsel in respect
of, any of their rights under this Section 11. This guarantee shall remain in
full force and effect until the Commitments have terminated, no L/C Obligations
are outstanding and all amounts owing under this Agreement have been paid in
full, notwithstanding that from time to time prior thereto the Borrower may be
free from any Obligations.
(b) The Parent agrees that whenever, at any time, or from time to time,
it shall make any payment to the Administrative Agent or any Lender on account
of its liability under this Section 11, it will notify the Administrative Agent
or such Lender in writing that such payment is made under this Section 11 for
such purpose. No payment or payments made by the Borrower or any other Person or
received or collected by the Administrative Agent or any Lender from the
Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Parent hereunder which shall
remain obligated hereunder, notwithstanding any such payment or payments (other
than payments made by or received or collected from the Parent in respect of the
Obligations) until the date upon which all amounts owing under this Agreement
have been paid in full.
11.2 Right of Set-Off. Upon the occurrence and continuance of any Event
of Default, the Administrative Agent and each Lender are hereby irrevocably
authorized by the Parent at any time and from time to time without notice to the
Parent, any such notice being hereby waived by the Parent, to set off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the
Administrative Agent or such Lender to or for the credit or the account of the
Parent, or any part thereof in such amounts as the Administrative Agent or such
Lender may elect, on account of the liabilities of the Parent hereunder and
claims of every nature and description of the Administrative Agent or such
Lender against the Parent, in any currency, whether arising hereunder or any
other Loan Document or otherwise, as the Administrative Agent or such Lender may
elect, whether or not the Administrative Agent or such Lender has made any
demand for payment and although such liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify the Parent
promptly of any such set-off made by it and the application made by it of the
proceeds thereof; provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Administrative
Agent and each Lender
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under this subsection are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Administrative Agent or
such Lender may have.
11.3 No Subrogation. Notwithstanding any payment or payments made by
the Parent hereunder, or any set-off or application of funds of the Parent by
the Administrative Agent or any Lender, the Parent shall not be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or against any collateral security or guarantee or right of
offset held by the Administrative Agent or any Lender for the payment of the
Obligations, nor shall the Parent seek or be entitled to seek any contribution
or reimbursement from the Borrower in respect of payments made by the Parent
hereunder, until the Commitments have terminated, no L/C Obligations are
outstanding and all amounts owing to the Administrative Agent and the Lenders by
the Borrower have been paid in full. If any amount shall be paid to the Parent
on account of such subrogation rights at any time when the Commitments have not
terminated, any L/C Obligations are outstanding or all amounts owing hereunder
shall not have been paid in full, such amount shall be held by the Parent in
trust for the Administrative Agent and the Lenders, segregated from other funds
of the Parent, and shall, forthwith upon receipt by the Parent, be turned over
to the Administrative Agent in the exact form received by the Parent (duly
indorsed by the Parent to the Administrative Agent, if required), to be applied
against the Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine.
11.4 Amendments, etc. The Parent shall remain obligated hereunder
notwithstanding that, without any reservation of rights against the Parent, and
without notice to or further assent by the Parent, any demand for payment of any
of the Obligations made by the Administrative Agent or any Lender may be
rescinded by the Administrative Agent or such Lender, and any of the Obligations
continued, and the Obligations, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and this
Agreement, any other Loan Document and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Required Lenders or the Lenders, as the
case may be, may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or any
Lender for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent nor any Lender shall
have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Obligations or pursuant to this Section 11 or any
property subject thereto.
11.5 Guarantee Absolute and Unconditional. The Parent waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon the guarantees contained in this Section 11 or acceptance of the
guarantee provisions of this Section 11; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon the guarantees contained in this Section 11; and all dealings between the
Borrower or the Parent, on the one hand, and the Administrative Agent and the
Lenders, on the other, shall likewise be conclusively presumed to have been had
or consummated in reliance upon the guarantees contained in this Section 11. The
Parent waives (to the extent permitted by law) diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Borrower
or the Parent with respect to the Obligations. The guarantees contained in this
Section 11 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of
this Agreement, any other Loan Document or any of the documents executed in
connection
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therewith, any of the Obligations or any collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower against the Administrative
Agent or any Lender, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Borrower or the Parent) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the
Borrower for the Obligations, or of the Parent under the guarantees contained in
this Section 11, in bankruptcy or in any other instance. When the Administrative
Agent or any Lender is pursuing its rights and remedies hereunder against the
Parent, the Administrative Agent or any Lender may, but shall be under no
obligation to, pursue such rights and remedies as it may have against the
Borrower or any other Person or against any collateral security or guarantee for
the Obligations or any right of offset with respect thereto, and any failure by
the Administrative Agent or any Lender to pursue such other rights or remedies
or to collect any payments from the Borrower or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower or any such other Person or of
any such collateral security, guarantee or right of offset, shall not relieve
the Parent of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Administrative Agent and the Lenders against the Parent.
11.6 Reinstatement. Each of the guarantees contained in this Section 11
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
11.7 Payments. The Parent hereby agrees that the amounts payable by the
Parent hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent specified in
subsection 12.2 or at such other office as the Administrative Agent shall
designate in writing to the Parent.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof, may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (x) enter into with the Loan
Parties hereto or thereto, as the case may be, written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose of
adding any provisions to this Agreement or to the other Loan Documents or
changing in any manner the rights or obligations of the Lenders or the Loan
Parties hereunder or thereunder or (y) waive at any Loan Party's request, on
such terms and conditions as the Required Lenders or the Administrative Agent,
as the case may be, may specify in such instrument, any of the requirements of
this Agreement or the other Loan Documents or any Default or Event of Default
and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall:
(i) reduce the amount or extend the scheduled date of maturity of any
Loan or any Reimbursement Obligation or of any scheduled installment
thereof or reduce the stated
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rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the amount or extend the
expiration date of any Lender's Revolving Credit Commitment, in each
case without the consent of each Lender directly affected thereby;
(ii) amend, modify or waive any provision of this subsection 12.1 or
reduce the percentage specified in the definition of Required Lenders,
in each case without the written consent of all the Lenders;
(iii) release any Guarantee or the Guarantee Obligations of the Parent
under this Agreement or, in the aggregate (in a single transaction or a
series of related transactions), substantially all of the Collateral
without the consent of all the Lenders, except as expressly permitted
hereby or by any Guarantee or Security Document (as such documents are
in effect on the date hereof or, if later, the date of execution and
delivery thereof in accordance with the terms hereof);
(iv) amend, modify or waive any provision of Section 10 without the
written consent of the then Administrative Agent and of any Other
Representative affected thereby;
(v) amend, modify or waive the provisions of any Letter of Credit or
any L/C Obligation without the written consent of the Issuing Lender
and each affected L/C Participant; or
(vi) amend, modify or waive any provision of this Agreement regarding
the allocation of prepayment amounts among the Term Loans or the
Delayed Draw Term Loans or the application of such prepayment amounts
to the respective installments of principal under the respective Term
Loans or Delayed Draw Term Loans without the written consent of the
Term Loan Lenders the Term Loan Commitment Percentages of which
aggregate more than 50% or of the Delayed Draw Term Loan Lenders the
Delayed Draw Term Loan Commitment Percentages of which aggregate more
than 50%, respectively; or
(vii) subject to clause (i) of this subsection 12.1 as it relates to
reducing the amount or extending the scheduled date of maturity of any
Loan or any installment thereof, amend, modify or waive any provision
of subsection 2.6 or subsection 2.7 or of subsection 2.9 or subsection
2.10 without the written consent of the Term Loan Lenders the Term Loan
Commitment Percentages of which aggregate more than 50% or of the
Delayed Draw Term Loan Lenders the Delayed Draw Term Loan Commitment
Percentages of which aggregate more than 50%, respectively; or
(viii) amend, modify or waive any provision of subsection 2.1, 2.2, 2.3
or 2.4 or, subject to paragraph (i) of this subsection 12.1 as it
relates to reducing the amount or extending the scheduled date of
maturity of any Reimbursement Obligation, Section 3 without the written
consent of the Revolving Credit Lenders the Revolving Credit Commitment
Percentages of which aggregate more than 50%; or
(ix) amend, modify or waive any provision of the Swing Line Note (if
any) or subsection 2.5 without the written consent of the Swing Line
Lender and each other Lender, if any, which holds, or is required to
purchase, a participation in any Swing Line Loan pursuant to subsection
2.5(d).
Any waiver and any amendment, supplement or modification pursuant to this
subsection 12.1 shall apply to each of the Lenders and shall be binding upon the
Loan Parties, the Lenders, the Administrative Agent and all future holders of
the Loans. In the case of any waiver, each of the
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Loan Parties, the Lenders and the Administrative Agent shall be restored to
their former position and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
12.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, or, in the case of delivery by a nationally recognized overnight
courier, when received, addressed as follows in the case of the Parent, the
Borrower and the Administrative Agent, and as set forth in Schedule I in the
case of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Loans:
The Parent: Global Decisions Group LLC
c/o McCarthy, Crisanti & Maffei, Inc.
590 Madison Avenue, 18th Floor
New York, New York 10022
Attention: Peter Derow
Telecopy: (212) 835-1399
The Borrower: McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
New York, New York 10005
Attention: David Nixon
Telecopy: (212) 908-4345
with a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Steve Gross, Esq.
Telecopy: (212) 909-6386
The Administrative The Chase Manhattan Bank
Agent, Swing Line 270 Park Avenue
Lender and Issuing New York, New York 10017
Lender Attention: William J. Caggiano
Telecopy: (212) 972-0009
with a copy to: Loan & Agency Services Group
One Chase Manhattan Plaza
New York, New York 10081
Attention: Margaret Swales
Telecopy: (212) 552-5662
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.3, 2.4, 2.8, 2.11, 3.2, 4.2, 4.4 or 4.8
shall not be effective until received.
12.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in
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exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
12.4 Survival of Representations and Warranties. All representations
and warranties made hereunder and in the other Loan Documents (or in any
amendment, modification or supplement hereto or thereto) and in any certificate
delivered pursuant hereto or such other Loan Documents shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.
12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent and the Other Representatives for all their
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation, execution, delivery and administration of, and any amendment,
supplement, waiver or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions (including the
syndication of the Revolving Credit Commitments, Term Loans and Delayed Draw
Term Loans (including the reasonable expenses of the Administrative Agent's due
diligence investigation) and the monitoring of the Collateral) contemplated
hereby and thereby, including, without limitation, the reasonable fees and
disbursements of one firm of counsel to the Administrative Agent and the Other
Representatives, (b) to pay or reimburse each Lender, each Other Representative
and the Administrative Agent for all its reasonable costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, the Other Representatives and the several Lenders, and any
reasonable Environmental Costs incurred by any of them arising out of or in any
way relating to any Loan Party or any property in which any Loan Party has had
any interest at any time, (c) to pay, and indemnify and hold harmless each
Lender, the Administrative Agent and the Other Representatives from and against,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other similar
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, and indemnify and
hold harmless each Lender, the Administrative Agent and the Other
Representatives (and their respective directors, trustees, officers, employees,
agents, successors and assigns) from and against, any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (whether or not
caused by any such Person's own negligence (other than gross negligence) and
including, without limitation, the reasonable fees and disbursements of counsel)
with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such other
documents (regardless of whether the Administrative Agent, any such Other
Representative or any Lender is a party to the litigation or other proceeding
giving rise thereto and regardless of whether any such litigation or other
proceeding is brought by the Parent, the Borrower or any other Person),
including, without limitation, any of the foregoing relating to the violation
of, noncompliance with, or liability under, any Environmental Laws or any
orders, requirements or demands of Governmental Authorities related thereto
applicable to the operations of the Parent, the Borrower, any of their
Subsidiaries or any of the facilities and
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properties owned, leased or operated by the Parent, the Borrower or any of their
Subsidiaries (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"), provided that the Borrower shall not have any
obligation hereunder to the Administrative Agent, any such Other Representative
or any Lender with respect to Environmental Costs or indemnified liabilities
arising from (i) the gross negligence or willful misconduct of the
Administrative Agent, any Other Representative or any such Lender (or any of
their respective directors, trustees, officers, employees, agents, successors
and assigns) or (ii) claims made or legal proceedings commenced against the
Administrative Agent, any Other Representative or any such Lender by any
securityholder or creditor thereof arising out of and based upon rights afforded
any such securityholder or creditor solely in its capacity as such.
Notwithstanding the foregoing, except as provided in clauses (b) and (c) above,
the Borrower shall have no obligation under this subsection 12.5 to the
Administrative Agent, any Other Representative or any Lender with respect to any
tax, levy, impost, duty, charge, fee, deduction or withholding imposed, levied,
collected, withheld or assessed by any Governmental Authority. The agreements in
this subsection shall survive repayment of the Loans and all other amounts
payable hereunder.
12.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of each of the Loan
Parties party hereto, the Lenders, the Administrative Agent, the Other
Representatives, all future holders of the Loans and their respective successors
and assigns, except that none of the Loan Parties may, other than in accordance
with subsection 8.5, assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Revolving Credit Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating interest
to a Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan (and any Note evidencing such Loan) for all purposes
under this Agreement and the other Loan Documents and the Loan Parties and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents, and such Lender shall be solely responsible for any
withholding taxes or any filing or reporting requirements relating to such
Participant. Any agreement pursuant to which any Lender shall sell any such
participating interest shall provide that such Lender shall retain the sole
right and responsibility to exercise such Lender's rights and enforce each of
the Loan Parties' obligations hereunder, including the right to consent to any
amendment, supplement, modification or waiver of any provision of this Agreement
or any of the other Loan Documents, provided that such participation agreement
may provide that such Lender would be required to obtain the consent of the
Participant prior to consenting to any amendment, supplement, modification or
waiver described in clauses (i) through (x) to which the affirmative vote of the
Lender would be required. The Parent and the Borrower agree that each Lender
shall be entitled to the benefits of subsections 4.9, 4.10, 4.11, 4.12 and 12.5
without regard to whether it has granted any participating interests, and that
all amounts payable to a Lender under subsections 4.9, 4.10, 4.11 and 4.12 shall
be determined as if such Lender had not granted any such participating
interests.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
other Lender or any Affiliate of such assigning Lender or, with the prior
written consent of the Administrative Agent and the
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Borrower (which consent in each case shall not be unreasonably withheld), to an
additional bank or financial institution (an "Assignee") all or any part of its
rights and obligations under this Agreement and any Notes, including, without
limitation, its Revolving Credit Commitment and Loans, pursuant to an Assignment
and Acceptance, substantially in the form of Exhibit G, executed by such
Assignee, such assigning Lender (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, by the Borrower and the Administrative
Agent) and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that (unless the Administrative Agent and
the Borrower otherwise consent in writing) no such transfer to an Assignee
(other than a Lender or any Affiliate or to an Approved Fund of the assigning
Lender) shall be (i) in an aggregate principal amount not less than $5,000,000
in the aggregate (or, if less, the full amount of such assigning Lender's Term
Loans, Delayed Draw Term Loans, if any, Revolving Credit Loans and Revolving
Credit Commitment) and (ii) if a partial assignment, after giving effect to such
partial assignment, the assigning Lender shall have remaining Loans and
Commitments aggregating at least $5,000,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with a Revolving Credit Commitment,
the Term Loans and the Delayed Draw Term Loans, as set forth therein, and (y)
the assigning Lender thereunder shall be released from its obligations under
this Agreement to the extent that such obligations shall have been expressly
assumed by the Assignee pursuant to such Assignment and Acceptance (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such assigning
Lender shall cease to be a party hereto but shall nevertheless continue to be
entitled to the benefits of subsections 4.10, 4.11, 4.12 and 12.5).
Notwithstanding the foregoing, no Assignee, which as of the date of any
assignment to it pursuant to this subsection 12.6(c) would be entitled to
receive any greater payment under subsection 4.10 or 4.11 than the assigning
Lender would have been entitled to receive as of such date under such
subsections with respect to the rights assigned, shall be entitled to receive
such payments unless the Borrower has expressly consented in writing to waive
the benefit of this provision at the time of the assignment. For the purposes of
this Section, "Approved Fund" means, with respect to any Lender that is a fund
that invests in bank loans, any other fund that invests in bank loans and is
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
(d) The Administrative Agent, on behalf of the Borrower, shall maintain
at its address referred to in subsection 12.2 a copy of each Assignment and
Acceptance delivered to it and a register (the "Register") for the recordation
of the names and addresses of the Lenders and the Revolving Credit Commitment
of, and the principal amount of the Loans owing to, and any Notes evidencing
such Loans owned by, each Lender from time to time. Notwithstanding anything in
this Agreement to the contrary, each of the Parent, the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of any Loan, any Notes and the Revolving
Credit Commitments recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower at any reasonable
time and from time to time upon reasonable prior notice.
(e) Notwithstanding anything in this Agreement to the contrary, no
assignment under subsection 12.6(c) of any rights or obligations under or in
respect of the Loans or the Notes evidencing such Loans shall be effective
unless and until the Administrative Agent shall have recorded the assignment
pursuant to subsection 12.6(d). Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and, in the case of an Assignee
that is not then a Lender or an Affiliate of the assigning Lender, by the
Administrative
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83
Agent and if no Default or Event of Default has occurred and is continuing, the
Borrower), together with payment to the Administrative Agent of a registration
and processing fee of $3,500 (which fee need not be paid in the case of any
assignment to an Affiliate of the assigning Lender), the Administrative Agent
shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give prompt notice of such acceptance and
recordation to the Borrower. On or prior to such effective date, the assigning
Lender shall surrender any outstanding Notes held by it all or a portion of
which are being assigned, and the Borrower, at its own expense, shall, upon the
request to the Administrative Agent by the assigning Lender or the Assignee, as
applicable, execute and deliver to the Administrative Agent (in exchange for the
outstanding Notes of the assigning Lender) a new Revolving Credit Note and/or
Term Note and/or Delayed Draw Term Note and/or Swing Line Note, as the case may
be, to the order of such Assignee in an amount equal to (i) in the case of a
Revolving Credit Note, the lesser of (A) the amount of such Assignee's Revolving
Credit Commitment and (B) the aggregate principal amount of all Revolving Credit
Loans made by such Assignee and (ii) in the case of a Term Note or Delayed Draw
Term Note, the amount of such Assignee's Term Loans or Delayed Draw Term Loans,
as the case may be, in each case with respect to the relevant Loan or Revolving
Credit Commitment after giving effect to such Assignment and Acceptance and, if
the assigning Lender has retained a Revolving Credit Commitment or Term Loan or
Delayed Draw Term Loan hereunder, a new Revolving Credit Note and/or Term Note
and/or Delayed Draw Term Note and/or Swing Line Note, as the case may be, to the
order of the assigning Lender in an amount equal to (i) in the case of a
Revolving Credit Note, the lesser of (A) the amount of such Lender's Revolving
Credit Commitment and (B) the aggregate principal amount of all Revolving Credit
Loans made by such Lender and (ii) in the case of a Term Note or Delayed Draw
Term Note the amount of such Lender's Term Loans or Delayed Draw Term Loans, as
the case may be, and (iii) in the case of a Swing Line Note, the lesser of (A)
the Swing Line Commitment and (B) the aggregate principal amount of all Swing
Line Loans made by such Lender, in each case with respect to the relevant Loan,
Swing Line Commitment, Revolving Credit Commitment, Term Loan Commitment or
Delayed Draw Term Loan Commitment after giving effect to such Assignment and
Acceptance. Any such new Notes shall be dated the Effective Date and shall
otherwise be in the form of the Note replaced thereby. Any Notes surrendered by
the assigning Lender shall be returned by the Administrative Agent to the
Borrower marked "cancelled".
(f) The Parent and the Borrower authorize each Lender to disclose to
any Participant or Assignee (each, a "Transferee") and any prospective
Transferee, subject to the provisions of subsection 12.15, any and all
information in such Lender's possession concerning the Parent and the Borrower
and their Affiliates which has been delivered to such Lender by or on behalf of
the Parent and the Borrower pursuant to this Agreement or which has been
delivered to such Lender by or on behalf of the Parent and the Borrower in
connection with such Lender's credit evaluation of each of the Borrower and its
Affiliates prior to becoming a party to this Agreement. No assignment or
participation made or purported to be made to any Transferee shall be effective
without the prior written consent of the Borrower if it would require the
Borrower to make any filing with any Governmental Authority or qualify any Loan
or Note under the laws of any jurisdiction, and the Borrower shall be entitled
to request and receive such information and assurances as it may reasonably
request from any Lender or any Transferee to determine whether any such filing
or qualification is required or whether any assignment or participation is
otherwise in accordance with applicable law.
(g) Nothing herein shall prohibit any Lender from pledging or assigning
any Loan or any Note to any Federal Reserve Bank in accordance with applicable
law.
12.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender")
shall at any time
<PAGE> 84
84
receive any payment of all or part of its Revolving Credit Loans, Term Loans,
Delayed Draw Term Loans or Reimbursement Obligations owing to it, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 9(f), or otherwise (except pursuant to subsection 4.4,
4.13(d) or 12.6)), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Revolving Credit Loans, Term Loans, Delayed Draw Term Loans or
Reimbursement Obligations, as the case may be, owing to it, or interest thereon,
such benefitted Lender shall purchase for cash from the other Lenders an
interest (by participation, assignment or otherwise) in such portion of each
such other Lender's Revolving Credit Loans, Term Loans, Delayed Draw Term Loans
or Reimbursement Obligations, as the case may be, owing to it, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by such Borrower to the extent permitted by
applicable law, upon the occurrence of an Event of Default under Section 9(a) to
set-off and appropriate and apply against any amount then due and payable under
Section 9(a) any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower. Each Lender agrees promptly to notify such Borrower and the
Administrative Agent after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
12.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of such counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be delivered to the Borrower and the
Administrative Agent.
12.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of each of the Loan Parties party hereto, the
Administrative Agent and the Lenders with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by any of
the Loan Parties party hereto, the Administrative Agent or any Lender relative
to the subject matter hereof not expressly set forth or referred to herein or in
the other Loan Documents.
12.11 GOVERNING LAW. THIS AGREEMENT AND ANY NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY NOTES
<PAGE> 85
85
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK.
12.12 Submission To Jurisdiction; Waivers. Each party hereto hereby
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof;
(ii) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient forum and
agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to
the Parent, the Borrower, the applicable Lender or the Administrative
Agent, as the case may be, at the address specified in subsection 12.2
or at such other address of which the Administrative Agent, any such
Lender and the Parent or the Borrower shall have been notified pursuant
thereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred
to in this subsection any punitive damages.
12.13 Acknowledgements. Each of the Parent and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Other Representative or
Lender has any fiduciary relationship with or duty to the Parent or the Borrower
arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Administrative Agent and Lenders, on
the one hand, and the Parent and the Borrower, on the other hand, in connection
herewith or therewith is solely that of creditor and debtor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby and
thereby among the Lenders or among the Parent or the Borrower and the Lenders.
12.14 WAIVER OF JURY TRIAL. THE PARENT, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE> 86
86
12.15 Confidentiality. The Administrative Agent and each Lender agrees
to keep confidential any information (a) provided to it by or on behalf of the
Parent, the Borrower or any of their Subsidiaries pursuant to or in connection
with this Agreement or (b) obtained by such Lender based on a review of the
books and records of the Parent, the Borrower or any of their Subsidiaries;
provided that nothing herein shall prevent any Lender from disclosing any such
information (i) to the Administrative Agent or any other Lender, (ii) to any
Transferee or prospective Transferee or to any direct or indirect contractual
counterparties in swap agreements or such contractual counterparties'
professional advisors which agrees to comply with the provisions of this
subsection, (iii) to its affiliates and the employees, directors, agents,
attorneys, accountants and other professional advisors of it and its affiliates,
provided that such Lender shall inform each such Person of the agreement under
this subsection 12.15 and take reasonable actions to cause compliance by any
such Person referred to in this clause (iii) with this agreement (including,
where appropriate, to cause any such Person to acknowledge its agreement to be
bound by the agreement under this subsection 12.15), (iv) upon the request or
demand of any Governmental Authority having jurisdiction over such Lender or to
the extent required in response to any order of any court or other Governmental
Authority or as shall otherwise be required pursuant to any Requirement of Law,
provided that such Lender shall, unless prohibited by any Requirement of Law,
notify the Parent or the Borrower, as applicable, of any disclosure pursuant to
this clause (iv) as far in advance as is reasonably practicable under such
circumstances, (v) which has been publicly disclosed other than in breach of
this Agreement, (vi) in connection with the exercise of any remedy hereunder,
(vii) in connection with periodic regulatory examinations and reviews conducted
by the National Association of Insurance Commissioners (to the extent
applicable), (viii) in connection with any litigation to which such Lender may
be a party, subject to the proviso in clause (iv), and (ix) if, prior to such
information having been so provided or obtained, such information was already in
the Administrative Agent's or a Lender's possession on a nonconfidential basis
without a duty of confidentiality to the Parent or the Borrower being violated.
<PAGE> 87
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
McCARTHY, CRISANTI & MAFFEI, INC.
By: _________________________
Name:
Title:
GLOBAL DECISIONS GROUP, LLC,
as Guarantor
By: _________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent, Swing Line Lender,
Issuing Lender and a Lender
By: _________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent and a Lender
By: _________________________
Name:
Title:
<PAGE> 88
Schedule I
Commitments and Addresses
I. Commitments:
<TABLE>
<CAPTION>
Delayed Draw
Term Loan Term Loan Revolving Credit
Lender Commitment Commitment Commitment
- ------ ---------- ------------ ----------------
<S> <C> <C> <C>
The Chase
Manhattan Bank $ 7,500,000 $ 5,000,000 $2,500,000
Bank of America
National Trust
and Savings
Association $ 7,500,000 $ 5,000,000 $2,500,000
----------- ----------- ----------
$15,000,000 $10,000,000 $5,000,000
</TABLE>
II. Addresses:
Bank of America National Trust and Savings Association
335 Madison Avenue, 6th Floor
New York, New York 10017
Attention: Daniel Rencricca
Telecopy: 212-503-7502
<PAGE> 89
89
Schedule II
Applicable Margin Step-Downs
Step-Downs for Revolving Credit Loans, Term Loans and Delayed Draw Term Loans
<TABLE>
<CAPTION>
=================================================================================================
Leverage Eurodollar ABR
Ratio Applicable Margin Applicable Margin
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
greater than 1.5x 1.50% 0.50%
- -------------------------------------------------------------------------------------------------
less than or equal to 1.5x greater than or equal to 1.0x 1.25% 0.25%
- -------------------------------------------------------------------------------------------------
less than 1.0x 1.00% 0.00%
=================================================================================================
</TABLE>
<PAGE> 90
EXECUTION COPY
CREDIT AGREEMENT
among
McCARTHY, CRISANTI & MAFFEI, INC.,
as Borrower,
GLOBAL DECISIONS GROUP LLC,
as Guarantor,
THE SEVERAL LENDERS FROM TIME TO TIME PARTIES HERETO,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of February 12, 1998
CHASE SECURITIES INC. and BANCAMERICA ROBERTSON STEPHENS,
as Arrangers
<PAGE> 91
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS............................................................................ 2
1.1 Defined Terms.......................................................................... 2
1.2 Other Definitional Provisions.......................................................... 21
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS........................................................ 22
2.1 Revolving Credit Commitments........................................................... 22
2.2 Revolving Credit Notes................................................................. 22
2.3 Procedure for Revolving Credit Borrowing............................................... 22
2.4 Termination or Reduction of Revolving Credit Commitments............................... 23
2.5 Swing Line Commitment.................................................................. 23
2.6 Term Loans............................................................................. 25
2.7 Term Notes............................................................................. 25
2.8 Procedure for Term Loan Borrowing...................................................... 26
2.9 Delayed Draw Term Loans................................................................ 27
2.10 Delayed Draw Term Notes................................................................ 27
2.11 Procedure for Delayed Draw Term Loan Borrowing......................................... 28
2.12 Repayment of Loans..................................................................... 28
SECTION 3. LETTERS OF CREDIT...................................................................... 29
3.1 L/C Commitment......................................................................... 29
3.2 Procedure for Issuance of Letters of Credit............................................ 30
3.3 Fees, Commissions and Other Charges.................................................... 30
3.4 L/C Participations..................................................................... 31
3.5 Reimbursement Obligation of the Borrower............................................... 32
3.6 Obligations Absolute................................................................... 32
3.7 Letter of Credit Payments.............................................................. 33
3.8 Application............................................................................ 33
SECTION 4. GENERAL PROVISIONS APPLICABLE
TO LOANS AND LETTERS OF CREDIT......................................................... 33
4.1 Interest Rates and Payment Dates....................................................... 33
4.2 Conversion and Continuation Options.................................................... 34
4.3 Minimum Amounts of Sets................................................................ 34
4.4 Optional and Mandatory Prepayments and Commitment Reductions........................... 35
4.5 Commitment Fees........................................................................ 37
4.6 Computation of Interest and Fees....................................................... 37
4.7 Inability to Determine Interest Rate................................................... 38
4.8 Pro Rata Treatment and Payments........................................................ 38
4.9 Illegality............................................................................. 39
4.10 Requirements of Law.................................................................... 40
4.11 Taxes.................................................................................. 42
4.12 Indemnity.............................................................................. 44
4.13 Certain Rules Relating to the Payment of Additional Amounts............................ 44
SECTION 5. REPRESENTATIONS AND WARRANTIES......................................................... 46
5.1 Financial Condition.................................................................... 46
5.2 No Change; Solvent..................................................................... 47
</TABLE>
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<PAGE> 92
<TABLE>
<CAPTION>
Page
----
<S> <C>
5.3 Corporate/Limited Liability Company Existence; Compliance with Law..................... 47
5.4 Corporate/Limited Liability Company Power; Authorization; Enforceable
Obligations............................................................................ 48
5.5 No Legal Bar........................................................................... 48
5.6 No Material Litigation................................................................. 49
5.7 No Default............................................................................. 49
5.8 Ownership of Property; Liens........................................................... 49
5.9 Intellectual Property.................................................................. 49
5.10 Computer Systems....................................................................... 49
5.11 No Burdensome Restrictions............................................................. 49
5.12 Taxes.................................................................................. 49
5.13 Federal Regulations.................................................................... 50
5.14 ERISA.................................................................................. 50
5.15 Collateral............................................................................. 50
5.16 Investment Company Act; Other Regulations.............................................. 51
5.17 Subsidiaries........................................................................... 52
5.18 Purpose of Loans....................................................................... 52
5.19 CERA Intercompany Loans................................................................ 52
5.20 Environmental Matters.................................................................. 52
5.21 No Material Misstatements.............................................................. 53
5.22 Delivery of the Transaction Documents.................................................. 53
5.23 Representations and Warranties Contained in the Transaction Documents.................. 53
SECTION 6. CONDITIONS PRECEDENT................................................................... 54
6.1 Conditions to Initial Extension of Credit.............................................. 54
6.2 Conditions to Each Other Extension of Credit........................................... 58
SECTION 7. AFFIRMATIVE COVENANTS.................................................................. 58
7.1 Financial Statements................................................................... 58
7.2 Certificates; Other Information........................................................ 59
7.3 Payment of Obligations................................................................. 60
7.4 Conduct of Business and Maintenance of Existence....................................... 60
7.5 Maintenance of Property; Insurance..................................................... 61
7.6 Inspection of Property; Books and Records; Discussions................................. 61
7.7 Notices................................................................................ 61
7.8 Environmental Laws..................................................................... 63
7.9 After-Acquired Real Property and Fixtures.............................................. 63
SECTION 8. NEGATIVE COVENANTS..................................................................... 64
8.1 Financial Condition Covenants.......................................................... 64
8.2 Limitation on Indebtedness............................................................. 66
8.3 Limitation on Liens.................................................................... 67
8.4 Limitation on Guarantee Obligations.................................................... 69
8.5 Limitation on Fundamental Changes...................................................... 70
8.6 Limitation on Sale of Assets........................................................... 71
8.7 Limitation on Restricted Payments...................................................... 71
8.8 Limitation on Capital Expenditures..................................................... 72
8.9 Limitation on Investments, Loans and Advances.......................................... 73
8.10 Limitation on Transactions with Affiliates............................................. 74
</TABLE>
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<PAGE> 93
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.11 Limitation on Changes in Fiscal Year................................................... 75
8.12 Limitation on Negative Pledge Clauses.................................................. 76
8.13 Limitation on Lines of Business; Creation of Subsidiaries.............................. 76
8.14 Limitations on Currency and Commodity Hedging Transactions............................. 77
8.15 Limitation on Modification of CERA Notes............................................... 77
8.16 Limitation on Licensing................................................................ 77
SECTION 9. EVENTS OF DEFAULT...................................................................... 77
SECTION 10. THE ADMINISTRATIVE AGENT AND THE OTHER
REPRESENTATIVES........................................................................ 81
10.1 Appointment............................................................................ 81
10.2 Delegation of Duties................................................................... 81
10.3 Exculpatory Provisions................................................................. 81
10.4 Reliance by Administrative Agent....................................................... 82
10.5 Notice of Default...................................................................... 82
10.6 Acknowledgements and Representations by Lenders........................................ 82
10.7 Indemnification........................................................................ 83
10.8 Administrative Agent and Other Representatives in Their Individual
Capacity............................................................................... 84
10.9 Successor Administrative Agent......................................................... 84
10.10 Swing Line Lender...................................................................... 84
SECTION 11. GUARANTEE.............................................................................. 84
11.1 Guarantee.............................................................................. 84
11.2 Right of Set-Off....................................................................... 85
11.3 No Subrogation......................................................................... 85
11.4 Amendments, etc........................................................................ 86
11.5 Guarantee Absolute and Unconditional................................................... 86
11.6 Reinstatement.......................................................................... 87
11.7 Payments............................................................................... 87
SECTION 12. MISCELLANEOUS.......................................................................... 87
12.1 Amendments and Waivers................................................................. 87
12.2 Notices................................................................................ 89
12.3 No Waiver; Cumulative Remedies......................................................... 90
12.4 Survival of Representations and Warranties............................................. 90
12.5 Payment of Expenses and Taxes.......................................................... 90
12.6 Successors and Assigns; Participations and Assignments................................. 91
12.7 Adjustments; Set-off................................................................... 94
12.8 Counterparts........................................................................... 95
12.9 Severability........................................................................... 95
12.10 Integration............................................................................ 95
12.11 GOVERNING LAW.......................................................................... 96
12.12 Submission To Jurisdiction; Waivers.................................................... 96
12.13 Acknowledgements....................................................................... 96
12.14 WAIVER OF JURY TRIAL................................................................... 97
12.15 Confidentiality........................................................................ 97
</TABLE>
-93-
<PAGE> 94
SCHEDULES
I Commitments and Addresses
II Applicable Margin Step-Downs
5.4 Consents Required
5.9 Intellectual Property Claims
5.15 Filing Jurisdictions and Lien Searches
5.17 Subsidiaries
8.2(f) Permitted Indebtedness
8.3(j) Permitted Liens
8.4(a) Permitted Guarantee Obligations
8.9(c) Permitted Investments
8.10 Permitted Transactions with Affiliates
EXHIBITS
A-1 Form of Revolving Credit Note
A-2 Form of Term Note
A-3 Form of Delayed Draw Term Note
A-4 Form of Swing Line Note
B Form of Guarantee and Collateral Agreement
C Form of Trademark Security Agreement
D Form of CERA Notes
E Form of Opinion of Debevoise & Plimpton
F Form of U.S. Tax Compliance Certificate
G Form of Assignment and Acceptance
H Form of Borrowing Certificate
-94-
<PAGE> 1
EX 10.48
EXHIBIT B TO
CREDIT AGREEMENT
FORM OF GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 11,
1998, made by GLOBAL DECISIONS GROUP LLC, a Delaware limited liability company
(the "Parent"), MCM GROUP, INC., a Delaware corporation ("MGI"), and McCARTHY,
CRISANTI & MAFFEI, INC., a New York corporation (the "Borrower"), together with
any other Subsidiary of the Parent or the Borrower that becomes a party hereto
from time to time after the date hereof (the "Granting Parties"), in favor of
THE CHASE MANHATTAN BANK ("Chase"), as administrative agent (in such capacity,
the "Administrative Agent") for the banks and other financial institutions
(collectively, the "Lenders"; individually, a "Lender") from time to time
parties to the Credit Agreement, dated as of February 12, 1998 (as amended,
waived, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the Parent, the Lenders, the Administrative
Agent and Bank of America National Trust and Savings Association ("Bank of
America"), as documentation agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, it is a condition to the obligation of the Lenders to
make their respective extensions of credit to the Borrower under the Credit
Agreement that the Granting Parties shall execute and deliver this Agreement to
the Administrative Agent for the benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Granting Party hereby agrees with the Administrative
Agent, for the ratable benefit of the Secured Parties (as defined below), as
follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement, and the following terms which are defined in the
Code (as defined below) are used herein as so defined: Accounts, Chattel Paper,
Documents, Equipment, Farm Products, Fixtures, Instruments, Inventory and
Investment Property.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time.
"Bank of America": as defined in the initial paragraph hereof.
"Borrower Obligations": the collective reference to the
"Obligations" as defined
<PAGE> 2
2
in the Credit Agreement and to the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
such loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
the loans made to the Borrower pursuant to the Letter Agreement and all
other obligations and liabilities of the Borrower to the Lenders,
whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with such loans and any other document made,
delivered or given in connection therewith, and which may arise under,
out of, or in connection with any cash management system maintained by
any Lender for the benefit of the Borrower, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees and
disbursements of counsel to the to the Lenders that are required to be
paid by the Borrower pursuant to the terms of this Agreement) or
otherwise.
"Chase": as defined in the initial paragraph hereof.
"Code": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral": as defined in Section 3.
"Collateral Account Bank": The Chase Manhattan Bank or another
bank which at all times is a Lender as selected by the Borrower and
notified to the Administrative Agent in writing promptly following such
selection.
"Collateral Proceeds Account": the cash collateral account
established by the relevant Grantor at an office of the Collateral
Account Bank in the name of the Administrative Agent.
"Commitments": the collective reference to the Revolving
Credit Commitments, the Swing Line Commitments, the Term Loan
Commitments, the Delayed Draw Term Loan Commitments and the L/C
Commitment; individually, a "Commitment".
"Contracts": with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and portions
thereof (except for the contracts listed on Schedule 8), to which such
Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of
such Grantor to receive moneys due and to become due to it thereunder
or in connection therewith, (ii) all rights of such Grantor to damages
arising thereunder and (iii) all rights of such Grantor to perform and
to exercise all remedies thereunder.
"Copyright Licenses": with respect to any Grantor, all United
States written license agreements of such Grantor providing for the
grant by such Grantor of any right to use any Copyright of such
Grantor, other than intercompany agreements, including, without
limitation, any license agreements listed on Schedule 5 hereto subject,
in each case, to the terms of such license agreements, and the right to
prepare for sale, sell and advertise for sale, all Inventory now or
hereafter covered by such licenses.
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"Copyrights": with respect to any Grantor, all of such
Grantor's right, title and interest in and to all United States
copyrights, whether or not the underlying works of authorship have been
published or registered, United States copyright registrations and
copyright applications, and (a) all renewals thereof, (b) all income,
royalties, damages and payments now and hereafter due and/or payable
with respect thereto, including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments
for past or future infringement thereof and (c) the right to sue or
otherwise recover for past, present and future infringement and
misappropriation thereof.
"Default": a "Default" as defined in the Credit Agreement.
"Event of Default": an "Event of Default" as defined in the
Credit Agreement.
"General Fund Account": the general fund account of the
relevant Grantor established at the same office of the Collateral
Account Bank as the Collateral Proceeds Account.
"General Intangibles": all "general intangibles" as such term
is defined in Section 9-106 of the Uniform Commercial Code in effect in
the State of New York on the date hereof.
"Granting Parties": as defined in the initial paragraph
hereof.
"Grantor": the Parent, MGI and each Domestic Subsidiary of the
Parent that from time to time becomes a party hereto.
"Guarantor Obligations": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or
in connection with this Agreement or any other Loan Document to which
such Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by such Guarantor pursuant to the terms of
this Agreement or any other Loan Document) and which may arise under,
out of, or in connection with any cash management system maintained by
any Lender for the benefit of the Borrower.
"Guarantors": the collective reference to each Granting Party
other than the Parent and the Borrower.
"Intellectual Property": with respect to any Grantor, the
collective reference to such Grantor's Copyrights, Copyright Licenses,
Trade Secrets, Trademarks and Trademark Licenses.
"Intercompany Note": with respect to any Grantor, any
promissory note evidencing loans made by such Grantor to the Parent or
any of its Subsidiaries.
"Issuers": the collective reference to the Persons identified
on Schedule 2 as the issuers of the Pledged Stock.
"Letter Agreement": the letter agreement, dated February 11,
1998, among
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Chase, Bank of America and the Borrower.
"Loan Documents": the collective reference to the "Loan
Documents" as defined in the Credit Agreement.
"Loans": the collective reference to the "Loans" as defined in
the Credit Agreement.
"Makers": the collective reference to the Persons identified
on Schedule 2 as the makers of the Pledged Notes.
"Notes": the collective reference to the "Notes" as defined in
the Credit Agreement.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, (ii) in the case of each Guarantor, its Guarantor
Obligations and (iii) in the case of the Parent, the Parent
Obligations.
"Parent Obligations": the collective reference to (i) the
Borrower Obligations and (ii) all obligations and liabilities of the
Parent which may arise under or in connection with this Agreement or
any other Loan Document to which the Parent is a party, in each case
whether on account of guarantee obligations, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent or to the Lenders that are required to be paid by the Parent
pursuant to the terms of this Agreement or any other Loan Document) and
which may arise under, out of, or in connection with any cash
management system maintained by any Lender for the benefit of the
Borrower.
"Pledged Collateral": as defined in Section 3.
"Pledged Notes": with respect to any Pledgor, all Intercompany
Notes at any time issued to such Pledgor and all other promissory notes
issued to or held by such Pledgor (other than promissory notes issued
in connection with extensions of trade credit by any Pledgor in the
ordinary course of business), excluding Cash Equivalents (as defined in
the Credit Agreement) to the extent that Cash Equivalents may be
considered promissory notes.
"Pledged Securities": the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock": with respect to any Pledgor, the shares of
Capital Stock listed on Schedule 2 as held by such Pledgor, together
with any other shares, stock certificates, options or rights of any
nature whatsoever in respect of such Capital Stock and any other
capital stock that may be issued or granted to, or held by, such
Pledgor (other than Capital Stock of the Parent issued to any
Subsidiary of the Parent as permitted by subsection 8.7(a) of the
Credit Agreement) while this Agreement is in effect (provided that in
no event shall there be pledged, nor shall any Pledgor be required to
pledge, directly or indirectly, more than 65% of any series of the
outstanding Capital Stock of any Foreign Subsidiary pursuant to this
Agreement).
"Pledgor": the Parent (with respect to Pledged Stock of CERA
and MGI), MGI (with respect to Pledged Stock of the Borrower), the
Borrower (with respect to Pledged
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Stock of the companies listed on Schedule 2 hereto under the name of
the Borrower and any other Subsidiary of the Borrower and any other
Pledged Securities held by the Borrower) and any other Granting Party
(with respect to Pledged Securities held by such Granting Party).
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New
York on the date hereof and, in any event, Proceeds of Pledged
Securities shall include, without limitation, all dividends or other
income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
"Revolving Credit Commitments": the collective reference to
the "Revolving Credit Commitments" as defined in the Credit Agreement.
"Secured Parties": the collective reference to the
Administrative Agent, the Lenders (including, without limitation, the
Issuing Lender) and any Affiliate of any Lender which has entered into
any Permitted Hedging Arrangement with the Parent or any of its
Subsidiaries, and their respective successors and assigns.
"Securities Act": the Securities Act of 1933, as amended from
time to time.
"Security Collateral": as defined in Section 3.
"Trade Secrets": with respect to any Grantor, all of such
Grantor's right, title and interest in and to all United States trade
secrets, including, without limitation, know-how, processes, formulae,
compositions, designs, and confidential business and technical
information, and all rights of any kind whatsoever accruing thereunder
or pertaining thereto, including, without limitation, (a) all income,
royalties, damages and payments now and hereafter due and/or payable
with respect thereto, including, without limitation, payments under all
licenses, non-disclosure agreements and memoranda of understanding
entered into in connection therewith, and damages and payments for past
or future misappropriation thereof, and (b) the right to sue or
otherwise recover for past, present or future misappropriation thereof.
"Trademark Licenses": with respect to any Grantor, all United
States written license agreements of such Grantor with any Person who
is not an Affiliate or a Subsidiary in connection with any of the
Trademarks of such Grantor or such other Person's names or trademarks,
whether such Grantor is a licensor or a licensee under any such
agreement, including, without limitation, the license agreements listed
on Schedule 5, subject, in each case, to the terms of such license
agreements.
"Trademarks": with respect to any Grantor, all of such
Grantor's right, title and interest in and to all United States
trademarks, service marks, trade names, trade dress or other indicia of
trade origin or business identifiers, United States trademark and
service mark registrations, and United States applications for
trademark or service mark registrations (except for "intent to use"
applications for trademark or service mark registrations filed pursuant
to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, unless and
until an Amendment to Allege Use or a Statement of Use under Sections
1(c) and 1(d) of said Act has been filed), and any renewals thereof,
including, without limitation, each registration and application
identified in Schedule 5, and including, without limitation, (a) the
right to sue or otherwise recover for any and all past, present and
future infringements and misappropriation thereof, (b) all income,
royalties, damages
<PAGE> 6
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and other payments now and hereafter due and/or payable with respect
thereto (including, without limitation, payments under all licenses
entered into in connection therewith, and damages and payments for past
or future infringements thereof), and (c) all other rights
corresponding thereto in the United States and all other rights of any
kind whatsoever of such Grantor accruing thereunder or pertaining
thereto, together in each case with the goodwill of the business
connected with the use of, and symbolized by, each such trademark,
service mark, trade name, trade dress or other indicia of trade origin
or business identifiers.
"Vehicles": all cars, trucks, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of title
law of any state and all tires and other appurtenances to any of the
foregoing.
1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section, Schedule and Annex references are to
this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the
Collateral, Pledged Collateral or Security Collateral, or any part thereof, when
used in relation to a Granting Party shall refer to such Granting Party's
Collateral, Pledged Collateral or Security Collateral or the relevant part
thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Secured Parties and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due and payable (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable law, including applicable federal
and state laws relating to the insolvency of debtors.
(c) Each Guarantor agrees that the Borrower Obligations may at
any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained in this Section 2
or affecting the rights and remedies of the Administrative Agent or any other
Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in
full force and effect until the earlier to occur of (i) the first date on which
all the Loans, any Reimbursement Obligations, all other Borrower Obligations
then due and owing, and the obligations of each Guarantor under the guarantee
contained in this Section 2 then due and owing shall have been satisfied by
payment in full, no Letter of Credit shall be outstanding and the Commitments
shall be terminated, notwithstanding that from time to time during the term of
the Credit Agreement
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the Borrower may be free from any Borrower Obligations or (ii) as to any
Guarantor, the sale or other disposition of all of the Capital Stock of such
Guarantor permitted under the Credit Agreement.
(e) No payment made by the Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by the
Administrative Agent or any other Secured Party from the Borrower, any of the
Guarantors, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Borrower Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of any
Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by such Guarantor in respect of the Borrower Obligations or any
payment received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the earlier to occur of (i) the
first date on which the Loans, any Reimbursement Obligations, and all other
Borrower Obligations then due and owing, are paid in full, no Letter of Credit
shall be outstanding and the Commitments are terminated or (ii) the sale or
other disposition of all of the Capital Stock of such Guarantor permitted under
the Credit Agreement.
2.2 Right of Contribution. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate share
of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has
not paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Section 2.3. The
provisions of this Section 2.2 shall in no respect limit the obligations and
liabilities of any Guarantor to the Administrative Agent and the other Secured
Parties, and each Guarantor shall remain liable to the Administrative Agent and
the Lenders for the full amount guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Administrative Agent or any other Secured Party, no Guarantor shall be
entitled to be subrogated to any of the rights of the Administrative Agent or
any other Secured Party against the Borrower or any other Guarantor or any
collateral security or guarantee or right of offset held by the Administrative
Agent or any other Secured Party for the payment of the Borrower Obligations,
nor shall any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all amounts owing to the Administrative
Agent and the other Secured Parties by the Borrower on account of the Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Borrower
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Administrative Agent and the other Secured Parties,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations.
To the maximum extent permitted by law, each Guarantor shall remain obligated
hereunder notwithstanding that, without any reservation of rights against any
Guarantor and without notice to or further assent by any Guarantor, any demand
for payment of any of the Borrower
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Obligations made by the Administrative Agent or any other Secured Party may be
rescinded by the Administrative Agent or such other Secured Party and any of the
Borrower Obligations continued, and the Borrower Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
other Secured Party, and the Credit Agreement and the other Loan Documents and
any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Administrative Agent (or the Required Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any other Secured Party
for the payment of the Borrower Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent nor any other Secured
Party shall have any obligation to protect, secure, perfect or insure any Lien
at any time held by it as security for the Borrower Obligations or for the
guarantee contained in this Section 2 or any property subject thereto, except to
the extent required by applicable law.
2.5 Guarantee Absolute and Unconditional. Each Guarantor
waives, to the maximum extent permitted by applicable law, any and all notice of
the creation, renewal, extension or accrual of any of the Borrower Obligations
and notice of or proof of reliance by the Administrative Agent or any other
Secured Party upon the guarantee contained in this Section 2 or acceptance of
the guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Administrative Agent and the other
Secured Parties, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 2. Each Guarantor waives, to the maximum extent permitted by applicable
law, diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon the Borrower or any of the other Guarantors with
respect to the Borrower Obligations. Each Guarantor understands and agrees, to
the extent permitted by law, that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional guarantee of
payment. Each Guarantor hereby waives, to the maximum extent permitted by
applicable law, any and all defenses that it may have arising out of or in
connection with any and all of the following: (a) the validity or enforceability
of the Credit Agreement or any other Loan Document, any of the Borrower
Obligations or any other collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time held by the
Administrative Agent or any other Secured Party, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower against the Administrative
Agent or any other Secured Party, (c) any change in the time, place, manner or
place of payment, amendment, or waiver or increase in the Obligations, (d) any
exchange, taking, or release of Collateral, (e) any change in the corporate
structure or existence of the Borrower, (f) any application of Collateral to
Obligations or (g) any other circumstance whatsoever (with or without notice to
or knowledge of the Borrower or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Borrower Obligations, or of such Guarantor under the guarantee contained in this
Section 2, in bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, the Administrative Agent or any other Secured Party may, but shall be
under no obligation to, make a similar demand on or otherwise pursue such rights
and remedies as it may have against the Borrower, any other Guarantor or any
other Person or against any collateral security or guarantee for the Borrower
Obligations or any right of offset with respect
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thereto, and any failure by the Administrative Agent or any other Secured Party
to make any such demand, to pursue such other rights or remedies or to collect
any payments from the Borrower, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Administrative Agent or any other Secured
Party against any Guarantor. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any other Secured Party upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or any Guarantor, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any Guarantor or any substantial
part of its property, or otherwise, all as though such payments had not been
made.
2.7 Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at 270
Park Avenue, New York, New York 10017.
SECTION 3. GRANT OF SECURITY INTEREST
Each Granting Party (1) that is a Grantor hereby grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a security
interest in all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, the
"Collateral"), as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations of such Grantor:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Documents;
(e) all Equipment (other than Vehicles);
(f) all General Intangibles;
(g) all Instruments, other than any Intercompany Note to the
extent that it constitutes an Instrument;
(h) all Investment Property, other than any Investment
Property which is a Pledged Security (or would be but for the exclusion
thereof in the definition of "Pledged Stock");
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(i) all Intellectual Property;
(j) all Inventory;
(k) all deposit accounts with Chase and Bank of America (to
the extent a security interest in such deposit accounts may be
perfected by this Agreement under the Uniform Commercial Code (or other
similar laws) in effect in the applicable jurisdiction with respect to
the security interest created hereby);
(l) all support obligations, letters of credit, commercial
tort claims (to the extent a security interest in such letters of
credit may be perfected by the filing of any financing statement or
financing statements under the Uniform Commercial Code (or other
similar laws) in effect in the applicable jurisdiction with respect to
the security interest created hereby);
(m) to the extent not included, all other personal property;
(n) all books and records pertaining to any of the foregoing;
(o) the Collateral Proceeds Account; and
(p) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security
and guarantees given by any Person with respect to any of the
foregoing;
and (2) that is a Pledgor hereby grants to the Administrative Agent, for the
ratable benefit of the Secured Parties, a security interest in all of the
Pledged Securities (other than the Capital Stock of McCarthy, Crisanti & Maffei
S.A.) now owned or at any time hereafter acquired by such Pledgor, and any
Proceeds thereof (the "Pledged Collateral"), as collateral security for the
prompt and complete performance when due (whether at the stated maturity by
acceleration or otherwise) of the Obligations of such Pledgor; (the Collateral
(if any) and the Pledged Collateral (if any) of any Granting Party being
collectively referred to herein as such Granting Party's "Security Collateral");
provided however, that (x) Collateral shall not include any Pledged Collateral,
or any property or assets specifically excluded from Pledged Collateral
(including any Capital Stock of any Foreign Subsidiary in excess of 65% of any
series of such stock); and (y) in the case of any Instruments, Contracts,
Chattel Paper, General Intangibles, Copyright Licenses, Trademark Licenses or
other contracts or agreements with or issued by Persons (other than a Subsidiary
of the Parent that is a party to this Agreement) that would otherwise be
included in the Security Collateral, no security interest in the right, title
and interest of any Granting Party thereunder or therein will be granted
pursuant to this Section 2 (and such Instruments, Contracts, Chattel Paper,
General Intangibles, Copyright Licenses, Trademark Licenses or other contracts
or agreements shall not be deemed to constitute a part of the Security
Collateral) for so long as, and to the extent that, the granting of a security
interest in the right, title and interest of such Grantor thereunder or therein
pursuant to the terms hereof would result in a breach, default or termination of
such Instruments, Contracts, Chattel Paper, General Intangibles, Copyright
Licenses, Trademark Licenses or other contracts or agreements; and (z) in the
case of the Equipment that would otherwise be included in the foregoing
Collateral, the foregoing will not be deemed to grant a security interest
therein under this Agreement (and such Equipment shall not be deemed to
constitute a part of the Collateral) if such Equipment is subject to a Lien
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permitted by subsection 8.3(h) of the Credit Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Each Guarantor. To
induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Guarantor hereby represents and warrants
to the Administrative Agent and each other Secured Party that the
representations and warranties set forth in Section 5 of the Credit Agreement as
they relate to such Guarantor or to the Loan Documents to which such Guarantor
is a party or to the Transaction Documents to which such Guarantor is a party,
each of which representations and warranties is hereby incorporated herein by
reference, are true and correct in all material respects as of the date hereof,
and the Administrative Agent and each other Secured Party shall be entitled to
rely on each of such representations and warranties as if fully set forth
herein; provided that each reference in each such representation and warranty to
the Parent's or the Borrower's knowledge shall, for the purposes of this Section
4.1, be deemed to be a reference to such Guarantor's knowledge.
4.2 Representations and Warranties of Each Grantor. To induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby represents and warrants to the
Administrative Agent and each other Secured Party that:
4.2.1 Title; No Other Liens. Except for the security interest
granted to the Administrative Agent, for the ratable benefit of the Secured
Parties, pursuant to this Agreement and the other Liens permitted to exist on
such Grantor's Collateral by the Credit Agreement (including without limitation
subsection 8.3 thereof), such Grantor owns each item of such Grantor's
Collateral free and clear of any and all Liens. Except as set forth on Schedule
6, no financing statement or other similar public notice with respect to all or
any part of such Grantor's Collateral is on file or of record in any public
office, except such as have been filed in favor of the Administrative Agent, for
the ratable benefit of the Secured Parties, pursuant to this Agreement or in
respect of Liens that are permitted by the Credit Agreement (including without
limitation subsection 8.3 thereof) or any other Loan Document or for which
termination statements will be delivered on the Effective Date.
4.2.2 Perfected First Priority Liens. (i) This Agreement is
effective to create, as collateral security for the Obligations of such Grantor,
valid and enforceable Liens on such Grantor's Collateral in favor of the
Administrative Agent, for the benefit of the Secured Parties, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditor's rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
(ii) Except with respect to (A) Liens on Equipment
constituting Fixtures, (B) any rights reserved in favor of the United States
government as required under law, (C) Liens upon Trademarks and Trademark
Licenses to the extent that (I) such Liens cannot be perfected by the filing of
financing statements under the Uniform Commercial Code or by the filing and
acceptance thereof in the United States Patent and Trademark Office or (II) such
Trademarks and Trademark Licenses are not, individually or in the aggregate,
material to the business of the Parent and its Subsidiaries taken as a whole,
(D) Liens on uncertificated securities, (E) Liens on Collateral the perfection
of which requires filings in or other actions under the laws of
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jurisdictions outside of the United States of America, any State, territory or
dependency thereof or the District of Columbia (except to the extent that such
filings or other actions have been made or taken), (F) Liens on contracts or
receivables on which the United States of America or any department, agency, or
instrumentality thereof is the obligor, (G) Liens on Proceeds of receivables and
Inventory, until transferred to or deposited in the Collateral Proceeds Account
(if any), (H) claims of creditors of Persons receiving goods included as
Collateral for "sale or return" within the meaning of Section 2-326 of the
Uniform Commercial Code of the applicable jurisdiction and (I) Liens on
Investment Property that is not delivered to the Administrative Agent or as to
which the Administrative Agent does not maintain continuous possession, upon
filing of the financing statements delivered to the Administrative Agent by such
Grantor on the Effective Date in the jurisdictions listed on Schedule 5.15 to
the Credit Agreement (which financing statements are in proper form for filing
in such jurisdictions) (and the recording of any Trademark Security Agreement,
as set forth therein, and the making of filings after the Effective Date in any
other jurisdiction as may be necessary under any Requirement of Law) and the
delivery to, and continuing possession by, the Administrative Agent of all
Instruments, Chattel Paper and Documents a security interest in which is
perfected by possession, the Liens created pursuant to this Agreement will
constitute valid Liens on and, to the extent provided herein, perfected security
interests in such Grantor's Collateral (but as to the Copyrights and Copyright
Licenses and accounts arising therefrom, only to the extent the Uniform
Commercial Code of the relevant jurisdiction, from time to time in effect, is
applicable) in favor of the Administrative Agent for the benefit of the Secured
Parties, which Liens will be prior to all other Liens of all other Persons,
except for Liens permitted pursuant to the Loan Documents (including, without
limitation, those permitted to exist pursuant to subsection 8.3 of the Credit
Agreement), and which Liens are enforceable as such as against all other Persons
(except to the extent that the recording of an assignment or other transfer of
title to the Administrative Agent in the United States Patent and Trademark
Office may be necessary for enforceability, and except, with respect to goods
only, buyers in the ordinary course of business to the extent provided in
Section 9-307(1) of the Code), except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law) or by an implied covenant of good faith and fair dealing.
4.2.3 Chief Executive Office. On the date hereof, such
Grantor's jurisdiction of organization and the location of such Grantor's chief
executive office or sole place of business are specified on Schedule 3.
4.2.4 Inventory and Equipment. On the date hereof, such
Grantor's Inventory and Equipment (other than mobile goods) in the United States
are kept at the locations listed on Schedule 4.
4.2.5 Farm Products. None of such Grantor's Collateral
constitutes, or is the Proceeds of, Farm Products.
4.2.6 Accounts. The amount represented by such Grantor to the
Administrative Agent or the other Secured Parties from time to time as owing by
each account debtor or by all account debtors in respect of such Grantor's
Accounts will at such time be the correct amount, in all material respects,
actually owing by such account debtor or debtors thereunder, except to the
extent that appropriate reserves therefor have been established on the books of
such Grantor in accordance with GAAP. The places where such Grantor keeps its
records concerning such Grantor's Accounts are listed on Schedule 7 or such
other location or locations of which such Grantor shall have provided prior
written notice to the Administrative Agent pursuant to Section 5.2.5 hereof.
Unless otherwise indicated in writing to the Administrative
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Agent, each Account of such Grantor arises out of a bona fide sale and delivery
of goods or rendition of services by such Grantor. Such Grantor has not given
any account debtor any deduction in respect of the amount due under any such
Account, except in the normal course of business or as such Grantor may
otherwise advise the Administrative Agent in writing.
4.2.7 Intellectual Property. Schedule 5 lists all material
Trademarks (including, without limitation, Trademarks registered in the United
States Patent and Trademark Office) owned by such Grantor in its own name as of
the date hereof and all material Trademark Licenses (including, without
limitation, material Trademark Licenses for registered Trademarks) owned by such
Grantor in its own name as of the date hereof.
4.3 Representations and Warranties of Each Pledgor. To induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Pledgor hereby represents and warrants to the
Administrative Agent and each other Secured party that:
4.3.1 The shares of Pledged Stock pledged by such Pledgor
hereunder constitute (i) in the case of each Domestic Subsidiary, all the issued
and outstanding shares of all classes of the Capital Stock of each such Domestic
Subsidiary owned by such Pledgor and (ii) in the case of each Foreign Subsidiary
such percentage (not more than 65%) as is specified on Schedule 2 of all the
issued and outstanding shares of all classes of the Capital Stock of each such
Foreign Subsidiary.
4.3.2 All the shares of the Pledged Stock pledged by such
Pledgor hereunder have been duly and validly issued and are fully paid and
nonassessable.
4.3.3 Such Pledgor is the record and beneficial owner of, and
has good and valid title to, the Pledged Securities pledged by it hereunder,
free of any and all Liens or options in favor of, or claims of, any other
Person, except the security interest created by this Agreement and Liens imposed
by operation of law.
4.3.4 Upon delivery to the Administrative Agent of the
certificates evidencing the Pledged Securities held by such Pledgor, the
security interest created by this Agreement in such Pledged Collateral, assuming
the continuing possession of such Pledged Securities by the Administrative
Agent, will constitute a valid, perfected first priority security interest in
such Pledged Collateral to the extent provided in the Code, enforceable in
accordance with its terms against all creditors of such Pledgor and any persons
purporting to purchase such Pledged Collateral from such Pledgor, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
SECTION 5. COVENANTS
5.1 Covenants of Each Guarantor. Each Guarantor covenants and
agrees with the Administrative Agent and the other Secured Parties that, from
and after the date of this Agreement until the Loans, any Reimbursement
Obligations, and all other Obligations then due and owing, shall have been paid
in full, no Letter of Credit shall be outstanding and the Commitments shall have
terminated, such Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
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5.2 Covenants of Each Grantor. Each Grantor covenants and
agrees with the Administrative Agent and the other Secured Parties that, from
and after the date of this Agreement until the Loans, any Reimbursement
Obligations, and all other Obligations then due and owing, shall have been paid
in full, no Letter of Credit shall be outstanding and the Commitments shall have
terminated:
5.2.1 Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of such Grantor's Collateral shall be or
become evidenced by any Instrument or Chattel Paper, such Instrument (other than
any Cash Equivalents that also constitute an Instrument) or Chattel Paper shall
be promptly delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
5.2.2 Maintenance of Insurance. (a) Such Grantor will
maintain, with financially sound and reputable companies, insurance policies (i)
insuring such Grantor's Inventory and Equipment against loss by fire, explosion,
theft and such other casualties as may be reasonably satisfactory to the
Administrative Agent and (ii) insuring such Grantor, the Administrative Agent
and the other Secured Parties against liability for personal injury and property
damage relating to such Inventory and Equipment, such policies to be in such
form and amounts and having such coverage as may be reasonably satisfactory to
the Administrative Agent.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as an additional
insured party or loss payee, (iii) include deductibles consistent with past
practice or otherwise reasonably satisfactory to the Administrative Agent and
(iv) be reasonably satisfactory in all other respects to the Administrative
Agent.
(c) Such Grantor (if the Parent or the Borrower) shall deliver
to the Administrative Agent and the other Secured Parties reports of one or more
reputable insurance brokers of the individual insurance companies with respect
to such insurance as the Administrative Agent may from time to time reasonably
request.
5.2.3 Payment of Obligations. Such Grantor will pay and
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental charges
or levies imposed upon such Grantor's Collateral or in respect of income or
profits therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with respect to
such Grantor's Collateral, except that no such tax, assessment, charge, levy or
claim need be paid or satisfied if the amount or validity thereof is currently
being contested in good faith by appropriate proceedings, reserves in conformity
with GAAP with respect thereto have been provided on the books of such Grantor
and such proceedings would not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral.
5.2.4 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement in such Grantor's Collateral as a perfected security interest
having at least the priority described in Section 4.2.2 and shall defend such
security interest against the claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent from
time to time
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statements and schedules further identifying and describing such Grantor's
Collateral and such other reports in connection with such Grantor's Collateral
as the Administrative Agent may reasonably request in writing, all in reasonable
detail.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of such Grantor,
such Grantor will promptly and duly execute and deliver such further instruments
and documents and take such further actions as the Administrative Agent may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted by such Grantor,
including, without limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in the applicable jurisdiction in the United States with respect to the security
interests created hereby.
5.2.5 Changes in Locations, Name, etc. Such Grantor will not,
except upon not less than 30 days' prior written notice to the Administrative
Agent and delivery to the Administrative Agent, if applicable, of a written
supplement to Schedule 4 showing any additional location at which such Grantor's
Inventory or Equipment shall be kept:
(i) permit any of such Grantor's Inventory or Equipment to be
kept at a location other than the location(s) applicable to such
Grantor listed on Schedule 4 (other than Inventory or Equipment being
conveyed, sold, leased, assigned, transferred or otherwise disposed of
as permitted by the Credit Agreement);
(ii) change the location of its chief executive office or sole
place of business from that referred to in Section 4.2.3; or
(iii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Administrative
Agent in connection with this Agreement would become misleading;
provided that, prior to taking any such action, or promptly after receiving a
written request therefor from the Administrative Agent, such Grantor shall
deliver to the Administrative Agent all additional executed financing statements
and other documents reasonably requested by the Administrative Agent to maintain
the validity, perfection and priority of the security interests provided for
herein.
5.2.6 Notices. Such Grantor will advise the Administrative
Agent promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or
Liens permitted under the Credit Agreement) on any of such Grantor's Collateral
which would adversely affect the ability of the Administrative Agent to exercise
any of its remedies hereunder; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the aggregate value
of such Grantor's Collateral or on the security interests created hereby.
5.2.7 Pledged Securities. In the case of each Grantor which is
an Issuer, such Issuer agrees that (i) it will be bound by the terms of this
Agreement relating to the Pledged Stock issued by it and will comply with such
terms insofar as such terms are applicable to it, (ii) it will notify the
Administrative Agent promptly in writing of the occurrence of any of the events
described in Section 5.3.1 with respect to the Pledged Stock issued by it and
(iii) the terms of
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Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Pledged Stock issued by it.
5.2.8 Accounts. (a) Other than in the ordinary course of
business, such Grantor will not (i) grant any extension of the time of payment
of any of such Grantor's Accounts, (ii) compromise or settle any such Account
for less than the full amount thereof, (iii) release, wholly or partially, any
Person liable for the payment of any Account, (iv) allow any credit or discount
whatsoever on any such Account or (v) amend, supplement or modify any Account in
any manner that could adversely affect the value thereof.
(b) Such Grantor will deliver to the Administrative Agent a
copy of each material demand, notice or document received by it that questions
or calls into doubt the validity or enforceability of more than 10% of the
aggregate amount of the then outstanding Accounts.
5.2.9 Maintenance of Records. Such Grantor will keep and
maintain at its own cost and expense reasonably satisfactory and complete
records of its Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to such Collateral, and
shall mark such records to evidence this Agreement and the Liens and the
security interests created hereby. For the Administrative Agent's and the other
Secured Parties' further security, the Administrative Agent, for the benefit of
the Secured Parties, shall have a security interest in all of such Grantor's
books and records pertaining to such Grantor's Collateral.
5.2.10 Acquisition of Intellectual Property. Within 45 days
after the end of each calendar quarter, such Grantor will notify the
Administrative Agent of any acquisition by such Grantor of (i) any material
registration of Copyright or Trademark or (ii) any exclusive rights under a
material Copyright License or Trademark License, and shall take such actions as
may be reasonably requested by the Administrative Agent (but only to the extent
such actions are within such Grantor's control) to perfect the security interest
granted to the Administrative Agent and the other Secured Parties therein
(including, without limitation, (x) the execution and delivery of a Trademark
Security Agreement (or amendments to any such agreement previously executed or
delivered by such Grantor) or other comparable agreements with respect to
Copyrights or Copyright Licenses and (y) the making of appropriate filings (I)
of financing statements under the Uniform Commercial Code of any applicable
jurisdiction in the United States and/or (II) in the United States Patent and
Trademark Office, or with respect to Copyrights and Copyright Licenses, other
applicable office in the United States).
5.2.11 Protection of Trade Secrets. Such Grantor shall take
all steps which it deems commercially reasonable to preserve and protect the
secrecy of all material Trade Secrets of such Grantor.
5.3 Covenants of Each Pledgor. Each Pledgor covenants and
agrees with the Administrative Agent and the other Secured Parties that, from
and after the date of this Agreement until the Loans, any Reimbursement
Obligations, and all other Obligations then due and owing shall have been paid
in full, no Letter of Credit shall be outstanding and the Commitments shall have
terminated:
5.3.1 If such Pledgor shall become entitled to receive or
shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any certificate issued
in connection with any reorganization), option or rights in respect of the
Capital Stock of any Issuer, whether in addition to, in substitution of, as a
conversion of, or in
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exchange for, any shares of the Pledged Stock, or otherwise in respect thereof,
such Pledgor shall accept the same as the agent of the Administrative Agent and
the other Secured Parties, hold the same in trust for the Administrative Agent
and deliver the same forthwith to the Administrative Agent in the exact form
received, duly indorsed by such Pledgor to the Administrative Agent, if
required, together with an undated stock power covering such certificate duly
executed in blank by such Pledgor and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent, subject
to the terms hereof, as additional collateral security for the Obligations
(provided that in no event shall there be pledged, nor shall any Pledgor be
required to pledge, more than 65% of any series of the outstanding Capital Stock
of any Foreign Subsidiary pursuant to this Agreement). If any property shall be
distributed upon or with respect to the Pledged Stock pursuant to the
liquidation or dissolution of, or the recapitalization or reclassification of
the capital of, any Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations. If any property so distributed in respect of the
Pledged Stock shall be received by such Pledgor, such Pledgor shall, until such
property is delivered to the Administrative Agent, hold such property in trust
for the Secured Parties, segregated from other property of such Pledgor, as
additional collateral security for the Obligations.
5.3.2 Without the prior written consent of the Administrative
Agent, such Pledgor will not (except pursuant to a transaction permitted by the
Credit Agreement) (i) vote to enable, or take any other action to permit, any
Issuer to issue any stock or other equity securities of any nature or to issue
any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Pledged Stock or Proceeds thereof or (iii) create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Pledged Stock or Proceeds thereof, or any
interest therein, except for the security interests created by this Agreement or
Liens arising by operation of law.
5.3.3 Such Pledgor shall maintain the security interest
created by this Agreement in such Pledgor's Pledged Collateral as a perfected
security interest having at least the priority described in Section 4.3.4 and
shall defend such security interest against the claims and demands of all
Persons whomsoever. At any time and from time to time, upon the written request
of the Administrative Agent, and at the sole expense of such Pledgor, such
Pledgor will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Administrative Agent may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted by such Pledgor.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Accounts. (a) At any time and
from time to time after the occurrence and during the continuance of an Event of
Default, the Administrative Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and the relevant Grantor shall furnish all such
assistance and information as the Administrative Agent may require in connection
with such test verifications. At any time and from time to time after the
occurrence and during the continuance of an Event of Default, upon the
Administrative Agent's reasonable request and at the expense of the relevant
Grantor, such Grantor shall cause independent public accountants
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or others reasonably satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Accounts and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of Default,
any Proceeds constituting collections of such Accounts, when collected by such
Grantor, (i) shall be forthwith (and, in any event, within two Business Days)
deposited by such Grantor in the exact form received, duly indorsed by such
Grantor to the Administrative Agent if required, in the Collateral Proceeds
Account established by such Grantor maintained under the sole dominion and
control of the Administrative Agent, subject to withdrawal by the Administrative
Agent for the account of the Secured Parties only as provided in Section , and
(ii) until so turned over, shall be held by such Grantor in trust for the
Administrative Agent and the other Secured Parties, segregated from other funds
of such Grantor. Each such deposit of Proceeds of Accounts shall be accompanied
by a report identifying in reasonable detail the nature and source of the
payments included in the deposit. All Proceeds constituting collections of
Accounts while held by the Collateral Account Bank (or by any Guarantor in trust
for the benefit of the Administrative Agent and the other Secured Parties) shall
continue to be collateral security for all of the Obligations and shall not
constitute payment thereof until applied as hereinafter provided. At any time
when an Event of Default has occurred and is continuing, at the Administrative
Agent's election, the Administrative Agent may apply all or any part of the
funds on deposit in the Collateral Proceeds Account established by the relevant
Grantor to the payment of the Obligations of such Grantor then due and owing,
such application to be made as set forth in Section 6.5 hereof. At any time when
an Event of Default has occurred and is continuing, at the Administrative
Agent's request, each Grantor shall deliver to the Administrative Agent all
original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to such Grantor's Accounts, including, without
limitation, all statements relating to such Grantor's Accounts.
(c) General Fund Account. Each Grantor agrees that the
proceeds of substantially all of its Accounts shall be deposited in a General
Fund Account. So long as no Event of Default has occurred and is continuing, the
Administrative Agent shall instruct the Collateral Account Bank to promptly
remit any funds on deposit in each Grantor's Collateral Proceeds Account (if
any) to such Grantor's General Fund Account. In the event that an Event of
Default has occurred and is continuing, the Administrative Agent and the
Grantors agree that the Administrative Agent, at its option, may require that
each Collateral Proceeds Account be established at The Chase Manhattan Bank.
Each Grantor shall have the right, at any time and from time to time, to
withdraw such of its own funds from its own General Fund Account, and to
maintain such balances in its General Fund Account, as it shall deem to be
necessary or desirable.
6.2 Communications with Obligors; Grantors Remain Liable. (a)
The Administrative Agent in its own name or in the name of others may at any
time and from time to time after the occurrence and during the continuance of an
Event of Default communicate with obligors under the Accounts and parties to the
Contracts (in each case, to the extent constituting Collateral) to verify with
them to the Administrative Agent's satisfaction the existence, amount and terms
of any Receivables or Contracts.
(b) Upon the request of the Administrative Agent at any time
after the occurrence and during the continuance of an Event of Default, each
Grantor shall notify obligors
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on such Grantor's Accounts and parties to such Grantor's Contracts (in each
case, to the extent constituting Collateral) that such Accounts and such
Contracts have been assigned to the Administrative Agent, for the ratable
benefit of the Secured Parties, and that payments in respect thereof shall be
made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of such Grantor's Accounts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Account (or any agreement giving rise thereto)
by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any other Secured Party of any payment relating thereto,
nor shall the Administrative Agent or any other Secured Party be obligated in
any manner to perform any of the obligations of any Grantor under or pursuant to
any Account (or any agreement giving rise thereto) to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Pledgor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Pledgor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, to the extent permitted in the
Credit Agreement, and to exercise all voting and corporate rights with respect
to the Pledged Stock; provided, however, that no vote shall be cast or corporate
right exercised or such other action taken (other than in connection with a
transaction expressly permitted by the Credit Agreement) in respect of the
Pledged Stock which would reasonably be expected to materially impair the
Pledged Stock or the related rights or remedies of the Secured Parties or which
would be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document. The Administrative
Agent agrees that at any time and from time to time the Pledgor thereof may
agree to amendments, waivers, extensions and reductions (including forgiveness)
of any Pledged Notes arising from the acquisition of any Capital Stock of the
Parent, without any consent of the Administrative Agent or any Lender.
(b) If an Event of Default shall occur and be continuing and
the Administrative Agent shall give notice of its intent to exercise such rights
to the relevant Pledgor or Pledgors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Stock and make application thereof to the Obligations in
such order as the Administrative Agent may determine, and (ii) any or all of the
Pledged Stock shall be registered in the name of the Administrative Agent or its
nominee, and the Administrative Agent or its nominee may thereafter exercise (x)
all voting, corporate and other rights pertaining to such Pledged Stock at any
meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y)
any and all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to such Pledged Stock as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by the relevant Pledgor or the
Administrative Agent of any right, privilege or option pertaining to such
Pledged Stock, and in connection therewith, the right to deposit and deliver any
and all of the Pledged Stock with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Administrative Agent may reasonably
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determine), all without liability (other than for its gross negligence or
willful misconduct) except to account for property actually received by it, but
the Administrative Agent shall have no duty to any Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing, provided that the Administrative Agent shall not exercise
any voting or other consensual rights pertaining to the Pledged Stock in any way
that would constitute an exercise of the remedies described in Section 7 other
than in accordance with Section 7.
(c) Each Pledgor hereby authorizes and instructs each Issuer
or Maker of any Pledged Securities pledged by such Pledgor hereunder to comply
with any instruction received by it from the Administrative Agent in writing
that (x) states that an Event of Default has occurred and (y) is otherwise in
accordance with the terms of this Agreement (including Section 6.3(b)), without
any other or further instructions from such Pledgor, and each Pledgor agrees
that each Issuer or Maker shall be fully protected in so complying.
6.4 Proceeds to be Turned Over To Administrative Agent. In
addition to the rights of the Administrative Agent and the other Secured Parties
specified in Section 6.1 with respect to payments of Accounts, if an Event of
Default shall occur and be continuing, and the Administrative Agent shall have
instructed any Grantor to do so, all Proceeds received by such Grantor
consisting of cash, checks and other Cash Equivalent items shall be held by such
Grantor in trust for the Administrative Agent and the other Secured Parties,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Administrative Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Administrative
Agent, if required). All Proceeds received by the Administrative Agent hereunder
shall be held by the Administrative Agent in the relevant Collateral Proceeds
Account maintained under its sole dominion and control. All Proceeds while held
by the Administrative Agent in such Collateral Proceeds Account (or by such
Grantor in trust for the Administrative Agent and the other Secured Parties)
shall continue to be held as collateral security for all the Obligations and
shall not constitute payment thereof until applied as provided in Section .
6.5 Application of Proceeds. It is agreed that if an Event of
Default shall occur and be continuing, any and all Proceeds of the relevant
Granting Party's Security Collateral received by the Administrative Agent
(whether from the relevant Granting Party or otherwise) shall be held by the
Administrative Agent for the benefit of the Secured Parties as collateral
security for the Obligations of the relevant Granting Party (whether matured or
unmatured), and/or then or at any time thereafter may, in the sole discretion of
the Administrative Agent, be applied by the Administrative Agent against the
Obligations of the relevant Granting Party then due and owing in the following
order of priority:
FIRST, to the payment of all reasonable costs and expenses
incurred by the Administrative Agent in connection with this Agreement,
the Credit Agreement, any other Loan Document or any of the Obligations
of the relevant Granting Party, including, without limitation, all
court costs and the reasonable fees and expenses of its agents and
legal counsel, and any other reasonable costs or expenses incurred in
connection with the exercise by the Administrative Agent of any right
or remedy under this Agreement, the Credit Agreement, or any other Loan
Document;
SECOND, to the ratable satisfaction of all other Obligations
of the relevant Granting Party; and
THIRD, to the relevant Granting Party or its successors or
assigns, or to
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whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall
occur and be continuing, the Administrative Agent, on behalf of the Secured
Parties, may exercise, in addition to all other rights and remedies granted to
them in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code or any other applicable law. Without limiting the
generality of the foregoing, to the extent permitted by applicable law, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Granting Party or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Security Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Security Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Administrative Agent or any other Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Administrative Agent or any other Secured Party shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Security
Collateral so sold, free of any right or equity of redemption in any Granting
Party, which right or equity is hereby waived or released. Each Granting Party
further agrees, at the Administrative Agent's request, to assemble the Security
Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Granting Party's
premises or elsewhere. The Administrative Agent shall apply the net proceeds of
any action taken by it pursuant to this Section 6.6, after deducting all
reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any of the Security Collateral or in
any way relating to the Security Collateral or the rights of the Administrative
Agent and the other Secured Parties hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in part
of the Obligations of the relevant Granting Party, in the order of priority
specified in Section 6.5 above, and only after such application and after the
payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Administrative Agent account for the surplus, if any, to any
Granting Party. To the extent permitted by applicable law, each Granting Party
waives all claims, damages and demands it may acquire against the Administrative
Agent or any other Secured Party arising out of the exercise by them of any
rights hereunder, except to the extent arising as a result of the gross
negligence or willful misconduct of the Administrative Agent or such other
Secured Party. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.
6.7 Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 6.6, and if in the reasonable opinion of the Administrative Agent it
is necessary or reasonably advisable to have the Pledged Stock, or that portion
thereof to be sold, registered under the provisions of the Securities Act, the
relevant Pledgor will use its reasonable best efforts to cause the Issuer
thereof to (i) execute and deliver, and use its best efforts to cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Administrative Agent, necessary or advisable to
register such Pledged Stock, or that portion thereof to be sold, under the
provisions
<PAGE> 22
22
of the Securities Act, (ii) use its best efforts to cause the registration
statement relating thereto to become effective and to remain effective for a
period of one year from the date of the first public offering of such Pledged
Stock, or that portion thereof to be sold, and (iii) make all amendments thereto
and/or to the related prospectus which, in the reasonable opinion of the
Administrative 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 applicable thereto. Such Pledgor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative Agent shall
reasonably designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) Such Pledgor recognizes that the Administrative Agent may
be unable to effect a public sale of any or all such Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to 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. Such
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Such Pledgor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of such Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Such Pledgor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and the Lenders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 6.7 shall be specifically enforceable
against such Pledgor, and to the extent permitted by applicable law, such
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no Event of
Default has occurred under the Credit Agreement.
6.8 Waiver; Deficiency. Each Granting Party (other than the
Borrower) waives and agrees not to assert any rights or privileges which it may
acquire under Section 9-112 of the Code, to the extent permitted by applicable
law. Each Granting Party shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Security Collateral are insufficient to
pay its Obligations and the reasonable fees and disbursements of any attorneys
employed by the Administrative Agent or any other Secured Party to collect such
deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact,
etc. (a) Each Granting Party hereby irrevocably constitutes and appoints the
Administrative Agent 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 Granting Party and in the
name of such Granting Party or in its own name, for the purpose of carrying out
the terms of
<PAGE> 23
23
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be reasonably necessary or desirable to
accomplish the purposes of this Agreement to the extent permitted by applicable
law. Without limiting the generality of the foregoing, at any time when an Event
of Default has occurred and is continuing (in each case to the extent permitted
by applicable law), (x) each Pledgor hereby gives the Administrative Agent the
power and right, on behalf of such Pledgor, without notice or assent by such
Pledgor, to execute, in connection with any sale provided for in Section 6.6 or
6.7, any indorsements, assessments or other instruments of conveyance or
transfer with respect to such Pledgor's Pledged Collateral, and (y) each Grantor
hereby gives the Administrative Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the
following:
(i) in the name of such Grantor or its own name, or otherwise,
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any Account of such Grantor or with respect to any other Collateral of
such Grantor and file any claim or take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such
moneys due under any Account of such Grantor or with respect to any
other Collateral of such Grantor whenever payable;
(ii) in the case of any Copyright or Trademark constituting
Collateral of such Grantor, execute and deliver any and all agreements,
instruments, documents and papers as the Administrative Agent may
reasonably request to evidence the Administrative Agent's and the
Lenders' security interest in such Copyright or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral of such Grantor, effect any repairs
or any insurance called for by the terms of this Agreement and pay all
or any part of the premiums therefor and the costs thereof; and
(iv) (i) direct any party liable for any payment under any of
the Collateral of such Grantor to make payment of any and all moneys
due or to become due thereunder directly to the Administrative Agent or
as the Administrative Agent shall direct; (ii) ask or demand for,
collect, receive payment of and receipt for, any and all moneys, claims
and other amounts due or to become due at any time in respect of or
arising out of any Collateral of such Grantor; (iii) sign and indorse
any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral of
such Grantor; (iv) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect the Collateral of such Grantor or any portion thereof and to
enforce any other right in respect of any Collateral of such Grantor;
(v) defend any suit, action or proceeding brought against such Grantor
with respect to any Collateral of such Grantor; (vi) settle, compromise
or adjust any such suit, action or proceeding and, in connection
therewith, to give such discharges or releases as the Administrative
Agent may deem appropriate; (vii) subject to any existing reserved
rights or licenses, assign any Copyright or Trademark constituting
Collateral of such Grantor (along with the goodwill of the business to
which any such Copyright or Trademark pertains), for such term or
terms, on such conditions, and in such manner, as the Administrative
Agent shall in its sole discretion determine; and (viii) generally,
<PAGE> 24
24
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral of such Grantor as fully and
completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent's option
and such Grantor's expense, at any time, or from time to time, all acts
and things which the Administrative Agent deems necessary to protect,
preserve or realize upon the Collateral of such Grantor and the
Administrative Agent's and the other Secured Parties' security
interests therein and to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Granting Party fails to perform or comply with any
of its agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may, after prior notice to such Grantor,
perform or comply, or otherwise cause performance or compliance, with such
agreement.
(c) The reasonable expenses of the Administrative Agent
incurred in connection with actions undertaken as provided in this Section 7.1,
together with interest thereon at a rate per annum equal to the rate per annum
at which interest would then be payable on past due ABR Loans which are Term
Loans under the Credit Agreement, from the date of payment by the Administrative
Agent to the date reimbursed by the relevant Granting Party, shall be payable by
such Granting Party to the Administrative Agent on demand.
(d) Each Granting Party hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable as to the relevant Granting Party until this
Agreement is terminated as to such Granting Party, and the security interests in
the Security Collateral of such Granting Party created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Security Collateral in its possession, under Section 9-207 of the Code or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any other Secured Party nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Security Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any Security
Collateral upon the request of any Granting Party or any other Person or to take
any other action whatsoever with regard to the Security Collateral or any part
thereof. The powers conferred on the Administrative Agent and the other Secured
Parties hereunder are solely to protect the Administrative Agent's and the other
Secured Parties' interests in the Security Collateral and shall not impose any
duty upon the Administrative Agent or any other Secured Party to exercise any
such powers. The Administrative Agent and the other Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Granting Party for any act or
failure to act hereunder, except for their own gross negligence or willful
misconduct.
7.3 Execution of Financing Statements. Pursuant to Section
9-402 of the Code and any other applicable United States law, each Granting
Party authorizes the Administrative Agent to file or record financing statements
and other filing or recording documents or
<PAGE> 25
25
instruments with respect to such Granting Party's Security Collateral without
the signature of such Granting Party in such form and in such offices as the
Administrative Agent reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing or
recording in any such jurisdiction.
7.4 Authority of Administrative Agent. Each Granting Party
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement or any amendment, supplement or other
modification of this Agreement shall, as between the Administrative Agent and
the Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Granting Parties the Administrative
Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from acting, and no
Granting Party shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
7.5 Right Of Inspection. Upon reasonable written advance
notice to any Grantor and at reasonable intervals, or at any time and from time
to time after the occurrence and during the continuation of an Event of Default,
the Administrative Agent shall have reasonable access during normal business
hours to all the books, correspondence and records of such Granting Party, and
the Administrative Agent and its representatives may examine the same, and to
the extent reasonable take extracts therefrom and make photocopies thereof, and
such Granting Party agrees to render to the Administrative Agent, at such
Granting Party's reasonable cost and expense, such clerical and other assistance
as may be reasonably requested with regard thereto. The Administrative Agent and
its representatives shall also have the right, upon reasonable advance written
notice to such Granting Party, to enter during normal business hours into and
upon any premises owned, leased or operated by such Granting Party where any of
such Granting Party's Inventory or Equipment is located for the purpose of
inspecting the same, observing its use or otherwise protecting its interests
therein.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by each affected Granting Party and the
Administrative Agent, provided that any provision of this Agreement imposing
obligations on any Granting Party may be waived by the Administrative Agent in a
written instrument executed by the Administrative Agent.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Granting Party hereunder shall be effected in the
manner provided for in subsection 12.2 of the Credit Agreement; provided that
any such notice, request or demand to or upon any Guarantor shall be addressed
to such Guarantor at its notice address set forth on Schedule 1, unless and
until such Guarantor shall change such address by notice to the Administrative
Agent given in accordance with subsection 12.2 of the Credit Agreement.
8.3 No Waiver by Course of Conduct; Cumulative Remedies.
Neither the Administrative Agent nor any other Secured Party shall by any act
(except by a written
<PAGE> 26
26
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any other Secured Party,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent or any other
Secured Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or such
other Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
agrees to pay or reimburse each Secured Party and the Administrative Agent for
all their respective reasonable costs and expenses incurred in collecting
against such Guarantor under the guarantee contained in Section 2 or otherwise
enforcing or preserving any rights under this Agreement against such Guarantor
and the other Loan Documents to which such Guarantor is a party, including,
without limitation, the reasonable fees and disbursements of one firm of counsel
to the Secured Parties and the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the
Administrative Agent and the Secured Parties harmless from, (x) any and all
liabilities with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other similar taxes which may be payable or determined
to be payable with respect to any of the Security Collateral or in connection
with any of the transactions contemplated by this Agreement and (y) any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement (collectively, the "indemnified liabilities"), in each case to the
extent the Borrower would be required to do so pursuant to subsection 12.5 of
the Credit Agreement, and in any event excluding any taxes or other indemnified
liabilities arising from gross negligence or willful misconduct of the
Administrative Agent or any Secured Party.
(c) The agreements in this Section 8.4 shall survive repayment
of the Obligations and all other amounts payable under the Credit Agreement and
the other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Granting Parties, the Administrative
Agent and the Secured Parties and their respective successors and assigns;
provided that no Granting Party may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent.
8.6 Set-Off. Each Guarantor hereby irrevocably authorizes the
Administrative Agent and each other Secured Party at any time and from time to
time without notice to such Guarantor, any other Guarantor or the Borrower, any
such notice being expressly waived by each Guarantor and by the Borrower, to the
extent permitted by applicable law, upon the occurrence and during the
continuance of an Event of Default under Section 9(a) of the Credit Agreement
and any amount remaining unpaid after it becomes due and payable by such
Guarantor hereunder, to set-off and appropriate and apply against any such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Administrative
<PAGE> 27
27
Agent or such other Secured Party to or for the credit or the account of such
Guarantor, or any part thereof in such amounts as the Administrative Agent or
such other Secured Party may elect. The Administrative Agent and each other
Secured Party shall notify such Guarantor promptly of any such set-off and the
application made by the Administrative Agent or such other Secured Party of the
proceeds thereof; provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Administrative
Agent and each other Secured Party under this Section 8.6 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent or such other Secured Party may have.
8.7 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. The Parent shall only become a party hereto upon its
execution and delivery of this Agreement, and upon the execution and delivery
hereof by all other parties listed on the signature page hereto, this Agreement
shall be binding on each of them.
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Granting Parties, the Administrative Agent
and the other Secured Parties with respect to the subject matter hereof, and
there are no promises, undertakings, representations or warranties by the
Granting Parties, the Administrative Agent or any other Secured Party relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each party hereto
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any
judgement in respect thereof, to the non-exclusive general jurisdiction
of the courts of the State of New York, the courts of the United States
of America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
<PAGE> 28
28
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such party at its address referred to in Section 8.2 or at
such other address of which the Administrative Agent (in the case of
any other party hereto) or the Borrower (in the case of the
Administrative Agent) shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any punitive damages.
8.13 Acknowledgements. Each Guarantor hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents
to which it is a party;
(b) neither the Administrative Agent nor any other Secured
Party has any fiduciary relationship with or duty to any Guarantor
arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Guarantors, on the one
hand, and the Administrative Agent and the Secured Parties, on the
other hand, in connection herewith or therewith is solely that of
debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Secured Parties or among the Guarantors
and the Secured Parties.
8.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
8.15 Additional Granting Parties. Each new Domestic Subsidiary
of the Parent or the Borrower that is required to become a party to this
Agreement pursuant to subsection 8.13 of the Credit Agreement shall become a
Granting Party for all purposes of this Agreement upon execution and delivery by
such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.
8.16 Releases. (a) At such time as the Loans, the
Reimbursement Obligations and the other Obligations then due and owing shall
have been paid in full, the Commitments have been terminated and no Letters of
Credit shall be outstanding, all Security Collateral shall be released from the
Liens created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Granting Party hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the
Security Collateral shall revert to the Granting Parties. At the request and
sole expense of any Granting Party following any such termination, the
Administrative Agent shall deliver to such Granting Party any Security
Collateral held by the Administrative Agent hereunder, and execute and deliver
to such Granting Party such
<PAGE> 29
29
documents (including without limitation UCC termination statements) as such
Granting Party shall reasonably request to evidence such termination.
(b) In connection with the sale or other disposition of all or
any portion of the Capital Stock of any Guarantor or the sale or other
disposition of Security Collateral permitted under the Credit Agreement and any
release of such Guarantor from its Guarantee or the release of the Security
Collateral subject to such sale or other disposition, the Borrower shall deliver
to the Administrative Agent, a written request for release identifying such
Guarantor or the relevant Security Collateral and the terms of the sale or other
disposition in reasonable detail, including the price thereof and any expenses
in connection therewith, together with a certification by the Borrower stating
that such transaction is in compliance with the Credit Agreement and the other
Loan Documents. The Administrative Agent shall execute and deliver to the
relevant Granting Party (at the sole cost and expense of such Granting Party)
all releases or other documents (including without limitation UCC termination
statements) necessary or reasonably desirable for the release of the Liens
created hereby on such Security Collateral as such Granting Party may reasonably
request.
[The remainder of this page is intentionally left blank.]
<PAGE> 30
30
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
GLOBAL DECISIONS GROUP LLC
By: ____________________________
Name:
Title
MCM GROUP, INC.
By: ____________________________
Name:
Title
McCARTHY, CRISANTI & MAFFEI, INC.
By: ____________________________
Name:
Title
Acknowledged and Agreed to as
of the date hereof by:
THE CHASE MANHATTAN BANK, as
Administrative Agent
By: _______________________________
Name:
Title:
<PAGE> 31
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
MCM Group, Inc.
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
New York, NY 10005
Attention: David Nixon
Telephone: (212) 509-5800
Telecopy: (212) 908-4345
with Copies to:
Brera Capital Partners, LLC
590 Madison Avenue
New York, NY 10022
re: McCarthy, Crisanti & Maffei, Inc.
Attention: Andrew Sutton
Telephone: (212) 835-1354
Telecopy: (212) 835-1399
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Steven R. Gross, Esq.
Telephone: (212) 909-6586
Telecopy: (212) 909-6836
<PAGE> 32
Schedule 2
DESCRIPTION OF PLEDGED SECURITIES
PLEDGED STOCK:
<TABLE>
<CAPTION>
Stock Certificate No. of
Issuer Class of Stock No. Shares
- ------------------------------------------- --------------------- --------------------- ------------------
<S> <C> <C> <C>
</TABLE>
<PAGE> 33
Schedule 3
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
OR SOLE PLACE OF BUSINESS
<TABLE>
<CAPTION>
Granting Party Location
-------------- --------
<S> <C>
Global Decisions Group LLC Jurisdiction of Organization:
Delaware
Chief Executive Office:
MCM Group, Inc. New York, NY
Jurisdiction of Organization:
Delaware
Chief Executive Office:
New York, NY
McCarthy, Crisanti & Maffei, Inc. Jurisdiction of Organization:
New York
Chief Executive Office:
New York, NY
</TABLE>
<PAGE> 34
Schedule 4
LOCATION OF INVENTORY AND EQUIPMENT
Granting Party Locations
Global Decisions Group LLC
MCM Group, Inc.
McCarthy, Crisanti & Maffei, Inc.
<PAGE> 35
Schedule 5
TRADEMARKS AND TRADEMARK LICENSES
<PAGE> 36
Schedule 6
EXISTING PRIOR LIENS
<PAGE> 37
Schedule 7
ACCOUNTS
<PAGE> 38
Schedule 8
CONTRACTS
<PAGE> 39
Annex 1 to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of _________ __, 199_, made by
______________________________, a ______________ [corporation] (the "Additional
Granting Party"), in favor of THE CHASE MANHATTAN BANK, as administrative agent
(in such capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") from time to time parties to the Credit Agreement
referred to below. All capitalized terms not defined herein shall have the
meaning ascribed to them in such the Guarantee and Collateral Agreement referred
to below, or if not defined therein, in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, McCarthy, Crisanti & Maffei, Inc., a New York
corporation (the "Borrower"), Global Decisions Group LLC, a Delaware limited
liability company (the "Parent"), the Lenders, the Administrative Agent and Bank
of America National Trust and Savings Association, as documentation agent, are
parties to a Credit Agreement, dated as of February 12, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Parent,
MCM Group, Inc., a Delaware corporation, the Borrower and certain of their
Subsidiaries (if any) are, or are to become, parties to the Guarantee and
Collateral Agreement, dated as of February 11, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee and Collateral Agreement")
in favor of the Administrative Agent, for the ratable benefit of the Secured
Parties (as defined in the Guarantee and Collateral Agreement);
WHEREAS, the Additional Grantor is a member of an affiliated
group of companies that includes the Parent, the Borrower and the other Granting
Parties to the Guarantee and Collateral Agreement; the proceeds of the
extensions of credit under the Credit Agreement will be used in part to enable
the Borrower to make valuable transfers to one or more of the other Granting
Parties (including the Additional Grantor) in connection with the operation of
their respective businesses; and the Parent, the Borrower and the other Granting
Parties (including the Additional Grantor) are engaged in related businesses,
and each such Granting Party (including the Additional Grantor) will derive
substantial direct and indirect benefit from the making of the extensions of
credit under the Credit Agreement;
WHEREAS, the Credit Agreement requires the Additional Granting
Party to become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Granting Party has agreed to execute
and deliver this Assumption Agreement in order to become a party to the
Guarantee and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and
delivering this Assumption Agreement, the Additional Granting Party, as provided
in Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a
party to the Guarantee and Collateral Agreement as a Granting Party thereunder
with the same force and effect as if originally named therein as a Guarantor
[,Grantor and Pledgor] [and Grantor] [and Pledgor] (1) and, without limiting
<PAGE> 40
40
the generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Guarantor [, Grantor and Pledgor] [and Grantor] [and Pledgor]
(2) thereunder. The information set forth in Annex 1-A hereto is hereby added to
the information set forth in Schedules ____________ to the Guarantee and
Collateral Agreement, and such Schedules are hereby amended and modified to
include such information. The Additional Granting Party hereby represents and
warrants that each of the representations and warranties of such Additional
Grantor, in its capacities as a Guarantor [, Grantor and Pledgor] [and Grantor]
[and Pledgor], (3) contained in Section 4 of the Guarantee and Collateral
Agreement is true and correct in all material respects on and as the date hereof
(after giving effect to this Assumption Agreement) as if made on and as of such
date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTING PARTY]
By: _______________________________
Name:
Title:
- --------
(1) Indicate the capacities in which the Additional Grantor is becoming a
Granting Party.
(2) Indicate the capacities in which the Additional Grantor is becoming a
Granting Party.
(3) Indicate the capacities in which the Additional Grantor is becoming a
Granting Party.
<PAGE> 41
Annex 1-A to
Assumption Agreement
<PAGE> 42
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINED TERMS....................................................................................... 1
1.1 Definitions................................................................................. 1
1.2 Other Definitional Provisions............................................................... 6
SECTION 2. GUARANTEE........................................................................................... 7
2.1 Guarantee................................................................................... 7
2.2 Right of Contribution....................................................................... 8
2.3 No Subrogation.............................................................................. 8
2.4 Amendments, etc. with respect to the Borrower Obligations................................... 8
2.5 Guarantee Absolute and Unconditional........................................................ 9
2.6 Reinstatement............................................................................... 10
2.7 Payments.................................................................................... 10
SECTION 3. GRANT OF SECURITY INTEREST.......................................................................... 10
SECTION 4. REPRESENTATIONS AND WARRANTIES...................................................................... 12
4.1 Representations and Warranties of Each Guarantor............................................ 12
4.2 Representations and Warranties of Each Grantor.............................................. 12
4.2.1 Title; No Other Liens....................................................................... 12
4.2.2 Perfected First Priority Liens.............................................................. 13
4.2.3 Chief Executive Office...................................................................... 14
4.2.4 Inventory and Equipment..................................................................... 14
4.2.5 Farm Products............................................................................... 14
4.2.6 Accounts.................................................................................... 14
4.2.7 Intellectual Property....................................................................... 14
4.3 Representations and Warranties of Each Pledgor.............................................. 14
SECTION 5. COVENANTS........................................................................................... 15
5.1 Covenants of Each Guarantor................................................................. 15
5.2 Covenants of Each Grantor................................................................... 15
5.2.1 Delivery of Instruments and Chattel Paper................................................... 15
5.2.2 Maintenance of Insurance.................................................................... 16
5.2.3 Payment of Obligations...................................................................... 16
5.2.4 Maintenance of Perfected Security Interest; Further Documentation........................... 16
5.2.5 Changes in Locations, Name, etc............................................................. 17
5.2.6 Notices..................................................................................... 17
5.2.7 Pledged Securities.......................................................................... 17
5.2.8 Accounts.................................................................................... 18
5.2.9 Maintenance of Records...................................................................... 18
5.2.10 Acquisition of Intellectual Property........................................................ 18
5.2.11 Protection of Trade Secrets................................................................. 18
5.3 Covenants of Each Pledgor................................................................... 18
SECTION 6. REMEDIAL PROVISIONS................................................................................. 20
6.1 Certain Matters Relating to Accounts.............................................................. 20
</TABLE>
42
<PAGE> 43
<TABLE>
<S> <C> <C>
6.2 Communications with Obligors; Grantors Remain Liable.............................................. 21
6.3 Pledged Stock..................................................................................... 21
6.4 Proceeds to be Turned Over To Administrative Agent................................................ 22
6.5 Application of Proceeds........................................................................... 23
6.6 Code and Other Remedies........................................................................... 23
6.7 Registration Rights............................................................................... 24
6.8 Waiver; Deficiency................................................................................ 25
SECTION 7. THE ADMINISTRATIVE AGENT............................................................................ 25
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc....................................... 25
7.2 Duty of Administrative Agent...................................................................... 27
7.3 Execution of Financing Statements................................................................. 28
7.4 Authority of Administrative Agent................................................................. 28
7.5 Right Of Inspection............................................................................... 28
SECTION 8. MISCELLANEOUS....................................................................................... 28
8.1 Amendments in Writing............................................................................. 28
8.2 Notices........................................................................................... 29
8.3 No Waiver by Course of Conduct; Cumulative Remedies............................................... 29
8.4 Enforcement Expenses; Indemnification............................................................. 29
8.5 Successors and Assigns............................................................................ 30
8.6 Set-Off........................................................................................... 30
8.7 Counterparts...................................................................................... 30
8.8 Severability...................................................................................... 30
8.9 Section Headings.................................................................................. 30
8.10 Integration...................................................................................... 31
8.11 GOVERNING LAW.................................................................................... 31
8.12 Submission To Jurisdiction; Waivers.............................................................. 31
8.13 Acknowledgements................................................................................. 31
8.14 WAIVER OF JURY TRIAL............................................................................. 32
8.15 Additional Granting Parties...................................................................... 32
8.16 Releases......................................................................................... 32
</TABLE>
43
<PAGE> 44
SCHEDULES
1 Notice Addresses of Guarantors
2 Description of Pledged Securities
3 Location of Jurisdiction of Organization and Chief Executive Office or
Sole Place of Business
4 Location of Inventory and Equipment
5 Copyrights and Copyright Licenses; Trademarks and Trademark Licenses
6 Existing Prior Liens
7 Accounts
8 Contracts
ANNEXES
1 Assumption Agreement
44
<PAGE> 45
EXHIBIT B TO
CREDIT AGREEMENT
FORM OF
GUARANTEE AND COLLATERAL AGREEMENT
made by
GLOBAL DECISIONS GROUP LLC,
MCM GROUP, INC.,
McCARTHY, CRISANTI & MAFFEI, INC.
and
certain of their Subsidiaries, if any, from time to time
in favor of
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of February 11, 1998
<PAGE> 1
EXHIBIT 10.49
EXHIBIT C TO
CREDIT AGREEMENT
FORM OF TRADEMARK SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT, dated as of February 11, 1998, made by
[McCarthy, Crisanti & Maffei, Inc., a New York corporation] (the "Grantor"), in
favor of The Chase Manhattan Bank, a New York banking corporation ("Chase"), as
administrative agent (in such capacity, the "Administrative Agent") for the
banks and other financial institutions (collectively, the "Lenders";
individually, a "Lender") from time to time parties to the Credit Agreement,
dated as of February 12, 1998 (as amended, waived, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Grantor, Global
Decisions Group LLC, the Lenders, the Administrative Agent and Bank of America
National Trust and Savings Association, as Documentation Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower (as defined
therein) upon the terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition to the obligation of the Lenders to make
their respective extensions of credit to the Borrower under the Credit Agreement
that the Grantor shall execute and deliver this Agreement to the Administrative
Agent for the ratable benefit of the Secured Parties (as defined below);
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, the Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Secured Parties, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, capitalized
terms which are defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Trademark Security Agreement, as the same may be
amended, supplemented, waived or otherwise modified from time to time.
"Code": the Uniform Commercial Code as from time to time in effect
in the State of New York.
"Collateral": as defined in Section 2 of this Agreement.
<PAGE> 2
2
"Default": a "Default" as defined in the Credit Agreement.
"Event of Default": an "Event of Default" as defined in the Credit
Agreement.
"General Intangibles": as defined in Section 9-106 of the Code,
including, without limitation, all Trademarks now or hereafter owned by
the Grantor to the extent such Trademarks would be included in General
Intangibles under the Code.
"Loan Documents": the collective reference to the "Loan Documents"
as defined in the Credit Agreement.
"Loans": the collective reference to the "Loans" as defined in the
Credit Agreement.
"Obligations": the Obligations (as defined in the Guarantee and
Collateral Agreement) of the Grantor (without duplication).
"Proceeds": as defined in Section 9-306(1) of the Code.
"Revolving Credit Commitments": the collective reference to the
"Revolving Credit Commitments" as defined in the Credit Agreement.
"Secured Parties": the collective reference to the Administrative
Agent, the Lenders (including, without limitation, the Issuing Lender and
the Swing Line Lender), any Affiliate of any Lender which has entered into
any Permitted Hedging Arrangement with the Parent or any of its
Subsidiaries, and their respective successors and assigns.
"Trademark Licenses": all United States written license agreements
of the Grantor with any Person who is not an Affiliate or Subsidiary of
the Grantor in connection with any of the Trademarks or such other
Person's names or trademarks, whether the Grantor is a licensor or a
licensee under any such agreement, including, without limitation, the
license agreements listed on Schedule I hereto, subject, in each case, to
the terms of such license agreements.
"Trademarks": all of the Grantor's right, title and interest in and
to all United States trademarks, service marks, trade names, trade dress
or other indicia of trade origin or business identifiers, United States
trademark and service mark registrations, and United States applications
for trademark or service mark registrations (except for "intent to use"
applications for trademark or service mark registrations filed pursuant to
Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, unless and until
an Amendment to Allege Use or a Statement of Use under Sections 1(c) and
1(d) of said Act has been filed), and any renewals thereof, including,
without limitation, each registration and application identified in
Schedule I hereto, and including, without limitation, (a) the right to sue
or otherwise recover for any and all past, present and future
infringements and misappropriations thereof, (b) all income, royalties,
damages and other payments now and hereafter due and/or payable with
respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments
for past or future infringements thereof), and (c) all other rights
corresponding thereto in the United States and all other rights of any
kind whatsoever of the Grantor accruing thereunder or pertaining thereto,
together in each case with the goodwill of the business connected with the
use of, and symbolized by, each such trademark, service
<PAGE> 3
3
mark, trade name, trade dress or other indicia of trade origin or business
identifiers (Trademarks and Trademark Licenses being, collectively, the
"Trademark Collateral").
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(d) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to the Grantor, shall refer to the
Grantor's Collateral or the relevant part thereof.
2. Grant of Security Interest. The Grantor hereby grants, subject to
existing licenses granted by the Grantor in the ordinary course of business with
respect to the Collateral (as hereinafter defined), to the Administrative Agent
for the ratable benefit of the Secured Parties a security interest in all of the
following property now owned or at any time hereafter acquired by the Grantor or
in which the Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"), as collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations of the Grantor:
(i) all Trademarks;
(ii) all Trademark Licenses;
(iii) all General Intangibles connected with the use of or
symbolized by the Trademarks; and
(iv) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing;
provided, that the foregoing grant of a security interest with respect to
General Intangibles and Trademark Licenses shall not include a security interest
in, and the Collateral shall not include, any Trademark License with or issued
by Persons other than a Subsidiary of the Grantor that would otherwise be
included in the Collateral to the extent that the grant by the Grantor of such
security interest is prohibited by the terms and provisions of the written
agreement or document or instrument creating or evidencing such license or
permit or Trademark License, or gives the other party thereto the right to
terminate such Trademark License in the event of the grant of a security
interest with respect thereto. All references in this Agreement to any of the
property described in clauses (i) through (iv) of the preceding sentence, or to
any Proceeds thereof, shall be deemed to be references to such property or
Proceeds to the extent such property or Proceeds constitutes Collateral.
3. Representations and Warranties. The Grantor hereby represents and
warrants to the Administrative Agent on behalf of the Secured Parties that:
(a) Power and Authority. As of the date hereof, the Grantor has the
LLC or
<PAGE> 4
4
corporate power and authority, and the legal right, to make, deliver and
perform its obligations under, and to grant the security interest in the
Trademark Collateral to the extent provided in, and pursuant to, this
Agreement and has taken all necessary corporate action to authorize the
execution, delivery and performance of, and grant of the security interest
in the Trademark Collateral to the extent provided in, and pursuant to,
this Agreement.
(b) Title; No Other Liens. As of the date hereof, except for the
Liens granted to the Administrative Agent, for the benefit of the Secured
Parties, pursuant to this Agreement and the other Liens permitted to exist
on the Collateral pursuant to the Loan Documents (including, without
limitation, any Liens permitted to exist on the Collateral pursuant to
subsection 8.3 of the Credit Agreement), the Grantor is (or, in the case
of after-acquired Collateral, will be) the sole, legal and beneficial
owner of the entire right, title and interest in and to the material
Trademarks set forth on Schedule I hereto free and clear of any and all
Liens. As of the date hereof, except as set forth on Schedule II hereto,
no security agreement, financing statement or other public notice similar
in effect with respect to all or any part of the Collateral is on file or
of record in any public office (including, without limitation, the United
States Patent and Trademark Office), except such as may have been filed in
favor of the Administrative Agent, for the benefit of the Secured Parties,
pursuant to this Agreement or in respect of such Liens as may be permitted
pursuant to the Loan Documents (including, without limitation, any Liens
permitted to exist on the Collateral pursuant to subsection 8.3 of the
Credit Agreement).
(c) Perfected First Priority Liens. (i) As of the date hereof, this
Agreement is effective to create, as collateral security for the
Obligations, valid and enforceable Liens on the Collateral in favor of the
Administrative Agent, for the benefit of the Secured Parties, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(ii) As of the date hereof, except with respect to Liens upon
Trademarks and Trademark Licenses, which Liens, to the extent not
otherwise perfected by the filing of financing statements under the Code
in accordance herewith, would, in the case of Trademarks listed in
Schedule I hereto, or may, in the case of Trademark Licenses listed in
Schedule I hereto, be perfected upon the filing, acceptance and
recordation thereof in the United States Patent and Trademark Office, upon
filing of the financing statements delivered to the Administrative Agent
by the Grantor on the Effective Date in the jurisdictions listed on
Schedule 5.15 to the Credit Agreement (which financing statements are in
proper form for filing in such jurisdictions) (and the recording of this
Agreement in the United States Patent and Trademark Office, and the making
of filings after the Effective Date in any other jurisdiction in the
United States as may be necessary under any Requirement of Law) the Liens
created pursuant to this Agreement will constitute valid and perfected
Liens on the Collateral in the United States in favor of the
Administrative Agent for the benefit of the Secured Parties, which Liens
will be prior to all other Liens of all other Persons with respect to the
Collateral, except for Liens permitted pursuant to the Loan Documents
(including, without limitation, those permitted to exist pursuant to
subsection 8.3 of the Credit Agreement), and which Liens are enforceable
as such against all creditors of and purchasers (except to the extent that
the recording of an assignment or other transfer of title to the
Administrative Agent in the United States Patent and Trademark Office may
be necessary for such enforceability)
<PAGE> 5
5
from the Grantor, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law) or by an implied covenant of good faith and fair dealing.
(d) Consents. No consent of any party (other than the Grantor) to
any material Trademark License constituting Collateral is required, or
purports to be required, to be obtained by or on behalf of the Grantor in
connection with the execution, delivery and performance of this Agreement
that has not been obtained. Each Trademark License constituting Collateral
is in full force and effect and constitutes a valid and legally
enforceable obligation of the Grantor and (to the knowledge of the
Grantor) each other party thereto except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally and by general
equitable principles (whether enforcement is sought by proceedings in
equity or at law) or by an implied covenant of good faith and fair dealing
and except to the extent the failure of any such Trademark License
constituting Collateral to be in full force and effect or valid or legally
enforceable would not be reasonably expected, in the aggregate, to have a
material adverse effect on the value of the Collateral (as such term is
defined in the Credit Agreement). No consent or authorization of, filing
with or other act by or in respect of any Governmental Authority is
required in connection with the execution, delivery, performance, validity
or enforceability of any of the Trademark Licenses constituting Collateral
by any party thereto other than those which have been duly obtained, made
or performed and are in full force and effect and those the failure of
which to make or obtain would not be reasonably expected, in the
aggregate, to have a material adverse effect on the value of the
Collateral (as such term is defined in the Credit Agreement). Neither the
Grantor nor (to the knowledge of the Grantor) any other party to any
Trademark License constituting Collateral is in default in the performance
or observance of any of the terms thereof, except for such defaults as
would not reasonably be expected, in the aggregate, to have a material
adverse effect on the value of the Collateral (as such term is defined in
the Credit Agreement). Except for rights reserved in favor of the United
States government, as required under law, the right, title and interest of
the Grantor in, to and under each Trademark License constituting
Collateral are not subject to any defense, offset, counterclaim or claim
which would be reasonably expected, either individually or in the
aggregate, to have a material adverse effect on the value of the
Collateral (as such term is defined in the Credit Agreement).
(e) Schedule I is Complete; All Filings Have Been Made. Set forth in
Schedule I is a complete and accurate list of all material Trademarks
owned by the Grantor as of the date hereof. As of the date hereof, the
Grantor will have made all necessary filings to protect and maintain its
interest in the Trademarks set forth in Schedule I, including, without
limitation, all necessary filings and payments of all maintenance fees, in
the United States Patent and Trademark Office to the extent such
Trademarks are material to the Grantor's business. Set forth in Schedule I
is a complete and accurate list of all of the material Trademark Licenses
owned by the Grantor as of the date hereof.
(f) The Trademarks and Trademark Licenses are Subsisting and Not
Adjudged Invalid. As of the date hereof, each trademark registration and
trademark application of the Grantor set forth in Schedule I is subsisting
as of the date hereof, and has not been adjudged invalid, unregisterable
or unenforceable, in whole or in part, and, to the best of
<PAGE> 6
6
the Grantor's knowledge, is valid, registrable and enforceable. As of the
date hereof, each of the Trademark Licenses set forth in Schedule I is
validly subsisting and has not been adjudged invalid or unenforceable, in
whole or in part, and, to the best of the Grantor's knowledge, is valid
and enforceable. As of the date hereof, the Grantor has notified the
Administrative Agent in writing of all uses of any item of Trademark
Collateral material to the Grantor's business of which the Grantor is
aware which could reasonably be expected to lead to such item becoming
invalid or unenforceable, including unauthorized uses by third parties and
uses which were not supported by the goodwill of the business connected
with such Collateral.
(g) No Previous Assignments or Releases. As of the date hereof, the
Grantor has not made an agreement constituting a present or future
assignment, sale, transfer or encumbrance of any of the Collateral (except
for any such assignment, sale, transfer or encumbrance terminated on or
prior to the Effective Date or permitted under the Loan Documents). Except
as permitted by the Loan Documents or as required by law, the Grantor has
not granted any license, shop right, release, covenant not to sue, or
non-assertion assurance to any Person with respect to any material part of
the Collateral which would have a Material Adverse Effect.
(h) Proper Statutory Notice. The Grantor has marked its products
with the trademark registration symbol (R) or the common law trademark
symbol (TM), as the case may be, to the extent that it is reasonably and
commercially practicable.
(i) No Knowledge of Claims Likely to Arise. Except for the Trademark
Licenses listed in Schedule I hereto, the Grantor has no knowledge of the
existence of any right or any claim (other than as permitted by this
Agreement or the Loan Documents) that is likely to be made under or
against any item of Collateral contained on Schedule I which would have a
Material Adverse Effect.
(j) No Knowledge of Existing or Threatened Claims. No claim has been
made and is continuing or, to the Grantor's knowledge, threatened that the
use by the Grantor of any item of Collateral is invalid or unenforceable
or that the use by the Grantor of any Collateral does or may violate the
rights of any Person, which would have a Material Adverse Effect. To the
Grantor's knowledge, there is currently no infringement or unauthorized
use of any item of Collateral contained on Schedule I hereto which would
have a Material Adverse Effect.
The Grantor agrees that the foregoing representations and warranties
shall be deemed to have been made by the Grantor on and as of each date on which
an extension of credit is made by the Lenders to the Borrower under the Credit
Agreement, in each case as though made by the Grantor on and as of each such
date (or, if any such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date).
4. Covenants. The Grantor covenants and agrees with the
Administrative Agent and the other Secured Parties that, from and after the date
of this Agreement until the payment in full of the Loans, the Reimbursement
Obligations and to the extent then due and owing, all other Obligations, the
termination of the Revolving Credit Commitments and the expiration, termination
or return to the Issuing Lender of any Letters of Credit:
(a) Further Documentation; Pledge of Instruments and Chattel Paper.
At any time and from time to time, upon the written request of the
Administrative Agent or the
<PAGE> 7
7
Grantor, as the case may be, and at the sole expense of the Grantor, the
Grantor or the Administrative Agent, as the case may be, will promptly and
duly execute and deliver such further instruments and documents and take
such further action as the Administrative Agent or the Grantor, as the
case may be, may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby. The
Grantor also hereby authorizes the Administrative Agent to file any such
financing or continuation statement without the signature of the Grantor
to the extent permitted by applicable law. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing
statement for filing in any jurisdiction. The Administrative Agent agrees
to notify the Grantor and the Grantor agrees to notify the Administrative
Agent of any financing or continuation statement filed by it pursuant to
this Section 4(a), provided that any failure to give any notice shall not
affect the validity or effectiveness of any filing.
(b) Indemnification and Expenses. The Grantor agrees to pay, and to
save the Administrative Agent, the other Secured Parties and their
respective agents, officers, directors and successors harmless from, any
and all liabilities and reasonable costs and expenses (including, without
limitation, reasonable legal fees and expenses) (i) with respect to, or
resulting from, any delay by the Grantor in complying with any material
Requirement of Law applicable to any of the Collateral, or (ii) in
connection with any of the transactions contemplated by this Agreement,
provided that such indemnity shall not, as to the Administrative Agent,
any of the other Secured Parties or any of their respective agents,
officers, directors and successors, be available to the extent that such
liabilities, costs and expenses resulted from the gross negligence or
willful misconduct of any of the same. In any suit, proceeding or action
brought by the Administrative Agent or any other Secured Party under any
of the Collateral for any sum owing thereunder, or to enforce this
Agreement, the Grantor will save, indemnify and keep the Administrative
Agent, such Secured Party and their respective agents, officers, directors
and successors harmless from and against all expense, loss or damage
suffered by reason of any defense or counterclaim raised in any such suit,
proceeding or action, except to the extent such expense, loss or damage
resulted from the gross negligence or willful misconduct of any of the
same.
(c) Maintenance of Records. The Grantor will keep and maintain at
its own cost and expense reasonably satisfactory and complete records of
the Collateral, and shall mark such records to evidence this Agreement and
the Liens and the security interests created hereby. For the
Administrative Agent's and the other Secured Parties' further security,
the Administrative Agent, for the benefit of the Secured Parties, shall
have a security interest in all of the Grantor's books and records
pertaining to the Collateral.
(d) Right of Inspection. Upon reasonable written advance notice to
the Grantor and at reasonable intervals, or at any time and from time to
time after the occurrence and during the continuation of an Event of
Default, the Administrative Agent shall have reasonable access during
normal business hours to all the books, correspondence and records of the
Grantor relating to the Collateral, and the Administrative Agent and its
representatives may examine the same, and to the extent reasonable take
extracts therefrom and make photocopies thereof, and the Grantor agrees to
render to the Administrative Agent, at the Grantor's reasonable cost and
expense, such clerical and other assistance as may be reasonably requested
with regard thereto.
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8
(e) Compliance with Laws, etc. The Grantor will comply in all
material respects with all material Requirements of Law applicable to the
Collateral or any part thereof, except to the extent that the failure to
so comply would not be reasonably expected to materially adversely affect
in the aggregate the Administrative Agent's or the other Secured Parties'
rights hereunder, the priority of their Liens on the Collateral or the
value of the Collateral.
(f) Further Identification of Collateral. The Grantor will furnish
to the Administrative Agent from time to time such statements and
schedules further identifying and describing the Collateral, and such
other reports in connection with the Collateral, as the Administrative
Agent may reasonably request, all in reasonable detail.
(g) Security Interest in Any Newly Acquired Collateral. The Grantor
agrees that, should it obtain an ownership interest in any material
Trademark or enter into a Trademark License which is not now a part of the
Collateral, (i) the provisions of Section 2 shall automatically apply
thereto, (ii) any such Trademark and Trademark License shall automatically
become part of the Collateral, and (iii) with respect to any ownership
interest in any such Trademark or Trademark License that the Grantor
should obtain or enter into, it shall give notice thereof to the
Administrative Agent in writing, in reasonable detail, at its address set
forth in the Credit Agreement within 45 days after the end of the fiscal
quarter in which it obtains such ownership interest. The Grantor
authorizes the Administrative Agent to modify this Agreement by amending
Schedules I and II (and will cooperate reasonably with the Administrative
Agent in effecting any such amendment) to include on Schedule I any
Trademark and Trademark License of which it receives notice under this
Section, or to prepare and file with the United States Patent and
Trademark Office a supplement to this Agreement to include any Trademark
of which it receives notice to under this Section.
(h) Maintenance of the Trademark Collateral. Except as permitted in
the Loan Documents, the Grantor agrees to take all reasonably necessary
steps, including, without limitation, in the United States Patent and
Trademark Office or in any court, to (i) maintain each trademark
registration identified on Schedule I hereto, and (ii) pursue each
trademark application now or hereafter identified in Schedule I hereto,
including, without limitation, the filing of responses to office actions
issued by the United States Patent and Trademark Office, the filing of
applications for renewal, the filing of affidavits under Sections 8 and 15
of the United States Trademark Act, and the participation in opposition,
cancellation, infringement and misappropriation proceedings, except, in
each case in which the Grantor has reasonably determined that any of the
foregoing is not of material economic value to it. Except as permitted in
the Loan Documents, the Grantor agrees to take corresponding steps with
respect to each new or acquired Trademark or application for Trademark
registration, in each case, to which it is now or later becomes entitled,
except in each case in which the Grantor has reasonably determined that
any of the foregoing is not of material economic value to it. Any expenses
incurred in connection with such activities shall be borne by the Grantor.
(i) Preservation and Protection of the Trademark Collateral. Except
as provided in Section 4(k) hereof, the Grantor shall take all steps which
it or the Administrative Agent deems reasonably appropriate under the
circumstances to preserve and protect its material Trademark Collateral.
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(j) The Grantor Shall Not Abandon any Collateral. Except as
permitted by the Loan Documents, the Grantor shall not abandon any United
States trademark registration or any pending trademark application, in
each case listed on Schedule I, without the written consent of the
Administrative Agent, unless the Grantor shall have determined that such
use or the pursuit or maintenance of such trademark registration or
pending trademark application is not of material economic value to it, in
which case, the Grantor will, at least annually, give notice of any such
abandonment to the Administrative Agent in writing, in reasonable detail,
at its address set forth in the Credit Agreement.
(k) Infringement of Any Collateral. In the event that the Grantor
becomes aware that any item of the Collateral which the Grantor has
reasonably determined to be material to its business is infringed or
misappropriated by a third party, which infringement or misappropriation
would reasonably be expected to have a Material Adverse Effect, the
Grantor shall notify the Administrative Agent promptly and in writing, in
reasonable detail, at its address set forth in the Credit Agreement, and
shall take such actions as the Grantor or the Administrative Agent deems
reasonably appropriate under the circumstances to protect such Collateral,
including, without limitation, suing for infringement or misappropriation
and for an injunction against such infringement or misappropriation. Any
expense incurred in connection with such activities shall be borne by the
Grantor. The Grantor will advise the Administrative Agent promptly and in
writing, in reasonable detail, at its address set forth in the Credit
Agreement, of any adverse determination or the institution of any
proceeding (including, without limitation, the institution of any
proceeding in the United States Patent and Trademark Office or any court)
regarding any item of the Collateral which has a Material Adverse Effect.
(l) Use of Statutory Notice. The Grantor shall mark its products
with the trademark registration symbol (R) or the common law trademark
symbol (TM), as the case may be, to the extent that it is reasonably and
commercially practicable.
(m) Limitation on Liens on Collateral. The Grantor will not create,
incur or permit to exist, will defend the Collateral against, and will
take such other action as is reasonably necessary to remove, any material
Lien or material adverse claim on or to any of the Collateral, other than
Liens created hereby and other than as permitted pursuant to the Loan
Documents (including, without limitation, any Liens permitted to exist on
the Collateral pursuant to subsection 8.3 of the Credit Agreement), and
will defend the right, title and interest of the Administrative Agent and
the other Secured Parties in and to any of the Collateral against the
claims and demands of all Persons whomsoever, except where failure to
defend would not have a Material Adverse Effect.
(n) Limitations on Dispositions of Collateral. Without the prior
written consent of the Administrative Agent, the Grantor will not sell,
assign, transfer, exchange or otherwise dispose of, or grant any option
with respect to, the Collateral, or attempt, offer or contract to do so,
except with respect to licenses in the ordinary course of business or as
permitted by this Agreement or the Loan Documents.
(o) Notices. The Grantor will advise the Administrative Agent
promptly and in writing, in reasonable detail, at its address set forth in
the Credit Agreement, (i) of any Lien (other than Liens created hereby or
permitted under the Loan Documents, including, without limitation, any
Liens permitted to exist on the Collateral pursuant to subsection 8.3 of
the Credit Agreement) on any Trademarks and (ii) of the occurrence of
<PAGE> 10
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any other event which would reasonably be expected in the aggregate to
have a material adverse effect on the aggregate value of the Collateral
taken as a whole or the Liens created hereunder.
5. Administrative Agent's Appointment as Attorney-in-Fact.
(a) Powers. The Grantor hereby irrevocably constitutes and appoints
the Administrative Agent and any officer or agent of the Administrative Agent,
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 the Grantor and
in the name of the Grantor or in its own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be reasonably necessary
or desirable to accomplish the purposes of this Agreement to the extent
permitted by law, and, without limiting the generality of the foregoing, to the
extent permitted by law, the Grantor hereby gives the Administrative Agent the
power and right, on behalf of the Grantor, without notice to or assent by the
Grantor, to do, at any time when an Event of Default has occurred and is
continuing, the following:
(i) to execute and deliver any and all agreements, instruments,
documents, and papers as the Administrative Agent may reasonably request
to evidence the Administrative Agent's and the other Secured Parties'
security interest in any of the Collateral and the goodwill of the Grantor
relating thereto or represented thereby;
(ii) in the name of the Grantor or its own name, or otherwise, to
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
General Intangible (to the extent that the foregoing constitute
Collateral) or with respect to any other Collateral and to file any claim
or to take any other action or institute any proceeding in any court of
law or equity or otherwise deemed appropriate by the Administrative Agent
for the purpose of collecting any and all such moneys due under such
General Intangible or with respect to any other Collateral whenever
payable;
(iii) to pay or discharge Liens placed on the Collateral, other than
Liens permitted under this Agreement or the other Loan Documents,
including, without limitation, any Liens permitted to exist on the
Collateral pursuant to subsection 8.3 of the Credit Agreement; and
(iv) (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (B) to ask for, or demand, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (C)
to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any thereof and to enforce any other right in respect of any Collateral;
(D) to defend any suit, action or proceeding brought against the Grantor
with respect to any of the Collateral; (E) to settle, compromise or adjust
any suit, action or proceeding described in clause (D) above and, in
connection therewith, to give such discharges or releases as the
Administrative Agent may deem appropriate; (F) subject to any pre-existing
reserved rights or licenses, to assign any Trademark constituting
Collateral (along with the
<PAGE> 11
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goodwill of the business to which any such Trademark pertains), for such
term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (G)
generally, to sell, transfer, pledge and make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes, and to do, at the Administrative Agent's option and the
Grantor's expense, at any time, or from time to time, all acts and things
which the Administrative Agent deems reasonably necessary to protect,
preserve or realize upon the Collateral and the Administrative Agent's and
the other Secured Parties' Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as the Grantor might do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable until the payment in full of the Loans, the
Reimbursement Obligations and the other Obligations then due and owing, the
termination of the Revolving Credit Commitments and the expiration, termination
or return to the Issuing Lender of any Letters of Credit.
Anything in this Section 5.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 5.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) Other Powers. The Grantor also authorizes the Administrative
Agent, from time to time if an Event of Default shall have occurred and be
continuing, to execute, in connection with any sale provided for in Section 8
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) No Duty on the Part of Administrative Agent or Secured Parties.
The powers conferred on the Administrative Agent and the other Secured Parties
hereunder are solely to protect the Administrative Agent's and the other Secured
Parties' interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any other Secured Party to exercise any such powers. The
Administrative Agent and the other Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees, affiliates,
agents or successors shall be responsible to the Grantor for any act or failure
to act hereunder, except for gross negligence or willful misconduct of any of
the same.
6. Performance by Administrative Agent of Grantor's Obligations. If
the Grantor fails to perform or comply with any of its agreements contained
herein and the Administrative Agent, as provided for by the terms of this
Agreement, shall perform or comply, or otherwise cause performance or
compliance, with such agreements, the reasonable expenses of the Administrative
Agent incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due ABR Loans which are Term Loans under
the Credit Agreement, from the date of payment by the Administrative Agent to
the date reimbursed by the Grantor, shall be payable by the Grantor to the
Administrative Agent on demand, and the Grantor's obligations to make such
payments shall constitute Obligations secured hereby.
7. Proceeds. It is agreed that if an Event of Default shall occur
and be continuing, (a) all Proceeds of any Collateral received by the Grantor
consisting of cash, checks and other near-cash items shall be held by the
Grantor in trust for the Administrative Agent and the other Secured Parties,
segregated from other funds of the Grantor, and shall, forthwith upon
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receipt by the Grantor, be turned over to the Administrative Agent in the exact
form received by the Grantor (duly indorsed by the Grantor to the Administrative
Agent, if required), and (b) any and all such Proceeds received by the
Administrative Agent (whether from the Grantor or otherwise) shall be held by
the Administrative Agent for the benefit of the Secured Parties as collateral
security for the Obligations (whether matured or unmatured), and/or then or at
any time thereafter may, in the sole discretion of the Administrative Agent, be
applied by the Administrative Agent against the Obligations then due and owing
in the following order of priority:
FIRST, to the payment of all reasonable costs and expenses incurred
by the Administrative Agent (including, without limitation, in its
capacity as Credit Agreement Administrative Agent) in connection with this
Agreement, the Guarantee and Collateral Agreement, the Credit Agreement,
any other Loan Document or any of the Obligations, including, without
limitation, all court costs and the reasonable fees and expenses of its
agents and legal counsel, and any other reasonable costs or expenses
incurred in connection with the exercise by the Administrative Agent
(including, without limitation, in its capacity as Credit Agreement
Administrative Agent) of any right or remedy under this Agreement, the
Credit Agreement, or any other Loan Document;
SECOND, to the ratable satisfaction of all other Obligations; and
THIRD, to the Grantor or its successors or assigns, or to whomsoever
may be lawfully entitled to receive the same.
8. Remedies. If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Secured Parties, may exercise all
rights and remedies of a secured party under the Code, and, to the extent
permitted by law, all other rights and remedies granted to the Administrative
Agent or any Secured Party in this Agreement and the other Loan Documents and in
any other instrument or agreement securing, evidencing or relating to the
Obligations. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances, to the extent permitted by law, forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Administrative Agent or any other Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Administrative Agent or any other Secured Party shall have the right, to the
extent permitted by law, upon any such sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption in
the Grantor, which right or equity is hereby waived and released. The Grantor
further agrees, upon the occurrence and continuation of an Event of Default, at
the Administrative Agent's request, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at the Grantor's premises or elsewhere. In the
event of any sale, assignment, or other disposition of any of the Collateral,
the goodwill of the business connected with and symbolized by any Trademark
Collateral subject to such disposition shall be included. The Administrative
Agent shall apply the net proceeds of any such collection, recovery, receipt,
appropriation,
<PAGE> 13
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realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the other Secured Parties hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment and
performance in whole or in part of the Obligations then due and owing, in the
order of priority specified in Section 7 hereof, and only after such application
and after the payment by the Administrative Agent of any other amount required
by any provision of law, if any, including, without limitation, Section 9-
504(1)(c) of the Code, need the Administrative Agent account for the surplus, if
any, to the Grantor. To the extent permitted by applicable law, (a) the Grantor
waives all claims, damages and demands it may acquire against the Administrative
Agent or any other Secured Party arising out of the repossession, retention or
sale of the Collateral, other than any such claims, damages and demands that may
arise from the gross negligence or willful misconduct of any of them, and (b) if
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition. The Grantor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay in full the Loans, the Reimbursement
Obligations, and, to the extent then due and owing, all other Obligations,
including, without limitation, the reasonable fees and disbursements of any
attorneys employed by the Administrative Agent or any other Secured Party to
collect such deficiency, as provided in the Credit Agreement.
9. Limitation on Duties Regarding Preservation of Collateral. The
Administrative Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. Neither
the Administrative Agent, any other Secured Party, nor any of their respective
directors, officers, employees, affiliates or agents shall be liable for failure
to demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Grantor or any other Person.
10. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are powers coupled with an
interest and are irrevocable until the payment in full of the Loans, the
Reimbursement Obligations and, to the extent then due and owing, all other
Obligations, the termination of the Revolving Credit Commitments and the
expiration, termination or return to the Issuing Lender of any Letters of
Credit.
11. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12. Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
13. No Waiver; Cumulative Remedies. Neither the Administrative Agent
nor any other Secured Party nor the Grantor shall by any act (except by a
written instrument pursuant to Section 14 hereof), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any
<PAGE> 14
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breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Administrative Agent, any other
Secured Party or the Grantor, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the
Administrative Agent, any other Secured Party or the Grantor of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent, such other Secured Party or the
Grantor would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
14. Waivers and Amendments; Successors and Assigns. None of the
terms or provisions of this Agreement may be amended, supplemented, waived or
otherwise modified except by a written instrument executed by the Grantor and
the Administrative Agent, provided that, if requested by the Grantor, any
provision of this Agreement for the benefit of the Administrative Agent and/or
the other Secured Parties may be waived by the Administrative Agent in a written
letter or agreement executed by the Administrative Agent or by telex or
facsimile transmission from the Administrative Agent. This Agreement shall be
binding upon and shall inure to the benefit of the Grantor and its successors
and assigns, and the Administrative Agent and the other Secured Parties and
their respective successors, indorsees, transferees and assigns, except that
(other than in accordance with subsection 8.5 of the Credit Agreement) the
Grantor shall not assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Administrative
Agent.
15. Notices. All notices, requests and demands to or upon the
respective parties hereto shall be made in accordance with subsection 12.2 of
the Credit Agreement. The Administrative Agent, the Secured Parties and the
Grantor may change their respective addresses and transmission numbers for
notices by notice in the manner provided in this Section 15.
16. Authority of Administrative Agent. The Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the other
Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantor, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Secured Parties
with full and valid authority so to act or refrain from acting, and the Grantor
shall not be under any obligation to make any inquiry respecting such authority.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
18. Release of Collateral and Termination. (a) This Agreement shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms and the security interest created by this Agreement shall
not be released until the payment in full of the Loans, the Reimbursement
Obligations and the other Obligations then due and owing shall have occurred,
the Revolving Credit Commitments shall have been terminated and any Letters
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of Credit shall have expired or been terminated or returned to the Issuing
Lender, at which time the Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Administrative Agent and the Grantor
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert to the
Grantor, provided that if any payment, or any part thereof, of any of the
Obligations is rescinded or must otherwise be restored or returned by the
Administrative Agent or any other Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Grantor or any other Loan
Party, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or a trustee or similar officer for, the Grantor or any other
Loan Party or any substantial part of its property, or otherwise, this
Agreement, all rights hereunder and the Liens created hereby shall continue to
be effective, or be reinstated, as though such payments had not been made. Upon
request of the Grantor following any such termination, the Administrative Agent
shall reassign (at the sole cost and expense of the Grantor) to the Grantor any
Collateral held by the Administrative Agent hereunder, and execute and deliver
(at the sole cost and expense of the Grantor) to the Grantor such documents as
the Grantor shall reasonably request to evidence such termination and
reassignment.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by the Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent shall execute and deliver to the Grantor (at the
sole cost and expense of the Grantor) all releases or other documents reasonably
necessary or desirable for the release of the Liens created hereby on such
Collateral.
19. Incorporation of Provisions of Guarantee and Collateral
Agreement. The Grantor hereby acknowledges and affirms that the rights and
remedies of the Administrative Agent with respect to the security interest in
the Collateral made and granted hereby are more fully set forth in the Guarantee
and Collateral Agreement, the terms, conditions and other provisions of which,
in so far as they relate to the Collateral, such security interest and such
rights and remedies, are incorporated by reference herein as if fully set forth
herein. Nothing in this Agreement shall defer or impair the attachment or
perfection of any security interest in any collateral described in the Guarantee
and Collateral Agreement which would attach or be perfected pursuant to the
terms of the Guarantee and Collateral Agreement without action by the Grantor or
any other Person.
20. Interpretation. In the event of a conflict between any term of
this Agreement and the terms of the Credit Agreement, the terms of the Credit
Agreement shall control.
21. Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Grantor and the Administrative Agent with
respect to the subject matter hereof and there are no promises or
representations by the Grantor, the Administrative Agent or any other Secured
Party relative to the subject matter hereof not reflected or referred to herein
or therein.
22. Submission To Jurisdiction; Waivers. Each party hereto hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general
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jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient forum and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Grantor or the applicable Secured Party, as the case may be, at the
address referred to in Section 15 or at such other address of which the
Administrative Agent and the Grantor shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section 22 any punitive damages.
23. WAIVER OF JURY TRIAL. THE GRANTOR AND THE ADMINISTRATIVE AGENT
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
24. Counterparts. This Agreement may be executed and acknowledged by
one or more of the parties to this Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
<PAGE> 17
17
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
McCARTHY, CRISANTI & MAFFEI, INC.
By: ____________________________________
Title:
ACKNOWLEDGED AND AGREED AS OF
THE DATE HEREOF BY:
THE CHASE MANHATTAN BANK, as Administrative Agent
By: ____________________________________
Title:
<PAGE> 18
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___________ day of _________, 1998, before me personally came
____________________ to me known, who, being by me duly sworn, did depose and
say he resides at ___________________________ and that he is the
_____________________________ of McCarthy, Crisanti & Maffei, Inc., the
corporation described in and which executed the above instrument; that he has
been authorized to execute said instrument on behalf of said corporation; and
that he signed said instrument on behalf of said corporation pursuant to said
authority.
____________________________________
Notary Public
[Notarial Seal]
<PAGE> 19
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of _________, 1998, before me personally came
_________________ to me known, who, being by me duly sworn, did depose and say
he resides at _______________________ and that he is the _______________________
of THE CHASE MANHATTAN BANK, the national banking association described in and
which executed the above instrument; that he has been authorized to execute said
instrument on behalf of said association; and that he has signed said instrument
on behalf of said association pursuant to said authority.
____________________________________
Notary Public
[Notarial Seal]
<PAGE> 20
Schedule I
TRADEMARKS AND TRADEMARK LICENSES
<PAGE> 21
Schedule II
EXISTING SECURITY INTERESTS
---------------------------
<PAGE> 1
Exhibit 10.50
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
REVOLVING NOTE
February 11, 1998
Cambridge Energy Research Associates, Inc., a Massachusetts
corporation (the "Company"), for value received, hereby promises to pay on
demand (subject to the limitations set forth below) and from time to time to
McCarthy, Crisanti & Maffei, Inc., a New York corporation ("MCM" or the
"Lender"), the principal amount of the lesser of (a) five million U.S. dollars
($5,000,000) and (b) the aggregate unpaid principal amount under this Revolving
Credit Note ("Note"), with interest. Payments of principal and interest shall be
payable as set forth below, and made in lawful money of the United States of
America to such account as the Lender shall designate from time to time.
Capitalized terms not otherwise defined herein shall have the same meaning
ascribed thereto in the Credit Agreement, dated as of February 12, 1998, among
MCM, as Borrower, Global Decisions Group LLC (the "Parent"), as Guarantor, Bank
of America N.T. & S.A., as Documentation Agent, and The Chase Manhattan Bank, as
Administrative Agent, (the "Credit Agreement").
1. Payments of Principal. The Company shall repay the Principal Amount, upon the
demand of the Lender; provided, however, that (i) no demand shall be made by the
Lender until five (5) days have elapsed from the date hereof, and (ii) the
lender shall not demand payment and the Lender shall demand payment and the
Company shall not be obligated to repay any principal hereunder prior to June
30, 2000, unless any demand for payment by the Lender is authorized by the Board
of Directors of the Parent (the "Board").
2. Final Maturity. Notwithstanding anything contained herein, this Note shall
mature and the Principal Amount and interest shall be paid by the Company to the
Lender on February 1, 2008.
3. Payment of Interest. Interest will accrue on the outstanding principal amount
of this Note and unpaid interest thereon at a rate equal to the rate
attributable from time to time to the Term Notes under the Credit Agreement. All
<PAGE> 2
interest shall be payable quarterly, in arrears, on the Interest Payment Dates,
provided, however, that (i) no demand shall be made by the Lender until five (5)
days have elapsed from the date hereof, and (ii) interest shall accrue but shall
not be paid by the Company prior to June 30, 2000, unless such payment is
demanded by the Lender upon authorization by the Board.
<PAGE> 3
Interest on unpaid principal and interest shall accrue and compound quarterly
from the date hereof until all obligations hereunder are repaid in full by the
Company.
4. Security. This Note is entitled to the benefits of collateral granted to the
Lender by the Company pursuant to the Collateral Agreement (the "CERA Collateral
Agreement"), dated February 11, 1998, between the Lender and the Company and the
Trademark Security Agreement (the "CERA Trademark Security Agreement"), dated
February 11, 1998 between the Lender and the Company (the CERA Collateral
Agreement and the CERA Trademark Security Agreement, collectively, the "CERA
Security Agreements").
5. Events of Default. The principal amount of this Note and all accrued but
unpaid interest thereon shall become immediately due and payable upon the
occurrence of any of the following events (each, an "Event of Default"):
(a) upon notice from the Lender, if the Company shall
default in the payment of principal or interest on this Note when
due, as provided in Sections 1 and 2 hereof or a default of the
covenant contained herein; or
(b) (i) the Company shall commence any case, proceeding
or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part
of its assets, or the Company shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced
against the Company any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry or an
order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged, unstayed or unbonded for a period
of 60 days; or (iii) there shall be commenced against the Company
any case, proceeding or other action seeking issuance of a warrant
of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the
<PAGE> 4
entry thereof; (iv) the Company shall take any corporate action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or
(iii) above; or (v) the Company shall be generally unable to, or
shall admit in writing its general inability to, pay its debts as
they become due.
(c) There shall have been an Event of Default under the
Demand Term Note, dated the date hereof, made by the Company to the Lender (the
"Term Note"); or
(d) There shall have been a Default under Section 9 of
the Credit Agreement and the Loans thereunder shall have been declared due and
payable;
Upon any of the circumstances described in paragraphs 5(b) or 5(d), all unpaid
principal and interest (including interest thereon) of this Note shall
automatically and immediately become due.
6. Representations and Warranties of the Company. To induce the Lender to make
the loan evidenced hereby, the Company hereby represents and warrants to the
Lender that:
(a) The audited balance sheets of the Company as of June
30, 1995, 1996 and 1997 and the audited statements of earnings, statements of
shareholders' equity and statements of cash flows for the years ended June 30,
1995, 1996, and 1997 have heretofore been furnished to the Lender. The unaudited
interim financial statements of the Company for the three-month period ended
September 30, 1997, have heretofore been furnished to the Lender. Such financial
statements (including the notes thereto) in the case of the financial statements
described in the first sentence of this section (i) have been audited by KPMG
Peat Marwick LLP, (ii) except in the case of unaudited financial statements
described in the second sentence of this section, for the absence of footnotes,
have been prepared in accordance with GAAP consistently applied throughout the
periods covered thereby and (iii) present fairly, in all material respects, the
financial condition, results of operations and cash flows of the Company as of
such dates and for such periods (except for normal year-end audit adjustments).
During the period from June 30, 1997 to and including the date hereof, except as
provided in the Transaction Documents, there has been no sale, transfer or other
disposition by the Company, and no
<PAGE> 5
purchase or other acquisition by it of any business or property (including any
Capital Stock of any other Person) material in relation to the financial
condition of the Company which is not reflected in the foregoing financial
statements or in the notes thereto or has not otherwise been disclosed in a
writing to the Lender on or prior to the date hereof.
(b) As of the date hereof, after giving effect to the
consummation of the Transactions, the Company is Solvent.
(c) The Company (i) is duly incorporated or organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority, and the legal right,
to own and operate its property, to lease the property it operates as lessee and
to conduct the business in which it is currently engaged, except to the extent
that the failure to have such power and authority or legal right would not be
reasonably expected to have a material adverse effect on the business, assets,
operations, property, condition (financial or otherwise) or prospects of the
Company, (a "Material Adverse Effect"), (iii) is duly qualified as a foreign
corporation 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, other than in such jurisdictions where the failure
to be so qualified and in good standing would not be reasonably expected to have
a Material Adverse Effect and (iv) is in compliance with All Requirements of
Law, except to the extent that the failure to comply therewith would not, in the
aggregate, be reasonably expected to have Material Adverse Effect.
(d) The Company has the corporate power and authority,
and the legal right, to make, deliver and perform under this Note and the
Transaction Documents, to obtain extensions of credit hereunder and under the
Revolving Note (this note and the Revolving Note, collectively, the "Notes") and
has taken all necessary corporate action to authorize the execution, delivery
and performance of the Notes and the Transaction Documents and to authorize the
extensions of credit on the terms and conditions contained in the Notes. No
consent or authorization of, filing with, notice to or other similar act by or
in respect of, any Governmental Authority or any other Person is required to be
obtained or made by or on behalf of the Company in connection with the
execution, delivery, performance, validity or enforceability of the Transaction
Documents or with the extensions of credit under the Notes, except for (i)
consents, authorizations, notices and filings required to be obtained or made on
or prior to the date hereof and described in Schedule 1, all of which, unless
noted in Schedule 1, have been obtained or made on or prior to the Effective
<PAGE> 6
Date, (ii) filings to perfect the Liens created by the CERA Security Agreements,
(iii) filings pursuant to the Assignment of Claims Act of 1940, as amended (31
U.S.C. Section 3727 et seq.), in respect of Accounts Receivable of the Company
the obligor in respect of which is the United States of America or any
department, agency or instrumentality thereof and (iv) consents, authorizations,
notices and filings which the failure to obtain or make which would reasonably
be expected to have a Material Adverse Effect. This Note has been duly executed
and delivered by the Company and the Transaction Documents have been or will be
duly executed and delivered on behalf of the Company. This Note constitutes a
legal, valid and binding obligation of the Company and each Transaction
Document, as executed and delivered does constitute, or when executed and
delivered, will constitute, a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or law).
(e) The execution, delivery and performance of the Notes
and the Transaction Documents by the Company, the extensions of credit hereunder
and the use of the proceeds thereof (i) will not violate any Requirement of Law
or Contractual Obligation of the Company in any respect that would reasonably be
expected to have a Material Adverse Effect and (ii) will not result in, or
require, the creation or imposition of any Lien (other than the Liens permitted
by the CERA Collateral Agreement) on any of its properties or revenues pursuant
to any such Requirement of Law or Contractual Obligation.
(f) No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Company, threatened by or against the Company or against any of its
properties or revenues (i) which is so pending or threatened at any time on or
prior to the date hereof and relates to the Notes, the CERA Security Agreements,
the Transaction Documents or any of the transactions contemplated hereby or
thereby or (ii) which would reasonably be expected to have a Material Adverse
Effect.
(g) The Company is not in default under or with respect
to any of its Contractual Obligations in any respect which would be reasonably
expected to have a Material Adverse Effect. No Event of Default has occurred and
is
<PAGE> 7
continuing.
(h) The Company has good record and marketable title in
fee simple to, or a valid leasehold interest in, all its material real property,
and good title to, or a valid leasehold interest in, all its other material
property other than any failure to have such title to or interest in such
property that would not reasonably be expected to have a Material Adverse
Effect, and none of such property is subject to any Lien, except for Liens
permitted by the CERA Collateral Agreement.
(i) The Company owns, or has the legal right to use, all
United States trademarks, trademark applications, tradenames, copyrights,
technology, know-how and processes necessary for it to conduct its business as
currently conducted (the "Intellectual Property") except for those the failure
to own or have such legal right to use would not be reasonably expected to have
a Material Adverse Effect. No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Company know of such claim, and, to the knowledge of the Company, the use of
such Intellectual Property by the Company does not infringe on the rights of any
Person, except for claims and infringements which in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
(j) No Requirement of Law or Contractual Obligation of
the Company would be reasonably expected to have a Material Adverse Effect.
(k) The Company has filed or caused to be filed all
United States federal income tax returns and all other material tax returns
which are required to be filed and has paid (i) all taxes shown to be due and
payable on such returns and (ii) all taxes shown to be due and payable on any
assessments of which it has received notice made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority, and no tax Lien has been filed, and no
claim is being asserted, with respect to any such tax, fee or other charge
(other than any (A) taxes, fees or other charges with respect to which the
failure to pay, in the aggregate, would not have a Material Adverse Effect or
(B) taxes, fees or other charges in the amount or validity of which are
currently being contested in good faith by appropriate proceedings diligently
conducted and with respect to reserves in conformity with GAAP have been
provided on the books of the Company).
<PAGE> 8
(l) No part of the proceeds of the extensions of credit
under the Notes will be used for any purpose which violates the provisions of
the Regulations of the Board, including, without limitation, Regulation G,
Regulation T or Regulation X of the Board.
(m) During the five year period prior to the date
hereof, with respect to any Plan (or, with respect to (vi) or (viii) below, as
of the date such representation is made or deemed made), none of the following
events or conditions, either individually or in the aggregate, has resulted or
is reasonably likely to result in a Material Adverse Effect: (i) the occurrence
of a Reportable Event; (ii) the occurrence of an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA); (iii) the occurrence of any noncompliance with the applicable provisions
of ERISA or the Code; (iv) a termination of a Single Employer Plan (other than a
standard termination pursuant to Section 4041(b) of ERISA); (v) the creation of
a Lien on the property of the Company in favor of the PBGC or a Plan; (vi) the
existence of any Underfunding with respect to any Single Employer Plan; (vii)
the occurrence of a complete or partial withdrawal from any Multiemployer Plan
by the Company or any Commonly Controlled Entity; (viii) the incurrence of any
liability by the Company or any Commonly Controlled Entity under ERISA if, as a
result of the withdrawal by the Company or any such Commonly Controlled Entity
from any Multiemployer Plans as of the annual valuation date most closely
preceding the date on which this representation is made or deemed made; or (ix)
the Reorganization or Insolvency of any Multiemployer Plan. There have been no
transactions that resulted or could result in any liability to the Company or
any Commonly Controlled Entity under Section 4069 or ERISA or Section 4212(c) of
ERISA.
(n) Except with respect to (i) Liens on equipment
constituting fixtures, (ii) any reserved rights of the United States government
as required under law, (iii) Liens upon Trademarks and Trademark Licenses (as
such terms are defined in the Guarantee and Collateral Agreement) to the extent
that (A) such Liens are not otherwise perfected by the filing of financing
statements under the Uniform Commercial Code or by the filing and acceptance
thereof in the United States and Trademark Office or (B) such Trademarks and
Trademark Licenses are not, individually or in the aggregate, material to the
business of the Company, (iv) Liens on uncertificated securities, (v) Liens on
collateral the perfection of which requires filings in or other actions under
the laws of jurisdictions outside of the United States of America, any State,
territory or dependency thereof or the District of Columbia (except to the
extent that such
<PAGE> 9
filings or other actions have been made or taken), (vi) Liens on contracts or
Accounts Receivable on which the United States of America or any department,
agency, or instrumentality thereof is the obligor, (vii) Liens on Proceeds of
Accounts Receivable, until transferred to or deposited in the Collateral
Proceeds Account (if any), and (viii) claims of creditors of Persons receiving
goods included as Collateral for "sale or return" within the meaning of Section
2-326 of the Uniform Commercial Code of the applicable jurisdiction, upon filing
of the financing statements delivered to the Lender by the Company on the date
hereof in the jurisdictions listed on Schedule 2 hereto (which financing
statements are in proper form for filing in such jurisdictions) (and the
recording of the CERA Trademark Security Agreement in the PTO and the making of
filings after the date hereof in any other jurisdiction as may be necessary
under any Requirement of Law) and the delivery to, and continuing possession by,
the Lender of all Instruments, Chattel Paper, Investment Property and Documents
a security interest in which is or may be perfected by possession, the Liens
created pursuant to the CERA Collateral Agreement, when executed and delivered,
will constitute valid Liens on and, to the extent provided therein, perfected
security interests in the collateral referred to in such CERA Security
Agreements (but as to the Copyrights and the Copyright Licenses (as defined in
the CERA Collateral Agreement) and accounts arising therefrom, only to the
extent the Uniform Commercial Code of the relevant jurisdiction, from time to
time in effect, is applicable) in favor of the Lender, which Liens will be prior
to all other Liens of all other Persons, except for Liens permitted pursuant to
the CERA Collateral Agreement, and which Liens are enforceable as such as
against all other Persons (except, with respect to goods only, buyers in the
ordinary course of business to the extent provided in Section 9-307(1) of the
Uniform Commercial Code as from time to time in effect in the applicable
jurisdiction and except to the extent that recording of an assignment or other
transfer of title to the Lender in the United States Patent and Trademark Office
may be necessary for such enforceability), except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law). Notwithstanding any other provision of this Note, capitalized
terms which are used in this subsection (j) and not defined in this Note or the
Credit Agreement are so used as defined in the CERA Collateral Agreement.
(o) Other than exceptions to any of the following that
would not, individually or in the aggregate, reasonably be expected to give rise
to a Material Adverse Effect:
<PAGE> 10
(1) The Company: (i) is, and within the period of all
applicable statutes of limitation has been, in compliance with all
applicable Environmental Laws and (ii) holds all Environmental
Permits (each of which is in full force and effect) required for any
of their current operations or for any property owned, leased, or
otherwise operated by it and reasonably expects to timely obtain
without material expense all such Environmental Permits required for
planned operations
(2) Materials of Environmental Concern have not been
transported, disposed of, emitted, discharged, or otherwise released
or threatened to be released, to or at any real property presently
or formerly owned, leased or operated by the Company or at any other
location, which could reasonably be expected to (i) give rise to
liability of the Company under any applicable Environmental Law or
(ii) impair the fair saleable value of any real property owned by
the Company.
(3) The Company has not received any written request for
information, or been notified that it is a potentially responsible
party, under the federal Comprehensive Environmental Response,
Compensation, and Liability Act or any similar Environmental Law, or
received any other written request for information
with respect to any Materials of Environmental Concern.
(4) The Company has not entered into or agreed to any
consent decree, order or settlement or other agreement, nor is
subject to any judgment, decree, or order or other agreement, in any
judicial, administrative, arbitral or other forum, relating to
compliance with or liability under any Environmental Law.
(p) The written information, reports, financial
statements, exhibits and schedules furnished by or on behalf of the Company to
the Lender in connection with the Transactions or this Note, taken as a whole,
did not contain as of the date hereof any material misstatement of fact. It is
understood that (x) no representation or warranty is made concerning the
forecasts, estimates, pro forma information, projections and statements as to
anticipated future performance or conditions, and the assumptions on which they
were based, contained in any such information, reports, financial statements,
exhibits or schedules, except that as of the date such forecasts, estimates, pro
forma information, projections and statements were generated, (1) such
forecasts,
<PAGE> 11
estimates, pro forma information, projections and statements were based on the
good faith assumptions of the management of the Company and (2) such forecasts,
estimates, pro forma information, projections and statements, and the
assumptions on which they were based, may or may not prove to be correct.
7. Covenant. The Company shall not, and shall not permit any of its Subsidiaries
(if any) to, take any action that would result in a violation of any of the
covenants of the Lender contained in the Credit Agreement.
8. Transfer. This Note is a registered Note and is transferable only upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the Lender or
its attorney duly authorized in writing. References in this Note to the "Lender"
shall mean the person in whose name this Note is at the time registered on the
register kept by the Company, and the Company may treat such person as the owner
of this Note for the purpose of receiving payment and for all other purposes.
9. No Modification or Waiver; Successors and Assigns. This Note may not be
changed, modified or discharged orally, nor may any waivers or consents be given
orally hereunder, and every such change, modification, discharge, waiver or
consent shall be in writing, duly signed by or on behalf of the Company and
Lender. This Note shall be binding upon and shall inure to the benefit of the
Company and the Lender and their respective successors and assigns.
10. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
11. Notices. All notices, requests and other communications required or
permitted to be given under this Note shall be deemed to have been duly given if
(a) personally delivered, (b) mailed, certified or registered mail with postage
prepaid, (c) sent by next day or overnight mail or delivery or (d) sent by fax
as follows:
(i) If to the Company to it at:
20 University Road
Cambridge, Massachusetts 02138
Attention: President
<PAGE> 12
(ii) If to the Lender to it at:
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: Mr. David D. Nixon
(iii) If to any assignee of the Lender pursuant to
paragraph 6 hereof, to such address that
such assignee provides to the Company upon
surrender for transfer of this Note.
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
By:__________________________
Name:
Title:
<PAGE> 13
ANNEX A
<TABLE>
<CAPTION>
Date Prepayment Princ. Balance Notation Made By
<S> <C> <C> <C>
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</TABLE>
<PAGE> 1
Exhibit 10.51
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
DEMAND TERM NOTE
February 11, 1998
Cambridge Energy Research Associates, Inc., a Massachusetts
corporation (the "Company"), for value received, hereby promises to pay on
demand (subject to the limitations set forth below) and from time to time to
McCarthy, Crisanti & Maffei, Inc., a New York corporation ("MCM" or the
"Lender"), the principal amount of twenty-six million four hundred thousand U.S.
dollars ($26,400,000), with interest. Payments of principal and interest shall
be payable as set forth below, and made in lawful money of the United States of
America to such account as the Lender shall designate from time to time.
Capitalized terms not otherwise defined herein shall have the same meaning
ascribed thereto in the Credit Agreement, dated as of February 12, 1998, among
MCM, as Borrower, Global Decisions Group LLC (the "Parent"), as Guarantor, Bank
of America N.T. & S.A., as Documentation Agent, and The Chase Manhattan Bank, as
Administrative Agent, (the "Credit Agreement").
1. Payments of Principal. The Company shall repay the principal hereof, in whole
or in part, upon the demand of the Lender; provided, however, that (i) no demand
shall be made by the Lender until five (5) days have elapsed from the date
hereof and (ii) the Lender shall not demand payment and the Company shall not be
obligated to repay any principal hereunder prior to June 30, 2000, unless any
demand for payment by the Lender is authorized by the Board of Directors of the
Parent (the "Board").
2. Final Maturity. Notwithstanding anything contained herein, this Note shall
mature and all outstanding principal and interest shall be paid by the Company
to the Lender on February 1, 2008.
3. Payment of Interest. Interest will accrue on the outstanding principal amount
of this Note and unpaid interest thereon at a rate equal to the rate
attributable from time to time to the Term Notes under the Credit Agreement. All
interest shall be payable quarterly, in arrears, on the Interest Payment Dates,
provided, however, that (i) no demand shall be made by the Lender until five (5)
<PAGE> 2
days have elapsed from the date hereof and (ii) interest shall accrue but shall
not be paid by the Company prior to June 30, 2000, unless such payment is
demanded by the Lender upon authorization by the Board. Interest on unpaid
principal and interest shall accrue and compound quarterly from the date hereof
until all obligations hereunder are repaid in full by the Company.
<PAGE> 3
4. Security. This Note is entitled to the benefits of collateral granted to the
Lender by the Company pursuant to the Collateral Agreement (the "CERA Collateral
Agreement"), dated February 11, 1998, between the Lender and the Company and the
Trademark Security Agreement (the "CERA Trademark Security Agreement"), dated
February 11, 1998 between the Lender and the Company (the CERA Collateral
Agreement and the CERA Trademark Security Agreement, collectively, the "CERA
Security Agreements").
5. Events of Default. The principal amount of this Note and all accrued but
unpaid interest thereon shall become immediately due and payable upon the
occurrence of any of the following events (each, an "Event of Default"):
(a) upon notice from the Lender, if the Company shall
default in the payment of principal or interest on this Note when
due, as provided in Sections 1 and 2 hereof or a default of the
covenant contained herein; or
(b) (i) the Company shall commence any case, proceeding
or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part
of its assets, or the Company shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced
against the Company any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry or an
order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged, unstayed or unbonded for a period
of 60 days; or (iii) there shall be commenced against the Company
any case, proceeding or other action seeking issuance of a warrant
of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; (iv) the Company shall take any corporate action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or
(iii) above; or (v) the Company shall be generally unable to, or
shall admit in writing its general
<PAGE> 4
inability to, pay its debts as they become due.
(c) There shall have been an Event of Default under the
Revolving Credit Note, dated the date hereof, made by the Company to the Lender
(the "Revolving Note"); or
(d) There shall have been a Default under Section 9 of
the Credit Agreement and the Loans thereunder shall have been declared due and
payable;
Upon any of the circumstances described in paragraphs 5(b) or 5(d), all unpaid
principal and interest (including interest thereon) of this Note shall
automatically and immediately become due.
6. Representations and Warranties of the Company. To induce the Lender to make
the loan evidenced hereby, the Company hereby represents and warrants to the
Lender that:
(a) The audited balance sheets of the Company as of
June 30, 1995, 1996 and 1997 and the audited statements of earnings, statements
of shareholders' equity and statements of cash flows for the years ended June
30, 1995, 1996, and 1997 have heretofore been furnished to the Lender. The
unaudited interim financial statements of the Company for the three-month period
ended September 30, 1997, have heretofore been furnished to the Lender. Such
financial statements (including the notes thereto) in the case of the financial
statements described in the first sentence of this section (i) have been audited
by KPMG Peat Marwick LLP, (ii) except in the case of unaudited financial
statements described in the second sentence of this section, for the absence of
footnotes, have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby and (iii) present fairly, in all material
respects, the financial condition, results of operations and cash flows of the
Company as of such dates and for such periods (except for normal year-end audit
adjustments). During the period from June 30, 1997 to and including the date
hereof, except as provided in the Transaction Documents, there has been no sale,
transfer or other disposition by the Company, and no purchase or other
acquisition by it of any business or property (including any Capital Stock of
any other Person) material in relation to the financial condition of the Company
which is not reflected in the foregoing financial statements or in the
<PAGE> 5
notes thereto or has not otherwise been disclosed in a writing to the Lender on
or prior to the date hereof.
(b) As of the date hereof, after giving effect to the
consummation of the Transactions, the Company is Solvent.
(c) The Company (i) is duly incorporated or organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority, and the legal right,
to own and operate its property, to lease the property it operates as lessee and
to conduct the business in which it is currently engaged, except to the extent
that the failure to have such power and authority or legal right would not be
reasonably expected to have a material adverse effect on the business, assets,
operations, property, condition (financial or otherwise) or prospects of the
Company, (a "Material Adverse Effect"), (iii) is duly qualified as a foreign
corporation 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, other than in such jurisdictions where the failure
to be so qualified and in good standing would not be reasonably expected to have
a Material Adverse Effect and (iv) is in compliance with All Requirements of
Law, except to the extent that the failure to comply therewith would not, in the
aggregate, be reasonably expected to have Material Adverse Effect.
(d) The Company has the corporate power and authority,
and the legal right, to make, deliver and perform under this Note and the
Transaction Documents, to obtain extensions of credit hereunder and under the
Revolving Note (this note and the Revolving Note, collectively, the "Notes") and
has taken all necessary corporate action to authorize the execution, delivery
and performance of the Notes and the Transaction Documents and to authorize the
extensions of credit on the terms and conditions contained in the Notes. No
consent or authorization of, filing with, notice to or other similar act by or
in respect of, any Governmental Authority or any other Person is required to be
obtained or made by or on behalf of the Company in connection with the
execution, delivery, performance, validity or enforceability of the Transaction
Documents or with the extensions of credit under the Notes, except for (i)
consents, authorizations, notices and filings required to be obtained or made on
or prior to the date hereof and described in Schedule 1, all of which, unless
noted in Schedule 1, have been obtained or made on or prior to the Effective
Date, (ii) filings to perfect the Liens created by the CERA Security Agreements,
(iii) filings pursuant to the Assignment of Claims Act of 1940, as amended (31
<PAGE> 6
U.S.C. Section 3727 et seq.), in respect of Accounts Receivable of the Company
the obligor in respect of which is the United States of America or any
department, agency or instrumentality thereof and (iv) consents, authorizations,
notices and filings which the failure to obtain or make which would reasonably
be expected to have a Material Adverse Effect. This Note has been duly executed
and delivered by the Company and the Transaction Documents have been or will be
duly executed and delivered on behalf of the Company. This Note constitutes a
legal, valid and binding obligation of the Company and each Transaction
Document, as executed and delivered does constitute, or when executed and
delivered, will constitute, a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or law).
(e) The execution, delivery and performance of the Notes
and the Transaction Documents by the Company, the extensions of credit hereunder
and the use of the proceeds thereof (i) will not violate any Requirement of Law
or Contractual Obligation of the Company in any respect that would reasonably be
expected to have a Material Adverse Effect and (ii) will not result in, or
require, the creation or imposition of any Lien (other than the Liens permitted
by the CERA Collateral Agreement) on any of its properties or revenues pursuant
to any such Requirement of Law or Contractual Obligation.
(f) No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Company, threatened by or against the Company or against any of its
properties or revenues (i) which is so pending or threatened at any time on or
prior to the date hereof and relates to the Notes, the CERA Security Agreements,
the Transaction Documents or any of the transactions contemplated hereby or
thereby or (ii) which would reasonably be expected to have a Material Adverse
Effect.
(g) The Company is not in default under or with respect
to any of its Contractual Obligations in any respect which would be reasonably
expected to have a Material Adverse Effect. No Event of Default has occurred and
is continuing.
<PAGE> 7
(h) The Company has good record and marketable title in
fee simple to, or a valid leasehold interest in, all its material real property,
and good title to, or a valid leasehold interest in, all its other material
property other than any failure to have such title to or interest in such
property that would not reasonably be expected to have a Material Adverse
Effect, and none of such property is subject to any Lien, except for Liens
permitted by the CERA Collateral Agreement.
(i) The Company owns, or has the legal right to use, all
United States trademarks, trademark applications, tradenames, copyrights,
technology, know-how and processes necessary for it to conduct its business as
currently conducted (the "Intellectual Property") except for those the failure
to own or have such legal right to use would not be reasonably expected to have
a Material Adverse Effect. No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Company know of such claim, and, to the knowledge of the Company, the use of
such Intellectual Property by the Company does not infringe on the rights of any
Person, except for claims and infringements which in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
(j) No Requirement of Law or Contractual Obligation of
the Company would be reasonably expected to have a Material Adverse Effect.
(k) The Company has filed or caused to be filed all
United States federal income tax returns and all other material tax returns
which are required to be filed and has paid (i) all taxes shown to be due and
payable on such returns and (ii) all taxes shown to be due and payable on any
assessments of which it has received notice made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority, and no tax Lien has been filed, and no
claim is being asserted, with respect to any such tax, fee or other charge
(other than any (A) taxes, fees or other charges with respect to which the
failure to pay, in the aggregate, would not have a Material Adverse Effect or
(B) taxes, fees or other charges in the amount or validity of which are
currently being contested in good faith by appropriate proceedings diligently
conducted and with respect to reserves in conformity with GAAP have ben provided
on the books of the Company).
(l) No part of the proceeds of the extensions of credit
under the Notes will be used for any purpose which violates the provisions of
the
<PAGE> 8
Regulations of the Board, including, without limitation, Regulation G,
Regulation T or Regulation X of the Board.
(m) During the five year period prior to the date
hereof, with respect to any Plan (or, with respect to (vi) or (viii) below, as
of the date such representation is made or deemed made), none of the following
events or conditions, either individually or in the aggregate, has resulted or
is reasonably likely to result in a Material Adverse Effect: (i) the occurrence
of a Reportable Event; (ii) the occurrence of an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA); (iii) the occurrence of any noncompliance with the applicable provisions
of ERISA or the Code; (iv) a termination of a Single Employer Plan (other than a
standard termination pursuant to Section 4041(b) of ERISA); (v) the creation of
a Lien on the property of the Company in favor of the PBGC or a Plan; (vi) the
existence of any Underfunding with respect to any Single Employer Plan; (vii)
the occurrence of a complete or partial withdrawal from any Multiemployer Plan
by the Company or any Commonly Controlled Entity; (viii) the incurrence of any
liability by the Company or any Commonly Controlled Entity under ERISA if, as a
result of the withdrawal by the Company or any such Commonly Controlled Entity
from any Multiemployer Plans as of the annual valuation date most closely
preceding the date on which this representation is made or deemed made; or (ix)
the Reorganization or Insolvency of any Multiemployer Plan. There have been no
transactions that resulted or could result in any liability to the Company or
any Commonly Controlled Entity under Section 4069 or ERISA or Section 4212(c) of
ERISA.
(n) Except with respect to (i) Liens on equipment
constituting fixtures, (ii) any reserved rights of the United States government
as required under law, (iii) Liens upon Trademarks and Trademark Licenses (as
such terms are defined in the Guarantee and Collateral Agreement) to the extent
that (A) such Liens are not otherwise perfected by the filing of financing
statements under the Uniform Commercial Code or by the filing and acceptance
thereof in the United States and Trademark Office or (B) such Trademarks and
Trademark Licenses are not, individually or in the aggregate, material to the
business of the Company, (iv) Liens on uncertificated securities, (v) Liens on
collateral the perfection of which requires filings in or other actions under
the laws of jurisdictions outside of the United States of America, any State,
territory or dependency thereof or the District of Columbia (except to the
extent that such filings or other actions have been made or taken), (vi) Liens
on contracts or Accounts Receivable on which the United States of America or any
department,
<PAGE> 9
agency, or instrumentality thereof is the obligor, (vii) Liens on Proceeds of
Accounts Receivable, until transferred to or deposited in the Collateral
Proceeds Account (if any), and (viii) claims of creditors of Persons receiving
goods included as Collateral for "sale or return" within the meaning of Section
2-326 of the Uniform Commercial Code of the applicable jurisdiction, upon filing
of the financing statements delivered to the Lender by the Company on the date
hereof in the jurisdictions listed on Schedule 2 hereto (which financing
statements are in proper form for filing in such jurisdictions) (and the
recording of the CERA Trademark Security Agreement in the PTO and the making of
filings after the date hereof in any other jurisdiction as may be necessary
under any Requirement of Law) and the delivery to, and continuing possession by,
the Lender of all Instruments, Chattel Paper, Investment Property and Documents
a security interest in which is or may be perfected by possession, the Liens
created pursuant to the CERA Collateral Agreement, when executed and delivered,
will constitute valid Liens on and, to the extent provided therein, perfected
security interests in the collateral referred to in such CERA Security
Agreements (but as to the Copyrights and the Copyright Licenses (as defined in
the CERA Collateral Agreement) and accounts arising therefrom, only to the
extent the Uniform Commercial Code of the relevant jurisdiction, from time to
time in effect, is applicable) in favor of the Lender, which Liens will be prior
to all other Liens of all other Persons, except for Liens permitted pursuant to
the CERA Collateral Agreement, and which Liens are enforceable as such as
against all other Persons (except, with respect to goods only, buyers in the
ordinary course of business to the extent provided in Section 9-307(1) of the
Uniform Commercial Code as from time to time in effect in the applicable
jurisdiction and except to the extent that recording of an assignment or other
transfer of title to the Lender in the United States Patent and Trademark Office
may be necessary for such enforceability), except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law). Notwithstanding any other provision of this Note, capitalized
terms which are used in this subsection (j) and not defined in this Note or the
Credit Agreement are so used as defined in the CERA Collateral Agreement.
(o) Other than exceptions to any of the following that
would not, individually or in the aggregate, reasonably be expected to give rise
to a Material Adverse Effect:
(1) The Company: (i) is, and within the period of all
applicable
<PAGE> 10
statutes of limitation has been, in compliance with all applicable
Environmental Laws and (ii) holds all Environmental Permits (each of
which is in full force and effect) required for any of their current
operations or for any property owned, leased, or otherwise operated
by it and reasonably expects to timely obtain without material
expense all such Environmental Permits required for planned
operations
(2) Materials of Environmental Concern have not been
transported, disposed of, emitted, discharged, or otherwise released
or threatened to be released, to or at any real property presently
or formerly owned, leased or operated by the Company or at any other
location, which could reasonably be expected to (i) give rise to
liability of the Company under any applicable Environmental Law or
(ii) impair the fair saleable value of any real property owned by
the Company.
(3) The Company has not received any written request for
information, or been notified that it is a potentially responsible
party, under the federal Comprehensive Environmental Response,
Compensation, and Liability Act or any similar Environmental Law, or
received any other written request for information
with respect to any Materials of Environmental Concern.
(4) The Company has not entered into or agreed to any
consent decree, order or settlement or other agreement, nor is
subject to any judgment, decree, or order or other agreement, in any
judicial, administrative, arbitral or other forum, relating to
compliance with or liability under any Environmental Law.
(p) The written information, reports, financial
statements, exhibits and schedules furnished by or on behalf of the Company to
the Lender in connection with the Transactions or this Note, taken as a whole,
did not contain as of the date hereof any material misstatement of fact. It is
understood that (x) no representation or warranty is made concerning the
forecasts, estimates, pro forma information, projections and statements as to
anticipated future performance or conditions, and the assumptions on which they
were based, contained in any such information, reports, financial statements,
exhibits or schedules, except that as of the date such forecasts, estimates, pro
forma information, projections and statements were generated, (1) such
forecasts, estimates, pro forma information, projections and statements were
based on the good faith assumptions of the management of the Company and (2)
such
<PAGE> 11
forecasts, estimates, pro forma information, projections and statements, and the
assumptions on which they were based, may or may not prove to be correct.
7. Covenant. The Company shall not, and shall not permit any of its Subsidiaries
(if any) to, take any action that would result in a violation of any of the
covenants of the Lender contained in the Credit Agreement.
8. Transfer. This Note is a registered Note and is transferable only upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the Lender or
its attorney duly authorized in writing. References in this Note to the "Lender"
shall mean the person in whose name this Note is at the time registered on the
register kept by the Company, and the Company may treat such person as the owner
of this Note for the purpose of receiving payment and for all other purposes.
9. No Modification or Waiver; Successors and Assigns. This Note may not be
changed, modified or discharged orally, nor may any waivers or consents be given
orally hereunder, and every such change, modification, discharge, waiver or
consent shall be in writing, duly signed by or on behalf of the Company and
Lender. This Note shall be binding upon and shall inure to the benefit of the
Company and the Lender and their respective successors and assigns.
10. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
11. Notices. All notices, requests and other communications required or
permitted to be given under this Note shall be deemed to have been duly given if
(a) personally delivered, (b) mailed, certified or registered mail with postage
prepaid, (c) sent by next day or overnight mail or delivery or (d) sent by fax
as follows:
(i) If to the Company to it at:
20 University Road
Cambridge, Massachusetts 02138
Attention: President
(ii) If to the Lender to it at:
<PAGE> 12
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: Mr. David D. Nixon
(iii) If to any assignee of the Lender pursuant to
paragraph 6 hereof, to such address that
such assignee provides to the Company upon
surrender for transfer of this Note.
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
By:__________________________
Name:
Title:
<PAGE> 13
ANNEX A
<TABLE>
<CAPTION>
Date Prepayment Princ. Balance Notation Made By
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 6,723
<SECURITIES> 0
<RECEIVABLES> 17,782
<ALLOWANCES> (579)
<INVENTORY> 0
<CURRENT-ASSETS> 25,379
<PP&E> 8,568
<DEPRECIATION> (3,788)
<TOTAL-ASSETS> 96,158
<CURRENT-LIABILITIES> 25,302
<BONDS> 15,000
0
1,929
<COMMON> 38,176
<OTHER-SE> 9,607
<TOTAL-LIABILITY-AND-EQUITY> 96,158
<SALES> 36,426
<TOTAL-REVENUES> 36,426
<CGS> 6,423
<TOTAL-COSTS> 33,929
<OTHER-EXPENSES> (13)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (154)
<INCOME-PRETAX> 2,330
<INCOME-TAX> 1,251
<INCOME-CONTINUING> 1,079
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,079
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.23
</TABLE>
