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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-11106
PRIMEDIA INC.
(Exact name of registrant as specified in its charter)
(SEE TABLE OF ADDITIONAL REGISTRANTS)
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DELAWARE 13-3647573
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
745 FIFTH AVENUE, NEW YORK, NEW YORK 10151
(Address of principal executive offices) (Zip Code)
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(212) 745-0100
(Registrant's telephone number, including area code)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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COMMON STOCK, PAR VALUE $.01 PER SHARE......................... NEW YORK STOCK EXCHANGE
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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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 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 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. [X]
The aggregate market value of the common equity of PRIMEDIA Inc.
("PRIMEDIA") which is held by non-affiliates of PRIMEDIA at February 28, 1999
was approximately $246 million.
As of February 28, 1999, 144,581,422 shares of PRIMEDIA's Common Stock were
outstanding.
The following documents are incorporated into this Form 10-K by reference:
PRIMEDIA's notice of annual meeting and proxy statement for its 1999 annual
meeting of shareholders into Part III hereof.
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TABLE OF ADDITIONAL REGISTRANTS
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STATE OR OTHER PRIMARY STANDARD I.R.S.
EXACT NAME OF JURISDICTION OF INDUSTRIAL EMPLOYER
REGISTRANT AS SPECIFIED INCORPORATION OR CLASSIFICATION IDENTIFICATION
IN ITS CHARTER ORGANIZATION CODE NUMBER NUMBER
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American Guidance Service, Inc. ............................. Minnesota 2731 41-0802162
AGS International Sales, Inc. ............................... Minnesota 2731 41-0982023
American Heat Video Productions, Inc. ....................... Missouri 8299 43-1418177
The Apartment Guide of Nashville, Inc........................ Tennessee 2741 62-1224076
Argus Publishers Corporation................................. California 2721 95-2219151
Bacon's Information, Inc. ................................... Delaware 7389 36-4011543
Bankers Consulting Company................................... Missouri 8299 43-1771756
Bowhunter Magazine, Inc. .................................... Pennsylvania 2721 23-2667502
Cambridge Research Group, Ltd. .............................. West Virginia 7812 55-0613105
Canoe & Kayak, Inc. ......................................... Delaware 2721 41-1895510
Cardinal Business Media, Inc. ............................... Delaware 2721 23-2695564
Cardinal Business Media Holdings, Inc. ...................... Delaware 2721 23-2695951
Channel One Communications Corp. ............................ Delaware 4833 13-3783278
Climbing, Inc. .............................................. Delaware 2721 41-1885204
CommCorp. LLC................................................ California 2721 95-4653392
Cover Concepts Marketing Services, LLC....................... Delaware 7319 04-3370389
Cowles Business Media, Inc. ................................. Connecticut 2721 06-0935977
Cowles History Group, Inc. .................................. Virginia 2721 54-1606227
CSK Publishing Company Incorporated.......................... Delaware 2721 13-3023395
Cumberland Publishing, Inc. ................................. Maryland 2721 52-1758147
The Electronics Source Book, Inc. ........................... Delaware 2741 33-0645610
Excellence in Training Corporation........................... Delaware 8299 75-2532442
Films for the Humanities & Sciences, Inc. ................... Delaware 7812 13-1932571
Funk & Wagnalls Yearbook Corp. .............................. Delaware 2731 13-3603787
Gareth Stevens, Inc. ........................................ Wisconsin 2731 39-1462742
GO LO Entertainment, Inc. ................................... California 7389 95-4307031
Guinn Communications, Inc. .................................. Tennessee 2741 62-1486552
Haas Publishing Companies, Inc. ............................. Delaware 2741 58-1858150
Health & Sciences Network, Inc. ............................. California 8299 95-3654568
Horse & Rider, Inc. ......................................... California 2721 33-0480523
Intermodal Publishing Company, Ltd. ......................... New York 2721 13-2633752
IDTN Leasing Corporation..................................... Delaware 8299 13-3414420
Industrial Training Systems Corporation...................... New Jersey 8299 22-2070040
IntelliChoice, Inc. ......................................... California 2721 77-0168905
Kitplanes Acquisition Company................................ Delaware 2721 95-4617433
Law Enforcement Television Network, Inc. .................... Texas 8299 75-2257839
Lifetime Learning Systems, Inc. ............................. Delaware 2741 13-3783276
Little Rock Apartment Guide, Inc. ........................... Arkansas 2741 74-2298918
Lockert Jackson & Associates, Inc. .......................... Washington 8299 91-1395126
Low Rider Publishing Group, Inc.............................. California 2721 95-4307029
Maddux Publishing, Inc. ..................................... Florida 2741 59-2338050
McMullen Argus Publishing, Inc. ............................. California 2721 95-2663753
Memphis Apartment Guide, Inc. ............................... Tennessee 2741 62-0964956
Miramar Communications Inc. ................................. California 2721 95-2845391
Pictorial, Inc. ............................................. Indiana 2731 35-1616640
Plaza Communications, Inc. .................................. California 2721 95-3053189
PRIMEDIA Enthusiast Publications, Inc. ...................... Pennsylvania 2721 23-1577768
PRIMEDIA Holdings III Inc. .................................. Delaware 6719 13-3617238
PRIMEDIA Information Inc. ................................... Delaware 2721 13-3555670
PRIMEDIA Intertec Corporation ............................... Delaware 2721 48-1071277
PRIMEDIA Magazines Inc. ..................................... Delaware 2721 13-3616344
PRIMEDIA Magazines Finance Inc. ............................. Delaware 2721 13-3616343
PRIMEDIA Reference Inc. ..................................... Delaware 2731 13-3603781
PRIMEDIA Special Interest Publications Inc. ................. Delaware 2721 52-1654079
PRIMEDIA Ventures, Inc. ..................................... Delaware 6799 13-4019919
PRIMEDIA Workplace Learning, Inc. ........................... Texas 8299 75-2110878
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STATE OR OTHER PRIMARY STANDARD I.R.S.
EXACT NAME OF JURISDICTION OF INDUSTRIAL EMPLOYER
REGISTRANT AS SPECIFIED INCORPORATION OR CLASSIFICATION IDENTIFICATION
IN ITS CHARTER ORGANIZATION CODE NUMBER NUMBER
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QWIZ, Inc. .................................................. Delaware 7372 58-2302364
R.E.R. Publishing Corporation................................ New York 2721 13-3090623
RetailVision, Inc. .......................................... Delaware 2721 03-0339898
Simba Information ........................................... Connecticut 2721 06-1281600
Southwest Art, Inc. ......................................... Delaware 2721 76-0233343
Symbol of Excellence Publishers, Inc. ....................... Alabama 2721 63-0845698
Tel-A-Train, Inc............................................. Delaware 8299 75-2532446
The Virtual Flyshop, Inc. ................................... Colorado 2721 84-1318377
TI-IN Acquisition Corporation................................ Texas 8299 75-2478738
TSECRP, Inc. ................................................ California 2721 95-4259640
Vegetarian Times, Inc. ...................................... Illinois 2721 36-3636836
Weekly Reader Corporation.................................... Delaware 2721 13-3603780
Westcott Communications Michigan, Inc. ...................... Michigan 8299 38-2955660
Westcott ECI, Inc. .......................................... Texas 8299 75-2475419
Western Empire Publications, Inc. ........................... Delaware 2721 95-3363328
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The address, including zip code, and telephone number, including area code,
of each additional registrant's principal executive office is 745 Fifth Avenue,
New York, New York 10151 (212-745-0100).
The financial statements of the guarantor subsidiaries are omitted because
PRIMEDIA believes the separate financial statements would not be material to the
shareholders and potential investors. The total assets, revenues, income or
equity of non-guarantor subsidiaries, both individually and on a combined basis
are inconsequential in relation to the total assets, revenues, income or equity
of PRIMEDIA. All of the equity securities of each of the additional registrants
set forth in the table above are owned, either directly or indirectly, by
PRIMEDIA, and there has been no default during the preceding 36 calendar months
with respect to any indebtedness or material long-term leases of PRIMEDIA or any
of the additional registrants.
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PRIMEDIA INC.
ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 1998
CROSS REFERENCE SHEET FOR
PARTS I, II, III AND IV
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PART I
Item 1. Business...................................................................................... 1
Item 2. Properties.................................................................................... 8
Item 3. Legal Proceedings............................................................................. 8
Item 4. Submission of Matters to a Vote of Security Holders........................................... 8
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters......................... 9
Item 6. Selected Financial Data....................................................................... 10
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.................................... 24
Item 8. Financial Statements and Supplementary Data................................................... 25
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......... 62
PART III -- Omitted, except Item 10 as to Executive Officers is included as part of Part I
Item 1........................................................................................ 62
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............................... 62
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PART I
ITEM 1. BUSINESS.
GENERAL
PRIMEDIA Inc. (which together with its subsidiaries and its predecessors is
herein referred to as either "PRIMEDIA" or the "Company" unless the context
implies otherwise) is a targeted media company providing highly specialized
information in the consumer, business-to-business and education markets. In
1998, eighty-five percent of the Company's products held the number one or
number two positions in the niches in which they compete. Some examples by
segment include specialty magazines (specialty consumer: SEVENTEEN, SOAP OPERA
DIGEST, FLY FISHERMAN, and technical and trade: TELEPHONY and NATIONAL REAL
ESTATE INVESTOR); information (consumer: APARTMENT GUIDES, NEW HOME GUIDES,
business: WARD'S and BACON'S); and education (classroom: CHANNEL ONE NETWORK and
WEEKLY READER and workplace: Pictorial's APPOINTPAK software.
The Company has achieved substantial revenue growth through the development
of its brands, combined with its operating expertise and a successful
acquisition strategy. For the period starting in 1994 through 1998, sales have
grown at a compound annual rate of 13% to $1,573.6 million. Operating income in
1998 was $118.2 million compared to $10.2 million in 1994 (after charges for
amortization and depreciation of $219.0 million in 1998 and $136.9 million in
1994.)
GROWTH STRATEGY
PRIMEDIA's strategy is to address growing information needs in specific
niche markets. Its portfolio of leadership brands utilizes the "full media
arsenal" of print, live events, video and interactive, including the Internet,
to reach its customers in the most effective means possible. The Company also
adds ancillary and spin-off products to reach its customers.
Many of the Company's products, such as those provided by PRIMEDIA's
specialty consumer magazines, technical and trade magazines, CHANNEL ONE NEWS
and the apartment and new and resale homes guides provide advertisers with an
opportunity to directly reach niche market audiences. PRIMEDIA's products are a
vital sales channel into these markets. In 1998, 42% of PRIMEDIA's revenues were
related to such "lead generation" advertising. Only 9% of revenues were derived
from brand awareness advertising.
The Company has exploited the Internet to take advantage of the
opportunities that this new medium affords our targeted media properties. The
Company has 177 Internet sites which complement our product lines, and provide
sources of additional revenue from content delivery, advertising, subscriptions
and e-commerce.
Within each segment, we take advantage of these trends toward targeted
media. The Company's specialty magazines take advantage of trends in the
specialty consumer market where advertising growth has substantially outpaced
that of general interest magazine, broadcast television, radio and newspaper
advertising growth since 1989. The Company's consumer and business information
products are capitalizing on the trend towards targeted marketing and away from
general interest sources such as newspapers and the increased spending by
businesses for information. In classroom and workplace learning, PRIMEDIA is
building on rising elementary and secondary school enrollments, increased
spending on supplementary educational materials and the rapid growth in
outsourced workplace education.
The Company seeks to maximize its operating performance by capitalizing on
its leading position in each of these growing markets. Each of PRIMEDIA's
businesses has opportunities for expansion through both internal organic
development and product-line acquisitions. Organic growth results from both
market expansion and product innovation in conventional and new media formats.
Growth through product-line acquisition is made possible by the constant
availability of leading brands for sale in niche markets related to PRIMEDIA's
business. To support this aspect of growth, the Company has successfully
developed a selective and disciplined process of identifying, evaluating and
integrating acquired companies. A significant source of funds for these
product-line acquisitions is the cash generated by the Company's operations,
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which by their nature have high operating margins and low capital requirements.
Net capital expenditures were approximately $55.2 million, $31.1 million and
$28.8 million, or 3.5%, 2.1% and 2.1% of sales, in 1998, 1997 and 1996,
respectively. Additionally, cash available for reinvestment is amplified because
the Company pays virtually no income taxes. This results largely from having
structured most of its acquisitions to create tax-deductible amortization of
intangible assets which has generated net operating losses.
Refer to Item 7 for a description of segment sales and income.
SPECIALTY MAGAZINES
The specialty magazines segment consists of specialty consumer magazines and
technical and trade magazines. In 1998, 63% of its 100 specialty consumer
magazines and nearly 50% of its 79 technical and trade magazines, were number
one in their respective markets. According to THE WALL STREET JOURNAL, PRIMEDIA
is the largest magazine publisher in the United States of America by ad page
count, and PRIMEDIA publishes more magazines than any other Company.
SPECIALTY CONSUMER MAGAZINES
The Company is the largest specialty consumer magazine company in the U.S.,
with 100 titles including SEVENTEEN, SOAP OPERA DIGEST, FLY FISHERMAN, AMERICAN
BABY, HORTICULTURE, POWER & MOTORYACHT and leadership positions in such
categories as automotive, crafts, teens, outdoor recreation, city magazines and
bridal. The principal sources for specialty consumer magazines' sales are
endemic advertising, circulation and ancillary revenues. In the year ended
December 31, 1998, approximately 54% of the sales were from advertising, 28%
from circulation and 18% were from ancillary sources.
Readers value specialty consumer magazines for their targeted editorial
content and also rely on them as catalogs of products in the relevant topic
areas. This catalog aspect makes the specialty consumer magazines important
media buys for advertisers. Advertising sales for the Company's specialty
consumer magazines are generated largely by in-house sales forces. The magazines
compete for advertising on the basis of circulation and the niche markets they
serve. Each of the Company's specialty consumer magazines faces competition in
its subject area from a variety of publishers and competes for readers on the
basis of quality and targeted editorial, which is provided by in-house and
free-lance writers.
The Company is the largest publisher of teen magazines. SEVENTEEN is the
leading young women's fashion and beauty magazine based on both circulation and
advertising pages, with fashion, boys, beauty, talent and lifestyle editorial
targeted to girls aged 12 to 24. SEVENTEEN'S monthly rate base is 2.35 million
and its total monthly readership is 14.2 million. Its principal competitor is
YM. SEVENTEEN competes for circulation based on the nature and quality of its
editorial. It offers several special issues and a frequently visited Internet
site, SEVENTEEN.COM. The 1998 acquisition of nine titles including TEEN BEAT and
BOP formed the new Youth Entertainment Group and gave the Company access to the
10 to 13 age market.
In the soap opera publication area, in 1998, PRIMEDIA commanded a 75% market
share through its SOAP OPERA DIGEST and SOAP OPERA WEEKLY. SOAP OPERA DIGEST has
been a weekly publication since 1997 with a 1998 average circulation of 1.1
million per week. SOAP OPERA WEEKLY had an average 1998 circulation of 406,000.
Both publications are distributed mainly at supermarket, convenience store and
drugstore checkout counters with SOAP OPERA DIGEST also having a significant
subscriber base. In early 1999, two of the Company's main competitive soap opera
magazines closed publication. SOAP OPERA DIGEST and SOAP OPERA WEEKLY compete
for circulation on the basis of editorial content and quality against such
publications as SOAP OPERA UPDATE and SOAPS IN DEPTH, both of which have
substantially lower circulation.
The Company publishes 31 automotive enthusiast magazines, including
AUTOMOBILE, catering to the high-end automotive market, as well as such highly
specialized titles as LOWRIDER, the largest selling retail magazine in the
automotive category, TRUCKIN', the leading truck customization publication,
MUSCLE MUSTANG & FAST FORDS, VETTE and SPORT COMPACT CAR.
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In the baby care category, the Company publishes AMERICAN BABY, a monthly
publication distributed to approximately 1.5 million expectant and new parents,
HEALTHY KIDS, a bi-monthly publication for parents and children from birth to
age ten, plus a series of ancillary products such as cable television, sampling
and couponing programs. The unit's principal competitor is BABY TALK.
The Company is a leading provider of information for brides through MODERN
BRIDE plus 13 regional bridal magazines, and owns two city magazines, CHICAGO
and NEW YORK.
In the outdoor recreation market, the Company is the leading publisher of
magazines for fishing enthusiasts with such titles as FLY FISHERMAN and
IN-FISHERMAN, and for equine enthusiasts with such titles as EQUUS and PRACTICAL
HORSEMAN. Other leading outdoor recreation titles include SAIL, POWER &
MOTORYACHT and SURFING.
The Company has a mix of sales between retail (largely newsstand and other
retail outlets) and subscription with a mix more heavily weighted toward retail.
The 1998 acquisition of Cowles Enthusiast Media balanced the mix between retail
and subscription.
The Company introduced 33 new products in 1998, including special issues,
ancillary products and Internet sites.
TECHNICAL AND TRADE MAGAZINES
The company is the third largest U.S. publisher of technical and trade
magazines with 79 titles that provide vital information to professionals in such
fields as telecommunications (TELEPHONY), agriculture (SOYBEAN DIGEST),
transportation (FLEET OWNER), real estate (NATIONAL REAL ESTATE INVESTOR),
professional services (REGISTERED REPRESENTATIVE), and marketing (CATALOG AGE).
In 1998, 81% of these titles ranked number one or two in the fields they serve
based on advertising pages. In 1998, 85% of revenues was derived from
advertising as these magazines are distributed on a controlled circulation
basis, meaning that they are distributed free of charge to readers.
Because each of the technical and trade magazines is distributed almost
exclusively to purchasing decision makers in a targeted industry group, product
and service providers are able to focus their advertising. The advertising rates
charged are based on the size of the circulation within the target group as well
as competitive factors. These magazines compete for advertising on the basis of
advertising rates, circulation, reach, editorial content and readership
commitment. Advertising sales are made by in-house sales forces, supplemented by
independent representatives in selected regions and overseas. Classified
advertising is sold through telemarketing. Magazine editorial is provided by
in-house writers and freelance authors, well-known in their specific industry
niches.
In addition to its technical and trade magazines, the Company sponsors
seminars and trade shows, serving the advertisers and readers of the
corresponding publications, including LIGHTING DIMENSIONS INTERNATIONAL,
INTERNATIONAL WIRELESS COMMUNICATIONS EXPO and THE SATELLITE COMMUNICATIONS EXPO
& CONFERENCE.
In 1998, the Company increased its spending on Internet site development and
expects to be a leader in developing vertical online communities enabling its
readers to gain additional information and services and advertisers to reach our
targeted customers. These vertical online communities will be an additional
source of revenue. Some sites include TELEPHONY'S INTERNETTELEPHONY.COM, the
agriculture group's HOMEFARM.COM and the publishing group's MEDIACENTRAL.COM.
INFORMATION
The Company produces over 200 highly targeted consumer and business
information products, most of which hold dominant positions in their niche
markets. The Company's premier consumer information products include Apartment
Guides, such business directories include Bacon's for public relations
professionals and INTELLICHOICE, which is largely Internet delivered, for
automotive buyers.
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The growth in advertising supported consumer information (e.g.--targeted
free publications, such as the Apartment Guides) is being driven by the desire
of advertisers to reach their customers as cost effectively as possible. From
1995 to 2005, advertising revenue generated from free shopping guides is
expected to nearly double. Consequently, Apartment Guides and PRIMEDIA's other
targeted free publications should continue to provide significant opportunities
for growth through new ventures and acquisitions. Business directories
capitalize on the growth in directory spending which is expected to increase 75%
between 1996 and 2001.
CONSUMER INFORMATION
The Company is the largest publisher of rental apartment guides in the U.S.
with 70 local versions of its apartment guides, most of which are distributed
monthly and provide informational listings about featured apartment communities.
Advertising community managers who need to fill vacant apartments and who
represent 100% of the apartment guide sales pay for these listings. The Company
is the dominant information provider in apartment guides and continues to gain
in market share from newspaper classifieds and competitors due to the cost
effectiveness of its products as measured by cost per lease to the advertiser.
The Company's only national competitor, FOR RENT, is present in 42 of the
Company's markets. In those markets, on average, the Company captured 53% of
total 1998 advertising pages, with FOR RENT capturing 47% of such pages.
In 1998, the Company's presence on the Internet through APARTMENTGUIDE.COM
was expanded through agreements with Excite, Netscape, Webcrawler and Yahoo!,
and the site, which carries all advertising included in the print products,
became the largest apartment rental site on the Internet.
In 1998, the Company became a leader in new home guides through the
acquisition of 12 guides in seven major markets including northern California,
southern California, Denver, Phoenix, Dallas-Fort Worth, Tampa Bay and Columbus.
These guides were added to the existing new home guides in the Philadelphia, New
Jersey, Raleigh, Atlanta and Austin markets.
A strategic advantage is the Company's DistribuTech Division which is the
nation's largest distributor of free publications, including its own consumer
directories and over 1,300 other titles. In 1998, it managed the distribution of
HPC Publications' and other publishers' free publications to over 21,000
grocery, convenience, video and drug stores in 64 metropolitan areas, as well as
universities, military bases and major employers. The majority of these
locations are operated under exclusive distribution agreements. The Company's
consumer information guides typically are displayed in free-standing,
multi-pocket racks. DistribuTech generates substantial revenues by leasing
additional distribution rack pockets to other publications that it also
distributes. DistribuTech competes on the basis of its prime retail locations
for its rack program.
BUSINESS INFORMATION
The Company, with over 100 products, is the leading publisher of directories
and databases addressing the specialized information needs of professionals in
such areas as government information technology procurement (FEDERAL SOURCES,
INC.), public relations (BACON'S INFORMATION), performing arts (MUSICAL
AMERICA), transportation (WARD'S and INTELLICHOICE), construction (MACHINERY
INFORMATION DIVISION) and media (SIMBA). These databases are increasingly being
made available via CD-ROM or the Internet in addition to print. This allows for
greater functionality to the user (updatability of the product as a data
management system), and opportunity for product and brand extension. Databases
are compiled by an in-house editorial staff, marketed directly to subscribers
and advertisers primarily by an in-house staff and distributed predominantly on
a paid subscription basis.
The Company also publishes periodicals that provide in-depth information on
selected markets. WARD'S AUTOMOTIVE REPORTS is recognized as the authoritative
source for industry-wide statistics on automotive production and sales. In
addition, the Company publishes, in print and electronic formats, used vehicle
valuation information. Other databases include THE ELECTRONICS SOURCE BOOK and
AC-U-KWIK.
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Most of the business directories published by the Company have no
competition. Where competition does exist, in most cases, the Company's
publication is dominant. Competition is on the basis of price and quality of
data. Management believes that the comprehensiveness and quality of its data and
the specialized focus of its publications have prevented others from launching
competing publications or competing effectively.
In 1998, the Company acquired Federal Sources, Inc. (FSI). FSI is the
leading provider of information technology-related databases to companies
competing for public sector information technology contracts. Its products are
delivered via the Internet and FSI is also expanding its presence at the state
and municipality level.
EDUCATION
The Company is a leading provider of supplemental educational materials and
programming in the United States, targeting both classroom and workplace
learning. PRIMEDIA's best-known brands in classroom learning include Channel One
and WEEKLY READER, and in workplace learning, PRIMEDIA Workplace Learning.
Classroom learning takes advantage of the growth in spending on supplementary
educational materials and the projected increases in elementary and secondary
school enrollments over the next decade (in particular, school enrollments are
expected to rise 4% between 1997 and 2007). Workplace learning focuses on the
$14 billion outsourced training market which is expected to rise 121% between
1995 and 2005.
CLASSROOM LEARNING
The Company is one of the largest supplemental education companies in the
U.S., with such properties as CHANNEL ONE NETWORK, WEEKLY READER, Films for the
Humanities and Sciences ("Films") and American Guidance Service.
Channel One's Network news program, CHANNEL ONE NEWS, is the only daily news
program targeted to secondary school students. CHANNEL ONE NEWS broadcasts every
school day via satellite to over eight million students and 350,000 educators in
approximately 12,000 secondary schools in the United States, reaching more
students than any other electronically delivered educational product. CHANNEL
ONE NEWS has ten times the teenage audience of the evening newscasts of ABC,
CBS, NBC and the cable networks combined.
Schools sign up for the CHANNEL ONE NETWORK service under a three-year
contract pursuant to which they agree to show CHANNEL ONE NEWS, in its entirety,
on at least 90% of all school days. CHANNEL ONE NETWORK provides to schools a
turnkey system of video cassette recorders and networked televisions. These
products and services are provided to schools at no charge; sales are generated
by two minutes of advertising shown during the 12-minute daily newscast. In
addition, CHANNEL ONE CONNECTION provides 90 minutes of educational programming
per school day at no charge. Substantially all school contracts have come up for
renewal at least once and approximately 99% have been renewed in each renewal
cycle.
CHANNEL ONE NETWORK has a library of over 1,600 broadcasts including
approximately 225 single subject series, 60 of which have been released as
educational videos. The Company's CHANNELONE.COM online network and its
TEACH1.COM provide supplemental information to students and educators.
CHANNEL ONE NEWS has no direct competition in the schools but does compete
for advertising dollars with other media aimed at teenagers. In the fourth
quarter of 1998, CHANNEL ONE NEWS achieved "sold-out" advertising status for the
first time. The Company's primary competitive advantage is its total audience of
over eight million teenagers each school day.
WEEKLY READER is the best-known and highest-circulation student newspaper in
the United States, with over 6.3 million subscriptions for elementary school
students alone. WEEKLY READER and its related products are sold in approximately
65% of all elementary schools and 55% of all secondary schools, and for the
1997-1998 school year had a 52% share of the elementary school market and a 37%
share of the secondary school market.
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For the secondary school market, WEEKLY READER publishes eight other
periodicals: READ MAGAZINE, WRITING, CURRENT EVENTS, CURRENT HEALTH I AND II,
CAREER WORLD and KNOW YOUR WORLD EXTRA. The Company's main competitors in these
markets are Scholastic Corporation and Time Warner, Inc. WEEKLY READER generally
competes on the basis of editorial quality, content and value.
Films is the exclusive distributor of approximately 6,500 educational
videos, videodiscs, CD-ROMs and related products that are sold primarily by
direct mail to teachers, instructors and librarians serving primarily grades 8
to 12 and college markets. Films is the largest distributor of such products to
colleges and high schools and competes on the basis of quality and breadth of
the subject matter. In 1998, it acquired Cambridge Educational adding an
additional 4,700 videos and CD-ROMs.
American Guidance Service, acquired in 1998, is the largest provider of
individualized tests and assessments for students with special needs. The unit
is taking advantage of the growing focus by school districts on assessment and
curricular needs of such students.
WORKPLACE LEARNING
PRIMEDIA Workplace Learning is a leading provider of high quality
accreditation-oriented vocational networks, largely delivered via satellite, and
associated products such as video programming, print and computer based
products. It is a leader in such markets as automotive (AUTOMOTIVE SATELLITE
TELEVISION NETWORK), industrial (INDUSTRIAL TRAINING SYSTEMS), healthcare
(HEALTH AND SCIENCES TELEVISION NETWORK) government (LAW ENFORCEMENT TRAINING
NETWORK) and banking (BANKERS TRAINING AND CONSULTING COMPANY). Its Pictorial
unit is the largest provider of specialized training and certification products
for the insurance industry and QWIZ is the leading provider of computer-based
office skills testing.
During 1998 and the first quarter of 1999, the Company further refined its
workplace learning strategy, and closed its executive education units (EXEN and
IDTN) and four small, start-up networks (see Recent Developments).
PRODUCTION AND FULFILLMENT
Virtually all of the Company's print products are printed and bound by
independent printers. The Company believes that because of its buying power,
outside printing services can be purchased at good prices. With the exception of
video products of PRIMEDIA Workplace Learning, Channel One and Films, and most
Internet sites, all other production of electronic and video products is
performed by third party vendors.
The principal raw material used in the Company's products is paper. The
Company has paper supply contracts and, in almost all cases, supplies paper used
by its outside printers. The Company believes that even if at some point in the
future paper is in limited supply, the existing arrangements providing for the
supply of paper will be adequate. The Company was able to meet its paper
requirements during 1998. In 1998, approximately 47% and 20% of the Company's
paper purchases were supplied through Lindenmeyr Central and Graphic
Communications, respectively. The Company's relationship with these suppliers is
good and is expected to continue to be good for the foreseeable future.
Many of the Company's products are packaged and delivered to the U.S. Postal
Service directly by the printer. Other products are sent from warehouses and
other facilities operated by the Company.
COMPANY ORGANIZATION
PRIMEDIA was incorporated on November 22, 1991 in the State of Delaware. The
principal executive office of the Company is located at 745 Fifth Avenue, New
York, New York 10151, telephone number (212) 745-0100.
6
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of PRIMEDIA:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
William F. Reilly.................................... 60 Chairman of the Board and Chief Executive Officer and
Director
Charles G. McCurdy................................... 43 President and Director
Beverly C. Chell..................................... 56 Vice Chairman, General Counsel, Secretary and
Director
Curtis A. Thompson................................... 47 Vice President
Richard J. LeBrasseur................................ 56 Vice President
Michaelanne C. Discepolo............................. 46 Vice President, Human Resources
Douglas B. Smith..................................... 38 Vice President and Treasurer
Robert J. Sforzo..................................... 51 Vice President and Controller
</TABLE>
Mr. Reilly is Chairman of the Board, Chief Executive Officer and a Director
of PRIMEDIA. Mr. Reilly is also a director of FMC Corporation.
Mr. McCurdy is President and a Director of PRIMEDIA and was Treasurer from
1991 to August 1993.
Ms. Chell is Vice Chairman, General Counsel, Secretary and a Director of
PRIMEDIA.
Mr. Thompson had been Vice President and Controller of PRIMEDIA since
November 1991. In October 1998, he was named to the position of President and
Chief Executive Officer of the PRIMEDIA Information Group while retaining the
title of Vice President.
Mr. LeBrasseur has been a Vice President of PRIMEDIA since March 1998,
President of the Supplemental Education Group since October 1997 and President
and Chief Executive Officer of Weekly Reader Corporation since April 1993.
Ms. Discepolo is Vice President, Human Resources of PRIMEDIA.
Mr. Smith has been a Vice President of PRIMEDIA since May 1997 and Treasurer
of PRIMEDIA since August 1993. Prior to that time he was at The Bank of New York
starting in 1982 holding various positions. He held the position of Senior Vice
President prior to joining PRIMEDIA.
Mr. Sforzo has been Vice President and Controller of PRIMEDIA since October
1998. Prior to that time, he was the Vice President of Internal Audit starting
in June 1997. From September 1994 to June 1997 he was the Executive Vice
President and Chief Financial Officer of The Katharine Gibbs Schools, Inc. Prior
to that time, he was the Corporate Controller at The Olsten Corporation.
The business address of the above executive officers of the Company is the
address of the principal executive office of PRIMEDIA.
EMPLOYEES
As of December 31, 1998, the Company had approximately 7,600 full- and
part-time employees, of whom none were union members. Management considers its
relations with its employees to be good.
7
<PAGE>
ITEM 2. PROPERTIES.
The Company's principal leased properties used by the specialty magazines
segment are located in California, Colorado, Connecticut, Georgia, Illinois,
Indiana, Kansas, Massachusetts, Michigan, Minnesota, Mississippi, New York,
Pennsylvania, Texas and Virginia; used by the information segment are located in
Arizona, California, Colorado, Georgia, Illinois, Maryland, New Jersey, New York
and Virginia; and used by the education segment are located in California,
Connecticut, Georgia, Indiana, Minnesota, New Jersey, New York, Ohio, Tennessee,
Texas, West Virginia and Wisconsin. Property is owned by the Company and used in
the specialty magazines segment in California, Illinois, Indiana, Minnesota and
Mississippi, in the information segment in New Jersey and Georgia and in the
education segment in Minnesota and West Virginia. The Company's only production
facilities are small printing operations for Films, broadcast production
facilities for PRIMEDIA Workplace Learning and Channel One and video duplicating
facilities for PRIMEDIA Workplace Learning and Films. The Company's distribution
properties and their capacity is adequate to satisfy the Company's needs.
ITEM 3. LEGAL PROCEEDINGS.
There are no material pending legal proceedings and no material legal
proceedings including any that were terminated in the fourth quarter of 1998, to
which the Company is or was a party other than ordinary routine litigation
incidental to the business of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during the
fourth quarter of 1998.
8
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
PRIMEDIA Common Stock is listed on the New York Stock Exchange. As of
February 28, 1999, there were 268 holders of record of PRIMEDIA Common Stock.
The Company has not and has no present intention to pay dividends on its Common
Stock. High and low sales prices for 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 SALES PRICE
--------------------
QUARTER ENDED HIGH LOW
- ------------------------------------------------------------------- --------- ---------
<S> <C> <C>
March 31........................................................... $14 7/8 $11 13/16
June 30............................................................ $15 $12 13/16
September 30....................................................... $13 13/16 $ 9 1/4
December 31........................................................ $11 15/16 $ 9 5/8
<CAPTION>
1997 SALES PRICE
--------------------
QUARTER ENDED HIGH LOW
- ------------------------------------------------------------------- --------- ---------
<S> <C> <C>
March 31........................................................... $12 3/4 $ 9 1/2
June 30............................................................ $13 1/8 $10
September 30....................................................... $12 3/4 $10 3/4
December 31........................................................ $13 7/16 $11 5/8
</TABLE>
9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The selected consolidated financial data were derived from the consolidated
financial statements of the Company which are included elsewhere in this Annual
Report. The data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the related notes thereto included herein.
PRIMEDIA INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Sales, net....................................... $1,573,573 $ 1,487,595 $ 1,374,449 $ 1,046,329 $ 964,648
Depreciation and amortization.................... 218,969 184,165 190,702 192,276 136,866
Other (income) charges(1)........................ (7,216) 138,640 -- 50,114 15,025
Operating income (loss)(2)....................... 118,157 (20,793) 85,901 (26,275) 10,203
Interest expense................................. 144,442 136,625 124,601 105,837 78,351
Income tax benefit(3)............................ -- 1,685 53,300 59,600 42,100
Income (loss) before extraordinary charge........ (37,736) (157,439) 17,597 (75,435) (29,529)
Extraordinary charge-extinguishment of debt(4)... -- (15,401) (9,553) -- (11,874)
Net income (loss)(2)............................. (37,736) (172,840) 8,044 (75,435) (41,403)
Preferred stock dividends(5)..................... 63,285 65,073 43,526 28,978 25,959
Loss applicable to common shareholders........... (101,021) (237,913) (35,482) (104,413) (67,362)
Basic and diluted loss applicable to common
shareholders per common share(2)(6):
Loss before extraordinary charge............... $ (.71) $ (1.72) $ (.20) $ (.92) $ (.55)
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Net loss....................................... $ (.71) $ (1.84) $ (.27) $ (.92) $ (.67)
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
Basic and diluted common shares outstanding...... 142,529,024 129,304,900 128,781,518 113,218,711 101,171,427
OTHER DATA:
EBITDA(7)........................................ $ 329,910 $ 302,012 $ 276,603 $ 216,115 $ 162,094
Capital expenditures, net........................ 55,238 31,108 28,790 23,414 14,184
Net cash provided by operating activities........ 140,804 125,360 150,192 64,062 64,890
Net cash used in investing activities............ (609,621) (185,725) (721,709) (318,712) (442,126)
Net cash provided by financing activities........ 470,377 46,688 580,946 263,644 383,924
<CAPTION>
AT DECEMBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................ $ 24,538 $ 22,978 $ 36,655 $ 27,226 $ 18,232
Working capital (deficiency)(8).................. (234,045) (146,245) (44,705) (56,560) 1,338
Intangible assets, gross......................... 3,171,598 2,508,650 2,649,805 1,996,564 1,656,590
Less: accumulated amortization............... 914,854 736,597 896,824 762,393 602,542
---------- ----------- ----------- ----------- -----------
Intangible assets, net........................... 2,256,744 1,772,053 1,752,981 1,234,171 1,054,048
Total assets..................................... 3,041,074 2,485,990 2,552,215 1,881,416 1,589,692
Long-term debt(9)................................ 1,928,892 1,656,541 1,565,686 1,134,916 1,034,689
Exchangeable preferred stock..................... 557,841 470,280 442,729 231,606 216,229
Common stock subject to redemption............... 2,964 4,376 5,957 28,022 16,552
Shareholders' equity (deficiency):
Common stock................................. 1,470 1,298 1,283 1,259 1,053
Additional paid-in capital................... 979,720 780,191 772,642 748,194 572,940
Accumulated deficit.......................... (1,030,032) (929,011) (691,098) (655,616) (551,203)
Accumulated other comprehensive loss......... (1,720) (1,543) (1,270) (1,275) (1,324)
Common stock in treasury, at cost............ (33,141) (13,158) -- -- --
---------- ----------- ----------- ----------- -----------
Total shareholders' equity (deficiency).......... $ (83,703) $ (162,223) $ 81,557 $ 92,562 $ 21,466
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
</TABLE>
(See notes on the following page)
10
<PAGE>
NOTES TO SELECTED FINANCIAL DATA
(1) Represents (gain) loss on the sales of businesses, net and other in 1998,
1997, 1995 and 1994 and provision for restructuring and other costs in 1995.
(2) The adoption of a change in method of accounting for internal use software
costs effective January 1, 1998, resulted in an increase in operating
income, an equal decrease in net loss and a decrease in basic and diluted
loss per common share of approximately $12,450 ($.09 per share) for the year
ended December 31, 1998.
(3) At December 31, 1998 and 1997, the Company's management determined that no
adjustment to net deferred income tax assets was required. In prior years,
management determined that a portion of the net deferred income tax assets
would likely be realized and accordingly, the Company recorded an income tax
benefit of $53,300 in 1996, $59,600 in 1995 and $42,100 in 1994. For the
year ended December 31, 1997, the Company recorded an income tax carryback
claim of $1,685. At December 31, 1998, the Company had net operating loss
carryforwards ("NOLs") and capital loss carryforwards of approximately
$901,400 which will be available to reduce future taxable income. In
addition, management estimates that approximately $1,130,000 of unamortized
goodwill and other intangible assets will be available as deductions from
any future taxable income.
(4) Represents the write-off of unamortized deferred financing costs. For the
years ended December 31, 1997 and 1996, amount also includes the premiums
paid on the redemptions of the 10 5/8% Senior Notes.
(5) Includes the premiums paid on the redemptions of the $11.625 Series B
Exchangeable Preferred Stock ("Series B Preferred Stock") and the $2.875
Senior Exchangeable Preferred Stock in 1998 and 1997, respectively. In 1997,
the Company recorded a preferred stock dividend accrual in the amount of
$9,517. Of the total dividend accrual recorded in 1997, the amounts that
relate to prior periods were not material.
(6) Basic and diluted loss per common share, as well as the basic and diluted
common shares outstanding, were computed as described in Note 15 of the
notes to the audited consolidated financial statements included elsewhere in
this Annual Report.
(7) Earnings before interest, taxes, depreciation, amortization and provision
for one-time charges ("EBITDA") is not intended to represent cash flow from
operations and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to cash
flows as a measure of liquidity. The Company believes EBITDA is a standard
measure commonly reported and widely used by analysts, investors and other
interested parties in the media industry. Accordingly, this information has
been disclosed herein to permit a more complete comparative analysis of the
Company's operating performance relative to other companies in its industry.
This measure may not be comparable to similarly titled measures used by
other companies.
(8) Includes current maturities of long-term debt and net assets held for sale,
where applicable.
(9) Excludes current maturities of long-term debt.
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS).
INTRODUCTION
The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Company's
historical consolidated financial statements and notes thereto included herein.
The Company organizes its businesses into three segments: specialty magazines,
information and education.
Management believes a meaningful comparison of the results of operations for
1998, 1997 and 1996 is obtained by using segment information as well as results
from continuing businesses ("Continuing Businesses") which exclude the results
of the non-core businesses ("Non-Core Businesses"), which are either sold
businesses or product discontinuances. In 1998, the Company reclassified certain
product lines as Non-Core Businesses and has restated prior periods accordingly.
The Non-Core Businesses include: (i) Krames Communications Incorporated
("Krames"), The Katharine Gibbs Schools, Inc. ("Katharine Gibbs"), NEW WOMAN,
Intertec Mailing Services, Newbridge Communications, Inc. (excluding Films for
the Humanities and Sciences), STAGEBILL, Nelson Information Inc. ("Nelson"), THE
DAILY RACING FORM and certain enthusiast titles which have been divested, and
(ii) the Funk and Wagnalls' products and certain enthusiast titles which are
being discontinued. Management believes that this presentation is the most
useful way to analyze the historical trends of its businesses.
In 1998, the Company reclassified PRIMEDIA Reference from the information
segment to the education segment and has restated prior periods accordingly. The
Company's management believes that the education segment is more reflective of
the focus of the PRIMEDIA Reference products.
SELECTED FINANCIAL DATA
PRIMEDIA is a targeted media company, focused on highly specialized niches
of the specialty magazine, information and education markets.
SPECIALTY MAGAZINES (60.6% of sales from Continuing Businesses, 76.5% of
operating income from Continuing Businesses before corporate overhead and 53.2%
of EBITDA from Continuing Businesses before corporate overhead): Includes 100
specialty consumer magazines such as SEVENTEEN, SOAP OPERA DIGEST, NEW YORK,
CHICAGO, AMERICAN BABY and FLY FISHERMAN plus 79 technical and trade magazines
including TELEPHONY, FLEET OWNER and REGISTERED REPRESENTATIVE.
This segment focuses on reaching enthusiasts, or those interested in the key
topics (hobbies, lifestyles, industry, etc.) that its customers demand, while
providing its advertisers with the most efficient mechanism for reaching the
targeted audience through print, the Internet and other allied products.
INFORMATION (17.8% of sales from Continuing Businesses, 35.9% of operating
income from Continuing Businesses before corporate overhead and 21.1% of EBITDA
from Continuing Businesses before corporate overhead): Includes over 100
consumer guides such as Apartment Guides, New Homes Guides, MICROTIMES, and over
100 specialized directories.
The information segment produces consumer and business information products
in a variety of formats, including print, CD-ROM and the Internet, for decision
makers in business, professional and special interest consumer markets.
EDUCATION (21.6% of sales from Continuing Businesses, (12.4)% of operating
income from Continuing Businesses before corporate overhead and 25.7% of EBITDA
from Continuing Businesses before corporate overhead): Includes classroom
learning products such as CHANNEL ONE NEWS, WEEKLY READER,
12
<PAGE>
Films for the Humanities and Sciences, American Guidance Service plus PRIMEDIA
Workplace Learning.
This segment targets grades Kindergarten through 12 with highly targeted
supplemental periodicals, video and network products to help teach students and
is also the leading provider of high-quality workplace learning programs in such
fields as healthcare, automotive, banking and insurance.
In 1998, PRIMEDIA completed its focusing program to accelerate growth by
divesting Non-Core Businesses. Proceeds from the sales of the Non-Core
Businesses in 1998 were $61,090 net of direct selling expenses. In 1998, the
Company recorded a gain on sales of businesses of $19,716, associated with the
sales of THE DAILY RACING FORM, Nelson and certain enthusiast titles. As a
result, the Company's focusing program generated total proceeds of $232,665 and
resulted in a cumulative net loss on sales of businesses and other of $118,924
for the two-year period ended December 31, 1998.
Additional selected financial data for the Company organized on the
foregoing basis are presented below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Sales, Net:
Continuing Businesses:
Specialty Magazines............................................... $ 927,501 $ 714,464 $ 629,001
Information....................................................... 272,819 228,145 190,014
Education......................................................... 330,790 269,246 209,366
------------ ------------ ------------
Subtotal........................................................ 1,531,110 1,211,855 1,028,381
Non-Core Businesses................................................... 42,463 275,740 346,068
------------ ------------ ------------
Total........................................................... $ 1,573,573 $ 1,487,595 $ 1,374,449
------------ ------------ ------------
------------ ------------ ------------
Depreciation, Amortization and Other Charges(1):
Continuing Businesses:
Specialty Magazines............................................... $ 94,152 $ 66,407 $ 71,195
Information....................................................... 30,339 33,971 25,940
Education......................................................... 105,542 71,702 54,589
Corporate......................................................... 1,284 99 779
------------ ------------ ------------
Subtotal........................................................ 231,317 172,179 152,503
Non-Core Businesses................................................... (19,564) 150,626 38,199
------------ ------------ ------------
Total........................................................... $ 211,753 $ 322,805 $ 190,702
------------ ------------ ------------
------------ ------------ ------------
Operating Income (Loss):
Continuing Businesses:
Specialty Magazines............................................... $ 92,952 $ 93,055 $ 65,598
Information....................................................... 43,630 29,671 31,413
Education......................................................... (15,142) 10,131 11,962
Corporate......................................................... (29,608) (25,644) (22,276)
------------ ------------ ------------
Subtotal........................................................ 91,832 107,213 86,697
Non-Core Businesses................................................... 26,325 (128,006) (796)
------------ ------------ ------------
Total........................................................... 118,157 (20,793) 85,901
</TABLE>
(CONTINUED ON FOLLOWING PAGE)
13
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1998 1997 1996
------------ ------------ ------------
Other Income (Expense):
<S> <C> <C> <C>
Interest expense...................................................... (144,442) (136,625) (124,601)
Amortization of deferred financing costs.............................. (3,046) (3,071) (3,662)
Other, net............................................................ (8,405) 1,365 6,659
------------ ------------ ------------
Loss before income tax benefit and extraordinary charge................. (37,736) (159,124) (35,703)
Income tax benefit...................................................... -- 1,685 53,300
------------ ------------ ------------
Income (loss) before extraordinary charge............................... (37,736) (157,439) 17,597
Extraordinary charge--extinguishment of debt............................ -- (15,401) (9,553)
------------ ------------ ------------
Net income (loss)....................................................... $ (37,736) $ (172,840) $ 8,044
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
- ------------------------
(1) Other charges include (gain) loss on the sales of businesses, net and other
in 1998 and 1997.
RESULTS OF OPERATIONS
1998 COMPARED TO 1997
CONSOLIDATED RESULTS:
Sales from Continuing Businesses increased 26.3% to $1,531,110 in 1998 from
$1,211,855 in 1997, due to sales increases in all segments. Sales as reported,
including the Non-Core Businesses, increased by 5.8% in 1998 as compared to the
same period in 1997.
Operating income from Continuing Businesses decreased 14.3% to $91,832
during 1998 from $107,213 during the same period in 1997. This decrease was
attributable to increased paper costs, management reorganization costs, the EXEN
shutdown provision, the satellite failure at Channel One as well as the reduced
margins at SOAP OPERA DIGEST due to the change from a bi-weekly to a weekly
publication. In addition, amortization expense increased due to the write-off of
EXEN's goodwill and other intangible assets as well as acquisitions. These
factors were partially offset by the sales increases during 1998. Operating
income (loss) as reported, including the Non-Core Businesses, increased to
$118,157 in 1998 from $(20,793) during the same period in 1997. The change is
primarily due to the $138,640 provision for loss on the sale of certain Non-Core
Businesses recorded during the third quarter of 1997.
Interest expense increased by 5.7% during 1998 as compared to 1997.
Additional interest from increased borrowings to fund acquisitions during the
period was partially mitigated by interest savings associated with the 1998
offerings (see Financing Arrangements).
Other expense, net in 1998 primarily represents a final legal settlement
relating to the acquisition of McMullen and Yee.
The Company's management determined that no adjustment to net deferred
income tax assets was required at December 31, 1998 and 1997.
SPECIALTY MAGAZINES:
Sales from Continuing Businesses increased 29.8% to $927,501 in 1998 from
$714,464 in 1997, due to advertising and circulation growth at various specialty
consumer and technical and trade magazines, particularly SEVENTEEN, as well as
approximately $185,700 from acquisitions.
Operating income from Continuing Businesses decreased $103 to $92,952 in
1998 from $93,055 in 1997, due to increased goodwill and other intangible
amortization expense resulting from acquisitions, the SOAP OPERA DIGEST
frequency change, weakness in the soap opera market, Cowles acquisition
integration
14
<PAGE>
costs, increased paper costs and management reorganization costs. These factors
were offset by the sales growth during the period.
Results from Continuing Businesses exclude NEW WOMAN, STAGEBILL, Intertec
Mailing Services and certain enthusiast titles recently sold or discontinued.
INFORMATION:
Sales from Continuing Businesses increased 19.6% to $272,819 in 1998 from
$228,145 in 1997. This increase is attributable to approximately $22,500 of
advertising and distribution revenue growth at the apartment and new homes
guides, as well as strong growth at Bacon's and acquisitions, offset by a
one-time telemarketing write-off at PRIMEDIA Information.
Operating income from Continuing Businesses increased 47.0% to $43,630 in
1998 from $29,671 in 1997, due largely to the strong sales growth.
Results from Continuing Businesses exclude THE DAILY RACING FORM and Nelson.
EDUCATION:
Sales from Continuing Businesses increased 22.9% to $330,790 in 1998 from
$269,246 in 1997 primarily attributable to approximately $63,300 from
acquisitions, offset by lower revenues at certain PRIMEDIA Workplace Learning
networks. Advertising revenue also declined at Channel One due to the failure of
PanAmSat's Galaxy IV satellite, which interrupted broadcasting for two weeks
during the second quarter.
Operating income (loss) from Continuing Businesses decreased to $(15,142) in
1998 from $10,131 in 1997, due to the EXEN shutdown provision, including the
write-off of goodwill and other intangible assets, the satellite failure at
Channel One and management reorganization costs.
Results from Continuing Businesses exclude Krames, Katharine Gibbs,
Newbridge (excluding Films for the Humanities and Sciences) and the Funk and
Wagnalls' products.
CORPORATE:
Corporate expenses increased to $29,608 in 1998 from $25,644 in 1997,
largely attributable to an increase in corporate headcount which is reflective
of the growth of the Company.
NON-CORE BUSINESSES:
Sales from Non-Core Businesses declined to $42,463 in 1998 from $275,740 in
1997 due to the divestitures of most of the Non-Core Businesses during 1997.
Operating income (loss) from Non-Core Businesses increased to $26,325 in
1998 from $(128,006) in 1997, largely attributable to losses on the sales of
certain Non-Core Businesses in 1997.
1997 COMPARED TO 1996
CONSOLIDATED RESULTS
Sales from Continuing Businesses increased 17.8% to $1,211,855 in 1997 from
$1,028,381 in 1996 due to sales increases in all segments. Sales as reported,
including the Non-Core Businesses, increased by 8.2% in 1997 over 1996.
Operating income from Continuing Businesses increased 23.7% to $107,213
during 1997 from $86,697 during 1996. This increase is attributable to the sales
increase as well as declines in paper costs which began in 1996.
15
<PAGE>
Interest expense increased by $12,024 or 9.7% in 1997 over 1996 reflecting
increased borrowings associated with acquisitions.
The loss before income tax benefit and extraordinary charge increased by
$123,421 to $159,124 during 1997 compared to $35,703 during 1996. This increase
is attributable to the provision for loss on the sales of businesses of $138,640
recorded during the third quarter of 1997.
At December 31, 1997 and 1996, management of the Company reviewed recent
operating results for the years then ended and projected future operating
results for the years through 2003. The Company's management determined that no
adjustment to net deferred income tax assets was required at December 31, 1997
and that an income tax benefit of $53,300 should be recognized at December 31,
1996 associated with the partial recognition of NOLs and other deferred income
tax assets. The Company reported a Federal income tax carryback claim of $1,685
in 1997.
The extraordinary charge in 1997 reflects the aggregate premium paid of
$9,537 on the redemption of the Company's 10 5/8% Senior Notes and an additional
write-off of related deferred financing costs of $5,864. The extraordinary
charge of $9,553 in 1996 resulted primarily from the write-off of deferred
financing costs relating to the replacement of the Company's then existing
credit facilities with new credit facilities.
SPECIALTY MAGAZINES
Sales from Continuing Businesses increased 13.6% to $714,464 in 1997 from
$629,001 in 1996 due to approximately $24,400 of advertising and circulation
growth at SEVENTEEN, which achieved record revenues in 1997, and at SOAP OPERA
DIGEST, which became a weekly publication during 1997. Technical and trade
magazines also showed strong growth, and revenue from Internet advertising,
while still a small portion of the segment, grew significantly. Acquisitions
such as LOWRIDER, MUSCLE MUSTANG & FAST FORDS, SURFING, REGISTERED
REPRESENTATIVE and MIX, also contributed approximately $51,500 to the sales
growth.
Operating income from Continuing Businesses increased 41.9% to $93,055 in
1997 from $65,598 in 1996 due to the sales increase as well as declines in paper
costs, which began in 1996.
Results from Continuing Businesses exclude NEW WOMAN, STAGEBILL, Intertec
Mailing Services and certain enthusiast titles recently sold or discontinued.
INFORMATION
Sales from Continuing Businesses increased 20.1% to $228,145 from $190,014
in 1996. This increase is largely attributable to growth at the Apartment Guides
approximating $32,000, including the start-up of new guides and acquisitions,
and strong performance at Bacon's and the directory units.
Operating income from Continuing Businesses decreased 5.5% to $29,671 in
1997 from $31,413 in 1996, largely attributable to an increase in amortization
expense resulting from acquisitions, partially offset by sales increases.
Results from Continuing Businesses exclude THE DAILY RACING FORM and Nelson.
EDUCATION
Sales from Continuing Businesses increased 28.6% to $269,246 from $209,366
in 1996. The increase is attributable to advertising growth at Channel One, and
the acquisitions of PRIMEDIA Workplace Learning, QWIZ, Cover Concepts and
Pictorial which added approximately $44,000 to sales growth.
Operating income from Continuing Businesses decreased 15.3% to $10,131 in
1997 from $11,962 in 1996 due primarily to increased goodwill and other
intangible amortization expense resulting from acquisitions.
16
<PAGE>
Results from Continuing Businesses exclude Krames, Katharine Gibbs,
Newbridge (excluding Films for the Humanities and Sciences) and the Funk and
Wagnalls' products.
CORPORATE
Corporate expenses increased to $25,644 in 1997 from $22,276 in 1996,
largely attributable to an increase in corporate headcount which is reflective
of the growth of the Company as well as a one-time executive death benefit.
NON-CORE BUSINESSES
Sales from Non-Core Businesses declined 20.3% to $275,740 from $346,068 in
1996. Most of this decline resulted from the divestitures of Krames, Katharine
Gibbs and NEW WOMAN during 1997, and lower revenue levels at Newbridge
(excluding Films for the Humanities and Sciences) and THE DAILY RACING FORM. The
operating loss from Non-Core Businesses increased to $128,006 in 1997 from $796
in 1996, attributable to the $138,640 provision for the loss on the sales of
businesses.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth certain information regarding the Company's
EBITDA and other net cash flow items. Data is presented for both Continuing
Businesses and Non-Core Businesses.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
EBITDA(1):
Continuing Businesses:
Specialty Magazines........................................................ $ 187,104 $ 159,462 $ 136,793
Information................................................................ 73,969 63,642 57,353
Education.................................................................. 90,400 81,833 66,551
Corporate.................................................................. (28,324) (25,545) (21,497)
----------- ----------- -----------
Subtotal................................................................. 323,149 279,392 239,200
Non-Core Businesses.......................................................... 6,761 22,620 37,403
----------- ----------- -----------
Total.................................................................... $ 329,910 $ 302,012 $ 276,603
----------- ----------- -----------
----------- ----------- -----------
Net Cash Provided by (Used in) Operating Activities:
Continuing Businesses:
Specialty Magazines........................................................ $ 154,251 $ 154,094 $ 125,062
Information................................................................ 73,808 55,443 48,277
Education.................................................................. 70,480 67,415 66,587
Corporate.................................................................. (156,645) (162,248) (129,090)
----------- ----------- -----------
Subtotal................................................................. 141,894 114,704 110,836
Non-Core Businesses.......................................................... (1,090) 10,656 39,356
----------- ----------- -----------
Total.................................................................... $ 140,804 $ 125,360 $ 150,192
----------- ----------- -----------
----------- ----------- -----------
Net Cash Provided by (Used in) Investing Activities:
Continuing Businesses:
Specialty Magazines........................................................ $ (414,975) $ (137,604) $ (219,821)
Information................................................................ (96,521) (28,185) (36,693)
Education.................................................................. (148,727) (183,381) (453,167)
Corporate.................................................................. (9,442) (1,740) (1,735)
----------- ----------- -----------
Subtotal................................................................. (669,665) (350,910) (711,416)
Non-Core Businesses.......................................................... 60,044 165,185 (10,293)
----------- ----------- -----------
Total.................................................................... $ (609,621) $ (185,725) $ (721,709)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net Cash Provided by (Used in) Financing Activities:
Continuing Businesses:
Specialty Magazines........................................................ $ (12,060) $ (4,320) $ (10,073)
Information................................................................ (2,431) (2,908) (4,159)
Education.................................................................. (4,943) (1,657) (3,153)
Corporate.................................................................. 489,751 54,656 600,156
----------- ----------- -----------
Subtotal................................................................. 470,317 45,771 582,771
Non-Core Businesses.......................................................... 60 917 (1,825)
----------- ----------- -----------
Total.................................................................... $ 470,377 $ 46,688 $ 580,946
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ------------------------
(1) Earnings before interest, taxes, depreciation, amortization and provision
for one-time charges ("EBITDA") is not intended to represent cash flow from
operations and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to cash
flows as a measure of liquidity. The Company believes EBITDA is a standard
measure commonly reported and widely used by analysts, investors and other
interested parties in the media industry. Accordingly, this information has
been disclosed herein to permit a more complete comparative analysis of the
Company's operating performance relative to other companies in its industry.
This measure may not be comparable to similarly titled measures used by
other companies.
Consolidated working capital deficiency, which includes current maturities
of long-term debt and in 1997, net assets held for sale, was $234,045 at
December 31, 1998 compared to $146,245 at December 31, 1997. Consolidated
working capital deficiency reflects certain industry working capital practices
and accounting principles, including the expensing of editorial and product
development costs when incurred and the recording of deferred revenues as a
current liability. Advertising costs are expensed when the promotional
activities occur except for certain direct-response advertising costs which are
capitalized and amortized over the estimated period of future benefit.
1998 COMPARED TO 1997
Consolidated EBITDA from Continuing Businesses increased by 15.7% to
$323,149 in 1998 from $279,392 in 1997 mainly as a result of acquisitions in all
segments and sales growth attributable to existing operations in the specialty
magazines and information segments partially offset by higher costs associated
with the growth in sales.
EBITDA from Continuing Businesses in the specialty magazines segment
increased 17.3% to $187,104 primarily due to growth from acquisitions and
advertising and circulation growth at SEVENTEEN, partially offset by increased
paper costs, reduced margins at SOAP OPERA DIGEST due to the change from a bi-
weekly to a weekly magazine, weakness in the soap opera market and integration
costs associated with the Cowles acquisition.
EBITDA from Continuing Businesses in the information segment increased 16.2%
to $73,969 due to sales growth at HPC Publications and Bacon's as well as
acquisitions.
EBITDA from Continuing Businesses in the education segment increased 10.5%
to $90,400, which is largely attributable to acquisitions offset by losses
associated with certain networks at PRIMEDIA Workplace Learning and the
satellite failure at Channel One.
Corporate expenses increased to $28,324 in 1998 from $25,545 in 1997,
largely attributable to an increase in corporate headcount which is reflective
of the growth of the Company.
EBITDA from the Non-Core Businesses declined to $6,761 primarily as a result
of the timing of divestitures and product discontinuances most of which occurred
in 1997.
18
<PAGE>
Net cash provided by operating activities, as reported, during 1998, after
interest payments of $139,623, was $140,804, an increase of 12.3% over 1997, due
primarily to EBITDA growth.
Net cash used in investing activities, as reported, increased in 1998
primarily attributable to increased spending on acquisitions. Payments for
acquisitions of $609,602 were made in 1998 as compared to $326,192 in 1997. Net
capital expenditures increased by $24,130 or 77.6% to $55,238 in 1998 from 1997
primarily due to increased capitalized software expenditures.
Net cash provided by financing activities, as reported, increased $423,689
to $470,377 in 1998 as compared to $46,688 in 1997. The increase was primarily
attributable to increased borrowings associated with acquisitions.
1997 COMPARED TO 1996
Consolidated EBITDA from Continuing Businesses increased by 16.8% to
$279,392 in 1997 from $239,200 in 1996 because of higher revenues, paper price
declines and acquisitions of new businesses.
EBITDA from Continuing Businesses in the specialty magazines segment
increased 16.6% in 1997 to $159,462 from $136,793 in 1996. This increase is
attributable to strong organic revenue growth, paper price declines and
acquisitions.
EBITDA from Continuing Businesses in the information segment increased 11.0%
in 1997 to $63,642 from $57,353 in 1996 primarily due to growth at the Apartment
Guides which was attributable to increased advertising revenue and the impact of
acquisitions.
EBITDA from Continuing Businesses in the education segment increased 23.0%
to $81,833 in 1997 from $66,551 in 1996 due to advertising revenue growth at
Channel One and the inclusion of acquisitions including PRIMEDIA Workplace
Learning.
Corporate expenses increased to $25,545 in 1997 from $21,497 in 1996,
largely attributable to an increase in corporate headcount which is reflective
of the growth of the Company as well as a one-time executive death benefit.
EBITDA from Non-Core Businesses declined 39.5% to $22,620 in 1997 from
$37,403 in 1996, due to sales declines at Newbridge (excluding Films for the
Humanities and Sciences) and THE DAILY RACING FORM.
Net cash provided by operating activities, as reported, during the year
ended December 31, 1997, after interest payments of $142,421, was $125,360, a
decrease of $24,832 from the 1996 period, due primarily to an increase in
interest payments.
Net cash used in investing activities, as reported, decreased in 1997 as a
result of decreased acquisition activities. The Company spent $326,192 for
acquisitions during 1997 compared with $700,990 in 1996. The reported net
capital expenditures were $31,108 during the 1997 period, an 8.1% increase from
$28,790 in 1996.
Net cash provided by financing activities, as reported, decreased in 1997 as
a result of reduced debt and stock issuances during 1997 as well as the
redemption of certain outstanding borrowings.
NET OPERATING LOSS CARRYFORWARDS
At December 31, 1998, the Company had NOLs and capital loss carryforwards of
approximately $901,400 which will be available to reduce future taxable income.
In addition, management estimates that approximately $1,130,000 of unamortized
goodwill and other intangible assets will be available as deductions from any
future taxable income.
19
<PAGE>
FINANCING ARRANGEMENTS
On February 17, 1998, the Company completed a private offering of $250,000
7 5/8% Senior Notes Due 2008 ("Old 7 5/8% Senior Notes"). The Old 7 5/8% Senior
Notes were issued at 99.425% with related issuance costs of approximately $4,000
and mature on April 1, 2008, with no sinking fund requirements. Interest on the
Old 7 5/8% Senior Notes was payable semi-annually in April and October at the
annual rate of 7 5/8% commencing October 1, 1998. On June 10, 1998, the Company
exchanged the Old 7 5/8% Senior Notes for a new series of $250,000 7 5/8% Senior
Notes Due 2008 ("New 7 5/8% Senior Notes"). The terms of the New 7 5/8% Senior
Notes are the same as the terms of the Old 7 5/8% Senior Notes except that the
New 7 5/8% Senior Notes have been registered under the Securities Act of 1933.
The New 7 5/8% Senior Notes may not be redeemed prior to April 1, 2003 other
than in connection with a change of control. Beginning on April 1, 2003 and
thereafter, the New 7 5/8% Senior Notes are redeemable in whole or in part, at
the option of the Company, at prices ranging from 103.813% with annual
reductions to 100% in 2006 plus accrued and unpaid interest. The New 7 5/8%
Senior Notes are recorded on the accompanying consolidated balance sheet at
their aggregate redemption value (net of unamortized discount) of $248,643 at
December 31, 1998.
On February 17, 1998, the Company completed a private offering of 2,500,000
shares of $.01 par value, $8.625 Series G Exchangeable Preferred Stock ("Series
G Preferred Stock") at $99.40 per share. Annual dividends of $8.625 per share on
the Series G Preferred Stock were cumulative and payable quarterly, in cash,
commencing July 1, 1998. On June 10, 1998, the Company exchanged the 2,500,000
shares of Series G Preferred Stock for 2,500,000 shares of $.01 par value,
$8.625 Series H Exchangeable Preferred Stock ("Series H Preferred Stock"). The
terms of the Series H Preferred Stock are the same as the terms of the Series G
Preferred Stock except that the Series H Preferred Stock has been registered
under the Securities Act of 1933. Prior to April 1, 2001, the Company may, at
its option, redeem in whole or in part, up to $125,000 of the aggregate
liquidation preference of the Series H Preferred Stock at a price per share of
$108.625 plus accrued and unpaid dividends to the redemption date, with the net
proceeds of one or more public offerings, subject to certain other restrictions.
On or after April 1, 2003, the Series H Preferred Stock may be redeemed in whole
or in part, at the option of the Company, at prices ranging from 104.313% with
annual reductions to 100% in 2006, plus accrued and unpaid dividends. The
Company is required to redeem the Series H Preferred Stock on April 1, 2010 at a
redemption price equal to the liquidation preference of $100 per share, plus
accrued and unpaid dividends. The Series H Preferred Stock is exchangeable, in
whole but not in part, at the option of the Company, on any scheduled dividend
payment date into 8 5/8% Class H Subordinated Exchange Debentures due 2010. The
Series H Preferred Stock is recorded on the accompanying consolidated balance
sheet at its aggregate redemption value (net of unamortized issuance costs) of
$242,493.
Net proceeds from these offerings of approximately $486,000 were primarily
used to redeem the $11.625 Series B Exchangeable Preferred Stock and to pay down
borrowings under its bank credit facilities which amounts may be reborrowed for
general corporate purposes including acquisitions.
On March 18, 1998, KKR 1996 Fund L.P., a Delaware limited partnership
affiliated with Kohlberg Kravis Roberts & Co. ("KKR"), purchased 16,666,667
shares of newly issued common stock from the Company for approximately $200,000
(the "KKR Fund Investment"). The net proceeds (after issuance costs) from the
KKR Fund Investment were used to repay borrowings outstanding under the bank
credit facilities, which amounts may be reborrowed for general corporate
purposes including acquisitions.
On March 20, 1998, the Company redeemed all of the outstanding shares of the
$11.625 Series B Exchangeable Preferred Stock at a price of $105.80 per share,
plus accrued and unpaid dividends aggregating approximately $169,000.
On April 20, 1998, the Company's 364-day credit facility expired. The
Company had commitments of $150,000.
20
<PAGE>
Under the bank credit facilities, the Company has total commitments of
$1,400,000 and can borrow up to $1,500,000 in the aggregate. As of December 31,
1998, aggregate borrowings under the bank credit facilities were $1,258,236. As
of December 31, 1998, the amounts borrowed under the bank credit facilities bore
interest at a weighted average variable interest rate of 6.96%. Also, at
December 31, 1998, the Company had outstanding $100,000 of 10 1/4% Senior Notes,
$300,000 of 8 1/2% Senior Notes, $250,000 of 7 5/8% Senior Notes, 2,000,000
shares of $10.00 Series D Exchangeable Preferred Stock, 1,250,000 shares of
$9.20 Series F Exchangeable Preferred Stock and 2,500,000 shares of $8.625
Series H Preferred Stock.
The above indebtedness, among other things, limits the ability of the
Company to change the nature of its businesses, incur indebtedness, create
liens, sell assets, engage in mergers, consolidations or transactions with
affiliates, make investments in or loans to certain subsidiaries, issue
guarantees and make certain restricted payments including dividend payments on
its common stock in excess of $25,000 in any given year. Under the Company's
most restrictive debt covenants, the Company must maintain a minimum interest
coverage ratio of 1.8 to 1 and a minimum fixed charge coverage ratio of 1.05 to
1. The Company's maximum allowable leverage ratio is 6.0 to 1. The Company
believes it is in compliance with the financial and operating covenants of its
principal financing arrangements. Borrowings under the above indebtedness are
guaranteed by each of the domestic wholly-owned subsidiaries of the Company.
Such guarantees are full, unconditional and joint and several. The separate
financial statements of the domestic subsidiaries are not presented because the
Company believes the separate financial statements would not be material to the
shareholders and potential investors. The Company's foreign subsidiaries are not
guarantors of the above indebtedness. The total assets, revenues, income or
equity of such foreign subsidiaries, both individually and on a combined basis,
are inconsequential in relation to the total assets, revenues, income or equity
of the Company.
The aggregate mandatory reductions of the commitments under the bank credit
facilities are $90,000 in 1999, $280,000 per year in 2000 through 2003 with a
final reduction or paydown of $190,000 in 2004. The 10 1/4% Senior Notes mature
in June 2004, the 8 1/2% Senior Notes mature in February 2006 and the New 7 5/8%
Senior Notes mature in April 2008. The per annum principal and interest payments
relating to an acquisition obligation are scheduled to be $21,167, $19,167, and
$8,833 to be made in semi-annual installments in 1999 through 2001,
respectively. The Company's aggregate lease obligations for 1999, 2000 and 2001
are expected to be approximately $37,000, $35,000 and $29,000, respectively. The
Company believes its liquidity, capital resources and cash flow are sufficient
to fund planned capital expenditures, working capital requirements, interest and
principal payments on its debt, the payment of preferred stock dividends and
other anticipated expenditures for the foreseeable future.
RECENT ACCOUNTING PRONOUNCEMENTS
In 1998, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information," and SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits," which
became effective for the Company's 1998 consolidated financial statements. SFAS
No. 130 requires the disclosure of comprehensive income, defined as the change
in equity of a business enterprise from transactions and other events and
circumstances from non-owner sources during a period. SFAS No. 131 requires the
disclosure of certain financial and descriptive information related to a
Company's reportable operating segments. SFAS No. 132 standardizes the
disclosure requirements for pensions and other postretirement benefits, requires
additional information on changes in the benefit obligations and fair values of
plan assets that will facilitate financial analysis and eliminates certain
previously required disclosures. The adoption of these new accounting standards
did not have a material effect on the consolidated financial statements of the
Company.
In 1998, the Company adopted the American Institute of Certified Public
Accountants' ("AICPA") Statement of Position ("SOP") 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use". Under the
Company's previous accounting policy, costs for internal use
21
<PAGE>
software, whether developed or obtained, were generally expensed as incurred. In
compliance with SOP 98-1, the Company expenses costs incurred in the preliminary
project stage and, thereafter, capitalizes costs incurred in the developing or
obtaining of internal use software. Certain costs, such as maintenance and
training, are expensed as incurred. Capitalized costs are amortized over a
period of not more than five years and are subject to impairment evaluation in
accordance with the provisions of SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". The adoption
of SOP 98-1 resulted in an increase in operating income and a decrease in net
loss of approximately $12,450 ($.09 per share) for the year ended December 31,
1998.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities," which requires that costs of start-up activities,
including organizational costs, be expensed as incurred. This SOP will be
effective for the Company's 1999 consolidated financial statements. In the
opinion of the Company's management, it is not anticipated that the adoption of
SOP 98-5 will have a material effect on the consolidated financial statements of
the Company. In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities", which
becomes effective for the Company's 2000 consolidated financial statements. SFAS
No. 133 requires that derivative instruments be measured at fair value and
recognized as assets or liabilities in a company's balance sheet. The Company is
currently evaluating the effect that SFAS No. 133 will have on the Company's
consolidated financial statements.
RECENT DEVELOPMENTS
On February 22, 1999, the Company announced the closing by PRIMEDIA
Workplace Learning of five unprofitable and recently launched product lines as
part of a program to return the Company's focus to accreditation-oriented
vocational networks and associated products. Accordingly, PRIMEDIA expects to
record a charge related to this refocusing for severance, lease discontinuance
for transponders and office sites, recoverability of certain assets, related
goodwill and other items against its 1999 first quarter results. The Company is
currently in the process of calculating the pre-tax charge, which is estimated
to be between $20,000 and $24,000. PRIMEDIA Workplace Learning is included in
the education segment.
Through March 3, 1999, the Company completed five product-line acquisitions
in all segments. The aggregate purchase price was approximately $35,000 and was
financed primarily through borrowings under the Company's bank credit
facilities.
On March 11, 1999, the Company completed an amendment and restatement of its
bank credit facilities to increase them by $250,000 to $1,650,000. The final
maturity date is July 31, 2004. Additionally, the Company entered into a
separate $150,000 bank revolving credit facility with a final maturity on
December 30, 1999. There are currently no borrowings under the bank revolving
credit facility.
IMPACT OF INFLATION
The impact of inflation was immaterial during 1998, 1997 and 1996. Paper
prices, which had risen significantly during early 1996, declined around
mid-year 1996 and continued that trend through the first six months of 1997.
Moderate paper price increases occurred in July 1997 and in January 1998 for
most of the grades of paper used by the Company and began to decline in October
1998. During 1998, paper costs represented approximately 9.1% of the Company's
total operating costs and expenses. Postage for product distribution and direct
mail solicitations is also a significant expense of the Company. The Company
uses the U.S. Postal Service for distribution of many of its products and
marketing materials. Postage costs have increased slightly in January 1999. In
the past, the effects of inflation on operating expenses have substantially been
offset by PRIMEDIA's ability to increase selling prices. No assurances can be
given that the Company can pass such cost increases through to its customers. In
addition to pricing actions, the Company is continuing to examine all aspects of
the manufacturing and purchasing processes to identify ways to offset some of
the effects of inflation.
22
<PAGE>
YEAR 2000 READINESS DISCLOSURE
PRIMEDIA has evaluated the potential impact of the situation commonly
referred to as the "Year 2000 problem." The Year 2000 problem potentially exists
for most companies since many computer systems in use today were designed and
developed using two digits, rather than four, to specify the year. As a result,
such systems will recognize the year 2000 as "00." This could cause many
computer applications to fail completely or to create erroneous results unless
corrective measures are taken. Although the Company does not believe that the
Year 2000 problem will have a material effect on its operations or results, the
Company has undertaken certain actions described below to mitigate the results
thereof.
PRIMEDIA instituted a company-wide Year 2000 Project ("Project") beginning
in early 1997. The Project addresses issues regarding computer infrastructure
(commonly referred to as "IT Systems"), Non-IT Systems, system software and
third-party vendors. The Project has been divided into four phases: (1)
inventorying all computer systems and identifying those with Year 2000 issues;
(2) assessment including prioritization; (3) remediation including modification,
upgrading and replacement; and (4) testing. The Company's senior management and
the board of directors receive regular updates on the status of the Project. As
of December 31, 1998, phase 1 and 2 have been completed. The remediation and
testing phases with respect to the Company's own operations are currently being
performed and are expected to be completed by July 1999.
PRIMEDIA has communicated with significant third-party vendors that provide
services to the Company's operations. This has enabled PRIMEDIA to assess the
Year 2000 readiness of the third-party vendors and, in turn, the Company's
vulnerability to their noncompliance. These vendors include the paper suppliers
and service entities that provide print and distribution services. Although the
Company may not be able to assure itself as to the Year 2000 compliance by such
vendors, the Company will remain involved with the vendors' progress and is
evaluating the need for related contingency planning.
The total costs associated with required remediation by the Company are
expected to be approximately $13,000 of which approximately $8,000 had been
expended through December 31, 1998 through funding from existing operations. The
remaining $5,000 is expected to be incurred by early 1999 and is not expected to
have a material effect on the Company's liquidity or results of operations.
These costs include the replacement of systems and equipment, outside
consultants and software repairs. The Project has been integrated into the
Company's overall technology upgrading plans and no important information
technology plans have been deferred.
At this time, the Company believes the risks associated with the Year 2000
problem lie within third-party vendor compliance. These risks are associated
with certain production and distribution processes and could involve a loss of
revenue. While an estimate of the revenue loss cannot be determined at this
time, the Company believes that the diversity of its product lines would
mitigate any losses until such time that the problem has been remedied.
FORWARD-LOOKING INFORMATION
This report contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition. These
statements are based upon a number of assumptions and estimates which are
inherently subject to uncertainties and contingencies, many of which are beyond
the control of the Company, and reflect future business decisions which are
subject to change. Some of these assumptions may not materialize and
unanticipated events will occur which can affect the Company's results.
23
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to the impact of changes in interest rates. In the
normal course of business, the Company manages fluctuations in interest rates
through the use of swap agreements to hedge a majority of its floating rate
borrowings. The Company's objective in managing this exposure is to reduce
fluctuations in earnings and cash flows associated with changes in interest
rates.
The following table provides information about our financial instruments
that are sensitive to changes in interest rates, including debt obligations and
interest rate swaps. For debt obligations, the table presents mandatory
principal reductions, repayment schedules of outstanding debt and projected
weighted average interest rates by expected maturity dates. For interest rate
swaps, the table presents notional amounts and projected weighted average
interest rates by contractual maturity dates. For variable rate instruments, we
have indicated the applicable floating rate index.
<TABLE>
<CAPTION>
FAIR VALUE
1999 2000 2001 2002 2003 THEREAFTER TOTAL AT 12/31/98
--------- --------- --------- --------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES
Long-Term Debt Including
Current Portion:
Fixed Rate Debt.................... $ 18,002 $ 17,561 $ 8,616 $ -- $ -- $ 650,000 $ 694,179 $ 704,679
Average Interest Rate.............. 8.61% 8.49% 8.43% 8.43% 8.43% 7.51% 7.90%
Variable Rate Debt................. $ -- $ 228,236 $ 280,000 $ 280,000 $ 280,000 $ 190,000 $1,258,236 $1,258,236
Average Interest Rate--Forward
LIBOR Curve Plus Determined
Spread........................... 6.71% 6.76% 6.86% 6.89% 7.01% 7.24% 6.84%
<CAPTION>
FAIR
VALUE
AT
1999 2000 2001 12/31/98
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE DERIVATIVES
Interest Rate Swaps:
Pay Fixed/Receive Variable--Notional
Amount $ 600,000 $ 600,000 $ 200,000 $ 18,519
Average pay rate..................... 6.33% 6.33% 6.30%
Average receive rate--Forward LIBOR
Curve.............................. 5.21% 5.63% 5.98%
</TABLE>
24
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PRIMEDIA INC. AND SUBSIDIARIES
Report of Independent Auditors--Deloitte & Touche LLP................................ 26
Statements of Consolidated Operations for the Years Ended December 31, 1998, 1997 and
1996............................................................................... 27
Consolidated Balance Sheets as of December 31, 1998 and 1997......................... 28
Statements of Consolidated Cash Flows for the Years Ended December 31, 1998, 1997 and
1996............................................................................... 29
Statements of Shareholders' Equity (Deficiency) for the Years Ended December 31,
1998, 1997 and 1996................................................................ 30
Notes to Consolidated Financial Statements for the Years Ended December 31, 1998,
1997 and 1996...................................................................... 32
</TABLE>
25
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of
PRIMEDIA Inc.
New York, New York:
We have audited the accompanying consolidated balance sheets of PRIMEDIA
Inc. and subsidiaries (the "Company") as of December 31, 1998 and 1997, and the
related statements of consolidated operations, shareholders' equity
(deficiency), and consolidated cash flows for each of the three years in the
period ended December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated 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 audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company at December 31,
1998 and 1997, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the Company
changed its method of accounting for internal use computer software costs to
conform with Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" of the American Institute of
Certified Public Accountants in 1998.
DELOITTE & TOUCHE LLP
New York, New York
January 27, 1999
(March 11, 1999 as to Note 23)
26
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
NOTES 1998 1997 1996
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales, net...................................................... 22 $ 1,573,573 $ 1,487,595 $ 1,374,449
Operating costs and expenses:
Cost of goods sold............................................ 367,466 341,879 337,065
Marketing and selling......................................... 280,323 271,351 249,301
Distribution, circulation and fulfillment..................... 260,428 262,151 230,533
Editorial..................................................... 145,235 120,952 104,484
Other general expenses........................................ 161,887 163,705 154,966
Corporate administrative expenses............................. 20 28,324 25,545 21,497
Depreciation and amortization of prepublication costs,
property and equipment...................................... 7, 9 42,214 37,334 38,233
(Gain) loss on the sales of businesses, net and other......... 4, 18 (7,216) 138,640 --
Amortization of intangible assets, excess of purchase price
over net assets acquired and other.......................... 4, 8 176,755 146,831 152,469
----------- ----------- -----------
Operating income (loss)......................................... 118,157 (20,793) 85,901
Other income (expense):
Interest expense.............................................. (144,442) (136,625) (124,601)
Amortization of deferred financing costs...................... 9 (3,046) (3,071) (3,662)
Other, net.................................................... 4 (8,405) 1,365 6,659
----------- ----------- -----------
Loss before income tax benefit and extraordinary charge......... (37,736) (159,124) (35,703)
Income tax benefit.............................................. 12 -- 1,685 53,300
----------- ----------- -----------
Income (loss) before extraordinary charge....................... (37,736) (157,439) 17,597
Extraordinary charge--extinguishment of debt.................... -- (15,401) (9,553)
----------- ----------- -----------
Net income (loss)............................................... (37,736) (172,840) 8,044
Preferred stock dividends:
Cash.......................................................... (54,144) (54,822) (26,944)
Non-cash dividends in kind.................................... -- (4,451) (16,582)
Preferred stock redemption premiums........................... 13 (9,141) (5,800) --
----------- ----------- -----------
Loss applicable to common shareholders.......................... $ (101,021) $ (237,913) $ (35,482)
----------- ----------- -----------
----------- ----------- -----------
Basic and diluted loss applicable to common shareholders per
common share: 15
Loss before extraordinary charge.............................. $ (.71) $ (1.72) $ (.20)
Extraordinary charge.......................................... -- (.12) (.07)
----------- ----------- -----------
Net loss...................................................... $ (.71) $ (1.84) $ (.27)
----------- ----------- -----------
----------- ----------- -----------
Basic and diluted common shares outstanding..................... 15 142,529,024 129,304,900 128,781,518
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements.
27
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
NOTES 1998 1997
------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................. $ 24,538 $ 22,978
Accounts receivable, net.............................................. 5 247,138 199,289
Inventories, net...................................................... 6 41,254 27,597
Net assets held for sale.............................................. 4 -- 38,665
Prepaid expenses and other............................................ 34,212 33,971
------------ ------------
Total current assets.............................................. 347,142 322,500
Property and equipment, net............................................. 7 147,658 116,361
Other intangible assets, net............................................ 8 730,241 660,268
Excess of purchase price over net assets acquired, net.................. 8 1,526,503 1,111,785
Deferred income tax asset, net.......................................... 12 176,200 176,200
Other non-current assets................................................ 9 113,330 98,876
------------ ------------
$ 3,041,074 $ 2,485,990
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable...................................................... $ 118,637 $ 95,546
Accrued interest payable.............................................. 20,451 13,622
Accrued expenses and other............................................ 10 223,801 204,770
Deferred revenues..................................................... 197,131 140,474
Current maturities of long-term debt.................................. 11 21,167 14,333
------------ ------------
Total current liabilities......................................... 581,187 468,745
------------ ------------
Long-term debt.......................................................... 11, 23 1,928,892 1,656,541
------------ ------------
Other non-current liabilities........................................... 53,893 48,271
------------ ------------
Commitments and contingencies 19
Exchangeable preferred stock (aggregated liquidation and redemption
values of $575,000 and $482,604 at December 31, 1998 and 1997,
respectively)......................................................... 13 557,841 470,280
------------ ------------
Common stock subject to redemption ($.01 par value, 294,119 shares and
402,650 shares outstanding at December 31, 1998 and 1997,
respectively)......................................................... 14 2,964 4,376
------------ ------------
Shareholders' deficiency:
Common stock ($.01 par value, 250,000,000 shares authorized;
146,966,562 shares and 129,797,078 shares issued at December 31,
1998 and 1997, respectively)........................................ 14, 20 1,470 1,298
Additional paid-in capital............................................ 14, 20 979,720 780,191
Accumulated deficit................................................... 16 (1,030,032) (929,011)
Accumulated other comprehensive loss.................................. (1,720) (1,543)
Common stock in treasury, at cost (2,752,300 shares and 1,048,600
shares at December 31, 1998 and 1997, respectively)................. 14 (33,141) (13,158)
------------ ------------
Total shareholders' deficiency.................................... (83,703) (162,223)
------------ ------------
$ 3,041,074 $ 2,485,990
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
28
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
<S> <C> <C> <C>
1998 1997 1996
--------- ---------- ----------
<CAPTION>
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................................................... $ (37,736) $ (172,840) $ 8,044
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization............................................. 222,015 187,236 194,364
Non-cash (gain) loss on the sales of businesses, net and other............ (21,291) 138,640 --
Accretion of discount on acquisition obligation, distribution advance and
other................................................................... 9,264 7,343 6,398
Extraordinary charge - extinguishment of debt............................. -- 15,401 9,553
Non-cash income tax benefit............................................... -- -- (53,300)
Other, net................................................................ 3,114 (1,090) (6,213)
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable, net.................................................. (8,601) 7,885 (24,692)
Inventories, net.......................................................... (739) 8,738 24,531
Prepaid expenses and other................................................ (565) (10,433) (598)
Increase (decrease) in:
Accounts payable.......................................................... 11,245 (7,366) 5,807
Accrued interest payable.................................................. 6,829 (8,528) 12,824
Accrued expenses and other................................................ (26,500) (16,864) (12,674)
Deferred revenues......................................................... (4,853) (17,377) (11,201)
Other non-current liabilities............................................. (11,378) (5,385) (2,651)
--------- ---------- ----------
Net cash provided by operating activities................................. 140,804 125,360 150,192
--------- ---------- ----------
INVESTING ACTIVITIES:
Additions to property, equipment and other, net............................. (55,238) (31,108) (28,790)
Proceeds from sales of businesses........................................... 62,690 171,575 8,071
Payments for businesses acquired............................................ (609,602) (326,192) (700,990)
Investments in joint venture and other...................................... (7,471) -- --
--------- ---------- ----------
Net cash used in investing activities..................................... (609,621) (185,725) (721,709)
--------- ---------- ----------
FINANCING ACTIVITIES:
Borrowings under credit agreements.......................................... 1,014,535 1,028,049 1,683,787
Repayments of borrowings under credit agreements............................ (975,900) (694,950) (1,384,800)
Proceeds from issuance of 8 1/2% Senior Notes, net of discount.............. -- -- 298,734
Proceeds from issuance of 7 5/8% Senior Notes, net of discount.............. 248,562 -- --
Payments of acquisition obligation.......................................... (14,333) (6,000) (6,000)
Payments of floating rate indebtedness...................................... -- -- (150,000)
Proceeds from issuance of common stock, net of redemptions.................. 202,020 7,843 3,498
Proceeds from issuance of Series C (exchanged into Series D) Preferred
Stock, net of issuance costs.............................................. -- -- 193,451
Proceeds from issuance of Series E (exchanged into Series F) Preferred
Stock, net of issuance costs.............................................. -- 120,434 --
Proceeds from issuance of Series G (exchanged into Series H) Preferred
Stock, net of issuance costs.............................................. 241,911 -- --
Redemption of Series B Preferred Stock...................................... (166,739) -- --
Redemption of Senior Preferred Stock........................................ -- (105,800) --
Redemptions and purchases of 10 5/8% Senior Notes........................... -- (242,787) (17,655)
Purchases of common stock for the treasury.................................. (19,983) (13,158) --
Dividends paid to preferred stock shareholders.............................. (53,019) (45,305) (26,944)
Deferred financing costs paid............................................... (5,321) (1,372) (13,132)
Other....................................................................... (1,356) (266) 7
--------- ---------- ----------
Net cash provided by financing activities................................. 470,377 46,688 580,946
--------- ---------- ----------
Increase (decrease) in cash and cash equivalents.............................. 1,560 (13,677) 9,429
Cash and cash equivalents, beginning of year.................................. 22,978 36,655 27,226
--------- ---------- ----------
Cash and cash equivalents, end of year........................................ $ 24,538 $ 22,978 $ 36,655
--------- ---------- ----------
--------- ---------- ----------
SUPPLEMENTAL INFORMATION:
Businesses acquired:
Fair value of assets acquired............................................. $ 741,847 $ 406,382 $ 779,192
Liabilities assumed....................................................... 132,245 80,190 78,202
--------- ---------- ----------
Cash paid for businesses acquired......................................... $ 609,602 $ 326,192 $ 700,990
--------- ---------- ----------
--------- ---------- ----------
Interest paid............................................................... $ 139,623 $ 142,421 $ 111,752
--------- ---------- ----------
--------- ---------- ----------
Non-cash investing and financing activities:
Assets acquired under capital lease obligations........................... $ 15,679 $ 15,760 $ --
--------- ---------- ----------
--------- ---------- ----------
Preferred stock dividends in kind......................................... $ -- $ 4,451 $ 16,582
--------- ---------- ----------
--------- ---------- ----------
Accretion in carrying value of preferred stock............................ $ 3,733 $ 2,666 $ 1,090
--------- ---------- ----------
--------- ---------- ----------
Accretion (reduction) in carrying value of common stock subject to
redemption.............................................................. $ (221) $ 755 $ (885)
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
29
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S><C>
Balance at January 1, 1996........................................................................................
Comprehensive income:
Net income....................................................................................................
Other comprehensive income--foreign currency translation adjustments..........................................
Comprehensive income..........................................................................................
Issuances of common stock, net of issuance costs..................................................................
Expiration of redemption feature on common stock subject to redemption............................................
$11.625 Series B Exchangeable Preferred Stock--dividends in kind..................................................
$2.875 Senior Exchangeable Preferred Stock--cash dividends........................................................
$10.00 Series D Exchangeable Preferred Stock--cash dividends......................................................
Reduction (accretion) of differences between carrying value and redemption value of:
$2.875 Senior Exchangeable Preferred Stock....................................................................
$11.625 Series B Exchangeable Preferred Stock.................................................................
$10.00 Series D Exchangeable Preferred Stock..................................................................
Common stock subject to redemption............................................................................
Balance at December 31, 1996......................................................................................
Comprehensive loss:
Net loss......................................................................................................
Other comprehensive loss--foreign currency translation adjustments............................................
Comprehensive loss............................................................................................
Issuances of common stock, net of issuance costs..................................................................
Purchases of treasury stock.......................................................................................
Expiration of redemption feature on common stock subject to redemption............................................
$11.625 Series B Exchangeable Preferred Stock--dividends in kind..................................................
$11.625 Series B Exchangeable Preferred Stock--cash dividends.....................................................
$2.875 Senior Exchangeable Preferred Stock--cash dividends........................................................
$10.00 Series D Exchangeable Preferred Stock--cash dividends......................................................
$9.20 Series E Exchangeable Preferred Stock--cash dividends.......................................................
$2.875 Senior Exchangeable Preferred Stock Redemption Premium.....................................................
Accretion of differences between carrying value and redemption value of:
$2.875 Senior Exchangeable Preferred Stock....................................................................
$11.625 Series B Exchangeable Preferred Stock.................................................................
$10.00 Series D Exchangeable Preferred Stock..................................................................
$9.20 Series E Exchangeable Preferred Stock...................................................................
Common stock subject to redemption............................................................................
Balance at December 31, 1997......................................................................................
Comprehensive loss:
Net loss......................................................................................................
Other comprehensive loss--foreign currency translation adjustments............................................
Comprehensive loss............................................................................................
Issuances of common stock, net of issuance costs..................................................................
Purchases of treasury stock.......................................................................................
Expiration of redemption feature on common stock subject to redemption............................................
$11.625 Series B Exchangeable Preferred Stock--cash dividends.....................................................
$11.625 Series B Exchangeable Preferred Stock Redemption Premium..................................................
$10.00 Series D Exchangeable Preferred Stock--cash dividends......................................................
$9.20 Series F Exchangeable Preferred Stock--cash dividends.......................................................
$8.625 Series H Exchangeable Preferred Stock--cash dividends......................................................
Reduction (accretion) of differences between carrying value and redemption value of:
$11.625 Series B Exchangeable Preferred Stock.................................................................
$10.00 Series D Exchangeable Preferred Stock..................................................................
$9.20 Series F Exchangeable Preferred Stock...................................................................
$8.625 Series H Exchangeable Preferred Stock..................................................................
Common stock subject to redemption............................................................................
Balance at December 31, 1998......................................................................................
</TABLE>
See notes to consolidated financial statements.
30
<PAGE>
<TABLE>
<CAPTION>
CUMULATIVE COMMON STOCK
COMMON STOCK ADDITIONAL OTHER IN TREASURY
- --------------------------- PAID-IN ACCUMULATED COMPREHENSIVE --------------------
SHARES AMOUNT CAPITAL DEFICIT INCOME (LOSS) SHARES AMOUNT TOTAL
- -------------- ----------- ----------- ------------ --------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
125,921,221 $ 1,259 $ 748,194 $ (655,616) $ (1,275) -- $ -- $ 92,562
8,044 8,044
5 5
---------
8,049
---------
681,890 7 3,440 3,447
1,745,934 17 21,213 21,230
(16,582) (16,582)
(11,500) (11,500)
(15,444) (15,444)
(273) (273)
(317) (317)
(500) (500)
885 885
- -------------- ----------- ----------- ------------ ------- --------- --------- ---------
128,349,045 1,283 772,642 (691,098) (1,270) -- -- 81,557
(172,840) (172,840)
(273) (273)
---------
(173,113)
---------
1,209,693 12 8,404 8,416
1,048,600 (13,158) (13,158)
238,340 3 2,566 2,569
(4,451) (4,451)
(16,794) (16,794)
(11,564) (11,564)
(23,333) (23,333)
(3,131) (3,131)
(5,800) (5,800)
(1,734) (1,734)
(317) (317)
(546) (546)
(69) (69)
(755) (755)
- -------------- ----------- ----------- ------------ ------- --------- --------- ---------
129,797,078 1,298 780,191 (929,011) (1,543) 1,048,600 (13,158) (162,223)
(37,736) (37,736)
(177) (177)
---------
(37,913)
---------
17,083,484 171 201,986 202,157
1,703,700 (19,983) (19,983)
86,000 1 1,055 1,056
(4,022) (4,022)
(9,141) (9,141)
(20,000) (20,000)
(11,436) (11,436)
(18,686) (18,686)
(2,317) (2,317)
(546) (546)
(288) (288)
(582) (582)
221 221
- -------------- ----------- ----------- ------------ ------- --------- --------- ---------
146,966,562 $ 1,470 $ 979,720 $(1,030,032) $ (1,720) 2,752,300 $ (33,141) $ (83,703)
- -------------- ----------- ----------- ------------ ------- --------- --------- ---------
- -------------- ----------- ----------- ------------ ------- --------- --------- ---------
</TABLE>
31
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. DESCRIPTION OF BUSINESS
PRIMEDIA Inc. (which together with its subsidiaries is herein referred to as
either "PRIMEDIA" or the "Company" unless the context implies otherwise) is the
authoritative source for specialized information to targeted markets. The
Company's three business segments are specialty magazines, information and
education. In 1998, the Company reclassified PRIMEDIA Reference from the
information segment to the education segment and has restated prior periods
accordingly. The Company's management believes that the education segment is
more reflective of the focus of the PRIMEDIA Reference products.
The specialty magazines segment includes PRIMEDIA Consumer Magazines,
PRIMEDIA Special Interest Publications, McMullen Argus, PRIMEDIA Enthusiast
Publications and the majority of PRIMEDIA Intertec. The specialty magazines
segment is concentrated primarily on specialty consumer magazines, and technical
and trade magazines. The information segment includes PRIMEDIA Information, HPC
Publications, Bacon's and a portion of PRIMEDIA Intertec. The information
segment produces consumer and business information products in a variety of
formats for decision makers in business, professional and special interest
consumer markets. The information is compiled and sold as guides, newsletters,
CD-ROMs, directories and via the Internet. The education segment includes
Channel One, PRIMEDIA Reference, Films for the Humanities and Sciences, PRIMEDIA
Workplace Learning, American Guidance Service and WEEKLY READER. This segment
specializes in providing educational materials to the classroom learning and
workplace learning markets.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION. The consolidated financial statements include the
accounts of PRIMEDIA and its subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts of
assets, liabilities, revenues and expenses reported in the consolidated
financial statements.
Significant accounting estimates used include estimates for sales returns
and allowances, bad debts and estimates for the realization of deferred tax
assets. Management has exercised reasonableness in deriving these estimates.
However, actual results may differ from these estimates.
Certain reclassifications have been made to the prior years' consolidated
financial statements to conform with the presentation used in the current
period.
RECENT ACCOUNTING PRONOUNCEMENTS. In 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," and SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits," which became effective for the Company's 1998
consolidated financial statements. SFAS No. 130 requires the disclosure of
comprehensive income, defined as the change in equity of a business enterprise
from transactions and other events and circumstances from non-owner sources
during a period. SFAS No. 131 requires the disclosure of certain financial and
descriptive information related to a Company's reportable operating segments.
SFAS No. 132 standardizes the disclosure requirements for pensions and other
postretirement benefits, requires additional information on changes in the
benefit obligations and fair values of plan assets that will facilitate
financial analysis and eliminates certain previously required disclosures. The
adoption of these new accounting standards did not have a material effect on the
consolidated financial statements of the Company.
32
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In 1998, the Company adopted the American Institute of Certified Public
Accountants' ("AICPA") Statement of Position ("SOP") 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use". Under the
Company's previous accounting policy, costs for internal use software, whether
developed or obtained, were generally expensed as incurred. In compliance with
SOP 98-1, the Company expenses costs incurred in the preliminary project stage
and, thereafter, capitalizes costs incurred in the developing or obtaining of
internal use software. Certain costs, such as maintenance and training, are
expensed as incurred. Capitalized costs are amortized over a period of not more
than five years and are subject to impairment evaluation in accordance with the
provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of". The adoption of SOP 98-1 resulted
in an increase in operating income and a decrease in net loss of approximately
$12,450 ($.09 per share) for the year ended December 31, 1998.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities," which requires that costs of start-up activities,
including organizational costs, be expensed as incurred. This SOP will be
effective for the Company's 1999 consolidated financial statements. In the
opinion of the Company's management, it is not anticipated that the adoption of
SOP 98-5 will have a material effect on the consolidated financial statements of
the Company. In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
becomes effective for the Company's 2000 consolidated financial statements. SFAS
No. 133 requires that derivative instruments be measured at fair value and
recognized as assets or liabilities in a company's balance sheet. The Company is
currently evaluating the effect that SFAS No. 133 will have on the Company's
consolidated financial statements.
CASH AND CASH EQUIVALENTS. Management considers all highly liquid
instruments purchased with an original maturity of 90 days or less to be cash
equivalents.
INVENTORIES. Inventories, including paper, purchased manuscripts,
photographs and art, are valued at the lower of cost or market, principally on a
first-in, first-out ("FIFO") basis.
PROPERTY AND EQUIPMENT. Property and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation of property and
equipment, and the amortization of leasehold improvements are provided at rates
based on the estimated useful lives or lease terms, if shorter, using primarily
the straight-line method. Improvements are capitalized while maintenance and
repairs are expensed as incurred.
INVESTMENTS IN JOINT VENTURE AND OTHER. Investments in which the Company
has at least a 20 percent, but not more than a 50 percent interest, are
accounted for under the equity method. Investments in companies below 20 percent
are accounted for under the cost method. The fair value of these investments
approximate cost and are recorded in other non-current assets on the
accompanying consolidated balance sheet.
EDITORIAL AND PRODUCT DEVELOPMENT COSTS. Editorial costs and product
development costs are generally expensed as incurred. Product development costs
include the cost of artwork, graphics, prepress, plates and photography for new
products.
33
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING AND SUBSCRIPTION ACQUISITION COSTS. Advertising and
subscription acquisition costs are expensed the first time the advertising takes
place, except for direct-response advertising, the primary purpose of which is
to elicit sales from customers who can be shown to have responded specifically
to the advertising and that results in probable future economic benefits.
Direct-response advertising consists of product promotional mailings,
catalogues, telemarketing and subscription promotions. These direct-response
advertising costs are capitalized as assets and amortized over the estimated
period of future benefit using a ratio of current period revenues to total
current and estimated future period revenues. The amortization periods range
from 6 months to 2 years subsequent to the promotional event. Amortization of
direct-response advertising costs is included in marketing and circulation
expenses on the accompanying statements of consolidated operations. Advertising
expense was approximately $54,700, $122,400 and $121,200 during the years ended
December 31, 1998, 1997 and 1996, respectively (see Note 9).
DEFERRED FINANCING COSTS. Deferred financing costs are being amortized by
the straight-line method over the terms of the related indebtedness.
DEFERRED WIRING AND INSTALLATION COSTS. Wiring and installation costs
incurred by Channel One and PRIMEDIA Workplace Learning have been capitalized
and are being amortized by the straight-line method over the related estimated
useful lives which range from five to 15 years.
$11.625 SERIES B EXCHANGEABLE PREFERRED STOCK ("SERIES B PREFERRED STOCK"),
$10.00 SERIES D EXCHANGEABLE PREFERRED STOCK ("SERIES D PREFERRED STOCK"), $9.20
SERIES E/SERIES F EXCHANGEABLE PREFERRED STOCK ("SERIES E/SERIES F PREFERRED
STOCK") AND $8.625 SERIES H EXCHANGEABLE PREFERRED STOCK ("SERIES H PREFERRED
STOCK"). The Series B Preferred Stock, Series D Preferred Stock, Series
E/Series F Preferred Stock and Series H Preferred Stock are stated at fair value
on the date of issuance less issuance costs. The difference between their
carrying values and their redemption values is being amortized (using the
interest method) by periodic charges to additional paid-in capital.
COMMON STOCK SUBJECT TO REDEMPTION. The common stock subject to redemption
is stated at redemption value which is equal to quoted market value. The
difference between the carrying value of such stock and its redemption value is
being amortized by periodic charges to additional paid-in capital.
COMPUTER SOFTWARE. Costs incurred in connection with computer software to
be sold, leased or otherwise marketed, which represent production costs
subsequent to establishing technological feasibility, are reported as other
non-current assets and amortized to cost of goods sold over the estimated period
of future benefit using the straight-line method. Costs incurred to develop or
obtain computer software for internal use are capitalized and recorded in
property and equipment. These costs are amortized over the estimated period of
future benefit using the straight-line method.
INTEREST RATE SWAP AGREEMENTS. The Company's interest rate swap agreements
are designated and effective as modifications to existing debt obligations to
reduce the impact of changes in the interest rates on its floating rate
borrowings and, accordingly, are accounted for using the settlement method of
accounting. The differentials to be paid or received under the interest rate
swap agreements are accrued as interest rates change and are recognized as
adjustments to interest expense. The Company considers swap terms including the
reference rate, payment and maturity dates and the notional amount in
determining if an interest rate swap agreement is effective at modifying an
existing debt obligation. If the criteria for designation are no longer met or
the underlying instrument matures or is extinguished, the Company will
34
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
account for outstanding swap agreements at fair market value and any resulting
gain or loss will be recognized as other income or expense. Any gains or losses
upon early termination of the agreements will be deferred and amortized over the
shorter of the remaining life of the hedged existing debt obligation or the
original life of the interest rate swap agreement.
PURCHASE ACCOUNTING. With respect to the acquisitions, the total purchase
price has been allocated to the tangible and intangible assets and liabilities
based on their respective fair values.
EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED AND INTANGIBLE
ASSETS. Intangible assets are being amortized using both accelerated and
straight-line methods over periods ranging from 1/4 of 1 year to 40 years. The
excess of purchase price over net assets acquired is being amortized on a
straight-line basis over 40 years. The recoverability of the carrying values of
the excess of the purchase price over the net assets acquired and intangible
assets is evaluated quarterly to determine if an impairment in value has
occurred. An impairment in value will be considered to have occurred when it is
determined that the undiscounted future operating cash flows generated by the
acquired businesses are not sufficient to recover the carrying values of such
intangible assets. If it has been determined that an impairment in value has
occurred, the excess of the purchase price over the net assets acquired and
intangible assets would be written down to an amount which will be equivalent to
the present value of the future operating cash flows to be generated by the
acquired businesses.
REVENUE RECOGNITION. Advertising revenues for all consumer magazines are
recognized as income at the on-sale date, net of provisions for estimated
rebates, adjustments and discounts. Other advertising revenues are generally
recognized based on the publications' cover dates. Newsstand sales are
recognized as income at the on-sale date for all publications, net of provisions
for estimated returns. Subscriptions are recorded as deferred revenue when
received and recognized as income over the term of the subscription. PRIMEDIA
Workplace Learning subscription and broadcast fees for satellite and videotape
network services are recognized in the month services are rendered. Sales of
books and other items are recognized as revenue upon shipment, net of an
allowance for returns which is provided based on sales. Distribution costs
charged to customers are recognized as revenue when the related product is
shipped. Channel One advertising revenue, net of commissions, is recognized as
advertisements are aired on the program. Certain advertisers are guaranteed a
minimum number of viewers per advertisement shown; the revenue recognized is
based on the actual viewers delivered not to exceed the original contract value.
FOREIGN CURRENCY. Gains and losses on foreign currency transactions, which
are not significant, have been included in other, net on the accompanying
statements of consolidated operations. The effects of translation of foreign
currency financial statements into U.S. dollars are included in the accumulated
other comprehensive loss account in shareholders' equity (deficiency).
3. ACQUISITIONS AND JOINT VENTURE AND OTHER
ACQUISITIONS. The Company acquired certain net assets or stock of:
1996-Cahners Consumer Magazines ("Cahners"), a publisher of specialty
consumer magazines including AMERICAN BABY, MODERN BRIDE, SAIL and POWER &
MOTORYACHT, along with 20 related properties and PRIMEDIA Workplace Learning,
which utilizes various multi-media technologies to provide workplace
35
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
3. ACQUISITIONS AND JOINT VENTURE AND OTHER (CONTINUED)
training, news, and information to professionals and students in the corporate
and professional, automotive, banking, government and public service, education,
healthcare, and interactive distance training markets. In addition to the
aforementioned, the Company completed several other smaller acquisitions during
1996.
The foregoing acquisitions, except PRIMEDIA Workplace Learning, if they had
occurred on January 1 of the year prior to acquisition, would not have had a
material impact on the results of operations. The following unaudited pro forma
information presents the results of operations of the Company as if the
acquisition of PRIMEDIA Workplace Learning had taken place on January 1, 1996:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
-----------------------
<S> <C>
Sales, net........................................................... $ 1,413,930
Operating income..................................................... 82,100
Income before extraordinary charge................................... 1,314
Loss applicable to common shareholders before
extraordinary charge............................................... (42,212)
Basic and diluted loss applicable to common shareholders
per common share before extraordinary charge....................... (.33)
</TABLE>
1997-QWIZ, a provider of interactive, computer-based testing and training
products; a leading electronic automotive cost guide; a publisher of automotive
enthusiast magazines including LOWRIDER, ARTE, LOWRIDER BICYCLE and LOWRIDER
JAPAN; the publisher of REGISTERED REPRESENTATIVE, a trade magazine edited for
and circulated to the retail securities industry in the United States; a
publisher of specialty magazines targeting the professional recording, sound and
music production industry; and the leading provider of highly specialized
training and certification software products for the insurance industry. In
addition to the aforementioned, the Company completed several other smaller
acquisitions during 1997. The 1997 acquisitions, if they had occurred on January
1 of the year prior to acquisition, would not have had a material impact on the
results of operations.
1998-Cowles Enthusiast Media and Cowles Business Media, publishers of 25
enthusiast titles, 11 technical and trade magazines and newsletters including,
FLY FISHERMAN, VEGETARIAN TIMES and CABLE WORLD; American Guidance Service, a
leading publisher of assessments, textbooks and instructional materials for
students with special education needs; and American Trucker, a publisher of 18
regional monthly journals. In addition to the aforementioned, the Company
completed several smaller acquisitions during 1998. The 1998 acquisitions, had
they occurred on January 1 of the year prior to acquisition, would not have had
a material impact on the results of operations. The 1998 acquisitions affected
all segments and were financed through borrowings under the Company's credit
agreements. The cash payments for these acquisitions on an aggregate basis were
$609,602 (net of liabilities assumed of approximately $132,000), including
certain immaterial purchase price adjustments. The excess purchase price over
net assets acquired was approximately $462,000.
The acquisitions have been accounted for by the purchase method. The
preliminary purchase cost allocations for the above-mentioned current year's
acquisitions are subject to adjustment when additional information concerning
asset and liability valuations are obtained. The final asset and liability fair
values
36
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
3. ACQUISITIONS AND JOINT VENTURE AND OTHER (CONTINUED)
may differ from those set forth on the accompanying consolidated balance sheet
at December 31, 1998; however, the changes are not expected to have a material
effect on the consolidated financial position of the Company. The consolidated
financial statements include the operating results of these acquisitions
subsequent to their respective dates of acquisition.
JOINT VENTURE AND OTHER. In 1998, the Company created PRIMEDIA Ventures, a
fund to invest in early-stage Internet companies and other technology
opportunities such as commerce services, enterprise software applications and
advertising-related technologies. Its investments include an online wedding gift
registry service, subscription based Internet services for building
relationships, a provider of online loyalty and rewards programs and an Internet
platform for staging live interactive presentations. In addition, PRIMEDIA
Intertec made an investment in a joint venture in China to publish trade
magazines in Chinese language editions. The investments aggregated $7,471 during
1998 (see Note 2).
4. DIVESTITURES AND NON-CORE BUSINESSES
During 1996, the Company completed the sale of certain technical and trade
magazines, which were acquired in 1995 and upon acquisition were designated to
be sold. The differences between the proceeds received and the carrying values
of the assets sold were treated as adjustments to the excess of purchase price
over net assets acquired related to the retained businesses. In addition, the
Company sold a monthly tabloid targeted to electronic design engineers for
consideration of a motion picture and television production magazine and cash
proceeds. During 1996, the Company also completed the sale of the Kits and
Leaflets Division of PRIMEDIA Special Interest Publications and certain
specialty consumer magazines. In connection with these sales, the Company
received aggregate cash proceeds of $8,071 and recorded a net gain on sale of
businesses of approximately $5,800.
During 1996, the Company decided to divest Katharine Gibbs. In 1997, the
Company announced its intention to divest the following non-core business units:
THE DAILY RACING FORM, Newbridge Communications, Inc. (excluding Films for the
Humanities and Sciences), NEW WOMAN magazine, Krames Communications Incorporated
("Krames"), STAGEBILL and Intertec Mailing Services. In 1998, the Company
decided to divest Nelson Information, Inc. ("Nelson") and certain enthusiast
titles as well as discontinue the Funk and Wagnalls' products and certain other
enthusiast titles. These planned divestitures and discontinuances are
collectively referred to as the Non-Core Businesses and are part of the
Company's plan to focus on markets that have dynamic growth opportunities.
During the second quarter of 1997, the Company completed the sale of
Katharine Gibbs with proceeds net of direct selling expenses approximating
carrying value. During the third quarter of 1997, the Company recorded a
provision aggregating $138,640 for the reduction of the carrying values of
Newbridge Communications, Inc. (excluding Films for the Humanities and
Sciences), THE DAILY RACING FORM, STAGEBILL, Krames, NEW WOMAN magazine and
Intertec Mailing Services to the estimated realizable value of the net assets of
such businesses. During the second half of 1997, the Company completed the sales
of Krames, NEW WOMAN magazine, Intertec Mailing Services, Newbridge Book Clubs,
Newbridge Educational Publishing and STAGEBILL. In connection with these sales,
the Company received aggregate proceeds of $171,575 net of direct selling
expenses.
37
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
4. DIVESTITURES AND NON-CORE BUSINESSES (CONTINUED)
In 1998, the Company completed its focusing program with the sales of
Nelson, certain enthusiast titles and THE DAILY RACING FORM. In connection with
these sales, the Company recorded a gain of $19,716 and has received aggregate
proceeds of $61,090 net of direct selling expenses.
The operating results of the Non-Core Businesses are included in the
accompanying statements of consolidated operations up to their date of
disposition for the years ended December 31, 1998, 1997 and 1996. Total sales
for the Non-Core Businesses were $42,463, $275,740 and $346,068 for the years
ended December 31, 1998, 1997 and 1996, respectively. Excluding the (gain) loss
on the sales of businesses net, and other, operating income (loss) for the
Non-Core Businesses was $6,609, $10,634 and $(796) for the years ended December
31, 1998, 1997 and 1996, respectively.
On August 1, 1998, the Company also discontinued Executive Education Network
("EXEN"), a PRIMEDIA Workplace Learning network, due to unprofitability and
increased competition in this field. As a result, the Company recorded a $4,000
provision related to discontinuance costs, which is recorded net of gains on the
sales of Nelson and THE DAILY RACING FORM, in (gain) loss on the sales of
businesses, net and other on the accompanying statement of consolidated
operations. In addition, the Company recorded a $5,800 write-down of EXEN's
excess of purchase price over net assets acquired and other intangible assets
which is included in amortization expense (see Note 8 and Note 23).
5. ACCOUNTS RECEIVABLE, NET
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1998 1997
---------- ----------
Accounts receivable................................................... $ 284,441 $ 236,819
Less: Allowance for doubtful accounts................................. 15,796 10,521
Allowance for returns and rebates................................ 21,507 27,009
---------- ----------
$ 247,138 $ 199,289
---------- ----------
---------- ----------
</TABLE>
6. INVENTORIES, NET
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1998 1997
--------- ---------
Finished goods.......................................................... $ 21,974 $ 12,271
Work in process......................................................... 223 3,314
Raw materials........................................................... 22,262 14,494
--------- ---------
44,459 30,079
Less: Allowance for obsolescence........................................ 3,205 2,482
--------- ---------
$ 41,254 $ 27,597
--------- ---------
--------- ---------
</TABLE>
38
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
7. PROPERTY AND EQUIPMENT, NET
Property and equipment, including that held under capital leases, consist of
the following:
<TABLE>
<CAPTION>
DECEMBER 31,
RANGE OF LIVES ----------------------
(YEARS) 1998 1997
--------------- ---------- ----------
<S> <C> <C> <C>
Land.................................................. -- $ 4,160 $ 4,986
Buildings and improvements............................ 1-40 53,053 33,808
Furniture and fixtures................................ 5-10 34,748 28,135
Machinery and equipment............................... 3-10 105,594 81,226
Internal use software................................. 3-5 14,091 --
School equipment...................................... 5-10 63,111 58,665
Other................................................. 1-7 8,533 2,992
---------- ----------
283,290 209,812
Less: Accumulated depreciation and amortization....... 135,632 93,451
---------- ----------
$ 147,658 $ 116,361
---------- ----------
---------- ----------
</TABLE>
Included in property and equipment are assets which were acquired under
capital leases in the amount of $31,439 and $27,498 with accumulated
amortization of $493 and $3,043 at December 31, 1998 and 1997, respectively (see
Note 19). In 1998, the Company replaced its existing satellite capital lease
with a new capital lease.
8. INTANGIBLE ASSETS AND EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED, NET
Other intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
RANGE OF LIVES --------------------------
(YEARS) 1998 1997
--------------- ------------ ------------
<S> <C> <C> <C>
Trademarks........................................ 40 $ 391,764 $ 342,645
Membership, subscriber and customer lists......... 2-20 582,812 456,716
Non-compete agreements............................ 1-10 227,108 194,116
Trademark license agreements...................... 1-40 3,721 2,909
Copyrights........................................ 3-20 36,594 25,715
Video library..................................... 1-7 14,837 14,837
Databases......................................... 10-12 10,577 10,577
Advertiser lists.................................. .25-20 200,069 223,443
Distribution agreements........................... 1-7 11,525 11,525
Other............................................. 1-15 28,994 19,647
------------ ------------
1,508,001 1,302,130
Less: Accumulated amortization.................... 777,760 641,862
------------ ------------
$ 730,241 $ 660,268
------------ ------------
------------ ------------
</TABLE>
The excess of the purchase price over the fair value of the net assets
acquired is net of accumulated amortization of $137,094 and $94,735 at December
31, 1998 and 1997, respectively (see Note 4).
39
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
9. OTHER NON-CURRENT ASSETS
Other non-current assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1998 1997
---------- ----------
<CAPTION>
<S> <C> <C>
Deferred financing costs, net......................................... $ 16,617 $ 15,276
Deferred wiring and installation costs, net........................... 49,822 54,387
Direct-response advertising costs, net................................ 17,466 16,520
Prepublication and programming costs, net............................. 12,652 4,526
Investments in joint venture and other................................ 6,843 --
Other................................................................. 9,930 8,167
---------- ----------
$ 113,330 $ 98,876
---------- ----------
---------- ----------
</TABLE>
The deferred financing costs are net of accumulated amortization of $7,309
and $5,093 at December 31, 1998 and 1997, respectively. The deferred wiring and
installation costs are net of accumulated amortization of $24,523 and $18,718 at
December 31, 1998 and 1997, respectively. Direct-response advertising costs are
net of accumulated amortization of $70,113 and $53,840 at December 31, 1998 and
1997, respectively. Prepublication and programming costs are net of accumulated
amortization of $11,765 and $6,843 at December 31, 1998 and 1997, respectively.
10. ACCRUED EXPENSES AND OTHER
Accrued expenses and other current liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1998 1997
---------- ----------
<CAPTION>
<S> <C> <C>
Payroll, commissions and related employee benefits.................... $ 68,350 $ 53,494
Systems costs......................................................... 1,357 2,066
Rent and lease liabilities............................................ 33,028 27,247
Retail display costs and allowances................................... 14,042 10,407
Promotion costs....................................................... 3,569 2,739
Royalties............................................................. 7,053 8,367
Circulation costs..................................................... 5,253 6,037
Professional fees..................................................... 10,877 12,319
Taxes................................................................. 17,290 18,528
Customer advances..................................................... 1,448 946
Deferred purchase price............................................... 10,853 16,204
Other................................................................. 50,681 46,416
---------- ----------
$ 223,801 $ 204,770
---------- ----------
---------- ----------
</TABLE>
40
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
11. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
<S> <C> <C>
1998 1997
------------ ------------
Borrowings under Credit Facilities................................ $ 1,258,236 $ 1,218,101
10 1/4% Senior Notes Due 2004..................................... 100,000 100,000
8 1/2% Senior Notes Due 2006..................................... 299,001 298,902
7 5/8% Senior Notes Due 2008..................................... 248,643 --
------------ ------------
1,905,880 1,617,003
Acquisition obligation payable.................................... 44,179 53,871
------------ ------------
1,950,059 1,670,874
Less: Current maturities of long-term debt........................ 21,167 14,333
------------ ------------
$ 1,928,892 $ 1,656,541
------------ ------------
------------ ------------
</TABLE>
The Company has credit facilities with The Chase Manhattan Bank, the Bank of
New York, Bankers Trust Company and the Bank of Nova Scotia as agents (the
"Credit Facilities"). The Credit Facilities are comprised of a $750,000 Tranche
A Revolving Loan Commitment ("Tranche A Loan Commitment"), a $250,000 Term Loan
("Term Loan") and an additional $250,000 Revolving Loan Commitment ("Revolver/
Term Loan"). In addition, the Company has the right to solicit commitments of up
to $250,000 under the Tranche B Revolving Loan Facility ("Tranche B Facility").
In May 1997, the Company solicited commitments of $150,000 ("Tranche B Loan
Commitment") under the Tranche B Facility. The Tranche A Loan Commitment may be
utilized through the incurrence of Tranche A revolving credit loans, swingline
loans which may not exceed $40,000 in total, Canadian dollar loans which may not
exceed the Canadian dollar equivalent of $40,000 in total or the issuance of
letters of credit which may not exceed $40,000. The Tranche B Facility may be
utilized through the incurrence of Tranche B revolving credit loans. The
borrowings under the Credit Facilities may be used for general corporate and
working capital purposes as well as to finance certain future acquisitions.
The commitments under the Tranche A Loan Commitment and the Tranche B Loan
Commitment are subject to mandatory reductions semi-annually on June 30 and
December 31 with the first reduction on June 30, 1999 and the final reduction on
June 30, 2004. The mandatory reductions for the Tranche A Loan Commitment are as
follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
- --------------------------------------------------------------------------------
<S> <C>
1999............................................................................ $ 75,000
2000............................................................................ 150,000
2001............................................................................ 150,000
2002............................................................................ 150,000
2003............................................................................ 150,000
2004............................................................................ 75,000
------------
$ 750,000
------------
------------
</TABLE>
41
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
11. LONG-TERM DEBT (CONTINUED)
The mandatory reductions for the Tranche B Loan Commitment are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
- --------------------------------------------------------------------------------
<S> <C>
1999............................................................................ $ 15,000
2000............................................................................ 30,000
2001............................................................................ 30,000
2002............................................................................ 30,000
2003............................................................................ 30,000
2004............................................................................ 15,000
------------
$ 150,000
------------
------------
</TABLE>
The mandatory reductions for the Tranche B Loan Commitment are based on
defined percentages of the total Tranche B Loan Commitment. To the extent that
the total revolving credit loans outstanding exceed the reduced commitment
amount, these loans must be paid down to an amount equal to or less than the
reduced commitment amount. However, if the total revolving credit loans
outstanding do not exceed the reduced commitment amount, then there is no
requirement to pay down any of the revolving credit loans.
The principal amounts of the Term Loan and the Revolver/Term Loan will each
be repaid semi-annually on June 30 and December 31 of each year, with an initial
payment of $25,000 on June 30, 2000, installments of $25,000 on each payment
date thereafter through December 31, 2003 and a final payment of $50,000 on June
30, 2004.
On April 20, 1998, the Company's 364-day credit facility (the "New Credit
Facility") expired. The Company had commitments of $150,000.
At December 31, 1998, the borrowings under the Credit Facilities consist of
$628,236 under the Tranche A Loan Commitment, $250,000 under the Revolver/Term
Loan, $130,000 under the Tranche B Loan Commitment and $250,000 under the Term
Loan.
At December 31, 1998, the Company has commitments of $1,400,000 and can
borrow up to $1,500,000 in the aggregate under the Credit Facilities.
The amounts borrowed pursuant to the Credit Facilities bear interest, at the
Company's option as follows: (i) the higher of (a) the Federal Funds Effective
Rate as published by the Federal Reserve Bank of New York plus 1/2 of 1% and (b)
the prime commercial lending rate announced by the Agent from time to time (in
each case, the "Base Rate"); plus, in each case, an applicable margin of up to
1/8 of 1% as specified in the Credit Facilities or (ii) the Eurodollar Rate plus
an applicable margin ranging from 1/2 of 1% to 1 1/2% as specified in the Credit
Facilities. All swingline loans bear interest at the Base Rate plus the
applicable margin of up to 1/8 of 1% as specified in the Credit Facilities.
During 1998 and 1997, the weighted average interest rate on the Credit
Facilities was 6.84% and 7.11%, respectively. Interest rates on the borrowings
outstanding under the Credit Facilities ranged from 6.35% to 8.50% in 1998 and
from 7.04% to 8.50% in 1997. Interest rates on the borrowings outstanding under
the Credit Facilities ranged from 6.72% to 7.88% at December 31, 1998.
42
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
11. LONG-TERM DEBT (CONTINUED)
Under the Credit Facilities, the Company has agreed to pay commitment fees
equal to 3/8 of 1% per annum on the daily average aggregate unutilized
commitment under the Tranche A Loan Commitment and the Tranche B Loan
Commitment. The Company has also agreed to pay certain fees with respect to the
issuance of letters of credit and an annual administration fee. Under the New
Credit Facility, the Company had agreed to pay commitment fees equal to 1/8 of
1% per annum on the daily average aggregate unutilized revolving loan
commitment.
10 5/8% SENIOR NOTES. The Company purchased $16,750 and $20,850 of the
10 5/8% Senior Notes in 1996 and 1997, respectively. On May 1, 1997, the Company
redeemed the $212,400 remaining principal amount of the 10 5/8% Senior Notes at
104% plus accrued and unpaid interest. The aggregate premium paid and the
write-off of related deferred financing costs are classified as an extraordinary
charge and are recorded at an aggregate value of $15,401 on the accompanying
statement of consolidated operations for the year ended December 31, 1997.
10 1/4% SENIOR NOTES. Interest is payable semi-annually in June and
December at an annual rate of 10 1/4%. The 10 1/4% Senior Notes mature on June
1, 2004, with no sinking fund requirements. The 10 1/4% Senior Notes may not be
redeemed prior to June 1, 1999 other than in connection with a change of
control. Beginning in 1999 and thereafter, the 10 1/4% Senior Notes are
redeemable at prices ranging from 104.95% with annual reductions to 100% in 2002
plus accrued and unpaid interest.
8 1/2% SENIOR NOTES. Interest is payable semi-annually in February and
August at an annual rate of 8 1/2%. The 8 1/2% Senior Notes mature on February
1, 2006, with no sinking fund requirements. The 8 1/2% Senior Notes may not be
redeemed prior to February 1, 2001 other than in connection with a change of
control. Beginning in 2001 and thereafter, the 8 1/2% Senior Notes are
redeemable in whole or in part, at the option of the Company, at prices ranging
from 104.25% with annual reductions to 100% in 2003 plus accrued and unpaid
interest.
7 5/8% SENIOR NOTES. On February 17, 1998, the Company completed a private
offering of $250,000 7 5/8% Senior Notes Due 2008, ("Old 7 5/8% Senior Notes").
The Old 7 5/8% Senior Notes were issued at 99.425% with related issuance costs
of approximately $4,000 and mature on April 1, 2008, with no sinking fund
requirements. Interest on the Old 7 5/8% Senior Notes was payable semi-annually
in April and October at the annual rate of 7 5/8% commencing October 1, 1998. On
June 10, 1998, the Company exchanged the Old 7 5/8% Senior Notes for a new
series of $250,000 7 5/8% Senior Notes Due 2008 ("New 7 5/8% Senior Notes"). The
terms of the New 7 5/8% Senior Notes are the same as the terms of the Old 7 5/8%
Senior Notes except that the New 7 5/8% Senior Notes have been registered under
the Securities Act of 1933. The New 7 5/8% Senior Notes may not be redeemed
prior to April 1, 2003 other than in connection with a change of control.
Beginning on April 1, 2003 and thereafter, the New 7 5/8% Senior Notes are
redeemable in whole or in part, at the option of the Company, at prices ranging
from 103.813% with annual reductions to 100% in 2006 plus accrued and unpaid
interest. Net proceeds from the issuance of the Old 7 5/8% Senior Notes of
approximately $244,000 were primarily used to redeem the Series B Preferred
Stock and to pay down borrowings under the Credit Facilities, which amounts may
be reborrowed for general corporate purposes including acquisitions.
The 10 1/4% Senior Notes, 8 1/2% Senior Notes and the New 7 5/8% Senior
Notes (together referred to as the "Senior Notes"), and the Credit Facilities,
all rank senior in right of payment to all subordinated indebtedness of PRIMEDIA
Inc. (a holding company).
43
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
11. LONG-TERM DEBT (CONTINUED)
The above indebtedness, among other things, limits the ability of the
Company to change the nature of its businesses, incur indebtedness, create
liens, sell assets, engage in mergers, consolidations or transactions with
affiliates, make investments in or loans to certain subsidiaries, issue
guarantees and make certain restricted payments including dividend payments on
its common stock in excess of $25,000 in any given year. Under the Company's
most restrictive debt covenants, the Company must maintain a minimum interest
coverage ratio of 1.8 to 1 and a minimum fixed charge coverage ratio of 1.05 to
1. The Company's maximum allowable leverage ratio is 6.0 to 1. The Company
believes it is in compliance with the financial and operating covenants of its
principal financing arrangements. Borrowings under the above indebtedness are
guaranteed by each of the domestic wholly-owned subsidiaries of the Company.
Such guarantees are full, unconditional and joint and several. The separate
financial statements of the domestic subsidiaries are not presented because the
Company believes the separate financial statements would not be material to the
shareholders and potential investors. The Company's foreign subsidiaries are not
guarantors of the above indebtedness. The total assets, revenues, income or
equity of such foreign subsidiaries, both individually and on a combined basis,
are inconsequential in relation to the total assets, revenues, income or equity
of the Company.
ACQUISITION OBLIGATION. In connection with the acquisition of certain of
the Company's specialty consumer magazine operations and THE DAILY RACING FORM,
an obligation was recorded equivalent to the present value of the principal and
interest payments of the notes payable in the amount of $44,179 at December 31,
1998 and $53,871 at December 31, 1997. The interest rate used in calculating the
present value was 13%, which represents management's estimate of the prevailing
market rate of interest for such obligation at the time of the acquisition.
Principal and interest amounts aggregating $49,167 will be repaid from June 1999
through June 2001.
INTEREST RATE SWAP AGREEMENTS. In May 1995, the Company entered into two,
three-year interest rate swap agreements with an aggregate notional amount of
$200,000 which expired in May 1998. Under these swap agreements, the Company
received a floating rate of interest based on three-month LIBOR, which reset
quarterly, and paid a fixed rate of interest which increased each year during
the terms of the respective agreements. The weighted average variable rate and
weighted average fixed rate were 5.7% and 6.7%, respectively, in 1998, 5.7% and
6.5%, respectively, in 1997 and 5.5% and 6.2%, respectively, in 1996. Also, in
May 1995, the Company entered into a three-year interest rate cap agreement
which expired in May 1998. As a result of this transaction, the Company had the
right to receive payments based on a notional principal amount of $100,000 to
the extent that three-month LIBOR exceeded 7.75% in year one, 8.75% in year two
and 9.75% in year three of the agreement. Any interest differential received was
recognized as an adjustment to interest expense. The interest rate cap fee was
recognized as an adjustment to interest expense over the life of the interest
rate cap agreement.
In the fourth quarter of 1996, the Company entered into six, one-year
interest rate swap agreements with an aggregate notional amount of $600,000.
Under these swap agreements, the Company received a floating rate of interest
based on three-month LIBOR, which reset quarterly, and paid a fixed rate of
interest, each quarter, for the term of the agreements. The weighted average
variable rate and weighted average fixed rate were 5.7% and 5.8%, respectively,
in 1997 and 5.5% and 5.8%, respectively, in 1996. These interest rate swap
agreements expired during the fourth quarter of 1997.
44
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
11. LONG-TERM DEBT (CONTINUED)
In July 1997, the Company entered into four, three-year and two, four-year
interest rate swap agreements, with an aggregate notional amount of $600,000.
Under these new swap agreements, which commenced on January 2, 1998, the Company
receives a floating rate of interest based on three-month LIBOR, which resets
quarterly, and the Company pays a fixed rate of interest, each quarter, for the
terms of the respective agreements. The weighted average variable rate and
weighted average fixed rate were 5.6% and 6.3%, respectively, in 1998.
The net interest differential, related to the interest rate swap agreements
and the interest rate cap agreement, charged to interest expense in 1998, 1997
and 1996 was $4,674, $2,048 and $1,943, respectively. The Company is exposed to
credit risk in the event of nonperformance by counterparties to its interest
rate swap agreements. Credit risk is limited by entering into such agreements
with primary dealers only; therefore, the Company does not anticipate that
nonperformance by counterparties will occur. Notwithstanding this, the Company's
treasury department monitors counterparty credit ratings at least quarterly
through reviewing independent credit agency reports. Both current and potential
exposure are evaluated, as necessary, by obtaining replacement cost information
from alternative dealers. Potential loss to the Company from credit risk on
these agreements is limited to amounts receivable, if any. The Company enters
into these agreements solely to hedge its interest rate risk.
12. INCOME TAXES
At December 31, 1998, the Company had aggregate net operating and capital
loss carryforwards for Federal and state income tax purposes of approximately
$901,400 which will be available to reduce future taxable income. The
utilization of such net operating losses ("NOLs") and capital losses is subject
to certain limitations under Federal income tax laws. In certain instances, such
NOLs may only be used to reduce future taxable income of the respective company
which generated the NOLs. The capital losses may only be used to offset future
capital gains. The NOLs and capital losses are scheduled to expire in the
following years:
45
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
12. INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
CAPITAL
NOLS LOSSES TOTAL
---------- --------- ----------
<S> <C> <C> <C>
2002....................................................... $ -- $ 15,200 $ 15,200
2003....................................................... 24,900 66,500 91,400
2004....................................................... 60,400 -- 60,400
2005....................................................... 121,800 -- 121,800
2006....................................................... 93,400 -- 93,400
2007....................................................... 82,700 -- 82,700
2008....................................................... 82,700 -- 82,700
2009....................................................... 68,900 -- 68,900
2010....................................................... 154,900 -- 154,900
2011....................................................... 25,400 -- 25,400
2012....................................................... 76,900 -- 76,900
2018(*).................................................... 27,700 -- 27,700
---------- --------- ----------
$ 819,700 $ 81,700 $ 901,400
---------- --------- ----------
---------- --------- ----------
</TABLE>
- ------------------------
(*) Under the Taxpayer Relief Act of 1997, the carryforward period of NOLs
arising after January 1, 1998 was extended from 15 to 20 years.
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b)
operating and capital loss carryforwards. The tax effects of significant items
comprising the Company's net deferred income tax assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
---------------------------------
<S> <C> <C> <C>
FEDERAL STATE TOTAL
---------- --------- ----------
DEFERRED INCOME TAX ASSETS:
Difference between book and tax basis of inventory............................. $ 452 $ 133 $ 585
Difference between book and tax basis of accrued expenses and other............ 24,298 7,118 31,416
Reserves not currently deductible.............................................. 499 146 645
Difference between book and tax basis of other intangible assets............... 47,484 13,911 61,395
Operating loss carryforwards................................................... 242,586 46,530 289,116
Capital loss carryforwards..................................................... 28,023 1,634 29,657
---------- --------- ----------
Total.......................................................................... 343,342 69,472 412,814
---------- --------- ----------
DEFERRED INCOME TAX LIABILITIES:
Difference between book and tax basis of other intangible assets............... 59,219 17,349 76,568
Difference between book and tax basis of property and equipment................ 9,396 2,753 12,149
Other.......................................................................... 14,102 4,131 18,233
---------- --------- ----------
Total.......................................................................... 82,717 24,233 106,950
---------- --------- ----------
Net deferred income tax assets................................................. 260,625 45,239 305,864
Less: Valuation allowances..................................................... 107,969 21,695 129,664
---------- --------- ----------
Net............................................................................ $ 152,656 $ 23,544 $ 176,200
---------- --------- ----------
---------- --------- ----------
</TABLE>
46
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
12. INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------------
<S> <C> <C> <C>
FEDERAL STATE TOTAL
---------- --------- ----------
DEFERRED INCOME TAX ASSETS:
Difference between book and tax basis of inventory............................. $ 2,187 $ 641 $ 2,828
Difference between book and tax basis of accrued expenses and other............ 16,075 4,709 20,784
Reserves not currently deductible.............................................. 2,615 766 3,381
Difference between book and tax basis of other intangible assets............... 80,945 23,714 104,659
Operating loss carryforwards................................................... 215,832 44,065 259,897
---------- --------- ----------
Total.......................................................................... 317,654 73,895 391,549
---------- --------- ----------
DEFERRED INCOME TAX LIABILITIES:
Difference between book and tax basis of other intangible assets............... 39,283 11,508 50,791
Difference between book and tax basis of property and equipment................ 16,405 4,806 21,211
Other.......................................................................... 19,424 5,691 25,115
---------- --------- ----------
Total.......................................................................... 75,112 22,005 97,117
---------- --------- ----------
Net deferred income tax assets................................................. 242,542 51,890 294,432
Less: Valuation allowances..................................................... 89,886 28,346 118,232
---------- --------- ----------
Net............................................................................ $ 152,656 $ 23,544 $ 176,200
---------- --------- ----------
---------- --------- ----------
</TABLE>
At December 31, 1998, 1997 and 1996, management of the Company reviewed
recent operating results and projected future operating results. At the end of
each of the respective years, management determined that a portion of the net
deferred income tax assets would likely be realized. The amounts of the net
deferred income tax assets were not adjusted in 1998 and 1997. In 1996, the
Company reduced the valuation allowances by $62,400 and recorded an income tax
benefit of $53,300 ($46,200 and $7,100 related to Federal and state income tax
benefits, respectively) and a reduction of the excess of purchase price over net
assets acquired of $9,100. The amount of the net deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced. There were net
increases in the valuation allowances of $11,432 and $43,638 during 1998 and
1997, respectively.
A portion of the valuation allowances in the amount of approximately $71,000
at December 31, 1998 relates to net deferred tax assets which were recorded in
accounting for the acquisitions of various entities. The recognition of such
amount in future years will be allocated to reduce the excess of the purchase
price over the net assets acquired and other non-current intangible assets.
47
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
13. EXCHANGEABLE PREFERRED STOCK
Exchangeable Preferred Stock consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
---------- ----------
<S> <C> <C>
$11.625 Series B Exchangeable Preferred Stock............................................. $ -- $ 155,281
$10.00 Series D Exchangeable Preferred Stock.............................................. 195,042 194,495
$9.20 Series E/Series F Exchangeable Preferred Stock...................................... 120,306 120,504
$8.625 Series H Exchangeable Preferred Stock.............................................. 242,493 --
---------- ----------
$ 557,841 $ 470,280
---------- ----------
---------- ----------
</TABLE>
$11.625 SERIES B EXCHANGEABLE PREFERRED STOCK. The Company authorized
2,000,000 shares of $.01 par value Series B Preferred Stock, 1,576,036 shares of
which were issued and outstanding at December 31, 1997. The liquidation and
redemption value at December 31, 1997 was $157,604. Annual dividends of $11.625
per share on the Series B Preferred Stock were cumulative and payable quarterly
in cash or by issuing additional shares of the Series B Preferred Stock.
Commencing in the second quarter of 1997, the Company elected to satisfy its
Series B Preferred Stock dividend requirements in cash. On March 20, 1998, the
Company redeemed all of the outstanding shares of the Series B Preferred Stock
at a price of $105.80 per share, plus accrued and unpaid dividends aggregating
approximately $169,000.
$10.00 SERIES D EXCHANGEABLE PREFERRED STOCK. In 1996, the Company
completed an offering of 2,000,000 shares of $.01 par value, Series D Preferred
Stock at $100 per share. Annual dividends of $10.00 per share on the Series D
Preferred Stock are cumulative and payable quarterly, in cash. The liquidation
and redemption value at December 31, 1998 and 1997 was $200,000. On or after
February 1, 2001, the Series D Preferred Stock may be redeemed in whole or in
part, at the option of the Company, at specified redemption prices plus accrued
and unpaid dividends. The Company is required to redeem the Series D Preferred
Stock on February 1, 2008 at a redemption price equal to the liquidation
preference of $100 per share, plus accrued and unpaid dividends. The Series D
Preferred Stock is exchangeable in whole but not in part, at the option of the
Company, on any scheduled dividend payment date, into 10% Class D Subordinated
Exchange Debentures due 2008.
$9.20 SERIES E/SERIES F EXCHANGEABLE PREFERRED STOCK. On September 26,
1997, the Company completed a private offering of 1,250,000 shares of $.01 par
value, $9.20 Series E Exchangeable Preferred Stock ("Series E Preferred Stock")
at $100 per share. Annual dividends of $9.20 per share on the Series E Preferred
Stock were cumulative and payable quarterly, in cash, commencing February 1,
1998. On February 17, 1998, the Company exchanged the 1,250,000 shares of Series
E Preferred Stock for 1,250,000 shares of $.01 par value, $9.20 Series F
Exchangeable Preferred Stock ("Series F Preferred Stock"). The terms of the
Series F Preferred Stock are the same as the terms of the Series E Preferred
Stock except that the Series F Preferred Stock has been registered under the
Securities Act of 1933. The Series F Preferred Stock is exchangeable into 9.20%
Class F Subordinated Exchange Debentures due 2009, in whole but not in part, at
the option of the Company on any scheduled dividend payment date. Dividends on
the Series F Preferred Stock accrued and were cumulative from the last dividend
payment date on which dividends were paid on shares of the Series E Preferred
Stock. As of December 31, 1998 and 1997, all shares of the Series E/Series F
Preferred Stock were issued and outstanding and the liquidation and redemption
value of
48
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
13. EXCHANGEABLE PREFERRED STOCK (CONTINUED)
the Series E/Series F Preferred Stock was $125,000. Net proceeds from this
private offering were used to pay down borrowings under the Credit Facilities.
$8.625 SERIES H EXCHANGEABLE PREFERRED STOCK. On February 17, 1998, the
Company completed a private offering of 2,500,000 shares of $.01 par value,
$8.625 Series G Exchangeable Preferred Stock ("Series G Preferred Stock") at
$99.40 per share. Annual dividends of $8.625 per share on the Series G Preferred
Stock were cumulative and payable quarterly, in cash, commencing July 1, 1998.
On June 10, 1998, the Company exchanged the 2,500,000 shares of Series G
Preferred Stock for 2,500,000 shares of $.01 par value, Series H Preferred
Stock. The terms of the Series H Preferred Stock are the same as the terms of
the Series G Preferred Stock except that the Series H Preferred Stock has been
registered under the Securities Act of 1933. Prior to April 1, 2001, the Company
may, at its option, redeem in whole or in part, up to $125,000 of the aggregate
liquidation preference of the Series H Preferred Stock at a price per share of
$108.625 plus accrued and unpaid dividends to the redemption date, with the net
proceeds of one or more public offerings, subject to certain other restrictions.
On or after April 1, 2003, the Series H Preferred Stock may be redeemed in whole
or in part, at the option of the Company, at prices ranging from 104.313% with
annual reductions to 100% in 2006, plus accrued and unpaid dividends. The
Company is required to redeem the Series H Preferred Stock on April 1, 2010 at a
redemption price equal to the liquidation preference of $100 per share, plus
accrued and unpaid dividends. The Series H Preferred Stock is exchangeable, in
whole but not in part, at the option of the Company, on any scheduled dividend
payment date into 8 5/8% Class H Subordinated Exchange Debentures due 2010. Net
proceeds from the issuance of Series G Preferred Stock of approximately $242,000
were primarily used to redeem the Series B Preferred Stock and to pay down
borrowings under the Credit Facilities, which amounts may be reborrowed for
general corporate purposes, including acquisitions.
14. COMMON STOCK
STOCK ISSUANCE. On March 18, 1998, KKR 1996 Fund L.P., a Delaware limited
partnership affiliated with Kohlberg Kravis Roberts & Co. ("KKR"), purchased
16,666,667 shares of newly issued common stock from the Company for
approximately $200,000 (the "KKR Fund Investment"). The net proceeds (after
issuance costs) from the KKR Fund Investment were used to repay borrowings
outstanding under the Credit Facilities, which amounts may be reborrowed for
general corporate purposes including acquisitions (see Note 20).
SHARE REPURCHASE PROGRAM. On September 9, 1997, the Company announced that
its board of directors had authorized the Company to repurchase up to $15,000 of
its outstanding common stock from time to time in the open market and through
privately negotiated transactions. In 1998, the board of directors authorized
the repurchase of an additional $15,000 of the Company's outstanding common
shares. During 1998, the Company repurchased 1,703,700 shares of common stock
for $19,983 at a weighted average price of $11.73. During 1997, the Company
repurchased 1,048,600 shares of common stock for $13,158 at a weighted average
price of $12.52. These 1997 repurchases included 523,000 shares that were
repurchased for $6,422 and were not part of the share repurchase program. All
repurchases above are recorded at cost and classified as common stock in
treasury on the consolidated balance sheets at December 31, 1998 and 1997,
respectively.
49
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
14. COMMON STOCK (CONTINUED)
STOCK PURCHASE AND OPTION PLAN. The PRIMEDIA Stock Purchase and Option Plan
(the "Plan") authorizes sales of shares of common stock and grants of incentive
awards in the forms of, among other things, stock options to key employees and
other persons with a unique relationship with the Company. The stock options are
granted with exercise prices at quoted market value at time of issuance.
COMMON STOCK SUBJECT TO REDEMPTION. Under the following circumstances,
employees who purchased shares prior to the Company's initial public offering of
common stock have the right to resell their shares of common stock to the
Company: termination of employment in connection with the sale of the business
for which they work, death, disability or retirement after age 65. The resale
feature expires five years after the effective purchase date of the common
stock. Since inception of the Company, none of the employees has exercised such
resale feature as a result of such sale, death, disability or retirement and the
likelihood of significant resales is considered by management to be remote
because the stock is freely tradeable on the public market.
The following summarizes the activity of the common stock subject to
redemption:
<TABLE>
<CAPTION>
SHARES AMOUNT
--------- ---------
<S> <C> <C>
Balance at January 1, 1996.................................................................. 2,406,513 $ 29,179
Acquisitions of common stock held by management............................................. (17,269) (148)
Expiration of redemption feature............................................................ (1,745,934) (21,230)
Reduction in carrying value................................................................. -- (885)
--------- ---------
Balance at December 31, 1996................................................................ 643,310 6,916
Acquisitions of common stock held by management............................................. (2,320) (19)
Expiration of redemption feature............................................................ (238,340) (2,569)
Accretion in carrying value................................................................. -- 755
--------- ---------
Balance at December 31, 1997................................................................ 402,650 5,083
Acquisitions of common stock held by management............................................. (22,531) (314)
Expiration of redemption feature............................................................ (86,000) (1,056)
Reduction in carrying value................................................................. -- (221)
--------- ---------
Balance at December 31, 1998................................................................ 294,119 $ 3,492
--------- ---------
--------- ---------
</TABLE>
The redemption values of the common stock subject to redemption of $3,492
and $5,083 at December 31, 1998 and 1997, respectively, were based on a
repurchase price of $11.875 per share and $12.625 per share, which are the
quoted market values at December 31, 1998 and 1997, respectively. Common stock
subject to redemption is recorded on the accompanying consolidated balance
sheets net of the amounts of notes receivable from employees (related to common
stock issuances) outstanding of $528 and $707 at December 31, 1998 and 1997,
respectively.
ACCOUNTING FOR EMPLOYEE STOCK BASED COMPENSATION. The Plan has authorized
grants of up to 25,000,000 shares of the Company's common stock or options to
management personnel. The options are exercisable at the rate of 20% per year
over a five-year period commencing on the effective date of the grant; however,
some optionees have received credit for periods of employment with the Company
and its predecessors and subsidiaries prior to the date the options were
granted. All options granted pursuant to the Plan will expire no later than ten
years from the date the option was granted.
50
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
14. COMMON STOCK (CONTINUED)
A summary of the status of the Company's stock option plan as of December
31, 1998, 1997 and 1996, and changes during the years ended on those dates is
presented below:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------------------- ------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE EXERCISE EXERCISE
OPTIONS PRICE PRICE OPTIONS PRICE PRICE OPTIONS PRICE
--------- ------------- ----------- --------- ------------- ----------- --------- -------------
Outstanding--
beginning of
year........... 11,562,930 $5.00-$12.00 $ 6.58 13,211,212 $5.00-$11.94 $ 6.69 12,326,087 $5.00-$ 8.00
Granted........ 1,530,590 1$2.00-$14.69 $ 12.68 135,800 1$0.88-$12.00 $ 11.27 1,830,400 1$0.00-$11.94
Exercised...... (416,817) $5.00-$11.13 $ 7.13 (1,209,693) $5.00-$11.81 $ 6.96 (681,890) $5.00-$ 8.00
Forfeited...... (446,730) $5.44-$12.63 $ 11.22 (574,389) $5.00-$11.81 $ 9.22 (263,385) $5.00-$ 8.00
--------- --------- ---------
Outstanding--end
of year........ 12,229,973 $5.00-$14.69 $ 7.16 11,562,930 $5.00-$12.00 $ 6.58 13,211,212 $5.00-$11.94
--------- --------- ---------
--------- --------- ---------
Exercisable--end
of year........ 9,369,633 $5.00-$12.00 $ 5.97 8,953,280 $5.00-$11.94 $ 5.73 8,707,528 $5.00-$ 8.00
--------- --------- ---------
--------- --------- ---------
<CAPTION>
<S> <C>
WEIGHTED
AVERAGE
EXERCISE
PRICE
-----------
Outstanding--
beginning of
year........... $ 5.98
Granted........ $ 11.12
Exercised...... $ 5.36
Forfeited...... $ 7.69
Outstanding--end
of year........ $ 6.69
Exercisable--end
of year........ $ 5.38
</TABLE>
The weighted-average fair value per option for options granted in 1998, 1997
and 1996 was $5.44, $4.45 and $4.13, respectively.
The following table summarizes information about stock options outstanding
at December 31, 1998:
<TABLE>
<CAPTION>
NUMBER WEIGHTED WEIGHTED
RANGE OF OUTSTANDING AVERAGE REMAINING AVERAGE
EXERCISE PRICES AT 12/31/98 CONTRACTUAL LIFE EXERCISE PRICE
- --------------- ----------- ----------------------- ---------------
<S> <C> <C> <C>
$ 5.00-$ 5.44 6,913,043 3 $ 5.00
$ 7.00 120,400 5 $ 7.00
$ 8.00 2,475,880 7 $ 8.00
$10.00-$12.00 1,410,460 8 $ 11.14
$12.63-$14.69 1,310,190 9 $ 12.68
-----------
12,229,973 5 $ 7.16
-----------
-----------
</TABLE>
SFAS No. 123, "Accounting for Stock Based Compensation," provides for a
fair-value based method of accounting for employee options and measures
compensation expense using an option valuation model that takes into account, as
of the grant date, the exercise price and expected life of the option, the
current price of the underlying stock and its expected volatility, expected
dividends on the stock, and the risk-free interest rate for the expected term of
the option. The Company has elected to continue accounting for employee
stock-based compensation under Accounting Principles Board Opinion ("APB") No.
25 and related interpretations. Under APB No. 25, because the exercise price of
the Company's employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recognized.
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of SFAS No.
123. The fair value of these options was estimated at the date of grant using
the Black-Scholes option pricing model for options granted in 1998, 1997 and
1996. The following weighted-
51
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
14. COMMON STOCK (CONTINUED)
average assumptions were used for 1998, 1997 and 1996, respectively: risk-free
interest rates of 5.63%, 6.65% and 6.36%; dividend yields of 0.0%, 0.0% and
0.0%; volatility factors of the expected market price of the Company's common
stock of 24.15%, 27.70% and 20.83%; and a weighted-average expected life of the
option of five years. The estimated fair value of options granted during 1998,
1997 and 1996 was $8,332, $604 and $7,560, respectively.
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the option's vesting period. The Company's
pro forma information is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Pro forma net income (loss)....................................................... $ (42,659) $(176,351) $ 5,738
Pro forma loss applicable to common shareholders.................................. $(105,944) $(241,424) $ (37,788)
Pro forma basic and diluted loss per common share................................. $ (.74) $ (1.87) $ (.29)
</TABLE>
The Company had reserved approximately 11,000,000 shares of the Company's
common stock or options for future grants in connection with the Plan at
December 31, 1998.
15. LOSS PER SHARE
Loss per share has been determined based on income (loss) before
extraordinary charge after preferred stock dividends, divided by the weighted
average number of common shares outstanding for all periods presented.
Options to purchase 12,229,973, 11,562,930 and 13,211,212 shares of common
stock were outstanding at December 31, 1998, 1997 and 1996, respectively, but
were not included in the computation of diluted loss per share because the
effect of their inclusion would be antidilutive.
16. ACCUMULATED DEFICIT
The accumulated deficit of $1,030,032 at December 31, 1998 includes non-cash
expenses related to the accumulated amortization of intangible assets, the
excess of the purchase price over the net assets acquired and deferred financing
costs, the write-offs of the unamortized balance of deferred financing costs
associated with all previous financings, the restructurings and other costs and
the (gain) loss on sales of businesses, net and other in the aggregate amount of
approximately $1,378,000 which is net of the non-cash income tax benefits
aggregating $155,000 through December 31, 1998.
52
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
17. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and the estimated fair values of the Company's
financial instruments for which it is practicable to estimate fair value are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
<S> <C> <C> <C> <C>
1998 1997
---------------------- ----------------------
<CAPTION>
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
10 1/4% Senior Notes............................................. $ 100,000 $ 106,013 $ 100,000 $ 108,000
8 1/2% Senior Notes.............................................. 299,001 309,000 298,902 307,470
7 5/8% Senior Notes.............................................. 248,643 245,000 -- --
Acquisition Obligation........................................... 44,179 44,666 53,871 55,329
Series B Preferred Stock......................................... -- -- 155,281 169,818
Series D Preferred Stock......................................... 195,042 208,500 194,495 210,500
Series E/Series F Preferred Stock................................ 120,306 122,813 120,504 125,000
Series H Preferred Stock......................................... 242,493 240,625 -- --
Interest Rate Swap Agreements.................................... 1,528 18,519 485 410
Purchased Interest Rate Cap Agreement............................ -- -- (43) --
</TABLE>
The bracketed amount above represents assets.
The fair values of the senior notes and preferred stocks were determined
based on the quoted market prices and the fair value of the acquisition
obligation was estimated using discounted cash flow analysis, based on current
incremental borrowing rates for similar types of borrowing arrangements. The
fair value of the interest rate swap agreements was determined using discounted
cash flow models.
For instruments including cash and cash equivalents, accounts receivable and
accounts payable, the carrying amount approximates fair value because of the
short maturity of these instruments. The fair value of floating-rate long-term
debt approximates carrying value because these instruments re-price frequently
at current market prices.
18. RETIREMENT PLANS AND OTHER EMPLOYEE COSTS
RETIREMENT PLANS. Substantially all of the Company's employees are eligible
to participate in defined contribution plans. The expense recognized for all of
these plans was approximately $7,700 in 1998, $6,300 in 1997 and $5,400 in 1996.
In addition, the employees at PRIMEDIA Magazines and the non-union employees
at THE DAILY RACING FORM were eligible to participate in a non-contributory
defined benefit pension plan ("Pension Plan"). The benefits paid under the
Pension Plan were based on years of service and compensation amounts for the
highest consecutive five years of service in the most current ten years. The
Pension Plan was funded by means of contributions by the Company to the plan's
trust. The pension funding policy was consistent with the funding requirements
of U.S. Federal and other governmental laws and regulations. Plan assets
consisted primarily of fixed income, equity and other short-term investments.
In January 1998, the Company amended the Pension Plan. The amendment
specifically froze plan participation effective December 31, 1997. The Company
received approval from the Pension Benefit Guarantee Corporation during the
third quarter to terminate this plan and distribute all the plan's assets.
53
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
18. RETIREMENT PLANS AND OTHER EMPLOYEE COSTS (CONTINUED)
In November 1998, the Company terminated this plan and settled all of its
obligations by making lump-sum distributions and purchasing annuity contracts.
The following tables set forth the Pension Plan's funded status as of
December 31, 1998 and 1997 and amounts recognized in the Company's statement of
operations for the years ended December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1998 1997
---------- ---------
<S> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Projected benefit obligation at beginning of period...................................... $ 18,036 $ 12,077
Service cost........................................................................... -- 1,387
Interest cost.......................................................................... 668 1,073
Amendments............................................................................. 4,536 2,404
Actuarial loss......................................................................... -- 1,570
Benefits paid.......................................................................... (866) (475)
Curtailment............................................................................ (6,448) --
Settlement............................................................................. (15,926) --
---------- ---------
Projected benefit obligation at end of period............................................ -- 18,036
---------- ---------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of period......................................... 13,391 5,473
Actual return on plan assets........................................................... 1,692 1,763
Employer contributions................................................................. 1,859 1,715
Benefits paid.......................................................................... (866) (475)
Other income........................................................................... -- 4,915
Settlement............................................................................. (15,926) --
---------- ---------
Fair value of plan assets at end of period............................................... 150 13,391
---------- ---------
Funded status.............................................................................. 150 (4,645)
Unrecognized net actuarial loss............................................................ -- 697
Unrecognized prior service cost............................................................ -- (2,137)
Unrecognized initial obligation............................................................ -- 2,587
---------- ---------
Prepaid (accrued) pension cost............................................................. $ 150 $ (3,498)
---------- ---------
---------- ---------
</TABLE>
The amendments included in the change in benefit obligation represent the
Pension Plan termination during the year ended December 31, 1998 and the merger
of the predecessor Daily Racing Form plan into the Pension Plan during the year
ended December 31, 1997.
54
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
18. RETIREMENT PLANS AND OTHER EMPLOYEE COSTS (CONTINUED)
The obligation recorded at the acquisition date of PRIMEDIA Magazines and
Daily Racing Form was the excess of the projected benefit obligation over the
plan assets at the date of acquisition which was included in other non-current
liabilities for the year ended December 31, 1997.
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31,
Discount rate................................................................................ 7.00% 7.00%
Expected return on plan assets............................................................... N/A 8.50%
Rate of compensation increases............................................................... N/A 4.00%
</TABLE>
The components of net periodic pension (income) expense for 1998, 1997 and
1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Service cost..................................................................... $ -- $ 1,387 $ 1,203
Interest cost.................................................................... 668 1,073 769
Expected return on plan assets................................................... (978) (1,763) (610)
Amortization of initial obligation............................................... -- 274 274
Amortization of prior service cost............................................... -- (159) (27)
Amortization of net actuarial loss............................................... -- 830 215
Curtailment gain................................................................. (5,301) -- --
Settlement loss.................................................................. 3,823 -- --
--------- --------- ---------
Net periodic pension (income) expense.............................................. $ (1,788) $ 1,642 $ 1,824
--------- --------- ---------
--------- --------- ---------
</TABLE>
In 1998, the Company acquired American Guidance Service, Inc. ("AGS"). AGS
sponsors a defined benefit pension plan (the "AGS Plan") for the benefit of its
employees. The allocation of the purchase price of AGS included a liability of
approximately $792 related to this plan. The benefits to be paid under the AGS
Plan are based on years of service and compensation amounts for the average of
the highest five consecutive plan years. The AGS Plan is funded by means of
contributions by the Company to the plan's trust. The pension funding policy is
consistent with the funding requirements of U.S. Federal and other governmental
laws and regulations. Plan assets consist primarily of fixed income, equity and
other short-term investments. The following tables set forth the AGS Plan's
funded status as of December 31, 1998 and
55
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
18. RETIREMENT PLANS AND OTHER EMPLOYEE COSTS (CONTINUED)
the amounts recognized in the Company's statement of operations from the
acquisition date through December 31, 1998.
<TABLE>
<S> <C>
CHANGE IN BENEFIT OBLIGATION:
Projected benefit obligation at beginning of period......................... $ 8,682
Service cost.............................................................. 318
Interest cost............................................................. 287
Actuarial loss............................................................ 308
Benefits paid............................................................. (137)
-------
Projected benefit obligation at end of period............................... 9,458
-------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of period............................ 8,198
Actual return on plan assets.............................................. (276)
Benefits paid............................................................. (137)
-------
Fair value of plan assets at end of period.................................. 7,785
-------
Funded status............................................................... (1,673)
Unrecognized net actuarial loss............................................. 637
-------
Accrued pension cost........................................................ $ (1,036)
-------
-------
COMPONENTS OF NET PERIODIC PENSION EXPENSE:
Service cost.............................................................. $ 318
Interest cost............................................................. 287
Expected return on plan assets ........................................... (361)
-------
Net periodic pension expense................................................ $ 244
-------
-------
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31, 1998:
Discount rate............................................................... 6.50%
Expected return on plan assets.............................................. 9.00%
Rate of compensation increases.............................................. 4.50%
</TABLE>
OTHER EMPLOYEE COSTS. During the third quarter of 1998, the Company
recorded management reorganization costs of approximately $8,500 which primarily
represented severance costs. This charge is recorded in the caption (gain) loss
on the sales of businesses, net and other on the accompanying statement of
consolidated operations.
56
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
19. COMMITMENTS AND CONTINGENCIES
COMMITMENTS. Total rent expense under operating leases was $36,282, $36,844
and $31,561 for the years ended December 31, 1998, 1997 and 1996, respectively.
Certain leases are subject to escalation clauses and certain leases contain
renewal options. Minimum rental commitments under noncancelable operating leases
are as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
- -------------------------------------------------------------------
<S> <C>
1999............................................................... $ 32,579
2000............................................................... 31,062
2001............................................................... 25,403
2002............................................................... 20,881
2003............................................................... 18,798
Thereafter......................................................... 45,890
--------
$ 174,613
--------
--------
</TABLE>
Future minimum lease payments under capital leases (see Note 7) are as
follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
- -------------------------------------------------------------------
<S> <C>
1999............................................................... $ 3,938
2000............................................................... 3,938
2001............................................................... 3,938
2002............................................................... 3,938
2003............................................................... 3,965
Thereafter......................................................... 24,351
-------
44,068
Less: Amount representing interest................................. 16,057
-------
Present value of net minimum lease payments........................ 28,011
Less: Current portion.............................................. 1,741
-------
Long-term obligations (included in other non-current
liabilities)..................................................... $ 26,270
-------
-------
</TABLE>
CONTINGENCIES. The Company is involved in ordinary and routine litigation
incidental to its business. In the opinion of management, there is no pending
legal proceeding that would have a material adverse affect on the consolidated
financial statements of the Company.
At December 31, 1998, the Company had letters of credit outstanding of
approximately $17,900 (see Note 11).
57
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
20. RELATED PARTY TRANSACTIONS
During each of the years ended December 31, 1998, 1997 and 1996, the Company
paid $1,000 in administrative and other fees to KKR, an affiliated party. The
Company paid an aggregate of $180 in directors' fees to certain partners of KKR
during the years ended December 31, 1998, 1997 and 1996. In 1998, a partnership
affiliated with KKR purchased 16,666,667 shares of newly issued common stock
from the Company for approximately $200,000 (see Note 14).
21. UNAUDITED QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
1998:
Sales, net..................... $ 344,986 $ 390,050 $ 392,296 $ 446,241 $ 1,573,573
Operating income............... 24,282 28,414 29,783 35,678 118,157
Net loss....................... (9,732) (7,225) (9,184) (11,595) (37,736)
Loss applicable to common
shareholders................. (33,217) (20,427) (22,517) (24,860) (101,021)
Basic and diluted loss
applicable to common
shareholders per common
share........................ $(.25) $(.14) $(.15) $(.17) $(.71)
Basic and diluted common shares
outstanding.................. 134,686,401 145,659,940 145,238,934 144,530,821 142,529,024
FOR THE YEAR ENDED DECEMBER 31,
1997:
Sales, net..................... $ 352,291 $ 368,762 $ 368,944 $ 397,598 $ 1,487,595
Operating income (loss)........ 20,478 39,518 (112,326) 31,537 (20,793)
Income (loss) before
extraordinary charge......... (12,546) 3,700 (147,674) (919) (157,439)
Extraordinary charge--
extinguishment of debt....... (1,554) (13,847) -- -- (15,401)
Net loss....................... (14,100) (10,147) (147,674) (919) (172,840)
Loss applicable to common
shareholders................. (26,426) (22,602) (160,130) (28,755) (237,913)
Basic and diluted loss
applicable to common
shareholders per common
share:
Loss before extraordinary
charge..................... $(.19) $(.07) $(1.24) $(.22) $(1.72)
Net loss..................... $(.20) $(.18) $(1.24) $(.22) $(1.84)
Basic and diluted common shares
outstanding.................. 129,114,344 129,289,307 129,411,579 129,404,368 129,304,900
</TABLE>
58
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
21. UNAUDITED QUARTERLY FINANCIAL INFORMATION (CONTINUED)
During the second and third quarters of 1998, the Company recorded a gain on
the sales of businesses, net and other of $1,849 and $5,367, respectively (see
Note 4 and Note 18).
During the first quarter of 1997, the Company purchased, in aggregate
$20,850 of the 10 5/8% Senior Notes from various brokers on the open market. The
premium paid on the purchase and the write-off of the related deferred financing
fees totaled $1,554. In the second quarter, the Company redeemed the remaining
principal of the 10 5/8% Senior Notes. The aggregate premium paid and the
write-off of the related deferred financing fees totaled $13,847. During the
third quarter of 1997, the Company recorded a provision for loss on the sales of
businesses, net and other in the amount of $138,640.
22. BUSINESS SEGMENT INFORMATION
The Company's operations have been classified into three business segments:
specialty magazines, information and education (see Note 1). The Company has
segregated the Non-Core Businesses from the aforementioned segments because the
Company's chief decision maker views these businesses separately when evaluating
and making decisions regarding ongoing operations (see Note 4). Information as
to the operations of the Company in different business segments is set forth
below based on the nature of the products offered. PRIMEDIA evaluates
performance based on several factors, of which the primary financial measure is
business segment earnings before interest, taxes, depreciation, amortization and
provision for one-time charges ("EBITDA"). The accounting policies of the
business segments are the same as those described in the summary of significant
accounting policies (see Note 2). There were no material intersegment sales
between the reported segments.
59
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
22. BUSINESS SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
SALES, NET:
Specialty Magazines............................... $ 927,501 $ 714,464 $ 629,001
Information....................................... 272,819 228,145 190,014
Education......................................... 330,790 269,246 209,366
Other:
Non-Core Businesses............................. 42,463 275,740 346,068
------------ ------------ ------------
Total............................................. $ 1,573,573 $ 1,487,595 $ 1,374,449
------------ ------------ ------------
------------ ------------ ------------
EBITDA (1):
Specialty Magazines............................... $ 187,104 $ 159,462 $ 136,793
Information....................................... 73,969 63,642 57,353
Education......................................... 90,400 81,833 66,551
Other:
Corporate....................................... (28,324) (25,545) (21,497)
Non-Core Businesses............................. 6,761 22,620 37,403
------------ ------------ ------------
Total............................................. $ 329,910 $ 302,012 $ 276,603
------------ ------------ ------------
------------ ------------ ------------
DEPRECIATION AND AMORTIZATION OF PREPUBLICATION
COSTS, PROPERTY AND EQUIPMENT:
Specialty Magazines............................... $ 12,518 $ 6,256 $ 4,980
Information....................................... 4,001 2,675 2,353
Education......................................... 24,323 23,553 20,808
Other:
Corporate....................................... 1,314 1,031 779
Non-Core Businesses............................. 58 3,819 9,313
------------ ------------ ------------
Total............................................. $ 42,214 $ 37,334 $ 38,233
------------ ------------ ------------
------------ ------------ ------------
TOTAL ASSETS:
Specialty Magazines............................... $ 1,437,530 $ 977,947 $ 892,841
Information....................................... 377,355 328,574 310,681
Education......................................... 1,047,462 968,690 799,941
Other:
Corporate....................................... 178,518 166,988 172,123
Non-Core Businesses............................. 209 43,791 376,629
------------ ------------ ------------
Total............................................. $ 3,041,074 $ 2,485,990 $ 2,552,215
------------ ------------ ------------
------------ ------------ ------------
CAPITAL EXPENDITURES, NET:
Specialty Magazines............................... $ 20,303 $ 9,085 $ 7,927
Information....................................... 8,187 2,563 2,719
Education......................................... 21,918 11,583 9,075
Other:
Corporate....................................... 3,782 1,740 1,735
Non-Core Businesses............................. 1,048 6,137 7,334
------------ ------------ ------------
Total............................................. $ 55,238 $ 31,108 $ 28,790
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
60
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
22. BUSINESS SEGMENT INFORMATION (CONTINUED)
- ------------------------
(1) EBITDA represents operating income before interest, taxes, depreciation,
amortization and provision for one-time charges.
The following is a reconciliation of EBITDA to operating income (loss).
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Total EBITDA........................................... $ 329,910 $ 302,012 $ 276,603
Depreciation and amortization of prepublication costs,
property and equipment............................... (42,214) (37,334) (38,233)
Gain (loss) on the sales of businesses, net and
other................................................ 7,216 (138,640) --
Amortization of intangible assets, excess of purchase
price over net assets acquired and other............. (176,755) (146,831) (152,469)
----------- ----------- -----------
Operating income (loss)................................ $ 118,157 $ (20,793) $ 85,901
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
23. SUBSEQUENT EVENTS
On February 22, 1999, the Company announced the closing by PRIMEDIA
Workplace Learning of five unprofitable and recently launched product lines as
part of a program to return the Company's focus to accreditation-oriented
vocational networks and associated products. Accordingly, PRIMEDIA expects to
record a charge related to this refocusing for severance, lease discontinuance
for transponders and office sites, recoverability of certain assets, related
goodwill and other items against its 1999 first quarter results. The Company is
currently in the process of calculating the pre-tax charge, which is estimated
to be between $20,000 and $24,000. PRIMEDIA Workplace Learning is included in
the education segment.
Through March 3, 1999, the Company completed five product-line acquisitions
in all segments. The aggregate purchase price was approximately $35,000 and was
financed primarily through borrowings under the Company's Credit Facilities.
On March 11, 1999, the Company completed an amendment and restatement of its
Credit Facilities to increase them by $250,000 to $1,650,000. The final maturity
date is July 31, 2004. Additionally, the Company entered into a separate
$150,000 bank revolving credit facility with a final maturity on December 30,
1999. There are currently no borrowings under the bank revolving credit
facility.
61
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None
PART III
Items 10, 11, 12 and 13 are omitted, except for information as to Executive
Officers set forth in Part I, Item 1.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Documents filed as part of this report:
1. Index to Financial Statements
See Table of Contents to Financial Statements included in Part II, Item 8
of this report.
2. Index to Financial Statement Schedules
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
PRIMEDIA Inc. and Subsidiaries
For the Year Ended December 31, 1998.............................................................. S-1
For the Year Ended December 31, 1997.............................................................. S-2
For the Year Ended December 31, 1996.............................................................. S-3
Independent Auditors' Report on Schedules--Deloitte & Touche LLP.................................... S-4
</TABLE>
All schedules, except those set forth above, have been omitted since the
information required to be submitted has been included in the Consolidated
Financial Statements or Notes thereto or has been omitted as not applicable or
not required.
(b)--Reports on Form 8-K
(c)--Exhibits
<TABLE>
<S> <C> <C>
3.1 --Certificate of Incorporation of K-III. (7)
3.2 --Certificate of Amendment to Certificate of Incorporation of K-III
(changing name from K-III to PRIMEDIA Inc.) (14)
3.3 --Certificate of Designations of the Series D Preferred Stock. (11)
3.4 --Certificate of Designations of the Series F Preferred Stock. (13)
3.5 --Certificate of Designations of the Series H Preferred Stock. (15)
3.6 --Amended and Restated By-laws of K-III. (7)
3.7 --Certificate of Incorporation of Intertec Publishing Corporation. (2)
3.8 --Certificate of Amendment to Certificate of Incorporation of Intertec
Publishing Corporation (changing name to PRIMEDIA Intertec Corporation)(*)
3.9 --Amended and Restated By-laws of Intertec Publishing Corporation. (2)
3.10 --Certificate of Incorporation of Newbridge Communications, Inc. (2)
</TABLE>
62
<PAGE>
<TABLE>
<S> <C> <C>
3.11 --Certificate of Amendment to Certificate of Incorporation of Newbridge
Communications, Inc. (changing name to Films for the Humanities and
Sciences, Inc.) (14)
3.12 --By-laws of Newbridge Communications, Inc. (2)
3.13 --Certificate of Incorporation of K-III Directory Corporation (1)
3.14 --Certificate of Amendment to Certificate of Incorporation of K-III
Directory Corporation (changing name to PRIMEDIA Information Inc.) (14)
3.15 --By-laws of K-III Directory Corporation (1)
3.16 --Certificate of Incorporation of R.E.R. Publishing Corporation. (2)
3.17 --Amended and Restated By-laws of R.E.R. Publishing Corporation. (2)
3.18 --Certificate of Incorporation of Intermodal Publishing Company, Ltd. (2)
3.19 --Amended and Restated By-laws of Intermodal Publishing Company, Ltd. (2)
3.20 --Certificate of Incorporation of Weekly Reader Corporation. (2)
3.21 --By-laws of Weekly Reader Corporation. (2)
3.22 --Certificate of Incorporation of K-III Reference Corporation. (9)
3.23 --Certificate of Amendment to Certificate of Incorporation of K-III
Reference Corporation (changing name to PRIMEDIA Reference Inc.) (14)
3.24 --By-laws of K-III Reference Corporation. (2)
3.25 --Certificate of Amendment to Certificate of Incorporation of Funk &
Wagnalls Corporation (changing name to K-III Reference Corporation) (12)
3.26 --Certificate of Incorporation of Funk & Wagnalls Yearbook Corp. (2)
3.27 --By-laws of Funk & Wagnalls Yearbook Corp. (2)
3.28 --Certificate of Incorporation of K-III Magazine Corporation. (2)
3.29 --Certificate of Amendment to Certificate of Incorporation of K-III Magazine
Corporation (changing name to PRIMEDIA Magazines Inc.) (14)
3.30 --By-laws of K-III Magazine Corporation. (2)
3.31 --Certificate of Incorporation of K-III Magazine Finance Corporation. (2)
3.32 --Certificate of Amendment to Certificate of Incorporation of K-III Magazine
Finance Corporation (changing name to PRIMEDIA Magazines Finance Inc.)
(14)
3.33 --By-laws of K-III Magazine Finance Corporation. (2)
3.34 --Certificate of Incorporation of K-III Holdings Corporation III. (2)
3.35 --Certificate of Amendment to Certificate of Incorporation of K-III Holdings
Corporation III (changing name to PRIMEDIA Holdings III Inc.) (14)
3.36 --By-laws of K-III Holdings Corporation III. (2)
3.37 --Certificate of Incorporation of Haas Publishing Companies, Inc. (5)
3.38 --By-laws of Haas Publishing Companies, Inc. (5)
3.39 --Certificate of Incorporation of Lifetime Learning Systems, Inc. (8)
</TABLE>
63
<PAGE>
<TABLE>
<S> <C> <C>
3.40 --By-laws of Lifetime Learning Systems, Inc. (8)
3.41 --Certificate of Incorporation of Channel One Communications Corporation.
(8)
3.42 --By-laws of Channel One Communications Corporation. (8)
3.43 --Certificate of Incorporation of Bacon's Information, Inc. (9)
3.44 --By-laws of Bacon's Information, Inc. (9)
3.45 --Certificate of Incorporation of Argus Publishers Corporation (9)
3.46 --By-laws of Argus Publishers Corporation (9)
3.47 --Certificate of Incorporation of PJS Publications, Inc. (8)
3.48 --Certificate of Amendment to Certificate of Incorporation of PJS
Publications, Inc. (changing name to PRIMEDIA Special Interest
Publications Inc.) (14)
3.49 --By-laws of PJS Publications, Inc. (8)
3.50 --Certificate of Incorporation of Symbol of Excellence Publishers, Inc. (8)
3.51 --By-laws of Symbol of Excellence Publishers, Inc. (8)
3.52 --Certificate of Incorporation of American Heat Video Productions, Inc. (12)
3.53 --By-laws of American Heat Video Productions, Inc. (12)
3.54 --Certificate of Incorporation of Bankers Consulting Company (12)
3.55 --By-laws of Bankers Consulting Company (12)
3.56 --Certificate of Incorporation of Excellence in Training Corporation (12)
3.57 --By-laws of Excellence in Training Corporation (12)
3.58 --Certificate of Incorporation of Gareth Stevens, Inc. (12)
3.59 --By-laws of Gareth Stevens, Inc. (12)
3.60 --Certificate of Incorporation of IDTN Leasing Corporation (12)
3.61 --By-laws of IDTN Leasing Corporation (12)
3.62 --Certificate of Incorporation of Industrial Training Systems Corporation
(12)
3.63 --By-laws of Industrial Training Systems Corporation (12)
3.64 --Certificate of Incorporation of Law Enforcement Television Network, Inc.
(TX) (12)
3.65 --By-laws of Law Enforcement Television Network, Inc. (TX) (12)
3.66 --Certificate of Incorporation of Lockert Jackson & Associates, Inc. (12)
3.67 --By-laws of Lockert Jackson & Associates, Inc. (12)
3.68 --Certificate of Incorporation of Tel-A-Train, Inc. (12)
3.69 --By-laws of Tel-A-Train, Inc. (12)
3.70 --Certificate of Incorporation of TI-IN Acquisition Corporation (12)
3.71 --By-laws of TI-IN Acquisition Corporation (12)
3.72 --Certificate of Incorporation of Westcott Communications, Inc. (12)
</TABLE>
64
<PAGE>
<TABLE>
<S> <C> <C>
3.73 --Certificate of Amendment to Certificate of Incorporation of Westcott
Communications, Inc. (changing name to PRIMEDIA Workplace Learning, Inc.)
(14)
3.74 --By-laws of Westcott Communications, Inc. (12)
3.75 --Certificate of Incorporation of Westcott Communications Michigan, Inc.
(12)
3.76 --By-laws of Westcott Communications Michigan, Inc. (12)
3.77 --Certificate of Incorporation of Westcott ECI, Inc. (12)
3.78 --By-laws of Westcott ECI, Inc. (12)
3.79 --Certificate of Incorporation of Western Empire Publications, Inc. (12)
3.80 --By-laws of Western Empire Publications, Inc. (12)
3.81 --Certificate of Incorporation of McMullen Argus Publishing, Inc. (12)
3.82 --By-laws of McMullen Argus Publishing, Inc. (12)
3.83 --Certificate of Incorporation of The Electronics Source Book, Inc. (12)
3.84 --By-laws of The Electronics Source Book, Inc. (12)
3.85 --Certificate of Incorporation of The Apartment Guide of Nashville, Inc.
(14)
3.86 --By-laws of The Apartment Guide of Nashville, Inc. (14)
3.87 --Certificate of Incorporation of Cardinal Business Media, Inc. (14)
3.88 --By-laws of Cardinal Business Media, Inc. (14)
3.89 --Certificate of Incorporation of Cardinal Business Media Holdings, Inc.
(14)
3.90 --By-laws of Cardinal Business Media Holdings, Inc. (14)
3.91 --Certificate of Formation of Cover Concepts Marketing Services, LLC (14)
3.92 --Limited Liability Company Agreement of Cover Concepts Marketing Services,
LLC (14)
3.93 --Certificate of Incorporation of CSK Publishing Company Incorporated (14)
3.94 --By-laws of CSK Publishing Company Incorporated (14)
3.95 --Certificate of Incorporation of GO LO Entertainment, Inc. (14)
3.96 --By-laws of GO LO Entertainment, Inc. (14)
3.97 --Certificate of Incorporation of Guinn Communications, Inc. (14)
3.98 --By-laws of Guinn Communications, Inc. (14)
3.99 --Certificate of Incorporation of Health & Sciences Network, Inc. (14)
3.100 --By-laws of Health & Sciences Network, Inc. (14)
3.101 --Certificate of Incorporation of IntelliChoice, Inc. (14)
3.102 --By-laws of IntelliChoice, Inc. (14)
3.103 --Certificate of Incorporation of Little Rock Apartment Guide, Inc. (14)
3.104 --By-laws of Little Rock Apartment Guide, Inc. (14)
3.105 --Certificate of Incorporation of Memphis Apartment Guide, Inc. (14)
</TABLE>
65
<PAGE>
<TABLE>
<S> <C> <C>
3.106 --By-laws of Memphis Apartment Guide, Inc. (14)
3.107 --Certificate of Incorporation of Low Rider Publishing Group, Inc. (14)
3.108 --By-laws of Low Rider Publishing Group, Inc. (14)
3.109 --Certificate of Incorporation of Pictorial, Inc. (14)
3.110 --By-laws of Pictorial, Inc. (14)
3.111 --Certificate of Incorporation of Plaza Communications, Inc. (14)
3.112 --By-laws of Plaza Communications, Inc. (14)
3.113 --Certificate of Incorporation of QWIZ, Inc. (14)
3.114 --By-laws of QWIZ, Inc. (14)
3.115 --Certificate of Incorporation of Bowhunter Magazine, Inc. (14)
3.116 --By-laws of Bowhunter Magazine, Inc. (14)
3.117 --Certificate of Incorporation of Canoe & Kayak, Inc. (14)
3.118 --By-laws of Canoe & Kayak, Inc. (14)
3.119 --Certificate of Incorporation of Climbing, Inc. (14)
3.120 --By laws of Climbing, Inc. (14)
3.121 --Certificate of Incorporation of Cowles Business Media, Inc. (14)
3.122 --By-laws of Cowles Business Media, Inc. (14)
3.123 --Certificate of Amendment to Certificate of Incorporation of Cowles
Enthusiast Media, Inc. (changing name to PRIMEDIA Enthusiast Publications,
Inc.) (*)
3.124 --Certificate of Incorporation of Cowles Enthusiast Media, Inc. (14)
3.125 --By-laws of Cowles Enthusiast Media, Inc. (14)
3.126 --Certificate of Incorporation of Cowles History Group, Inc. (14)
3.127 --By-laws of Cowles History Group, Inc. (14)
3.128 --Certificate of Incorporation of Cowles/Simba Information, Inc. (14)
3.129 --Certificate of Amendment to Certificate of Incorporation of Cowles/Simba
Information, Inc. (changing name to Simba Information)(*)
3.130 --By-laws of Cowles/Simba Information, Inc. (14)
3.131 --Certificate of Incorporation of Cumberland Publishing, Inc. (14)
3.132 --By-laws of Cumberland Publishing, Inc. (14)
3.133 --Certificate of Incorporation of Horse & Rider, Inc. (14)
3.134 --By-laws of Horse & Rider, Inc. (14)
3.135 --Certificate of Incorporation of Kitplanes Acquisition Company (14)
3.136 --By-laws of Kitplanes Acquisition Company (14)
3.137 --Certificate of Incorporation of RetailVision, Inc. (14)
3.138 --By-laws of RetailVision, Inc. (14)
</TABLE>
66
<PAGE>
<TABLE>
<S> <C> <C>
3.139 --Certificate of Incorporation of Southwest Art, Inc. (14)
3.140 --By-laws of Southwest Art, Inc. (14)
3.141 --Certificate of Incorporation of Vegetarian Times, Inc. (14)
3.142 --By-laws of Vegetarian Times, Inc. (14)
3.143 --Certificate of Incorporation of The Virtual Flyshop, Inc. (14)
3.144 --By-laws of The Virtual Flyshop, Inc. (14)
3.145 --Certificate of Restated Articles of Incorporation of American
Guidance Service, Inc. (*)
3.146 --Amended By-laws of American Guidance Service, Inc. (*)
3.147 --Certificate of Incorporation of AGS International Sales, Inc. (*)
3.148 --By-laws of AGS International Sales, Inc. (*)
3.149 --Certificate of Incorporation of Cambridge Research Group, Ltd. (*)
3.150 --By-laws of Cambridge Research Group, Ltd. (*)
3.151 --Certificate of Formation of CommCorp. LLC (*)
3.152 --Amendment to Limited Liability Company Operating Agreement of
CommCorp. LLC (*)
3.153 --Certificate of Incorporation of Maddux Publishing, Inc. (*)
3.154 --By-laws of Maddux Publishing, Inc. (*)
3.155 --Certificate of Amendment of Articles of Incorporation of Miramar
Communications, Inc. (*)
3.156 --By-laws of Miramar Communications, Inc. (*)
3.157 --Certificate of Incorporation PRIMEDIA Ventures, Inc. (*)
3.158 --By-laws of PRIMEDIA Ventures, Inc. (*)
3.159 --Certificate of Incorporation for TSECRP, Inc. (*)
3.160 --By-laws of TSECRP, Inc. (*)
4.1 --10 1/4% Senior Note Indenture (including form of note and form of
guarantee). (8)
4.2 --8 1/2% Senior Note Indenture (including forms of note and guarantee). (9)
4.3 --Form of Class D Subordinated Debenture Indenture (including form of deben-
ture). (11)
4.4 --Form of Class F Subordinated Debenture Indenture (including form of deben-
ture). (13)
4.5 --Form of Class H Subordinated Debenture Indenture (including form of deben-
ture). (15)
4.6 --7 5/8% Senior Note Indenture (including form of note and form of
guarantee). (15)
10.1 --Non-Competition Agreement, dated as of June 17, 1991, between News America
Holdings Incorporated, K-III Holdings Corporation III, K-III Magazines and
Daily Racing Form. (2)
</TABLE>
67
<PAGE>
<TABLE>
<S> <C> <C>
10.2 --$250,000 Credit Facility with The Chase Manhattan Bank, The Bank of New
York, Bankers Trust Company and The Bank of Nova Scotia, as agents
(including forms of Guaranty and Contribution Agreements). (12)
10.3 --$1,500,000 Credit Facility with The Chase Manhattan Bank, Canadian
Sailings Inc., The Bank of New York, Bankers Trust Company and the Bank of
Nova Scotia, as agents (including forms of Guaranty and Contribution
Agreements). (*)
10.4 --Amendment to the $250,000 Credit Facility with The Chase Manhattan Bank,
The Bank of New York, Bankers Trust Company and The Bank of Nova Scotia,
as agents.(*)
10.5 --$150,000 Credit Facility with The Chase Manhattan Bank, The Bank of New
York, Bankers Trust Company and The Bank of Nova Scotia, as agents
(including forms of Guaranty and Contribution Agreements). (*)
+10.6 --Form of Amended and Restated K-III 1992 Stock Purchase and Option Plan.
(7)
+10.7 --Amendment No. 1 to the 1992 Stock Purchase and Option Plan Amended and
Restated as of March 5, 1997. (12)
+10.8 --Form of Common Stock Purchase Agreement between K-III and senior manage-
ment. (2)
+10.9 --Form of Common Stock Purchase Agreement between K-III and various purchas-
ers. (2)
+10.10 --Form of Non-Qualified Stock Option Agreement between K-III and various
employees. (2)
10.11 --Form of Common Stock Purchase Agreement between K-III and senior manage-
ment. (2)
10.12 --Form of Common Stock Purchase Agreement between K-III and various purchas-
ers. (2)
10.13 --Form of Securities Purchase Agreement between PRIMEDIA Inc. and KKR 1996
Fund L.P. (*)
+10.14 --Form of Non-Qualified Stock Option Agreement between K-III and various
employees. (2)
10.15 --Amended Registration Rights Agreement dated as of February 5, 1998 among
PRIMEDIA Inc., KKR 1996 Fund L.P., MA Associates, L.P., FP Associates,
L.P., Magazine Associates, L.P., Publishing Associates, L.P., Channel One
Associates, L.P. and KKR Partners II, L.P. with respect to common stock of
K-III. (*)
+10.16 --Free Cash Flow Long-Term Plan. (1)
+10.17 --Executive Incentive Compensation Plan. (8)
+10.18 --Pension Plan. (1)
+10.19 --1995 Restoration Plan. (8)
+10.20 --Form of K-III Communications Short Term Senior Executive
Non-Discretionary Plan. (7)
+10.21 --Form of K-III Communications Short Term Senior Executive Performance Plan.
(7)
</TABLE>
68
<PAGE>
<TABLE>
<S> <C> <C>
+10.22 --Form of K-III Communications Corporation Directors' Deferred Compensation
Plan. (12)
+10.23 --Agreement, dated as of December 24, 1996, between K-III Communications
Corporation and Harry A. McQuillen (12)
+10.24 --Agreement, dated as of December 24, 1996, between K-III Communications
Corporation and Jack L. Farnsworth (12)
21 --Subsidiaries of K-III. (*)
27 --1998 Financial Data Schedule (*)
</TABLE>
- ------------------------
(1) Incorporated by reference to K-III Communications Corporation's Annual
Report on Form 10-K for the year ended December 31, 1992. File No. 1-11106.
(2) Incorporated by reference to K-III Communications Corporation's Registration
Statement on Form S-1, File No. 33-46116.
(3) Incorporated by reference to K-III Communications Corporation's Registration
Statement on Form S-1, File No. 33-60786.
(4) Incorporated by reference to K-III Communications Corporation's Annual
Report on Form 10-K for the year ended December 31, 1993. File No. 1-11106.
(5) Incorporated by reference to K-III Communications Corporation's Registration
Statement on Form S-1, File No. 33-77520.
(6) Incorporated by reference to K-III Communications Corporation's Current
Report on Form 8-K dated September 30, 1994.
(7) Incorporated by reference to K-III Communications Corporation's Registration
Statement on Form S-1, File No. 33-96516.
(8) Incorporated by reference to K-III Communications Corporation Annual Report
on Form 10-K for the year ended December 31, 1994, File No. 1-11106.
(9) Incorporated by reference to K-III Communications Corporation's Form 10-K
for the year ended December 31, 1995, File No. 1-11106.
(10) Incorporated by reference to K-III Communications Corporation's Form 10-Q
for the quarter ended March 31, 1996.
(11) Incorporated by reference to K-III Communications Corporation's
Registration Statement on Form S-4, File No. 333-3691.
(12) Incorporated by reference to K-III Communications Corporation's Annual
Report on Form 10-K for the year ended December 31, 1996, File No. 1-11106.
(13) Incorporated by reference to K-III Communications Corporation's
Registration Statement on Form S-4, File No. 333-38451.
(14) Incorporated by reference to K-III Communications Corporation's Annual
Report on Form 10-K for the year ended December 31, 1997, File No. 1-11106.
(15) Incorporated by reference to PRIMEDIA Inc.'s Registration Statement on Form
S-4, File No. 333-51891.
+ Executive contract or compensation plan or arrangement.
(*) Filed herewith.
69
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on March 25, 1999.
PRIMEDIA INC.
By /S/ BEVERLY C. CHELL
...................................
(Beverly C. Chell)
VICE CHAIRMAN AND SECRETARY
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons
in the capacities indicated on March 25, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------------- ------------------------------------------------------------
<S> <C>
/s/ WILLIAM F. REILLY Chairman, Chief Executive Officer and Director (Principal
................................................... Executive Officer)
(William F. Reilly)
/s/ CHARLES G. MCCURDY President and Director (Principal Financial Officer)
...................................................
(Charles G. McCurdy)
/s/ BEVERLY C. CHELL Vice Chairman, Secretary and Director
...................................................
(Beverly C. Chell)
/s/ MEYER FELDBERG Director
...................................................
(Meyer Feldberg)
/s/ PERRY GOLKIN Director
...................................................
(Perry Golkin)
/s/ H. JOHN GREENIAUS Director
...................................................
(H. John Greeniaus)
/s/ HENRY KRAVIS Director
...................................................
(Henry Kravis)
/s/ GEORGE R. ROBERTS Director
...................................................
(George R. Roberts)
/s/ MICHAEL T. TOKARZ Director
...................................................
(Michael T. Tokarz)
/s/ ROBERT J. SFORZO Vice President and Controller (Principal Accounting Officer)
...................................................
(Robert J. Sforzo)
</TABLE>
70
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on March 25, 1999.
American Guidance Service, Inc.
AGS International Sales, Inc.
American Heat Video Productions, Inc.
The Apartment Guide of Nashville, Inc.
Argus Publishers Corporation
Bacon's Information, Inc.
Bankers Consulting Company
Bowhunter Magazine, Inc.
Cambridge Research Group, Ltd.
Canoe & Kayak, Inc.
Cardinal Business Media, Inc.
Cardinal Business Media Holdings, Inc.
Channel One Communications Corp.
Climbing, Inc.
CommCorp. LLC
Cover Concepts Marketing Services, LLC
Cowles Business Media, Inc.
Cowles History Group, Inc.
CSK Publishing Company Incorporated
Cumberland Publishing, Inc.
The Electronics Source Book, Inc.
Excellence in Training Corporation
Films for the Humanities & Sciences, Inc.
Funk & Wagnalls Yearbook Corp.
Gareth Stevens, Inc.
GO LO Entertainment, Inc.
Guinn Communications, Inc.
Haas Publishing Companies, Inc.
Health & Sciences Network, Inc.
Horse & Rider, Inc.
Intermodal Publishing Company, Ltd.
IDTN Leasing Corporation
Industrial Training Systems Corporation
IntelliChoice, Inc.
Kitplanes Acquisition Company
Law Enforcement Television Network, Inc.
Lifetime Learning Systems, Inc.
Little Rock Apartment Guide, Inc.
Lockert Jackson & Associates, Inc.
Low Rider Publishing Group, Inc.
Maddux Publishing, Inc.
McMullen Argus Publishing, Inc.
Memphis Apartment Guide, Inc.
Miramar Communications, Inc.
Pictorial, Inc.
Plaza Communications, Inc.
PRIMEDIA Enthusiast Publications, Inc.
PRIMEDIA Holdings III Inc.
PRIMEDIA Information Inc.
PRIMEDIA Intertec Corporation
PRIMEDIA Magazines Inc.
PRIMEDIA Magazines Finance Inc.
PRIMEDIA Reference Inc.
PRIMEDIA Special Interest Publications Inc.
PRIMEDIA Ventures, Inc.
PRIMEDIA Workplace Learning, Inc.
QWIZ, Inc.
R.E.R. Publishing Corporation
RetailVision, Inc.
Simba Information
Southwest Art, Inc.
Symbol of Excellence Publishers, Inc.
Tel-A-Train, Inc.
The Virtual Flyshop, Inc.
TI-IN Acquisition Corporation
TSECRP, Inc.
Vegetarian Times, Inc.
Weekly Reader Corporation
Westcott Communications Michigan, Inc.
Westcott ECI, Inc.
Western Empire Publications, Inc.
71
<PAGE>
<TABLE>
<S> <C>
By: /s/ BEVERLY C. CHELL
--------------------------------------
(Beverly C. Chell)
VICE CHAIRMAN AND SECRETARY
</TABLE>
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons
in the capacities indicated on March 25, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------------- ------------------------------------------------------------
<S> <C>
/s/ WILLIAM F. REILLY Chairman and Director (Principal Executive Officer)
...................................................
(William F. Reilly)
/s/ CHARLES G. MCCURDY Vice Chairman, Chief Financial Officer and Director
................................................... (Principal Financial Officer)
(Charles G. McCurdy)
/s/ BEVERLY C. CHELL Vice Chairman, Secretary and Director
...................................................
(Beverly C. Chell)
/s/ ROBERT J. SFORZO Vice President (Principal Accounting Officer)
...................................................
(Robert J. Sforzo)
</TABLE>
72
<PAGE>
SCHEDULE II
PRIMEDIA INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------------------------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Accounts receivable
Allowance for doubtful
accounts...................................... $ 10,521 $ 12,584 $ 2,629(1) $(14,911)(3) $ 15,796
$ 5,314(2)
$ (341)(4)
Allowance for sales returns and
rebates....................................... $ 27,009 $ 22,556 $ 1,328(1) $(28,474)(3) $ 21,507
$ (912)(4)
Inventory
Allowance for obsolescence...................... $ 2,482 $ 595 $ 1,621(1) $ (1,472)(3) $ 3,205
$ (21)(4)
Accumulated amortization
Goodwill........................................ $ 94,735 $ 42,623 $ 364(1) $ (57)(3) $ 137,094
(571)(4)
Other intangibles............................... $641,862 $127,099 $12,854(1) $ (1,721)(3) $ 777,760
(2,334)(4)
Deferred financing costs........................ $ 5,093 $ 3,046 $ (215)(4) $ (615)(3) $ 7,309
Deferred wiring and
installation costs............................ $ 18,718 $ 7,033 $ -- $ (1,228)(3) $ 24,523
Prepublication and programming costs............ $ 6,843 $ 5,759 $ -- $ (837)(3) $ 11,765
Direct-response advertising costs............... $ 53,840 $ 33,354 $ (235)(4) $(16,846)(3) $ 70,113
</TABLE>
- ------------------------
Notes:
(1) Increases in related valuation account result from acquisitions.
(2) Increases in related valuation account result from the recovery of amounts
previously written off.
(3) Deductions from related valuation account result from write-offs and actual
returns.
(4) Deductions from related valuation account result from reclassifications and
write-offs related to divestitures.
S-1
<PAGE>
SCHEDULE II
PRIMEDIA INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------------------------- ------------ ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Accounts receivable
Allowance for doubtful
accounts...................................... $ 15,418 $ 20,904 $ 850(1) $ (21,982)(3) $ 10,521
$ 1,732(2)
$ (6,401)(4)
Allowance for sales returns
and rebates................................... $ 24,098 $ 83,438 $ (3,378)(4) $ (77,149)(3) $ 27,009
Inventory
Allowance for obsolescence...................... $ 8,703 $ 5,674 $ 218(2) $ (4,837)(3) $ 2,482
$ (7,276)(4)
Accumulated amortization
Goodwill........................................ $ 82,763 $ 29,024 $(17,026)(4) $ (26)(3) $ 94,735
Other intangibles............................... $814,061 $110,799 $(282,911)(4) $ (87)(3) $ 641,862
Deferred financing costs........................ $ 9,794 $ 3,071 $ -- $ (7,772)(3) $ 5,093
Deferred wiring and
installation costs............................ $ 12,850 $ 7,008 $ (7)(4) $ (1,133)(3) $ 18,718
Prepublication and programming costs............ $ 7,968 $ 4,491 $ (3,489)(4) $ (2,127)(3) $ 6,843
Direct-response advertising
costs......................................... $ 70,661 $ 42,659 $(49,320)(4) $ (10,160)(3) $ 53,840
</TABLE>
- ------------------------
Notes:
(1) Increases in related valuation account result from acquisitions.
(2) Increases in related valuation account result from the recovery of amounts
previously written off.
(3) Deductions from related valuation account result from write-offs and actual
returns.
(4) Deductions from related valuation account result from reclassifications and
write-offs related to net assets held for sale.
S-2
<PAGE>
SCHEDULE II
PRIMEDIA INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------------------------- ------------ ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Accounts receivable
Allowance for doubtful
accounts...................................... $ 14,364 $ 21,438 $ 62(1) $(21,069)(3) $ 15,418
$ 970(2)
$ (347)(4)
Allowance for sales returns and
rebates....................................... $ 23,015 $ 79,819 $ -- $(78,736)(3) $ 24,098
Inventory
Allowance for obsolescence...................... $ 7,129 $ 4,423 $ 279(2) $ (3,128)(3) $ 8,703
Accumulated amortization
Goodwill........................................ $ 66,889 $ 23,576 $ (640)(4) $ (7,062)(3) $ 82,763
Other intangibles............................... $695,504 $122,140 $(2,932)(4) $ (651)(3) $ 814,061
Deferred financing costs........................ $ 8,139 $ 3,662 $ -- $ (2,007)(3) $ 9,794
Deferred wiring and
installation costs............................ $ 7,163 $ 6,753 $ -- $ (1,066)(3) $ 12,850
Prepublication and programming costs............ $ 4,121 $ 5,963 $ -- $ (2,116)(3) $ 7,968
Direct-response advertising costs............... $ 29,569 $ 41,481 $ -- $ (389)(3) $ 70,661
</TABLE>
- ------------------------
Notes:
(1) Increases in related valuation account result from acquisitions.
(2) Increases in related valuation account result from the recovery of amounts
previously written off.
(3) Deductions from related valuation account result from write-offs and actual
returns.
(4) Deductions from related valuation account result from reclassifications and
write-offs related to net assets held for sale.
S-3
<PAGE>
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
To the Shareholders and Board of Directors of
PRIMEDIA Inc.
New York, New York:
We have audited the consolidated balance sheets of PRIMEDIA Inc. and
subsidiaries as of December 31, 1998 and 1997, and the related statements of
consolidated operations, consolidated cash flows and shareholders' equity
(deficiency) for each of the three years in the period ended December 31, 1998,
and have issued our report thereon dated January 27, 1999 (March 11, 1999 as to
Note 23); such report is included elsewhere in this Form 10-K. Our audits also
included the financial statement schedules of PRIMEDIA Inc. and subsidiaries,
listed in Item 14. These financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedules, when considered
in relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
New York, New York
January 27, 1999
(March 11, 1999 as to Note 23)
S-4
<PAGE>
Exhibit 3.8
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
****
Intertec Publishing Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation at a meeting duly
held, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of Intertec
Publishing Corporation be amended by changing the First Article thereof so
that, as amended, said Article shall be and read as follows: "The name of
the corporation shall be PRIMEDIA Intertec Corporation."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of sections 242 and 228 of the General Corporation Law
of the State of Delaware.
<PAGE>
Exhibit 3.123
Microfilm Number Filed with the Department of State on Feb 03 1999
Entity No. 161885
---------------------------------------------------
ACTING Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. section 1915 (relating
to articles of amendment), the undersigned business corporation, desiring to
amend its Articles, hereby states that:
1. The name of the corporation is: Cowles Enthusiast Media Inc.
---------------------------------------------
---------------------------------------------------------------------------
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and
the county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a)
------------------------------------------------------------------------
Number and Street City State Zip County
(b)c/o: CT Corporation System Philadelphia
-------------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: Business
----------------------
Corporation Law of the Commonwealth of Pennsylvania approved May 5, 1933,
---------------------------------------------------------------------------
P.L. 364
---------------------------
4. The name of the corporation is: (February 1, 1960)
---------------------------------------------
5. (Check , and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of
--- Amendment in the Department of State.
The amendment shall be effective on at
--- ------------------ ------------------
Date Hour
6. (Check one of the following):
The amendment was adopted by the shareholders (or members) pursuant to
--- 15 Pa.C.S. section 1914(a) and (b).
The amendment was adopted by the board of directors pursuant to 15
--- Pa.C.S. section 1914(c).
7. (Check , and if appropriate complete, one of the following):
The amendment adopted by the corporation, set forth in full, is as
--- follows:
<PAGE>
X The amendment adopted by the corporation as set forth in full in
--- Exhibit A attached hereto and made a part hereof.
8. X The restated Articles of Incorporation supersede the original
--- Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof
this 3rd day of February, 1999.
---- -------- ---
---------------------------------------------
(Name of Corporation)
BY: /s/ Beverly C. Chell
------------------------------------------
(Signature)
TITLE: Beverly C. Chell, Secretary
- - ---------------------------------------
<PAGE>
EXHIBIT A
---------
CERTIFICATE OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
COWLES ENTHUSIAST MEDIA INC., a corporation organized and existing under
and by virtue of the Business Corporation Law of the Commonwealth of
Pennsylvania (the "Corporation").
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth and declaring advisable a proposed amendment to
the Articles of Incorporation of said Corporation:
RESOLVED, that the articles of Incorporation of this Corporation be
amended by changing Article I so that, as amended, said Article shall be
and read as follows: "The name of the Corporation is PRIMEDIA Enthusiast
Publications, Inc.".
SECOND: That by written consent, filed with the minutes of the
Corporation, the sole stockholder approved said amendment in accordance with
the provisions of Section 801 of the Business Corporation Law of the
Commonwealth of Pennsylvania.
THIRD: That the aforesaid amendment to the Corporation's Articles of
Incorporation was duly adopted in accordance with the applicable provisions of
Section 801 of the Business Corporation Law of the the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF, said Cowles Enthusiast Media Inc. has caused these
Articles of Incorporation to be executed by Beverly C. Chell, its authorized
officer, on this 3rd day of February, 1999.
By: /s/ Beverly C. Chell
----------------------------------------
Name: Beverly C. Chell
Title: Secretary
<PAGE>
Microfilm Number
Files with the Department State on
Entity No 161885
Secretary of the Commonwealth
ARTICLES OF AMENDMENT DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (REV 90)
In compliance with the requirements of 15 Pa.C.S. 1915 (relating to articles of
amendment), the undersigned business corporation, desiring to amend its
Articles, hereby states that:
1. The name of the corporation is: Cowles Enthusiast Media Inc.
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name its commercial registered office provider and the
county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a)
Number and Street
City
State
Zip
County
(b) c/o: CT Corporation System
Philadelphia
Name of Commercial Registered Officer Provider
County
For a corporation represented by a commercial registered office provider, the
county in
(b) shall be deemed the county in which the corporation is located for venue
and official publication purposes.
3. The statute by or under which it was incorporated: Business Corporation
Law of the Commonwealth of Pennsylvania approved May 5, 1933, P.L. 364
4. The date of incorporation is: (February 1, 1960)
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of Amendment in
the Department of State
The amendment shall be effective on
Date
at
Hour
6. (Check one of the following):
The amendment was adopted by the board of shareholders (or members) pursuant to
15 Pa.C.S. 1914(a) and (b).
X The amendment was adopted by the board of directors pursuant to 15 Pa.C.S.
1914(c)
7. (Check, and if appropriate complete, one of the following):
The amendment adopted by the corporation, set forth in full, is a follows:
X The amendment adopted by the corporation as set forth in full in Exhibit A
attached hereto and made a part hereof.
X The restated Articles of Incorporation supersede the original Articles
and all amendments thereto.
In testimony whereof, the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer thereof this 3rd day
of February, 1999.
(Name of Corporation)
By:
Signature
Title: Beverly C. Chell, Secretary
Exhibit A
Certificate of Amendment
Of the
Articles of Incorporation
Cowles Enthusiast Media Inc., a corporation organized and existing under and
by virtue of the Business Corporation Law of the Commonwealth of Pennsylvania
(the "Corporation").
Does hereby certify:
First: That the Board of Directors of the Corporation duly adopted
resolutions setting forth and declaring advisable a proposed amendment to the
Articles of Incorporation of said Corporation:
Resolved, that the Articles of Incorporation of this Corporation be amended
by changing Article I so that, as amended, said Article shall be and read as
follows: "The name of the Corporation is PRIMEDIA Enthusiast Publications,
Inc.".
Second: That by written consent, filed with the minutes of the Corporation,
the sole stockhlder approved said amendment in accordance with the provisions
of Section 801 of the Business Corporation Law of the Commonwealth of
Pennsylvania.
Third: That the aforesaid amendment to the Corporation's articles of
Incorporation was duly adopted in accordance with the applicable provision of
Section 801 of the Business Corporation Law of the Commonwealth of
Pennsylvania.
In Witness Whereof, said Cowles Enthusiast Media Inc., has caused these
Articles of Incorporation to be executed by Beverly C. Chell, its authorized
officer, on this 3rd day of February, 1999.
By:
Name Beverly C. Chell
Title Secretary
<PAGE>
Exhibit 3.129
FILING #0001832638 PG 01 OF 02 VOL B-00187
FILED 04/24/1998 01:00 PM PAGE 00533
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
CERTIFICATE AMENDING OR RESTATING CERTIFICATE OF INCORPORATION
61-38 Rev. 9/90
Stock Corporation
STATE OF CONNECTICUT
SECRETARY OF THE STATE
30 TRINITY STREET
HARTFORD, CT 06106
Cowles/Simba Information, Inc.
- --------------------------------------------------------------------------------
1. Name of Corporation ( Please enter name within lines)
- --------------------------------------------------------------------------------
2. The Certificate of Incorporation is: (Check one)
|X| A. Amended only,
|_| B. Amended only, to cancel authorized shares (state number of shares to
be cancelled, the class, the series, if any, and the par value, P.A.
90-107.)
|_| C. Restated only, pursuant to Conn. Gen. Stat. ss.33 - 362(a).
|_| D. Amended and restated, pursuant to Conn. Gen. Stat. ss.33 - 362(c).
|_| E. Restated and superseded pursuant to Conn. Gen. Stat. ss.33 - 362(d).
Set forth here the resolution of amendment and/or restatement. Use an 8 1/2 X 11
attached sheet if more space is needed.
Resolved, that the Certificate of Incorporation be amended to read in its
entirety as follows:
"1. The name of the Corporation is Simba Information, Inc."
(If 2A or 2B is checked, go to 5 & 6 to complete this certificate. If 2C or 2D
ia checked, complete 3A or 3B. If 2E is checked, complete 4.)
3. (Check one)
|_| A. This certificate purports merely to restate but not to change the
provisions of the original Certificate of Incorporation as supplemented
and amended to date, and there is no discrepancy between the provisions of
the original Certificate of Incorporation as supplemented and amended to
date, and the provisions of this Restated Certificate of Incorporation.
(If 3A is checked, go to 5 & 6 to complete this certificate.).
|_| B. This Restated Certificate of Incorporation shall give effect to the
amendment(s) and purports to restate all those provisions now in effect
not being amended by such new amendment(s). (If 3B is checked, check 4, if
true, and go to 5 & 6 to complete this Certificate.)
4. (Check, if true)
|_| This restated Certificate of Incorporation was adopted by the greatest
vote which would have been required to amend any provision of the
Certificate of Incorporation as in effect before such vote and supersedes
such Certificate of Incorporation.
<PAGE>
FILING# 0001832638 PG 02 OF 02 VOL B-00187
FILED 04/24/1998 01:00 PM PAGE 00534
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
[ILLEGIBLE] of adopting the resolution was as follows:
|_| A. By the board of directors and shareholders, pursuant to Conn. Gen. Stat.
ss.33 - 360. Vote of Shareholders: (Check (i) or (ii), and check (iii) if
applicable.)
(i) |_| No shares are required to be voted as a class; the
shareholder's vote was as follows:
Vote Required for Adoption ___________ Vote Favoring Adoption __________
(ii) |_| There are shares of more than one class entitled to vote as a
class. The designation of each class required for adoption of
the resolution and the vote of each class in favor of adoption
were as follows:
(Use an 8 1/2 x 11 attached sheet if more space is needed.
Conn. Gen. Stat. ss. 1 - 9.)
(iii) |_| Check here if the corporation has 100 or more recordholders,
as defined in Conn. Gen. Stat. ss.33 - 311a(a).
|X| B. By the board of directors acting alone
The number of affirmative votes required to adopt such resolution is: 11
The number of directors' votes in favor of the resolution was: 11
[ILLEGIBLE] hereby declare, under the penalties of false statement, that the
statements made in the foregoing certificate are
(Print or Type) Signature
- --------------------------------------------------------------------------------
Name of Pres. / V. Pres. /s/ Michaelanne Discepolo
Michaelanne Discepolo
- --------------------------------------------------------------------------------
(Print or Type) Signature
- --------------------------------------------------------------------------------
Name of Sec. /s/ Beverly C. Chell
Beverly C. Chell
- --------------------------------------------------------------------------------
|_| C. The corporation does not have any shareholders. The resolution was
adopted by vote of at least two-thirds of the incorporators before
the organization meeting of the corporation, and approved in writing
by all subscribers for shares of the corporation. If there are no
subscribers, state NONE below.
[ILLEGIBLE](at least two-thirds of the incorporators) hereby declare, under the
penalties of false statement, that the statements made in the foregoing
certificate are true.
- --------------------------------------------------------------------------------
Signed Incorporator Signed Incorporator Signed Incorporator
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signed Subscriber Signed Subscriber Signed Subscriber
- --------------------------------------------------------------------------------
(Use an 8 1/2 X 11 attached sheet if more space is needed. Conn. Gen. Stat. ss.
1 - 9)
Dated at ____ this 22nd day of April, 1998
Rec, CC, GS: (Type or Print)
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
Please provide filer's name and complete
address for mailing receipt
<PAGE>
Exhibit 3.145
CERTIFICATE OF RESTATED
ARTICLES OF INCORPORATION
OF
AMERICAN GUIDANCE SERVICE, INC.
The undersigned, being the President of AMERICAN GUIDANCE SERVICE, INC., a
Minnesota corporation subject to the provisions of Chapter 302A of the Minnesota
Statutes, known as the Minnesota Business Corporation Act, does hereby certify
that pursuant to a Written Action taken in accordance with Section 302A.441 of
the Minnesota Business Corporation Act effective as of the 26th day of June,
1990, the following resolution was unanimously adopted by the company's
shareholders entitled to vote thereon and these Restated Articles of
Incorporation supersede and take the place of existing Articles of Incorporation
and all amendments thereto:
RESOLVED, that the Articles of Incorporation of AMERICAN GUIDANCE SERVICE,
INC. be, and the same are hereby restated and the following Restated Articles of
Incorporation take the place of and supersede the existing Articles of
Incorporation and all amendments thereto, pursuant to Minnesota Statutes Section
302A.135, subd. 4, to read as follows:
ARTICLE 1. NAME
The name of the Corporation is AMERICAN GUIDANCE SERVICE, INC.
ARTICLE 2. REGISTERED OFFICE
The address of the registered office of the Corporation is Publishers'
Building, Circle Pines, Minnesota 55014.
ARTICLE 3. AUTHORIZED SHARES
The number of shares which the Corporation shall have authority to issue,
itemized by class and par value of the shares, if any, is:
Class Shares Par Value
- ----- -------- ---------
Class A Common Stock 10,000,000 $.01 Par Value
Class B Common Stock 1,000,000 $.01 Par Value
Class C Common Stock 5,000,000 $.01 Par Value
ARTICLE 4. PREFERENCES, LIMITATIONS AND
RELATIVE RIGHTS OF AUTHORIZED SHARES
The preferences, limitations, designation and relative rights of each
class of stock of the Corporation shall be identical with regard to dividend
rights, preferences on liquidation and all other respects except as more
specifically set forth as follows:
1. The shares of Class A Common Stock shall be voting stock and shall
be entitled to dividends if and when declared by the Board of
Directors; and
2. The shares of Class B Common Stock shall be voting stock and shall
be entitled to dividends if and when declared by the Board of
Directors.
<PAGE>
3. The shares of Class C Common Stock shall be nonvoting stock and
shall be entitled to dividends if and when declared by the Board of
Directors.
The Board of Directors may declare dividends with respect to only one
class of stock and shall not be required to declare dividends with respect to
all classes of stock. If dividends are declared with respect to only one class
of stock, other than Class A common stock, the dividends must also be declared
with respect to the shares of Class A Common Stock. The shares of the Class B
Common Stock and Class C Common Stock may not be owned by an Employee Stock
Ownership Plan and Trust ("ESOP") as defined in Sections 401 and 4975(e)(7) of
the Internal Revenue Code of 1986, as amended (the "Code"). In the event any
shares of the Class B Common Stock or Class C Common Stock are sold,
distributed, or otherwise transferred or disposed of to an ESOP, such stock
shall immediately be converted to Class A Common Stock on a share for share
basis. The Class B Common Stock and the Class C Common Stock may be converted at
any time, on a share for share basis, to Class A Common Stock, at the sole
discretion of a shareholder, by giving thirty (30) days advance notice to the
Corporation of the shareholder's desire to convert his or her shares upon
delivering his or her Class B or Class C Common Stock Certificates to the
Secretary of the Corporation. Upon receipt of such notice and the appropriate
Class B or Class C Common Stock Certificates, the Secretary of the Corporation
will issue new Class A Common Stock Certificates to such shareholder.
ARTICLE 5. NO CUMULATIVE VOTING
There shall be no cumulative voting by the shareholders of the
Corporation.
ARTICLE 6. NO PREEMPTIVE RIGHTS
The shareholders of the Corporation shall not have preemptive rights.
ARTICLE 7. DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for (i) liability based on a breach of the director's
duty of loyalty to the Corporation or its shareholders; (ii) liability for acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law; (iii) liability under Sections 302A.559 or 80A.23 of
the Minnesota Business Corporation Act or on violations of federal or state
securities laws; (iv) liability for any transaction from which the director
derived an improper personal benefit; or (v) liability for any act or omission
occurring prior to the date this Article 7 becomes effective. If Chapter 302A,
the Minnesota Business Corporation Act, hereafter is amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation in addition to the limitation on
personal liability provided herein, shall be eliminated or limited to the
fullest extent permitted by the amended Chapter 302A, the Minnesota Business
Corporation Act as amended. Any repeal or modification of this Article by the
shareholders of the Corporation shall be prospective only and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
IN WITNESS WHEREOF, I have subscribed my name this 26th day of June,1990.
/s/ John P. Yackel
--------------------------------
John P. Yackel, the President of
American Guidance Service, Inc.
<PAGE>
Exhibit 3.146
AMENDED
BY-LAWS
AMERICAN GUIDANCE SERVICE, INC.
ARTICLE I.
OFFICE & SEAL
SECTION 1. OFFICE. The registered office of the corporation shall be
Publisher's Building, Circle Pines, Minnesota, 55014, and the corporation shall
have other offices at such places as the Board of Directors may from time to
time determine.
SECTION 2. SEAL. The corporation seal shall have inscribed thereon the
name of the corporation and the words, "Corporate Seal, Minnesota". Said seal
may be used by causing it, or a facsimile thereof to be impressed, affixed,
reproduced or otherwise.
ARTICLE II.
SHAREHOLDERS MEETINGS
SECTION 1. PLACE. All meetings of the Shareholders shall be held at the
registered office of the corporation in the County of Anoka, Minnesota, and such
other places as the Board of Directors may determine except as limited by law.
SECTION 2. TIME. A meeting of the Shareholders shall be held at a time to
be determined by the Corporation's Board of Directors, when they shall elect by
a majority vote a Board of Directors. Except as otherwise provided in the
articles, pursuant to provisions of Section 301.06 Subdivision 4 and 12 of
Minnesota Statutes 1945, directors other than constituting the first board shall
be elected by the Shareholders in accordance with the relative voting granted in
the shares of each class by the articles.
SECTION 3. ANNUAL MEETINGS. Written notice of the annual meeting shall be
mailed at least ten (10) days prior to the meeting to each Shareholder entitled
to vote thereat to the last known address of such Shareholder as same appears
upon the books of the corporation.
<PAGE>
Amended By-Laws
Page 2
SECTION 4. SPECIAL MEETINGS. Written notice of a special meeting of
Shareholders, stating the time, place and object thereof, shall be mailed to the
last known address of such Shareholder, postage prepaid, at least ten (10) days
before such meeting to each Shareholder entitled to vote thereat.
SECTION 5. QUORUM. The presence at any meeting, in person or by proxy, of
the holders of a majority of the shares entitled to vote shall constitute a
quorum for the transaction of business. If, however, such majority shall not be
present in person or by proxy, at any meeting of the Shareholders, entitled to
vote thereat, those present shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until the requisite
amount of voting shares shall be represented. At such adjourned meeting at which
the required amount of voting shares shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 6. VOTING. At each meeting of the Shareholders, every Shareholder
having the right to vote shall be entitled to vote in person, or by proxy, duly
appointed by an instrument in writing subscribed by such shareholder. Upon
demand of any Shareholder, the vote for directors, or the vote upon any question
before the meeting, shall be by ballot. All elections shall be had and all
questions decided by a majority vote, except as otherwise required by statute.
SECTION 7. CALL FOR SPECIAL MEETINGS. Special meetings of the
Shareholders, for any purpose, or purposes, unless otherwise prescribed by
statute, shall be called by the President, or shall be called by the President
and Secretary at the request in writing of the Shareholders owning not less than
one-tenth of the voting power of the Shareholders of the corporation. Such call
shall state the purpose or purposes of the proposed meeting.
SECTION 8. ORDER FOR BUSINESS. Business transacted at all special meetings
shall be confined to purposes stated in the call.
<PAGE>
Amended By-Laws
Page 3
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. ELECTION OF DIRECTORS. The management of this corporation shall
be vested in a Board of Directors to be chosen at each annual meeting by the
shareholders. The Board of Directors shall consist of not less than three (3)
nor more than seven (7) persons who need not be shareholders, except that where
all of the shares of the Corporation are owned beneficially and of record by
either one or two shareholders, the number of directors may be less than three
(3), but not less than the number of shareholders. They shall be elected at the
annual meeting of Shareholders, by majority vote and each Director shall be
elected to serve for one year or until their successor shall have been elected
and qualified. Except as otherwise provided in the articles pursuant to
provisions of Section 301.26, Subdivision 4 and 12, of the Minnesota Statutes
1945, directors, other than those constituting the first board, shall be
selected by the Shareholders in accordance with the relative voting rights
granted to the shares of each class by the articles.
SECTION 2. ANNUAL MEETING. The regular annual meetings of the board shall
be held without notice at the time and immediately following the adjournment of
the annual Shareholders' meeting, for the purpose of election of officers for
the ensuing year and to transact such other business as may properly come before
it.
SECTION 3. REGULAR MEETINGS. Regular meetings of the board shall be held
without notice at the registered office or such other place within and without
the State of Minnesota and at such times as a majority of the members of the
board may from time to time determine.
<PAGE>
Amended By-Laws
Page 4
SECTION 4. SPECIAL MEETINGS. Special meetings of the board may be
called by the President at any time and shall be called by him whenever
requested to do so in writing by any member of the Board. Notice of special
meetings may be given to each director personally or by mail or telegram at
least five (5) days prior to the meeting. A special meeting may be called
without notice to the directors if a full board convenes and all agree to the
holding of the meeting at such time and place and waive all rights to notice
thereof. Any action which might be taken at a meeting of the Board of
Directors may be taken without meeting if done in writing, signed by all the
directors.
SECTION 5. QUORUM. At all meetings of the board, a majority of the
directors shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the directors present at
the meeting at which there is a quorum, shall be the act of the Board of
Directors.
SECTION 6. ORDER FOR BUSINESS. The Board of Directors may from time to
time determine the order of business at their meeting.
ARTICLE IV.
POWERS OF BOARD OF DIRECTORS
SECTION 1. MANAGEMENT. The Board of Directors shall have full power and
authority to manage and control the affairs and business of this corporation.
SECTION 2. CHAIRMAN OF THE BOARD. At each annual meeting, directors shall
choose from among its members a Chairman of the board who shall conduct the
affairs of the Board of Directors and shall preside at all meetings of the
Shareholders and Board of Directors.
SECTION 3. ISSUANCE OF SHARES. The Board of Directors are authorized and
directed to issue shares of the corporation to the full amount authorized by the
Articles of Incorporation in such amounts and at such times as may be determined
by the board and as may be permitted by law.
<PAGE>
Amended By-Laws
Page 5
SECTION 4. TRANSFER OF SHARES. Transfer of shares shall be made on the
books of the corporation only by the person named in the certificate, or by
attorney, lawfully constituted in writing, and upon surrender of the certificate
thereof properly endorsed.
SECTION 5. CLOSING OF BOOKS. The Board of Directors may fix a time not
exceeding (60) days preceding the date of any meeting of the Shareholders, as a
record date for the determination of the shareholders entitled to notice of and
to vote at such meeting, notwithstanding any transfer of any shares on the books
of the corporation after any record date so fixed. The Board of Directors may
close the books of the corporation after any record date so fixed. The Board of
Directors may close the books of the corporation against transfer of shares
during the whole or any part of such period.
SECTION 6. OTHER POWERS. In addition to the powers and authorities
conferred upon them by these By-Laws, the Board of Directors shall have the
power to do all lawful acts necessary and expedient to the conduct of the
business of this corporation, that are not conferred upon the shareholders, by
these By-Laws, or by the Articles of Incorporation, or by Statutes.
ARTICLE V.
OFFICERS
SECTION 1. BOARD OF DIRECTORS. The Board of Directors at its first meeting
after each annual meeting of Shareholders shall elect a President, one or more
Vice-Presidents, a Secretary and Treasurer, none of whom need be a member of the
board. Any two offices, except that of President and Vice-President, may be held
by the same person.
SECTION 2. OTHER OFFICERS. The board may appoint such other officers and
agents as it shall deem necessary, from time to time, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
<PAGE>
Amended By-Laws
Page 6
SECTION 3. TERMS OF OFFICE. The officers of the corporation shall hold
office for one year or until their successors are chosen and qualify in their
stead, notwithstanding an earlier termination of their office as directors. Any
officer elected or appointed by the Board of Directors may be removed by the
affirmative of a majority of the whole Board of Directors.
SECTION 4. PRESIDENT. (a) The President shall be the chief executive
officer of the corporation; he shall have general active management of the
business of the corporation, and shall see that all orders and resolutions of
the board are carried into effect. (b) He shall execute all bonds, mortgages,
and other contracts. (c) He shall be ex-officio a member of all standing
committees, and shall have the general powers and duties of supervision and
management usually vested in the office of the President of a corporation.
SECTION 5. VICE-PRESIDENTS. One of the officers shall be designated First
Vice-President, who in the absence or disability of the President shall perform
the duties and exercise the powers of the President and shall perform such other
duties as the Board of Directors shall prescribe. All other Vice-Presidents
shall perform such duties as the Board of Directors shall prescribe.
SECTION 6. SECRETARY. The Secretary shall attend all sessions of the Board
of Directors and all meetings of the Shareholders and record all votes and the
minutes of all proceedings in a book kept for that purpose; and shall perform
like duties for the standing committee when required. He shall give, or cause to
be given, notice of all meetings of the Shareholders and of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or President, under whose supervision he shall be. He shall be
sworn to the faithful discharge of his duty. He shall keep in safe custody the
seal of the corporation and, when authorized by the board, affix the same to any
instrument requiring it.
SECTION 7. TREASURER. (a) The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects, in the name and to the credit of
the corporation, in such depositories as may be designated by the Board of
Directors.
<PAGE>
Amended By-Laws
Page 7
(b) He shall disburse the funds of the corporation as may be ordered by the
board, taking the proper vouchers for such disbursements, and shall render to
the President and Directors, at the regular meetings of the Board, or whenever
they may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation. (c) He shall give the corporation a bond
if required by a majority of the Board of Directors, in such amount as they may
determine, and with one or more sureties satisfactory to the board, for the
faithful performance of the duties of his office, and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control, belonging to the corporation.
SECTION 8. VACANCIES. If the office of any director or any officer or
agent becomes vacant by reason of death, resignation, retirement,
disqualification, removal from office or otherwise, the directors then in
office, although less than a quorum, by a majority vote, may choose a successor
or successors, who shall hold office for the unexpired term in respect of which
such vacancy occurred.
ARTICLE VI.
COMPENSATION OF DIRECTORS & OFFICERS
SECTION 1. COMPENSATION OF DIRECTORS. Directors may be paid such
compensation for their services rendered as directors, as may be fixed by
resolution of the Board of Directors itself, and it shall be lawful for the
Board to allow to each director his expense for attendance at meetings of the
Board. Nothing herein shall be construed to preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
SECTION 2. COMPENSATION OF OFFICERS. The salaries of all officers and
agents of the corporation shall be determined by the Board of Directors.
<PAGE>
Amended By-Laws
Page 8
SECTION 3. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Each director and
officer of the corporation, whether or not then in office, shall be indemnified
by the corporation against reasonable costs and expenses (including counsel
fees) incurred by him in connection with any action, suit or proceedings to
which he may be a party by reason of his being or having been a director or
officer of the corporation, except in relation to matters as to which he shall
finally be adjudged in such action, suit or proceeding to have been derelict in
the performance of his duties as such director or officer; and the foregoing
right of indemnification shall not be exclusive of other rights to which he
shall be entitled as a matter of law.
ARTICLE VII.
CERTIFICATES OF SHARES
SECTION 1. CERTIFICATES OF SHARES. Certificates of shares of the
corporation shall be in a form approved by the directors to comply with the
statues and shall be registered in the books of the corporation as they are
issued. They shall exhibit the holder's name, number of shares, and shall be
signed by the President and Secretary.
SECTION 2. LOST CERTIFICATES. Any shareholder claiming a certificate of
shares to be lost or destroyed shall make an affidavit or affirmation of the
fact in such form as the Board of Directors may require, and shall, if the
directors so require, give the corporation a bond of indemnity in form and with
one or more sureties satisfactory to the board, in at least double the value of
the shares represented by said certificate, whereupon a new certificate may be
issued of the same tenure and for the same number of share as the one alleged to
have been lost or destroyed.
<PAGE>
Amended By-Laws
Page 9
ARTICLE VIII.
DIVIDENDS
SECTION 1. DECLARATION. The Board of Directors shall have authority to
declare dividends upon the shares of the corporation to the extent permitted by
law.
SECTION 2. RECORD DATE. The Board of Directors may fix a time not
exceeding sixty (60) days preceding the date fixed for the payment of any
dividend as a record date for the determination of the shareholders entitled to
receive payment of any such dividend, and in such case, only shareholders of
record on that date so fixed shall be entitled to receive payment of such
dividend notwithstanding any transfer of any shares on the books of the
corporation after any record date so fixed. The Board of Directors may close the
books of the corporation after any record date so fixed. The Board of Directors
may close the books of the corporation against the transfer of shares during the
whole or any part of such period.
ARTICLE IX.
FISCAL YEAR
SECTION 1. FISCAL YEAR. The fiscal year of this corporation shall
terminate on June 30th of each year.
<PAGE>
Amended By-Laws
Page 10
ARTICLE X.
AMENDMENTS
SECTION 1. AMENDMENTS TO BY-LAWS. These By-Laws may be amended or altered
by the vote of a majority of the whole Board of Directors at any meeting
provided that notice of such proposed amendments shall have been given in the
notice to the directors of such meeting. Such authority in the Board of
Directors is subject to the powers of the Shareholders to change or repeal such
By-Laws by a majority vote of the shareholders present and represented at any
annual meeting or at any special meeting called for that purpose, and the Board
of Directors shall not make or alter any By-Laws fixing their number,
qualifications, or terms of office.
This is to certify that the foregoing By-Laws are the duly adopted By-Laws
of this corporation.
American Guidance Service, Inc.
By /s/ Marc J. Berman
----------------------------
Marc J. Berman
Its Secretary/Treasurer
----------------------------
Date January 30, 1995
---------------------------
<PAGE>
Exhibit 3.147
ARTICLES OF INCORPORATION
OF
AGS INTERNATIONAL SALES, INC.
We, the undersigned incorporators of full age, for the purpose of forming
a corporation under and pursuant to the provisions of Chapter 301, Minnesota
Statutes, known as the Minnesota Business Corporation Act, and laws amendatory
thereof and supplementary thereto, do hereby associate ourselves as a body
corporate and do hereby adopt the following Articles of Incorporation:
I.
The name of this corporation shall be AGS INTERNATIONAL SALES, INC.
II.
The period of existence and the duration or life of this corporation shall
be perpetual.
III.
The principal office and registered place of business of this corporation
shall be Publishers' Building, Circle Pines, Minnesota, 55014.
IV.
This corporation is organized for general business purposes and shall have
unlimited power to engage in, and to do any lawful act concerning any and all
lawful business and in particular, but without limitation on the general
business purpose hereinabove stated, to engage in the sale and export in foreign
<PAGE>
markets of literary, educational, guidance and testing supplies, materials
and services.
V.
The management of this corporation shall be vested in a Board of Directors
to be chosen at each annual meeting by the Shareholders. The Board of Directors
shall consist of not less than three (3) nor more than seven (7) persons who
need not be Shareholders, except that where all of the shares of the corporation
are owned beneficially and of record by either one or two shareholders, the
number of directors may be less than three (3), but not less than the number of
Shareholders. At each annual meeting of the Shareholders, the first order of
business shall be to determine the number of members upon the Board of Directors
for the ensuing year. The power of the Board of Directors shall be specified in
the By-Laws to be adopted. The Directors shall choose a President,
Vice-President, Secretary and Treasurer. Any two offices, except President and
Vice-President, may be held by the same person.
VI.
The authorized stock of this corporation shall be $25,000.00 which shall
be divided into 2,500 shares, each with a par value of $10.00 per share. Said
stock may be issued by the corporation from time to time, for such consideration
as may be fixed from time to time by the Board of Directors without regard to
pre-emptive rights of Shareholders and
<PAGE>
shall be fully paid and not subject to assessment upon the corporation's receipt
of such consideration. There shall be only one class of stock which shall be
common stock. Each share of common stock shall convey with it to the owner of
said share, one vote in the management of the corporation and the election of
Directors.
VII.
The amount of stated capital with which the corporation shall commence
doing business shall not be less than $2,500.00.
VIII.
The name and address of each person who has been selected as a director of
the corporation to manage the business and affairs thereof until the next annual
meeting is:
John P. Yackel, 20 E. Golden Lake Road, Circle Pines, Mn. 55014
A. P. Bergee, 26 Golden Lake Road, Circle Pines, Mn. 55014
Norman Dahl, 24 West Road, Circle Pines, Mn. 55014
IX.
The name and address of each incorporator, who, by this instrument, forms
the corporation named above is as follows: Norman Dahl, 24 West Road, Circle
Pines, Mn. 55014
X.
The By-Laws of this corporation shall be adopted by the Board of Directors
to be effective until the first annual meeting of the Shareholders.
IN WITNESS WHEREOF, Each incorporator has hereunto affixed his signature
this 29th day of l972.
IN PRESENCE OF:
/s/ Mary Louise Juhnke
- -------------------------
/s/ Margaret Wall Eide
- -------------------------
/s/ Norman Dahl
- -------------------------
Norman Dahl
<PAGE>
STATE OF MINNESOTA
COUNTY OF Anoka
On this 29th day of February, 1972, personally appeared before me, a notary
public in and for said County, Norman Dahl to me known to be the person named in
and who executed the foregoing Articles of Incorporation, and he executed the
same as his own free act and deed for the uses and purposes herein expressed.
/s/ Mary Louise Juhnke
-----------------------------------
Notary Public, Anoka County, Mn.
My Commission Expires: Oct 28, 1978
[SEAL]
- --------------------------------------------------------------------------------
STATE OF MINNESOTA
DEPARTMENT OF STATE
I hereby certify that the within instrument was filed for record in this
office on the 3 day of March A.D. 1972, at 8:00 o'clock A.M., and was duly
recorded in Scok C.-38 of incorporation, on page 284
/s/ Arlen I. Erdahl
Secretary of State
- --------------------------------------------------------------------------------
- ------------------
APPR'D & FILED
INDEXED _________
IND. FILED_______
[Illegible]
- ------------------
Filed for record on the 10 day of Mar. A.D. 1972 at 9 o'clock A.M.
<PAGE>
Exhibit 3.148
BY-LAWS
AGS INTERNATIONAL SALES, INC.
ARTICLE I.
OFFICE & SEAL
SECTION 1. OFFICE. The registered office of the corporation shall be
Publishers' Building, Circle Pines, Minnesota, 55014 and the corporation shall
have other offices at such places as the Board of Directors may from time to
time determine.
SECTION 2. SEAL. The corporation seal shall have inscribed thereon the
name of the corporation and the words, "Corporate Seal, Minnesota". Said seal
may be used by causing it, or a facsimile thereof to be impressed, affixed,
reproduced or otherwise.
ARTICLE II.
SHAREHOLDERS MEETINGS
SECTION 1. PLACE. All meetings of the Shareholders shall be held at the
registered office of the corporation in the County of Anoka, Minnesota, and such
other places as the Board of Directors may determine except as limited by law.
SECTION 2. TIME. An annual meeting of the Shareholders after the year
1972, shall be held on the 2nd Monday in May of each year, or if the date shall
fall upon a holiday, then on the next succeeding business day, when they shall
elect by a majority vote a Board of Directors. Except as otherwise provided in
the articles, pursuant to provisions of Section 301.06 Subdivision 4 and 12 of
Minnesota Statutes 1945, directors other
<PAGE>
than those constituting the first board shall be elected by the Shareholders in
accordance with the relative voting rights granted in the shares of each class
by the articles.
SECTION 3. ANNUAL MEETINGS. Written notice of the annual meeting shall be
mailed at least ten (10) days prior to the meeting to each Shareholder entitled
to vote thereat to the last known address of such Shareholder as same appears
upon the books of the corporation.
SECTION 4. SPECIAL MEETINGS. Written notice of a special meeting of
Shareholders, stating the time, place and object thereof, shall be mailed to the
last known address of such Shareholders, postage prepaid, at least three (3)
days before such meeting to each Shareholder entitled to vote thereat.
SECTION 5. QUORUM. The presence at any meeting, in person or by proxy, of
the holders of a majority of the shares entitled to vote shall constitute a
quorum for the transaction of business. If, however, such majority shall not be
present in person or by proxy, at any meeting of the Shareholders, entitled to
vote thereat, those present shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until the requisite
amount of voting shares shall be represented. At such adjourned meeting at which
the required amount of voting shares shall
<PAGE>
be represented, any business may be transaction which might have been transacted
at the meeting as originally notified.
SECTION 6. VOTING. At each meeting of the Shareholders, every Shareholder
having the right to vote shall be entitled to vote in person, or by proxy, duly
appointed by an instrument in writing subscribed by such Shareholder. Upon
demand of any Shareholder, the vote for directors, or the vote upon any question
before the meeting, shall be by ballot. All elections shall be had and all
questions decided by a majority vote, except as otherwise required by statute.
SECTION 7. CALL FOR SPECIAL MEETINGS. Special meetings of the
Shareholders, for any purpose, or purposes, unless otherwise prescribed by
statute, shall be called by the President, or shall be called by the President
and Secretary at the request in writing of the Shareholders owning not less than
one-tenth of the voting power of the Shareholders of the corporation. Such call
shall state the purpose or purposes of the proposed meeting.
SECTION 8. ORDER FOR BUSINESS. Business transacted at all special meetings
shall be confined to purposes stated in the call.
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. ELECTION OF DIRECTORS. The property and business of this
corporation shall be managed by its Board of
<PAGE>
Directors, consisting of not less than three (3) nor more than seven (7) persons
who need not be Shareholders, except that where all of the shares of the
corporation are owned beneficially and of record by either one or two
shareholders, the number of directors may be less than three (3), but not less
than the number of Shareholders. They shall be elected at the annual meeting of
the Shareholders, by majority vote and each director shall be elected to serve
for one year or until his successor shall have been elected and qualified.
Except as otherwise provided in the articles pursuant to provisions of Section
301.06, Subdivision 4 and 12 of Minnesota Statutes 1945, directors, other than
those constituting the first board, shall be selected by the Shareholders in
accordance with the relative voting rights granted to the shares of each class
by the articles.
SECTION 2. ANNUAL MEETINGS. The regular annual meetings of the board shall
be held without notice at the time and immediately following the adjournment of
the annual Shareholders' meeting, for the purpose of election of officers for
the ensuing year and to transact such other business as may properly come before
it.
SECTION 3. REGULAR MEETINGS. Regular meetings of the board shall be held
without notice at the registered office or such other place within and without
the State of Minnesota and at such times as a majority of the members of the
board
<PAGE>
may from time to time determine.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board may be called
by the President at any time and shall be called by him whenever requested to do
so in writing by any member of the Board. Notice of special meetings may be
given to each director personally or by mail or telegram at least three (3) days
prior to the meeting. A special meeting may be called without notice to the
directors if a full board convenes and all agree to the holding of the meeting
at such time and place and waive all rights to notice thereof. Any action which
might be taken at a meeting of the Board of Directors may be taken without
meeting if done in writing, signed by all the directors.
SECTION 5. QUORUM. At all the meetings of the board, a majority of the
directors shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the directors present at
the meeting at which there is a quorum, shall be the act of the Board of
Directors.
SECTION 6. ORDER FOR BUSINESS. The Board of Directors may from time to
time determine the order of business at their meeting.
ARTICLE IV.
POWERS OF BOARD OF DIRECTORS
SECTION 1. MANAGEMENT. The Board of Directors shall
<PAGE>
have full power and authority to manage and control the affairs and business of
this corporation.
SECTION 2. ISSUANCE OF SHARES. The Board of Directors are authorized and
directed to issue shares of the corporation to the full amount authorized by the
Articles of Incorporation in such amounts and at such times as may be determined
by the board and as may be permitted by law.
SECTION 3. TRANSFER OF SHARES. Transfer of shares shall be made on the
books of the corporation only by the person named in the certificate, or by
attorney, lawfully constituted in writing, and upon surrender of the certificate
therefor, properly endorsed.
SECTION 4. CLOSING OF BOOKS. The Board of Directors may fix a time not
exceeding sixty (60) days preceding the date of any meeting of the Shareholders,
as a record date for the determination of the shareholders entitled to notice of
and to vote at such meeting, notwithstanding any transfer of any shares on the
books of the corporation after any record date so fixed. The Board of Directors
may close the books of the corporation after any record date so fixed. The Board
of Directors may close the books of the corporation against transfer of shares
during the whole or any part of such period.
SECTION 5. OTHER POWERS. In addition to the powers and authorities
conferred upon them by these By-Laws, the Board of Directors shall have the
power to do all lawful acts
<PAGE>
necessary and expedient to the conduct of the business of this corporation, that
are not conferred upon the shareholders, by these By-Laws, or by the Articles
of Incorporation, or by Statutes.
ARTICLE V.
OFFICERS
SECTION 1. OFFICERS. The Board of Directors at its first meeting after
each annual meeting of Shareholders shall elect a President, Vice-President,
Secretary and Treasurer, none of whom need be a member of the board. Any two
officers, except that of President and Vice-President, may be held by the same
person.
SECTION 2. OTHER OFFICERS. The board may appoint such other officers and
agents as it shall deem necessary, from time to time, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
SECTION 3. TERMS OF OFFICE. The officers of the corporation shall hold
office for one year or until their successors are chosen and qualify in their
stead, notwithstanding an earlier termination of their office as directors. Any
officer elected or appointed by the Board of Directors may be removed by the
affirmative of a majority of the whole Board of Directors.
SECTION 4. PRESIDENT. (a) The President shall be the
<PAGE>
chief executive officer of the corporation; he shall preside at all meetings of
the shareholders and directors; he shall have general active management of the
business of the corporation, and shall see that all orders and resolutions of
the board are carried into effect. (b) He shall execute all bonds, mortgages,
and other contracts. (c) He shall be ex-officio a member of all standing
committees, and shall have the general powers and duties of supervision and
management usually vested in the office of the President of a corporation.
SECTION 5. VICE-PRESIDENT. The Vice-President shall, in the absence or
disability of the President, perform the duties and exercise the powers of the
President, and shall perform such other duties as the Board of Directors shall
prescribe.
SECTION 6. SECRETARY. The Secretary shall attend all sessions of the Board
of Directors and all meetings of the Shareholders and record all votes and the
minutes of all proceedings in a book kept for that purpose; and shall perform
like duties for the standing committee when required. He shall give, or cause to
be given, notice of all meetings of the Shareholders and of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or President, under whose supervision he shall be. He shall be
sworn to the faithful discharge of his duty.
<PAGE>
He shall keep in safe custody the seal of the corporation and, when authorized
by the board, affix the same to any instrument requiring it.
SECTION 7. TREASURER. (a) The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects, in the name and to the credit of
the corporation, in such depositories as may be designated by the Board of
Directors. (b) He shall disburse the funds of the corporation as may be ordered
by the board, taking the proper vouchers for such disbursements, and shall
render to the President and Directors, at the regular meetings of the Board, or
whenever they may require it, an account of all his transactions as Treasurer
and of the financial condition of the corporation. (c) He shall give the
corporation a bond if required by a majority of the Board of Directors, in such
amount as they may determine, and with one or more sureties satisfactory to the
board, for the faithful performance of the duties of his office, and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control, belonging to the
corporation.
<PAGE>
SECTION 8. VACANCIES. If the office of any director or any officer or
agent becomes vacant by reason of death, resignation, retirement,
disqualification, removal from office or otherwise, the directors then in
office, although less than a quorum, by a majority vote, may choose a successor
or successors, who shall hold office for the unexpired term in respect of which
such vacancy occurred.
ARTICLE VI.
COMPENSATION OF DIRECTORS & OFFICERS
SECTION 1. COMPENSATION OF DIRECTORS. Directors may be paid such
compensation for their services rendered as directors, as may be fixed by
resolution of the Board of Directors itself, and it shall be lawful for the
Board to allow to each director his expense for attendance at meetings of the
Board. Nothing herein shall be construed to preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
SECTION 2. COMPENSATION OF OFFICERS. The salaries of all officers and
agents of the corporation shall be determined by the Board of Directors.
SECTION 3. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Each director and
officer of the corporation, whether or not then in office, shall be indemnified
by the corporation against reasonable costs and expenses (including counsel
fees) incurred by him in connection with any action, suit or proceedings
<PAGE>
to which he may be a party by reason of his being or having been a director or
officer of the corporation, except in relation to matters as to which he shall
finally be adjudged in such action, suit or proceeding to have been derelict in
the performance of his duties as such director or officer; and the foregoing
right of indemnification shall not be exclusive of other rights to which he
shall be entitled as a matter of law.
ARTICLE VII.
CERTIFICATES OF SHARES
SECTION 1. CERTIFICATES OF SHARES. Certificates of shares of the
corporation shall be in a form approved by the directors to comply with the
statutes and shall be registered in the books of the corporation as they are
issued. They shall exhibit the holder's name, number of shares, and shall be
signed by the President and Secretary.
SECTION 2. LOST CERTIFICATES. Any shareholder claiming a certificate of
shares to be lost or destroyed shall make an affidavit or affirmation of the
fact in such form as the Board of Directors may require, and shall, if the
directors so require, give the corporation a bond of indemnity in form and with
one or more sureties satisfactory to the board, in at least double the value of
the shares represented by said certificate, whereupon a new certificate may be
issued of the same tenure and for the same number of shares as the
<PAGE>
one alleged to have been lost or destroyed
ARTICLE VIII.
DIVIDENDS
SECTION 1. DECLARATION. The Board of Directors shall have authority to
declare dividends upon the shares of the corporation to the extent permitted by
law.
SECTION 2. RECORD DATE. The Board of Directors may fix a time not
exceeding sixty (60) days preceding the date fixed for the payment of any
dividend as a record date for the determination of the shareholders entitled to
receive payment of any such dividend, and in such case, only shareholders of
record on that date so fixed shall be entitled to receive payment of such
dividend notwithstanding any transfer of any shares on the books of the
corporation after any record date so fixed. The Board of Directors may close the
books of the corporation after any record date so fixed. The Board of Directors
may close the books of the corporation against the transfer of shares during the
whole or any part of such period.
ARTICLE IX.
FISCAL YEAR
SECTION 1. FISCAL YEAR. The fiscal year of this corporation shall
terminate on the last day of January of each year.
<PAGE>
ARTICLE X.
AMENDMENTS
SECTION 1. AMENDMENTS TO BY-LAWS. These By-Laws may be amended or altered
by the vote of a majority of the whole Board of Directors at any meeting
provided that notice of such proposed amendments shall have been given in the
notice to the directors of such meeting. Such authority in the Board of
Directors is subject to the powers of the Shareholders to change or repeal such
By-Laws by a majority vote of the shareholders present and represented at any
annual meeting or at any special meeting called for that purpose, and the Board
of Directors shall not make or alter any By-Laws fixing their number,
qualifications, or terms of office.
This is to certify that the foregoing By-Laws are the duly adopted By-Laws
of this corporation.
/s/ Norman N. Dahl
-----------------------
<PAGE>
Exhibit 3.149
BOOK 342 PAGE 362
State of West Virginia
[SEAL OF THE STATE OF WEST VIRGINIA]
CERTIFICATE
I, A. James Manchin, Secretary of State of the State of West Virginia, hereby
certify that pursuant to the provisions of Section 28, Article 1, Chapter 31 of
the Code of West Virginia, 1931, as amended, duplicate originals of Articles of
Incorporation of
CAMBRIDGE RESEARCH GROUP, LTD.,
have been received and are found to conform to law, and declared to be from this
date a Corporation by the name and for the purposes as set forth in the said
Articles, with the right of perpetual existence.
ACCORDINGLY, I hereby issue this Certificate of Incorporation.
Given under my hand and the Great Seal of the said State at the City of
Charleston, this TWENTY-EIGHTH day of JULY, 1981
[Seal of State of West Virginia]
/s/ A. James Manchin
------------------------
Secretary of State
<PAGE>
BOOK 342 PAGE 363
FILED IN THE OFFICE OF
SECRETARY OF STATE OF
WEST VIRGINA
No. [ILLEGIBLE]
ARTICLES OF INCORPORATION
OF
CAMBRIDGE RESEARCH GROUP, LTD.
The undersigned, acting as incorporator(s) of a corporation under Section 27,
Article 1, Chapter 31 of the Code of West Virginia adopt(s) the following
Articles of Incorporation for such corporation, FILED IN DUPLICATE:
I. The undersigned agree to become a corporation of the name of CAMBRIDGE
RESEARCH GROUP, LTD.
II. The address of the principal office of said corporation will be P. 0.
Box 389, 808 Union Building, Charleston, WV 25322.
III. The purpose or purposes for which this corporation is formed are as
follows:
To engage in general survey research, marketing research, evaluation
research, advertising research, data tabulation, statistical consulting,
political polling and projection, and computer software development, and to
undertake and carry on any business transaction or operation commonly undertaken
by those in such businesses and generally to institute, advise, consult, enter
into, assist, promote, and participate any such businesses or operations.
To purchase, to receive by way of gift, subscribe for, invest in, and in
all other ways acquire, import, lease, possess, maintain, handle on consignment,
own, hold for investment or otherwise use, enjoy, exercise, operate, manage,
conduct, perform, make, borrow, guarantee, contract in respect of, trade and
deal in, sell, exchange, let, lend, export, mortgage, pledge, deed in trust,
hypothecate, encumber, transfer, assign and in all other ways dispose of,
design, develop, invent, improve, equip, repair, alter, fabricate, assemble,
build, construct, operate, manufacture, plant, cultivate, produce, market, and
in all other ways (whether like or unlike any of the foregoing), deal in and
with property of every kind and character, real, personal or mixed, tangible or
<PAGE>
BOOK 342 PAGE 364
intangible, wherever situated and however held, including but not limited to,
money, credits, choses in action, securities, stocks, bonds, warrants, script,
certificates, debentures, mortgages, notes, commercial paper and other
obligations and evidences of interest in or indebtedness of any person, firm or
corporation, foreign or domestic, or of any government or subdivision or agency
thereof, documents of title, and accompanying rights, and every other kind and
character of personal property, real property (improved or unimproved), and the
products and avails thereof, and every character of interest therein and
appurtenance thereto, including, but not limited to, mineral, oil, gas and water
rights, all or any part of any going business and its incidents, franchises,
subsidies, charters, concessions, grants, rights, powers or privileges, granted
or conferred by any government or subdivision or agency thereof, and any
interest in or part of any of the foregoing, and to exercise in respect thereof
all of the rights, powers, privileges, and immunities of individual owners or
holders thereof.
To incur debts, and to raise, borrow and secure the payment of money in
any lawful manner, including the issue or sale or other distribution of bonds,
warrants, space, debentures, obligations, negotiable and transferrable
instruments, and evidences of indebtedness of all kinds, whether secured by
mortgage, pledge, deed of trust or otherwise and without limit as to amount.
To enter into, make, perform and carry out contracts of every sort and
kind with any person, firm, association, corporation, public private or
municipal, or body politic.
To hire, and employ agents, servants and employees and to enter in to
agreements of employment and collective bargaining agreements, and to act as
agent, contractor, trustee, factor or otherwise, either alone or in company with
others.
To promote or aid in any manner, financially or otherwise, any person,
firm, association or corporation, and to guarantee contracts and other
obligations.
- 2 -
<PAGE>
BOOK 342 PAGE 365
To let concessions to others to do any of the things that this corporation
is empowered to do, and to enter into, make, perform and carry out, contracts
and arrangements of every kind and character with any person, firm, association
or corporation, or any government or authority or subdivision or agency thereof.
For the purpose of attaining or furthering any of its objects, to do any
and all other acts and things, and to exercise any and all other powers which a
copartnership or a natural person, could do and exercise, and which now or
hereafter may be authorized by law.
To carry on any business whatsoever that this corporation may deem proper
or convenient in connection with any of the foregoing purposes or otherwise, or
that it may deem calculated, directly or indirectly, to improve the interests of
this corporation, and to do all things specified in Chapter 31 of the West
Virginia Code of 1931, as amended, and to have and to exercise all powers
conferred by the laws of the State of West Virginia on corporations formed under
the laws pursuant to which and under which this corporation is formed, as such
laws are now in effect or may at any time hereafter be amended, and to do any
and all things hereinabove set forth to the same extent and as fully as natural
persons might or could do, either alone or in connection with other persons,
firms, associations or corporations, and in any part of the world.
The foregoing statement of purposes shall be construed as a statement of
both purposes and powers, shall be liberally construed in aid of the powers of
this corporation, and the powers and purposes stated in each clause shall,
except where otherwise stated, be in nowise limited or restricted by any term or
provision of any other clause, and shall be regarded not only as independent
purposes, but the purposes and powers stated shall be construed distributively
as each object expressed, and the enumeration as to specific powers shall not be
construed as to limit in any manner the aforesaid general powers, but are in
furtherance of, and in addition to, and not in limitation of said general
powers.
- 3 -
<PAGE>
BOOK 342 PAGE 366
IV. Provisions granting preemptive rights are:
Preemptive rights are not granted by these Articles of
Incorporation.
V. Provisions for the regulation of the internal affairs of the
corporation are:
Regulation for the internal affairs of the corporation are not
provided for by these Articles of Incorporation, but bylaws will later be
adopted by the shareholders.
VI. The amount of the total authorized capital stock of said corporation
shall be $1,000.00, which shall be divided into 1000 shares of the par value of
$1.00 each.
VII. The full name and address of the incorporator is:
Edward T. Gardner III
P.O. Box 389
Charleston, WV 25322
VIII. The name and address of the appointed person to whom notice of
process may be sent:
Edward T. Gardner III
P.O. Box 389
Charleston, WV 25322
X. The number of directors shall be fixed by, or in the manner provided
in, the bylaws.
- 4 -
<PAGE>
BOOK 342 PAGE 367
THE UNDERSIGNED, for the purpose of forming a corporation under the laws
of the State of West Virginia, does make and file these Articles of
Incorporation, and has accordingly hereunto set his respective hand this 27th
day of July, 1981.
/s/ Edward T. Gardner III
---------------------------------
Edward T. Gardner III
This instrument prepared by:
STEVEN F. WHITE, ESQUIRE
GOODWIN & GOODWIN
1717 Charleston National Plaza
Charleston, West Virginia 25301
STATE OF WEST VIRGINIA,
COUNTY OF KANAWHA, to-wit:
I, Shirley M. Hill, a Notary Public in and for the County and State
aforesaid, do hereby certify that STEVEN F. WHITE, whose name is signed to the
foregoing writing, bearing date the 27th day of July, 1981, has this day
acknowledged the same before me in my said County.
Given under my hand this 27th day of July, 1981
/s/ Shirley M. Hill
---------------------------------
Notary Public
My commission expires September 15, 1988.
-------------------
This instrument was presented to the Clerk of the County Commission of
Kanawha County, West Virginia, on and the same is admitted to record.
JUL 31 1981
Teste: /s/ Margaret D. Miller Clerk
Kanawha County Commission
- 5 -
<PAGE>
BOOK 448 PAGE 290
State of West Virginia
[SEAL OF THE STATE OF WEST VIRGINIA]
CERTIFICATE
I, Ken Hechler, Secretary of State of the State of West Virginia, hereby certify
that originals of the Articles of Amendment to the Articles of Incorporation of
CAMBRIDGE RESEARCH GROUP, LTD.
are filed in my office, signed and verified, as required by the provisions of
Chapter 31, Article 1, Section 31 of the West Virginia Code and conform to law.
Therefore, I issue this
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
of the corporation, to which I have attached a duplicate original of the
Articles of Amendment.
Given under my hand and the Great Seal of the State of West Virginia on this
EIGHTH day of JANUARY, 1988
[SEAL OF THE STATE OF WEST VIRGINIA]
/s/ Ken Hechler
------------------
Secretary of State
RECORDED
1989 JAN 13 AM 8:30
CLERK OF THE [ILLEGIBLE]
<PAGE>
BOOK 448 PAGE 291
FILED
JAN 08 1988
IN THE OFFICE OF
SECRETARY OF STATE
WEST VIRGINIA
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
CAMBRIDGE RESEARCH GROUP, LTD.
Pursuant to the provisions of Section 31, Article 1, Chapter 31 of the
Code of West Virginia, 1931 as amended, the undersigned corporation adopts the
following Articles of Amendment to its Articles of Incorporation:
1. The name of the corporation is Cambridge Research Group, Ltd.
2. The following Amendments of the Articles of Incorporation were adopted
by the shareholders of the corporation on 4th day of January, 1988 in the manner
prescribed by Sections 107 and 147, Article 1, Chapter 31 of the Code of West
Virginia:
Section VI - Capitalization is amended by deleting the existing Section
in its entirety and substituting the following:
VI. Capitalization.
The amount of the total authorized capital stock of said corporation shall
be Two Thousand Five Hundred Dollars ($2,500.00) which shall be divided into Two
Thousand (2,000) shares of authorized voting shares of a par value of One Dollar
($1.00) per share, and Five Hundred (500) authorized Class B non-voting shares
at a par value of One Dollar ($1.00) per share.
Class A stock shall have all rights and authorities, including voting
privileges and power of common stock.
Class B stock shall be distinguished from Class A stock in that:
(a) Class B stock shall have no voting privileges or power;
<PAGE>
BOOK 448 PAGE 292
(b) Class B stock may be converted to Class A stock by vote of
two-thirds (2/3) of Class A stock stockholders.
3. The number of shares of the Corporation outstanding, at the time of the
adoption of this amendment, was One Thousand (1,000) of Class A stock and the
number of shares entitled to vote thereon was One Thousand (1,000) of Class A
stock.
4. The designation and number of outstanding shares of each class entitled
to vote thereon as a class are as follows:
Class A common stock, number of shares One Thousand (1,000).
5. The number of shares voted for such amendment was One Thousand (1,000)
of Class A stock, and the number of shares voted against such amendment was
zero.
6. The manner in which such amendment effects a change in the amount of
stated capital is as follows:
Prior to said amendment the stated capital was One Thousand Dollars
($1,000.00). After such amendment the amount of stated capital is Two
Thousand Five Hundred Dollars ($2,500.00).
The undersigned, for the purpose of adopting this Amendment to the
Articles of Incorporation of Cambridge Research Group, Ltd. have executed this
document in duplicate this 4th day of January, 1988.
CAMBRIDGE RESEARCH GROUP, LTD.
By: /s/ Edward T. Gardner, III
-----------------------------------
Its President
and
By: /s/ Robert P. Martin
-----------------------------------
Its Secretary
<PAGE>
BOOK 448 PAGE 293
STATE OF WEST VIRGINIA
COUNTY OF KANAWHA, to-wit:
I, Janie S. Pote, a Notary Public in and for the said County and State
aforesaid, do hereby certify that Edward T. Gardner III, President, and Robert
P. Martin, Secretary, who signed the above and hereto annexed writing for
CAMBRIDGE RESEARCH GROUP, LTD., has this day in my said County, before me,
acknowledged the same to be the act and deed of said Corporation.
My commission expires June 18th, 1996.
---------------
/s/ Janie S. Pote
-----------------------------------
Notary Public
-------------------------------------
OFFICIAL SEAL
STATE OF WEST VIRGINIA
[SEAL] NOTARY PUBLIC
JANIE S. POTE
2 Players Club Dr.
Charleston, WV 25311
MY COMMISSION EXPIRES 6-18-96
-------------------------------------
This Instrument was presented to the Clerk of the County Commission of Kanawha
County, West Virginia, on and the same is admitted to record.
JAN 13, 1988
Teste: /s/ Alma Y. King, Clerk
Kanawha County Commission
<PAGE>
BOOK 505 PAGE 734
State of West Virginia
[SEAL OF THE STATE OF WEST VIRGINIA]
CERTIFICATE
I, Ken Hechlen, Secretary of State of the State of West Virginia, hereby certify
that originals of the Articles of Amendment to the Articles of Incorporation of
CAMBRIDGE RESEARCH GROUP, LTD.
are filed in my office, signed and Verified, as required by the provisions of
Chapter 31, Article 1, Section 31 of the West Virginia Code and conform to law.
Therefore, I issue this
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
of the corporation, to which I have attached a duplicate original of the
Articles of Amendment.
[SEAL OF THE STATE OF WEST VIRGINIA]
Given under my hand and the Great seal of the State of West Virginia, on this
Thirtieth day of December 1994
Ken Hechlen,
-------------------
Secretary of State.
<PAGE>
BOOK 505 PAGE 735
FILED
DEC 30 1994
IN THE OFFICE OF
SECRETARY OF STATE
WEST VIRGINIA
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
CAMBRIDGE RESEARCH GROUP, LTD.
Pursuant to the provisions of Section 31, Article 1, Chapter 31 of the
Code of West Virginia, 1931, as amended, the undersigned corporation adopts the
following Articles of amendment to its Articles of Incorporation:
1. The name of the corporation is Cambridge Research Group, Ltd.
2. The following Amendments of the Articles of Incorporation were adopted
by the shareholders of the corporation on 29th day of December, 1994 in the
manner prescribed by Section 107, Article 1, Chapter 31 of the Code of West
Virginia:
Section VI of the Articles of Incorporation is amended by deleting the
existing Section in its entirety and substituting the following:
VI. Capitalization.
The amount of the total authorized capital stock of said corporation shall
be Ten Thousand Dollars ($10, 000) which shall be divided into Eight Hundred
Thousand (800,000) shares of authorized voting shares of a par value of One Cent
($.01) per share of Class A Common Stock and Two Hundred Thousand (200,000)
authorized Class B Common Stock non-voting shares at a par value of One Cent
($.01) per share.
Class A Common Stock shall have all rights and authorities, including
voting privileges and power of common stock.
Class B Common Stock shall be distinguished from Class A Common Stock in
that Class B Common Stock shall have no voting privileges or power.
<PAGE>
BOOK 505 PAGE 736
Further, Section I of the Articles of Incorporation is amended by deleting
the existing Section in its entirety and substituting the following:
"I. The name of the corporation shall be Cambridge Research Group, Ltd.
and its period of duration shall be perpetual."
3. The number of shares of the Corporation outstanding, at the time of the
adoption of this amendment, was One Thousand Five Hundred (1,500) shares of
Class A Stock and Four Hundred (400) shares of Class B stock and the number of
shares entitled to vote thereon was One Thousand Five Hundred (1,500) shares of
Class A Stock.
4. The designation and number of outstanding shares of each class entitled
to vote thereon as a class are as follows:
Class A common stock, number of shares One Thousand Five Hundred (1,500).
5. The number of shares voted for such amendment was One Thousand Five
Hundred (1,500) shares of Class A Stock, and the number of shares voted against
such amendment was zero (0).
6. The manner in which such amendment effects a change in the amount of
stated capital is as follows:
Prior to said amendment the stated capital was Two Thousand Five Hundred
Dollars ($2,500). After such amendment the amount of stated capital is Ten
Thousand Dollars ($10,000).
<PAGE>
BOOK 505 PAGE 737
The undersigned, for the purpose of adopting this Amendment to the
Articles of Incorporation of Cambridge Research Group, Ltd. have executed this
document in duplicate this 29th day of December, 1994.
CAMBRIDGE RESEARCH GROUP, LTD.
By: /s/ Edward T. Gardner, III
---------------------------
Its: Chairman and CEO
and
By: /s/ Janie S. Pote
---------------------------
Its: Secretary
<PAGE>
BOOK 505 PAGE 738
STATE OF WEST VIRGINIA,
COUNTY OF KANAWHA, to-wit:
I, Kelly L. Parsons, a Notary Public in and for the said County and State
aforesaid, do hereby certify that EDWARD T. GARDNER, III, Chairman and CEO, and
Janie S. Pote, Secretary, who signed the above and hereto annexed writing for
CAMBRIDGE RESEARCH GROUP, LTD., has this day in my said County, before me,
acknowledged the same to be the act and deed of said Corporation.
My commission expires March 9, 2004
------------------------.
/s/ Kelly L. Parsons
------------------------
Notary Public
- -----------------------------------------
OFFICIAL SEAL
NOTARY PUBLIC
STATE 0F WEST VIRGINIA
[SEAL] KELLY L. PARSONS
CAMBRIDGE EDUCATIONAL
90 MacCORKLE AVENUE. SW
SO. CHARLESTON. WV 25303
My Commission Expires March 9, 2004
- -----------------------------------------
This Instrument was presented to the Clerk of the County Commission of Kanawha
County, West Virginia, on and the same is admitted to record.
JAN 04 1995
Teste: /s/ Alma Y. King
--------------------------
Kanawha County Commission
<PAGE>
Exhibit 3.150
WRITTEN AGREEMENT OF SHAREHOLDERS
OF
CAMBRIDGE RESEARCH GROUP, LTD.
Edward T. Gardner, III and Catherine H. White being the sole shareholders
of Cambridge Research Group, Ltd. (the "Corporation"), pursuant to the
provisions of P.31-1-73 of the West Virginia Code, 1981, as amended, hereby
dispenses with a meeting and vote of the shareholders of the Corporation, and
agrees in writing to the following corporate action being taken:
RESOLVED: That the attached By Laws are adopted as the By Laws for the
government of the Corporation.
RESOLVED: That the following persons are elected directors of the
Corporation:
EDWARD T. GARDNER, III
CATHERINE H. WHITE
Dated this 31st day of August, 1981.
/s/ Edward T. Gardner, III
-----------------------------
EDWARD T. GARDNER, III
/s/ Catherine H. White
-----------------------------
CATHERINE H. WHITE
<PAGE>
CAMBRIDGE RESEARCH GROUP, LTD.
BYLAWS
ARTICLE I
OFFICES
Section 1. The principal office of the corporation shall be located at P.
0. Box 389, 808 Union Building, Charleston, West Virginia 25322, provided that
the Board of Directors shall have power to change the location of the principal
office at its discretion.
Section 2. The corporation may also have offices and keep its books at
such other place or places within the State of West Virginia as the Board of
Directors may from time to time appoint, or as the business of the corporation
may require.
ARTICLE II
Shareholders and shares of stock
Section 1. Annual Meetings. The annual meeting of the shareholders shall
be held on the first Monday in January of each calendar year or on such other
date in the month of January as may be designated in the notice and call of such
meeting, at the principal office of the corporation, or at such other place
either within or without the State of West Virginia as the Board of Directors
shall, from time to time, determine, and the place and the hour at which such
meeting shall be held shall be stated in the notice and call of such meeting. At
such meeting, the Board of Directors shall be elected and such other business
shall be transacted as is usual at the annual meeting of a corporation. Such
Meeting may adjourn to a later date, and no notice of such adjourned meeting
shall be necessary. If such meeting be not held as herein prescribed, the
election of directors to succeed those whose terms expire may be held at any
meeting thereafter called pursuant to these Bylaws.
<PAGE>
Section 2. Special Meetings. Special meetings of the shareholders may be
held at such places within the State of West Virginia as may be designated in
the notice and call of such meeting, or if no place be specified, then at the
principal office of the corporation; provided, however, that when called by the
Board of Directors any special meeting of the shareholders may be held either
within or without the State of West Virginia at such place as may be designated
in the notice and call of such meeting. Special meetings of the shareholders may
be called by the Board of Directors, the President, any Vice President, the
Secretary, or any number of shareholders owning in the aggregate at least one
tenth of the number of shares outstanding. The notice of special meetings shall
state the business to be transacted, and no business other than that included in
the notice or incidental thereto shall be transacted at such meeting. Special
meetings may adjourn to a later date, and no notice of such adjourned meeting
shall be necessary.
Section 3. Notice of Meetings. Notice of annual and special meetings shall
be given by mailing to each shareholder a written notice thereof specifying the
time and place of such meeting, and, in the case of special meetings, the
business to be transacted, as hereinbefore set forth, such notice to be mailed
to the last addresses of the shareholders as they respectively appear upon the
books of the corporation, and in the case of annual meetings not less than ten
(10) days, and in the case of special meetings not less than five (5) days,
before the date of such meeting and the mailing of such notice shall be
sufficient and no publication or further notice shall be sufficient and no
publication or further notice shall be necessary. Such notice may be signed by
the President or a Vice President or the Secretary or an Assistant Secretary.
Section 4. Waiver of Notice. Notice of the time, place or purpose of any
meeting of shareholders, whether required by the provisions of the corporation
laws of the State of West Virginia or by these Bylaws, shall be dispensed with
if every shareholder shall attend such meeting either in person or by proxy, or
if every absent shareholder shall, in writing filed with the records of the
meeting either before or after the holding thereof, waive such notice.
Section 5. Action by Unanimous Consent. Whenever the vote of shareholders
at a meeting thereof is required or permitted to be taken in connection with any
corporate action, the meeting and vote of such shareholders may be dispensed
with if all of the shareholders who would have been entitled to vote upon the
action if such meeting were held, shall agree in writing to such corporation
action being taken, and such agreement shall have like effect and validity as
though the action were duly taken by the unanimous action of all shareholders
entitled to vote at a meeting of such shareholders duly called and legally held.
<PAGE>
Section 6. Quorum. A quorum of the shareholders shall consist of at least
a majority of all of the shares of stock entitled to vote. Any number less than
a quorum present may adjourn any shareholders' meeting until a quorum is
present, and no notice as to such adjourned meeting shall be necessary.
Section 7. Voting Rights. In all elections of directors of the
corporation, each shareholder shall have the right to cast one vote for each
share of stock owned by him and entitled to a vote, and he may cast the same in
person or by proxy for as many persons as there are directors to be elected, or
he may cumulate such votes and give one candidate as many votes as the number of
directors to be elected multiplied by the number of his shares of stock shall
equal; or he may distribute them on the same principle among as many candidates
and in such manner as he shall desire, and the directors shall not be elected in
any other manner; and on any other question to be determined by a vote of shares
at any meeting of shareholders, each shareholder shall be entitled to one vote
for each share of stock owned by him and entitled to a vote, and he may exercise
this right in person or by proxy; provided, however, no voting rights shall
attach to any fractional part of a share of stock, and no person shall vote on
any proxy after three (3) years from the date thereof, unless the proxy
specifically confers the right to vote for a longer period and then only within
the period specified.
Section 8. Organization of Shareholders' Meeting. The President of the
corporation, or, in his absence, a Vice President shall call the meetings of the
shareholders to order and shall act as Chairman of such meetings, and the
Secretary or an Assistant Secretary of the corporation shall act as Secretary of
such meetings. In the absence of such officers, or any one of them, the meeting
shall designate the Chairman and/or Secretary, as the case may be.
Section 9. Order of Business. No formal order of business need be followed
in any meeting, regular or special, of the shareholders.
Section 10. Certificates for Shares of Stock. Every holder of shares of
stock in this corporation, when the same shall be fully paid for, shall be
entitled to have a certificate signed by, or in the name of the corporation by,
the President or a Vice President and the Secretary or an Assistant Treasurer,
of this corporation, certifying the number of shares owned by him in this
corporation.
Section 11. Lost or Destroyed Stock Certificates. A certificate of stock
may be issued in lieu of the certificate lost or destroyed upon compliance with
the following terms and conditions by the person who appears by the books of the
corporation to be the owner of the lost or destroyed certificate, that is to
say: (a) Such apparent owner shall file with the officers of the corporation,
first, an affidavit setting forth the time, place and circumstances of the loss
to the best
<PAGE>
of his knowledge, and belief; second, proof of his having advertised the loss in
a newspaper of general circulation published near the principal office of the
corporation once a week for two weeks; and (b) he shall execute and deliver to
the corporation a bond with good security, in a penalty of at least the value of
the shares of stock represented by the lost or destroyed certificate,
conditioned to indemnify the corporation and all persons whose rights may be
affected by the issuance of the new certificate against any loss in consequence
of the new certificate being issued; provided, however, that a new certificate
may be issued in lieu of the one lost in the discretion of the Board of
Directors, without requiring the publication of the above notice or the giving
of a bond.
Section 12. Ownership of Capital Stock. The person in whose name shares of
stock stand on the books of the corporation shall be deemed the owner thereof so
far as the corporation is concerned. The personal representatives of a deceased
stockholder shall be entitled to vote the shares of stock of his decedent
without having any such shares transferred to him. No voting right shall be
given to any stock while owned by the corporation nor shall any stock so held be
entitled to any dividend.
Section 13. Stock Transfer Books. Stock transfer books shall be kept by
the Secretary of the corporation, in which the shares shall be transferred under
such regulations as may be prescribed by the Board of Directors.
Section 14. Restrictions on Transfer, Pledge or Sale of Stock. The rights
to subscribe for, and to transfer, pledge or sell, shares of stock of this
corporation may be made subject to such conditions and restrictions as are
provided for in any written agreement among and between the stockholders and
this corporation that may be authorized and approved by the Board of Directors.
Section 15. Closing of Stock Books. The Board of Directors are authorized
to fix the time, not exceeding forty (40) days preceding the date of any meeting
of the shareholders or any dividend payment date, or any date for the allotment
of rights, during which the books of the corporation shall be closed against the
transfer of stock, or in lieu of providing for the closing of the books against
transfer of stock, the Board of Directors are authorized to fix a date, not
exceeding forty (40) days preceding the date of any meeting of the shareholders
or any dividend payment date, or any date for allotment of rights, as a record
date for the determination of the shareholders entitled to notice of, or to vote
at, such meeting and/or entitled to receive such dividend payments or rights, as
the case may be, and only shareholders of record on such date shall be entitled
to notice of and/or to vote at such meeting or to receive such dividend payments
or rights.
ARTICLE III
Director
Section 1. Board of Directors. The business and affairs of
<PAGE>
the corporation shall be managed by a Board of Directors. Directors need not be
residents of the State of West Virginia or shareholders in the corporation.
Section 2. Election of Directors. The number of directors shall be at
least two (2) provided that the number may be increased or decreased from time
to time by an amendment to these Bylaws, but no increase shall have the effect
of shortening the term of any incumbent director. The directors shall be elected
at each annual meeting of the shareholders, or any adjournment thereof, to serve
until the next annual meeting of the shareholders or until their offices shall
be declared vacant, or until their successors are elected and qualified.
Section 3. Vacancies. Any vacancy occurring in the Board of Directors may
be filled by the affirmative vote of the remaining directors, though less than a
quorum of the Board. Any directorship to be filled by reason of an increase in
the number of directors shall be filled by election at an annual meeting or at a
special meeting of shareholders called for that purpose. A director elected to
fill a vacancy shall be elected for the unexpired term of his predecessor in
office.
Section 4. Quorum of Directors. A majority of the Board of Directors shall
constitute a quorum for the transaction of business. The act of the majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 5. Annual Meeting of Directors. Within thirty (30) days after each
annual meeting of shareholders, the Board of Directors elected at such meeting
shall hold an annual meeting at which they shall elect officers and transact
such other business as may come before the meeting.
Section 6. Regular Meetings of Directors. A regular meeting of the Board
of Directors may be held at such time as shall be determined from time to time
by resolution of the Board of Directors.
Section 7. Special Meetings of Directors. The Secretary shall call a
special meeting of the Board of Directors whenever requested to do so by the
President or by two (2) directors. Such special meeting shall be held at the
time specified in the notice of meeting.
Section 8. Place of Directors' Meeting. All meetings of the Board of
Directors (annual, regular or special) shall be held either at the principal
office of the corporation or at such other place, either within or without the
State of West Virginia, as shall be specified in the notice of meeting.
Section 9. Notice of Directors' Meetings. All meetings of the Board of
Directors (annual, regular or special) shall be held upon not less than three
(3) days written notice stating the date, place and hour of meeting delivered to
each director either personally or by mail at the direction of the President or
the Secretary of the officer or person calling the meeting.
<PAGE>
Section 10. Waiver of Notice. Notice of the time, place or purpose of any
meeting of directors, whether required by the provisions of the corporation laws
of the State of West Virginia or by these Bylaws, shall be dispensed with if
every director shall attend such meeting in person, or if every absent director
shall, in writing filed with the records of the meeting either before or after
the holding thereof, waive such notice.
Section 11. Action by Unanimous Consent. Whenever the vote of directors at
a meeting thereof is required or permitted to be taken in connection with any
corporate action, the meeting and vote of such directors may be dispensed with
if all the directors shall agree in writing to such corporate action being
taken, and such agreement shall have like effect and validity as though the
action were duly taken by the unanimous action of all directors at a meeting of
such directors duly called and legally held.
Section 12. Specification of Purpose of Meeting Not Required. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
Section 13. Order of Business. No formal order of business need be
followed in any meeting of the directors, either regular or special.
Section 14. Committees. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the directors of the
corporation, which, to the extent provided in such resolution or resolutions,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the corporation, and may have power to
authorize the seal of the corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
Section 15. Election of Officers. The directors shall elect the President,
one or more Vice Presidents, the Treasurer and Secretary of the corporation, and
may elect all other officers and agents, or, as to the latter, may delegate
their election to an officer and/or officers of the corporation. In addition to
the foregoing officers, the Board of Directors may designate such other officers
or officials as from time to time may be deemed advisable, and may prescribe
their duties. The directors shall have the power to fix the salaries of all
officers, agents and employees of the corporation, but in the absence of action
by the directors, such power shall be vested in the President, except as to his
own salary and that of any Vice President.
Section 16. Compensation. Directors, as such, shall not receive any stated
salary for their services, but by resolution of the Board of Directors a fixed
sum and expenses of attendance, if any, may
<PAGE>
be allowed for attendance at each annual, regular or special meeting of the
Board, provided, that nothing herein contained shall be construed to preclude
any director from serving the corporation in any other capacity and receiving
compensation therefor.
ARTICLE IV
Officers and Agents
Section 1. Officers. Officers of the corporation shall be a
President/Treasurer, and a Secretary/Vice President each of whom shall be chosen
by the Board of Directors, and, if from time to time designated and chosen by
the Board of Directors, an Assistant Secretary and an Assistant Treasurer. None
of the officers of the corporation need be a shareholder or director of the
corporation. Any two of the above named officers, except those of the President
and Secretary or Assistant Secretary, may be held by the same person, but no
officer shall execute, acknowledge, or verify any instrument in more than one
capacity, if such instrument is required by law or by these Bylaws to be
executed, acknowledged, verified or countersigned by any two or more officers.
The foregoing officers shall hold office until the next regular annual meeting
of the Board of Directors, held after the annual meeting of the shareholders,
and until their successors are elected and qualified. Any duty to be performed
by an officer of the corporation may be performed by his duly authorized
assistant officer.
Section 2. Removal of Officers. Any and all officers of the corporation
may he removed at any time and their successors elected by a majority vote of
the Board of Directors at any regular or special meeting of the directors.
Section 3. Agents and Employees. All agents and employees of the
corporation may be appointed and their salaries fixed by the Board of Directors,
by the President, and except as to any Vice President, the Secretary, and
Assistant Secretary, the Treasurer and the Assistant Treasurer, they shall hold
office during the will and pleasure of the President, subject to action by the
Board of Directors, and may be removed at any time by the President, subject to
action by the Board of Directors. If such agents and employees are appointed by
the directors, they (except the above specified officers) may nevertheless be
removed by the President, unless he be expressly forbidden so to do by the
directors.
Section 4. Powers and Duties of the President. The President shall preside
at all meetings of the shareholders and the Board of Directors. Subject to the
control of the Board of Directors, he shall have general charge of the business
of the corporation; he shall keep the Board of Directors fully informed of the
business of the corporation; he may sign and execute all authorized bonds,
contracts or other obligations in the name of, and on behalf of the corporation;
and, with the
<PAGE>
Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer,
he shall sign all certificates of stock; and, without further authorization than
these presents, he may sign all checks and/or drafts upon funds of the
corporation in its name and on its behalf, and any bank or depository in which
funds of the corporation shall be deposited shall be fully and conclusively
protected in honoring any checks and/or drafts on behalf of the corporation
signed by the President. Subject to the action of the Board of Directors, he
shall have the power to fix the salaries of all officers, agents and employees
of the corporation, except the President and Vice Presidents, and shall have the
power to employ and discharge all agents and employees of the corporation,
subject to the control of the Board of Directors, except the Vice Presidents,
the Secretary, the Assistant Secretary, the Treasurer and the Assistant
Treasurer. He shall generally conduct the affairs of the corporation, and shall
do and perform such other duties as from time to time may be assigned to him by
the Board of Directors.
Section 5. Vice President. The Vice President shall perform all of the
duties and be vested with all of the authority of the President in case of a
vacancy in the office of President or in the absence of disqualification of the
President, and shall have such other powers and shall perform such other duties
as may be assigned to him by the Board of Directors. If there be more than one
Vice President, the Board of Directors may designate one of them as the Senior
Vice President and he shall perform all the duties and be vested with all the
authority set forth in the preceding sentence; and the other Vice President or
Vice Presidents shall have such other powers and shall perform such other duties
as may be assigned to him or them by the Board of Directors.
Section 6. Secretary. The Secretary shall keep the minutes of all meetings
of the Board of Directors and the shareholders. The Secretary shall likewise
attend to the giving and serving of all notices of meetings, and shall affix the
seal of the corporation to all certificates of stock and all authorized
contracts and obligations of the corporation, and shall attest the same, and
shall keep the transfer books and ledgers of the corporation, which books shall
be at all reasonable times, open for examination to any director, and he shall
in general perform all of the duties incident to the office of the Secretary,
and shall have such other powers and duties as shall be from time to time
conferred upon him by the Board of Directors.
Section 7. Assistant Secretary. The Board of Directors may designate and
choose an Assistant Secretary, who shall have the usual powers and duties
pertaining to his office together with such other powers and duties as may be
assigned to him by the Board of Directors. In case of the absence or disability
of the Secretary, the duties of the Secretary shall be performed by the
Assistant Secretary.
Section 8. Treasurer. The Treasurer shall have the custody of all the
funds and securities of the corporation, and shall have the power to sign checks
and drafts of the corporation, and any depository in which the funds of the
corporation are deposited shall be conclusively protected in honoring and acting
upon any check or draft signed by the Treasurer. The treasurer shall keep full
and accurate account of all
<PAGE>
moneys received and paid on account of the corporation which shall truly reflect
all of the financial transactions and conditions of the corporation, and shall
conform to the requirements of Article V hereof, and he shall generally perform
all acts incident to the position of Treasurer, and shall have such further
powers and duties as shall be from time to time conferred upon him by the Board
of Directors.
Section 9. Assistant Treasurer. The Board of Directors may designate and
choose an Assistant Treasurer, who shall have the usual powers and duties
pertaining to his office together with such other powers and duties as may be
assigned to him by the Board of Directors. In case of the absence or disability
of the Treasurer, the duties of the Treasurer shall be performed by the
Assistant Treasurer.
Section 10. Absence or Inability to Act. In the case of absence or
inability to act of any officer of the corporation and of any person herein
authorized to act in his place, the Board of Directors may from time to time
delegate the powers or duties of such officer to any other officer, or any
director or other person whom it may select.
ARTICLE V
Corporate Records
Section 1. Corporate Records. The directors and officers of the
corporation shall keep accurate account of the corporate transactions. The books
and records of the corporation shall at all times be subject to examination by
any director or by any committee appointed for the purpose at a meeting of the
shareholders, or by the holders of at least one-tenth of the stock outstanding
not in a meeting. The minutes and resolutions of the Board of Directors shall at
all times be open to examination by any member of the Board or by any committee
appointed by the shareholders, and such minutes shall be produced whenever
required by the shareholders at any meeting. The books of the corporation shall
be so kept as to show at all times what money or other consideration was
received by the corporation for the stock issued by it and the number of shares
issued.
ARTICLE VI
Dividends and Finance
Section 1. Dividends. The Board of Directors may from time to time declare
and pay dividends of so much of the net profits of the corporation as they deem
it prudent to divide, payable in cash or other property of the corporation,
against its accumulated earnings or surplus, whenever such declaration of
dividends will not impair the capital of the corporation.
<PAGE>
Section 2. Depository of Funds. The moneys of the corporation shall be
deposited in the name of the corporation in such bank or banks or trust company
or trust companies as the Board of Directors shall designate, and shall be drawn
out only by check, signed by persons designated by resolution of the Board of
Directors.
Section 3. Fiscal Year. The fiscal year of the corporation shall begin on
the first day of _____ in each year, unless otherwise provided by the Board of
Directors.
ARTICLE VII
Corporate Seal
Section 1. Corporate Seal. The corporate seal of this corporation shall be
circular in form and shall have inscribed thereon the name of this corporation
and the words "Corporate Seal" in the center, and for this purpose hereby adopts
the seal the impression of which is made on the margin hereof.
ARTICLE VIII
Amendment to Bylaws
Section 1. Amendment to Bylaws. These Bylaws may be altered, amended or
repealed in whole or in part at any meeting of the Board of Directors by the
affirmative vote of a majority of the directors present at the meeting, a quorum
being present, subject to repeal or change by the affirmative vote of the
holders of a majority of the issued and outstanding shares then entitled to
vote, at any meeting of the shareholders.
<PAGE>
Exhibit 3.151
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
SPACE ABOVE THIS LINE FOR RECORDER'S USE
================================================================================
State of California
[SEAL OF THE SECRETARY
Bill Jones OF STATE OMITTED]
Secretary of State
SACRAMENTO
I, BILL JONES, Secretary of State of California, hereby certify:
That the annexed transcript of 1 page(s) was prepared by and in this
office from tire record on file, of which it purports to be a copy, and that it
is full, true and correct.
[SEAL OF THE STATE OF CALIFORNIA] IN WITNESS WHEREOF, I execute
this certificate and affix the Great
Seal of the State of California
------------------------------------
OCT 20 1997
------------------------------------
/s/ Bill Jones
Secretary of State
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
[SEAL OF THE STATE STATE OF CALIFORNIA
OF CALIFORNIA] ACTING SECRETARY OF STATE
TONY MILLER
LIMITED LIABILITY COMPANY
ARTICLES OF ORGANIZATION
IMPORTANT - Read instructions before completing the form.
This document is presented for filing pursuant to Section 17050 of the
California Corporations Code.
================================================================================
1. Limited liability company name:
CommCorp, LLC
(End the name with "LLC" or "Limited Liability Company". No
periods between the letters in "LLC" and "Company" may be
abbreviated to "Ltd." and "Co.")
- --------------------------------------------------------------------------------
2. Latest date on which the limited liability company is to dissolve:
September 30, 2027
- --------------------------------------------------------------------------------
3. The purpose of the limited liability company is to engage in any
lawful act or activity for which a limited liability company may be
organized under the Beverly-Killea Limited Liability Company Act.
- --------------------------------------------------------------------------------
4. Enter the name of initial agent for service of process and check the
appropriate provision below:
Timothy Novoselski, which is
|X| an individual residing in California, Proceed to Item 5.
|_| a corporation which has filed a certificate pursuant to
Section 1505 of the California Corporations Code. Skip Item 5
and proceed to Item 6.
- --------------------------------------------------------------------------------
5. If the initial agent for service of process is an individual, enter
a business or residential street address in California:
Street address: 22313 Carbon Mesa Road
City: Malibu State: CALIFORNIA Zip Code: 90265
- --------------------------------------------------------------------------------
6. The limited liability company will be managed by : (check one)
|_| one manager |_| more than one manager |X| limited liability
company members
- --------------------------------------------------------------------------------
7. If other matters are to be included in the articles of organization
attach one or more separate pages.
Number of pages attached, if any:
- --------------------------------------------------------------------------------
8. It is hereby declared that I am For Secretary of State Use
the person who executed this
instrument, which execution is 101997290036
my act and deed.
FILED
/s/ Timothy Novoselski In the office of the Secretary of
------------------------------- State of the State of California
Signature of organizer
OCT 17 1997
Timothy Novoselski
------------------------------- /s/ BILL JONES
Type or print name of organizer BILL JONES, Secretary of State
Date: October 14, 1997
------------------------- [SEAL OF THE SECRETARY
OF STATE OMITTED]
=================================================
LLC-1 Approved by the Secretary of State
Filing Fee $80 8/31/94
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 3.152
================================================================================
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
COMMCORP, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
Dated October 14, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.1 ADJUSTED CAPITAL ACCOUNT DEFICIT 1
1.2 AFFILIATE 1
1.3 AGREEMENT 1
1.4 ARTICLES OF ORGANIZATION 2
1.5 AVAILABLE CASH FLOW 2
1.6 BUSINESS OF THE LLC 2
1.7 CAPITAL ACCOUNT 2
1.8 CAPITAL CONTRIBUTION 2
1.9 CODE 2
1.10 DEPRECIATION 2
1.11 DISSOLUTION 2
1.12 ECONOMIC INTEREST 2
1.13 FISCAL YEAR 2
1.14 LLC 2
1.15 LLC INTEREST 3
1.16 LLC LOANS 3
1.17 LLC MINIMUM GAIN 3
1.18 MAJORITY IN INTEREST OF THE MEMBERS 3
1.19 MANAGER 3
1.20 MEMBER NONRECOURSE DEBT 3
1.21 MEMBER NONRECOURSE DEBT MINIMUM GAIN 3
1.22 MEMBER NONRECOURSE DEDUCTIONS 3
1.23 MEMBER 4
1.24 NET CAPITAL CONTRIBUTIONS 4
1.25 NET PROFITS AND NET LOSS 4
1.26 PERCENTAGE INTEREST 5
1.27 PERIOD OF DURATION 5
1.28 PERSON 5
1.29 PRINCIPAL 5
1.30 PROPERTY 5
1.31 REGULATIONS 5
1.32 RESERVES 5
1.33 SECRETARY OF STATE 5
1.34 STATUTE 5
1.35 VOTE 5
<PAGE>
ARTICLE 2
INTRODUCTORY MATTERS
2.1 FORMATION OF LLC 6
2.2 NAME 6
2.3 PRINCIPAL OFFICE 6
2.4 AGENT FOR SERVICE OF PROCESS 6
2.5 PERIOD OF DURATION 6
2.6 BUSINESS AND PURPOSE OF THE LLC 6
ARTICLE 3
MEMBERS AND CAPITAL CONTRIBUTIONS
3.1 NAMES AND ADDRESSES OF INITIAL MEMBERS 7
3.2 CONTRIBUTIONS 7
3.3 ADDITIONAL CONTRIBUTIONS 7
3.4 RIGHTS WITH RESPECT TO CAPITAL 7
3.5 GENERAL RULES FOR ADJUSTMENT OF CAPITAL
ACCOUNTS 7
3.6 SPECIAL RULES WITH RESPECT TO CAPITAL ACCOUNTS 8
3.7 TRANSFEREE'S CAPITAL ACCOUNT 8
ARTICLE 4
ALLOCATION OF PROFITS AND LOSSES
4.1 ALLOCATION OF NET PROFITS AND LOSSES 9
4.2 RESIDUAL ALLOCATIONS 9
4.3 QUALIFIED INCOME OFFSET 9
4.4 MINIMUM GAIN CHARGEBACK 10
4.5 MEMBER NONRECOURSE DEBT MINIMUM GAIN
CHARGEBACK 10
4.6 MEMBER NONRECOURSE DEDUCTIONS 10
4.7 SPECIAL ALLOCATIONS 10
4.8 FEES TO MEMBERS OR AFFILIATES 11
4.9 SECTION 704(c) ALLOCATION 11
ARTICLE 5
DISTRIBUTIONS
5.1 AVAILABLE CASH FLOW 11
<PAGE>
ARTICLE 6
RIGHTS, DUTIES, OBLIGATIONS AND COMPENSATION
OF MANAGERS AND OFFICERS
6.1 CO-MANAGERS 12
6.2 MEETINGS OF MANAGERS 13
6.3 LIMITATIONS ON RIGHTS AND POWERS 14
6.4 COMPENSATION OF MANAGERS 14
6.5 COMPENSATION OF MEMBERS 15
6.6 EXPENSE REIMBURSEMENT 15
6.7 RELATED PARTY TRANSACTIONS 15
ARTICLE 7
MEMBERS' MEETINGS
7.1 PLACE OF MEETINGS 15
7.2 ANNUAL MEETINGS OF MEMBERS 15
7.3 SPECIAL MEETINGS 15
7.4 NOTICE OF MEETINGS 15
7.5 VALIDATION OF MEMBERS' MEETINGS 16
7.6 ACTIONS WITHOUT A MEETING 16
7.7 QUORUM AND EFFECT OF VOTE 16
ARTICLE 8
RESTRICTIONS ON TRANSFER OR CONVERSION
OF LLC INTERESTS, ADDITIONAL CAPITAL CONTRIBUTIONS;
ADMISSION OF NEW MEMBERS
8.1 TRANSFER OR ASSIGNMENT OF MEMBER'S INTEREST 17
8.2 VOID TRANSFERS 17
8.3 ADMISSION OF NEW MEMBERS 17
ARTICLE 9
BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS
9.1 MAINTENANCE OF BOOKS AND RECORDS 18
9.2 ANNUAL ACCOUNTING 18
9.3 INSPECTION AND AUDIT RIGHTS 19
9.4 RIGHTS OF MEMBERS AND NON-MEMBERS 19
9.5 BANK ACCOUNTS 19
9.6 TAX MATTERS HANDLED BY MANAGERS 19
9.7 FEDERAL INCOME TAX ELECTIONS MADE BY MANAGERS 19
9.8 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS 20
<PAGE>
ARTICLE 10
TERMINATION AND DISSOLUTION
10.1 DISSOLUTION 20
10.2 STATEMENT OF INTENT TO DISSOLVE 20
10.3 CONDUCT OF BUSINESS 20
10.4 DISTRIBUTION OF NET PROCEEDS 21
ARTICLE 11
INDEMNIFICATION OF THE MEMBERS, MANAGERS, AND THEIR
AFFILIATES
11.1 INDEMNIFICATION OF THE MEMBERS AND THEIR
PRINCIPALS 21
11.2 EXPENSES 22
11.3 INDEMNIFICATION RIGHTS NON-EXCLUSIVE 22
11.4 ERRORS AND OMISSIONS INSURANCE 22
11.5 ASSETS OF THE LLC 22
ARTICLE 12
ISSUANCE OF LLC CERTIFICATES
12.1 ISSUANCE OF LLC CERTIFICATES 22
12.2 TRANSFER OF LLC CERTIFICATES 23
12.3 LOST, STOLEN OR DESTROYED CERTIFICATES 23
ARTICLE 13
AMENDMENTS
13.1 AMENDMENT, ETC. OF OPERATION AGREEMENT 24
13.2 AMENDMENT, ETC. OF ARTICLES OF ORGANIZATION 24
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 COUNTERPARTS 24
14.2 SURVIVAL OF RIGHTS 24
14.3 SEVERABILITY 24
14.4 NOTIFICATION OR NOTICES 24
14.5 CONSTRUCTION 25
14.6 SECTION HEADINGS 25
14.7 GOVERNING LAW 25
14.8 ADDITIONAL DOCUMENTS 25
14.9 PRONOUNS AND PLURALS 25
<PAGE>
14.10 TIME OF THE ESSENCE 25
14.11 FURTHER ACTIONS 25
14.12 MANDATORY ARBITRATION 25
14.13 EQUITABLE RELIEF 26
14.14 WAIVER OF JURY 27
14.15 THIRD PARTY BENEFICIARIES 27
14.16 TAX ELECTIONS 27
14.17 PARTITION 27
14.18 ENTIRE AGREEMENT 27
14.19 WAIVER 27
14.20 ATTORNEYS' FEES 27
14.21 CONFIDENTIALITY 28
<PAGE>
COMMCORP, LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
This Limited Liability Company Operating Agreement (the "Agreement") is
made and entered into and effective as of October 14, 1997, by and among Tim
Novoselski, an individual, and Denise Novoselski, an individual, husband and
wife. The Members have formed a limited liability company (hereinafter called
the "LLC") pursuant to the provisions of the (California) Beverly-Killea Limited
Liability Company Act as set forth in Title 2.5 (commencing with Section 17000)
of the Corporations Code of the State of California.
In consideration of the covenants and the promises made herein, the
parties hereto, as signatories to the Agreement, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 ADJUSTED CAPITAL ACCOUNT DEFICIT. "Adjusted Capital Account Deficit"
means, with respect to any Member, the deficit balance, if any, in such Member's
Capital Account as of the end of the relevant Fiscal Year, after giving effect
to the following adjustments:
1.1.1 increase such Capital Account by any amounts which such Member
is obligated to contribute to the LLC (pursuant to the terms of this
Agreement or otherwise) or is deemed to be obligated to contribute to the
LLC pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
1.1.2 reduce such Capital Account by the amount of the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1.2 AFFILIATE. "Affiliate" means, when used with reference to a specified
Person, (i) the Principal of the Person, (ii) any Person directly or indirectly
controlling, controlled by or under common control with such Person, (iii) any
Person owning or controlling 10% or more of the outstanding voting interests of
such Person, and (iv) any relative or spouse of such Person.
1.3 AGREEMENT. "Agreement" means this Limited Liability Company Operating
Agreement, as originally executed and as amended from time to time, as the
context requires. Words such as "herein", "hereinafter", "hereto", "hereby" and
"hereunder", when used with reference to this Agreement, refer to this Agreement
as a whole, unless the context otherwise requires.
<PAGE>
1.4 ARTICLES OF ORGANIZATION. "Articles of Organization" means the
articles of organization filed with the California Secretary of State for the
purpose of forming the LLC.
1.5 AVAILABLE CASH FLOW. "Available Cash Flow" means, with respect to any
Fiscal Year or other period, the sum of all cash receipts of the LLC from any
and all sources, less all cash disbursements (including loan repayments, capital
improvements and replacements) and a reasonable allowance for Reserves,
contingencies and anticipated obligations as determined by the Manager.
1.6 BUSINESS OF THE LLC. "Business of the LLC" shall have the meaning set
forth in Section 2.6 hereof.
1.7 CAPITAL ACCOUNT. "Capital Account" of a Member shall have the meaning
set forth in Section 3.5 hereof.
1.8 CAPITAL CONTRIBUTION. "Capital Contribution" shall have the meaning
set forth in Article 3 hereof.
1.9 CODE. "Code" means the Internal Revenue Code of 1986, as amended (or
any corresponding provision or provisions of any succeeding law).
1.10 DEPRECIATION. "Depreciation" means, for each Fiscal Year or other
period, an amount equal to the depreciation, amortization or other cost recovery
reduction allowable with respect to an asset for such Fiscal Year or other
period.
1.11 DISSOLUTION. "Dissolution" means (i) when used with reference to the
LLC, the earlier of (a) the date upon which the LLC is terminated under the
Statute, or any similar provision enacted in lieu thereof, or (b) the date upon
which the LLC ceases to be a going concern, and (ii) when used with reference to
any Member, the earlier of (a) the date upon which there is a Dissolution of the
LLC or (b) the date upon which such Member's entire interest in the LLC is
terminated by means of a distribution or series of distributions by the LLC to
such Member.
1.12 ECONOMIC INTEREST. "Economic Interest" means a Person's right to
share in the Net Profits, Net Loss or similar items of, and to receive
distributions from, the LLC, but does not include any other rights of a Member
including, without limitation, the right to vote or to participate in the
management of the LLC, or, except as provided in Section 9.4, any right to
information concerning the business and affairs of the LLC.
1.13 FISCAL YEAR. "Fiscal Year" means the period of January 1 to and
including December 31.
1.14 LLC. "LLC" means CommCorp, LLC.
<PAGE>
1.15 LLC INTEREST. "LLC Interest" or "Interest" means an ownership
interest in the LLC, which includes the Economic Interest, the right to vote or
participate in the management of the LLC, and the right to information
concerning the business and affairs of the LLC, as provided in this Agreement
and under the Statute.
1.16 LLC LOANS. "LLC Loans" shall refer to any loans or advances made by
any Member to the LLC at the Member's option, without obligation to so do, to
the extent the LLC does not have sufficient resources (assets, borrowings or
otherwise) to meet its LLC obligations. Such LLC Loans shall bear interest at
the rate agreed to between the Member and the Manager.
1.17 LLC MINIMUM GAIN. "LLC Minimum Gain" means the amount determined by
computing with respect to each nonrecourse liability of the LLC, the amount of
gain (of whatever character), if any, that would be realized by the LLC if it
disposed (in a taxable transaction) of the Property subject to such liability in
full satisfaction thereof, and by then aggregating the amounts so computed as
set forth in Regulations Section 1.704-2(d).
1.18 MAJORITY IN INTEREST OF THE MEMBERS. "Majority in Interest of the
Members." unless otherwise provided in the Agreement, means more than fifty
percent (50%) of the interests of the Members in the current profits of the LLC.
1.19 MANAGER. "Manager" means the Person elected to manage the LLC
pursuant to Section 6.1 of this Agreement. At any time that the Members shall
have elected to have more than one Manager, all such Persons so elected shall be
referred to as the "Managers."
1.20 MEMBER NONRECOURSE DEBT. "Member Nonrecourse Debt" has the meaning
set forth in Regulations Section 1.704-2(b)(4).
1.21 MEMBER NONRECOURSE DEBT MINIMUM GAIN. "Member Nonrecourse Debt
Minimum Gain" means an amount, with respect to each Member Nonrecourse Debt,
equal to the LLC Minimum Gain that would result if such Member Nonrecourse Debt
were treated as a nonrecourse liability of the LLC, determined in accordance
with Regulations Sections 1.704-2(i)(2) and (3).
1.22 MEMBER NONRECOURSE DEDUCTIONS. "Member Nonrecourse Deductions" has
the meaning set forth in Regulations Section 1.704-2(i)(2). The amount of Member
Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a Fiscal
Year of the LLC equals the excess (if any) of the net increase (if any) in the
amount of Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt during that Fiscal Year over the aggregate amount of any
distributions during that Fiscal Year to the Member that bears (or is deemed to
bear) the economic loss for such Member Nonrecourse Debt to the extent such
distributions are from the proceeds of such Member Nonrecourse Debt and are
allocable to an increase in Member Nonrecourse Debt Minimum
<PAGE>
Gain attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(2).
1.23 MEMBER. "Member" means a Person who:
1.23.1 Has been admitted to the LLC as a member in accordance with
the Articles of Organization or this Agreement, or an assignee of an
Interest, other than an Economic Interest, who has become a Member
pursuant to Section 8.1.
1.23.2 Has not resigned, withdrawn or been expelled as a Member or,
if other than an individual, been dissolved.
Reference to a "Member" shall be to any one of the Members. Reference to an
"Initial Member" shall be to any one of the Members listed in Section 3.1.
1.24 NET CAPITAL CONTRIBUTIONS. "Net Capital Contributions" means the
aggregate of a Member's Capital Contributions over the aggregate distributions
theretofore made to such Member pursuant to Section 5.1.
1.25 NET PROFITS AND NET LOSS. "Net Profits" and "Net Loss" mean, for each
Fiscal Year or other period, an amount equal to the LLC's taxable income or loss
for such year or period, determined in accordance with Code Section 703(a) (for
this purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
1.25.1 Any income of the LLC that is exempt from Federal income tax
and not otherwise taken into account in computing Net Profits or Net Loss
shall be added to such taxable income or loss;
1.25.2 Any expenditures of the LLC described in Code Section
705(b)(2)(B) or treated as Code Section 705(b)(2)(B) expenditures pursuant
to Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account in computing Net Profits or Net Loss shall be subtracted from such
taxable income or loss;
1.25.3 Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for Federal income tax
purposes shall be computed by reference to the fair market value of the
Property disposed of, notwithstanding that the adjusted tax basis of such
Property differs from its fair market value;
1.25.4 In lieu of depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Fiscal Year
or other period, computed in accordance with the subsection hereof
entitled "Depreciation"; and
Page 4 of 28
<PAGE>
1.25.5 Notwithstanding any other provision of this subsection, any
items of income, gain, loss or deduction which are specifically allocated
shall not be taken into account in computing Net Profits or Net Loss.
1.26 PERCENTAGE INTEREST. The Initial Member's "Percentage Interest" shall
be in the following percentages:
Tim Novoselski, an individual 50%
Denise Novoselski, an individual 50%
1.27 PERIOD OF DURATION. "Period of Duration" shall have the meaning set
forth in Section 2.5 hereof.
1.28 PERSON. "Person" means an individual, partnership, limited
partnership, corporation, trust, estate, association, limited liability company,
or other entity, whether domestic or foreign.
1.29 PRINCIPAL. Principal" means the natural Person which is in ultimate
control of a Member.
1.30 PROPERTY. "Property" means all assets of the LLC, both tangible and
intangible, or any portion thereof.
1.31 REGULATIONS. "Regulations" means the federal income tax regulations
promulgated by the Treasury Department under the Code, as such regulations may
be amended from time to time. All references herein to a specific section of the
Regulations shall be deemed also to refer to any corresponding provisions of
succeeding Regulations.
1.32 RESERVES. "Reserves" means funds set aside from Capital Contributions
or gross cash revenues as reserves. Such Reserves shall be maintained in amounts
reasonably deemed sufficient by the Manager for working capital and the payment
of taxes, insurance, debt service, repairs, replacements renewals, or other
costs or expenses incident to the Business of the LLC, or in the alternative,
the Dissolution of the LLC.
1.33 SECRETARY OF STATE. "Secretary of State" shall mean the Secretary of
State of the State of California.
1.34 STATUTE. "Statute" shall mean the (California) Beverly-Killea Limited
Liability Company Act as set forth in Title 2.5 (commencing with Section 17000)
of the Corporations Code of the State of California (or any corresponding
provision or provisions of any succeeding law).
1.35 VOTE. Except where superseded by another Section of this Agreement,
or required by the terms of the Statute, Code or applicable Regulations
thereunder, all decisions
Page 5 of 28
<PAGE>
made by the LLC shall be approved by fifty-one percent (51%) of the votes
("Vote") of the Members, wherein each Member casts a number of votes equal to
the Member's Percentage Interest in the LLC.
ARTICLE 2
INTRODUCTORY MATTERS
2.1 FORMATION OF LLC. The parties have formed the LLC pursuant to the
provisions of the Statute by filing the Articles of Organization with the
Secretary of State.
2.2 NAME. The name of the LLC is "COMMCORP, LLC" The Members shall operate
the Business of the LLC under such name or use such other or additional names as
the Members may deem necessary or desirable provided that: (i) no such name
shall contain the words "bank," "insurance," "trust," "trustee," "incorporated,"
"inc.," "corporation," "corp.," or any similar name or variation thereof; (ii)
the Members shall have reasonably determined, before use of any such name, that
the LLC is entitled to use such name and will not by reason of such use infringe
upon any rights of any other Person, or violate any applicable laws or
governmental regulations; and (iii) the Members shall register such name under
assumed or fictitious name statutes or similar laws of the states in which the
LLC operates.
2.3 PRINCIPAL OFFICE. The LLC shall maintain its principal place of
business at 22313 Carbon Mesa Road, Malibu, California 90265, or any other
location agreed upon by the Managers.
2.4 AGENT FOR SERVICE OF PROCESS. The name and address of the LLC's agent
for service of process is Tim Novoselski, 22313 Carbon Mesa Road, Malibu,
California 90265.
2.5 PERIOD OF DURATION. The period of duration of the LLC ("Period of
Duration") shall be thirty (30) years, commencing on the date of the filing of
the Articles of Organization with the California Secretary of State, unless the
LLC is terminated or dissolved sooner, in accordance with the provisions of this
Agreement.
2.6 BUSINESS AND PURPOSE OF THE LLC. The purpose of the LLC is to engage
in any lawful activities for which a LLC may be organized under the Statute,
including, but not limited to ownership, operation, and management of a custom
publishing business; provided that the LLC shall not conduct any banking,
insurance or trust company business.
Page 6 of 28
<PAGE>
ARTICLE 3
MEMBERS AND CAPITAL CONTRIBUTIONS
3.1 NAMES AND ADDRESSES OF INITIAL MEMBERS. The names and addresses of the
Initial Members are as follows:
Tim Novoselski, an individual, whose address is 22313 Carbon
Mesa Road, Malibu, California 90265
Denise Novoselski, an individual, whose address is 22313
Carbon Mesa Road, Malibu, California 90265
3.2 CONTRIBUTIONS. The Initial Members shall contribute the aggregate sum
of Five Thousand Dollars ($5,000.00), to the LLC in proportion to their
Percentage Interest.
3.3 ADDITIONAL CONTRIBUTIONS. No Member shall be required to (a) make any
additional Capital Contributions, (b) make any loan, or (c) cause to be loaned
any money or other assets to the LLC.
3.4 RIGHTS WITH RESPECT TO CAPITAL.
3.4.1 LLC CAPITAL. No Member shall have the right to withdraw, or
receive any return of, its Capital Contribution, and no Capital
Contribution may be returned in the form of property other than cash
except as specifically provided herein.
3.4.2 NO INTEREST ON CAPITAL. No Capital Contribution of any Member
shall bear any interest or otherwise entitle the contributing Member to
any compensation for use of the contributed capital.
3.4.3 ESTABLISHMENT OF CAPITAL ACCOUNTS. A separate capital account
("Capital Account") shall be maintained for each Member. For book
purposes, each Member's Capital Account will be separated into a
contribution account and an income (loss) account and will be maintained
according to generally accepted accounting principles. Sections 3.6 and
3.7 below describe the appropriate accounting treatment for tax purposes
of the Capital Accounts.
3.5 GENERAL RULES FOR ADJUSTMENT OF CAPITAL ACCOUNTS. The Capital Account
of each Member shall be:
3.5.1 INCREASES. Increased by:
(i) Such Member's cash contributions;
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(ii) The agreed fair market value of property contributed by
such Member (net of liabilities secured by such contributed property
that the LLC is considered to assume or take subject to under Code
Section 752);
(iii) All items of LLC income and gain (including income and
gain exempt from tax) allocated to such Member pursuant to Article 4
or other provisions of this Agreement; and
3.5.2 DECREASES. Decreased by:
(i) The amount of cash distributed to such Member:
(ii) The agreed fair market value of all actual and deemed
distributions of property made to such Member pursuant to this
Agreement (net of liabilities secured by such distributed property
that the Member is considered to assume or take subject to under
Code Section 752);
(iii) All items of LLC deduction and loss allocated to such
Member pursuant to Article 4 or other provisions of this Agreement.
3.6 SPECIAL RULES WITH RESPECT TO CAPITAL ACCOUNTS.
3.6.1 TIME OF ADJUSTMENT FOR CAPITAL CONTRIBUTIONS. For purposes of
computing the balance in a Member's Capital Account, no credit shall be
given for any Capital Contribution which such Member is to make until such
contribution is actually made. "Capital Contribution" refers to the total
amount of cash and the agreed fair market value (net of liabilities)
contributed to the LLC by that Member and any subsequent contributions of
cash and the agreed fair market value (net of liabilities) of any other
property subsequently contributed to the LLC by that Member.
3.6.2 INTENT TO COMPLY WITH TREASURY REGULATIONS. The foregoing
provisions of Sections 3.6 and 3.7 and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations Section. To the
extent such provisions are inconsistent with such Regulations Section or
are incomplete with respect thereto, Capital Accounts shall be maintained
in accordance with such Regulations Section.
3.7 TRANSFEREE'S CAPITAL ACCOUNT. In the event a Member, of the holder of
an Economic Interest, transfers an Interest in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred Interest.
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ARTICLE 4
ALLOCATION OF PROFITS ANTI LOSSES
4.1 ALLOCATION OF NET PROFITS AND LOSSES. Except as otherwise provided in
this Article 4, Net Profits and Net Loss of the LLC in each Fiscal Year shall be
allocated among the Members as follows:
4.1.1 NET PROFITS. Net Profits shall be allocated among the Members
as follows:
(i) first, to each of the Members until the cumulative Net
Profits allocated to such Member pursuant to this Section 4.1.1 is
equal to the cumulative Net Loss allocated to the Member pursuant to
Section 4.1.2 for any prior period; and
(ii) thereafter, to the Members in accordance with their
Percentage Interests.
4.1.2 ALLOCATION OF NET LOSS. Except as otherwise provided in this
Article 4, Net Loss shall be allocated among the Members as follows:
(i) first, to offset any Net Profits allocated pursuant to
Section 4.1.1(i) hereof, and then to offset any Net Profits
allocated pursuant to Section 4.1.1(ii) hereof (in each case pro
rata in proportion to their shares of Net Profits being offset);
(ii) second, in proportion to the positive balances, if any,
in the Members' respective Capital Accounts, until such balances are
reduced to zero; and
(iii) third, to the Members, pro rata, in accordance with
their Percentage Interests; provided, however, that if, and to the
extent that the allocation of Net Loss in this manner would cause a
Member to have an Adjusted Capital Account Deficit at the end of the
Fiscal Year, then such Net Loss shall instead be allocated to the
Member who has the largest Percentage Interest.
4.2 RESIDUAL ALLOCATIONS. Except as otherwise provided in this Agreement,
all items of LLC income, gain, loss, deduction, and any other allocations not
otherwise provided for shall be divided among the Members in the same
proportions as they share Net Profits or Net Losses, as the case may be, for the
Fiscal Year.
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4.3 QUALIFIED INCOME OFFSET. If any Member unexpectedly receives any
adjustments, allocation or distributions described in clauses (4), (5) or (6) of
Regulations Section 1.704-1(b)(2)(ii)(d), items of LLC income shall be specially
allocated to such Member in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 4.3 is intended to constitute
a "qualified income offset" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(d)(3).
4.4 MINIMUM GAIN CHARGEBACK. If there is a net decrease in LLC Minimum
Gain during a Fiscal Year, each Member will be allocated, before any other
allocation under this Article 4, items of income and gain for such Fiscal Year
(and if necessary, subsequent years) in proportion to and to the extent of an
amount equal to such Member's share of the net decrease in LLC Minimum Gain
determined in accordance with Regulations Section l.704-2(g)(2). This Section
4.4 is intended to comply with, and shall be interpreted consistently with, the
"minimum gain chargeback" provisions of Regulations Section 1.704-2(f).
4.5 MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. Notwithstanding any
other provision of this Article 4, but except Section 4.4, if there is a net
decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any Fiscal Year of the LLC, each Member who has a share
of the Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704-2(i)(5), shall be specially allocated items of LLC income and gain for
such year (and, if necessary, subsequent years) in an amount equal such Member's
share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i)(4). This Section 4.5 is intended
to comply with a minimum gain chargeback requirement of that Section of the
Regulations and shall be interpreted consistently therewith.
4.6 MEMBER NONRECOURSE DEDUCTIONS. Any Member Nonrecourse Deductions for
any Fiscal Year or other period shall be specially allocated to the Member who
bears (or is deemed to bear) the economic risk of loss with respect to the
Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(2).
4.7 SPECIAL ALLOCATIONS. Any special allocations of items of Net Profits
pursuant to Sections 4.4, 4.5 and 4.6 shall be taken into account in computing
subsequent allocations of Net Profits pursuant to Section 4.1, so that the net
amount of any items so allocated and the gain, loss and any other item allocated
to each Member pursuant to Section 4.1 shall, to the extent possible, be equal
to the net amount that would have been
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allocated to each such Member pursuant to the provisions of this Article if such
special allocations had not occurred.
4.8 FEES TO MEMBERS OR AFFILIATES. Notwithstanding the provisions of
Section 4.1, in the event that any fees, interest, or other amounts paid to any
Member or any Affiliate thereof pursuant to this Agreement or any other
agreement between the LLC and any Member or Affiliate thereof providing for the
payment of such amount, and deducted by the LLC in reliance on Section 707(a)
and/or 707(c) of the Code, are disallowed as deductions to the LLC on its
federal income tax return and are treated as LLC distributions, then
4.8.1 the Net Profits or Net Loss, as the case may be, for the
Fiscal Year in which such fees, interest, or other amounts were paid shall
be increased or decreased, as the case may be, by the amount of such fees,
interest, or other amounts that are treated as LLC distributions; and
4.8.2 there shall be allocated to the Member to which (or to whose
Affiliate) such fees, interest, or other amounts were paid, prior to the
allocations pursuant to Section 4.1, an amount of gross income for the
Fiscal Year equal to the amount of such fees, interest, or other amounts
that are treated as LLC distributions.
4.9 SECTION 704(c) ALLOCATION. Any item of income, gain, loss, and
deduction with respect to any property (other than cash) that has been
contributed by a Member to the capital of the LLC and which is required or
permitted to be allocated to such Member for income tax purposes under Section
704(c) of the Code so as to take into account the variation between the tax
basis of such property and its fair market value at the time of its contribution
shall be allocated to such Member solely for income tax purposes in the manner
so required or permitted.
ARTICLE 5
DISTRIBUTIONS
5.1 AVAILABLE CASH FLOW. Available Cash Flow of the LLC shall be
distributed to the Members in accordance with the following priority and
agreements:
5.1.1 FIRST. Pro rata among the Members, in the ratio of the
principal loan balances outstanding, until all of the accrued but unpaid
interest on all LLC Loans, if any, has been paid, and then the principal
amounts thereof.
5.1.2 SECOND. To the Members, pari passu, on a pro rata basis, until
all Net Capital Contributions are reduced to zero.
5.1.3 THIRD. To the Members in accordance with their applicable
Percentage Interests as of the time of such distribution.
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ARTICLE 6
RIGHTS, DUTIES, OBLIGATIONS AND COMPENSATION
OF MANAGERS AND OFFICERS
6.1 CO-MANAGERS. The LLC shall be managed by TIM NOVOSELSKI and DENISE
NOVOSELSKI (the "Managers"). The Managers shall have such rights, duties and
powers as are specified in this Agreement, or conferred upon the Managers by
Vote of the Members.
6.1.1 DUTIES OF THE MANAGERS. The Managers shall share the duties
described in Section 6.1.1. The Managers are the co-general managers and
co-chief executive officers of the LLC and have, subject to the control of
the Members, general supervision, direction, and control of the business
of the LLC. The Managers shall preside at all meetings of the Members. The
Managers shall have the general powers and duties of management typically
vested in the office of president of a corporation, and such other powers
and duties as may be prescribed by the Members. The Members acknowledge
that Tim Novoselski and Denise Novoselski have other business interests
related to Miramar Communications, Inc., and otherwise, which take a
substantial portion of their time, and, accordingly, the Managers shall be
required to devote to the LLC business the time and attention that each in
his/her sole discretion shall determine is necessary.
6.1.2 ELECTION. Each Manager shall hold office until the Manager
resigns or shall be removed or otherwise disqualified to serve, or the
Manager's successor is elected and qualified. In voting for Managers, each
Member shall have a number of votes equal to its Percentage Interest in
the LLC.
6.1.3 SUBORDINATE OFFICERS. The Members may appoint a secretary, a
chief financial officer, and such other officers of the LLC as the
Business of the LLC may require, each of whom shall hold office for such
period, have such authority and perform such duties as are provided in
this Agreement, or as the Members determine.
6.1.4 REMOVAL AND RESIGNATION. Any Manager or other officer of the
LLC may be removed, with or without cause, by the Vote of the Members. Any
Manager or other officer of the LLC may resign at any time without
prejudice to any rights of the LLC under any contract to which the Manager
or other officer of the LLC is a party, by giving written notice to the
Members, or to the Manager, as applicable. Any such resignation shall take
effect at the date of the receipt of such notice or at any later time
specified therein; and unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
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6.1.5 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled
by a Vote of the Members through the appointment of a successor Manager,
or officer who shall hold the office for the unexpired term.
6.2 MEETINGS OF MANAGERS. Meetings of the Managers shall be held at the
principal office of the LLC, unless some other place is designated in the notice
of the meeting. Any Manager may participate in a meeting through use of a
conference telephone or similar communication equipment so long as all Managers
participating in such a meeting can hear one another.
6.2.1 Regular meetings of the Managers shall be held immediately
following the adjournment of the annual meeting of the Members. No notice
need be given of such regular meetings.
6.2.2 Special meetings of the Managers for any purpose may be called
at any time by any Manager. At least forty-eight (48) hours notice of the
time and place of a special meeting of the Managers shall be delivered
personally to the Managers or personally communicated to them by an
officer of the LLC by telephone, telegraph or facsimile. If the notice is
sent to a Manager by letter, it shall be addressed to him at his last
known business address as it is shown on the records of the LLC. In case
such notice is mailed, it shall be deposited in the United States mail,
first-class postage, prepaid, in the place in which the principal office
of the LLC is located at least four (4) days prior to the time of the
holding of the meeting. Such mailing, telegraphing, telephoning or
delivery as above provided shall be considered due, legal and personal
notice to such Manager.
6.2.3 With respect to a special meeting which has not been duly
called or noticed pursuant to the provisions of Section 6.2.2,
transactions carried out at the meeting are as valid as if had at a
meeting regularly called and noticed if: (i) all Managers are present at
the meeting, and sign a written consent to the holding of such meeting, or
(ii) if a majority of the Managers are present and if those not present
sign a waiver of notice of such meeting or a consent to holding the
meeting or an approval of the minutes thereof, whether prior to or after
the holding of such meeting, which waiver, consent or approval shall be
filed with the other records of the LLC, or (iii) if a Manager attends a
meeting without notice and does not protest prior to the meeting or at its
commencement that notice was not given to him or her.
6.2.4. Any action required or permitted to be taken by the Managers
may be taken without a meeting and will have the same force and effect as
if taken by a vote of Managers at a meeting properly called and noticed,
if authorized by a writing signed individually or collectively by all, but
not less than all, the Managers. Such consent shall be filed with the
records of the LLC.
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6.2.5 A majority of the total number of incumbent Managers shall be
necessary to constitute a quorum for the transaction of business at any
meeting of the Managers, and except as otherwise provided in this
Agreement or by the Statute, the action of a majority of the Managers
present at any meeting at which there is a quorum, when duly assembled, is
valid. A meeting at which a quorum is initially present may continue to
transact business, notwithstanding the withdrawal of Managers, if any
action taken is approved by a majority of the required quorum for such
meeting.
6.3 LIMITATIONS ON RIGHTS AND POWERS. Except by the unanimous agreement of
the Members which is evidenced in writing, neither the Manager nor any other
officer of the LLC shall have authority to:
6.3.1 Enter into or commit to any agreement, contract, commitment or
obligation on behalf of the LLC obligating any Member or Principal to find
additional capital, to make or guarantee a loan or to increase its
personal liability either to the LLC or to third parties;
6.3.2 Receive or permit any Member or Principal to receive any fee
or rebate, or to participate in any reciprocal business arrangements that
would have the effect of circumventing any of the provisions hereof;
6.3.3 Materially alter the Business of the LLC or deviate from any
approved business plan of the LLC as set forth in this Agreement;
6.3.4 Permit the LLC's fund to be commingled with the funds of
any other Person;
6.3.5 Do any act in contravention of this Agreement;
6.3.6 Possess Property, or assign rights in specific Property, for
other than a LLC purpose;
6.3.7 Do any act of which would make it impossible to carry on the
Business of the LLC;
6.3.8 Admit any person as a Member, except as otherwise provided in
this Agreement;
6.3.9 Sell, lease, pledge or grant or specify interest in any
Property, except in the ordinary course of business; and
6.3.10 Attempt to dissolve from the LLC.
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6.4 COMPENSATION OF MANAGERS. The LLC shall pay to the Manager such salary
and other benefits, as shall be approved from time to time by Vote of the
Members. The LLC shall reimburse the Manager for any expense paid by the Manager
that properly is to be borne by the LLC.
6.5 COMPENSATION OF MEMBERS. Except as expressly permitted by this
Agreement or any other written agreement, the LLC shall pay no compensation to
any Member or any Principal of any Member for their services to the LLC.
6.6 EXPENSE REIMBURSEMENT. The LLC shall reimburse the Members for any
expense paid by them that properly is to be borne by the LLC, as pre-approved
from time to time by the Managers.
6.7 RELATED PARTY TRANSACTIONS. The Managers may cause the LLC to provide,
or obtain, products or services to or from Miramar Communications, Inc. or other
entities controlling, controlled by, or under common control with the Members,
and to receive from, or to pay, such entities reasonable fees for such products
and services.
ARTICLE 7
MEMBERS' MEETINGS
7.1 PLACE OF MEETINGS. Meetings of the Members shall be held at the
principal office of the LLC, unless some other appropriate and convenient
location, either within or without the state where the Articles of Organization
were filed, shall be designated for that purpose from time to time by the
Manager.
7.2 ANNUAL MEETINGS OF MEMBERS. An annual meeting of the Members shall be
held, each year, on the anniversary of the date of this Agreement, at 10:00 a.m.
If this day shall be a legal holiday, then the meeting shall be held on the next
succeeding business day, at the same time. At the annual meeting, the Members
shall elect the Manager (or Managers) and transact such other business as may be
properly brought before the meeting.
7.3 SPECIAL MEETINGS. Special meetings of the Members may be called at any
time by the Manager or by one or more Members holding in the aggregate more than
ten percent (10%) of the Percentage Interests. Upon receipt of a written
request, which request may be mailed or delivered personally to the Manager, by
any Person entitled to call a special meeting of Members, the Manager shall
cause notice to be given to the Members that a meeting will be held at a time
requested by the Person or Persons calling the meeting, which time for the
meeting shall be not less than ten (10) nor more than sixty (60) days after the
receipt of such request. If such notice is not given within twenty (20) days
after receipt of such request, the Persons calling the meeting may give notice
thereof in the manner provided by this Agreement.
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7.4 NOTICE OF MEETINGS. Except as provided for in Section 7.3 for special
meetings, notice of meetings shall be given to the Members in writing not less
than ten (10) nor more than sixty (60) days before the date of the meeting by
the Manager. Notices for regular and special meetings shall be given personally,
by mail, or by facsimile, and shall be sent to each Member's last known business
address appearing on the books of the LLC. Such notice shall be deemed given at
the time it is delivered personally, or deposited in the mail, or sent by
facsimile. Notice of any meeting of Members shall specify the place, the day and
the hour of the meeting, and (i) in case of a special meeting, the general
nature of the business to be transacted, or (ii) in the case of an annual
meeting, those matters which the Manager, at the date of mailing, intends to
present for action by the Members.
7.5 VALIDATION OF MEMBERS' MEETINGS. The transactions of a meeting of
Members which was not called or noticed pursuant to the provisions of Section
7.3 or 7.4 shall be valid as though transacted at a meeting duly held after
regular call and notice, if Members holding in the aggregate fifty-one percent
(51%) or more of the Percentage Interests are present, and if, either before or
after the meeting, each of the Members entitled to vote but not present (whether
in person or by proxy, as that term is used in the Statute) at the meeting signs
a written waiver of notice, or a consent to the holding of such meeting, or an
approval of the minutes thereof. All such waivers, consents or approvals shall
be filed with the records of the LLC. Attendance shall constitute a waiver of
notice, unless objection shall be made.
7.6 ACTIONS WITHOUT A MEETING.
7.6.1 Any action which may be taken at any annual or special meeting
of Members may be taken without a meeting and without prior notice if a
consent in writing, setting forth the action so taken, shall be signed by
Members holding in the aggregate the number of votes equal to or greater
than the Vote, unless a lesser vote is provided for by this Agreement or
the Statute; provided, however, that any action which by the terms of this
Agreement or by the Statute is required to be taken pursuant to a greater
vote of the Members may only be taken by a written consent which has been
signed by Members holding the requisite number of votes.
7.6.2 Unless the consents of all Members have been given in writing,
notice of any approval made by the Members without a meeting by less than
unanimous written consent shall be given at least ten (10) days before the
consummation of the action authorized by such approval. Any Member giving
a written consent may revoke the consent by a writing received by the LLC
prior to the time that written consents of Members required to authorize
the proposed action have been filed with the LLC. Such revocation is
effective upon its receipt by the LLC.
7.7 QUORUM AND EFFECT OF VOTE. Each Member shall have a number of votes
equal to the Percentage Interest held by such Member, provided that if, pursuant
to the Statute or the terms of this Agreement, a Member is not entitled to vote
on a specific
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matter, then such Member's number of votes and Percentage Interest shall not be
considered for purposes of determining whether a quorum is present, or whether
approval by Vote of the Members has been obtained, in respect of such specific
matter. Members holding an aggregate of fifty-one percent (51%) or more of the
Percentage Interests shall constitute a quorum at all meetings of the Members
for the transaction of business, and the Vote of Members shall be required to
approve any action, unless a greater vote is required or a lesser vote is
provided for by this Agreement or by the Statute.
ARTICLE 8
RESTRICTIONS ON TRANSFER OR CONVERSION
OF LLC INTERESTS, ADDITIONAL CAPITAL CONTRIBUTIONS;
ADMISSION OF NEW MEMBERS
8.1 TRANSFER OR ASSIGNMENT OF MEMBER'S INTEREST, The Interest of each
Member and the Economic Interest of a Person who is not a Member constitutes
personal property of the Member or Economic Interest holder. Each Member and
each Economic Interest holder has no interest in the Property.
8.1.1 A Member's Interest or an Economic Interest may be transferred
or assigned only as provided in this Agreement.
8.1.2 No transfer, encumbrance or assignment ("Transfer") of a
Member's Interest, or an Economic Interest, or any part thereof, in the
LLC will be valid without the consent of a Majority in Interest of the
Members, other than the Members proposing to dispose of its Interest.
8.1.3 Any holder of an Economic Interest shall have no right to vote
or to participate in the management of the business and affairs of the LLC
or to become or exercise any rights of a Member thereof.
8.2 VOID TRANSFERS. Any Transfer of an Interest which does not satisfy the
requirements of Article 8, including, without limitation, Section 8.1.2, shall
be null and void.
8.3 ADMISSION OF NEW MEMBERS. A new Member may be admitted into the LLC
only upon the unanimous consent of all of the Members, which consent may be
given or withheld in the sole and absolute discretion of each Member.
8.3.1 The amount of Capital Contribution which must be made by a new
Member shall be determined by the Vote of all existing Members.
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8.3.2 A new Member shall not be deemed admitted into the LLC until
the Capital Contribution required of such Person shall have been made and
such Person has become a party to this Agreement.
8.3.3 A new Member shall not be deemed admitted into the LLC until
receipt by the Managers of a signed and acknowledged request from the
Member proposing to Transfer an Interest that the proposed assignee be
admitted as a Member, and execution by the proposed assignee of an
amendment to the Agreement agreeing to be bound by the terms and
provisions thereof.
ARTICLE 9
BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS
9.1 MAINTENANCE OF BOOKS AND RECORDS. The LLC shall cause books and
records of the LLC to be maintained in accordance with generally accepted
accounting principles, and shall give reports to the Members in accordance with
prudent business practices and the Statute. There shall be kept at the principal
office of the LLC, as well as at the office of record of the LLC specified in
Section 2.3, if different, the following LLC documents:
9.1.1 A current list of the full name and last known business or
residence address of each Member and of each holder of an Economic
Interest in the LLC set forth in alphabetical order, together with the
Capital Contributions and share in Net Profits and Net Loss of each Member
and holder of an Economic Interest;
9.1.2 A current list of the full name and business or residence
address of each Manager;
9.1.3 A copy of the Articles of Organization and any amendments
thereto, together with any powers of attorney pursuant to which the
Articles of Organization and any amendments thereto were executed;
9.1.4 Copies of the LLC's federal, state and local income tax or
information returns and reports, if any, for the six most recent Fiscal
Years;
9.1.5 A copy of this Agreement and any amendments thereto, together
with any powers of attorney pursuant to which this Agreement and any
amendments thereto were executed;
9.1.6 Copies of the financial statements of the LLC, if any, for the
six most recent Fiscal Years;
9.1.7 The LLC's books and records as they relate to the internal
affairs of the LLC for at least the current and past four Fiscal Years;
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9.1.8 Originals or copies of all minutes, actions by written
consent, consents to action and waivers of notice to Members and Member
Votes, actions and consents; and
9.1.9 Any other information required to be maintained by the LLC
pursuant to the Statute.
9.2 ANNUAL ACCOUNTING. Within 120 days after the close of each Fiscal Year
of the LLC, the LLC shall (i) cause to be prepared and submitted to each Member
a balance sheet and income statement for the preceding Fiscal Year of the LLC
(or portion thereof) in conformity with generally accepted accounting principles
and (ii) provide to the Members all information necessary for them to complete
federal and state tax returns.
9.3 INSPECTION AND AUDIT RIGHTS. Each Member and each holder of an
Economic Interest in the LLC who is not a Member has the right upon reasonable
request, for purposes reasonably related to the interest of that Person, to
inspect and copy during normal business hours any of the LLC books and records
required to be maintained in accordance with Section 9.1. Such right may be
exercised by the Person or by that Person's agent or attorney. Any Member may
require a review and/or audit of the books, records and reports of the LLC. The
determination of the Manager as to adjustments to the financial reports, books,
records and returns of the LLC, in the absence of fraud or gross negligence,
shall be final and binding upon the LLC and all of the Members.
9.4 RIGHTS OF MEMBERS AND NON-MEMBERS. Upon the request of a Member or a
holder of an Economic Interest who is not a Member, for purposes reasonably
related to the interest of that Person, the Manager shall promptly deliver to
the Member or holder of an Economic Interest, at the expense of the LLC, a copy
of this Agreement and a copy of the information listed in Sections 9.1.1, 9.1.2
and 9.1.4 of this Agreement.
9.5 BANK ACCOUNTS. The bank accounts of the LLC shall be maintained in
such banking institutions as the Manager shall determine, provided such
institutions have a net worth in excess of One Hundred Million Dollars
($100,000,000).
9.6 TAX MATTERS HANDLED BY MANAGERS. One of the Managers who is also a
Member, or in the event no Manager is a Member, a Member or an officer of a
corporate Member, shall be designated as "Tax Matters Partner" (as defined in
Code section 6231), to represent the LLC (at the LLC's expense) in connection
with all examinations of the LLC's affairs by tax authorities, including
resulting judicial and administrative proceedings, and to expend LLC funds for
professional services and costs associated therewith. In its capacity as "Tax
Matters Partner," the designated Person shall oversee the LLC tax affairs in the
overall best interests of the LLC. Unless the Members designate another Member
to be "Tax Matters Partner," Tim Novoselski shall be the "Tax Matters Partner."
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9.7 FEDERAL INCOME TAX ELECTIONS MADE BY MANAGERS. The Manager on behalf
of the LLC may make all elections for federal income tax purposes, including but
not limited to, the following:
9.7.1 USE OF ACCELERATED DEPRECIATION METHODS. To the extent
permitted by applicable law and regulations, the LLC may elect to use an
accelerated depreciation method on any depreciable unit of the assets of
the LLC; and
9.7.2 ADJUSTMENT OF BASIS OF ASSETS. In case of a transfer of all or
part of the Interest of any Member, the LLC may elect, pursuant to code
Sections 734, 743, and 754 of the Code to adjust the basis of the assets
of the LLC.
9.7.3 ACCOUNTING METHOD. For financial reporting purposes, the books
and records of the LLC shall be kept on the accrual method of accounting
applied in a consistent manner and shall reflect all transactions of the
LLC and be appropriate and adequate for the purposes of the LLC.
9.8 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS. The Members are aware of
the income tax consequences of the allocations made by this Agreement and hereby
agree to be bound by the provisions of this Section 9.8 in reporting their
shares of the LLC income and loss for income tax purposes.
ARTICLE 10
TERMINATION AND DISSOLUTION
10.1 DISSOLUTION. The LLC shall be dissolved upon the occurrence of any of
the following events:
10.1.1 When the Period of Duration of the LLC expires;
10.1.2 The written approval by a Majority In Interest of the Members
to dissolve the LLC;
10.1.3 The death, withdrawal, resignation, expulsion, bankruptcy or
dissolution of a Member or the occurrence of any other event which
terminates the Member's continued membership in the LLC, unless the
Managers and a Majority in Interest of the remaining Members, within
ninety (90) days of the happening of that event, consent to continue any
business of the LLC. For purposes of this Section 10.1.3, a "Majority in
Interest" means a majority of both capital and profits interest, as
determined under Revenue Procedure 94-46, 1994-28 I.R.B. 129.
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<PAGE>
10.2 STATEMENT OF INTENT TO DISSOLVE. As soon as possible after the
occurrence of any of the events specified in Section 10.1 above, the LLC shall
execute a Statement of Intent to Dissolve in such form as prescribed by the
Secretary of State.
10.3 CONDUCT OF BUSINESS. Upon the filing of the Statement of Intent to
Dissolve with the Secretary of State, the LLC shall cease to carry on its
business, except insofar as may be necessary for the winding up of its business,
but the LLC's separate existence shall continue until the Articles of
Dissolution have been filed with the Secretary of State or until a decree
dissolving the LLC has been entered by a court of competent jurisdiction.
10.4 DISTRIBUTION OF NET PROCEEDS. The Members shall continue to divide
Net Profits and Losses and Available Cash Flow during the winding-up period in
the same manner and the same priorities as provided for in Articles 4 and 5
hereof. The proceeds from the liquidation of Property shall be applied in the
following order:
10.4.1 To the payment of creditors, in the order of priority as
provided by law, except to Members on account of their contributions;
10.4.2 To the payment of loans or advances that may have been made
by any of the Members or their Principals for working capital or other
requirements of the LLC;
10.4.3 To the Members in accordance with the positive balances in
their Capital Accounts after adjustments for all allocations of Net
Profits and Net Loss.
Where the distribution pursuant to this Section 10.4 consists both of cash
(or cash equivalents) and non-cash assets, the cash (or cash equivalents) shall
first be distributed, in a descending order, to fully satisfy each category
starting with the most preferred category above. In the case of noncash assets,
the distribution values are to be based on the fair market value thereof as
determined in good faith by the liquidator, and the shortest maturity portion of
such non-cash assets (e.g., notes or other indebtedness) shall, to the extent
such non-cash assets are readily divisible, be distributed, in a descending
order, to fully satisfy each category above, starting with the most preferred
category.
ARTICLE 11
INDEMNIFICATION OF THE MEMBERS, MANAGERS,
AND THEIR AFFILIATES
11.1 INDEMNIFICATION OF THE MEMBERS AND THEIR PRINCIPALS. The LLC shall
indemnify and hold harmless the Members, the Managers, their Affiliates and
their respective officers, directors, employees, agents and Principals
(individually, an "Indemnitee") from and against any and all losses, claims,
demands, costs, damages,
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<PAGE>
liabilities, joint and several, expenses of any nature (including reasonable
attorneys' fees and disbursements), judgments, fines, settlements and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
whether civil, criminal, administrative or investigative, in which the
Indemnitee was involved or may be involved, or threatened to be involved, as a
party or otherwise, arising out of or incidental to the Business of the LLC,
excluding liabilities to any Member, regardless of whether the Indemnitee
continues to be a Member, an Affiliate, or an officer, director, employee, agent
or Principal of the Member at the time any such liability or expense is paid or
incurred, to the fullest extent permitted by the Statute and all other
applicable laws. No Manager shall be liable to any of the Members for good faith
errors (meaning mistakes of judgment or losses due to such mistakes or to the
negligence or bad faith of any employee, broker, adviser or other agent or
representative of the LLC, provided that such agent or representative was
selected with reasonable care). The Managers may consult with legal counsel and
shall have no liability for the consequences of any action or omission resulting
from good faith reliance on the advice of such counsel. The exculpation provided
herein also shall apply to the agents, employees and other legal representatives
of each Manager.
11.2 EXPENSES. Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit or proceeding subject to Section 11.1 shall, from time to
time, be advanced by the LLC prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the LLC of an undertaking by
or on behalf of the Indemnitee to repay such amount if it shall be determined
that such Person is not entitled to be indemnified as authorized in Section
11.1.
11.3 INDEMNIFICATION RIGHTS NON-EXCLUSIVE. The indemnification provided by
Section 11.1 shall be in addition to any other rights to which those indemnified
may be entitled under any agreement, vote of the Members, as a matter of law or
equity or otherwise, both as to action in the Indemnitee's capacity as a Member,
as an Affiliate or as an officer, director, employee, agent or Principal of a
Member and as to any action in another capacity, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.
11.4 ERRORS AND OMISSIONS INSURANCE. The LLC may purchase and maintain
insurance, at the LLC's expense, on behalf of the Members and such other Persons
as the Members shall determine, against any liability that may be asserted
against, or any expense that may be incurred by, such Person in connection with
the activities of the LLC and/or the Members' acts or omissions as the Members
of the LLC regardless of whether the LLC would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
11.5 ASSETS OF THE LLC. Any indemnification under Section 11.1 shall be
satisfied solely out of the assets of the LLC. No Member shall be subject to
personal liability or required to fund or to cause to be funded any obligation
by reason of these indemnification provisions.
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<PAGE>
ARTICLE 12
ISSUANCE OF LLC CERTIFICATES
12.1 ISSUANCE OF LLC CERTIFICATES. The interest of each Member in the LLC
shall be represented by an LLC Certificate. Upon the execution of this Agreement
and the payment of the Capital Contributions by the Members pursuant to Section
3.2 hereof, the Manager shall cause the LLC to issue one or more LLC
Certificates in the name of each Member certifying that the Person named therein
is the record holder of the LLC Units (representing such Member's Percentage
Interest of the total of the initial 1,000 LLC Units) set forth therein. For
purposes of this Agreement, the term "record holder" shall mean the person whose
name appears in Section 1.27 as the Member owning the LLC Interest at issue.
12.2 TRANSFER OF LLC CERTIFICATES. An LLC Interest which is transferred in
accordance with the terms of Article 8.1 of this Agreement shall be transferable
on the books of the LLC by the record holder thereof in person or by such record
holder's duly authorized attorney, but, except as provided in Section 12.3
hereof with respect to lost, stolen or destroyed certificates, no transfer of an
LLC Interest shall be entered until the previously issued LLC Certificate
representing such LLC Interest shall have been surrendered to the LLC and
cancelled and a replacement LLC Certificate issued to the assignee of such LLC
Interest in accordance with such procedures as the Manager may establish. The
Manager shall issue to the transferring Member a new LLC Certificate
representing the LLC Units not being transferred by the Member, in the event
such Member only transferred some, but not all, of the LLC Units represented by
the original LLC Certificate. Except as otherwise required by law, the LLC shall
be entitled to treat the record holder of an LLC Certificate on its books as the
owner thereof for all purposes regardless of any notice or knowledge to the
contrary.
12.3 LOST, STOLEN OR DESTROYED CERTIFICATES. The LLC shall issue a new LLC
Certificate in place of any LLC Certificate previously issued if the record
holder of the LLC Certificate:
12.3.1 makes proof by affidavit, in form and substance satisfactory
to the Manager, that a previously issued LLC Certificate has been lost,
destroyed or stolen;
12.3.2 requests the issuance of a new LLC Certificate before the LLC
has notice that the LLC Certificate has been acquired by a purchaser for
value in good faith and without notice of an adverse claim
12.3.3 if requested by the Manager, delivers to the LLC a bond, in
form and substance reasonably satisfactory to the Manager, with such
surety or sureties and with fixed or open penalty as the Manager may
direct, in his reasonable discretion, to
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<PAGE>
indemnify the LLC against any claim that may be made on account of the
alleged loss, destruction or theft of the LLC Certificate; and
12.3.4 satisfies any other reasonable requirements imposed by the
Manager.
If a Member fails to notify the LLC within a reasonable time after it has
notice of the loss, destruction or theft of an LLC Certificate, and a transfer
of the LLC Interest represented by the LLC Certificate is registered before
receiving such notification, the LLC shall have no liability with respect to any
claim against the LLC for such transfer or for a new LLC Certificate.
ARTICLE 13
AMENDMENTS
13.1 AMENDMENT OF AGREEMENT. This Agreement may be adopted, altered,
amended, or repealed and a new operating agreement may be adopted by consent of
the Managers and a Majority In Interest of the Members, which consent may be
given or withheld in the sole and absolute discretion of the Managers and the
Members.
13.2 AMENDMENT OF ARTICLES OF ORGANIZATION. Notwithstanding any provision
to the contrary in the Articles of Organization or this Agreement, in no event
shall the Articles of Organization be amended without the consent of the
Managers and a Majority In Interest of the Members, which consent may be given
or withheld in the sale and absolute discretion of the Managers and the Members.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 COUNTERPARTS. This Agreement may be executed in several counterparts,
and all counterparts so executed shall constitute one Agreement, binding on all
of the parties hereto, notwithstanding that all of the parties are not signatory
to the original or the same counterpart.
14.2 SURVIVAL OF RIGHTS. This Agreement shall be binding upon, and, as to
permitted or accepted successors, transferees and assigns, inure to the benefit
of the Members and the LLC and their respective heirs, legatees, legal
representatives, successors, transferees and assigns, in all cases whether by
the laws of descent and distribution, merger, reverse merger, consolidation,
sale of assets, other sale, operation of law or otherwise.
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<PAGE>
14.3 SEVERABILITY. In the event any Section, or any sentence within any
Section, is declared by a court of competent jurisdiction to be void or
unenforceable, such sentence or Section shall be deemed severed from the
remainder of this Agreement and the balance of this Agreement shall remain in
full force and effect.
14.4 NOTIFICATION OR NOTICES. Except for notices to be given under
Articles 6 and 7 for purposes of meetings of Managers and meetings of Members,
any notice or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been given if personally delivered,
transmitted by facsimile (with mechanical confirmation of transmission), or
deposited in the United States mail, registered or certified, postage prepaid,
addressed to the parties' addresses set forth below. Notices given in the manner
provided for in this Section 14.4 shall be deemed effective on the third day
following deposit in the mail or on the day of transmission or delivery if given
by facsimile or by hand. Notices must be addressed to the parties hereto at the
following addresses, unless the same shall have been changed by notice in
accordance herewith:
14.5 CONSTRUCTION. The language in all parts of this Agreement shall be in
all cases construed simply according to its fair meaning and not strictly for or
against any of the Members.
14.6 SECTION HEADINGS. The captions of the Articles or Sections in this
Agreement are for convenience only and in no way define, limit, extend or
describe the scope or intent of any of the provisions hereof, shall not be
deemed part of this Agreement and shall not be used in construing or
interpreting this Agreement.
14.7 GOVERNING LAW. This Agreement shall be construed according to the
laws of the State of California.
14.8 ADDITIONAL DOCUMENTS. Each Member, upon the request of another
Member, agrees to perform all further acts and execute, acknowledge and deliver
all documents which may be reasonably necessary, appropriate or desirable to
carry out the provisions of this Agreement, including but not limited to
acknowledging before a notary public any signature heretofore or hereafter made
by a Member.
14.9 PRONOUNS AND PLURALS. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine and
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
14.10 TIME OF THE ESSENCE. Except as otherwise provided herein, time is of
the essence in connection with each and every provision of this Agreement.
14.11 FURTHER ACTIONS. Each of the Members agrees to execute, acknowledge
and deliver such additional documents, and take such further actions, as may
reasonably be required from time to time to carry out each of the provisions,
and the intent, of
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<PAGE>
this Agreement, and every agreement or document relating hereto, or entered into
in connection herewith.
14.12 MANDATORY ARBITRATION. Subject to the provision of Section 14.13
below, in the event of any controversy, dispute or claim arising out of or
related to this agreement, or the interpretation, breach, termination or
validity hereof, the parties shall submit such controversy, dispute or claim to
binding arbitration hereunder. All arbitration proceedings pursuant to this
section shall be before a retired judge of the United States District Court for
the Central District of California, Los Angeles Division, or the Los Angeles
County Superior Court or such other arbitrator as the parties shall mutually
agree upon. In the event that the parties are unable to agree upon the selection
of an arbitrator, any party may request the presiding judge of the United States
District Court for the Central District of California, Los Angeles Division, or
the Los Angeles County Superior Court to appoint such arbitrator. Arbitration of
the dispute shall commence no later than thirty (30) days after the selection or
appointment of such arbitrator. The arbitrator shall be bound by the express
terms of this agreement and shall endeavor to reach his or her decision as
quickly as possible, which decision shall be final and binding on the parties to
this agreement. The arbitrator shall also have the power to award costs and
expenses (including, without limitation, attorneys' fees) to the prevailing
party. Application to enforce the arbitrator's decision can be made in any court
or other tribunal of competent jurisdiction; any other application or dispute
shall be submitted to the United States District Court for the Central District
of California, Los Angeles Division, or the Los Angeles County Superior Court
for determination. The rules of discovery then pertaining to the United States
District Court for the Central District of California, Los Angeles Division, or
a California State Court of Law, as the case may be, shall apply to any such
arbitration, including, without limitation, sections 1283.01 and 1283.05 of the
California Code of Civil Procedure, the provisions of which are hereby
incorporated herein and made a part hereof by reference. The provisions of the
California Arbitration Statute, contained in the California Code of Civil
Procedure Section 1280 et seq. Shall apply. The parties hereby consent to
arbitration to be held within the City of Los Angeles, State of California and
agree that all actions or proceedings relating to this agreement shall take
place in the City of Los Angeles, and waive any objections that they may have
based on improper venue or forum non conveniens.
NOTICE: BY SIGNING THIS AGREEMENT, YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE MANDATORY ARBITRATION OF DISPUTES'
PROVISION DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP ANY RIGHTS YOU
MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE
ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS PROVISION YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY
OF THE APPLICABLE STATE STATUTE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS
VOLUNTARY.
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<PAGE>
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES' PROVISION TO
NEUTRAL ARBITRATION.
14.13 EQUITABLE RELIEF. Each party agrees that a monetary remedy for any
breach or threatened breach of any provision of Article 8 would be inadequate
and impracticable and extremely difficult to prove, and that such breach or
threatened breach would cause the other parties irrevocable harm. Accordingly,
each party agrees that the other parties shall be entitled to temporary and
permanent injunctive relief, specific performance and other equitable relief for
any breach or threatened breach of any provision of Article 8 above, without the
necessity of proving actual damages. Nothing contained in this section, however,
shall be deemed to constitute a waiver of the right of arbitration or shall be
construed as prohibiting or precluding any party from pursuing any other rights
and remedies that may be available to such party for such breach or threatened
breach, including, without limitation, recovery of damages from the defaulting
party.
14.14 WAIVER OF JURY. Waiver of jury with respect to any dispute arising
under or in connection with this agreement or any related agreement, as to which
no member invokes the right to arbitration hereinabove provided, or as to which
legal action nevertheless occurs, each member hereby irrevocably waives all
rights it may have to demand a jury trial. This waiver is knowingly,
intentionally, and voluntarily made by the members and each member acknowledges
that none of the other members nor any person acting on behalf of the other
parties has made any representation of fact to induce this waiver of trial by
jury or in any way to modify or nullify its effect. The members each further
acknowledge that it has been represented (or has had the opportunity to be
represented) in the signing of this agreement and in the making of this waiver
by independent legal counsel, selected of its own free will, and that it has had
the opportunity to discuss this waiver with counsel. The members each further
acknowledges that it has read and understand the meaning and ramifications of
this waiver provision.
14.15 THIRD PARTY BENEFICIARIES. There are no third party beneficiaries of
this Agreement except (i) Affiliates and Principals of the Members and (ii) any
other Persons as may be entitled to the benefits of Article 11.1 hereof.
14.16 TAX ELECTIONS. The Managers, in their sole discretion, shall cause
the LLC to make or not make all elections required or permitted to be made for
income tax purposes.
14.17 PARTITION. The Members agree that the Property that the LLC may own
or have an interest in is not suitable for partition. Each of the Members hereby
irrevocably waives any and all rights that it may have to maintain any action
for partition of any Property the LLC may at any time have an interest in.
14.18 ENTIRE AGREEMENT. This Agreement and the Articles of Organization
constitute the entire agreement of the Members with respect to, and supersedes
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<PAGE>
all prior written and oral agreements, understandings and negotiations with
respect to, the subject matter hereof.
14.19 WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
14.20 ATTORNEYS' FEES. In the event of any litigation, arbitration or
other dispute arising as a result of or by reason of this Agreement, the
prevailing party in any such litigation, arbitration or other dispute shall be
entitled to, in addition to any other damages assessed, its reasonable
attorneys' fees, and all other costs and expenses incurred in connection with
settling or resolving such dispute. The attorneys' fees which the prevailing
party is entitled to recover shall include fees for prosecuting or defending any
appeal and shall be awarded for any supplemental proceedings until the final
judgment is satisfied in full. In addition to the foregoing award of attorneys'
fees to the prevailing party, the prevailing party in any lawsuit or arbitration
procedure on this Agreement shall be entitled to its reasonable attorneys' fees
incurred in any post judgment proceedings to collect or enforce the judgment.
This attorneys' fees provision is separate and several and shall survive the
merger of this Agreement into any judgment.
14.21 CONFIDENTIALITY. The Members and their respective Affiliates and
Principals hereby agree that it is in all of their best interests to keep this
Agreement and the Business of the LLC and all information concerning such
business confidential.
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
Agreement as of the date first written above.
/s/ Tim Novoselski
--------------------------------
TIM NOVOSELSKI
/s/ Denise Novoselski
--------------------------------
DENISE NOVOSELSKI
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<PAGE>
EXHIBIT A
(FACE OF CERTIFICATE)
THE LLC INTERESTS AND LLC UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE. SUCH LLC INTERESTS AND LLC UNITS MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUBSEQUENTLY REGISTERED OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. THE LLC AGREEMENT (AS DEFINED BELOW) PROVIDES FOR
FURTHER RESTRICTIONS ON TRANSFER OF THE LLC INTERESTS AND LLC UNITS REPRESENTED
HEREBY.
CERTIFICATE FOR LLC INTEREST
IN
COMMCORP, LLC
Certificate No. ___________ _________ LLC UNITS
TIM NOVOSELSKI and DENISE NOVOSELSKI, as the Managers of CommCorp,
LLC, a California limited liability LLC (the "LLC"), hereby certify that
_________________________________________________ is the holder of _________ LLC
Offered Interest, as that term is defined in the Operating Agreement of
California, LLC, dated as of October 14, 1997, as amended and restated from time
to time (the "Agreement") (copies of which are on file at the principal office
of the LLC).
This Certificate is not negotiable or transferable except by
operation of law, or as otherwise provided in the Agreement, and any such
transfer will be valid only upon delivery of this Certificate, together with an
assignment in the form set forth on the reverse hereof (or otherwise acceptable
to the Managers and sufficient to convey an interest in an LLC pursuant to the
(California) Beverly-Killea Limited Liability LLC Act, as it may be amended and
in effect from time to time, or any successor statute thereto), duly executed,
to the Managers of the LLC.
Dated:________________ ____________________________________
TIM NOVOSELSKI and DENISE NOVOSELSKI
Managers of CommCorp, LLC
A California Limited Liability Company
EXHIBIT A
- 1 -
<PAGE>
(REVERSE OF CERTIFICATE)
ASSIGNMENT OF LLC INTEREST
IN
COMMCORP, LLC
FOR VALUE RECEIVED, the undersigned ("Assignor") hereby assigns,
conveys, sells and transfers unto
________________________________________________________________________________
("Assignee")
________________________________________ _____________________________
(Please insert Social Security (Please print or typewrite
or other identifying number of Assignee) name and address of Assignee)
all rights and interest of Assignor in _________ LLC Units evidenced hereby and
directs that all future distributions and allocations with respect to such
specified assigned LLC Units be paid or allocated by the LLC to such Assignee.
The Assignor hereby irrevocably constitutes and appoints the Managers, and each
of them, as Assignor's attorney-in-fact with full power of substitution in the
premises to transfer the same on the books of the LLC.
Dated: __________________________ _______________________________
Signature of Assignor
Signature guaranteed: _________________________________________
Note: The signature to any assignment must correspond with the name as
written upon the face of this Certificate, in every particular,
without alteration or enlargement or any change whatever. If the
assignment is executed by an attorney, executor, administrator,
trustee or guardian, the person executing the assignment must give
such person's full title in such capacity, and proper evidence of
authority to act in such capacity, if not on file with the LLC or
its transfer agent, must be forwarded with this Certificate.
EXHIBIT A
- 2 -
<PAGE>
The undersigned, the Managers of the LLC, hereby consents to this
Assignment pursuant to Section 12.2 of the Agreement.
Dated: _____________________
____________________________ _____________________________
TIM NOVOSELSKI DENISE NOVOSELSKI
Manager Manager
THE LLC INTEREST AND LLC UNITS EVIDENCED HEREBY ARE SUBJECT TO ALL
TERMS AND CONDITIONS OF THE AGREEMENT AND UNLESS AND UNTIL ADMITTED TO THE LLC
AS A MEMBER, NO ASSIGNEE SHALL BE ENTITLED TO ANY OF THE RIGHTS, POWERS OR
PRIVILEGES OF THE ASSIGNOR EXCEPT THAT ASSIGNEE SHALL BE ENTITLED TO THE
DISTRIBUTIONS PAID AND ALLOCATIONS MADE WITH RESPECT TO SUCH INTEREST AS
DIRECTED BY THE ASSIGNOR ABOVE.
EXHIBIT A
- 3 -
<PAGE>
AMENDMENT TO
LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF
COMMCORP, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
AMENDMENT, dated as of October 1, 1998 (this "Amendment"), to the Limited
Liability Company Operating Agreement (the "Agreement") of CommCorp, LLC, a
California Limited Liability Company ("CommCorp"), dated as of October 14, 1997,
among PRIMEDIA Intertec Corporation, a Delaware corporation ("Intertec"), and
Plaza Communications, Inc., a Delaware corporation ("Plaza," together with
Intertec, "Purchaser").
W I T N E S S E T H
WHEREAS, Purchaser has entered into a Purchase Agreement pursuant to which
Purchaser acquired all of the issued and outstanding membership interests of
CommCorp as of October 1, 1998; and
WHEREAS, Purchaser desires to amend the Agreement as provided hereunder;
NOW, THEREFORE, Purchaser has acquired all the membership interests of
CommCorp and are now the sole parties to the Agreement and the parties hereto
agree as follows:
1. Amendments. (a) Article 1 of the Agreement is hereby amended by
deleting both of the Initial Members' names and interest percentages in Section
1.26 and inserting new Members and interest percentages as follows:
"PRIMEDIA Intertec Corporation, a Delaware corporation: 99%
"Plaza Communications, Inc., a Delaware corporation: 1%."
(b) Article 3 of the Agreement is hereby amended by deleting both of the
Initial Members in Section 3.1 and inserting new Members in Section 3.1 as
follows:
"PRIMEDIA Intertec Corporation, a Delaware corporation, whose address is
9800 Metcalf, Overland Park, Kansas 66212-2215.
"Plaza Communications, Inc., a Delaware corporation, whose address is 745
Fifth Avenue, New York, New York 10151-0099."
(c) Article 6 of the Agreement is hereby amended by deleting Tim
Novoselski and Denise Novoselski as Managers and replacing them with Charles G.
McCurdy and Beverly C. Chell, who shall serve as the Managers of CommCorp.
(d) Other than as set forth in this Amendment, all terms and conditions of
the Agreement shall remain unchanged in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first above written.
PRIMEDIA INTERTEC CORPORATION
By: /s/ Beverly C. Chell
----------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
PLAZA COMMUNICATIONS, INC.
By: /s/ Ann M. Riposanu
----------------------------------
Name: Ann M. Riposanu
Title: Vice Chairman
<PAGE>
Exhibit 3.153
================================================================================
State of Florida
[GRAPHIC OMITTED]
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of MADDUX PUBLISHING, INC., a corporation organized under the laws
of the State of Florida, filed on October 19, 1983, as shown by the records of
this office.
The document number of this corporation is G66717.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Nineteenth day of June, 1998
[Seal of the State of Florida Omitted]]
/s/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
================================================================================
<PAGE>
EFFECTIVE DATE
[ILLEGIBLE]
--------------
ARTICLES OF INCORPORATION
OF
MADDUX PUBLISHING, INC.
We, the undersigned, hereby associate ourselves together for the
purpose of becoming a corporation for profit under the laws of the State of
Florida.
ARTICLE I
NAME
The name of the corporation is Maddux Publishing, Inc.
ARTICLE II
DURATION
The term of existence of this corporation shall commence on October
19, l983, and shall be perpetual.
ARTICLE III
PURPOSE
The general nature of the business to be transacted by this
corporation and its purpose is: to manufacture, purchase, or otherwise acquire,
and to own, mortgage, pledge, sell, assign, transfer, or otherwise dispose of,
and to invest in, trade in, deal in and with goods, wares, merchandise, real and
personal property, and services, of every class, kind, and description, or any
other business activity permitted under the laws of the United States and of the
State of Florida.
ARTICLE IV
PREEMPTIVE RIGHTS GRANTED
Each shareholder of any class of stock of this corporation shall be
entitled to full preemptive rights to purchase any unissued or treasury shares
of the corporation and any securities of the corporation convertible into or
carrying a right to subscribe to or acquire shares of an unissued or treasury
shares.
<PAGE>
ARTICLE V
REGISTERED OFFICE
The address of the initial registered office of the corporation is
One Beach Drive, SE, Suite 205, St. Petersburg, Florida. The initial resident
agent at this address will be C. Philip Campbell, Jr.
ARTICLE VI
CAPITAL STOCK
The corporation is hereby authorized to issue ten thousand (10,000)
shares of common stock with the par value of ten cents ($0.10) per share.
ARTICLE VII
DIRECTORS
The initial Board of Directors of this Corporation shall consist of
one (1) member whose name and address is:
NAME ADDRESS
---- -------
Carlen Maddux 138 16th Avenue North
St. Petersburg,
Florida 33701
The number of directors may be either increased or decreased from
time to time by the Bylaws but shall never be less than one(1).
ARTICLE VIII
INCORPORATORS
The name and address of the Incorporator is:
NAME ADDRESS
---- -------
Carlen Maddux 138 16th Avenue North
St. Petersburg,
Florida 33701
IN WITNESS WHEREOF, the undersigned has made and subscribed these
Articles of Incorporation at St. Petersburg, Pinellas County, Florida, for the
use and purposes aforesaid.
/s/ Carlen Maddux
-----------------
CARLEN MADDUX
<PAGE>
STATE OF FLORIDA
DEPARTMENT OF STATE
Certificate Designating Place of Business or Domicile for the Service of
Process Within This State, Naming Agent Upon Whom Process may Be Served and
Names and Addresses of the Officers and Directors.
--------------------
The following is submitted, in compliance with Chapter 48.091,
Florida Statutes:
Maddux Publishing, Inc., a corporation organized (or organizing)
under the Laws of the State of Florida with its registered office at One Beach
Drive, SE, Suite 205, in the City of St. Petersburg, County of Pinellas, State
of Florida, has named C. Philip Campbell, Jr., located at said registered
office, as its agent to accept service of process within this state.
OFFICERS:
NAME TITLE SPECIFIC ADDRESS
CARLEN MADDUX President 138 16th Avenue North
St. Petersburg, Florida 33701
CARLEN MADDUX Secretary Same as above
CARLEN MADDUX Treasurer Same as above
DIRECTORS: SPECIFIC ADDRESS
CARLEN MADDUX Same as above
BY: /s/ Carlen Maddux
-----------------------
(Corporate Officer)
ACCEPTANCE:
I agree as Resident Agent to accept Service of Process; to keep
office open during prescribed hours; to post my name (and any other officers of
said corporation authorized to accept service of process at the above Florida
designated address) in some conspicuous place in office as required by Law.
/s/ C. Philip Campbell, Jr.
---------------------------
Resident Agent
<PAGE>
STATE OF FLORIDA )
COUNTY OF PINELLAS )
BE IT REMEMBERED, that on the 19 day of October, 1983, personally
appeared before the undersigned, a Notary Public of the State of Florida, CARLEN
MADDUX, party to the foregoing Articles of Incorporation, and who acknowledged
and declared that he did make, subscribe and acknowledge these foregoing
Articles of Incorporation as his voluntary act and deed and that the facts
therein set forth are true and correct to the best of his knowledge.
/s/ [ILLEGIBLE]
-------------------------------
NOTARY PUBLIC, State of Florida
My Commission Expires:
<PAGE>
Exhibit 3.154
================================================================================
STATE OF FLORIDA
[GRAPHIC OMITTED]
Department of State
I certify from the records of this office that MADDUX PUBLISHING, INC., is a
corporation organized under the laws of the State of Florida, filed on October
19, 1983.
The document number of this corporation is G66717.
I further certify that said corporation has paid all fees and penalties due this
office through December 31, 1998, that its most recent annual report was filed
on February 16, 1998, and its status is active.
I further certify that said corporation has not filed Articles of Dissolution.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Nineteenth day of June, 1998
[SEAL OF THE STATE OF FLORIDA OMITTED]
/s/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
================================================================================
<PAGE>
BY-LAWS OF MADDUX PUBLISHING, INC.
ARTICLE I
NAME, REGISTERED OFFICE AND REGISTERED AGENT
Section 1. NAME. The name of this Corporation is MADDUX PUBLISHING,
INC.
Section 2. REGISTERED OFFICE AND REGISTERED AGENT. The address of
the registered office of the Corporation shall be One Beach Drive, SE, Suite
205, St. Petersburg, Pinellas County, Florida.
The Corporation may also have offices at such other places as the
Board of Directors may from time to time appoint, or as the business of the
Corporation may require.
ARTICLE II
SEAL AND FISCAL YEAR
Section 1. SEAL. The seal of this Corporation shall have inscribed
on it the name of this Corporation, the date of its organization and the words
"Corporate Seal, State of Florida."
Section 2. FISCAL YEAR. The fiscal year of this Corporation shall be
determined by the Board of Directors upon filing the tax return of the
Corporation.
ARTICLE III
MEETING OF STOCKHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of Stockholders shall
be held at the principal office of the Corporation, in the City of St.
Petersburg, County of Pinellas, State of Florida, or at such other places as the
Board of Directors may from time to time determine, either within or without the
State of Florida in the month of June of each year, and at such time as the
Directors may designate. The Secretary shall serve personally, or by mail, a
written notice thereof, not less than 20 days nor more than 45 days previous to
such meeting, addressed to each stockholder at his address as it appears on the
stock book; but at any meeting at which all Stockholders shall be present, or of
which all Stockholders not present have waived notice in writing, the giving of
notice as above required may be dispensed with. If the annual meeting of
Stockholders be not held as herein prescribed, the election of Directors may be
held at any meeting thereafter called pursuant to these By-Laws.
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<PAGE>
Section 2. SPECIAL MEETINGS. Special meetings of Stockholders other
than those regulated by Statute, may be called at any time by: the President; a
majority of the Board of Directors; or the Secretary, upon the request of
Stockholders owning at least 51% of the outstanding stock of the Corporation
entitled to vote at such meeting. Notice of such meeting stating the purpose for
which it is called shall be served personally or by mail by the Secretary not
less than 7 days before the date set for such meeting. If mailed, it shall be
directed to a Stockholder at his address as it appears on the stock book; but at
any meeting of which all Stockholders shall be present, or of which Stockholders
not present have waived notice in writing, the giving of notice as above
described may be dispensed with. No business other than that specified in the
call for the meeting, shall be transacted at any meeting of the Stockholders,
except upon the unanimous consent of all the Stockholders entitled to notice
thereof. Special meetings may be held within or without the State of Florida.
Section 3. ADJOURNMENTS. Any meeting of shareholders may be
adjourned. Notice of the adjourned meeting or of the business to be transacted
there, other than by announcement at the meeting at which the adjournment is
taken shall not be necessary. If, however, after the adjournment the board fixes
a new record date for the adjourned meeting, a notice of the adjourned meeting
shall be given in compliance with Section 2 hereof to each shareholder of record
on the new record date entitled to vote at such meeting. At an adjourned meeting
at which a quorum is present, any business may be transacted which could have
been transacted at the meeting originally called.
Section 4. INFORMAL ACTION BY SHAREHOLDERS. Any action that may be
taken at a shareholders' meeting may be taken without a meeting if a consent in
writing, setting forth the action, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted, and filed with the Secretary of the
corporation. Within ten (10) days after obtaining such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing to such action taken.
Section 5. VOTING. At all meetings of the Stockholders, each
Stockholder of the Corporation shall be entitled at each proposal presented at
the meeting, to one vote for each share of voting stock recorded in the name of
such Stockholder on the books of the company. All voting may be viva voce, but
any qualified voter may demand a stock vote whereupon such stock vote shall be
taken by ballot, each of which shall state the name of the Stockholder voting
and the number of shares voted by him. Votes may be cast in person or by written
authorized proxy. Any ballot including proxy shall state the name of the
shareholder on such proxy in order to be valid.
<PAGE>
Section 6. PROXY. Each proxy must be executed in writing by the
Stockholder of the Corporation, or his duly authorized attorney in fact. No
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution unless it shall have specified therein its duration.
Section 7. QUORUM. The presence in person or by proxy of the holders
of a majority of the shares outstanding and entitled to vote shall constitute a
quorum at shareholders' meetings, but in no event can a quorum consist of less
than one-third (1/3) of the shares entitled to vote. At a duly organized meeting
shareholders present can continue to do business until adjournment even though
enough shareholders withdraw to leave less than a quorum. The affirmative vote
of a majority of the shares present and entitled to vote shall be the act of the
shareholders.
Section 8. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of, or to vote at, any meeting of shareholders,
or any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than sixty (60) days and, in case of a meeting of shareholders, not less
than ten (10) days prior to the date on which the particular action requiring
such determination of shareholders, is to be taken. If no record date is fixed
for the determination of shareholders entitled to notice or to vote at the
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed, or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders has been made, as provided
herein, such determination shall apply to any adjournment thereof, unless the
Board of Directors fixes a new record date for the adjourned meeting.
Section 9. VALIDATION. When Stockholders who hold four-fifths of the
voting stock having the right and entitled to vote at any meeting shall be
present at such meeting, however called or notified, and shall sign a written
consent thereto on the record of the meeting, the acts of such meeting shall be
as valid as if legally called and notified.
Section 10. ORDER OF BUSINESS. The annual meeting of the
Stockholders shall proceed as follows:
A. Calling meeting to order.
B. Proof of mailing notice of meeting or waiver of notice.
C. Reading of Minutes of last previous annual meeting.
D. Reports of officers.
E. Reports of committees.
F. Election of directors.
G. Miscellaneous business.
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<PAGE>
ARTICLE IV
BOARD OF DIRECTORS
Section 1. NUMBER. The affairs and business of this Corporation
shall be managed and its corporate powers exercised by a Board of Directors
composed of not less than one (1), nor more than five (5) directors, who need
not be stockholders of record. All of the directors shall be of full age and at
least one of such directors shall be a citizen of the United States.
Section 2. HOW ELECTED. At the annual meeting of Stockholders, the
one (1) person receiving a plurality of the votes cast shall be the director and
shall constitute the Board of Directors until the next annual meeting of the
Stockholders and election and qualification of their successors.
Section 3. TERM OF OFFICE. The term of office of each of the
directors shall be one (1) year, and thereafter until his successor has been
elected and qualified.
Section 4. DUTIES. The affairs and business of this Corporation
shall be managed and its corporate powers exercised by a Board of Directors
composed of one (1) member who need not be a Stockholder of record. All of the
Directors shall in all cases act as a Board, regularly convened, by majority
vote, and they may adopt such rules and regulations for the conduct of their
meetings and the management of the company as they may deem proper, not
inconsistent with these By-Laws, the Articles of Incorporation, and the Laws of
the State of Florida.
Section 5. DIRECTORS' MEETINGS. Regular meetings of the Board of
Directors shall be held immediately following the meetings of the Stockholders,
and at such other times as the Board of Directors may determine. Special
meetings of the Board of Directors may be called by the President at any time,
and shall be called by the President or the Secretary upon the written request
of two (2) directors. Directors' meetings may be held within or without the
State of Florida.
Section 6. ANNUAL MEETING. The Board of Directors shall meet each
year immediately after the annual meeting of the shareholders at the place that
meeting has been held to elect officers and consider other business.
Section 7. NOTICE OF MEETINGS. Notice of meetings, other than the
regular annual meeting, shall be given by service upon each director in person,
or by mailing to him at his last known post office address, at least 7 days
before the date therein designated for such meeting including the day of
mailing, of a
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<PAGE>
written or printed notice thereof specifying the time and place of such meeting,
and the business to be brought before the meeting, and no business other than
that specified in such notice shall be transacted at any special meeting. At any
meeting at which every member of the Board of Directors shall be present,
although held without notice, any business may be transacted as if the meeting
had been duly called.
Section 8. VOTING RIGHTS. Subject to the provisions of the laws of
the State of Florida and to the Articles of Incorporation dealing with
cumulative voting, each holder of capital stock in this corporation shall be
entitled to each shareholders' meeting to one (1) vote for every share of stock
standing in his name on the books of the corporation; but transferees of shares
that are transferred on the books of the corporation within ten (10) days next
preceding the date set for a meeting shall not be entitled to notice of or to
vote at the meeting.
Section 9. VACANCIES. Vacancies in the Board occurring between
annual meetings shall be filled for the unexpired portion of the term by
majority vote of the remaining directors.
Section 10. REMOVAL OF DIRECTORS. Any one or more of the Directors
may be removed either with or without cause, at any time by a vote of the
Stockholders holding 51 percent (51%) of the stock, at any special meeting
called for the purpose.
Section 11. WAIVER OF NOTICE. Whenever by statute, the provisions of
the Articles of Incorporation or these By-Laws, the Stockholders or the Board of
Directors are authorized to take any action after notice, such notice may be
waived, in writing, before or after the holding of the meeting, by the person or
persons entitled to such notice, or, in the case of a Stockholder, by his
attorney in fact thereunto authorized.
Section 12. QUORUM. At any meeting of the Board of Directors, a
majority of the Board shall constitute a quorum for the transaction of business,
but in the event of a quorum not being present, a less number may adjourn the
meeting to some future time, no more than seven (7) days later. The number of
directors who shall be present at any meeting of the Board of Directors in order
to constitute a quorum for the transaction of any business of any specified item
of business shall be two (2) directors.
If a quorum shall not be present at any meeting of the Board of
Directors, those present may adjourn the meeting from time to time, until a
quorum shall be present.
Section 13. INFORMAL ACTION. If all the directors severally or
collectively consent in writing to any action taken or to be taken by the
corporation, and the writing or writings evidencing their consent are filed with
the Secretary of the corporation, the action shall be as valid as though it has
been authorized at a meeting of the Board.
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<PAGE>
Section 14. EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution, designate two (2) or more of their number to constitute an Executive
Committee, who, to the extent provided in such resolution, shall have and may
exercise the powers of the Board of Directors.
Section 15. STANDING OR TEMPORARY COMMITTEES. The Board of Directors
may from time to time appoint two (2) or more of its own number to standing or
temporary committees for such purposes as designated by the Board of Directors
and invest such committees with such powers as it may see fit, subject to any
conditions as may be prescribed by such Board. Said committee shall have all of
the powers exercisable by the Board subject to any specific limitations by the
Board. All committees so appointed shall keep regular minutes of the
transactions of their meetings and shall cause them to be recorded in books kept
for that purpose in the office of the Corporation and shall report the same to
the Board of Directors at its next meeting.
ARTICLE V
OFFICERS
Section 1. OFFICERS. This Corporation shall have a President, a
Vice-President, a Secretary and a Treasurer, and such other officers as shall be
elected, from time to time by the Board. Any person may hold two or more
offices.
Section 2. ELECTION. All officers of the Corporation shall be
elected annually by the Board of Directors at its meeting held immediately after
the meeting of Stockholders, and shall hold office for the term of one (1) year,
or until their successors are duly elected. Officers need not be members of the
Board. The Board may appoint such other officers, agents and employees as it
shall deem necessary who shall have such authority and shall perform such duties
as from time to time shall be prescribed by the Board.
Section 3. DUTIES OF OFFICERS. The duties and powers of the officers
of the company shall be as follows:
PRESIDENT. The President shall be the chief executive officer of the
Corporation, shall have general and active management of the business and
affairs of the Corporation subject to the directions of the Board of Directors,
and shall preside at all meetings of the Stockholders and Board of Directors
unless a Chairman is elected as one of the officers of the Corporation, in which
case the Chairman of the Board shall preside.
He shall present at each annual meeting of the shareholders and
directors a report of the condition of the business of the Corporation.
He shall cause to be called regular and special meetings of the
Stockholders and directors in accordance with these By-Laws.
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<PAGE>
He shall appoint and remove, employ and discharge, and fix the
compensation of all servants, agents, employees and clerks of the Corporation
other than the duly appointed officers, subject to the approval of the Board of
Directors.
He shall sign and make all contracts and agreements in the name of
the Corporation and see that they are properly carried out.
He shall see that the books, reports, statements and certificates
required by the Statutes are properly kept, made and filed according to law.
He shall enforce these By-Laws and perform all the duties incident
to the position and office and which are required by the Laws of the State of
Florida.
VICE-PRESIDENT. The Vice-President shall, in the event that the
President is absent or unable to render or perform his duties or exercise his
powers as set forth in these By-Laws or in the acts under which this Corporation
is organized, assume all of the rights, privileges, authority, duties,
obligations and responsibilities of the President. The Board of Directors may,
at their pleasure, omit the appointment of a person to the office of
Vice-President.
SECRETARY. The Secretary shall have custody of, and maintain, all of
the corporate records except the financial records; shall record the minutes of
all meetings of the Stockholders and Board of Directors, send out all notices of
meetings, and perform such other duties as may be prescribed by the Board of
Directors or President.
He shall give and serve all notices of the Corporation.
He shall keep the stock and transfer books in the manner prescribed
by law, so as to show at all times the amount of capital stock, the manner and
the time the same was paid in, the names of the owners thereof, alphabetically
arranged, their respective places of residence, their post office addresses, the
number of shares owned by each, the time at which each person became such owner,
and the amount paid thereon; and keep such stock and transfer books open daily
during business hours at the office of the Corporation or the office of the
Resident Agent of the Corporation, subject to the inspection of any Stockholder
of the Corporation, and permit such Stockholder to make extracts from said books
at the expense of said Stockholder to the extent and as prescribed by law.
He shall sign all certificates of stock.
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<PAGE>
He shall present to the Board of Directors at their stated meetings
all communications addressed to him officially by the President or any officer
or shareholder of the Corporation. He shall attend to all correspondence and
perform all the duties incident to the office of Secretary.
TREASURER. The Treasurer shall have custody of all corporate funds
and financial records, shall keep full and accurate accounts of receipts and
disbursements and render account thereof at the annual meetings of Stockholders
and whenever else required by the Board of Directors or President, and shall
perform such other duties as may be prescribed by the Board of Directors or
President. He shall render to the President or the Board of Directors from time
to time as may be requested an account of the financial condition of the
Corporation.
Section 4. BOND. The Treasurer shall, if required by the Board of
Directors, give to the Corporation such security for the faithful discharge of
his duties as the Board may direct.
Section 5. VACANCIES, HOW FILLED. All vacancies in any office shall
be filled by the Board of Directors without undue delay at its regular meeting
or at a meeting specially called for that purpose. In the case of the absence of
any officer of the Corporation or for any reason that the Board of Directors may
deem sufficient, the Board may, except as specifically otherwise provided in
these By-Laws, delegate the powers or duties of such officers to any other
officer or director for the time being, provided 51 percent of the entire Board
concur therein.
Section 6. COMPENSATION OF OFFICERS. The officers shall receive such
salary or compensation as may be determined by the Board of Directors.
Section 7. REMOVAL OF OFFICERS. The Board of Directors may remove
any officer by a majority vote, at any time with or without cause.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. DESCRIPTION OF STOCK CERTIFICATES. The certificates of
stock shall be numbered in the order in which they are issued. They should be in
a book and shall be issued in consecutive order and a record of the name of the
person owning the shares, with the date of issuance and number thereof, shall be
kept by the Secretary. Such certificates shall exhibit the holder's name and the
number of shares. They shall be signed by the President or Vice-President, and
countersigned by the Secretary, assistant Secretary, Treasurer or Assistant
Treasurer and sealed with the seal of the Corporation.
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<PAGE>
Section 2. TRANSFER OF STOCK. The stock of the Corporation shall be
assignable and transferable on the books of the Corporation only by the person
in whose name it appears on said books, his legal representatives or by his duly
authorized agent. In case of transfer by attorney, the power of attorney, duly
executed and acknowledged, shall be deposited with the Secretary. In all cases
of transfer, the former certificate must be surrendered up and canceled before a
new certificate be issued. No transfers of stock shall be made in any manner
which is inconsistent with the Security and Exchange Act of 1933 as amended.
Section 3. LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation
shall issue a new stock certificate in the place of any certificate previously
issued if the holder of record of the certificate (a) makes proof in affidavit
form that it has been lost, destroyed or wrongfully taken; (b) requests the
issue of a new certificate before the corporation has notice that the
certificate has been acquired by a purchaser for value in good faith and without
notice of any adverse claim; (c) gives bond in such form as the corporation may
direct, to indemnify the corporation, the transfer agent, and registrar against
any claim that may be made on account of the alleged loss, destruction or theft
of a certificate; and (d) satisfies any other reasonable requirements imposed by
the corporation.
Section 4. REGISTERED STOCKHOLDERS. Registered Stockholders only
shall be entitled to be treated by the Corporation as the holders in fact of the
stock standing in their respective names, and the Corporation shall not be bound
to recognize any equitable or other claim to or interest in any share on the
part of any other person, whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of the State of Florida.
Section 5. CLOSING OF TRANSFER BOOKS. The Board of Directors shall
have power to close the stock transfer books of the Corporation for a period not
exceeding forty (40) days preceding the date of any meeting of Stockholders, or
the date of payment of any dividend, or the date of the allotment of rights, or
the date when any change or conversion or exchange of capital stock shall go
into effect, or for a period of not exceeding forty (40) days in connection with
obtaining the consent of Stockholders for any purpose; provided, however, that
in lieu of closing the stock transfer books as aforesaid, the Board of Directors
shall fix in advance a date, not exceeding forty (40) days preceding the date of
any meeting of Stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent, as a record date for the determination of the
Stockholders entitled to notice of and to vote at any such meeting, and the
adjournment thereof, or entitled to receive payment of any
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such dividend, or to any such allotment or rights, or to exercise the rights in
respect of any change, conversion, or exchange of capital stock or to give such
consent without actually closing such transfer books, and in such case such
shareholders, and only such shareholders as shall be Stockholders of record on
the date fixed, shall be entitled to such notice of and to vote at such meeting,
and any adjournment thereof, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any such record date fixed as
aforesaid.
ARTICLE VII
DIVIDENDS
Section 1. WHEN DECLARED. The Board of Directors shall by vote
declare dividends from net earnings or from surplus of the assets over
liabilities including capital, whenever, in their opinion, the condition of the
Corporation affairs will render it expedient for such dividends to be declared.
When the Board of Directors shall so determine, the dividends may be paid in
stock.
ARTICLE VIII
AMENDMENTS
Section 1. BY--LAWS. These By-Laws may be altered, amended, repealed
or added to by the majority vote of the Board of Directors of this Corporation
at any regular meeting of said Board, or at a special meeting of directors
called for that purpose provided a quorum of the directors are present at such
regular or special meeting. These By-Laws, and any amendments thereto, and new
By-Laws added by the directors, may be amended, altered or replaced by the
majority vote of the Stockholders at any annual or special meeting of the
Stockholders.
Section 2. ARTICLES OF INCORPORATION. The Articles of Incorporation
may be altered, amended, repealed or added to by a two-thirds vote of the Board
of Directors, and any rights of amendment conferred upon the shareholders is
subject to this reservation. Such amendments shall be in compliance with the
Laws of the State of Florida.
ARTICLE IX
DISALLOWED EXPENSES
Any payment to an officer and/or director of this Corporation (such
as salary, commission, bonus, interest, rent, royalty, and reimbursement of
entertainment expenses, etc.) which shall be disallowed in whole or in part as a
deductible expense by the Internal Revenue Service, shall be reimbursed by such
officer and/or director to this Corporation to the full extent of such
disallowance. It shall be the duty of the directors, as a Board, to enforce
recovery of any disallowed expense.
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ARTICLE X
NOTICES
Section 1. FORM. Whenever the provisions of the Statutes or these
By-Laws require notice to be given to any director, officer or Stockholder, they
shall not be construed to mean personal notice; such notice may be given in
writing by depositing the same in a post office or letter box, in a post paid,
sealed wrapper, addressed to such director, officer or Stockholder at his or her
address as the same appears on the books of the Corporation, and the time when
the same shall be mailed shall be deemed to be the time of the giving of such
notice.
Section 2. WAIVER. A Waiver of any notice in writing, signed by a
Stockholder, director or officer, whether before or after the time stated in
said Waiver for holding a meeting, shall be deemed equivalent to a notice
required to be given to any director, officer or shareholder.
ARTICLE XI
INDEMNIFICATION
The corporation may be empowered to indemnify any officer or
director, or any former officer or director, by a majority vote of a quorum of
directors, or by a majority vote of a quorum of shareholders, who were not
parties to such action, suit or proceeding, in the manner provided in Section
607.014 of the Florida Statutes, as amended. If such indemnification is
authorized by the directors and shareholders, expenses incurred in defending
such civil or criminal action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding in the
manner described in Subsection 5 of Section 607.014 of the Florida Statutes, as
amended, upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless he or she is found to be
entitled to such indemnification.
ARTICLE XII
LOANS
No loans shall be contracted on behalf of the corporation, and no
evidences of indebtedness shall be issued in its name, unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
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ARTICLE XIII
LONG-TERM EMPLOYMENT CONTRACTS
The Board of Directors may authorize the corporation to enter into
employment contracts with any executive officer for periods longer than one (1)
year and any charter or By-Law provision for annual election shall be without
prejudice to contract rights, if any, of the executive officer under such
contracts.
ARTICLE XIV
BOOKS AND RECORDS
Section 1. BOOKS AND RECORDS. This corporation shall keep correct
and complete books and records of account and shall keep minutes of the
proceedings of its shareholders, Board of Directors and committee of directors.
It shall keep at its registered office or principal place of business a record
of its shareholders, giving the names and addresses of all shareholders, and the
number, class and series, if any, of the shares held by each.
Section 2. SHAREHOLDERS' INSPECTION RIGHTS. Any person who shall
have been a holder of record of one quarter (1/4) of one percent (1%) of shares,
or of voting trust certificates, therefor at least six (6) months immediately
preceding his demand, or shall be the holder of record of, or the holder of
record of voting trust certificates for, at least five percent (5%) of the
outstanding shares of any class or series of a corporation, upon written demand
stating the purpose thereof, shall have the right to examine, in person or by
agent or attorney, at any reasonable time or times, for any proper purpose, its
relevant books and records of accounts, minutes and records of shareholders and
to make extracts therefrom.
Section 3. FINANCIAL INFORMATION. Not later than four (4) months
after the close of each fiscal or calendar year, this corporation shall prepare
a balance sheet showing in reasonable detail the financial condition of the
corporation as of the date of its fiscal or calendar year, and a profit and loss
statement showing the results of the operations of the corporation during its
fiscal or calendar year.
Upon written request of any shareholder or holder of voting trust
certificate for shares of the corporation, the corporation shall mail to such
shareholder or holder of voting trust certificates a copy of the most recent
such balance sheet and profit and loss statement.
The balance sheets and profit and loss statements shall be filed in
the registered office of the corporation, kept for at least five (5) years, and
shall be subject to inspections during business hours by any shareholder or
holder of voting trust certificates, in person or by agent.
-12-
<PAGE>
ARTICLE XV
LOANS TO OFFICERS
The corporation may lend money to, guarantee any obligation of, or
otherwise assist any officer of the corporation, or of a subsidiary, including
any officer who is a director of the corporation or of a subsidiary, when, in
the judgment of the directors, such loan, guaranty or assistance may reasonably
be expected to benefit the corporation. The loan, guaranty or other assistance
may be with or without interest, and may be unsecured or secured in such manner
as the Board of Directors shall approve including, without limitation, a pledge
of shares of stock of the corporation.
ARTICLE XVI
DEADLOCK
A. Should deadlock, dispute or controversy arise among the
shareholders or directors of the corporation in regard to matters of management
and company policy or matters arising under the provisions of the charter and
should the shareholders, by using their legal power and influence as
shareholders, be unable to resolve such deadlock, dispute or controversy, the
matter shall be submitted by the shareholders to arbitration.
B. Should the shareholders or directors be unable to agree as to the
scope of this provision or the application of this provision to the deadlock,
dispute or controversy at issue, the scope and applicability of this provision
shall be determined by the arbitrator.
C. The shareholders shall then select an arbitrator within sixty
(60) days of the receipt of such notice of deadlock, upon a unanimous vote of
the shares of stock outstanding and entitled to vote. The shareholders shall
reserve the right to replace the arbitrator by unanimous vote of the shares
outstanding and entitled to vote.
D. Should the shareholders be unable to select an arbitrator or a
successor arbitrator, the deadlock, dispute or controversy shall be resolved in
accordance with the Florida Arbitration Code, Section 682 of the Florida
Statutes.
E. The decision of the arbitrator shall be final and binding upon
all shareholders. The shareholders shall vote their shares as the arbitrator
shall direct.
F. To enforce those provisions, the arbitrator may obtain an
injunction from a court having jurisdiction to direct the shareholders to vote
as the arbitrator has determined.
-13-
<PAGE>
G. After arbitration and settlement, should matters in controversy
continue to arise, the arbitrator shall determine when arbitration shall no
longer reasonably resolve the deadlock, dispute or controversy. Upon the making
of such a determination by the arbitrator, the objecting shareholder(s) shall
offer for sale, first to the corporation and then to the remaining shareholders
his or her stock interest in the corporation upon the terms of sale and methods
of valuation provided for in these By-Laws. If the value or terms of sale be
disputed, this matter shall be submitted to arbitration as provided in Article
XVI hereinabove.
H. The corporation and the remaining shareholder(s) shall each have
sixty (60) days to exercise their option to purchase the shares of the objecting
shareholder(s). Should the corporation or the remaining shareholder(s) refuse to
exercise their option to purchase the shares of the objecting shareholders(s),
the shareholder(s), upon the written demand of the objecting shareholder(s),
shall unanimously vote to voluntarily dissolve the corporation. Should a
shareholder refuse to vote his stock in this matter, the arbitrator may obtain
an injunction from a court of competent jurisdiction to direct the shareholder
to so vote.
ARTICLE XVII
INTERESTED DIRECTORS
A. No contract or other transaction between a corporation and one
(1) or more of its directors, or between a corporation and any other
corporation, firm, association or other entity in which one or more of its
directors are directors or officers or financially interested, shall be either
void or voidable for this reason alone or by reason alone that such director or
directors are present at the meeting of the Board of Directors, or of a
committee thereof, which approves such contract or transaction, or that his or
their votes are counted for such purposes:
1. If the fact of such common directorship, officership or financial
interest is disclosed or known to the Board or Committee, and the Board or
Committee approves such contract or transaction by vote sufficient for such
purpose without counting the vote or votes of such interested director or
directors; or
2. If such common directorship, officership or financial interest is
disclosed or known to be shareholders entitled to vote thereon, and such
contract or transaction is approved by vote of the shareholders; or
3. If the contract or transaction if fair and reasonable as to the
corporation at the time it is approved by the Board, a committee or the
shareholders.
B. Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which approved
such contract or transaction.
-14-
<PAGE>
WAIVER OF NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND DIRECTORS
The undersigned, being the sole shareholder and sole director of
MADDUX PUBLISHING, INC., a Florida Corporation, hereby waives all notice of the
special meeting of said corporation, and hereby consents that August 29, 1986,
shall be the date of said meeting, and that said meeting shall be held at One
Beach Drive SE, Suite 205, St. Petersburg, Florida 33701, for the purpose of
electing a Vice President of the Corporation, and for conducting such other
business as may lawfully come before the special meeting.
Dated this 29th day of August, 1986.
/s/ Carlen Maddux
-----------------
CARLEN MADDUX
<PAGE>
Exhibit 3.155
[GRAPHIC OMITTED]
State
of
California
================================================================================
SECRETARY OF STATE'S OFFICE
CORPORATION DIVISION
I, TONY MILLER, Acting Secretary of State of the State of California,
hereby certify:
That the annexed transcript has been compared with the corporate record on
file in this purports to be a copy, and that same is full, true and correct.
IN WITNESS WHEREOF, I execute
this certificate and affix the Great
Seal of the State of California this
JUL 5 1994
------------------------
[SEAL OF THE STATE OF CALIFORNIA OMITTED]
/s/ Tony Miller
Acting Secretary of State
================================================================================
<PAGE>
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
AUG 29 1975
EDMUND G. BROWN, Jr., Secretary of State
By BILL HOLDEN
Deputy
ARTICLES OF INCORPORATION
OF
MIRAMAR PUBLISHING COMPANY
I
The name of this corporation shall be
MIRAMAR PUBLISHING COMPANY
II
The specific business in which the corporation will primarily engage
is the publication of trade magazines.
III
The purposes for which this corporation is formed in addition to
conducting the primary business hereinbefore described, are the following:
(1) To engage in one or more other businesses or transactions which the
Board of Directors of the corporation may from time to time
authorize or approve, whether related or unrelated to the business
described in Article II above or to any other business then or
theretofore done by this corporation.
(2) To purchase, lease, sell, convey, mortgage, hypothecate and/or
encumber such real and personal property as may be requisite or
necessary in connection with the operation of this corporation.
1.
<PAGE>
(3) To exercise any and all rights and powers which a corporation may
now or hereafter exercise.
(4) To act as principal, agent, joint venturer, partner or in any other
capacity which may be authorized or approved by the Board of
Directors of this corporation.
(5) To transact business in the State of California or in any other
jurisdiction of the United States Of America or elsewhere in the
world.
The foregoing statement of purposes shall be construed as a
statement of both purposes and powers, and the purposes and powers in each
clause shall, except where otherwise expressed, be in no wise limited or
restricted by reference to or inference from the terms or provisions of any
other clause but shall be regarded as independent purposes and powers.
IV
The county in the State of California where the principal office for
the transaction of the business of this corporation is to be located is the
County of Los Angeles.
V
This corporation is authorized to issue only one class of shares;
the total number of such shares is seven hundred fifty (750); all such shares
are to have a par value of one hundred dollars ($100.00) per share; the
aggregate
2.
<PAGE>
par value of all shares is seventy-five thousand dollars ($75,000.00).
VI
The number of Directors of the corporation shall be three (3).
VII
The names and addresses of the persons who are appointed to act as
the first Directors of the corporation are:
Name Address
Harriet Hamilton 6380 Wilshire Boulevard
Los Angeles, California 90048
Ann J. Graham 11320 Exposition Boulevard
Los Angeles, California 90064
Bonnie J. Black 6330 Green Valley Circle
Culver City, California 90230
IN WITNESS WHEREOF, for the purpose of forming this corporation
under the laws of the State of California, the undersigned, constituting the
persons named hereinabove as the first Directors of this corporation, have
executed these Articles Of Incorporation this 21st day of August, 1973.
/s/ Harriet Hamilton
--------------------
Harriet Hamilton
/s/ Ann J. Graham
--------------------
Ann J. Graham
/s/ Bonnie J. Black
--------------------
Bonnie J. Black
3.
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On August 21, 1973, before me, the undersigned, a Notary Public in
and for said State, personally appeared HARRIET HAMILTON, ANN J. GRAHAM, and
BONNIE J. BLACK, known to me to be the persons whose names are subscribed to the
foregoing Articles Of Incorporation and acknowledged that they executed the
same.
WITNESS my hand and official seal.
====================================================
OFFICIAL SEAL
[SEAL OMITTED] AUDREY DEUTSCH /s/ Audrey Deutsch
NOTARY PUBLIC - CALIFORNIA ------------------
LOS ANGELES COUNTY Notary Public
My Commission Expires Apr. 27, 1976
====================================================
4.
<PAGE>
(Department of ------------------------------------------
Corporations DEPARTMENT OF CORPORATIONS
Use Only) FILE NO., If Any
Fee Paid $___________ (Insert File Number(s) of Previous Filings
Before the Department, If Any)
Receipt No.__________ ------------------------------------------
- --------------------- FEE: $25.00
TO THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA
Notice of Issuance of Securities Pursuant to Subdivision (h) of
Section 25102 of the California Corporations Code
- --------------------------------------------------------------------------------
Name of Issuer
MIRAMAR PUBLISHING COMPANY
- --------------------------------------------------------------------------------
State of Incorporation
California
- --------------------------------------------------------------------------------
Address of Principal Place of Business
Number and Street City State Zip Code
2048 Cotner Avenue Los Angeles California 90025
- --------------------------------------------------------------------------------
1. Under the exemption provided by Section 25102(h), shares of voting common
stock have been or are proposed to he issued pursuant to this Notice to not more
than 10 persons, whose names are set forth below:
Francis B. Frank
- ----------------------------------- --------------------------------------
James J. Gartland
- ----------------------------------- --------------------------------------
- ----------------------------------- --------------------------------------
- ----------------------------------- --------------------------------------
- ----------------------------------- --------------------------------------
2. Immediately after the issuance and sale of such shares, the above-named
issuer had or will have only one class of stock outstanding which was or will he
owned beneficially by no more than 10 persons.
Mailed with check for $25.00 on 4/27/78. vn
<PAGE>
3. The offer and sale of such shares was not nor will be accompanied by the
publication of any advertisement and neither selling expenses nor promotional
considerations were or will be given, paid or incurred in connection therewith.
4. Pursuant to the requirements of Section 260.102.6 of Title 10 of the
California Administrative Code, all certificates evidencing such shares bear or
will bear on their face the legend required by such Section, and a Copy of such
Section has been or will be delivered to each issuee or transferee of the
shares.
The undersigned officer of the issuer hereby declares that the foregoing
is true under penalty of perjury. Executed at Los Angeles, California this 26
day of April, 1978.
/s/ James Gartland
------------------
Name
President
------------------
Title
NOTE If the officer signs this form outside of California, there must be
attached a verification executed and sworn to before a notary public.
OPINION OF COUNSEL
I certify that I am an active member of the State Bar of California. On
the basis of the facts stated in the foregoing Notice and other information,
including representations as to the type of consideration received or to be
received, supplied to me by officials and shareholders of the issuer and by
proposed issuees, it is my opinion that the exemption from qualification with
the Commissioner of Corporations provided by Subdivison (h) of Section 25102 of
the California Corporations Code is available for the offer and sale of the
shares referred to in this Notice.
/s/ Gilbert Woolway
-------------------------------------------------
Member of the State of California Gilbert Woolway
800 West First Street
Los Angeles, California 90012
-------------------------------------------------
Address Tel. No.
GILBERT WOOLWAY
-------------------------------------------------
Firm Name
(This opinion of counsel must be signed by an active member of the State Bar of
California. Type name of attorney, address, phone number and firm name, if any,
under signature.)
NOTE: If the issuer is a non-California corporation, a Consent to Service of
Process as prescribed in the Commissioner's Rule 102.8(b) must be Filed
concurrently.
<PAGE>
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
JUN 30 1994
TONY MILLER, Acting Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
MIRAMAR PUBLISHING COMPANY
TIMOTHY NOVOSELSKI and DENISE NOVOSELSKI certify that:
1. They are the President and Secretary of Miramar Publishing Company, a
California corporation, respectively.
2. Article I of the Articles of Incorporation is hereby amended as
follows:
I.
The name of this Corporation shall be
MIRAMAR COMMUNICATIONS, INC.
3. The foregoing amendment of the Articles of Incorporation has been
duly approved by the directors.
4. The foregoing amendment of the Articles of Incorporation has been
duly approved by the required vote of shareholders in accordance
with Section 902 of the California Corporations Code. The total
number of outstanding common shares entitle to vote with respect to
the amendment was 100. The number of shares voting in favor of the
amendment equalled or exceeded the vote required. The vote required
was more than fifty percent (50%).
The undersigned further declare under penalty of perjury under the laws of
the State of California that the matters set forth in this Certificate are true
and correct of their own respective knowledge, and this Certificate is executed
in Los Angeles, California.
DATED: June 8, 1994
/s/ Timothy Novoselski
-----------------------------
TIMOTHY NOVOSELSKI, President
/s/ Denise Novoselski
-----------------------------
DENISE NOVOSELSKI, Secretary
<PAGE>
Exhibit 3.156
BY-LAWS OF
MIRAMAR PUBLISHING COMPANY
A California Corporation
ARTICLE I
SHAREHOLDERS' MEETINGS
Section 1. Place of Meetings.
All meetings of the shareholders shall be held at the office of the
corporation in the State of California, as may be designated for that purpose
from time to time by the Board of Directors.
Section 2. Annual Meetings.
The annual meeting of the shareholders shall be held on the following
date:
The third Friday in April of each year, commencing on the 19th day of
April, 1974, at 11:00 a.m.
If said date shall fall on a legal holiday, the meeting shall be held at the
same time on the next succeeding business day as is not a legal holiday. At the
annual meeting, the shareholders shall elect by plurality vote a Board of
Directors, consider reports of the affairs of the corporation, and transact such
other business as may properly be brought before the meeting.
Section 3. Special Meetings.
Special meetings of the shareholders, for any purpose or purposes
whatsoever, may be called at any time by the President, or by the Board of
Directors, or by any two or more members thereof, or by one or more shareholders
holding not less than one-tenth of the voting power of the corporation.
Section 4. Notice of Meetings.
Notices of meetings, annual or special, shall be given in writing to
shareholders entitled to vote by the Secretary or the Assistant Secretary, or if
there be no such officer, or in case of his neglect or refusal, by any director
or shareholder.
Such notices shall be sent to the shareholder's address appearing on the
books of the corporation, or supplied by him to the corporation for the purpose
of notice, not less than seven days before such meeting.
<PAGE>
Notice of any meeting of shareholders shall specify the place, the day,
and the hour of meeting, and in case of special meeting, as provided by the
Corporations Code of the State of California, the general nature of the business
to be transacted.
When a meeting is adjourned for thirty days or more, notice of the
adjourned meeting shall be given as in case of an original meeting. Save, as
aforesaid, it shall not be necessary to give any notice of the adjournment or of
the business to be transacted at an adjourned meeting other than by announcement
at the meeting at which such adjournment is taken.
Section 5. Consent To Shareholders' Meetings.
The transactions of any meeting of shareholders, however called and
noticed, shall be valid as though had at a meeting duly held after regular call
and notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each of the shareholders entitled to vote, not
present in person or by proxy, signs a written waiver of notice, or a consent to
the holding of such meeting, or an approval of the minutes thereof. All such
waivers, consents, or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Any action which may be taken at a meeting of the shareholders may be
taken without a meeting if authorized by a writing signed by all of the holders
of shares who would be entitled to vote at a meeting for such purpose, and filed
with the Secretary of the corporation.
Section 6. Quorum.
The holders of a majority of the shares entitled to vote thereat, present
in person, or represented by proxy, shall be requisite and shall constitute a
quorum at all meetings of the shareholders for the transaction of business
except as otherwise provided by law, by the Articles of Incorporation, or by
these By-Laws. If, however, such majority shall not be present or represented at
any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person, or by proxy, shall have power to adjourn the meeting from
tine to time, until the requisite amount of voting shares shall be present. At
such adjourned meeting at which the requisite amount of voting shares shall be
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 7. Voting Rights; Cumulative Voting.
Only persons in whose names shares entitled to vote stand on the stock
records of the corporation on the day of any meeting of shareholders, unless
some other day be fixed by the
2.
<PAGE>
Board of Directors for the determination of shareholders of record, then on such
other day, shall be entitled to vote at such meeting.
Every shareholder entitled to vote shall be entitled to one vote for each
of said shares and shall have the right to accumulate his votes as provided in
Section 2235, Corporations Code of the State of California.
Section 8. Proxies.
Every shareholder entitled to vote, or to execute consents, may do so
either in person or by written proxy, executed in accordance with the provisions
of Section 2225 of the Corporations Code of the State of California and filed
with the Secretary of the corporation.
ARTICLE II
DIRECTORS; MANAGEMENT
Section 1. Powers.
Subject to the limitation of the Articles of Incorporation, these By-Laws,
and the laws of the State of California as to action to be authorized or
approved by the shareholders, all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by, a Board of Directors.
Section 2. Number And Qualification.
The authorized number of directors of this corporation shall be three (3).
Said authorized number of directors of this corporation shall remain
unchanged until amendment to the Articles of Incorporation or by an amendment to
this Section 2, Article II, of these By-Laws, adopted by the vote or written
assent of the shareholders entitled to exercise the majority of the voting power
of the corporation, except that the votes or written consents of shareholders
holding more than eighty per cent (80%) of the voting power shall be necessary
to reduce the number of directors below five (5).
Section 3. Election And Tenure Of Office.
The directors shall be elected by ballot at the annual meeting of the
shareholders, to serve for one year and until their successors are elected and
have qualified. Their term of office shall begin immediately after election.
Section 4. Vacancies.
Vacancies in the Board of Directors may be filled by a
3.
<PAGE>
majority of the remaining directors, though less than a quorum, or by a sole
remaining director, and each director so elected shall hold office until his
successor is elected at an annual meeting of shareholders or at a special
meeting called for that purpose.
The shareholders may at any time elect a director to fill any vacancy not
filled by the directors, and may elect the additional directors at the meeting
at which an amendment of the By-Laws is voted authorizing an increase in the
number of directors.
A vacancy or vacancies shall be deemed to exist in case of the death,
resignation or removal of any director, or if the shareholders shall increase
the authorized number of directors but shall fail at the meeting at which such
increase is authorized, or at an adjournment thereof, to elect the additional
director so provided for, or in case the shareholders fail at any tine to elect
the full number of authorized directors.
If the Board of Directors accepts the resignation of a director tendered
to take effect at a future time, the Board, or the shareholders, shall have
power to elect a successor to take office when the resignation shall become
effective.
No reduction of the number of directors shall have the effect of removing
any director prior to the expiration of his term of office.
Section 5. Removal Of Directors.
The entire Board of Directors or any individual director may be removed
from office as provided by Section 810 of the Corporations Code of the State of
California.
Section 6. Place Of Meetings.
Meetings of the Board of Directors shall be held at the office of the
corporation in the State of California, as designated for that purpose, from
tine to time, by resolution of the Board of Directors or written consent of all
of the members of the Board. Any meeting shall be valid, wherever held, if held
by the written consent of all members of the Board of Directors, given either
before or after the meeting and filed with the Secretary of the corporation.
Section 7. Organization Meetings.
The organization meetings of the Board of Directors shall be held
immediately following the adjournment of the annual meetings of the
shareholders.
4.
<PAGE>
Section 8. Other Regular Meetings.
Regular meetings of the Board of Directors shall be held on the following
date:
The third Friday in April of each year, commencing on the 19th day of
April, 1974, at 1:00 p.m.
If said date shall fall upon a holiday, such meetings shall be held on the next
succeeding business day thereafter. No notice need be given of such regular
meetings.
Section 9. Special Meetings - Notices.
Special meetings of the Board of Directors for any purpose or purposes
shall be called at any tine by the President or if he is absent or unable or
refuses to act, by any Vice President or by any two directors.
Written notice of the time and place of special meetings shall be
delivered personally to the directors or sent to each director by letter or by
telegram, charges prepaid, addressed to him at his address as it is shown upon
the records of the corporation, or if it is not so shown upon the records of the
corporation or is not readily ascertainable, at the place in which the meetings
of the directors are regularly held. In case such notice is mailed or
telegraphed, it shall be deposited in the United States mail or delivered to the
telegraph company in the place in which the principal office of the corporation
is located at least forty-eight hours prior to the time of the holding of the
meeting. In case such notice is not delivered as above provided, it shall be so
delivered at least twenty-four hours prior to the time of the holding of the
meeting, Such mailing, telegraphing, or delivery as above provided shall be due,
legal, and personal notice to such director.
Section 10. Waiver Of Notice.
When all of the directors are present at any directors' meeting, however
called or noticed, and sign a written consent thereto on the records of such
meeting, or, if a majority of the directors are present, and if those not
present sign in writing a waiver of notice of such meeting, whether prior to or
after the holding of such meeting, which said waiver shall be filed with the
Secretary of the corporation, the transactions thereof are as valid as if had at
a meeting regularly called and noticed.
Section 11. Directors Acting Without A Meeting.
Any action required or permitted to be taken by the Board of Directors,
may be taken without a meeting, and with the same
5.
<PAGE>
force and effect as a unanimous vote of directors, if all members of the Board
shall individually or collectively consent in writing to such action.
Section 12. Notice Of Adjournment.
Notice of the time and place of holding an adjourned meeting need not be
given to absent directors if the time and place be fixed at the meeting
adjourned.
Section 13. Quorum.
A majority of the number of directors as fixed by the Articles of
Incorporation or the By-Laws shall be necessary to constitute a quorum for the
transaction of business, and the action of a majority of the directors present
at any meeting at which there is a quorum, when duly assembled, is valid as a
corporate act; provided that a minority of the directors, in the absence of a
quorum, may adjourn from time to time, but may not transact any business.
ARTICLE III
OFFICERS
Section 1. Officers.
The officers of the corporation shall be a president, a vice president, a
secretary, and a treasurer. The corporation may also have, at the discretion of
the Board of Directors, a chairman of the board, one or more additional vice
presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article III. One person may hold two or more
offices, except those of president and secretary.
Section 2. Election.
The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Section 3 or Section 5 of this Article III
shall be chosen annually by the Board of Directors, and each shall hold his
office until he shall resign or shall be removed or otherwise disqualified to
serve, or his successor shall be elected and qualified.
Section 3. Subordinate Officers, Etc.
The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom
6.
<PAGE>
shall hold office for such period, have such authority, and perform such duties
as are provided in the By-Laws or as the Board of Directors may from time to
time determine.
Section 4. Removal and Resignation.
Any officer may be removed, either with or without cause, by a majority of
the directors at the time in office, at any regular or special meeting of the
Board, or, except in case of an officer chosen by the Board of Directors, by any
officer upon whom such power of removal may be conferred by the Board of
Directors.
Any officer may resign at any time by giving written notice to the Board
of Directors or to the president, or to the Secretary of the corporation. Any
such resignation shall take effect at the date of the receipt or such notice or
at any later tine specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 5. Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
the By-Laws for regular appointments to such office.
Section 6. Chairman Of The Board.
The Chairman of the Board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors, and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the By-laws.
Section 7. President.
Subject to such supervisory powers, if any, as may be given by the Board
of Directors to the Chairman of the Board, if there be such an officer, the
President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction, and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the Chairman
of the Board, or if there be none, at all meetings of the Board of Directors. He
shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of
management usually vested in the office of President of a corporation, and shall
have such other powers and duties as may be prescribed by the Board of Directors
or the By-Laws.
7.
<PAGE>
Section 8. Vice President.
In the absence or disability of the President, the Vice Presidents in
order of their rank as fixed by the Board of Directors, or if not ranked, the
Vice President designated by the Board of Directors, shall perform all the
duties of the President, and when so acting, shall have all the powers of, and
be subject to, all the restrictions upon the President. The Vice Presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them, respectively, by the Board of Directors or the
By-Laws.
Section 9. Secretary.
The Secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the By-Laws or by
law to be given, and he shall keep the seal of the corporation in safe custody,
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or the By-Laws.
Section 10. Treasurer.
The Treasurer shall keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, surplus, and shares. Any surplus,
including earned surplus, paid-in surplus and surplus arising from a reduction
of stated capital, shall be classified according to source and shown in a
separate account. The books of account shall at all reasonable times be open to
inspection by any director.
8.
<PAGE>
The Treasurer shall deposit all moneys and other valuables in the name and
to the credit of the corporation with such depositaries as may be designated by
the Board of Directors. He shall disburse the funds of the corporation as may be
ordered by the Board of Directors, shall render to the President and directors,
whenever they request it, an account of all of his transactions as Treasurer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the Board of Directors or
the By-Laws.
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
The Board of Directors may appoint an executive committee, and such other
committees as may be necessary from time to time, consisting of such number of
its members and with such powers as it may designate, consistent with the
Articles of Incorporation and By-Laws and the general corporation laws of the
State of California. Such committees shall hold office at the pleasure of the
Board.
ARTICLE V
CORPORATE RECORDS AND REPORTS - INSPECTION
Section 1. Records.
The corporation shall maintain adequate and correct accounts, books, and
records of its business and properties. All of such books, records, and accounts
shall be kept at its principal place of business in the State of California, as
fixed by the Board of Directors from time to time.
Section 2. Inspection Of Books And Records.
All books and records provided for in Section 3003 of the Corporations
Code of the State of California shall be open to inspection of the directors and
shareholders from time to time and in the manner provided in said Section 3003.
Section 3. Certification And Inspection Of By-Laws.
The original or a copy of these By-Laws, as amended or otherwise altered
to date, certified by the Secretary, shall be open to inspection by the
shareholders of the corporation, as provided in Section 502 of the Corporations
Code of the State of California.
9.
<PAGE>
Section 4. Checks, Drafts, Etc.
All checks, drafts, or other orders for payment of money, notes, or other
evidences of indebtedness, issued in the name of or payable to the corporation,
shall be signed or endorsed by such person or persons and in such manner as
shall be determined from time to time by resolution of the Board of Directors.
Section 5. Contracts, Etc. - How Executed.
The Board of Directors, except as in the By-Laws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation. Such
authority may be general or confined to specific instances. Unless so authorized
by the Board of Directors, no officer, agent, or employee shall have any power
or authority to bind the corporation by any contract or engagement, or to pledge
its credit, or to render it liable for any purpose or to any amount.
Section 6. Annual Report.
The Board of Directors shall cause an annual report or statement to be
sent to the shareholders of this corporation not later than one hundred twenty
days after the close of the fiscal or calendar year in accordance with the
provisions of Sections 3006-10 of the Corporations Code of the State of
California.
ARTICLE VI
CERTIFICATES AND TRANSFER OF SHARES
Section 1. Certificates For Shares.
Certificates for shares shall be of such form and device as the Board of
Directors may designate and shall state the name of record holder of the shares
represented thereby; its number; date of issuance, the number of shares for
which it is issued; the par value, if any, or a statement that such shares are
without par value; a statement of the rights, privileges, preferences, and
restrictions, if any; a statement as to the redemption or conversion, if any; a
statement of liens or restrictions upon transfer or voting, if any; if the
shares be assessable or, if assessments are collectible by personal action, a
plain statement of such facts.
Every certificate for shares must be signed by the President or a Vice
President and the Secretary or an Assistant Secretary or must be authenticated
by facsimiles of the signatures of the President and Secretary or by a facsimile
of the signature of its President and the written signature of its
10.
<PAGE>
Secretary or an Assistant Secretary. Before it becomes effective, every
certificate for shares authenticated by a facsimile of a signature must be
countersigned by a transfer agent or transfer clerk and must be registered by an
incorporated bank or trust company, either domestic or foreign, as registrar of
transfers.
Section 2. Transfer On the Books.
Upon surrender to the Secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment, or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction upon its books.
Section 3. Lost Or Destroyed Certificates,
Any person claiming a certificate of stock to be lost or destroyed shall
make an affidavit or affirmation of that fact and advertise the same in such
manner as the Board of Directors may require, and shall, if the directors so
require, give the corporation a bond of indemnity, in form and with one or more
sureties satisfactory to the Board, in at least double the value of the stock
represented by said certificate, whereupon a new certificate may be issued of
the same tenor and for the same number of shares as the one alleged to be lost
or destroyed.
Section 4. Transfer Agents And Registrars.
The Board of Directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, which shall be an incorporated bank or trust
company - either domestic or foreign - who shall be appointed at such times and
places as the requirements of the corporation may necessitate and the Board of
Directors may designate.
Section 5. Closing Stock Transfer Books.
The Board of Directors may close the transfer books in its discretion for
a period not exceeding thirty days preceding any meeting, annual or special, of
the shareholders, or the day appointed for the payment of a dividend.
ARTICLE VII
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the corporation, the date
11.
<PAGE>
of its incorporation, and the word "California."
ARTICLE VIII
AMENDMENTS TO BY-LAWS
Section 1. By Shareholders.
New By-Laws may be adopted or these By-Laws may be repealed or amended at
an annual meeting or at any other meeting of the shareholders called for that
purpose, by a vote of shareholders entitled to exercise a majority of the voting
power of the corporation, or by written assent of such shareholders.
Section 2. Powers Of Directors.
Subject to the right of the shareholders to adopt, amend, or repeal
By-Laws, as provided in Section 1 of this Article VIII, the Board of Directors
may adopt, amend or repeal any of these By-Laws other than a By-Law or amendment
thereof changing the authorized number of directors.
Section 3. Record Of Amendments.
Whenever an amendment or new By-Laws are adopted, it shall be copied in
the book of By-Laws with the original By-Laws, in the appropriate place. If any
By-Law is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or written assent was filed shall be stated in said book.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, being all of the persons appointed in the
Articles of Incorporation to act as the first Board of Directors of this
corporation, hereby assent to the foregoing By-Laws, and adopt the same as the
By-Laws of the corporation.
DATED: September 4, 1973.
/s/ Harriet Hamilton
-----------------------------------
HARRIET HAMILTON
/s/ Bonnie J. Black
-----------------------------------
BONNIE J. BLACK
/s/ Ann J. Graham
-----------------------------------
ANN J. GRAHAM
12.
<PAGE>
TEMPORARY SECRETARY'S CERTIFICATE
THIS IS TO CERTIFY that I am the duly elected, qualified, and acting
Temporary Secretary of MIRAMAR PUBLISHING COMPANY, a California corporation, and
that the above and foregoing by-laws were adopted as the by-laws of said
corporation on the 4th day of September, 1973, by the persons appointed in the
Articles Of Incorporation to act as the first Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of
September, 1973.
/s/ Ann J. Graham
-------------------------------------
ANN J. GRAHAM, Temporary Secretary of
MIRAMAR PUBLISHING COMPANY
(Corporate
Seal)
<PAGE>
Exhibit 3.157
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "PRIMEDIA VENTURES, INC." FILED IN THIS OFFICE ON THE
THIRTEENTH DAY OF APRIL, A.D. 1998, AT 4.30 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[SEAL]
[SEAL] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2889214 8100 AUTHENTICATION: 9051806
981160924 DATE: 04-29-98
<PAGE>
CERTIFICATE OF INCORPORATION
OF
PRIMEDIA VENTURES, INC.
The undersigned, in order to form a corporation for the purpose
hereinafter stated, under and pursuant to the provisions of the Delaware General
Corporation Law, hereby certifies that:
FIRST: The name of the Corporation is PRIMEDIA Ventures, Inc.
SECOND: The registered office and registered agent of the Corporation is
The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle
County, Delaware, 19801.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock that the Corporation is
authorized to issue is 1,000 shares of Common Stock, par value $0.01 each.
FIFTH: The name and address of the incorporator is Beverly C. Chell, 745
Fifth Avenue, New York, NY 10151.
SIXTH: The Board of Directors of the Corporation, acting by majority vote,
may alter, amend or repeal the By-Laws of the Corporation.
SEVENTH: Except as otherwise provided by the Delaware General Corporation
Law as the same exists or may hereafter be amended, no director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. Any repeal or
modification of this Article SEVENTH by the stockholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Incorporation on April 2, 1998.
/s/ Beverly C. Chell
-------------------------
Beverly C. Chell
<PAGE>
Exhibit 3.158
PRIMEDIA VENTURES, INC.
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the stockholders of
the Corporation shall be held at such place either within or without the State
of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of stockholders
shall be held, at a date, time and place fixed by the Board of Directors and
stated in the notice of meeting, to elect a Board of Directors and to transact
such other business as may properly come before the meeting. Special meetings of
the stockholders may be called by the President for any purpose and shall be
called by the President or Secretary if directed by the Board of Directors or
requested in writing by the holders of not less than 25% of the capital stock of
the Corporation. Each such stockholder request shall state the purpose of the
proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at least 10 and
not more than 60 days before each meeting of stockholders, written notice of the
time, date and place of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given to each
stockholder.
Section 4. Quorum. At any meeting of stockholders, the holders of record,
present in person or by proxy, of a majority of the Corporations issued and
outstanding capital stock shall constitute a quorum for the transaction of
business, except as otherwise provided by law. In the absence of a quorum, any
officer entitled to preside at or to act as secretary of the meeting shall have
power to adjourn the meeting from time to time until a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all matters
submitted to a meeting of stockholders shall be decided by vote of the holders
of record, present in person or by proxy, of a majority of the Corporation's
issued and outstanding capital stock.
<PAGE>
ARTICLE II
DIRECTORS
Section I. Number. Election and Removal of Directors. The number of
Directors that shall constitute the Board of Directors shall not be less than
one or more than fifteen. The first Board of Directors shall consist of three
Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or the stockholders. The
Directors shall be elected by stockholders at their annual meeting. Vacancies
and newly created directorships resulting from any increase in the number of
Directors may be filled by a majority of the Directors then in office, although
less than a quorum, or by the sole remaining Director or by the stockholders. A
Director may be removed with or without cause by the stockholders.
Section 2. Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as may from time to time be fixed by the Board of
Directors or as may be specified in a notice of meeting.
Section 3. Quorum. One-third of the total number of Director shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until such a quorum is present. Except as otherwise provided by law,
the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a majority
of the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors.
Section 4. Committees. The Board of Directors may, by resolution adopted
by a majority of the whole Board, designate one or more committees, including,
without limitation, an Executive Committee, to have and exercise such power and
authority as the Board of Directors shall specify. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another Director to act at the
meeting in place of any such absent or disqualified member.
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President, a Secretary,
a Treasurer and such other additional officers with such titles as the Board of
Directors shall determine, all of which shall be chosen by and shall serve at
the
<PAGE>
pleasure of the Board of Directors. Such officers shall have the usual powers
and shall perform all the usual duties incident to their respective offices. All
officers shall be subject to the supervision and direction of the Board of
Directors. The authority, duties or responsibilities of any officer of the
Corporation may be suspended by the President with or without cause. Any officer
elected or appointed by the Board of Directors may be removed by the Board of
Directors with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General Corporation Law,
the Corporation shall indemnify any current or former Director or officer of the
Corporation and may, at the discretion of the Board of Directors, indemnify any
current or former employee or agent of the Corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding brought by or in the right of the Corporation or otherwise, to which
he was or is a party by reason of his current or former position with the
Corporation or by reason of the fact that he is or was serving, at the request
of the Corporation, as a director, officer, partner, trustee, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise.
ARTICLE V
GENERAL PROVISIONS
Section I. Notices. Whenever any statute, the Certificate of Incorporation
or these By-Laws require notice to be given to any Director or stockholder, such
notice may be given in writing by mail, addressed to such Director or
stockholder at his address as it appears in the records of the Corporation, with
postage thereon prepaid. Such notice shall be deemed to have been given when it
is deposited in the United States mail. Notice to Directors may also be given by
telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed
by the Board of Directors.
<PAGE>
Exhibit 3.159
[GRAPHIC OMITTED] State
Of
California
OFFICE OF THE SECRETARY OF STATE
================================================================================
CORPORATION DIVISION
I, MARCH FONG EU, Secretary of State of the State of California, hereby
certify:
That the annexed transcript has been compared with the corporate record on
file in this office, of which it purports to be a copy, and that same is full,
true and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great
Seal of the State of California this
JAN 3 1990
----------------------
/s/ March Fong Eu
Secretary of State
[SEAL OF THE STATE OF CALIFORNIA]
================================================================================
<PAGE>
ENDORSED
FILED
in the office of the Secretary of State
of the State of California
DEC 26 1989
MARCH FONG EU, Secretary of State
ARTICLES OF INCORPORATION
I
The name of this corporation is TSECRP, INC.
II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III
The name and address in this State of the corporation's initial agent for
service of process is: Tim Novoselski, 6133 Bristol Parkway, Culver City,
California 90231.
IV
This corporation is authorized to issue only one class of shares of stock;
and the total number of shares which the corporation is authorized to issue is
100,000.
Dated: December 19, 1989
/s/ Kenneth A. Braun
--------------------
KENNETH A. BRAUN
<PAGE>
Exhibit 3.160
BYLAWS
OF
TSECRP, INC.
ARTICLE I
OFFICES
Section 1. PRINCIPAL EXECUTIVE OFFICE. The board of directors shall fix
the location of the principal executive office of the corporation at any place
within or outside the State of California, and is hereby granted full power and
authority to change the principal executive office from one location to another.
If the principal executive office is located outside this state, and the
corporation has one or more business offices in this state, the board of
directors shall fix and designate a principal business office in the State of
California.
Section 2. OTHER OFFICES. The board of directors may at any time establish
branch or subordinate offices at any place or places.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be held at
any place within or outside the State of California designated by the board of
directors. In the absence of any such designation, shareholders' meeting shall
be held at the principal executive office of the corporation.
Section 2. ANNUAL MEETING. The annual meeting of shareholders shall be
held on the third Thursday or such other date or such other time as may be
designated by the board of directors. However, if this day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day. At such meeting, directors shall be elected, and
any other proper business may be transacted.
Section 3. SPECIAL MEETING. A special meeting of the shareholders may be
called at any time by the board of directors, by the chairman of the board, by
the president, or by one or more shareholders entitled to cast not less than ten
percent (10%) of the votes at such meeting.
If a special meeting is called by any person or persons other than
the board of directors, the request shall be in writing,
<PAGE>
specifying the time of such meeting and the general nature of the business
proposed to be transacted, and shall be delivered personally or sent by
registered mail or by telegraphic or other facsimile transmissions to the
chairman of the board, the president, any vice president, or the secretary of
the corporation. The officer receiving the request shall cause notice to be
promptly given to the shareholders entitled to vote, in accordance with the
provisions of Sections 4 and 5 of this Article II, that a meeting will be held
at the time requested by the person or persons calling the meeting, not less
than thirty-five (35) nor more than sixty (60) days after the receipt of the
request. If the notice is not given within twenty (20) days after receipt of the
request, the person or persons requesting the meeting may give the notice.
Nothing contained in this paragraph of this Section 3 shall be construed as
limiting, fixing or affecting the time when a meeting of shareholders called by
action of the board of directors may be held.
Section 4. NOTICE OF SHAREHOLDERS' MEETINGS. All notices of meeting of
shareholders shall be sent or otherwise given in accordance with Section 5 of
this Article II not less than ten (10) nor more than sixty (60) days before the
date of the meeting. The notice shall specify the place, date and hour of the
meeting and (i) in the case of a special meeting, the general nature of the
business to be transacted, and no other business may be transacted; or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the
shareholders, but subject to the provisions of applicable law, any proper matter
may be presented at the meeting for such action. The notice of any meeting at
which directors are to be elected shall include the name of any nominee or
nominees whom, at the time of the notice, management intends to present for
election.
If action is proposed to be taken at any meeting for approval of (i)
a contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California; (ii)
an amendment of the articles of incorporation, pursuant to Section 902 of that
Code; (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code; (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code; or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any
meeting of shareholders shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
shareholder at the address of that shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice. If no such address appears on the corporation's books or is given,
notice shall be deemed to have been given if
2
<PAGE>
sent to that shareholder by first-class mail or telegraphic or other written
communication to the corporation's principal executive office, or if published
at least once in a newspaper of general circulation in the county where that
office is located. Notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other means
of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, all future notices or reports shall be deemed to have been duly
given without further mailing if these shall be available to the shareholder on
written demand of the shareholder at the principal executive office of the
corporation for a period of one year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of
any shareholders' meeting shall be executed by the secretary, assistant
secretary, or any transfer agent of the corporation giving the notice, and shall
be filed and maintained in the minute book of the corporation.
Section 6. QUORUM. The presence in person or by proxy of the holders of a
majority of the shares entitled to vote at any meeting of shareholders shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING, NOTICE. Any shareholders' meeting, annual or
special, whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the shares represented at that meeting, either in
person or by proxy, but in the absence of a quorum, no other business may be
transacted at that meeting, except as provided in Section 6 of this Article II.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at a meeting at which the
adjournment is taken, unless a new record date for the adjourned meeting is
fixed or unless the adjournment is for more than forty-five (45) days from the
date set for the original meeting, in which case the board of directors shall
set a new record date. Notice of any such adjourned meeting shall be given to
each shareholder of record entitled to vote at the adjourned meeting in
accordance with the provisions of Sections 4
3
<PAGE>
and 5 of this Article II. At any adjourned meeting the corporation may transact
any business which might have been transacted at the original meeting.
Section 8. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 11
of this Article II, subject to the provisions of Section 702 to 704, inclusive,
of the Corporations Code of California (relating to voting shares held by a
fiduciary, in the name of a corporation, or in joint ownership). The
shareholder's vote may be by voice vote or by ballot; provided, however, that
any election for directors must be by ballot if demanded by any shareholder
before the voting has begun. On any matter other than elections of directors,
any shareholder may vote part of the shares in favor of the proposal and refrain
from voting the remaining shares or vote them against the proposal, but, if the
shareholder fails to specify the number of shares which the shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares that the shareholder is entitled to
vote. If a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless the vote of
a greater number or voting by classes is required by California General
Corporation Law or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to cumulate votes (i.e., cast for any one or more
candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or distribute the
shareholder's votes in the same principle amount among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of shareholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting, or an approval of the
minutes. Neither the business to be transacted at nor the purpose of any regular
or special meeting of
4
<PAGE>
shareholders need be specified in any written waiver of notice, except as
provided in Section 601(f) of the California General Corporation Law. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver
of notice of that meeting, except when the person objects, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened, and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters not included in
the notice of the meeting if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any
action which may be taken at any annual or special meeting of shareholders may
be taken without a meeting and without prior notice, if a consent in writing,
setting forth the action so taken, is signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take that action at a meeting at which all shares entitled to
vote on that action were present and voted. In the case of election of
directors, such a consent shall be effective only if signed by the holders of
all outstanding shares entitled to vote for the election of directors; provided,
however, that a director may be elected at any time to fill a vacancy on the
board of directors that has not been filled by the directors, by the written
consent of the holders of a majority of the outstanding shares entitled to vote
for the election of directors. All such consents shall be filed with the
secretary of the corporation and shall be maintained in the corporate records.
Any shareholder giving a written consent, or the shareholder's proxy holders, or
a transferee of the shares or a personal representative of the shareholder of
their respective proxy holders, may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary shall give prompt
notice of the corporate action approved by the shareholders without a meeting.
This notice shall be given in the manner specified in Section 5 of this Article
II. In the case of approval of (i) contracts or transactions in which a director
has a direct or indirect financial interest, pursuant to Section 310 of the
Corporations Code of California; (ii) indemnification of agents of the
corporation, pursuant to Section 317 of that Code; (iii) a reorganization of the
corporation, pursuant to Section 1201 of that Code; and (iv) a distribution in
dissolution other than in accordance with the rights of outstanding preferred
shares, pursuant to Section 2007 of that Code, the notice shall be
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given at least ten (10) days before the consummation of any action authorized by
that approval.
Section 11. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING, AND GIVING
CONSENTS. For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) days not less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only shareholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the California General
Corporation Law.
If the board of directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close of business on
the business day next preceding the day on which notice is given or, if notice
is waived, at the close of business on the business day next preceding the day
on which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, (i) when no prior
action by the board has been taken, shall be the day on which the first written
consent is given; or (ii) when the prior action of the board has been taken,
shall be at the close of business on the day on which the board adopts the
resolution relating to that action, or the sixtieth (60th) day before the date
of such other action, whichever is later.
Section 12. PROXIES. Every person entitled to vote for directors or on any
other matter shall have the right to do so either in person or by one or more
agents authorized by a written proxy signed by the person and filed with the
secretary of the corporation. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission, or otherwise) by the shareholder or the
shareholder's attorney in fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation stating that the proxy is revoked, or by a
subsequent proxy executed by, or attendance at the meeting and voting in person
by, the person executing the proxy; or (ii) written notice of the death or
incapacity of the maker of that proxy is received by the corporation before the
vote pursuant to that proxy is counted; provided, however, that no proxy shall
be valid after the expiration of eleven (11) months from the date of the proxy,
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unless otherwise provided in the proxy. The revocability of a proxy that states
on its face that it is irrevocable shall be governed by the provisions of
Sections 702(e) and 705(f) of the Corporations Code of California.
Section 13. INSPECTORS OF ELECTION. Before any meeting of shareholders,
the board of directors may appoint any persons other than nominees for office to
act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the chairman of the meeting may, and on
the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall be either
one (1) or three (3). If inspectors are appointed at a meeting on the request of
one or more shareholders or proxies, the holders of a majority of shares or
their proxies present at the meeting shall determine whether one (1) or three
(3) inspectors are to be appointed. If any person appointed as inspector fails
to appear or fails or refuses to act, the chairman of the meeting may, and upon
the request of any shareholder or a shareholder's proxy shall, appoint a person
to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of a quorum, and
the authenticity, validity, and effect of proxies;
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to the provisions of the California General
Corporation Law and any limitations in the articles of incorporation and these
bylaws relating to action required to be approved by the shareholders or by the
outstanding shares, the business and affairs of the corporation shall be
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managed and all corporate powers shall be exercised by or under the direction of
the board of directors.
Without prejudice to these general powers, and subject to the same
limitations, the directors shall have the power to:
(a) Select and remove all officers, agents, and employees of the
corporation; prescribe any powers and duties for them that are consistent with
law, with the articles of incorporation, and with these bylaws; and fix their
compensation.
(b) Change the principal executive office or the principal business
office in the State of California from one location to another; cause the
corporation to be qualified to do business in any other state, territory,
dependency, or country and conduct business within or without the State of
California; and designate any place within or without the State of California
for the holding of any shareholders' meeting, or meetings, including annual
meetings.
(c) Adopt, make and use a corporate seal; prescribe the forms of
certificates of stocks; and alter the form of the seal and certificates.
(d) Authorize the issuance of shares of stock of the corporation on
any lawful terms, in consideration of money paid, labor done, services actually
rendered, debts or securities cancelled, or tangible or intangible property
actually received.
(e) Borrow money and incur indebtedness on behalf of the
corporation, and cause to be executed and delivered for the corporation's
purposes, in the corporate name, promissory notes, bonds, debentures, deeds of
trust, mortgages, pledges, hypothecations, and other evidences of debt and
securities.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of
directors shall be four (4) until changed by a duly adopted amendment to the
articles of incorporation or by an amendment to this bylaw adopted by the vote
of written consent of holders of a majority of the outstanding shares entitled
to vote; provided, however, that an amendment reducing the number of directors
to a number less than five (5) cannot be adopted if the votes cast against its
adoption at a meeting, or the shares not consenting in the case of action by
written consent, are equal to more than sixteen and two-thirds percent (16-2/3%)
of the outstanding shares entitled to vote.
Section 3. ELECTION AND TERM OF OFFICE. The directors shall be elected at
each annual meeting of shareholders but if any such annual meeting is not held
or the directors are not elected thereat, the directors may be elected at any
special meeting of shareholders held for that purpose. Each director shall hold
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office until the next annual meeting and until a successor has been elected and
qualified.
Section 4. VACANCIES. Vacancies in the board of directors may be filled by
a majority of the remaining directors, though less than a quorum, or by a sole
remaining director, except that a vacancy created by the removal of a director
by the vote or written consent of the shareholders or by court order may be
filled only by the vote of a majority of the shares entitled to vote represented
at a duly held meeting at which a quorum is present, or by the written consent
of holders of a majority of the outstanding shares entitled to vote. Each
director so elected shall hold office until the next annual meeting of the
shareholders and until a successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist in the event of the death, resignation, or removal of any director, or if
the board of directors by resolution declares vacant the office of a director
who has been declared of unsound mind by an order of court or convicted of a
felony, or if the authorized number of directors is increased, or if the
shareholders fail, at any meeting of shareholders at which any director or
directors are elected, to elect the number of directors to be voted for at that
meeting.
The shareholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors, but any such election
by written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary, or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
Section 5. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. Regular meetings
of the board of directors may be held at any place within or outside the State
of California that has been designated from time to time by resolution of the
board. In the absence of such a designation, regular meetings shall be held at
the principal executive office of the corporation. Special meetings of the board
shall be held at any place within or outside the State of California that has
been designated in the notice of the meeting or, if not stated in the notice or
there is not notice, at the principal executive office of the corporation. Any
meeting, regular or special, may be held by conference telephone or similar
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communication equipment, so long as all directors participating in the meeting
can hear one another, and all such directors shall be deemed to be present in
person at the meeting.
Section 6. ANNUAL MEETING. Immediately following each annual meeting of
shareholders, the board of directors shall hold a regular meeting for the
purpose of organization, any desired election of officers, and the transactions
of other business. Notice of this meeting shall not be required.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board of
directors shall be held without call at such time as shall from time to time be
fixed by the board of directors. Such regular meetings may be held without
notice.
Section 8. SPECIAL MEETINGS. Special meetings of the board of directors
for any purpose or purposes may be called at any time by the chairman of the
board or the president or any vice president or the secretary or any two
directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In case the notice is mailed,
it shall be deposited in the United States mail at least four (4) days before
the time of the holding of the meeting. In case the notice is delivered
personally, or by telephone or telegram, it shall be delivered personally or by
telephone or to the telegraph company at least forty-eight (48) hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.
Section 9. QUORUM. A majority of the authorized number of directors shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 11 of this Article III. Every act or decision done or made
by a majority of the directors present at a meeting duly held at which a quorum
is present shall be regarded as the act of the board of directors, subject to
the provisions of Section 310 of the Corporations Code of California (as to
approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of that Code (as to
appointment of committees), Section 317(e) of that Code (as to indemnification
of directors). A meeting, at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
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Section 10. WAIVER OF NOTICE. The transactions of any meeting of the board
of directors, however called and noticed or whenever held, shall be as valid as
though had at a meeting duly held after regular call and notice if a quorum is
present and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice, a consent to holding the meeting or an
approval of the minutes. The waiver of notice or consent need not specify the
purpose of the meeting. All such waivers, consents, and approvals shall be filed
with the corporate records or made a part of the minutes of the meeting. Notice
of a meeting shall also be deemed given to any director who attends the meeting
without protesting before or at its commencement, the lack of notice to that
director.
Section 11. ADJOURNMENT. A majority of the directors present, whether or
not constituting a quorum, may adjourn any meeting to another time and place.
Section 12. NOTICE OF ADJOURNMENT. Notice of the time and place of holding
an adjourned meeting need not be given, unless the meeting is adjourned for more
than twenty-four (24) hours which case notice of the time and place shall be
given before the time of the adjourned meeting, in the manner specified in
Section 8 of this Article III, to the directors who were not present at the time
of the adjournment.
Section 13. ACTION WITHOUT MEETING. Any action required or permitted to be
taken by the board of directors may be taken without a meeting, if all members
of the board shall individually or collectively consent in writing to that
action. Such action by written consent shall have the same force and effect as a
unanimous vote of the board of directors. Such written consent or consents shall
be filed with the minutes of the proceedings of the board.
Section 14. FEES AND COMPENSATION OF DIRECTORS. Directors and members of
committees may receive such compensation, if any, for their services, and such
reimbursement of expenses, as may be fixed or determined by resolution of the
board of directors. This Section 14 shall not be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation for those services.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF DIRECTORS. The board of directors may, by
resolution adopted by a majority of the authorized number of directors,
designate one or more committees, each consisting of two or more directors, to
serve at the pleasure of the board. The
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board may designate one or more directors as alternate members of any committee,
who may replace any absent member at any meeting of the committee. Any
committee, to the extent provided in the resolution of the board, shall have all
the authority of the board, except with respect to:
(a) The approval of any action which, under the General Corporation
Law of California, also requires shareholders' approval or approval of the
outstanding shares;
(b) The filling of vacancies on the board of directors or in any
committee;
(c) The fixing of compensation of the directors for serving on the
board or on any committee;
(d) The amendment or repeal of bylaws or the adoption of new bylaws;
(e) The amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or repealable;
(f) A distribution to the shareholders of the corporation, except at
a rate or in a periodic amount or within a price range determined by the board
of directors; or
(g) The appointment of any other committees of the board of
directors or the members of these committee.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by, and held and taken in accordance with, the
provisions of Article III of these bylaws, Sections 5 (place of meetings), 7
(regular meetings), 8 (special meetings and notice), 9 (quorum), 10 (waiver of
notice), 11 (adjournment), 12 (notice of adjournment), and 13 (action without
meeting) , with such changes in the context of those bylaws as are necessary to
substitute the committee and its members for the board of directors and its
members, except that the time of regular meetings of committees may be
determined either by resolution of the board of directors or by resolution of
the committee; special meetings of committees may also be called by resolution
of the board of directors; and notice of special meetings of committees shall
also be given to all alternate members, who shall have the right to attend all
meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
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ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall be a president,
a secretary, and a chief financial officer. The corporation may also have, at
the discretion of the board of directors, a chairman of the board, one of more
vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with
provisions of Section 3 of this Article V. Any number of officers may be held by
the same person.
Section 2. ELECTION OF OFFICERS. The officers of the corporation, except
such officers as may be appointed in accordance with the provisions of Section 3
or Section 5 of this Article V, shall be chosen by the board of directors, and
each shall serve at the pleasure of the board, subject to the rights, if any, of
an officer under any contract employment.
Section 3. SUBORDINATE OFFICERS. The board of directors may appoint, and
may empower the president to appoint, such other officers as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in the bylaws or as the
board of directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be removed,
either with or without cause, by the board of directors, at any regular or
special meeting of the board, or, except in case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointments to that office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if such an
officer be elected, if present, shall preside at meetings of the board of
directors and exercise and perform such other powers and duties as may be from
time to time assigned to him by
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the board of directors or prescribed by the bylaws. If there is no president,
the chairman of the board shall in addition be the chief executive officer of
the corporation and shall have the powers and duties prescribed in Section 7 of
this Article V.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may
be given by the board of directors to the chairman of the board, if there be
such an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction, and control of the business and the officers of
the corporation. He shall preside at all meetings of the shareholders and, in
the absence of the chairman of the board, or if there be none, at all meetings
of the board of directors. He shall have the general powers and duties of
management usually vested in the office of the president of a corporation, and
shall have such other powers and duties as may be prescribed by the board of
directors or the bylaws.
Section 8. VICE PRESIDENTS. In the absence or disability of the president,
the vice presidents, if any, in order of their rank as fixed by the board of
directors, or, if not ranked, a vice president designated by the board of
directors, shall perform all the duties of the president, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors or the bylaws, and the president, or the chairman of the
board.
Section 9. SECRETARY. The secretary shall keep or cause to be kept, at the
principal executive office or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and shareholders, with the time and place of holding, whether
regular or special, and, if special, how authorized, the notice given, the names
of those present at directors' meetings or committee meetings, the number of
shares present or represented at shareholders' meetings, and the proceedings.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number and classes of shares held by each, the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of the shareholders and of the board of directors required by the
bylaws or by law to be given, and he shall keep the seal of the corporation if
one be adopted, in safe custody, and
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shall have such other powers and perform such other duties as may be prescribed
by the board of directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER. The chief financial officer shall
keep and maintain, or cause to be kept and maintained, adequate and correct
books and records of accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings, and shares. The books
of account shall at all reasonable times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the corporation as may be ordered by the
board of directors, shall render to the president and directors, whenever they
request it, an account of all of his transactions as chief financial officer and
of the financial condition of the corporation, and shall have other powers and
perform such other duties as may be prescribed by the board of directors or the
bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER AGENTS
The corporation may at its option, to the maximum extent permitted by the
California General Corporation Law, indemnify each of its agents against
expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact that such person is or was an agent of the corporation. For the purposes of
this Section, an "agent" of the corporation includes a person who is or was a
Director, officer, employee or other agent of the corporation, or is or was
serving at the request of the corporation as a Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or was a Director, officer, employee or agent of a corporation which
was a predecessor corporation of the corporation or of any other enterprise at
the request of such predecessor corporation.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF REGISTER. The corporation shall
keep at its principal executive office, or at the office of its transfer agent
or registrar, if either be appointed and as determined by resolution of the
board of
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directors, a record of its shareholders, giving the names and addresses of all
shareholders and the number and class of shares held by each shareholder.
A shareholder or shareholders of the corporation holding at least
five percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (i) inspect and copy the records of shareholders' names and
addresses and shareholdings during usual business hours on five days prior
written demand on the corporation; and (ii) obtain from the transfer agent of
the corporation, on written demand and on the tender of such transfer agent's
usual charges for such list, a list of the shareholders' names and addresses,
who are entitled to vote for the election of directors, and their shareholdings,
as of the most recent record date for which that list has been compiled or as of
a date specified by the shareholder after the date of demand. This list shall be
made available to any such shareholder by the transfer agent on or before the
later of five (5) days after the demand is received or the date specified in the
demand as the date as of which the list is to be compiled. The record of
shareholders shall also be open to inspection on the written demand of any
shareholder or holder of a voting trust certificate, at any time during usual
business hours, for a purpose reasonably related to the holder's interest as a
shareholder or as the holder of a voting trust certificate. Any inspection and
copying under this Section 1 may be made in person or by an agent or attorney of
the shareholder or holder of a voting trust certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall
keep at its principal executive office, or if its principal executive office is
not in the State of California, at its principal business office in this state,
the original or a copy of the bylaws as amended to date, which shall be open to
inspection by the shareholders at all reasonable times during office hours. If
the principal executive office of the corporation is outside the State of
California and the corporation has no principal business office in this state,
the Secretary shall, upon the written request of any shareholder, furnish to
that shareholder a copy of the bylaws as amended to date.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. The
accounting books and records and minutes of proceedings of the shareholders and
the board of directors and any committee or committees of the board of directors
shall be kept at such place or places designated by the board of directors, or,
in the absence of such designation, at the principal executive office of the
corporation. The minutes shall be kept in written form and the accounting books
and records shall be kept either in written form or in any other form capable of
being converted into written form. The minutes and accounting books and records
shall be open to inspection upon the written demand of any shareholder or holder
of a voting trust certificate, at any reasonable time during usual business
hours, for a purpose reasonably related to the holder's
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interests as a shareholder or as the holder of a voting trust certificate. The
inspection may be made in person or by an agent or attorney, and shall include
the right to copy and make extracts. These rights of inspection shall extend to
the records of each subsidiary corporation of the corporation.
Section 4. INSPECTION BY DIRECTORS. Every director shall have the absolute
right at any reasonable time to inspect all books, records, and documents of
every kind and the physical properties of the corporation and each of its
subsidiary corporations. This inspection by a director may be made in person or
by an agent or attorney and the right of inspection includes the right to copy
and make extracts of documents.
Section 5. ANNUAL REPORT TO SHAREHOLDERS. The annual report to
shareholders referred to in Section 1501 of the California General Corporation
Law is expressly dispensed with, but nothing herein shall be interpreted as
prohibiting the board of directors from issuing annual or other periodic reports
to the shareholders of the corporation as they consider appropriate.
Section 6. FINANCIAL STATEMENTS. A copy of any annual financial statement
and any income statement of the corporation for each quarterly period of each
fiscal year, and any accompanying balance sheet of the corporation as of the end
of each such period, that has been prepared by the corporation shall be kept on
file in the principal executive office of the corporation for twelve (12) months
and each such statement shall be exhibited at all reasonable times to any
shareholder demanding an examination of any such statement or a copy shall be
mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%)
of the outstanding shares of any class of the stock of the corporation makes a
written request to the corporation for an income statement of the corporation
for the three-month, six- month or nine-month period of the then current fiscal
year ended more than thirty (30) days before the date of the request, and a
balance sheet of the corporation as of the end of that period, the chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, this report shall likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.
The corporation shall also, on the written request of any
shareholder, mail to the shareholder a copy of the last annual, semi-annual, or
quarterly income statement which it has prepared, and a balance sheet as of the
end of that period.
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The quarterly income statements and balance sheets referred to in
this section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION. The Corporation shall,
within the ninety days after filing its original articles, and every year
thereafter during the calendar month of original filing or within the five
calendar months preceding the month of original filing, file on the prescribed
form a statement setting forth the presently authorized number of directors of
the corporation, the names and complete business or residence addresses of all
the incumbent directors, the names and complete business or residence addresses
of the chief executive officer, secretary, and chief financial officer, the
street address of its principal executive office or principal business office in
this state, and the general type of business constituting the principal business
activity of the corporation, together with a designation of the agent of the
corporation for the purpose of service of process, all in compliance with
Section 1502 of the Corporations Code of California.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For
purposes of determining the shareholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action (other than action by
shareholders by written consent without a meeting), the board of directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action, and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the board of directors does not so fix a record date, the record
date for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All checks, drafts,
or other orders for payment of money, notes, or other evidences of indebtedness,
issued in the name of or payable to the corporation, shall be signed or endorsed
by such person or
18
<PAGE>
persons and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
Section 3. CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED. The board of
directors, except as otherwise provided in these bylaws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation, and this authority
may be general or confined to specific instances; and, unless so authorized or
ratified by the board of directors or within the agency power of an officer, no
officer, agent, or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
Section 4. CERTIFICATES FOR SHARES. A certificate or certificates for
shares of the capital stock of the corporation shall be issued to each
shareholder when any of these shares are fully paid, and the board of directors
may authorize the issuance of certificates or shares as partly paid provided
that these certificates shall state the amount of the consideration to be paid
for them and the amount paid. All certificates shall be signed in the name of
the corporation by the chairman of the board or vice chairman of the board or
the president or vice president and by the secretary or an assistant secretary,
certifying the number of shares and the class or series of shares owned by the
shareholder. Any or all of the signatures on the certificate may be facsimile.
Section 5. LOST CERTIFICATES. Except as provided in this Section 5, no new
certificates for shares shall be issued to replace an old certificate unless the
latter is surrendered to the corporation and cancelled at the same time. The
board of directors may, in case any share certificate or certificate for any
other security is lost, stolen, or destroyed, authorize the issuance of a
replacement certificate on such terms and conditions as the board may require,
including provision for indemnification of the corporation secured by a bond or
other adequate security sufficient to protect the corporation against any claim
that may be made against it, including any expense or liability, on account of
the alleged loss, theft, or destruction of the certificate or the issuance of
the replacement certificate.
Section 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman of
the board, the president, or any vice president, or any other person authorized
by resolution of the board of directors or by any of the foregoing designated
officers, is authorized to vote on behalf of the corporation, foreign or
domestic, standing in the name of the corporation. The authority granted to
these officers to vote or represent on behalf of the corporation any and all
shares held by the corporation in any other corporation or corporations may be
exercised by any of these officers in person or by any person authorized to do
so by a proxy duly executed by these officers.
19
<PAGE>
Section 7. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in the
California General Corporation Law shall govern the construction of these
bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
"person" included both a corporation and a natural person.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or these
bylaws may be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote; provided, however, that if
the articles of incorporation of the corporation set forth the number of
authorized directors of the corporation, the authorized number of directors may
be changed only by an amendment of the articles of incorporation.
Section 2. AMENDMENT BY DIRECTORS. Subject to the rights of the
shareholders as provided in Section 1 of this Article IX, bylaws, other than a
bylaw or an amendment of a bylaw changing the authorized number of directors,
may be adopted, amended, or repealed by the board of directors.
20
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
(1) That I am the duly elected and acting secretary of TSECRP, Inc., a
California corporation; and
(2) That the foregoing Bylaws of said corporation were adopted by Action
of Incorporator of said corporation on January 2, 1990.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed seal of the
corporation this 29th day of January, 1990, at Los Angeles, California.
/s/ Denise Novoselski
----------------------------
DENISE NOVOSELSKI
21
<PAGE>
Exhibit 10.3
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
among
PRIMEDIA INC.
(f/k/a K-III Communications Corporation),
CANADIAN SAILINGS INC.,
VARIOUS LENDING INSTITUTIONS,
THE BANK OF NEW YORK
and
BANKERS TRUST COMPANY,
as Co-Syndication Agents,
THE BANK OF NOVA SCOTIA,
as Documentation Agent
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
----------------------------------------------
Dated as of May 24, 1996
and amended and restated as of March 11, 1999
----------------------------------------------
================================================================================
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit.........................................2
1.01 Commitments.....................................................2
1.02 Minimum Borrowing Amounts, etc..................................6
1.03 Notice of Borrowing.............................................6
1.04 Disbursement of Funds...........................................7
1.05 Register........................................................8
1.06 Conversions.....................................................8
1.07 Pro Rata Borrowings.............................................9
1.08 Interest........................................................9
1.09 Interest Periods...............................................10
1.10 Increased Costs, Illegality, etc...............................11
1.11 Compensation...................................................14
1.12 Changeof Lending Office........................................14
1.13 Tranche B Commitments..........................................15
SECTION 2. Letters of Credit.................................................15
2.01 Letters of Credit..............................................15
2.02 Minimum Stated Amount..........................................16
2.03 Letter of Credit Requests; Notices of Issuance.................16
2.04 Agreement to Repay Letter of Credit Drawings...................16
2.05 Letter of Credit Participations................................17
2.06 Increased Costs................................................19
SECTION 3. Fees; Commitments.................................................20
3.01 Fees...........................................................20
3.02 Voluntary Reduction of Commitments.............................20
3.03 Mandatory Reduction of Commitments, etc........................21
SECTION 4. Payments..........................................................23
4.01 Voluntary Prepayments..........................................23
4.02 Mandatory Repayments...........................................24
4.03 Method and Place of Payment....................................27
4.04 Net Payments...................................................27
SECTION 5. Conditions Precedent..............................................28
5.01 Conditions Precedent to the Restatement Effective Date.........28
5.02 Conditions Precedent to each Credit Event......................30
(a) No Default; Representations and Warranties.............30
(b) Notice of Borrowing; Letter of Credit Request..........31
SECTION 6. Representations, Warranties and Agreements........................31
6.01 Corporate Status...............................................31
6.02 Corporate Power and Authority..................................31
6.03 No Violation...................................................32
6.04 Litigation.....................................................32
6.05 Use of Proceeds; Margin Regulations............................32
6.06 Governmental Approvals.........................................33
6.07 Investment Company Act.........................................33
6.08 Public Utility Holding Company Act.............................33
6.09 True and Complete Disclosure...................................33
6.10 Financial Statements; Financial Condition......................34
6.11 Tax Returns and Payments.......................................34
6.12 Compliance with ERISA..........................................34
6.13 Subsidiaries...................................................35
6.14 Intellectual Property..........................................35
6.15 Compliance with Statutes, etc..................................36
<PAGE>
SECTION 7. Affirmative Covenants.............................................36
7.01 Information Covenants..........................................36
7.02 Books, Records and Inspections.................................38
7.03 Payment of Taxes...............................................38
7.04 Corporate Franchises...........................................38
7.05 Compliance with Statutes, etc..................................39
7.06 ERISA..........................................................39
7.07 End of Fiscal Years; Fiscal Quarters...........................39
7.08 Use of Proceeds................................................39
7.09 Ownership of Subsidiaries......................................40
7.10 Maintenance of Corporate Separateness..........................40
7.11 Canadian Borrower Capital Structure............................40
SECTION 8. Negative Covenants................................................40
8.01 Changes in Business............................................40
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc.........41
8.03 Liens..........................................................43
8.04 Indebtedness...................................................45
8.05 Advances, Investments and Loans................................47
8.06 Contingent Obligations.........................................48
8.07 Dividends, etc.................................................49
8.08 Transactions with Affiliates...................................51
8.09 Fixed Charge Coverage Ratio....................................52
8.10 Interest Coverage Ratio........................................52
8.11 Leverage Ratio.................................................52
8.13 Modifications of Certain Agreements, etc.......................53
8.14 Limitation on the Creation of Subsidiaries; Redesignation
of Partially-Owned Restricted Subsidiaries..................54
8.15 Limitation on Payments Under the Non-Compete Notes.............55
SECTION 9. Events of Default.................................................55
9.01 Payments.......................................................55
9.02 Representations, etc...........................................55
9.03 Covenants......................................................55
9.04 Default Under Other Agreements.................................55
9.05 Bankruptcy, etc................................................56
9.06 ERISA..........................................................56
9.07 Guaranty.......................................................57
9.08 Judgments......................................................57
9.09 Ownership......................................................57
SECTION 10. Definitions......................................................58
SECTION 11. The Administrative Agent.........................................90
11.02 Delegation of Duties..........................................90
11.03 Exculpatory Provisions........................................90
11.04 Reliance by Administrative Agent..............................91
11.05 Notice of Default.............................................91
11.06 Non-Reliance on Administrative Agent and Other Banks..........91
11.07 Indemnification...............................................92
11.08 Administrative Agent in Its Individual Capacity...............93
11.10 Resignation of the Administrative Agent; Successor Agent......93
SECTION 12. Miscellaneous....................................................93
12.01 Payment of Expenses, etc......................................93
12.02 Right of Setoff...............................................94
12.03 Notices.......................................................94
12.04 Benefit of Agreement..........................................95
12.05 No Waiver; Remedies Cumulative................................97
12.06 Payments Pro Rata.............................................97
12.08 Governing Law; Submission to Jurisdiction; Venue..............98
12.09 Counterparts..................................................99
12.10 Effectiveness.................................................99
12.11 Headings Descriptive..........................................99
12.12 Amendment or Waiver...........................................99
12.13 Survival.....................................................100
12.14 Domicile of Loans............................................100
12.15 Confidentiality..............................................100
<PAGE>
ANNEX I List of Banks
ANNEX II Bank Addresses
ANNEX III Subsidiaries
ANNEX IV Liens
ANNEX V Existing Debt/Existing Contingent Obligations
ANNEX VI Existing Preferred Stock
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B -- Form of Tranche B Assumption Agreement
EXHIBIT C-1 -- Form of Opinion of Simpson, Thacher & Bartlett
EXHIBIT C-2 -- Form of Opinion of Beverly C. Chell, Esq.
EXHIBIT C-3 -- Form of Opinion of White & Case LLP
EXHIBIT D -- Form of Officer's Certificate
EXHIBIT E-1 -- Form of Amended and Restated Subsidiary Guaranty
EXHIBIT E-2 -- Form of Amended and Restated Company Guaranty
EXHIBIT F -- Form of Amended and Restated Contribution Agreement
EXHIBIT G -- Form of Assignment and Assumption Agreement
EXHIBIT H -- Form of Subsidiary Assumption Agreement
<PAGE>
CREDIT AGREEMENT, dated as of May 24, 1996 and amended and
restated as of March 11, 1999, among PRIMEDIA INC., a Delaware corporation
(f/k/a K-III Communications Corporation) (the "Company"), CANADIAN SAILINGS
INC., a Canada corporation (the "Canadian Borrower"), the lending institutions
listed from time to time on Annex I hereto (each a "Bank" and, collectively, the
"Banks"), THE BANK OF NOVA SCOTIA, as the Canadian Lender, THE BANK OF NEW YORK
and BANKERS TRUST COMPANY, as Co-Syndication Agents, THE BANK OF NOVA SCOTIA, as
Documentation Agent and THE CHASE MANHATTAN BANK, as Administrative Agent (the
"Administrative Agent"). Unless otherwise defined herein, all capitalized terms
used herein and defined in Section 10 are used herein as so defined.
W I T N E S S E T H:
WHEREAS, the Company, the Canadian Borrower, the Banks, the
Canadian Lender, the Co-Syndication Agents, the Documentation Agent and the
Administrative Agent are parties to a Credit Agreement, dated as of May 24, 1996
(as the same may have been amended, modified and supplemented to but excluding
the Restatement Effective Date, the "Original Credit Agreement"); and
WHEREAS, subject to and upon the terms and conditions herein
set forth, the parties hereto wish to amend and restate the Original Credit
Agreement in the form of this Agreement;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitments. (a) Subject to and upon the terms and
conditions set forth herein, each Bank with a Term Loan Commitment severally
agrees to make, on the Initial Borrowing Date, a term loan or term loans (each a
"Term Loan" and, collectively, the "Term Loans") to the Company, which Term
Loans (i) shall be made pursuant to a single drawing, (ii) shall, at the option
of the Company, be Base Rate Loans or Eurodollar Loans, provided that all Term
Loans made as part of the same Borrowing shall, unless otherwise specifically
provided herein, consist of Term Loans of the same Type, (iii) shall equal for
each Bank, in initial aggregate principal amount, that amount which equals the
Term Loan Commitment of such Bank on the Initial Borrowing Date (before giving
effect to the termination thereof on such date pursuant to Section 3.03(d)).
Once repaid, Term Loans incurred hereunder may not be reborrowed.
(b) Subject to and upon the terms and conditions herein set
forth, each Bank with a Tranche A Revolving Loan Commitment severally agrees at
any time and from time to time on and after the Initial Borrowing Date and prior
to the Original Final Maturity Date, to make a revolving loan or revolving loans
(each a "Tranche A Revolving Loan" and, collectively, the "Tranche A Revolving
Loans") to the Company, which Tranche A Revolving Loans (i) shall,
<PAGE>
at the option of the Company, be Base Rate Loans or Eurodollar Loans, provided
that all Tranche A Revolving Loans made as part of the same Borrowing shall,
unless otherwise specifically provided herein, consist of Tranche A Revolving
Loans of the same Type, (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed for any Bank at any time outstanding
that aggregate principal amount which, when combined with such Bank's Adjusted
Percentage, if any, of the sum of (x) the Letter of Credit Outstandings at such
time, (y) the outstanding principal amount of Swingline Loans at such time plus
(z) the Dollar Equivalent of the outstanding principal amount of Canadian Dollar
Loans at such time, equals (1) if such Bank is a Non-Defaulting Bank, the
Adjusted Tranche A Commitment of such Bank at such time and (2) if such Bank is
a Defaulting Bank, the Tranche A Revolving Loan Commitment of such Bank at such
time and (iv) shall not exceed in aggregate principal amount at any time
outstanding, when combined with the aggregate principal amount of all Swingline
Loans then outstanding, the Dollar Equivalent of the aggregate principal amount
of Canadian Dollar Loans then outstanding and the aggregate amount of all Letter
of Credit Outstandings at such time, an amount equal to the Total Tranche A
Revolving Loan Commitment at such time.
(c) Subject to and upon the terms and conditions herein set
forth, each Bank with a Tranche B Revolving Loan Commitment severally agrees at
any time and from time to time on and after the Tranche B Assumption Date with
respect to such Bank and prior to the Original Final Maturity Date, to make a
revolving loan or revolving loans (each a "Tranche B Revolving Loan" and
together with the Tranche A Revolving Loans, the "Revolving Loans") to the
Company, which Tranche B Revolving Loans (i) shall, at the option of the
Company, be Base Rate Loans or Eurodollar Loans, provided that all Tranche B
Revolving Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Tranche B Revolving Loans of the same
Type, (ii) may be repaid and reborrowed in accordance with the provisions
hereof, (iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which equals the Tranche B Revolving Loan Commitment
of such Bank at such time.
(d) Subject to and upon the terms and conditions herein set
forth, Chase in its individual capacity agrees to make, at any time and from
time to time on and after the Initial Borrowing Date and prior to the Swingline
Expiry Date, a revolving loan or revolving loans (each a "Swingline Loan" and,
collectively, the "Swingline Loans") to the Company, which Swingline Loans (i)
shall be made and maintained as Base Rate Loans, (ii) may be repaid and
reborrowed in accordance with the provisions hereof, (iii) shall not exceed in
aggregate principal amount at any time outstanding, when combined with the
aggregate principal amount of all Tranche A Revolving Loans made by
Non-Defaulting Banks then outstanding, the Dollar Equivalent of the principal
amount of all Canadian Dollar Loans then outstanding and the Letter of Credit
Outstandings at such time, an amount equal to the Adjusted Total Tranche A
Commitment then in effect (after giving effect to any reductions to the Adjusted
Total Tranche A Commitment on such date) and (iv) shall not exceed in aggregate
principal amount at any time outstanding the Maximum Swingline Amount. Chase
will not make a Swingline Loan after it has received written notice from the
Required Banks that one or more of the applicable conditions to Credit Events
specified in Section 5 are not then satisfied.
-3-
<PAGE>
(e) On any Business Day, Chase may, in its sole discretion,
give notice to the Banks that its outstanding Swingline Loans shall be funded
with a Borrowing of Tranche A Revolving Loans (provided that each such notice
shall be deemed to have been automatically given upon the occurrence of an Event
of Default under Section 9.05), in which case a Borrowing of Tranche A Revolving
Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all
Banks with a Tranche A Revolving Loan Commitment pro rata based on each Bank's
Adjusted Percentage (determined before giving effect to any termination of the
Tranche A Revolving Loan Commitments pursuant to the last paragraph of Section
9), and the proceeds thereof shall be applied directly to repay Chase for such
outstanding Swingline Loans. Each such Bank hereby irrevocably agrees to make
Base Rate Loans upon one Business Day's notice pursuant to each Mandatory
Borrowing in the amount and in the manner specified in the preceding sentence
and on the date specified in writing by Chase notwithstanding (i) that the
amount of the Mandatory Borrowing may not comply with the Minimum Borrowing
Amount otherwise required hereunder, (ii) whether any conditions specified in
Section 5 are then satisfied, (iii) whether a Default or an Event of Default has
occurred and is continuing, (iv) the date of such Mandatory Borrowing and (v)
any reduction in the Total Tranche A Revolving Loan Commitment or Adjusted Total
Tranche A Commitment after any such Swingline Loans were made. In the event that
any Mandatory Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the commencement
of a proceeding under the Bankruptcy Code in respect of the Company), then each
such Bank (other than Chase) hereby agrees that it shall forth-with purchase (as
of the date the Mandatory Borrowing would otherwise have occurred, but adjusted
for any payments received from the Company on or after such date and prior to
such purchase) from Chase (without recourse or warranty other than that such
Swingline Loans are free and clear of any Liens) such assignment of the
outstanding Swingline Loans as shall be necessary to cause such Banks to share
in such Swingline Loans ratably based upon their respective Adjusted Percentages
(determined before giving effect to any termination of the Tranche A Revolving
Loan Commitments pursuant to the last paragraph of Section 9), provided that all
interest payable on the Swingline Loans shall be for the account of Chase until
the date the respective assignment is purchased and, to the extent attributable
to the purchased assignment, shall be payable to the Bank purchasing same from
and after such date of purchase. Upon any change in the Tranche A Revolving Loan
Commitments or Adjusted Percentages of the Banks pursuant to Section 1.10(c)(ii)
or 12.04(b), or upon the occurrence of a Bank Default, it is hereby agreed that,
with respect to all outstanding Swingline Loans, there shall be an automatic
adjustment to the participations pursuant to this Section 1.01(e) to reflect the
new Adjusted Percentages of the assigning and assignee Banks or of all
Non-Defaulting Banks, as the case may be.
(f) Subject to and upon the terms and conditions herein set
forth, the Canadian Lender in its individual capacity agrees to make, at any
time and from time to time on and after the Initial Borrowing Date and prior to
the Original Final Maturity Date, a revolving loan or revolving loans (each a
"Canadian Dollar Loan" and, collectively, the "Canadian Dollar Loans") to the
Canadian Borrower, which Canadian Dollar Loans (i) shall, at the option of the
Canadian Borrower, be Base Rate Loans or Eurodollar Loans, provided that all
Canadian Dollar Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein,
-4-
<PAGE>
consist of Canadian Dollar Loans of the same Type, (ii) may be repaid and
reborrowed in accordance with the provisions hereof, (iii) shall not exceed in
Dollar Equivalent aggregate principal amount at any time outstanding, when
combined with the aggregate principal amount of all Tranche A Revolving Loans
made by Non-Defaulting Banks then outstanding, the aggregate principal amount of
all Swingline Loans then outstanding and the Letter of Credit Outstandings at
such time, an amount equal to the Adjusted Total Tranche A Commitment then in
effect (after giving effect to any reductions to the Adjusted Total Tranche A
Commitment on such date) and (iv) shall not exceed in Dollar Equivalent
aggregate principal amount at any time outstanding the Maximum Canadian Dollar
Amount. The Canadian Lender will not make a Canadian Dollar Loan after it has
received written notice from the Required Banks that one or more of the
applicable conditions to Credit Events specified in Section 5 are not then
satisfied. On the date of the making of any Canadian Dollar Loan, the Canadian
Lender shall notify the Administrative Agent and the Canadian Borrower of the
Dollar Equivalent of such Borrowing of Canadian Dollar Loans on such date.
(g) On any Business Day, the Canadian Lender may, in its sole
discretion, give notice to the Banks that all outstanding Canadian Dollar Loans
shall be assigned to the Banks (provided that such notice shall be deemed to
have been automatically given upon the occurrence of an Event of Default under
Section 9.05). Each Bank with a Tranche A Revolving Loan Commitment hereby
irrevocably and unconditionally agrees that in the event that any such notice is
given or deemed given, such Bank shall purchase from the Canadian Lender
(without recourse or warranty other than that such Canadian Dollar Loans are
free and clear of any Liens) an assignment of the outstanding Canadian Dollar
Loans in an amount equal to such Bank's Adjusted Percentage of such outstanding
Canadian Dollar Loans in accordance with the provisions of this Section 1.01(g).
Any such purchase shall be made on the second immediately succeeding Business
Day, on which Business Day each such Bank shall pay to the Administrative Agent
for the account of the Canadian Lender an amount equal to such Bank's Adjusted
Percentage of all outstanding Canadian Dollar Loans in Canadian Dollars and same
day funds. If and to the extent any such Bank shall not have so made its
Adjusted Percentage of the outstanding principal amount of the Canadian Dollar
Loans available to the Administrative Agent for the account of the Canadian
Lender, such Bank agrees to pay to the Administrative Agent for the account of
the Canadian Lender, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Administrative Agent for the account of the Canadian Lender at the overnight
Federal Funds rate. All interest payable on the Canadian Dollar Loans shall be
for the account of the Canadian Lender until the date the respective assignment
is purchased and, to the extent attributable to the purchased assignment, shall
be payable to the Bank purchasing same from and after such date of purchase. The
failure of any such Bank to make available to the Administrative Agent for the
account of the Canadian Lender its Adjusted Percentage of the outstanding
principal amount of Canadian Dollar Loans shall not relieve any other Bank of
its obligation hereunder to make available to the Administrative Agent for the
account of the Canadian Lender its Adjusted Percentage of the outstanding
principal amount of Canadian Dollar Loans on the date required, as specified
above, but no Bank shall be responsible for the failure of any other Bank to
make available to the Administrative Agent for the account of the Canadian
Lender such other Bank's Adjusted Percentage of any such payment. Each such Bank
hereby irrevocably agrees to
-5-
<PAGE>
purchase its Adjusted Percentage of the outstanding Canadian Dollar Loans in the
manner specified above and on the date specified above notwithstanding (i)
whether any conditions specified in Section 5 are then satisfied, (ii) whether a
Default or an Event of Default has occurred and is continuing, (iii) the date of
such purchase and (iv) any reduction in the Total Tranche A Revolving Loan
Commitment or Adjusted Total Tranche A Commitment after any such Canadian Dollar
Loans were made. Notwithstanding the foregoing, to the extent any Bank
determines that at the time of a purchase of Canadian Dollar Loans pursuant to
this Section 1.01(g), it is unable to obtain Canadian Dollars with which to fund
such purchase, it may, upon notice to the Canadian Lender and the Administrative
Agent, fund such purchase in U.S. Dollars in an aggregate amount which the
Canadian Lender determines, in its sole discretion, is equivalent to what the
Canadian Lender would have received if such Bank had funded in Canadian Dollars.
(h) Subject to and upon the terms and conditions set forth
herein, each Bank with a B Term Loan Commitment severally agrees to make, on the
Restatement Effective Date, a term loan or term loans (each a "B Term Loan" and,
collectively, the "B Term Loans") to the Company, which B Term Loans (i) shall
be made pursuant to a single drawing, (ii) shall, at the option of the Company,
be Base Rate Loans or Eurodollar Loans, provided that all B Term Loans made as
part of the same Borrowing shall, unless otherwise specifically provided herein,
consist of B Term Loans of the same Type, (iii) shall equal for each Bank, in
initial aggregate principal amount, that amount which equals the B Term Loan
Commitment of such Bank on the Restatement Effective Date (before giving effect
to the termination thereof on such date pursuant to Section 3.03(f)). Once
repaid, B Term Loans incurred hereunder may not be reborrowed.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal
amount of each Borrowing shall not be less than the Minimum Borrowing Amount for
such Loans. More than one Borrowing may be incurred on any day, provided that at
no time shall there be outstanding more than 20 Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Company desires to
incur Loans hereunder (excluding Swingline Loans, Canadian Dollar Loans, and
Revolving Loans incurred pursuant to a Mandatory Borrowing), it shall give the
Administrative Agent at its Notice Office, prior to 12:00 Noon (New York time),
at least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing of Eurodollar Loans and at
least one Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Base Rate Loans to be incurred
hereunder. Each such notice (each, together with each notice referred to in
Sections 1.03(b)(i) and 1.03(c), a "Notice of Borrowing"), except as otherwise
expressly provided in Section 1.10, shall be irrevocable, and, in the case of
each written notice and each confirmation of telephonic notice, shall be in the
form of Exhibit A, appropriately completed to specify (i) whether the Loans
being incurred pursuant to such Borrowing shall consist of Term Loans, B Term
Loans, Tranche A Revolving Loans or Tranche B Revolving Loans, (ii) the
aggregate principal amount of such Loans to be made pursuant to such Borrowing,
(iii) the date of such Borrowing (which shall be a Business Day) and (iv)
whether the respective Borrowing shall consist of Base Rate Loans or Eurodollar
Loans and, if Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Administrative Agent
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shall promptly give each Bank which is required to make Loans pursuant to the
Borrowing specified in the respective Notice of Borrowing written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing, of
such Bank's proportionate share thereof, if any, and of the other matters
covered by the Notice of Borrowing.
(b) (i) Whenever the Company desires to incur a Borrowing of
Swingline Loans hereunder, it shall give Chase no later than 12:00 Noon (New
York time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
incurred hereunder. Each such Notice of Borrowing shall be irrevocable and shall
specify in each case (x) the date of such Borrowing (which shall be a Business
Day) and (y) the aggregate principal amount of the Swingline Loans to be
incurred pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(e), with the Company irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of Mandatory Borrowings as set
forth in such Section.
(c) Whenever the Canadian Borrower desires to incur a
Borrowing of Canadian Dollar Loans hereunder, it shall give the Canadian Lender
and the Administrative Agent, prior to 12:00 Noon (New York time), at least
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Eurodollar Loans and at least one
Business Day's prior written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing of Base Rate Loans to be incurred hereunder. Each
such Notice of Borrowing, except as otherwise expressly provided in Section
1.10, shall be irrevocable and shall specify in each case (i) the date of such
Borrowing (which shall be a Business Day), (ii) the aggregate principal amount
of the Canadian Dollar Loan to be made pursuant to such Borrowing and (iii)
whether the respective Borrowing shall consist of Base Rate Loans or Eurodollar
Loans and, if Eurodollar Loans, the Interest Period to be initially applicable
thereto.
(d) Without in any way limiting the obligation of either
Borrower to confirm in writing any telephonic notice permitted to be given
hereunder, the Administrative Agent, Chase (in the case of a Borrowing of
Swingline Loans), the Canadian Lender (in the case of a Borrowing of Canadian
Dollar Loans) or the Letter of Credit Issuer (in the case of the issuance of
Letters of Credit), as the case may be, may prior to receipt of written
confirmation act without liability upon the basis of such telephonic notice,
believed by the Administrative Agent, Chase, the Canadian Lender or the Letter
of Credit Issuer, as the case may be, in good faith to be from the chairman, a
vice chairman, the president, a vice president, a treasurer, an assistant
treasurer or the director of treasury operations of such Borrower. In each such
case, each Borrower hereby waives the right to dispute the Administrative
Agent's, Chase's, the Canadian Lender's or the Letter of Credit Issuer's record
of the terms of such telephonic notice.
1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New
York time) on the date specified in each Notice of Borrowing relating to any
Loans other than Canadian Dollar Loans (or (x) in the case of Swingline Loans,
no later than 2:00 P.M. (New York time) on the date specified pursuant to
Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, no later
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than 12:00 Noon (New York time) on the date specified in Section 1.01(e)), each
Bank with a Commitment under the respective Tranche will make available its Pro
Rata Share (if any) of each Borrowing of Loans requested to be made on such date
in the manner provided below (or, in the case of Swingline Loans, Chase will
make available the full amount thereof). All such amounts shall be made
available to the Administrative Agent in U.S. Dollars and immediately available
funds at the Payment Office and the Administrative Agent promptly will make
available to the Company by depositing to its account at the Payment Office the
aggregate of the amounts so made available in the type of funds received (other
than in respect of Mandatory Borrowings). Unless the Administrative Agent shall
have been notified by any Bank prior to the date of Borrowing of any Loans
referred to in this Section 1.04(a) that such Bank does not intend to make
available to the Administrative Agent its portion of the Borrowing or Borrowings
to be made on such date, the Administrative Agent may assume that such Bank has
made such amount available to the Administrative Agent on such date of
Borrowing, and the Administrative Agent, in reliance upon such assumption, may
(in its sole discretion and without any obligation to do so) make available to
the Company a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Bank and the Administrative
Agent has made available same to the Company, the Administrative Agent shall be
entitled to recover such corresponding amount from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the Company, and
the Company shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
from the Bank or the Company, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Company to the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (x) if paid by such Bank, the overnight Federal Funds rate or (y)
if paid by the Company, the then applicable rate of interest, calculated in
accordance with Section 1.08, for the respective Loans. Nothing herein shall be
deemed to relieve any Bank from its obligation to fulfill its commitments
hereunder or to prejudice any rights which the Company may have against any Bank
as a result of any failure by such Bank to make Loans hereunder.
(b) No later than 1:00 P.M. (New York time) on the date
specified in each Notice of Borrowing relating to Canadian Dollar Loans, the
Canadian Lender will make available to the Canadian Borrower such Canadian
Dollar Loans requested to be made on such date, in Canadian Dollars and in
immediately available funds at the Canadian Payment Office.
1.05 Register. (a) The Administrative Agent shall maintain a
register for the recordation of the Commitments of the Banks from time to time
and the principal amount of the Term Loans, B Term Loans, Tranche A Revolving
Loans, Tranche B Revolving Loans, Swingline Loans and Canadian Dollar Loans
owing to each Bank (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error. The Register
shall be available for inspection by the Company or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
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(b) Each Borrower hereby agrees to provide a Note, promptly
upon the request of any Bank, to the extent such Bank has requested such Note in
connection with any pledge or assignment by such Bank of any or all of its Loans
hereunder to a Federal Reserve Bank.
1.06 Conversions. Either Borrower shall have the option to
convert on any Business Day all or a portion at least equal to the applicable
Minimum Borrowing Amount of the outstanding principal amount of the Loans (other
than Swingline Loans, which at all times shall be maintained as Base Rate Loans)
owing by a Borrower into a Borrowing or Borrowings of another Type of Loan;
provided that (i) no such partial conversion of a Borrowing of Eurodollar Loans
shall reduce the outstanding principal amount of the Eurodollar Loans made
pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Base Rate Loans may not be converted into Eurodollar Loans if a
Default or Event of Default is in existence and the Administrative Agent and/or
the Required Banks have notified the Company that such a conversion will not be
permitted as a result thereof and (iii) Borrowings of Eurodollar Loans resulting
from this Section 1.06 shall be limited in number as provided in Section 1.02.
Each such conversion shall be effected by the respective Borrower by giving the
Administrative Agent at its Notice Office (and, in the case of any proposed
conversion of Canadian Dollar Loans, the Canadian Lender at the Canadian Notice
Office), prior to 12:00 Noon (New York time), at least three Business Days (or
one Business Day in the case of a conversion into Base Rate Loans) prior written
notice (or telephonic notice promptly confirmed in writing) (each a "Notice of
Conversion") specifying the Loans to be so converted, the Type of Loans to be
converted into and, if to be converted into a Borrowing of Eurodollar Loans, the
Interest Period to be initially applicable thereto. The Administrative Agent
shall give each Bank prompt notice of any such proposed conversion affecting any
of its Loans.
1.07 Pro Rata Borrowings. All Borrowings of Term Loans, B Term
Loans, Tranche A Revolving Loans and Tranche B Revolving Loans under this
Agreement shall be made by the Banks pro rata on the basis of their Term Loan
Commitments, B Term Loan Commitments, Tranche A Revolving Loan Commitments or
Tranche B Revolving Loan Commitments, as the case may be, provided that all
Borrowings of Tranche A Revolving Loans made pursuant to a Mandatory Borrowing
shall be incurred from the Banks with Tranche A Revolving Loan Commitments pro
rata on the basis of their Adjusted Percentages. It is understood that no Bank
shall be responsible for any default by any other Bank of its obligation to make
Loans hereunder and that each Bank shall be obligated to make the Loans to be
made by it hereunder, regardless of the failure of any other Bank to make its
Loans hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base
Rate Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be the Applicable Margin (or, in the case of B Term Loans, the
Applicable B Term Loan Margin) plus the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall
bear interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate
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per annum which shall at all times be the Applicable Margin (or, in the case of
B Term Loans, the Applicable B Term Loan Margin) plus the relevant Eurodollar
Rate.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan shall bear interest at a rate per annum
equal to the Base Rate in effect from time to time plus the sum of (i) 2% and
(ii) the Applicable Margin (or, in the case of B Term Loans, 1.75%) for Base
Rate Loans; provided that principal in respect of Eurodollar Loans shall bear
interest after the same becomes due (whether by acceleration or otherwise) until
the end of the applicable Interest Period for such Eurodollar Loan at a per
annum rate equal to 2% in excess of the rate of interest applicable on the due
date therefor.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Loan, on any prepayment or conversion (on the
amount prepaid or converted), at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Administrative Agent, upon determining the interest
rate for any Borrowing of Eurodollar Loans for any Interest Period, shall
promptly notify the respective Borrower and the Banks thereof.
1.09 Interest Periods. At the time either Borrower gives a
Notice of Borrowing or Notice of Conversion in respect of the making of, or
conversion into, a Borrowing of Eurodollar Loans (in the case of the initial
Interest Period applicable thereto) or prior to 12:00 Noon (New York time) on
the third Business Day prior to the expiration of an Interest Period applicable
to a Borrowing of Eurodollar Loans, it shall have the right to elect by giving
the Administrative Agent written notice (or telephonic notice promptly confirmed
in writing) of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the respective Borrower, be a one, two, three,
six or, if available to each of the Banks (as determined by each such Bank in
good faith based on prevailing conditions in the interbank Eurodollar market on
any date of determination thereof) (available to the Canadian Lender in the case
of the Canadian Dollar Loans), nine or twelve month period. Notwithstanding
anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date
of any conversion from a Borrowing of Base Rate Loans) and each
Interest Period occurring thereafter in respect of such Borrowing shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
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(ii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, provided that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day;
(iv) no Interest Period in respect of Term Loans, Tranche A
Revolving Loans or Tranche B Revolving Loans shall extend beyond the
Original Final Maturity Date, and no Interest Period in respect of B
Term Loans shall extend beyond the Final Maturity Date; and
(v) no Interest Period may be elected at any time when a
Default or Event of Default is then in existence and the Administrative
Agent and/or the Required Banks have notified the Company that such an
election will not be permitted as a result thereof.
If upon the expiration of any Interest Period, the respective Borrower has
failed to elect a new Interest Period to be applicable to the respective
Borrowing of Eurodollar Loans as provided above, or a Default or an Event of
Default then exists and the Administrative Agent and/or the Required Banks have
given the notice referred to in clause (v) above, such Borrower shall be deemed
to have elected to convert such Borrowing into a Borrowing of Base Rate Loans
effective as of the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
(x) in the case of clause (i) below, the Administrative Agent (or the Canadian
Lender in the case of Canadian Dollar Loans) or (y) in the case of clauses (ii)
and (iii) below, any Bank, shall have determined (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising after the date
of this Agreement affecting the interbank Eurodollar market, adequate
and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect
to any Eurodollar Loans because of (x) any change since the date of
this Agreement in any applicable law, governmental rule, regulation,
guideline, order or request (whether or not having the force of law),
or in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline, order or request such as, for example, but not limited to,
(A) a change since the Original Effective Date in the basis of taxation
of payment to any Bank of the principal of or interest on the Loans or
any other amounts payable hereunder (except for changes with respect to
Taxes and those taxes described in
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clauses (x) and (y) of the proviso in the second sentence of Section
4.04) or (B) a change since the Original Effective Date in official
reserve requirements, but, in all events, excluding reserves required
under Regulation D to the extent included in the computation of the
Eurodollar Rate and/or (y) other circumstances affecting such Bank, the
interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time since the Original Effective Date, that the
making or continuance of any Eurodollar Loan has become unlawful by
compliance by such Bank in good faith with any law, governmental rule,
regulation, guideline or order (or would conflict with any such
governmental rule, regulation, guideline or order not having the force
of law but with which such Bank customarily complies even though the
failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the Original
Effective Date which materially and adversely affects the interbank
Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within 10 Business Days of
the date on which such event no longer exists give notice (by telephone
confirmed in writing) to each Borrower and (except in the case of clause (i)) to
the Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrowers and the Banks that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by a
Borrower with respect to Eurodollar Loans which have not yet been incurred shall
be deemed rescinded by such Borrower, (y) in the case of clause (ii) above, the
Company (or, in the case of Canadian Dollar Loans, each of the Company and the
Canadian Borrower) agrees to pay to such Bank, upon written demand therefor
(accompanied by the written notice referred to below), such additional amounts
(in the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Bank in its sole discretion shall determine) as
shall be required to compensate such Bank for such increased costs or reductions
in amounts received or receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the calculation
thereof, submitted to the respective Borrower by such Bank shall, absent
manifest error, be final and conclusive and binding upon all parties hereto) and
(z) in the case of clause (iii) above, the respective Borrower shall take one of
the actions specified in Section 1.10(b) as promptly as possible and, in any
event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the respective Borrower
may (and in the case of a Eurodollar Loan affected pursuant to Section
1.10(a)(iii) the respective Borrower shall) either (i) if the affected
Eurodollar Loan is then being made pursuant to a Borrowing, cancel said
Borrowing by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof promptly (but in any event no later than the later
of (x) the Business Day next preceding the date of such Borrowing and (y) one
Business Day after the respective Borrower was notified by a Bank pursuant to
Section 1.10(a)(ii) or (iii)), or (ii) if the affected Eurodollar Loan is then
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outstanding, upon at least three Business Days' notice to the Administrative
Agent, require the affected Bank to convert each such Eurodollar Loan into a
Base Rate Loan (which conversion, in the case of the circumstances described in
Section 1.10(a)(iii), shall occur no later than the last day of the Interest
Period then applicable to such Eurodollar Loan (or such earlier date as shall be
required by applicable law)); provided that if more than one Bank is affected at
any time, then all affected Banks must be treated the same pursuant to this
Section 1.10(b).
(c) (i) If any Bank shall have determined that after the
Original Effective Date, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such Bank could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), accompanied by the notice referred to in the last
sentence of this clause (i), the Company shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction. Each Bank,
upon determining in good faith that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Company, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish the Company's obligations to pay additional amounts pursuant
to this Section 1.10(c).
(ii) If (x) any Bank becomes a Defaulting Bank or otherwise
defaults in its obligations to make Loans or fund Unpaid Drawings, (y) any Bank
has notified the Borrower that one of its Eurodollar Loans is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), or (z) any Bank is owed
increased costs or other amounts under Section 1.10(c)(i), 2.06 or 4.04 and, in
the case of such clause (y) or (z), compensation or other action with respect to
such event is not otherwise requested generally by the other Banks, the Company
shall have the right, if no Default or Event of Default then exists and, in the
case of a Bank described in clause (y) or (z) above, such Bank has not changed
its applicable lending office with the effect of eliminating such increased
cost, to replace such Bank (the "Replaced Bank") with another commercial bank or
banks or other financial institutions (collectively, the "Replacement Bank")
reasonably acceptable to the Administrative Agent, and, in the case of any
Replaced Bank with a Tranche A Revolving Loan Commitment, the Canadian Lender
and the Letter of Credit Issuer, provided that (i) at the time of any
replacement pursuant to this Section 1.10(c)(ii), the Replacement Bank shall
enter into one or more assignment agreements pursuant to Section 12.04(b) hereof
(and with all fees payable pursuant to said Section 12.04(b) to be paid by the
Replacement Bank) pursuant to which the Replacement Bank shall acquire all of
the Commitments and outstanding Loans of, and participations in Letters of
Credit by, the Replaced Bank and, in connection therewith, shall pay to the
Replaced Bank (or the Letter of Credit Issuer in the case of the proviso
contained in clause (b) below, the Canadian Lender in the case of clause (c)
below or Chase in the case of
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clause (d) below) in respect thereof an amount equal to the sum of (a) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
the Replaced Bank, (b) an amount equal to the sum of such Replaced Bank's
Adjusted Percentage (for this purpose, determined as if the adjustment described
in clause (y) of the immediately succeeding sentence had been made with respect
to such Replaced Bank) of all Unpaid Drawings and all then unpaid interest with
respect thereto at such time, provided that in the event such Replaced Bank did
not reimburse the Letter of Credit Issuer pursuant to Section 2.05(c) in respect
of any Unpaid Drawing, such amount shall instead be paid to the Letter of Credit
Issuer, (c) an amount equal to any unpaid obligation of the Replaced Bank
pursuant to Section 1.01(g), which amount shall be paid to the Canadian Lender,
(d) an amount equal to any unpaid obligation of the Replaced Bank pursuant to
Section 1.01(e), which amount shall be paid to Chase, and (e) an amount equal to
all accrued, but theretofore unpaid, Fees owing to the Replaced Bank pursuant to
Section 3.01 hereof and (ii) all obligations of each Borrower owing to the
Replaced Bank (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Bank concurrently with such
replacement. Upon the execution of the respective assignment documentation
pursuant to clause (i) above and the payment of amounts referred to in clauses
(i) above and (ii) above, (x) the Replacement Bank shall become a Bank or Banks
hereunder, as the case may be, and the Replaced Bank shall cease to constitute a
Bank hereunder, except with respect to indemnification provisions (including,
without limitation, Sections 1.10, 1.11, 2.06, 4.04, 11.07 and 12.01 of this
Agreement) under this Agreement, which shall survive as to such Replaced Bank
and (y) the Adjusted Percentages of the Banks shall be automatically adjusted at
such time to give effect to such replacement (and to give effect to the
replacement of a Defaulting Bank with one or more Non-Defaulting Banks).
1.11 Compensation. The Company (or, in the case of Canadian
Dollar Loans, each of the Company and the Canadian Borrower) agrees to
compensate each Bank in the appropriate currency, upon its written request
(which request shall set forth the basis for requesting such compensation), for
all reasonable losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Bank to fund its
Eurodollar Loans but excluding loss of anticipated profit with respect to any
Loans) which such Bank may sustain: (i) if for any reason (other than a default
by such Bank or the Administrative Agent) a Borrowing of Eurodollar Loans does
not occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the respective Borrower or deemed
withdrawn pursuant to Section 1.10(a)); (ii) if any repayment, prepayment or
conversion of any Eurodollar Loans occurs on a date which is not the last day of
an Interest Period applicable thereto; (iii) if any prepayment of any Eurodollar
Loans is not made on any date specified in a notice of prepayment given by a
Borrower; or (iv) as a consequence of (x) any other default by a Borrower to
repay its Loans when required by the terms of this Agreement or (y) an election
made pursuant to Section 1.10(b). Calculation of all amounts payable to a Bank
under this Section 1.11 shall be made as though that Bank had actually funded
its relevant Eurodollar Loan through the purchase of a Eurodollar deposit
bearing interest at the Eurodollar Rate in an amount equal to the amount of that
Loan, having a maturity comparable to the relevant Interest Period and through
the transfer of such Eurodollar deposit from an offshore office of that Bank to
a domestic office of
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that Bank in the United States of America (or Canada, in the case of Canadian
Dollar Loans); provided, however, that each Bank may fund each of its Eurodollar
Loans in any manner it sees fit and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Section 1.11.
1.12 Change of Lending Office. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c)(i), 2.06 or 4.04 with respect to such Bank, it will, if
requested by the respective Borrower, use reasonable efforts (subject to overall
policy considerations of such Bank) to designate another lending office for any
Loans or Letters of Credit affected by such event; provided that such
designation is made on such terms that in the sole judgment of such Bank, such
Bank and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequences of the event giving
rise to the operation of any such Section. Nothing in this Section 1.12 shall
affect or postpone any of the obligations of either Borrower or the right of any
Bank provided in Sections 1.10, 2.06 or 4.04.
1.13 Tranche B Commitments. At any time and from time to time
on and after the Original Effective Date and prior to June 30, 1999, the Company
may request one or more Banks or other lending institutions to assume a Tranche
B Revolving Loan Commitment and to make Tranche B Revolving Loans to the Company
as provided in Section 1.01(c) and, in the sole discretion of each such Bank or
other institution, any such Bank or other institution may agree to so commit;
provided that (i) no Default or Event of Default then exists, (ii) the increase
in the Total Tranche B Revolving Loan Commitment pursuant to any such request
shall be in an aggregate amount of at least $50,000,000 and (iii) after giving
effect to each such increase, the Total Tranche B Revolving Loan Commitment
shall not exceed $250,000,000. The Company and each such Bank or other lending
institution (each an "Assuming Bank") which agrees to commit to make Tranche B
Revolving Loans shall execute and deliver to the Administrative Agent a Tranche
B Assumption Agreement substantially in the form of Exhibit B (with the increase
in, or in the case of a new Assuming Bank, assumption of, such Bank's Tranche B
Revolving Loan Commitment to be effective upon delivery of such Tranche B
Assumption Agreement to the Administrative Agent). The Administrative Agent
shall promptly notify each Bank as to the occurrence of the Initial Tranche B
Assumption Date and as to each Additional Tranche B Assumption Date occurring
thereafter. On each Tranche B Assumption Date, (x) Annex I shall be deemed
modified to reflect the revised Tranche B Revolving Loan Commitments of such
Banks, and (y) the Company shall pay to each such Assuming Bank such up front
fee (if any) as may have been agreed between the Company and such Assuming Bank.
Notwithstanding anything to the contrary contained in this Agreement, in
connection with any increase in the Total Tranche B Revolving Loan Commitment
after the Initial Tranche B Assumption Date, the Company shall, in coordination
with the Administrative Agent and the Banks with Tranche B Revolving Loan
Commitments, repay outstanding Tranche B Revolving Loans of certain Banks and,
if necessary, incur additional Tranche B Revolving Loans from other Banks, in
each case so that such Banks participate in each Borrowing of Tranche B
Revolving Loans pro rata on the basis of their Tranche B Revolving Loan
Commitments (after giving effect to any increase thereof). It is hereby agreed
that any breakage costs of the type described in
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Section 1.11 incurred by the Banks in connection with the repayment of Tranche B
Revolving Loans contemplated by this Section 1.13 shall be for the account of
the Company.
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Company may request the Letter of Credit Issuer
at any time and from time to time on or after the Initial Borrowing Date and
prior to the Business Day next preceding the Original Final Maturity Date to
issue, for the account of the Company and in support of (x) trade obligations of
the Company and/or its Restricted Subsidiaries and/or (y) on a standby basis,
such other obligations (contingent or otherwise) of the Company and/or its
Restricted Subsidiaries to any other Person, in each case, that arise in the
ordinary course of business and are in respect of general corporate purposes
(including, without limitation, in connection with Permitted Acquisitions) of
the Company and/or its Restricted Subsidiaries, and subject to and upon the
terms and conditions herein set forth the Letter of Credit Issuer agrees to
issue from time to time, irrevocable letters of credit in such form as may be
approved by the Letter of Credit Issuer and the Administrative Agent (each such
letter of credit, a "Letter of Credit" and collectively, the "Letters of
Credit").
(b) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letter of Credit
Outstandings at such time, would exceed either (x) $40,000,000 or (y) when added
to the aggregate principal amount of all Tranche A Revolving Loans made by
Non-Defaulting Banks and Swingline Loans and the Dollar Equivalent of the
aggregate principal amount of Canadian Dollar Loans then outstanding, the
Adjusted Total Tranche A Revolving Loan Commitment at such time; (ii) each
Letter of Credit shall have an expiry date occurring not later than two years
after such Letter of Credit's date of issuance, provided that standby Letters of
Credit may provide that, absent notice to the contrary from the Letter of Credit
Issuer to the beneficiary thereof, the expiry date shall be automatically
extended for successive one year periods and (iii) no Letter of Credit shall
have an expiry date occurring later than the Business Day next preceding the
Original Final Maturity Date.
2.02 Minimum Stated Amount. The initial Stated Amount of each
Letter of Credit shall be not less than $5,000 or such lesser amount acceptable
to the Letter of Credit Issuer, provided that no more than 40 Letters of Credit
(or such greater number acceptable to the Letter of Credit Issuer) shall be
outstanding at any one time.
2.03 Letter of Credit Requests; Notices of Issuance. (a)
Whenever it desires that a Letter of Credit be issued, the Company shall give
the Administrative Agent and the Letter of Credit Issuer written notice (or
telephonic notice confirmed in writing) thereof prior to 12:00 Noon (New York
time) at least five Business Days' (or such shorter period as may be acceptable
to the Letter of Credit Issuer) prior to the proposed date of issuance (which
shall be a Business Day) (each a "Letter of Credit Request"), which Letter of
Credit Request shall include an application for such Letter of Credit and any
other documents that the Letter of Credit Issuer customarily requires in
connection therewith. The Administrative Agent shall promptly notify each Bank
of each Letter of Credit Request.
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(b) The Letter of Credit Issuer shall, on the date of each
issuance of a Letter of Credit by it or amendment thereto, give the
Administrative Agent, each Bank and the Company written notice of the issuance
or amendment of such Letter of Credit, accompanied by a copy to the
Administrative Agent of the Letter of Credit or Letters of Credit issued by it
or of the amendment thereto.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The
Company hereby agrees to reimburse the Letter of Credit Issuer, by making
payment to the Administrative Agent in immediately available funds at the
Payment Office, for any payment or disbursement made by the Letter of Credit
Issuer under any Letter of Credit issued by it (each such amount so paid or
disbursed until reimbursed, an "Unpaid Drawing") no later than one Business Day
following the date of such payment or disbursement, with interest on the amount
so paid or disbursed by the Letter of Credit Issuer, to the extent not
reimbursed prior to 1:00 P.M. (New York time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but not including
the date the Letter of Credit Issuer is reimbursed therefor at a rate per annum
which shall be the Applicable Margin for Base Rate Loans plus the Base Rate as
in effect from time to time (plus an additional 2% per annum if not reimbursed
by the third Business Day after the date of such payment or disbursement), such
interest also to be payable on demand. The Letter of Credit Issuer shall provide
the Company prompt notice of any payment or disbursement made by it under any
Letter of Credit issued by it, although the failure of, or delay in, giving any
such notice shall not release or diminish the obligations of the Company under
this Section 2.04(a) or under any other Section of this Agreement.
(b) The Company's obligation under this Section 2.04 to
reimburse the Letter of Credit Issuer with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances, including, without limitation, those set forth
in Section 2.05(e)(i) through (v), inclusive, and irrespective of any setoff,
counterclaim or defense to payment which the Company may have or have had
against the Letter of Credit Issuer, the Administrative Agent or any Bank,
including, without limitation, any defense based upon the failure of any drawing
under a Letter of Credit to conform to the terms of the Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of such
drawing; provided, however, that the Company shall not be obligated to reimburse
the Letter of Credit Issuer for any wrongful payment made by the Letter of
Credit Issuer under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of the Letter of
Credit Issuer.
2.05 Letter of Credit Participations. (a) Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of
Credit Issuer shall be deemed to have sold and transferred to each other Bank
with a Tranche A Revolving Loan Commitment, and each such Bank (each a
"Participant") shall be deemed irrevocably and unconditionally to have purchased
and received from such Letter of Credit Issuer, without recourse or warranty, an
undivided interest and participation, to the extent of such Bank's Adjusted
Percentage, in such Letter of Credit, each substitute letter of credit, each
drawing made thereunder and the obligations of the Company under this Agreement
with respect thereto (although Letter of Credit Fees shall be payable directly
to the Administrative Agent for the account of the Banks as provided in
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Section 3.01(b) and the Participants shall have no right to receive any portion
of any Facing Fees) and any security therefor or guaranty pertaining thereto.
Upon any change in the Tranche A Revolving Loan Commitments or Adjusted
Percentages of the Banks pursuant to Section 1.10(c)(ii) or 12.04(b) or
otherwise, or upon the occurrence of a Bank Default, it is hereby agreed that,
with respect to all outstanding Letters of Credit and Unpaid Drawings, there
shall be an automatic adjustment to the participations pursuant to this Section
2.05 to reflect the new Adjusted Percentages of the assigning and assignee Banks
or of all Non-Defaulting Banks, as the case may be.
(b) In determining whether to pay under any Letter of Credit,
the Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they appear to comply
on their face with the requirements of such Letter of Credit. Any action taken
or omitted to be taken by the Letter of Credit Issuer under or in connection
with any Letter of Credit if taken or omitted in the absence of gross negligence
or willful misconduct, shall not create for the Letter of Credit Issuer any
resulting liability.
(c) In the event that the Letter of Credit Issuer makes any
payment under any Letter of Credit and the Company shall not have reimbursed
such amount in full to the Letter of Credit Issuer pursuant to Section 2.04(a),
the Letter of Credit Issuer shall promptly notify the Administrative Agent, and
the Administrative Agent shall promptly notify each Participant of such failure,
and each Participant shall promptly and unconditionally pay to the
Administrative Agent for the account of the Letter of Credit Issuer, the amount
of such Participant's Adjusted Percentage of such unreimbursed payment in U.S.
Dollars and in same day funds; provided, however, that no Participant shall be
obligated to pay to the Administrative Agent its Adjusted Percentage of such
unreimbursed amount for any wrongful payment made by the Letter of Credit Issuer
under a Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Letter of Credit Issuer. If
the Administrative Agent so notifies any Participant required to fund a payment
under a Letter of Credit prior to 11:00 A.M. (New York time) on any Business
Day, such Participant shall make available to the Administrative Agent for the
account of the Letter of Credit Issuer such Participant's Adjusted Percentage of
the amount of such payment on such Business Day in same day funds. If and to the
extent such Participant shall not have so made its Adjusted Percentage of the
amount of such payment available to the Administrative Agent for the account of
the Letter of Credit Issuer, such Participant agrees to pay to the
Administrative Agent for the account of the Letter of Credit Issuer, forthwith
on demand such amount, together with interest thereon, for each day from such
date until the date such amount is paid to the Administrative Agent for the
account of the Letter of Credit Issuer at the overnight Federal Funds rate. The
failure of any Participant to make available to the Administrative Agent for the
account of the Letter of Credit Issuer its Adjusted Percentage of any payment
under any Letter of Credit shall not relieve any other Participant of its
obligation hereunder to make available to the Administrative Agent for the
account of the Letter of Credit Issuer its Adjusted Percentage of any payment
under any Letter of Credit on the date required, as specified above, but no
Participant shall be responsible for the failure of any other Participant to
make available to the Administrative Agent for the account of the Letter of
Credit Issuer such other Participant's Adjusted Percentage of any such payment.
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(d) Whenever the Letter of Credit Issuer receives a payment of
a reimbursement obligation as to which the Administrative Agent has received for
the account of the Letter of Credit Issuer any payments from the Participants
pursuant to clause (c) above, the Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
Participant which has paid its Adjusted Percentage thereof, in U.S. Dollars and
in same day funds, an amount equal to such Participant's Adjusted Percentage of
the principal amount thereof and interest thereon accruing after the purchase of
the respective participations.
(e) The obligations of the Participants to make payments to
the Administrative Agent for the account of the Letter of Credit Issuer with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other
right which the Company may have at any time against a beneficiary
named in a Letter of Credit, any transferee of any Letter of Credit (or
any Person for whom any such transferee may be acting), the
Administrative Agent, the Letter of Credit Issuer, any Bank, or other
Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Company
and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.06 Increased Costs. If at any time after the Original
Effective Date, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Letter of Credit
Issuer or any Participant with any request or directive (whether or not having
the force of law) by any such authority, central bank or comparable agency shall
either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by the Letter
of Credit Issuer or such Participant's participation therein, or (ii) impose on
the Letter of Credit Issuer or any Participant any other conditions affecting
this Agreement, any Letter of Credit or such Participant's participation
therein; and the result of any of the foregoing is to increase the cost to the
Letter of Credit Issuer or such
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Participant of issuing, maintaining or participating in any Letter of Credit, or
to reduce the amount of any sum received or receivable by the Letter of Credit
Issuer or such Participant hereunder, then, upon demand to the Company by the
Letter of Credit Issuer or such Participant (a copy of which notice shall be
sent by the Letter of Credit Issuer or such Participant to the Administrative
Agent), accompanied by the certificate described in the last sentence of this
Section 2.06, the Company shall pay to the Letter of Credit Issuer or such
Participant such additional amount or amounts as will compensate the Letter of
Credit Issuer or such Participant for such increased cost or reduction. A
certificate submitted to the Company by the Letter of Credit Issuer or such
Participant, as the case may be (a copy of which certificate shall be sent by
the Letter of Credit Issuer or such Participant to the Administrative Agent),
setting forth the basis for the determination of such additional amount or
amounts necessary to compensate the Letter of Credit Issuer or such Participant
as aforesaid shall be final and conclusive and binding on the Company absent
manifest error, although the failure to deliver any such certificate shall not
release or diminish the Company's obligations to pay additional amounts pursuant
to this Section 2.06.
SECTION 3. Fees; Commitments.
3.01 Fees. (a) The Company agrees to pay to the Administrative
Agent for distribution to each Non-Defaulting Bank with a Revolving Loan
Commitment a commitment fee (the "Commitment Fee") for the period from the
Original Effective Date to but not including the date the Total Revolving Loan
Commitment has been terminated, computed at a per annum rate equal to the
Applicable Commitment Fee Percentage on the daily average Aggregate Unutilized
Revolving Loan Commitment of such Non-Defaulting Bank. Accrued Commitment Fees
shall be due and payable quarterly in arrears on the last Business Day of March,
June, September and December of each year and the date upon which the Total
Revolving Loan Commitment is terminated.
(b) The Company shall pay to the Administrative Agent for the
account of each Non-Defaulting Bank with a Tranche A Revolving Loan Commitment
pro rata on the basis of their respective Adjusted Percentages, a fee in respect
of each Letter of Credit (the "Letter of Credit Fee") computed at a rate equal
to the Applicable Letter of Credit Fee Percentage on the average daily Stated
Amount of such Letter of Credit. Accrued Letter of Credit Fees shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December of each year and on the date upon which the Total Tranche
A Revolving Loan Commitment shall be terminated.
(c) The Company shall pay to the Administrative Agent for the
account of the Letter of Credit Issuer a fee in respect of each Letter of Credit
issued by it (the "Facing Fee") computed at the rate of 1/4 of 1% per annum on
the average daily Stated Amount of such Letter of Credit. Accrued Facing Fees
shall be due and payable quarterly in arrears on the last Business Day of each
March, June, September and December of each year and on the date upon which the
Total Tranche A Revolving Loan Commitment shall be terminated.
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(d) The Company hereby agrees to pay directly to the Letter of
Credit Issuer upon each issuance of, drawing under, and/or amendment of, a
Letter of Credit issued by it such amount as shall at the time of such issuance,
drawing or amendment be the administrative charge which the Letter of Credit
Issuer is customarily charging for issuances of, drawings under or amendments
of, letters of credit issued by it.
(e) The Company shall pay to the Administrative Agent, for its
own account, such other fees as have been agreed to in writing by the Company
and the Administrative Agent.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
3.02 Voluntary Reduction of Commitments. Upon at least three
Business Days' prior written notice (or telephonic notice promptly confirmed in
writing) to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks), the Company
shall have the right, without premium or penalty, to terminate or partially
reduce the Total Unutilized Tranche A Revolving Loan Commitment and/or the Total
Unutilized Tranche B Revolving Loan Commitment; provided that (v) any such
termination or partial reduction shall apply to proportionately and permanently
reduce the Tranche A Revolving Loan Commitment or the Tranche B Revolving Loan
Commitment, as the case may be, of each of the Banks with such Commitments, (w)
any partial reduction pursuant to this Section 3.02 shall be in the amount of at
least $2,000,000, (x) the reduction to the Total Unutilized Tranche A Revolving
Loan Commitment shall in no case be in an amount which would cause the Tranche A
Revolving Loan Commitment of any Bank to be reduced (as required by the
preceding clause (v)) by an amount which exceeds the remainder of (i) the
Aggregate Unutilized Tranche A Commitment of such Bank as in effect immediately
before giving effect to such reduction minus (ii) such Bank's Adjusted
Percentage of the sum of (A) the aggregate principal amount of Swingline Loans
then outstanding and (B) the Dollar Equivalent of the aggregate principal amount
of Canadian Dollar Loans then outstanding, (y) each reduction to the Total
Tranche A Revolving Loan Commitment pursuant to this Section 3.02 shall reduce
the then remaining Scheduled A Commitment Reductions on a pro rata basis (based
upon the then remaining principal amount of each such Scheduled A Commitment
Reduction) and (z) each reduction to the Total Tranche B Revolving Loan
Commitment pursuant to this Section 3.02 shall reduce the then remaining
Scheduled B Commitment Reductions on a pro rata basis (based upon the then
remaining principal amount of each such Scheduled B Commitment Reduction).
3.03 Mandatory Reduction of Commitments, etc. (a) Subject to
Sections 3.02 and 3.03(g), the Total Tranche A Revolving Loan Commitment (and
the Tranche A Revolving Loan Commitment of each Bank with such a Commitment)
shall be permanently reduced on each date set forth below (provided that if any
date set forth below is not a Business Day then the permanent reduction shall
occur on the first Business Day immediately succeeding such date set forth
below) (each a "Scheduled A Commitment Reduction Date"), in the amount set forth
below opposite such date (each such reduction, as such reduction may have been
reduced pursuant to Sections 3.02 and/or 3.03(g), a "Scheduled A Commitment
Reduction"):
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Scheduled A Commitment
Reduction Date Amount
---------------------- ------
June 30, 1999 $37,500,000
December 31, 1999 37,500,000
June 30, 2000 75,000,000
December 31, 2000 75,000,000
June 30, 2001 75,000,000
December 31, 2001 75,000,000
June 30, 2002 75,000,000
December 31, 2002 75,000,000
June 30, 2003 75,000,000
December 31, 2003 75,000,000
June 30, 2004 75,000,000
(b) Subject to Sections 3.02 and 3.03(g), the Total Tranche B
Revolving Loan Commitment (and the Tranche B Revolving Loan Commitment of each
Bank with such a Commitment) shall be permanently reduced on each date set forth
below (provided that if any date set forth below is not a Business Day then the
permanent reduction shall occur on the first Business Day immediately succeeding
such date set forth below) (each a "Scheduled B Commitment Reduction Date"), in
an amount equal to the product of (x) the Total Tranche B Revolving Loan
Commitment as of June 30, 1999 (immediately prior to giving effect to the
Scheduled B Commitment Reduction to occur on such date) multiplied by (y) the
percentage set forth below opposite such date (each such reduction, as such
reduction may have been reduced pursuant to Sections 3.02 and/or 3.03(g), a
"Scheduled B Commitment Reduction"):
Scheduled A Commitment
Reduction Date Amount
---------------------- ------
June 30, 1999 5%
December 31, 1999 5%
June 30, 2000 10%
December 31, 2000 10%
June 30, 2001 10%
December 31, 2001 10%
June 30, 2002 10%
December 31, 2002 10%
June 30, 2003 10%
December 31, 2003 10%
June 30, 2004 10%
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Term Loan Commitment (and the Term Loan
Commitment of each Bank with such a Commitment) shall terminate on the Initial
Borrowing Date (after giving effect to the making of the Term Loans on such
date).
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(d) The Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate in its entirety on the earlier of
(i) the date which is the earlier of (x) 30 days after any date on which a
Specified Change of Control Event occurs and (y) the date on which any Senior
Notes or any other Indebtedness of the Company or its Restricted Subsidiaries
are required to be repurchased, redeemed or prepaid as a result of any such
Specified Change of Control Event and (ii) the Original Final Maturity Date.
(e) With respect to any Asset Sale, (i) on the earliest of (x)
the date occurring one year after the consummation of such Asset Sale, (y) the
date, if any, following the date of consummation of such Asset Sale upon which
the Administrative Agent, on behalf of the Required Banks, shall have delivered
a written reinvestment termination notice to the Company, provided that such
notice may only be given while an Event of Default exists, and (z) the date the
Company or any of its Subsidiaries shall be required to make an offer to
purchase Senior Notes or any other Indebtedness of the Company or its Restricted
Subsidiaries (other than Indebtedness specifically relating to the assets sold
in such Asset Sale) with the proceeds received in connection with such Asset
Sale, and (ii) on any date after the earliest of the dates referred to in clause
(i) above of receipt by the Company or any of its Restricted Subsidiaries of
additional Net Cash Proceeds from such Asset Sale, in each case, the Total
Revolving Loan Commitment shall be reduced and the aggregate principal amount of
the Term Loans and the B Term Loans shall be repaid in an aggregate amount equal
to 100% of the then Remaining Net Cash Proceeds from such Asset Sale (with the
Tranche A Facility Percentage of such Remaining Net Cash Proceeds to be applied
to reduce the Total Tranche A Revolving Loan Commitment, the Tranche B Facility
Percentage to be applied to reduce the Total Tranche B Revolving Loan Commitment
and the Term Loan Facility Percentage to be applied as a repayment of the
aggregate principal amount of Term Loans, and with all such Remaining Net Cash
Proceeds to be applied as a repayment of the aggregate principal amount of the B
Term Loans after the Total Revolving Loan Commitment has terminated, all Term
Loans have been paid in full and all loans have been repaid and all commitments
terminated under the Additional Credit Agreement). Each reduction to the Total
Tranche A Revolving Loan Commitment pursuant to this Section 3.03(e) shall
reduce each of the remaining Scheduled A Commitment Reductions on a pro rata
basis (based upon the then remaining amount of each such Scheduled A Commitment
Reduction), and each reduction to the Total Tranche B Revolving Loan Commitment
pursuant to this Section 3.03(e) shall reduce each of the remaining Scheduled B
Commitment Reductions on a pro rata basis (based upon the then remaining amount
of each such Scheduled B Commitment Reduction).
(f) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total B Term Loan Commitment (and the B Term
Loan Commitment of each Bank with such a Commitment) shall terminate on the
Restatement Effective Date (after giving effect to the making of the B Term
Loans on such date).
(g) Each reduction to the Total Term Loan Commitment, the
Total B Term Loan Commitment, the Total Tranche A Revolving Loan Commitment and
the Total Tranche B Revolving Loan Commitment pursuant to this Section 3.03
shall be applied proportionately to reduce the Term Loan Commitment, the B Term
Loan Commitment, the Tranche A Revolving
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Loan Commitment or the Tranche B Revolving Loan Commitment, as the case may be,
of each Bank with such a Commitment.
SECTION 4. Payments.
4.01 Voluntary Prepayments. Each Borrower shall have the right
to prepay the Loans incurred by it (and the Company on behalf of the Canadian
Borrower may, at its option, prepay the Canadian Dollar Loans incurred by the
Canadian Borrower), in whole or in part, without premium or penalty except as
otherwise provided in this Agreement, from time to time on the following terms
and conditions: (i) the Company or, in the case of any prepayment of Canadian
Dollar Loans, the Company or the Canadian Borrower, shall give the
Administrative Agent at the Notice Office written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay the Loans, whether such
Loans are Term Loans, B Term Loans, Tranche A Revolving Loans, Tranche B
Revolving Loans, Swingline Loans or Canadian Dollar Loans, the amount of such
prepayment and (in the case of Eurodollar Loans) the specific Borrowing(s)
pursuant to which made, which notice shall be given by the Company or the
Canadian Borrower, as the case may be, prior to 12:00 Noon (New York time) (x)
at least two Business Days prior to the date of such prepayment in the case of
Term Loans, B Term Loans, Revolving Loans or Canadian Dollar Loans, or (y) on
the date of such prepayment in the case of Swingline Loans, which notice shall
promptly be transmitted by the Administrative Agent to each of the Banks (or to
the Canadian Lender in the case of Canadian Dollar Loans); (ii) (x) each partial
prepayment of any Borrowing (other than a Borrowing of Swingline Loans and
Canadian Dollar Loans) shall be in an aggregate principal amount of at least
$1,000,000 and, if greater, in an integral multiple of $500,000, (y) each
partial prepayment of any Borrowing of Swingline Loans shall be in an aggregate
principal amount of at least $250,000 and, if greater, in an integral multiple
of $50,000 and (z) each partial prepayment of any Borrowing of Canadian Dollar
Loans shall be in an aggregate principal amount of at least Can. $50,000 and, if
greater, in an integral multiple of Can. $50,000, provided that no partial
prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce the
aggregate principal amount of the Loans outstanding pursuant to such Borrowing
to an amount less than the Minimum Borrowing Amount applicable thereto; (iii)
each prepayment of Term Loans or B Term Loans pursuant to this Section 4.01
shall reduce the then remaining Scheduled TL Repayments or Scheduled BTL
Repayments, as the case may be, on a pro rata basis (based upon the then
remaining principal amount of each such Scheduled TL Repayment or Scheduled BTL
Repayment, as the case may be); and (iv) each prepayment in respect of any Loans
made pursuant to a Borrowing shall be applied pro rata among such Loans;
provided that at the Company's election in connection with any prepayment of
Revolving Loans pursuant to this Section 4.01, such prepayment shall not be
applied to any Revolving Loans of a Defaulting Bank.
4.02 Mandatory Repayments. (a) (i) If on any date the sum of
(x) the aggregate outstanding principal amount of Tranche A Revolving Loans made
by Non-Defaulting Banks and Swingline Loans and the Dollar Equivalent of the
aggregate outstanding principal amount of Canadian Dollar Loans (in each case
after giving effect to all other repayments thereof on such date), plus (y) the
Letter of Credit Outstandings on such date exceeds the Adjusted Total Tranche A
Commitment as then in effect, the Company shall repay on such date the principal
of
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Swingline Loans, and if no Swingline Loans are or remain outstanding, Tranche A
Revolving Loans of Non-Defaulting Banks in an aggregate amount equal to such
excess, and if no Tranche A Revolving Loans of Non-Defaulting Banks are or
remain outstanding thereafter, the Canadian Borrower shall (or, at its option,
the Company, on behalf of the Canadian Borrower, shall) repay on such date the
principal of Canadian Dollar Loans, in an aggregate amount equal to such excess.
If, after giving effect to the repayment of all outstanding Swingline Loans,
Tranche A Revolving Loans and Canadian Dollar Loans, the aggregate amount of
Letter of Credit Outstandings exceeds the Adjusted Total Tranche A Commitment
then in effect, the Company agrees to pay to the Administrative Agent an amount
in cash and/or Cash Equivalents equal to such excess (up to the aggregate amount
of Letter of Credit Outstandings) and the Administrative Agent shall hold such
payment as security for the obligations of the Company hereunder pursuant to a
cash collateral agreement to be entered into in form and substance satisfactory
to the Administrative Agent (which shall permit certain investments in Cash
Equivalents satisfactory to the Administrative Agent, until the proceeds are
applied to the secured obligations).
(ii) If on any date the aggregate outstanding principal amount
of Tranche A Revolving Loans made by any Defaulting Bank exceeds the Tranche A
Revolving Loan Commitment of such Defaulting Bank, the Company shall repay the
Tranche A Revolving Loans of such Defaulting Bank in an amount equal to such
excess.
(iii) If on any date the aggregate outstanding principal
amount of Tranche B Revolving Loans made by any Bank exceeds the Tranche B
Revolving Loan Commitment of such Bank, the Company shall repay the Tranche B
Revolving Loans of such Bank in an amount equal to such excess.
(b) If on any date the Dollar Equivalent of the aggregate
outstanding principal amount of Canadian Dollar Loans (after giving effect to
all other repayments thereof on such date) exceeds the Maximum Canadian Dollar
Amount as then in effect, the Canadian Borrower shall repay on such date the
principal of Canadian Dollar Loans in an amount such that after giving effect to
such repayment the Dollar Equivalent of the aggregate outstanding principal
amount of the Canadian Dollar Loans is equal to or less than the Maximum
Canadian Dollar Amount.
(c) In addition to any other mandatory repayments pursuant to
this Section 4.02, the Company shall repay, on each date set forth below
(provided that if any date set forth below is not a Business Day then the
repayment shall occur on the first Business Day immediately succeeding such date
set forth below) (each a "Scheduled TL Repayment Date"), the Term Loans in an
amount equal to the amount set forth below opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01, and 4.02(e),
a "Scheduled TL Repayment"):
Scheduled TL Repayment Date Amount
--------------------------- ------
June 30, 2000 $25,000,000
December 31, 2000 25,000,000
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Scheduled TL Repayment Date Amount
--------------------------- ------
June 30, 2001 25,000,000
December 31, 2001 25,000,000
June 30, 2002 25,000,000
December 31, 2002 25,000,000
June 30, 2003 25,000,000
December 31, 2003 25,000,000
June 30, 2004 50,000,000
(d) In the event that a Specified Change of Control Event
occurs, the Company shall repay all outstanding Term Loans and B Term Loans in
their entirety on the date which is the earlier of (i) 30 days after any date on
which such Specified Change of Control Event occurs and (ii) the date on which
any Senior Notes or any other Indebtedness of the Company or its Restricted
Subsidiaries are required to be repurchased, redeemed or prepaid as a result of
any such Specified Change of Control Event.
(e) The aggregate principal amount of Term Loans and B Term
Loans shall be repaid at the times, and in the amounts, provided in Section
3.03(e). The amount of each principal repayment of Term Loans or B Term Loans
pursuant to this Section 4.02(e) shall be applied to reduce each of the
remaining Scheduled TL Repayments or Scheduled BTL Repayments, as the case may
be, on a pro rata basis (based upon the then remaining amount of each such
Scheduled TL Repayment or Scheduled BTL Repayment, as the case may be).
(f) Notwithstanding anything to the contrary contained in this
Agreement, (i) all then outstanding Loans (other than B Term Loans) under this
Agreement shall be repaid in full on the Original Final Maturity Date, (ii) all
then outstanding Swingline Loans shall be repaid in full on the Swingline Expiry
Date and (iii) all then outstanding B Term Loans under this Agreement shall be
repaid in full on the Final Maturity Date.
(g) In addition to any other mandatory repayments pursuant to
this Section 4.02, the Company shall repay, on each date set forth below
(provided that if any date set forth below is not a Business Day then the
repayment shall occur on the first Business Day immediately succeeding such date
set forth below) (each a "Scheduled BTL Repayment Date"), the B Term Loans in an
amount equal to the amount set forth below opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01, and 4.02(e),
a "Scheduled BTL Repayment"):
Scheduled BTL Repayment Date Amount
---------------------------- ------
June 30, 2000 $1,250,000
December 31, 2000 1,250,000
June 30, 2001 1,250,000
December 31, 2001 1,250,000
June 30, 2002 1,250,000
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Scheduled BTL Repayment Date Amount
---------------------------- ------
December 31, 2002 1,250,000
June 30, 2003 1,250,000
December 31, 2003 1,250,000
July 31, 2004 240,000,000
(h) With respect to each repayment of Loans required by this
Section 4.02, the Company (or, in the case of Canadian Dollar Loans, the
Canadian Borrower or the Company on behalf of the Canadian Borrower) may
designate the Types of Loans which are to be repaid and the specific
Borrowing(s) pursuant to which made; provided that (i) Eurodollar Loans may be
designated for repayment pursuant to this Section 4.02 only on the last day of
an Interest Period applicable thereto unless all Eurodollar Loans under the
respective Tranche with Interest Periods ending on such date of required
repayment and all Base Rate Loans under the respective Tranche have been paid in
full; (ii) each repayment of any Loans made pursuant to a Borrowing shall be
applied pro rata among such Loans; (iii) notwithstanding the provisions of the
preceding clause (ii), no repayment of Tranche A Revolving Loans pursuant to
Section 4.02(a)(i) shall be applied to the Tranche A Revolving Loans of a
Defaulting Bank; and (iv) repayments of Tranche A Revolving Loans of Defaulting
Banks pursuant to Section 4.02(a)(ii) shall be applied pro rata among such
Tranche A Revolving Loans. In the absence of a designation by a Borrower as
described in the preceding sentence, the Administrative Agent shall, subject to
the above, make such designation in its sole discretion with a view, but no
obligation, to minimize breakage costs owing under Section 1.11. Notwithstanding
the foregoing provisions of this Section 4.02, if at any time the mandatory
repayment of Loans pursuant to Section 4.02(a) or (b) arising solely as a result
of a reduction to the Total Revolving Loan Commitment pursuant to Section
3.03(e) would result, after giving effect to the procedures set forth above in
this clause (h), in the Company (or, in the case of Canadian Dollar Loans, the
Canadian Borrower) incurring breakage costs under Section 1.11 as a result of
Eurodollar Loans being repaid other than on the last day of an Interest Period
applicable thereto (the "Affected Eurodollar Loans"), then the Company (or, in
the case of Canadian Dollar Loans, the Canadian Borrower or the Company on
behalf of the Canadian Borrower) may in its sole discretion initially deposit a
portion (up to 100%) of the amounts that otherwise would have been paid in
respect of the Affected Eurodollar Loans with the Administrative Agent to be
held as security for the obligations of the respective Borrower hereunder
pursuant to a cash collateral agreement to be entered into in form and substance
satisfactory to the Administrative Agent, with such cash collateral to be
released from such cash collateral account upon the first occurrence (or
occurrences) thereafter of the last day of an Interest Period applicable to the
relevant Loans that are Eurodollar Loans (or such earlier date or dates as shall
be requested by the respective Borrower), to repay an aggregate principal amount
of such Loans equal to the Affected Eurodollar Loans not initially repaid
pursuant to this sentence.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement shall be made to
the Administrative Agent for the ratable account of the Banks entitled thereto
(based on each Bank's Pro Rata Share, if any), no later than 1:00 P.M. (New York
time) on the date when due and shall be made in immediately
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available funds and in lawful money of the United States of America (or Canadian
Dollars in the case of Canadian Dollar Loans which have been assigned to the
other Banks by the Canadian Lender pursuant to Section 1.01(g)) at the Payment
Office, provided that payments in respect of Canadian Dollar Loans owing to the
Canadian Lender shall be made to the Canadian Lender no later than 1:00 P.M.
(New York time) on the date when due and shall be made in immediately available
funds and in lawful money of Canada at the Canadian Payment Office.
Notwithstanding anything to the contrary contained herein, any amounts owing or
payments required to be made by the Canadian Borrower hereunder, including,
without limitation, pursuant to Section 1.10, 1.11, 4.04 or 12.01, may, at the
option of the Company, be paid by the Company on behalf of the Canadian
Borrower. Any payments under this Agreement which are made later than 1:00 P.M.
(New York time) shall be deemed to have been made on the next succeeding
Business Day; provided, however, that to the extent that the Administrative
Agent shall have received any payment under this Agreement after 1:00 P.M. (New
York time) on a Business Day, the Administrative Agent shall use its best
efforts to distribute such payment as promptly as practicable on such date to
the Banks (other than any Bank that has consented in writing to waive its pro
rata share of such payment) pro rata based upon their respective shares, if any,
of the Obligations with respect to which such payment was received, and to the
extent that any such Bank receives its portion of such payment from the
Administrative Agent on such same date by a time satisfactory to such Bank, such
payment to such Bank shall be deemed to have been made on such date. Whenever
any payment to be made hereunder shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable during such extension at the applicable rate in effect immediately prior
to such extension.
4.04 Net Payments. All payments made by each Borrower
hereunder will be made without setoff, counterclaim or other defense. Promptly
upon notice from any Bank to the respective Borrower, the Company (or, in the
case of Canadian Dollar Loans, each of the Company and the Canadian Borrower)
agrees to pay, prior to the date on which penalties attach thereto, all present
and future income, stamp and other taxes, levies, or costs and charges
whatsoever imposed, assessed, levied or collected on or in respect of any
Canadian Dollar Loan of any Type, or in respect of a Loan solely as a result of
the interest rate being determined by reference to the Eurodollar Rate, and/or
the provisions of this Agreement relating to the Eurodollar Rate, and/or the
recording, registration, notarization or other formalization of any thereof
and/or any payments of principal, interest or other amounts made on or in
respect of a Canadian Dollar Loan of any Type, or a Loan when the interest rate
is determined by reference to the Eurodollar Rate (all such taxes, levies, costs
and charges being herein collectively called "Taxes"); provided that Taxes shall
not include (x) taxes imposed on or measured by the overall net income or
receipts of the Administrative Agent or any Bank by the United States of America
or any political subdivision or taxing authority thereof or therein or (y) taxes
on or measured by the overall net income of any foreign office, branch or
subsidiary of the Administrative Agent or that Bank by any foreign country or
subdivision thereof in which the Administrative Agent's or that Bank's office,
branch or subsidiary is doing business. Each Borrower agrees to also pay such
additional amounts equal to increases in taxes payable by that Bank described in
the foregoing proviso which increases arise solely from the receipt by that Bank
of payments made by such Borrower described in the immediately preceding
sentence of this Section 4.04.
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Promptly after the date on which payment of any such Tax is due pursuant to
applicable law, the respective Borrower will, at the request of that Bank,
furnish to that Bank evidence, in form and substance satisfactory to that Bank,
that the respective Borrower has met its obligation under this Section 4.04.
Each Borrower agrees to indemnify each Bank against, and reimburse each Bank on
demand for, any Taxes, as reasonably determined by that Bank in its good faith.
Such Bank shall provide the respective Borrower with appropriate receipts for
any payments or reimbursements made by such Borrower pursuant to this Section
4.04. Notwithstanding the foregoing, each Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold and pay to the
appropriate taxing authority within the time prescribed by applicable law (and
shall not be required to make payments as otherwise required in this Section on
account of such deductions or withholdings) income or other similar taxes
imposed by the United States of America from interest, fees or other amounts
payable hereunder for the account of the Administrative Agent or any Bank other
than the Administrative Agent or any Bank (i) who is a U.S. Person for Federal
income tax purposes or (ii) who has the Prescribed Forms on file with the
Company for the applicable year to the extent deduction or withholding of such
taxes is not required as a result of the filing of such Prescribed Forms,
provided that if a Borrower shall so deduct or withhold any such taxes, it shall
provide a statement to the Administrative Agent and such Bank, setting forth the
amount of such taxes so deducted or withheld, the applicable rate and any other
information or documentation which the Administrative Agent or such Bank may
reasonably request for assisting the Administrative Agent or such Bank to obtain
any allowable credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which the Administrative Agent or such Bank is
subject to tax. Notwithstanding anything to the contrary contained herein, the
Company shall compensate each Bank for all losses, expenses, liabilities, taxes
(including, without limitation, Taxes) or other costs which any such Bank may
incur or sustain as a result of the Company paying any obligations of the
Canadian Borrower hereunder or under any other Credit Document, which such Bank
would not otherwise incur or sustain if the Canadian Borrower had made any such
payments instead of the Company paying such amounts on behalf of the Canadian
Borrower.
SECTION 5. Conditions Precedent.
5.01 Conditions Precedent to the Restatement Effective Date.
The occurrence of the Restatement Effective Date pursuant to Section 12.10 and
the obligation of each Bank to make each Loan to the respective Borrower
hereunder (including, without limitation, the obligation of the Canadian Lender
to make each Canadian Dollar Loan hereunder), and the obligation of the Letter
of Credit Issuer to issue each Letter of Credit hereunder, are subject, on the
Restatement Effective Date, to the satisfaction of the following conditions:
(a) Execution of Agreement. This Agreement shall have been
executed and delivered in accordance with Section 12.10.
(b) No Default; Representations and Warranties. (i) There
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Credit Documents in effect at such
time shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of
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such date, unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.
(c) Opinions of Counsel. The Administrative Agent shall have
received opinions, addressed to each of the Banks and dated the Restatement
Effective Date, (i) from Simpson, Thacher & Bartlett, special counsel to the
Credit Parties, which opinion shall cover the matters contained in Exhibit C-1
and such other matters incident to the transactions contemplated herein as the
Administrative Agent may reasonably request, (ii) from Beverly C. Chell, Esq.,
counsel to the Credit Parties, which opinion shall cover the matters contained
in Exhibit C-2 and such other matters incident to the transactions contemplated
herein as the Administrative Agent may reasonably request, and (iii) from White
& Case LLP, special counsel to the Administrative Agent, which opinion shall
cover the matters contained in Exhibit C-3.
(d) Corporate Proceedings. (i) The Administrative Agent shall
have received from each of the Company, the Canadian Borrower and each
Subsidiary Guarantor, a certificate, dated the Restatement Effective Date,
signed by the chairman, a vice chairman, the president, any vice-president or
the treasurer of such Person, and attested to by the secretary or any assistant
secretary of such Person, in the form of Exhibit D with appropriate insertions
and, to the extent required, together with copies of the Certificate of
Incorporation, By-Laws and the resolutions of such Person referred to in such
certificate, and the foregoing shall be satisfactory to the Administrative
Agent.
(ii) All corporate and legal proceedings and all instruments
and agreements in connection with the transactions contemplated by this
Agreement and the other Credit Documents shall be reasonably satisfactory in
form and substance to the Administrative Agent, and the Administrative Agent
shall have received all information and copies of all certificates, documents
and papers, including good standing certificates and any other records of
corporate proceedings and governmental approvals, if any, which the
Administrative Agent reasonably may have requested in connection therewith, such
documents and papers, where appropriate, to be certified by proper corporate or
governmental authorities.
(e) Guaranties. (i) Each Subsidiary Guarantor shall have duly
authorized, executed and delivered an amended and restated guaranty in the form
of Exhibit E-1 hereto (as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof, the "Subsidiary Guaranty"), and
the Subsidiary Guaranty shall be in full force and effect.
(ii) The Company shall have duly authorized, executed and
delivered an amended and restated guaranty in the form of Exhibit E-2 hereto (as
amended, modified or supplemented from time to time in accordance with the terms
hereof and thereof, the "Company Guaranty"), and the Company Guaranty shall be
in full force and effect.
(f) Notice of Borrowing; Letter of Credit Request. The
Administrative Agent (and, in the case of any Borrowing of Canadian Dollar
Loans, the Canadian Lender) shall have received a Notice of Borrowing satisfying
the requirements of Section 1.03 with respect to any Borrowing of Loans on the
Restatement Effective Date; and the Administrative Agent and the Letter of
Credit Issuer shall have received a Letter of Credit Request satisfying the
requirements
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of Section 2.03 with respect to the issuance of any Letter of Credit on the
Restatement Effective Date.
(g) Payment of Fees, etc. All costs, fees and expenses, and
all other compensation contemplated by this Agreement, due to the Administrative
Agent, the Letter of Credit Issuer or the Banks shall have been paid to the
extent due.
(h) Contribution Agreement. The Subsidiary Guarantors shall
have entered into an amended and restated contribution agreement in the form of
Exhibit F hereto (as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof, the "Contribution Agreement"), and
the Contribution Agreement shall be in full force and effect.
(i) Existing Indebtedness Agreements. There shall have been
delivered to (or made available for review by) the Banks copies, certified (in
the case of those delivered) as true and correct by an appropriate officer of
the Company making such delivery, of all agreements evidencing or relating to
the Existing Debt or the Existing Contingent Obligations with respect to
Indebtedness for borrowed money (collectively, the "Existing Indebtedness
Agreements").
The occurrence of the Restatement Effective Date and the
acceptance of the benefits of any Credit Event on the Restatement Effective Date
shall constitute a representation and warranty by the Company to each of the
Banks that all of the conditions specified above exist as of the Restatement
Effective Date. All of the certificates, legal opinions and other documents and
papers referred to in this Section 5.01, unless otherwise specified, shall be
delivered to the Administrative Agent at its Notice Office for the account of
each of the Banks and in sufficient counterparts for each of the Banks and shall
be reasonably satisfactory in form and substance to the Administrative Agent.
5.02 Conditions Precedent to each Credit Event. The obligation
of each Bank to make each Loan to the respective Borrower hereunder (including,
without limitation, the obligation of the Canadian Lender to make each Canadian
Dollar Loan hereunder), and the obligation of the Letter of Credit Issuer to
issue each Letter of Credit hereunder, are subject, at the time of each such
Credit Event, to the satisfaction of the following conditions:
(a) No Default; Representations and Warranties. At the time of
each Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents in effect at such time shall
be true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.
(b) Notice of Borrowing; Letter of Credit Request. The
Administrative Agent (and, in the case of any Borrowing of Canadian Dollar
Loans, the Canadian Lender) shall have received a Notice of Borrowing satisfying
the requirements of Section 1.03 with respect to any Borrowing of Loans; and the
Administrative Agent and the Letter of Credit Issuer shall have
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received a Letter of Credit Request satisfying the requirements of Section 2.03
with respect to the issuance of any Letter of Credit.
The acceptance of the benefits of each Credit Event shall
constitute a representation and warranty by the Company to each of the Banks
that all of the conditions specified above exist as of the date of such Credit
Event. All of the documents and papers referred to in this Section 5.02, unless
otherwise specified, shall be delivered to the Administrative Agent at its
Notice Office for the account of each of the Banks and in sufficient
counterparts for each of the Banks and shall be reasonably satisfactory in form
and substance to the Administrative Agent.
SECTION 6. Representations, Warranties and Agreements. In
order to induce the Banks to enter into this Agreement and to make the Loans and
issue and/or participate in the Letters of Credit provided for herein, the
Company makes the following representations and warranties to, and agreements
with, the Banks, all of which shall survive the execution and delivery of this
Agreement, the making of the Loans and the issuance of the Letters of Credit
(with the occurrence of each Credit Event on and after the Initial Borrowing
Date being deemed to constitute a representation and warranty that the matters
specified in this Section 6 are true and correct in all material respects on and
as of the Initial Borrowing Date and as of the date of each such Credit Event,
unless stated to relate to a specific earlier date):
6.01 Corporate Status. The Company and each of its Restricted
Subsidiaries (i) is a duly organized and validly existing corporation under the
laws of the jurisdiction of its organization and has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage, (ii) is in good standing under
the laws of the jurisdiction of its organization and (iii) is duly qualified and
is authorized to do business and is in good standing in all jurisdictions where
it is required to be so qualified, except, in the cases of clauses (ii) and
(iii) above, for such failures to be in good standing and failures to be so
qualified which, in the aggregate, would not have a material adverse effect on
the condition (financial or otherwise), operations, assets, liabilities or
prospects of the Company and its Restricted Subsidiaries taken as a whole.
6.02 Corporate Power and Authority. Each of the Company and
each of its Restricted Subsidiaries has the corporate power and authority to
execute, deliver and carry out the terms and provisions of the Credit Documents
to which it is a party and has taken all necessary corporate action to authorize
the execution, delivery and performance of the Credit Documents to which it is a
party. Each of the Company and each of its Restricted Subsidiaries has duly
executed and delivered each Credit Document to which it is a party and each such
Credit Document constitutes the legal, valid and binding obligation of such
Person enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
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6.03 No Violation. Neither the execution, delivery or
performance by the Company or any of its Restricted Subsidiaries of the Credit
Documents to which it is a party nor compliance by them with the terms and
provisions thereof, nor the consummation of the transactions contemplated
therein (i) will contravene in any material respect any applicable provision of
any law, statute, rule or regulation, or any order, writ, injunction or decree
of any court or governmental instrumentality, (ii) will conflict or be
inconsistent with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of the Company or any of its Subsidiaries pursuant
to the terms of any indenture, mortgage, deed of trust, credit agreement, loan
agreement or other material agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which any of them or any of their
respective property or assets is bound or to which it may be subject or (iii)
will violate any provision of the Certificate of Incorporation or By-Laws of the
Company or any of its Subsidiaries.
6.04 Litigation. There are no actions, suits or proceedings
pending, or, to the best knowledge of the Company, threatened, with respect to
the Company or any of its Subsidiaries (i) that are likely to have a material
adverse effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole or (ii) that could reasonably be expected to have a material adverse
effect on the rights or remedies of the Banks, the Letter of Credit Issuer or
the Administrative Agent or on the ability of the Company or of the Subsidiary
Guarantors, taken as a whole, in either case, to perform its or their respective
obligations hereunder and under the other Credit Documents to which it is or
they are, or will be, a party.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of
all Terms Loans shall be utilized (i) to refinance the loans outstanding on the
Initial Borrowing Date under the Existing Credit Agreements, and (ii) to pay
certain fees and expenses arising in connection with such refinancing.
(b) The proceeds of all Revolving Loans, Swingline Loans and
Canadian Dollar Loans shall be used for the purposes referred to in Section
6.05(a) above and for general corporate and working capital purposes of the
Company and its Subsidiaries (including, without limitation, to finance
Permitted Acquisitions and refinance Senior Notes).
(c) The proceeds of all B Term Loans shall be used for the
general corporate and working capital purposes of the Company and its
Subsidiaries (including, without limitation, to finance Permitted Acquisitions
and refinance Senior Notes).
(d) Neither the making of any Loan hereunder, nor the use of
the proceeds thereof, will violate the provisions of Regulation T, U or X of the
Board of Governors of the Federal Reserve System and no part of the proceeds of
any Loan will be used to purchase or carry any Margin Stock or to extend credit
for the purpose of purchasing or carrying any Margin Stock, provided that the
Company may use the proceeds of Loans to purchase Margin Stock in compliance
with Regulations T, U and X, so long as at the time of the making of such Loan,
and
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after giving effect thereto, not more than 25% of the value of the assets
subject to the provisions of Section 8 of the Company, or of the Company and its
Restricted Subsidiaries on a consolidated basis, shall constitute Margin Stock.
6.06 Governmental Approvals. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any foreign or domestic governmental or public body or
authority, or any subdivision thereof, is required to authorize or is required
in connection with (i) the execution, delivery and performance of any Credit
Document or (ii) the legality, validity, binding effect or enforceability of any
Credit Document, except those which have been obtained or made or those the
absence of which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on either (x) the condition
(financial or otherwise), operations, assets, liabilities or prospects of the
Company and its Restricted Subsidiaries taken as a whole or (y) the rights or
remedies of the Banks, the Letter of Credit Issuer or the Administrative Agent
or on the ability of the Company or of the Subsidiary Guarantors, taken as a
whole, in either case, to perform its or their respective obligations hereunder
and under the other Credit Documents to which it is or they are, or will be, a
party.
6.07 Investment Company Act. Neither the Company nor any of
its Restricted Subsidiaries is an "investment company" or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
6.08 Public Utility Holding Company Act. Neither the Company
nor any of its Restricted Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.09 True and Complete Disclosure. (a) All factual information
(taken as a whole) heretofore or contemporaneously furnished by the Company or
any of its Subsidiaries in writing to the Administrative Agent and/or any Bank
on or before the Restatement Effective Date (including, without limitation, (i)
the Information Memorandum and (ii) all information contained in the Credit
Documents) for purposes of or in connection with this Agreement or any
transaction contemplated herein is true and complete in all material respects on
the date as of which such information is dated or certified and not incomplete
by omitting to state any material fact necessary to make such information (taken
as a whole) not misleading at such time in light of the circumstances under
which such information was provided, it being understood and agreed that for
purposes of this Section 6.09(a), such factual information shall not include
projections and pro forma financial information.
(b) The projections and pro forma financial information
contained in the factual information referred to in paragraph (a) above were
based on good faith estimates and assumptions believed by such Persons to be
reasonable at the time made, it being recognized by the Banks that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results.
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6.10 Financial Statements; Financial Condition. (a) The
consolidated balance sheets of the Company and its Subsidiaries as at December
31, 1997 and September 30, 1998 and the related consolidated statements of
income and cash flows of the Company and its Subsidiaries for the fiscal year or
nine-month period, as the case may be, ended as of said dates, which, in the
case of the December 31, 1997 statements, have been examined by Deloitte &
Touche, independent certified public accountants, who delivered an unqualified
opinion in respect thereof, present fairly the financial position of the Company
and its Subsidiaries at the dates of said statements and the results for the
period covered thereby. All such financial statements have been prepared in
accordance with GAAP consistently applied except to the extent provided in the
notes to said financial statements (subject, in the case of the September 30,
1998 statements, to normal year-end audit adjustments).
(b) Since December 31, 1997 and after giving effect to the
incurrence of Indebtedness hereunder and the other transactions contemplated
hereby, there has been no material adverse change in the condition (financial or
otherwise), operations, assets, liabilities or prospects of the Company and its
Restricted Subsidiaries taken as a whole (other than any change in general
economic conditions or any change in conditions affecting the Business
generally).
6.11 Tax Returns and Payments. Each of the Company and each of
its Restricted Subsidiaries has filed all Federal income tax returns and all
other material tax returns, domestic and foreign, required to be filed by it and
has paid all Federal taxes and assessments shown to be due on such returns and
all other material taxes and assessments, domestic and foreign, in each case
payable by it which have become due, other than those not yet delinquent and
except for those contested in good faith and for which adequate reserves have
been provided in accordance with GAAP.
6.12 Compliance with ERISA. As of the Initial Borrowing Date,
there are no Plans and neither the Company nor any of its Restricted
Subsidiaries nor any ERISA Affiliate has incurred any unpaid material liability
or reasonably expects to incur any material liability with respect to any
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) covered by
Title IV of ERISA. As of the date of each subsequent Credit Event, each Plan is
in substantial compliance with ERISA and the Code; no Reportable Event has
occurred with respect to a Plan; no Plan is insolvent or in reorganization; no
Plan has an accumulated or waived funding deficiency, has permitted decreases in
its funding standard account or has applied for an extension of any amortization
period within the meaning of Section 412 of the Code; neither the Company nor
any of its Restricted Subsidiaries nor any ERISA Affiliate has incurred or
reasonably expects to incur any liability to or on account of a Plan pursuant to
ERISA or the Code; no proceedings have been instituted by the PBGC to terminate
any Plan; no condition exists which presents a material risk to the Company, any
of its Restricted Subsidiaries or any ERISA Affiliate of incurring a liability
to or on account of a Plan pursuant to ERISA or the Code; no lien imposed under
the Code or ERISA on the assets of the Company, any of its Restricted
Subsidiaries or any ERISA Affiliate exists or is likely to arise on account of
any Plan; and the Company and its Restricted Subsidiaries do not maintain or
contribute to any "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), which provides benefits to retired
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employees (other than as required by Section 601 of ERISA) where, with respect
to any of the foregoing representations in this Section 6.12, the liability for
or the lien which could arise as a result of, the particular circumstance or
event which is the subject of the representation, would be reasonably likely to
result in a material adverse effect on the condition (financial or otherwise),
operations, assets, liabilities or prospects of the Company and its Restricted
Subsidiaries taken as a whole. Using actuarial assumptions and computation
methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the
aggregate liabilities of the Company, its Restricted Subsidiaries and ERISA
Affiliates to all Plans which are "multiemployer plans" (as defined in Section
4001(a)(3) of ERISA) (each a "Multiemployer Plan") in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan would not be reasonably likely to be an amount that could result in a
material adverse effect on the condition (financial or otherwise), operations,
assets, liabilities or prospects of the Company and its Restricted Subsidiaries
taken as a whole. Notwithstanding anything in this Section 6.12 to the contrary,
all representations and warranties made with respect to any Plan which is a
Multiemployer Plan shall be made to the best knowledge of the Company.
6.13 Subsidiaries. On the Restatement Effective Date, the
corporations listed on Annex III under the name of the Company are the only
Subsidiaries of the Company. Annex III correctly sets forth, as of the
Restatement Effective Date, the percentage ownership (direct and indirect) of
the Company in each class of capital stock of each of its Subsidiaries and also
identifies the direct owner thereof.
6.14 Intellectual Property. (a) The Company and each of its
Restricted Subsidiaries owns, or is licensed or otherwise authorized to sell,
distribute, use or exploit, all material copyrights, literary works, texts and
other works of authorship fixed in any tangible medium of expression necessary
for the present conduct of its business ("Copyrights"), except to the extent
that the failure to own or obtain licenses or authorizations with respect to any
of the foregoing, individually or in the aggregate, would not have a material
adverse effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole.
(b) The Company and each of its Restricted Subsidiaries owns
or is licensed to use all the patents, trademarks, permits, service marks, trade
names, technology, know-how and formulas, or rights with respect to the
foregoing, necessary for the present conduct of its business, except to the
extent that the failure to own or obtain licenses with respect to any of the
foregoing, individually or in the aggregate, would not have a material adverse
effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole (together with the Copyrights, "Intellectual Property").
(c) All Intellectual Property is protected in all material
respects under the laws of the United States relating to such Intellectual
Property and has been duly and properly registered or filed with or issued by
the appropriate governmental offices and jurisdictions for such registrations,
filings or issuances, except to the extent that the failure to make or obtain
such registrations, filings or issuances would not have a material adverse
effect on the condition
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(financial or otherwise), operations, assets, liabilities or prospects of the
Company and its Restricted Subsidiaries taken as a whole.
(d) No material claim has been asserted by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property. The use of such
Intellectual Property by the Company or its Restricted Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
as do not, individually or in the aggregate, give rise to any liabilities on the
part of the Company and its Restricted Subsidiaries that are material to the
Company and its Restricted Subsidiaries taken as a whole.
6.15 Compliance with Statutes, etc. The Company and each of
its Restricted Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including compliance with all
applicable Environmental Laws with respect to any Real Property and the
requirements of any permits issued under such Environmental Laws with respect to
any such Real Property or the operations of the Company or any of its
Subsidiaries), except such noncompliances as would not, in the aggregate, have a
material adverse effect on the condition (financial or otherwise), operations,
assets, liabilities or prospects of the Company and its Restricted Subsidiaries
taken as a whole.
SECTION 7. Affirmative Covenants. The Company hereby covenants
and agrees that on the Original Effective Date and thereafter for so long as
this Agreement is in effect and until the Commitments have terminated, no
Letters of Credit or Notes are outstanding and the Loans together with interest,
Fees and all other Obligations are paid in full:
7.01 Information Covenants. The Company will furnish to each
Bank:
(a) Annual Financial Statements. Within 100 days after the
close of each fiscal year of the Company, the consolidated balance sheets of
each of (A) the Company and its Subsidiaries and of (B) the Company and its
Restricted Subsidiaries, as at the end of such fiscal year and, in each case,
the related consolidated statements of income and retained earnings and of cash
flows for such fiscal year, setting forth for such fiscal year, in comparative
form, the corresponding figures for the preceding fiscal year and, in the case
of the figures with respect to the Company and its Restricted Subsidiaries the
corresponding figures from the budget for such fiscal year delivered pursuant to
Section 7.01(c); all of which shall be examined by Deloitte & Touche or such
other independent certified public accountants of recognized national standing
as shall be acceptable to the Administrative Agent, whose opinion shall not be
qualified as to the scope of audit or as to the status of the Company and its
Subsidiaries or of the Company and its Restricted Subsidiaries, as the case may
be, as a going concern, together with a certificate of such accounting firm
stating that in the course of its regular audit of the business of the Company
and its Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, no Default or Event of Default which has occurred
and is continuing has come to its attention or, if such a Default or Event of
Default has come to its attention a statement as to the
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nature thereof (provided that in no event shall such accountants be liable as a
result of this Agreement by reason of any failure to obtain knowledge of any
Default or Event of Default that would not be disclosed in the course of their
audit examination).
(b) Quarterly Financial Statements. As soon as available and
in any event within 50 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Company (beginning with the
quarterly accounting period ending June 30, 1996) and, at the sole option of the
Company, at any time prior to 100 days after the close of the fourth quarterly
accounting period in each fiscal year, the consolidated balance sheet of each of
(A) the Company and its Subsidiaries and of (B) the Company and its Restricted
Subsidiaries, as at the end of such quarterly period and the related
consolidated statements of income and retained earnings and of cash flows for
such quarterly period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly period; all of which shall be in reasonable
detail and certified by the chief financial officer or other Authorized Officer
of the Company that they fairly present the financial condition of the Company
and its Subsidiaries or of the Company and its Restricted Subsidiaries, as the
case may be, as of the dates indicated and the results of their operations and
changes in their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end audit adjustments.
(c) Budgets; etc. Not more than 90 days after the commencement
of each fiscal year of the Company, budgets of the Company and its Restricted
Subsidiaries in reasonable detail for each of the four fiscal quarters of such
fiscal year setting forth Consolidated EBITDA and consolidated sales and setting
forth, with appropriate discussion, the principal assumptions upon which such
budgets are based.
(d) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 7.01(a) and (b), a certificate of
the chief financial officer, controller or chief accounting officer of the
Company (i) to the effect that no Default or Event of Default exists or, if any
Default or Event of Default does exist, specifying the nature and extent
thereof, which certificate shall set forth the calculations required to
establish whether the Company and its Subsidiaries were in compliance with the
provisions of Sections 8.04(c), 8.05(d), 8.07 and Sections 8.09 through and
including 8.11, as at the end of such fiscal quarter or year, as the case may be
and (ii) setting forth the calculations demonstrating (A) with respect to each
Affected Transaction consummated during the most recently ended fiscal quarter,
that the Company was in compliance, on a Pro Forma Basis, with Sections 8.09,
8.10 and 8.11 and (B) with respect to each business sold (or deemed sold)
pursuant to Section 8.02(c) hereof, compliance by the Company with clause (iii)
of such Section 8.02(c). In addition, at the time of the delivery of the
financial statements provided for in Section 7.01(a) and (b), a certificate of
the chief financial officer, controller or chief accounting officer of the
Company setting forth the amount of, and calculations required to establish the
amount of, Excess Cash Flow for the respective fiscal year or quarter.
(e) Notice of Default or Litigation. Promptly, and in any
event within three Business Days after any officer of the Company obtains
knowledge thereof, notice of (x) the occurrence of any event which constitutes a
Default or Event of Default, which notice shall
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specify the nature thereof, the period of existence thereof and what action the
Company proposes to take with respect thereto and (y) the commencement of, or
threat of, or any significant development in, any litigation or governmental
proceeding pending against the Company or any of its Subsidiaries which is
likely to have a material adverse effect on the condition (financial or
otherwise), operations, assets, liabilities or prospects of the Company and its
Restricted Subsidiaries taken as a whole, or the ability of the Company or of
the Subsidiary Guarantors, taken as a whole, in either case, to perform its or
their respective obligations hereunder or under any other Credit Document.
(f) Auditors' Reports. Promptly upon receipt thereof, a copy
of each report or "management letter" submitted to the Company or any of its
Subsidiaries by its independent accountants in connection with any annual,
interim or special audit made by them of the books of the Company or any of its
Subsidiaries.
(g) Other Information. Promptly upon transmission thereof,
copies of any filings and registrations with, and reports to, the SEC by the
Company or any of its Subsidiaries and, with reasonable promptness, such other
information or documents (financial or otherwise) as the Administrative Agent on
its own behalf or on behalf of the Required Banks may reasonably request from
time to time.
7.02 Books, Records and Inspections. The Company will, and
will cause each of its Restricted Subsidiaries to, permit, upon notice to the
chief financial officer or other Authorized Officer of the Company, officers and
designated representatives of the Administrative Agent or the Required Banks to
visit and inspect any of the properties or assets of the Company and any of its
Restricted Subsidiaries in whomsoever's possession, and to examine the books of
account of the Company and any of its Restricted Subsidiaries and discuss the
affairs, finances and accounts of the Company and of any of its Restricted
Subsidiaries with, and be advised as to the same by, their officers and
independent accountants, all at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or the Required Banks may desire.
7.03 Payment of Taxes. The Company will pay and discharge, and
will cause each of its Restricted Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which material penalties attach thereto, and all lawful claims for sums that
have become due and payable which, if unpaid, might become a Lien not otherwise
permitted under Section 8.03(a) or charge upon any properties of the Company or
any of its Restricted Subsidiaries; provided that neither the Company nor any of
its Restricted Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with GAAP.
7.04 Corporate Franchises. The Company will do, and will cause
each of its Restricted Subsidiaries to do, or cause to be done, all things
necessary to preserve and keep in full force and effect its existence and its
rights, franchises, licenses, permits and Intellectual
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Property rights except to the extent its failures to do so would not, in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), operations, assets, liabilities or prospects of the Company and its
Restricted Subsidiaries taken as a whole; provided, however, that any
transaction permitted by Section 8.02 will not constitute a breach of this
Section 7.04.
7.05 Compliance with Statutes, etc. The Company will, and will
cause each of its Restricted Subsidiaries to, comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls) other than those the non-compliance with which would not have a
material adverse effect on the condition (financial or otherwise), operations,
assets, liabilities or prospects of the Company and its Restricted Subsidiaries
taken as a whole or on the ability of the Company or of the Subsidiary
Guarantors, taken as a whole, in either case, to perform its or their
obligations hereunder or under any other Credit Document.
7.06 ERISA. As soon as possible and, in any event, within 30
days after the Company, any of its Restricted Subsidiaries or any ERISA
Affiliate knows or could reasonably be expected to know of the occurrence of any
of the following and where it could reasonably be expected that a material
liability of the Company and its Restricted Subsidiaries and ERISA Affiliates,
taken as a whole, could result in connection therewith, the Company will deliver
to each of the Banks a certificate of the chief financial officer or other
Authorized Officer of the Company setting forth details as to such occurrence
and such action, if any, which the Company, such Restricted Subsidiary or such
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Company, such
Restricted Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant or the
Plan administrator with respect thereto: that a Reportable Event has occurred;
that an accumulated funding deficiency has been incurred or an application is
reasonably likely to be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan; that a Plan has been or is reasonably
likely to be terminated, reorganized, partitioned or declared insolvent under
Title IV of ERISA; that a Plan has an Unfunded Current Liability giving rise to
a lien under ERISA or the Code; that proceedings are reasonably likely to be or
have been instituted to terminate a Plan; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan;
or that the Company, any of its Restricted Subsidiaries or any ERISA Affiliate
will or is reasonably likely to incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409 or 502(i) or 502(1) of ERISA. At the request of any Bank, the
Company will deliver to such Bank a complete copy of the annual report (Form
5500) of each Plan required to be filed with the Internal Revenue Service.
7.07 End of Fiscal Years; Fiscal Quarters. The Company will,
for financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on
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December 31 of each year and (ii) each of its, and each of its Subsidiaries',
fiscal quarters to end on March 31, June 30, September 30 and December 31 of
each year.
7.08 Use of Proceeds. All proceeds of the Loans shall be used
as provided in Section 6.05.
7.09 Ownership of Subsidiaries. The Company will, at all
times, maintain, directly or indirectly, ownership of at least a majority of the
capital stock of its Restricted Subsidiaries, except to the extent 100% of the
capital stock owned by the Company or any Restricted Subsidiary of any such
Restricted Subsidiary is sold, transferred or disposed of in a transaction
permitted by Section 8.02(c) or (j) or any such Restricted Subsidiary is merged,
consolidated or liquidated in a transaction permitted by Section 8.02(e),
provided that the Company shall not be required to own a majority of the capital
stock of the Canadian Borrower so long as the Company continues to hold at least
as much of such capital stock as is held on the Original Effective Date.
7.10 Maintenance of Corporate Separateness. The Company will,
and will cause each of its Subsidiaries to, satisfy customary corporate
formalities, including the holding of regular board of directors' and
shareholders' meetings and the maintenance of corporate offices and records.
Neither the Company nor any Restricted Subsidiary shall make any payment to a
creditor of any Unrestricted Subsidiary in respect of any liability of such
Unrestricted Subsidiary, and no bank account of an Unrestricted Subsidiary shall
be commingled with any bank account of the Company or any of its Restricted
Subsidiaries. Any financial statements distributed to any creditors of an
Unrestricted Subsidiary shall clearly establish the separateness of such
Unrestricted Subsidiary from the Company and its Restricted Subsidiaries.
Finally, neither the Company nor any of its Subsidiaries shall take any action,
or conduct its affairs in a manner, which is likely to result in the corporate
existence of any Unrestricted Subsidiary which is a direct Subsidiary of the
Company or any Restricted Subsidiary being ignored by any court of competent
jurisdiction, or in the assets and liabilities of the Company or any Restricted
Subsidiary being substantively consolidated with those of any Unrestricted
Subsidiary in a bankruptcy, reorganization or other insolvency proceeding.
7.11 Canadian Borrower Capital Structure. The Company will, or
will cause K-III Directory Corporation, or any other domestic Wholly-Owned
Restricted Subsidiary of the Company to which all of the equity owned by the
Company or any of its Subsidiaries in the Canadian Borrower shall have been
transferred (such entity the "Replacement Canadian Parent"), to (i) continue to
be the owner of record of at least 25% of the issued and outstanding shares of
common stock of the Canadian Borrower, (ii) maintain in full force and effect
the Voting Trust Agreement, the Shareholders Agreement and the Canadian Borrower
Management Agreement, (iii) continue to own and hold the Convertible
Subordinated Debenture or to be the owner of record of all of the shares of
common stock of the Canadian Borrower issued upon the conversion thereof and
(iv) otherwise maintain the capital structure of the Canadian Borrower as is in
effect on the Original Effective Date.
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SECTION 8. Negative Covenants. The Company hereby covenants
and agrees that as of the Original Effective Date, and thereafter for so long as
this Agreement is in effect and until the Commitments have terminated, no
Letters of Credit or Notes are outstanding and the Loans, together with
interest, Fees and all other Obligations are paid in full:
8.01 Changes in Business. The Company will not, and will not
permit any of its Restricted Subsidiaries to, engage in any businesses other
than Businesses, provided that the Company and its Restricted Subsidiaries may
engage in businesses other than a Business so long as the businesses engaged in
by the Company and its Restricted Subsidiaries, taken as a whole, consist
substantially of Businesses.
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc.
The Company will not, and will not permit any of its Restricted Subsidiaries to,
wind up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, or convey, sell, lease or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or any part of its
property or assets, or enter into any partnerships, joint ventures or
sale-leaseback transactions, or purchase or otherwise acquire (in one or a
series of related transactions) any part of the property or assets (other than
purchases or other acquisitions of inventory, materials and equipment (and, to
the extent consistent with industry practices, other tangible and intangible
assets) in the ordinary course of business) of any Person, except that the
following shall be permitted:
(a) any sale, transfer or other disposition of (x) inventory
in the ordinary course of business or (y) any other tangible or
intangible asset in the ordinary course of business of the Company
and/or its Restricted Subsidiaries;
(b) the advances, investments and loans permitted pursuant to
Section 8.05;
(c) Asset Sales constituting the disposition of a business
(including, without limitation, to the extent permitted in this Section
8.02(c), sales of the capital stock of a Restricted Subsidiary but
excluding sales of the stock of an Unrestricted Subsidiary); provided
that (i) no Default or Event of Default exists at such time or would
exist immediately after giving effect thereto; (ii) such sale, transfer
or disposition (or deemed sale, transfer or disposition pursuant to any
Permitted Restricted Subsidiary Conversion) (x) is for fair market
value, as determined in good faith by management of the Company (or, in
the case of any Permitted Restricted Subsidiary Conversion or Permitted
Restricted Asset Sale, to the extent requested by the Administrative
Agent or the Required Banks, as determined by a written opinion of
value reasonably satisfactory to the Administrative Agent by an
Appraisal Firm) and (y) except in the case of a Permitted Restricted
Subsidiary Conversion otherwise permitted pursuant to the terms hereof,
results in consideration in the form of cash, promissory notes issued
by the respective purchaser and/or other assets, provided that, to the
extent any such other assets are received by the Company and/or its
Restricted Subsidiaries in connection with any such Asset Sale, (I) the
market value of such other assets, when added to the aggregate amount
of other consideration received in connection with such Asset Sale,
shall equal or exceed the market value of the assets so sold (such
value to be set forth, to the extent requested by
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the Administrative Agent or the Required Banks, in a written opinion of
value reasonably satisfactory to the Administrative Agent by an
Appraisal Firm) and (II) such assets are permitted to be acquired by
the Company or any of its Restricted Subsidiaries pursuant to Section
8.02(g) at the time of consummation of such Asset Sale (both before and
after giving effect to such Asset Sale); (iii) the businesses sold (or
deemed sold pursuant to any Permitted Restricted Subsidiary Conversion)
by the Company and/or its Restricted Subsidiaries pursuant to this
Section 8.02(c) in any fiscal year of the Company shall not, in the
aggregate, have EBITDA in the immediately preceding fiscal year in an
amount in excess of 25% of the Consolidated EBITDA of the Company and
its Restricted Subsidiaries for such preceding fiscal year, determined
on a pro forma basis as if (A) any dispositions (or deemed dispositions
pursuant to any Permitted Restricted Subsidiary Conversion) consummated
during such preceding fiscal year had been consummated on the first day
of such preceding fiscal year and (B) any acquisitions consummated
after the beginning of such preceding fiscal year but prior to the date
of any proposed Asset Sale pursuant to this Section 8.02(c) had been
consummated on the first day of such preceding fiscal year; and (iv) to
the extent such sale, transfer or disposition constitutes a sale,
transfer or disposition of less than 100% of the capital stock of any
Restricted Subsidiary of the Company, after giving effect to such sale,
transfer or disposition, the Company shall own at least a majority of
the capital stock of such Restricted Subsidiary;
(d) Asset Sales constituting the disposition of the capital
stock owned by the Company and its Restricted Subsidiaries or
Unrestricted Subsidiaries;
(e) any Restricted Subsidiary may be merged or consolidated
with or into, or be liquidated into, the Company or any other
Restricted Subsidiary of the Company, or all or any part of its
business, properties and assets may be conveyed, leased, sold or
otherwise transferred to the Company or any other Restricted
Subsidiary, provided that (v) in any such merger or consolidation
involving the Company, the Company shall be the surviving corporation,
(w) no Default or Event of Default exists or would exist after giving
effect thereto, (x) no Excluded Foreign Restricted Subsidiary or
Excluded Domestic Restricted Subsidiary may be the surviving
corporation of any such merger or consolidation (other than, in the
case of an Excluded Foreign Restricted Subsidiary, a merger or
consolidation with another Excluded Foreign Restricted Subsidiary and
other than, in the case of an Excluded Domestic Restricted Subsidiary,
a merger or consolidation with another Excluded Domestic Restricted
Subsidiary), (y) no businesses, properties or assets may be transferred
to Excluded Foreign Restricted Subsidiaries if after giving effect to
such transfer the Net Investments in Excluded Foreign Restricted
Subsidiaries would exceed $30,000,000 and (z) to the extent any
business, properties or assets are transferred to Excluded Domestic
Restricted Subsidiaries in connection with any such merger or
consolidation the Company shall have determined, with respect to such
transaction, that the Company and its Restricted Subsidiaries would
have been in compliance, on a Pro Forma Basis, with Sections 8.09, 8.10
and 8.11 of this Agreement;
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(f) the Company and/or its Restricted Subsidiaries may lease
real or personal property (so long as such lease does not create
Capitalized Lease Obligations except as otherwise permitted by Section
8.04);
(g) so long as no Default or Event of Default exists or would
result therefrom, the Company and its Restricted Subsidiaries may
acquire assets, the capital stock of, or other ownership interests in,
any Person (any such acquisition permitted by this clause (g), a
"Permitted Acquisition"); provided that (A) after giving effect to any
such acquisition, the Company and its Restricted Subsidiaries shall be
in compliance with Section 8.01 hereof; (B) the Company shall have
determined, with respect to such acquisition, that, on a Pro Forma
Basis, the Company and its Restricted Subsidiaries would have been in
compliance with Sections 8.09, 8.10 and 8.11 of this Agreement; and (C)
to the extent that such acquisition is of the capital stock of or other
ownership interest in another Person (such Person, the "Acquired
Entity"), (I) such acquisition must be of at least a majority of such
capital stock or of such ownership interests, such Person shall
constitute a Restricted Subsidiary and all of the applicable provisions
of Section 8.14 shall have been complied with in respect of such
Restricted Subsidiary and (II) the Board of Directors or other
governing body of the Acquired Entity shall not have indicated, either
publicly or privately to the Company or any of its Restricted
Subsidiaries, its opposition to the consummation by the Company or such
Subsidiary of such acquisition;
(h) the Company and its Restricted Subsidiaries may sell or
discount, in each case without recourse, accounts receivable arising in
the ordinary course of business, but only in connection with the
compromise or collection thereof;
(i) Capital Expenditures by the Company and/or its Restricted
Subsidiaries made in the ordinary course of business; and
(j) the Company and its Restricted Subsidiaries may sell
assets (and may effect Permitted Restricted Subsidiary Conversions)
other than in the ordinary course of business, so long as (x) each such
asset is sold (or deemed sold pursuant to any Permitted Restricted
Subsidiary Conversion) at fair market value, as determined in good
faith by management of the Company; (y) each such sale (or deemed sale
pursuant to any Permitted Restricted Subsidiary Conversion) results in
consideration in the form of cash, promissory notes issued by the
respective purchaser and/or other assets, provided that, to the extent
any such other assets are received by the Company and/or its Restricted
Subsidiaries in connection with any such asset sale, (I) the market
value of such other assets, when added to the aggregate amount of other
consideration received in connection with such asset sale, shall equal
or exceed the market value of the assets so sold and (II) such assets
are permitted to be acquired by the Company or any of its Restricted
Subsidiaries pursuant to Section 8.02(g) at the time of consummation of
such asset sale (both before and after giving effect to such asset
sale); and (z) the aggregate value of all assets so sold (or deemed
sold pursuant to any Permitted Restricted Subsidiary Conversion) by the
Company and its Restricted Subsidiaries in any fiscal year shall not
exceed $25,000,000.
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8.03 Liens. The Company will not, and will not permit any of
its Restricted Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon or with respect to any property or assets of any kind (real or
personal, tangible or intangible) of the Company or its Restricted Subsidiaries,
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable or notes with
recourse to the Company or any of its Restricted Subsidiaries) or assign any
right to receive income, except:
(a) Liens for taxes not yet due or Liens for taxes being
contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP;
(b) Liens in respect of property or assets of the Company or
any of its Restricted Subsidiaries imposed by law which were incurred
in the ordinary course of business and which have not arisen to secure
Indebtedness for borrowed money, such as carriers', warehousemen's and
mechanics' Liens, statutory landlord's Liens, and other similar Liens
arising in the ordinary course of business, and which either (x) do not
in the aggregate materially detract from the value of such property or
assets or materially impair the use thereof in the operation of the
business of the Company or its Restricted Subsidiaries or (y) are being
contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property or
asset subject to such Lien;
(c) Liens in existence on the Original Effective Date which
are listed, and the property subject thereto described, in Annex IV,
without giving effect to any extensions or renewal thereof ("Permitted
Liens");
(d) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.08;
(e) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations incurred in the ordinary course of
business (exclusive of obligations in respect of the payment for
borrowed money);
(f) leases or subleases granted to third Persons not
interfering in any material respect with the business of the Company or
any of its Restricted Subsidiaries;
(g) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Company or any of its Restricted Subsidiaries;
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(h) Liens arising from UCC financing statements regarding
leases permitted by this Agreement;
(i) purchase money Liens securing payables arising from the
purchase by the Company or any of its Restricted Subsidiaries of any
equipment or goods in the normal course of business, provided that such
payables shall not constitute Indebtedness;
(j) any interest or title of a lessor or sublessor under any
lease permitted by this Agreement;
(k) Liens created pursuant to Capital Leases permitted
pursuant to Section 8.04(c);
(l) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of custom duties in connection
with the importation of goods so long as such Liens attach only to the
imported goods;
(m) Liens on assets acquired (or owned by a Restricted
Subsidiary acquired) after the Original Effective Date securing
Indebtedness permitted under Section 8.04(g), provided that at the time
of such acquisition the value of the assets subject to such Liens does
not exceed 10% of the total value of the assets so acquired, or of the
assets of the Restricted Subsidiary so acquired, as the case may be;
(n) Liens arising out of consignment or similar arrangements
for the sale of goods entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business;
(o) Liens created under this Agreement and/or the other Credit
Documents;
(p) Liens created under the Additional Credit Agreement, the
other Additional Facility Documents, the 1999 Additional Credit
Agreement and the other 1999 Additional Facility Documents; and
(q) Liens not otherwise permitted hereunder which secure
Indebtedness, Contingent Obligations or other obligations (in each case
permitted hereunder) not exceeding (as to the Company and its
Restricted Subsidiaries) $20,000,000 in the aggregate at any time
outstanding.
8.04 Indebtedness. The Company will not, and will not permit
any of its Restricted Subsidiaries to, contract, create, incur, assume or suffer
to exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
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(b) (i) Indebtedness incurred pursuant to the Additional
Credit Agreement and the other Additional Facility Documents and (ii)
Indebtedness incurred pursuant to the 1999 Additional Credit Agreement
and the other 1999 Additional Facility Documents;
(c) Capitalized Lease Obligations of the Company and its
Restricted Subsidiaries; provided that the aggregate Capitalized Lease
Obligations under all Capital Leases outstanding at any one time shall
not exceed $50,000,000;
(d) Existing Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Original Effective Date and listed on
Part A of Annex V hereto ("Existing Debt"), without giving effect to
any subsequent extension, renewal or refinancing thereof except
pursuant to Section 8.04(i);
(e) Indebtedness to the extent permitted pursuant to Section
8.05(c);
(f) Indebtedness evidenced by the Subordinated Exchange
Debentures after the issuance thereof in an aggregate principal amount
not to exceed $500,000,000 at any time outstanding;
(g) Indebtedness of a Restricted Subsidiary acquired after the
Original Effective Date (or Indebtedness assumed at the time of an
acquisition of an asset securing such Indebtedness), provided that (i)
such Indebtedness was not incurred in connection with or in
anticipation of such acquisition and (ii) at the time of such
acquisition such Indebtedness does not exceed 10% of the total value of
the assets of the Restricted Subsidiary so acquired, or of the asset so
acquired, as the case may be;
(h) additional Indebtedness of the Company and its Restricted
Subsidiaries not otherwise permitted hereunder; provided that (A) in no
event shall the final maturity of such Indebtedness occur prior to the
Final Maturity Date, (B) in no event shall such Indebtedness have a
shorter average life than the Loans hereunder, (C) in no event shall
such Indebtedness contain terms and conditions (including, without
limitation, with respect to the obligor and guarantors, if any, in
respect of such Indebtedness, prepayment and redemption provisions,
covenants, defaults, security, remedies and, if applicable,
subordination provisions) materially less favorable to the Company and
its Restricted Subsidiaries or to the Banks than the terms and
conditions of (I) in the case of Indebtedness issued to the public or
in accordance with Rule 144A or similar rule under the Securities Act
of 1933, as amended, the Senior Notes, (II) in the case of other senior
Indebtedness, this Agreement and the other Credit Documents, and (III)
in the case of other Indebtedness, similar Indebtedness of the Company
then outstanding or if no similar Indebtedness of the Company is then
outstanding, the Senior Notes (in each case excluding the impact of
market conditions on the interest rate and other economic terms) and
(D) the Company shall have determined, with respect to the incurrence
of such Indebtedness, that the Company and its Restricted Subsidiaries
would have been in compliance, on Pro Forma Basis, with Sections 8.09,
8.10 and 8.11 of this Agreement (any Indebtedness issued pursuant to
this Section 8.04(h), "Additional Indebtedness"), provided further,
that, the aggregate principal amount of any such Additional
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Indebtedness incurred directly by the Subsidiary Guarantors (taken as a
whole), when added to the aggregate principal amount of Indebtedness
incurred directly by the Subsidiary Guarantors (taken as a whole)
pursuant to Section 8.04(j) shall not exceed $300,000,000 at any time
outstanding;
(i) Indebtedness of the Company and its Restricted
Subsidiaries constituting Permitted Refinancing Debt; and
(j) additional Indebtedness of the Company and its Restricted
Subsidiaries (including, but not limited to, Non-Facility Letter of
Credit Outstandings) not exceeding in an aggregate principal amount at
any one time outstanding an amount equal to $150,000,000, provided that
the aggregate principal amount of such Indebtedness incurred directly
by the Subsidiary Guarantors (taken as a whole), when added to the
aggregate principal amount of Additional Indebtedness incurred directly
by the Subsidiary Guarantors (taken as a whole) pursuant to Section
8.04(h), shall not exceed $300,000,000 at any time outstanding.
8.05 Advances, Investments and Loans. The Company will not,
and will not permit any of its Restricted Subsidiaries to, lend money or credit
or make advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, except:
(a) the Company and its Restricted Subsidiaries may invest in
cash and Cash Equivalents;
(b) the Company or any of its Restricted Subsidiaries may
acquire and hold receivables owing to it, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance
with customary trade terms of the Company or such Restricted
Subsidiary, as the case may be;
(c) the Company may make intercompany loans and advances to
any Restricted Subsidiary, and any Restricted Subsidiary may make
intercompany loans and advances to any other Restricted Subsidiary or
the Company (collectively, "Intercompany Loans"), provided that (i) no
Intercompany Loan may be made to an Excluded Foreign Restricted
Subsidiary at any time if after giving effect to such Intercompany Loan
the Net Investments in Excluded Foreign Restricted Subsidiaries would
exceed $30,000,000, and (ii) no such Intercompany Loan may be made by
the Company or a Wholly-Owned Restricted Subsidiary to an Excluded
Domestic Restricted Subsidiary;
(d) so long as no Default or Event of Default exists or would
result therefrom, the Company and its Restricted Subsidiaries may make
loans and advances of cash to, or cash capital contributions in, any
Unrestricted Subsidiary of the Company; provided that (i) the sum of
(A) the aggregate amount of capital contributions made in, plus the
aggregate principal amount of loans or advances outstanding at any one
time made to, Unrestricted Subsidiaries after the Original Effective
Date pursuant to this clause (d) (such amount, the "Unrestricted
Subsidiary Investment Amount") plus (B) the Aggregate
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Conversion Amount at such time, shall not exceed the Unrestricted
Subsidiary Investment Limit then in effect, and (ii) the Unrestricted
Subsidiary receiving cash proceeds from such loan, advance or
contribution shall utilize the entire amount of cash so received to
effectuate an acquisition of assets or capital stock of a Person not an
affiliate of the Company and its Subsidiaries (other than pursuant to a
Permitted Restricted Subsidiary Conversion or a Permitted Restricted
Asset Sale) or to develop the Business and to finance the working
capital needs of such Unrestricted Subsidiary;
(e) the Company and its Restricted Subsidiaries shall be
permitted to (i) make Permitted Acquisitions, (ii) engage in any
transaction to the extent permitted by Section 8.02(e) and (iii)
acquire and hold promissory notes issued by the purchasers of assets
sold in accordance with Section 8.02(c) or 8.02(j);
(f) the Company and any of its Restricted Subsidiaries may
acquire and own investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business;
(g) the Company or any Subsidiary Guarantor may acquire
capital stock or other equity securities (or warrants, rights or
options with respect thereto) issued by any other Restricted
Subsidiary;
(h) Interest Rate Protection Agreements permitted by Section
8.06(e) shall be permitted;
(i) investments by the Company or Restricted Subsidiaries in
(x) Subsidiary Guarantors, provided that if the Subsidiary Guarantor in
which such investment is made is a newly-formed Subsidiary or a
Partially-Owned Restricted Subsidiary newly designated as a Subsidiary
Guarantor pursuant to Section 8.14(b)(x), all of the applicable
provisions of Section 8.14 shall have been satisfied with respect to
such Restricted Subsidiary, (y) Excluded Domestic Restricted
Subsidiaries, provided that, the Company shall have determined, in
connection with any such investment, that the Company and its
Restricted Subsidiaries would have been in compliance, on a Pro Forma
Basis, with Sections 8.09, 8.10 and 8.11 of this Agreement and (z) in
Excluded Foreign Restricted Subsidiaries, provided that no investment
in an Excluded Foreign Restricted Subsidiary may be made at any time if
after giving effect to such investment the Net Investments in Excluded
Foreign Restricted Subsidiaries would exceed $30,000,000;
(j) the Company and its Restricted Subsidiaries may make loans
and advances to officers, employees and agents in the ordinary course
of business (i) constituting travel advances or (ii) otherwise equal in
the aggregate for the Company and its Restricted Subsidiaries, in the
case of all loans and advances pursuant to this clause (ii), to no more
than $10,000,000 at any one time outstanding less the principal amount
of all Contingent Obligations then outstanding pursuant to Section
8.06(i);
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(k) the Company may acquire obligations of, or make loans or
advances to, one or more management investors in connection with such
management investors' acquisition of shares of capital stock of the
Company, provided that (x) the aggregate amount of cash actually
advanced to all such management investors by the Company and its
Restricted Subsidiaries shall not exceed $10,000,000 at any time, and
(y) the aggregate principal amount of all such obligations, loans and
advances shall not exceed $25,000,000 at any one time outstanding; and
(l) advances, investments and loans not otherwise permitted
hereunder with an aggregate cost or principal amount, as the case may
be, not to exceed $25,000,000 at any time outstanding.
8.06 Contingent Obligations. The Company will not, and will
not permit any of its Restricted Subsidiaries to, contract, create, incur,
assume or suffer to exist any Contingent Obligations, except:
(a) any Subsidiary Guarantor may become liable as guarantor
with respect to any Indebtedness, obligation or liability of the
Company or any other Subsidiary Guarantor to the extent that such
Indebtedness, obligation or liability is otherwise permitted by this
Agreement, provided that a Subsidiary Guarantor (x) may not guaranty
any Subordinated Exchange Debentures and (y) may only guaranty
Permitted Refinancing Debt if and to the extent either (A) it
guarantied the indebtedness refinanced thereby or (B) such Subsidiary
Guarantor would have guarantied the indebtedness refinanced thereby if
it had been a Subsidiary of the Company while such indebtedness was
outstanding;
(b) Contingent Obligations pursuant to the Guaranties;
(c) Contingent Obligations pursuant to the Additional Facility
Documents and the 1999 Additional Facility Documents;
(d) Contingent Obligations in respect of the Letters of
Credit;
(e) Contingent Obligations under Interest Rate Protection
Agreements with respect to the Loans, loans incurred under the
Additional Credit Agreement or any other floating rate Indebtedness of
the Company and its Restricted Subsidiaries otherwise permitted by this
Agreement;
(f) Contingent Obligations pursuant to the Contribution
Agreement;
(g) Contingent Obligations of the Company outstanding on the
Original Effective Date and listed on Part B of Annex V hereto
("Existing Contingent Obligations"), without giving effect to any
subsequent extension, renewal or refinancing thereof;
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(h) the Company may become liable as guarantor with respect to
any Indebtedness, obligation or liability of any Subsidiary Guarantor
to the extent that such Indebtedness, obligation or liability is
otherwise permitted by this Agreement;
(i) the Company and its Restricted Subsidiaries may guaranty
in the ordinary course of business loans and advances to officers,
employees and agents so long as the aggregate principal amount of the
loans and advances so guaranteed does not exceed $10,000,000 less the
principal amount of all loans and advances outstanding pursuant to
Section 8.05(j); and
(j) additional Contingent Obligations (including, without
limitation, Contingent Obligations consisting of Non-Facility Letters
of Credit and reimbursement obligations with respect thereto) not
otherwise permitted hereunder not exceeding (for the Company and all of
its Restricted Subsidiaries) in aggregate principal amount at any time
outstanding an amount equal to the lesser of (x) $30,000,000 and (y)
when added to the aggregate principal amount of Indebtedness
outstanding under Section 8.04(j) at such time, $150,000,000.
8.07 Dividends, etc. The Company will not, and will not permit
any of its Restricted Subsidiaries to, declare or pay any dividends (other than
dividends payable solely in capital stock of such Person) or return any capital
to, its stockholders or authorize or make any other distribution, payment or
delivery of property or cash to its stockholders as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for a consideration, any
shares of any class of its capital stock now or hereafter outstanding (or any
warrants for or options or stock appreciation rights in respect of any of such
shares), or set aside any funds for any of the foregoing purposes, and the
Company will not permit any of its Restricted Subsidiaries to purchase or
otherwise acquire for consideration any shares of any class of the capital stock
of the Company or any other Subsidiary, as the case may be, now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued by
such Person with respect to its capital stock) (all of the foregoing
"Dividends"), except that:
(a) the Company may pay regularly accruing dividends on each
issuance of Preferred Stock through the issuance of additional shares
of such Preferred Stock, provided that the Company may pay such
regularly accruing dividends on its Preferred Stock in cash so long as
no Default or Event of Default exists at such time or would result
therefrom;
(b) any Subsidiary of the Company may pay Dividends to the
Company or to any Wholly-Owned Restricted Subsidiary of the Company;
(c) any Partially-Owned Restricted Subsidiary may pay cash
Dividends to its stockholders, provided that the Company and its
Restricted Subsidiaries must receive at least their proportionate share
of any Dividends paid by such Subsidiary;
(d) so long as no Default or Event of Default exists at such
time or would result therefrom (x) the Company may issue its
Subordinated Exchange Debentures in
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exchange for its Senior Preferred Stock in accordance with the terms
thereof, (y) the Company may issue its Subordinated Exchange Debentures
in exchange for its Series B Preferred Stock in accordance with the
terms thereof and (z) the Company may issue its Subordinated Exchange
Debentures in exchange for its Series C Preferred Stock in accordance
with the terms thereof, provided that in each such case, the Company
shall have determined, with respect to such issuance, that the Company
and its Restricted Subsidiaries would have been in compliance, on a Pro
Forma Basis, with Sections 8.09, 8.10 and 8.11 of this Agreement;
(e) the Company may exchange shares of its common stock in
replacement for shares of outstanding Preferred Stock;
(f) the Company may issue Permitted Replacement Preferred
Stock so long as either (x) such stock is issued in exchange for or (y)
all of the proceeds from such issuance are used to redeem or
repurchase, shares of outstanding Preferred Stock;
(g) the Company may redeem or repurchase shares of its common
stock from management investors; provided that (x) no Default or Event
of Default is then in existence or would arise therefrom and (y) the
aggregate amount of all cash paid in respect of all such shares and
equity interests so redeemed or repurchased does not exceed the sum of
(i) $5,000,000 in any fiscal year or $15,000,000 in the aggregate after
the Original Effective Date and (ii) the amount of cash proceeds
received by the Company in respect of the issuance of common equity to
management investors on or after the Original Effective Date;
(h) the Company and its Subsidiaries may enter into
transactions permitted under Section 8.05(g);
(i) the Company and its Restricted Subsidiaries may acquire
the capital stock of Unrestricted Subsidiaries in accordance with the
provisions of this Agreement;
(j) so long as no Default or Event of Default exists at such
time or would result therefrom, the Company may redeem or repurchase
shares of its Preferred Stock at a price equal to the liquidation
preference thereof plus accrued but unpaid dividends thereon and any
applicable premium with respect thereto in exchange for, or with the
proceeds of, Additional Preferred Stock and/or Indebtedness incurred
under Sections 8.04(h) and/or 8.04(j) (it being understood and agreed
that such redemption and/or repurchase need not occur contemporaneously
with the issuance of such Additional Preferred Stock or Indebtedness);
(k) so long as no Default or Event of Default exists at such
time or would result therefrom, the Company may declare and pay cash
Dividends to the holders of its common stock (including, without
limitation, repurchases of shares of its common stock), provided that
(x) the aggregate amount of cash Dividends paid pursuant to this clause
(k) during any fiscal year of the Company does not exceed $25,000,000
and (y) the Company shall have determined, in connection with such
Dividend, that the Company and its
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Restricted Subsidiaries would have been in compliance, on a Pro Forma
Basis, with Sections 8.09, 8.10 and 8.11 of this Agreement; and
(l) the Company may pay additional cash Dividends to the
holders of its common stock so long as (x) no Default or Event of
Default exists at such time or would result therefrom, (y) the Leverage
Ratio at such time is less than 4.00:1.00 and (z) the Company shall
have determined, in connection with such Dividend, that the Company and
its Restricted Subsidiaries would have been in compliance, on a Pro
Forma Basis, with Sections 8.09, 8.10 and 8.11 of this Agreement.
8.08 Transactions with Affiliates. The Company will not, and
will not permit any of its Restricted Subsidiaries to, enter into any
transaction or series of transactions, whether or not in the ordinary course of
business, with any Affiliate (other than the Company or any Restricted
Subsidiary) other than on terms and conditions substantially as favorable to the
Company or such Restricted Subsidiary as would be obtainable by the Company or
such Restricted Subsidiary at the time in a comparable arm's-length transaction
with a Person other than an Affiliate; provided that (i) the Company may pay
management and transaction fees to KKR or its affiliates which have been
disclosed in writing to the Banks prior to the Original Effective Date; (ii) the
payment of transaction fees to KKR for the rendering of financial advice and
services in connection with acquisitions, dispositions and financings by the
Company and its Restricted Subsidiaries in amounts which are in accordance with
past practices shall be permitted; (iii) loans and advances to officers,
employees and agents in the ordinary course of business shall be permitted; (iv)
customary fees may be paid to non-officer directors of the Company and/or its
Restricted Subsidiaries; (v) the loans, advances and contributions made (or
deemed made) in Unrestricted Subsidiaries in compliance with Section 8.05(d)
shall be permitted; and (vi) transactions specifically permitted by the
provisions of this Agreement to occur between the Company, its Restricted
Subsidiaries and their respective Affiliates shall be permitted to the extent so
otherwise specifically permitted.
8.09 Fixed Charge Coverage Ratio. The Company will not permit
the ratio of (i) Consolidated EBITDA of the Company and its Restricted
Subsidiaries to (ii) Consolidated Fixed Charges of the Company and its
Restricted Subsidiaries, for any Test Period, to be less than 1.05 to 1.0.
8.10 Interest Coverage Ratio. The Company will not permit the
ratio of (i) Consolidated EBITDA of the Company and its Restricted Subsidiaries
to (ii) Consolidated Interest Expense of the Company and its Restricted
Subsidiaries for any Test Period ending during a period listed below to be less
than the ratio set forth opposite such period below:
Period Ratio
------ -----
Original Effective Date to and including 1.80 to 1.00
December 31, 1999
January 1, 2000 to and including 2.00 to 1.00
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Period Ratio
------ -----
December 31, 2000
January 1, 2001 to and including 2.25 to 1.00
December 31, 2001
January 1, 2002 and thereafter 2.50 to 1.00
8.11 Leverage Ratio. The Company will not permit the ratio
(the "Leverage Ratio") of (i) Consolidated Debt of the Company and its
Restricted Subsidiaries at any date of determination thereof to (ii)
Consolidated EBITDA of the Company and its Restricted Subsidiaries for the Test
Period then last ended, to exceed, at any time during a period set forth below,
the ratio set forth opposite such period below:
Period Ratio
------ -----
Original Effective Date to and including 6.00 to 1.00
December 31, 1999
January 1, 2000 to and including 5.50 to 1.00
December 31, 2000
January 1, 2001 to and including 5.00 to 1.00
December 31, 2001
January 1, 2002 and thereafter 4.50 to 1.00
8.12 Issuance of Stock. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, issue,
sell, assign, pledge or otherwise encumber or dispose of any shares of its or
such Restricted Subsidiary's preferred or preference stock or other redeemable
equity securities (or warrants, rights or options to acquire shares of any of
the foregoing) except:
(a) in the case of shares of capital stock of the Company and
its Restricted Subsidiaries, to the extent permitted by Section 8.02,
8.03, 8.05, 8.07 or 8.13(b);
(b) issuances by Restricted Subsidiaries to the Company or to
Wholly-Owned Restricted Subsidiaries; and
(c) issuances by the Company of additional preferred stock not
otherwise permitted hereunder; provided that (A) in no event shall such
preferred stock contain any provision requiring mandatory redemption or
permitting any put with respect to all or any
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portion of such stock prior to the Final Maturity Date, (B) in no event
shall such preferred stock contain terms and conditions (including,
without limitation, pay-in-kind features, liquidation preferences,
voting rights and exchange rights) materially less favorable to the
Company and its Restricted Subsidiaries or to the Banks than the terms
and conditions of the Existing Preferred Stock (excluding the impact of
market conditions on the dividend rate and other economic terms) and
(C) the Company shall have determined, in connection with such
issuance, that the Company and its Restricted Subsidiaries would have
been in compliance, on a Pro Forma Basis, with Sections 8.09, 8.10 and
8.11 of this Agreement, provided that, for purposes of the calculation
of compliance with Section 8.09, the ratio set forth in Section 8.09
shall be deemed to equal 1.25 to 1.0 (any Preferred Stock issued
pursuant to this Section 8.12(c), "Additional Preferred Stock").
8.13 Modifications of Certain Agreements, etc. The Company
will not, and will not permit any of its Subsidiaries to: (a) after the issuance
thereof, amend or modify (or permit the amendment or modification of) any of the
terms or provisions of the Senior Notes, the Additional Facility Documents, the
1999 Additional Facility Documents, the Preferred Stock, the Subordinated
Exchange Debentures, any Additional Indebtedness, any Permitted Refinancing
Debt, the Convertible Subordinated Debenture, the Canadian Borrower Management
Agreement, the Voting Trust Agreement, the Shareholders Agreement, or any
agreement related to any of the foregoing, provided that (i) Permitted
Amendments may be made to the Senior Notes, the Additional Facility Documents,
the 1999 Additional Facility Documents, the Preferred Stock, any Permitted
Refinancing Debt, any Additional Indebtedness, any Subordinated Exchange
Debenture, and the documents governing the terms of any of the foregoing and
(ii) amendments or modifications may be made to the Canadian Borrower Management
Agreement which, in the aggregate or individually, would not adversely affect
the interests of any Bank under this Agreement or the other Credit Documents (it
being understood and agreed that the annual fee payable to K-III Directory
Corporation or the Replacement Canadian Parent, if any, pursuant thereto may be
amended or modified); or (b) make (or give any notice in respect thereof) any
voluntary or optional payment or prepayment or redemption or acquisition for
value of (including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of paying
when due) or exchange of any Subordinated Exchange Debentures, or any Permitted
Refinancing Debt (to the extent issued to refinance Subordinated Exchange
Debentures), provided that the Subordinated Exchange Debentures and any
Permitted Refinancing Debt previously issued to refinance same may be (i)
refinanced with (A) Additional Indebtedness (to the extent that such Additional
Indebtedness would have qualified as Permitted Refinancing Debt in respect
thereof if it had been issued contemporaneously with such refinancing) and/or
Permitted Refinancing Debt or (B) the proceeds from a common equity issuance by
the Company or an issuance by the Company of Additional Preferred Stock, in each
case, after the Original Effective Date or (ii) exchanged for Additional
Preferred Stock or non-redeemable common equity of the Company (it being
understood and agreed that any refinancing of such Indebtedness need not occur
contemporaneously with the issuance of such Additional Indebtedness, Additional
Preferred Stock and/or common equity). In addition, the Company will not, and
will not permit any of its Restricted Subsidiaries to, agree to modify,
supplement, amend, rescind or otherwise alter the terms, conditions or
provisions of its Certificate of Incorporation (including, without limitation,
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by the filing of any certificate of designation) or its By-Laws in any material
respect, other than such modifications, supplements or amendments that would not
materially adversely affect the interests of the Banks under this Agreement or
the other Credit Documents.
8.14 Limitation on the Creation of Subsidiaries; Redesignation
of Partially-Owned Restricted Subsidiaries. (a) Notwithstanding anything to the
contrary contained in this Agreement, the Company shall not, and shall not
permit any Subsidiary to, establish, create or acquire after the Original
Effective Date any Subsidiary unless (w) such Subsidiary is an Unrestricted
Subsidiary; (x) such Subsidiary is an Excluded Foreign Restricted Subsidiary;
(y) such Subsidiary is a Partially-Owned Restricted Subsidiary and at the time
of creation or acquisition thereof, the Company shall have made a Non-Guarantor
Designation with respect to such Partially-Owned Restricted Subsidiary in
accordance with the terms hereof or (z) such Subsidiary is a Restricted
Subsidiary (other than a Restricted Subsidiary of the type described in clauses
(x) or (y) above) and each such new Restricted Subsidiary becomes a party to the
Subsidiary Guaranty by executing a Subsidiary Assumption Agreement in the form
of Exhibit H hereto.
(b) At any time and from time to time, (x) the Company may
redesignate any Excluded Domestic Restricted Subsidiary as a Subsidiary
Guarantor by giving notice thereof to the Administrative Agent and by causing
such Subsidiary to become a party to the Subsidiary Guaranty by executing a
Subsidiary Assumption Agreement in the form of Exhibit H hereto, and (y) the
Company may redesignate any Subsidiary Guarantor which is a Partially-Owned
Restricted Subsidiary as an Excluded Domestic Restricted Subsidiary by making a
Non-Guarantor Designation with respect to such Subsidiary in accordance with the
terms hereof.
(c) At the time of the creation of any Subsidiary described in
clause (z) of Section 8.14(a) and at the time of any redesignation pursuant to
clause (x) of Section 8.14(b), each such new Subsidiary Guarantor shall execute
and deliver, or cause to be executed and delivered, in each case to the extent
not previously executed and delivered, all other relevant documentation of the
type described in Section 5 as such new Subsidiary Guarantor would have had to
deliver if such new Restricted Subsidiary had been a Restricted Subsidiary and a
Subsidiary Guarantor on the Initial Borrowing Date.
(d) Notwithstanding anything to the contrary contained in this
Section 8.14 or elsewhere in this Agreement, in no event shall any Subsidiary of
the Company guaranty any Indebtedness of the Company or any Wholly-Owned
Subsidiary unless such Subsidiary is a party to the Subsidiary Guaranty;
provided that, to the extent not prohibited by Section 8.04 hereof, (x) Excluded
Foreign Restricted Subsidiaries may guaranty Indebtedness of other Excluded
Foreign Restricted Subsidiaries and (y) Unrestricted Subsidiaries may guaranty
Indebtedness of other Unrestricted Subsidiaries.
8.15 Limitation on Payments Under the Non-Compete Notes. The
Company will not, and will not permit any of its Subsidiaries to, make any
payment representing the principal of, or interest on, any Non-Compete Note at
any time when any Default or Event of Default exists or would exist immediately
after giving effect to such payment.
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SECTION 9. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
9.01 Payments. (a) Either Borrower shall (i) default in the
payment when due of any principal of the Loans or (ii) default, and such default
shall continue for five or more days, in the payment when due of any Unpaid
Drawing, any interest on the Loans or any Fees or any other amounts owing
hereunder or under any other Credit Document or (b) any Guarantor shall default
in the payment when due of any amount in respect of any payment of the type
described in clause (a)(ii) above pursuant to its Guaranty, and such default
shall continue for five or more days; or
9.02 Representations, etc. Any representation, warranty or
statement made by either Borrower or any Subsidiary Guarantor herein or in any
other Credit Document or in any statement or certificate delivered pursuant
hereto or thereto shall prove to be untrue in any material respect on the date
as of which made or deemed made; or
9.03 Covenants. The Company shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 7.08, 7.11(i), (iii) or (iv) or 8, or (b) default in the due performance
or observance by it of any term, covenant or agreement (other than those
referred to in Section 9.01, 9.02 or clause (a) of this Section 9.03) contained
in this Agreement and such default shall continue unremedied for a period of at
least 30 days after notice to the defaulting party by the Administrative Agent
or the Required Banks; or
9.04 Default Under Other Agreements. (a) The Company or any of
its Restricted Subsidiaries shall (i) default in any payment with respect to any
Indebtedness or Contingent Obligation (other than the Obligations) beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness or Contingent Obligation was created or (ii) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or Contingent Obligation 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 Contingent Obligation (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness or Contingent Obligation to become due
prior to its stated maturity; or (b) any Indebtedness or Contingent Obligation
(other than the Obligations) of the Company or any of its Restricted
Subsidiaries shall be declared to be due and payable, or shall be required to be
prepaid other than by a regularly scheduled required prepayment or as a
mandatory prepayment (unless such required prepayment or mandatory prepayment
results from a default thereunder or an event of the type that constitutes an
Event of Default), prior to the stated maturity thereof, provided that it shall
not constitute an Event of Default pursuant to clause (a) or (b) of this Section
9.04 unless the principal amount of any one issue of such Indebtedness or
Contingent Obligation exceeds $7,500,000 or the aggregate amount of all such
Indebtedness and Contingent Obligations referred to in clauses (a) and (b) above
exceeds $15,000,000 at any one time; or
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9.05 Bankruptcy, etc. The Company or any of its Restricted
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Company or any of its Restricted Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Company or any of its Restricted Subsidiaries; or the Company or
any of its Restricted Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company or any of its Restricted
Subsidiaries; or there is commenced against the Company or any of its Restricted
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or the Company or any of its Restricted Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Company or any of its Restricted
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or the Company or any of its Restricted Subsidiaries makes a
general assignment for the benefit of creditors; or any corporate action is
taken by the Company or any of its Restricted Subsidiaries for the purpose of
effecting any of the foregoing; or
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code; any Plan is, shall have been or is likely to be
terminated or the subject of termination proceedings under ERISA; any Plan shall
have an Unfunded Current Liability; or the Company, any Restricted Subsidiary or
any ERISA Affiliate has incurred or is likely to incur a liability to or on
account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of
the Code; or the Company or any Restricted Subsidiary has incurred or is likely
to incur liabilities pursuant to one or more employee welfare benefit plans (as
defined in Section 3(1) of ERISA) which provide benefits to retired employees
(other than as required by Section 601 of ERISA); and (b) there shall result
from any such event or events the imposition of a lien, the granting of a
security interest, or a liability or a material risk of incurring a liability,
on the part of the Company, any of its Restricted Subsidiaries or any ERISA
Affiliate, which lien, security interest or liability will have a material
adverse effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole; or
9.07 Guaranty. (a) Any Guaranty or any provision thereof shall
cease to be in full force and effect, or any Guarantor thereunder or any Person
acting on behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under such Guaranty or (b) except as otherwise provided in Section
9.01(b), any Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed pursuant to
the respective Guaranty, provided that in the case of Section 13 of the
Subsidiary Guaranty, if the default constitutes a failure to perform or comply
with any provision,
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covenant or agreement contained in Section 7 (other than Section 7.08) of this
Agreement, such default shall continue unremedied for a period of at least 30
days after notice to the defaulting Guarantor by the Administrative Agent or the
Required Banks; or
9.08 Judgments. One or more judgments or decrees shall be
entered against the Company or any of its Restricted Subsidiaries involving a
liability of $8,000,000 or more in the case of any one such judgment or decree
or $20,000,000 or more in the aggregate for all such judgments and decrees for
the Company and its Restricted Subsidiaries (not paid or to the extent not
covered by insurance) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof; or
9.09 Ownership. A Change of Control Event shall have occurred;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Banks, by written notice to the Company, take any or all
of the following actions, without prejudice to the rights of the Administrative
Agent, the Letter of Credit Issuer or any Bank to enforce its claims against the
Company, except as otherwise specifically provided for in this Agreement
(provided that if an Event of Default specified in Section 9.05 shall occur with
respect to the Company, the result which would occur upon the giving of written
notice by the Administrative Agent as specified in clauses (i) and (ii) below
shall occur automatically without the giving of any such notice): (i) declare
the Total Commitment (or the unutilized portion thereof) terminated, whereupon
the Commitment of each Bank (or the unutilized portion thereof) shall forthwith
terminate immediately and any Commitment Fees shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal of and
any accrued interest in respect of all Loans and all obligations owing hereunder
(including Unpaid Drawings) to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company; (iii) terminate any Letter
of Credit which may be terminated in accordance with its terms; and (iv) direct
the Company to pay (and the Company hereby agrees upon receipt of such notice,
or upon the occurrence of any Event of Default specified in Section 9.05, to
pay) to the Administrative Agent at the Payment Office such additional amounts
of cash, to be held as security for the Company's reimbursement obligations in
respect of Letters of Credit then outstanding, equal to the aggregate Stated
Amount of all Letters of Credit then outstanding.
SECTION 10. Definitions. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Additional Credit Agreement" shall mean the credit agreement,
dated as of the date hereof, among the Company, various lending institutions,
The Bank of New York and Bankers Trust Company, as Co-Syndication Agents, The
Bank of Nova Scotia, as Documentation Agent, and The Chase Manhattan Bank, as
Administrative Agent, as amended, modified, supplemented or extended from time
to time in accordance with the terms thereof and hereof.
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"Additional Facility Amount" shall mean at any time, the
aggregate commitments then outstanding under the Additional Credit Agreement,
provided that, if at such time, the commitments under the Additional Credit
Agreement shall have terminated "Additional Facility Amount" shall mean, at such
time, the aggregate principal amount of loans outstanding under the Additional
Credit Facility at such time.
"Additional Facility Documents" shall mean and include each of
the documents and other agreements entered into by the Company or any of its
Subsidiaries in connection with the Additional Credit Agreement (including,
without limitation, the Additional Credit Agreement and any guaranty or
guaranties relating thereto), as in effect on the Initial Borrowing Date and as
the same may be modified, supplemented or amended from time to time pursuant to
the terms hereof and thereof.
"Additional Indebtedness" shall have the meaning provided in
Section 8.04(h).
"Additional Preferred Stock" shall have the meaning provided
in Section 8.12(c).
"Additional Tranche B Assumption Date" shall mean the date on
which each Tranche B Assumption Agreement is delivered to the Administrative
Agent after the Initial Tranche B Assumption Date pursuant to Section 1.13 of
this Agreement.
"Adjusted Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank such Bank's Tranche A Percentage and (y) at a time
when a Bank Default exists (i) for each Bank that is a Defaulting Bank, zero and
(ii) for each Bank that is a Non-Defaulting Bank, the percentage determined by
dividing such Bank's Tranche A Revolving Loan Commitment at such time by the
Adjusted Total Tranche A Commitment at such time, it being understood that all
references herein to Tranche A Revolving Loan Commitments and the Adjusted Total
Tranche A Commitment at a time when the Total Tranche A Revolving Loan
Commitment or Adjusted Total Tranche A Commitment, as the case may be, has been
terminated shall be references to the Tranche A Revolving Loan Commitments or
Adjusted Total Tranche A Commitment, as the case may be, in effect immediately
prior to such termination, provided that (A) no Bank's Adjusted Percentage shall
change upon the occurrence of a Bank Default from that in effect immediately
prior to such Bank Default if, after giving effect to such Bank Default and any
repayment of Tranche A Revolving Loans, Swingline Loans and Canadian Dollar
Loans at such time pursuant to Section 4.02(a) or otherwise, the sum of (i) the
aggregate outstanding principal amount of Tranche A Revolving Loans of all
Non-Defaulting Banks plus (ii) the aggregate outstanding principal amount of
Swingline Loans plus (iii) the Dollar Equivalent of the aggregate outstanding
principal amount of Canadian Dollar
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Loans plus (iv) the Letter of Credit Outstandings, exceeds the Adjusted Total
Tranche A Commitment; (B) the changes to the Adjusted Percentage that would have
become effective upon the occurrence of a Bank Default but that did not become
effective as a result of the preceding clause (A) shall become effective on the
first date after the occurrence of the relevant Bank Default on which the sum of
(i) the aggregate outstanding principal amount of the Tranche A Revolving Loans
of all Non-Defaulting Banks plus (ii) the aggregate outstanding principal amount
of Swingline Loans plus (iii) the Dollar Equivalent of the aggregate outstanding
principal amount of Canadian Dollar Loans plus (iv) the Letter of Credit
Outstandings is equal to or less than the Adjusted Total Tranche A Commitment;
and (C) if (i) a Non-Defaulting Bank's Adjusted Percentage is changed pursuant
to the preceding clause (B) and (ii) any repayment of such Bank's Tranche A
Revolving Loans, or of Unpaid Drawings with respect to Letters of Credit or of
Swingline Loans or Canadian Dollar Loans, that was made during the period
commencing after the date of the relevant Bank Default and ending on the date of
such change to its Adjusted Percentage must be returned to either Borrower as a
preferential or similar payment in any bankruptcy or similar proceeding of such
Borrower, then the change to such Non-Defaulting Bank's Adjusted Percentage
effected pursuant to said clause (B) shall be reduced to that positive change,
if any, as would have been made to its Adjusted Percentage if (x) such
repayments had not been made and (y) the maximum change to its Adjusted
Percentage would have resulted in the sum of the outstanding principal of
Tranche A Revolving Loans made by such Bank plus such Bank's new Adjusted
Percentage of the outstanding principal amount of Swingline Loans and Dollar
Equivalent of Canadian Dollar Loans and of Letter of Credit Outstandings
equaling such Bank's Tranche A Revolving Loan Commitment at such time.
"Adjusted Total Tranche A Commitment" shall mean at any time
the Total Tranche A Revolving Loan Commitment less the aggregate Tranche A
Revolving Loan Commitments of all Defaulting Banks.
"Adjusted Tranche A Commitment" for each Non-Defaulting Bank
shall mean at any time the product of such Bank's Adjusted Percentage and the
Adjusted Total Tranche A Commitment.
"Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 11.10.
"Affected Eurodollar Loan" shall have the meaning provided in
Section 4.02(h).
"Affected Period" shall mean, with respect to each Affected
Transaction, the period commencing on the date occurring twelve months prior to
the last day of the then most recently ended fiscal quarter of the Company and
ending on the date such Affected Transaction is consummated.
"Affected Transaction" shall mean and include each of the
following: (i) any transfer of assets to an Excluded Domestic Restricted
Subsidiary in connection with a transaction permitted pursuant to Section
8.02(e), (ii) any Permitted Acquisition, (iii) any incurrence of Additional
Indebtedness, (iv) any investment in an Excluded Domestic Restricted Subsidiary
pursuant to Section 8.05(d), (v) any issuance of Subordinated Exchange
Debentures, (vi) the payment of any Dividend as permitted by Section 8.07(k) or
(l), (vii) any issuance of Additional Preferred Stock, (viii) any Permitted
Restricted Subsidiary Conversion or Non-Guarantor Designation and (ix) any
designation of an Unrestricted Subsidiary as a Restricted Subsidiary pursuant to
the definition of "Restricted Subsidiaries."
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"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Aggregate Conversion Amount" shall mean, at any time, the sum
of the Conversion Value Amount with respect to each Permitted Restricted
Subsidiary Conversion consummated after the Original Effective Date but on or
prior to the date of determination thereof.
"Aggregate Unutilized Revolving Loan Commitment" with respect
to any Bank at any time shall mean the sum of (x) such Bank's Tranche A
Revolving Loan Commitment at such time less the sum of (i) the aggregate
outstanding principal amount of all Tranche A Revolving Loans made by such Bank
and (ii) such Bank's Adjusted Percentage of the Letter of Credit Outstandings at
such time and (y) such Bank's Tranche B Revolving Loan Commitment at such time
less the aggregate outstanding principal amount of all Tranche B Revolving Loans
made by such Bank.
"Aggregate Unutilized Tranche A Commitment" of any Bank at any
time shall mean the Aggregate Unutilized Revolving Loan Commitment of such Bank
at such time without giving effect to clause (y) of the definition of Aggregate
Unutilized Revolving Loan Commitment.
"Agreement" shall mean this Credit Agreement, as the same may
be from time to time modified, amended and/or supplemented.
"Applicable B Term Loan Margin" shall mean, at any time, (a)
with respect to Base Rate Loans, the margin set forth below under the heading
Applicable B Term Loan Base Rate Margin and (b) with respect to Eurodollar
Loans, the margin set forth below under the heading Applicable B Term Loan
Eurodollar Margin, in each case, opposite the ratio of (i) Consolidated Debt as
of the last day of the most recent fiscal year or fiscal quarter in respect of
which the Banks shall have received Section 7.01 Financials to (ii) Consolidated
EBITDA for the Test Period ending on the last day of such fiscal year or fiscal
quarter (it being understood that each Applicable B Term Loan Margin shall be in
effect from the date the respective Section 7.01 Financials are required to be
delivered to the Banks until the date the next such Section 7.01 Financials are
required to be delivered to the Banks at which time the Applicable B Term Loan
Margin shall be reset in accordance with the foregoing provisions of this
definition):
Applicable B Term Loan Applicable B Term Loan Base
Eurodollar Rate
Debt/EBITDA Ratio Margin Margin
- ----------------- ------ ------
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5.00:1 or Greater 2.75% 1.75%
Less than 5.00:1 2.375% 1.375%
; provided that (I) until delivery of the Section 7.01 Financials for the fiscal
quarter ending September 30, 1999 the Applicable B Term Loan Margin shall be
2.75% for Eurodollar Loans and 1.75% for Base Rate Loans and (II) if (A) any
Section 7.01 Financials are not delivered when required (the "Late Section 7.01
Financials") and such Late Section 7.01 Financials establish that any Applicable
B Term Loan Margin would have been increased or reduced to an amount set forth
in the table above on the date that such Late Section 7.01 Financials were
required to have been delivered (the "Required Delivery Date") and (B) a
Borrower shall have made any interest payment during the period from the
Required Delivery Date to the actual date of delivery of such Late Section 7.01
Financials based upon any such lower or higher Applicable B Term Loan Margin,
then (x) in the case of actual payments based on any such lower Applicable B
Term Loan Margin, the respective Borrower shall pay in the form of a
supplemental interest payment, an amount which equals the difference between the
amount of interest which would otherwise have been paid determined as if the
Late Section 7.01 Financials were delivered on the Required Delivery Date and
the amount of such interest so paid, which supplemental interest payment shall
be due and payable on the date of delivery of the Late Section 7.01 Financials
and (y) in the case of actual payments made based on such higher Applicable B
Term Loan Margin, the Banks shall retain all such amounts so paid.
"Applicable Commitment Fee Percentage" shall mean 3/8 of 1%,
provided that in the event that and for so long as the ratio of (i) Consolidated
Debt as of the last day of the most recent fiscal year or fiscal quarter in
respect of which the Banks shall have received Section 7.01 Financials to (ii)
Consolidated EBITDA for the Test Period ending on the last day of such fiscal
year or fiscal quarter is less than 4.50:1, then the Applicable Commitment Fee
Percentage shall be 1/4 of 1% (it being understood that each Applicable
Commitment Fee Percentage shall be in effect from the date the respective
Section 7.01 Financials are required to be delivered to the Banks until the date
the next such Section 7.01 Financials are required to be delivered to the Banks
at which time the Applicable Commitment Fee Percentage shall be reset in
accordance with the foregoing provisions of this definition), provided further,
that if (A) any Section 7.01 Financials are not delivered when required (the
"Late Section 7.01 Financials") and such Late Section 7.01 Financials establish
that the Applicable Commitment Fee Percentage would have been increased or
reduced to a percentage set forth above on the date that such Late Section 7.01
Financials were required to have been delivered (the "Required Delivery Date")
and (B) the Company shall have made any payment of Commitment Fees during the
period from the Required Delivery Date to the actual date of delivery of such
Late Section 7.01 Financials based upon any such lower or higher Applicable
Commitment Fee Percentage, then (x) in the case of actual payments made based on
any such lower Applicable Commitment Fee Percentage, the Company shall pay in
the form of a supplemental Commitment Fee payment an amount which equals the
difference between the amount of Commitment Fees which would otherwise have been
paid determined as if the Late Section 7.01 Financials were delivered on the
Required Delivery Date and the amount of such Commitment Fees so paid, which
supplemental Commitment Fee payment shall be due and payable on the date of
delivery of such Late Section
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7.01 Financials and (y) in the case of actual payments made based on such higher
Applicable Commitment Fee Percentage, the Banks shall retain all amounts so
paid.
"Applicable Letter of Credit Fee Percentage" shall mean, at
any time, the Applicable Margin then in effect for Eurodollar Loans less 1/4 of
1%.
"Applicable Margin" shall mean, at any time, (a) with respect
to Base Rate Loans, the margin set forth below under the heading Applicable Base
Rate Margin and (b) with respect to Eurodollar Loans, the margin set forth below
under the heading Applicable Eurodollar Margin, in each case, opposite the ratio
of (i) Consolidated Debt as of the last day of the most recent fiscal year or
fiscal quarter in respect of which the Banks shall have received Section 7.01
Financials to (ii) Consolidated EBITDA for the Test Period ending on the last
day of such fiscal year or fiscal quarter (it being understood that each
Applicable Margin shall be in effect from the date the respective Section 7.01
Financials are required to be delivered to the Banks until the date the next
such Section 7.01 Financials are required to be delivered to the Banks at which
time the Applicable Margin shall be reset in accordance with the foregoing
provisions of this definition):
Applicable Applicable Base
Eurodollar Rate
Debt/EBITDA Ratio Margin Margin
----------------- ------ ------
5.50:1 or Greater 1-1/2% 1/8 of 1%
Less than 5.50:1 but equal 1-1/8% 0%
to or greater than 5.00:1
Less than 5.00:1 but equal to or 7/8 of 1% 0%
greater than 4.50:1
Less than 4.50:1 but equal to or 5/8 of 1% 0%
greater than 4.00:1
Less than 4.00:1 1/2 of 1% 0%
; provided that if (A) any Section 7.01 Financials are not delivered when
required (the "Late Section 7.01 Financials") and such Late Section 7.01
Financials establish that any Applicable Margin would have been increased or
reduced to an amount set forth in the table above on the date that such Late
Section 7.01 Financials were required to have been delivered (the "Required
Delivery Date") and (B) a Borrower shall have made any interest payment during
the period from the Required Delivery Date to the actual date of delivery of
such Late Section 7.01 Financials based upon any such lower or higher Applicable
Margin, then (x) in the case of actual payments based on any such lower
Applicable Margin, the respective Borrower shall pay in the form of a
supplemental interest payment, an amount which equals the difference between the
amount of interest which would otherwise have been paid determined as if the
Late Section 7.01 Financials were delivered on the Required Delivery Date and
the amount of such interest so paid, which supplemental interest payment shall
be due and payable on the date of delivery of the Late Section 7.01 Financials
and (y) in the case of actual payments made based on such higher Applicable
Margin, the Banks shall retain all such amounts so paid.
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"Appraisal Firm" shall mean an independent appraisal firm
(which may be an investment banking firm of national recognition) selected by,
and at the expense of, the Company and reasonably satisfactory to the
Administrative Agent.
"Approved Fund" shall mean, with respect to any Bank, any fund
or commingled investment vehicle that invests in loans and is managed or advised
by the same investment advisor (or an affiliate of such investment advisor) as
such Bank or an affiliate of such Bank.
"Asset Sale" shall mean any sale, transfer or other
disposition by the Company or any of its Restricted Subsidiaries to any Person
other than the Company or any Restricted Subsidiary of any asset (including,
without limitation, any capital stock or other securities of another Person, but
excluding any sale, transfer or other disposition by the Company of its capital
stock) of the Company or such Restricted Subsidiary, including, without
limitation, a Permitted Restricted Asset Sale and any sale, transfer or other
disposition deemed made pursuant to a Permitted Restricted Subsidiary Conversion
(other than (x) any sale, transfer or disposition of Cash Equivalents; (y) any
sale, transfer or disposition permitted by Section 8.02(a), (e) or (h); and (z)
for purposes of Sections 3.03(e), any sale, transfer or disposition of assets
(other than capital stock or other securities of any Subsidiary) that results in
Available Cash Proceeds (including Available Cash Proceeds of any related sale,
transfer or disposition) of not in excess of $10,000,000).
"Authorized Officer" shall mean any officer of the Company
designated as such in writing to the Administrative Agent by the Company, in
each case to the extent reasonably acceptable to the Administrative Agent.
"Available Cash Proceeds" shall mean, with respect to any
sale, lease, transfer or other disposition of assets, the aggregate cash
payments (including any cash received by way of deferred payment pursuant to a
note receivable issued in connection with such sale, lease, transfer or other
disposition, other than the portion of such deferred payment constituting
interest, and including any amounts received as disbursement or withdrawals from
any escrow or similar account established in connection with any such sale,
lease, transfer or other disposition, but, in either such case, only as and when
so received; but excluding any portion of cash payments which the Company
determines in good faith (x) should be reserved for post-closing adjustments (to
the extent the Company delivers to the Banks a certificate signed by its chief
financial officer, controller or chief accounting officer as to such
determination) or (y) must be applied to repurchase Senior Notes pursuant to the
Senior Note Documents (to the extent the Company delivers to the Banks a
certificate signed by its chief financial officer, controller or chief
accounting officer as to such determination), it being understood and agreed
that on the date that all such post-closing adjustments have been determined
and/or the date such repurchases shall be required to be effected, as the case
may be, the amount (if any) by which the reserved amount in respect of such sale
or disposition exceeds the actual post-closing adjustments payable by the
Company or any of its Subsidiaries or actual amount expended in connection with
such repurchases, as the case may be, shall constitute Available Cash Proceeds
on such date) received by the Company and/or any of its Subsidiaries from such
sale, lease, transfer or other disposition.
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"Bank" shall have the meaning provided in the first paragraph
of this Agreement; provided that for purposes of references in this Agreement to
Canadian Dollar Loans, "Bank" shall include the Canadian Lender.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or to fund
its portion of any assignment of Canadian Dollar Loans under Section 1.01(g) or
to fund its portion of any unreimbursed payment under Section 2.05(c) or (ii) a
Bank having notified the Administrative Agent and/or the Company that it does
not intend to comply with the obligations under Section 1.01(b), 1.01(c),
1.01(e), 1.01(g) or 2.05(c), in the case of either (i) or (ii) as a result of
the appointment of a receiver or conservator with respect to such Bank at the
direction or request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section
9.05.
"Base Rate" at any time shall mean (i) in the case of Canadian
Dollar Loans, the Canadian Lender Prime Lending Rate as in effect from time to
time and (ii) in the case of Loans other than Canadian Dollar Loans, the higher
of (x) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate
and (y) the Prime Lending Rate as in effect from time to time.
"Base Rate Loan" shall mean each Loan bearing interest at the
rates provided in Section 1.08(a).
"BONY Term Loan Facility" shall mean the credit facility among
the Company, various lending institutions and The Bank of New York, as Agent,
providing for the making of term loans to the Company in an aggregate amount not
to exceed $150,000,000 outstanding at any time, as same may have been modified,
supplemented or amended from time to time pursuant to the terms thereof.
"Borrower" shall mean each of the Company and the Canadian
Borrower.
"Borrowing" shall mean a borrowing of Loans under a single
Tranche from all Banks having Commitments with respect to such Tranche (or (x)
from Chase in the case of Swingline Loans and (y) from the Canadian Lender in
the case of Canadian Dollar Loans) on a given date (or resulting from
conversions on a given date), in each case, as required by the provisions of
this Agreement, being of a single Type of Loans and having, in the case of
Eurodollar Loans, the same Interest Period, provided that Base Rate Loans
incurred pursuant to Section 1.10(b) shall be considered part of any related
Borrowing of Eurodollar Loans.
"B Term Loan" shall have the meaning provided in Section
1.01(h).
"B Term Loan Commitment" shall mean, with respect to each
Bank, the amount set forth opposite such Bank's name in Annex I hereto directly
below the column entitled "B Term Loan Commitment," as same may be reduced from
time to time pursuant to Sections 3.03 and/or 9.
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"Business" shall mean and include the communications,
information, education, publishing and/or media businesses.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) or (iii) below, any day excluding Saturday, Sunday and
any day which shall be in the City of New York a legal holiday or a day on which
banking institutions are authorized by law or other governmental actions to
close, (ii) with respect to all notices and determinations in connection with,
and payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market and
(iii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Canadian Dollar Loans, any day which is a
Business Day described in clause (i) and which is also a day which is not in
Toronto, Canada a legal holiday or a day on which banking institutions are
authorized by law or other governmental actions to close.
"Canadian Borrower" shall have the meaning provided in the
first paragraph of this Agreement.
"Canadian Borrower Management Agreement" shall mean the
Management Agreement, dated as of March 9, 1994 between the Canadian Borrower
and K-III Directory Corporation, as amended to the Original Effective Date and
as further amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
"Canadian Dollar" and "Can.$" shall mean freely transferable
lawful money of Canada.
"Canadian Dollar Loan" shall have the meaning provided in
Section 1.01(f).
"Canadian Lender" shall mean The Bank of Nova Scotia.
"Canadian Lender Prime Lending Rate" at any time shall mean
the higher of (i) the rate per annum designated by the Canadian Lender from time
to time (and in effect on such day) as its prime rate for Canadian Dollar
commercial loans made in Canada and (ii) one-half of one percent (1/2%) plus the
CDOR Rate from time to time (and in effect on such day), as advised by the
Canadian Lender to the Canadian Borrower and the Administrative Agent from time
to time. The Canadian Lender Prime Lending Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
The Canadian Lender may make commercial loans or other loans at rates of
interest at, above or below the Canadian Lender Prime Lending Rate.
"Canadian Notice Office" shall mean the office of the Canadian
Lender set forth as the Canadian Notice Office on Annex II hereto, or such other
office as the Canadian Lender may designate to the Company, the Administrative
Agent and the Banks from time to time.
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"Canadian Payment Office" shall mean the office of the
Canadian Lender set forth as the Canadian Payment Office on Annex II hereto, or
such other office as the Canadian Lender may designate to the Company, the
Administrative Agent and the Banks from time to time.
"Capital Expenditures" shall mean, for any period, any
expenditures (whether paid in cash or accrued as liabilities and including in
all events all amounts expended or capitalized under Capital Leases) by any
Person during that period that, in conformity with GAAP, are or are required to
be included in the property, plant or equipment reflected in the balance sheet
of such Person.
"Capital Lease," as applied to any Person, shall mean any
lease of any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations
under Capital Leases of the Company or any of its Restricted Subsidiaries in
each case taken at the amount thereof accounted for as liabilities in accordance
with GAAP.
"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities of
not more than one year from the date of acquisition, (ii) U.S. dollar
denominated time deposits, certificates of deposit and bankers acceptances of
(x) any Bank, (y) any commercial bank of recognized standing having capital and
surplus in excess of $500,000,000 or (z) any bank whose short-term commercial
paper rating from Standard & Poor's Ratings Group ("S&P") is at least A-2 or the
equivalent thereof or from Moody's Investors Service, Inc. ("Moody's") is at
least P-2 or the equivalent thereof (any such bank or Bank, an "Approved Bank"),
in each case with maturities of not more than one year from the date of
acquisition, (iii) commercial paper issued by any Approved Bank or by the parent
company of any Approved Bank and commercial paper issued by, or guaranteed by,
any industrial or financial company with a short-term commercial paper rating of
at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent
thereof by Moody's, or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within one
year after the date of acquisition, (iv) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one year from
the date of acquisition thereof and, at the time of acquisition, having one of
the two highest ratings obtainable from either S&P or Moody's and (v)
investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through (iv)
above.
"CDOR Rate" shall mean that annual rate of interest equal to
the average "BA 1 Month" interest rates for Canadian Dollar denominated bankers'
acceptances displayed and identified as such on the "Reuters Screen CDOR Page"
(as defined in the International Swap and Derivatives Association, Inc.
definitions, as modified and amended from time to time) as of
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10:00 A.M., Toronto, Ontario local time on any particular day and, if such day
is not a Business Day, then on the immediately preceding Business Day (as
adjusted by the Canadian Lender after 10:00 A.M., Toronto, Ontario local time to
reflect any error in a posted rate of interest or in the posted average annual
rate of interest). If such rates are not available on the Reuters Screen CDOR
Page on any particular day, then the CDOR Rate on that day shall be calculated
as the arithmetic mean of the 30 day rates applicable to Canadian dollar
denominated banker's acceptances quoted by four major Canadian Schedule I
chartered banks as of 10:00 A.M., Toronto, Ontario local time on such day, or if
such day is not a Business Day, then on the immediately preceding Business Day.
The four major Canadian Schedule I chartered banks shall, unless the Canadian
Borrower and the Canadian Lender otherwise agree, be The Toronto-Dominion Bank,
The Bank of Nova Scotia, Royal Bank of Canada and Canadian Imperial Bank of
Commerce. The arithmetic average of any rates or quotations to be calculated
hereunder shall be rounded, if necessary, to the nearest 1/100,000 of one
percent (.00001%), with five one millionths of a percentage point rounded
upwards. All dollar amounts used in or resulting from any calculation based on
the CDOR Rate will be rounded to the nearest cent (with one-half of one cent
rounded upwards).
"Change of Control Event" shall mean (a) any "Change of
Control" or similar term as defined in the indentures governing the terms of the
Senior Notes as in effect on the Initial Borrowing Date or in any agreement
governing any Indebtedness incurred pursuant to Section 8.04(f), (h), (i) or
(j), (b) KKR or one or more Affiliates of KKR shall cease to own (directly or
indirectly) at least 25% on a fully diluted basis of the economic and voting
interest in the Company's common stock or (c) any Person or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 ,
as amended) becomes the "beneficial owner" (as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of more of the voting common stock
of the Company than that owned (directly or indirectly) by KKR and its
Affiliates.
"Chase" shall mean The Chase Manhattan Bank or any successor
thereto by merger.
"Chase Revolving Credit Facility" shall mean the amended and
restated credit facility among the Company, the Canadian Borrower, various
lending institutions, Bank of America NT&SA, The Bank of New York, The Bank of
Nova Scotia, Bankers Trust Company, Canadian Imperial Bank of Commerce and
Societe Generale, as Co-Agents, and Chase, as Administrative Agent, providing
for the making of revolving loans and the issuance of, and participation in,
letters of credit in an aggregate amount not to exceed $670,000,000 outstanding
at any time, as same may have been modified, supplemented or amended from time
to time pursuant to the terms thereof.
"Chase Term Loan Facility" shall mean the credit facility
among the Company, various lending institutions, Bank of America Illinois, The
Bank of Nova Scotia, Chemical Bank, Midland Bank plc and The Industrial Bank of
Japan, Limited, as Co-Agents, and Chase, as Administrative Agent, providing for
the making of term loans in an aggregate amount not to
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exceed $150,000,000 outstanding at any time, as same may have been modified,
supplemented or amended from time to time pursuant to the terms thereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect at the
date of this Agreement and any subsequent provisions of the Code amendatory
thereof, supplemental thereto or substituted therefor.
"Commitment" shall mean, at any time, for any Bank the sum of
the Term Loan Commitment, B Term Loan Commitment, Tranche A Revolving Loan
Commitment, and Tranche B Revolving Loan Commitment of such Bank at such time.
"Commitment Fee" shall have the meaning provided in Section
3.01(a).
"Company" shall have the meaning provided in the first
paragraph of this Agreement.
"Company Guaranty" have the meaning provided in Section
5.01(e)(ii).
"Consolidated Capital Expenditures" shall mean, for any
period, the aggregate of all Capital Expenditures by the Company and its
Restricted Subsidiaries at such time determined on a consolidated basis.
"Consolidated Current Assets" shall mean, at any time, the
current assets (other than cash and Cash Equivalents, and deferred income taxes
to the extent included in current assets) of the Company and its Restricted
Subsidiaries at such time determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any time,
the current liabilities of the Company and its Restricted Subsidiaries
determined on a consolidated basis, but excluding (i) all short-term
Indebtedness for borrowed money, (ii) the current portion of any long-term
Indebtedness of the Company or its Restricted Subsidiaries, (iii) deferred
income taxes, (iv) liabilities arising from cash overdrafts, and (v) liabilities
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business,
provided that such liabilities are extinguished within three Business Days of
their incurrence; in each case to the extent included in current liabilities.
"Consolidated Debt" shall mean all Indebtedness of the Company
and its Restricted Subsidiaries, determined on a consolidated basis, other than
Indebtedness owing by the Company to any of its Restricted Subsidiaries or by
any of the Company's Restricted Subsidiaries to the Company or any other
Restricted Subsidiary of the Company, provided that, for purposes of this
definition, (x) only the principal amount of Indebtedness outstanding under the
Non-Compete Notes issued as of the date of determination (net of the amount of
any reduction to the amounts owed under such Non-Compete Notes made in
accordance with the terms of the Non-Competition Agreement referred to in the
definition of Non-Compete Notes)
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shall be included and (y) Indebtedness of any Partially-Owned Restricted
Subsidiary shall be included in Consolidated Debt in an aggregate amount equal
to the percentage equity ownership of the Company in such Partially-Owned
Restricted Subsidiary multiplied by the aggregate Indebtedness of such
Partially-Owned Restricted Subsidiary.
"Consolidated EBITDA" shall mean, for any period, (A) the sum
(without duplication) of the amounts for such period of (i) the net income (or
loss) of the Company and its Restricted Subsidiaries on a consolidated basis for
such period taken as a single accounting period, provided that, except as
provided in clauses (I) through (III) below, there shall be excluded from
Consolidated EBITDA (x) the net income (or loss) of all Unrestricted
Subsidiaries and all Partially-Owned Restricted Subsidiaries for such period and
(y) all cash or other payments received during such period by the Company and
its Restricted Subsidiaries from any Unrestricted Subsidiaries from dividends or
distributions (including tax sharing payments), in each case to the extent
otherwise included, (ii) provisions for taxes based on income, (iii)
Consolidated Interest Expense, (iv) amortization or write-off of deferred
financing costs, (v) losses on sales of assets (excluding sales in the ordinary
course of business) and other extraordinary losses, (vi) non-cash amounts
charged as compensation for "phantom stock" arrangements, (vii) all non-cash
interest expense not included in the foregoing clause (vi), (viii) depreciation
expense and (ix) amortization expense, in the case of each of clauses (ii)
through (ix) above to the extent deducted in determining net income (or loss)
pursuant to clause (i) above for such period, less (B) the amount for such
period of gains on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains, in each case, to the extent included in
determining net income (or loss) pursuant to clause (A)(i) above for such
period, all as determined on a consolidated basis; provided, however, that (I)
for purposes of Section 8.11 and the definitions of Applicable Margin and
Applicable Commitment Fee Percentage, (1) there shall be included in determining
Consolidated EBITDA for any period (x) the net income (or loss) of any person,
business, property or asset (other than an Unrestricted Subsidiary) acquired and
not subsequently sold or otherwise disposed of (but not including the net income
(or loss) of any related person, business, property or assets to the extent not
so acquired) by the Company or one of its Restricted Subsidiaries during such
period (each such person, business, property or asset acquired and not
subsequently disposed of, an "Acquired Entity or Business"), and the net income
(or loss) of any Unrestricted Subsidiary that is converted into a Restricted
Subsidiary during such period (each, a "Converted Restricted Subsidiary"), in
each case based on the actual net income (or loss) of such Acquired Entity or
Business or Converted Restricted Subsidiary for the entire period (including the
portion thereof occurring prior to such acquisition or conversion) and (y) an
increase in respect of each Acquired Entity or Business acquired during such
period equal to the cost adjustment amount applicable to the relevant period
determined by the Company to represent the savings secured by the Company in
connection with its reduction of salary and other employment expenses and lease
and other contractual expenses with respect to such Acquired Entity or Business
and (2) there shall be excluded in determining Consolidated EBITDA for any
period the net income (or loss) of any person, business, property or asset
(other than an Unrestricted Subsidiary) sold or disposed of by the Company or
one of its Restricted Subsidiaries during such period (each such person,
business, property or asset so sold or disposed of, a "Sold Entity or
Business"), and the net income (or loss) of any Restricted Subsidiary that is
converted into an Unrestricted Subsidiary during such period (each, a "Converted
Unrestricted
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Subsidiary"), in each case based on the actual net income (or loss) of such Sold
Entity or Business or Converted Unrestricted Subsidiary for the entire period
(including the portion thereof occurring prior to such sale, disposition or
conversion), (II) for purposes of this definition, subject to clause (III)
below, there shall be included or excluded any of the items described in the
above clauses (A) and (B) attributable to a Partially-Owned Restricted
Subsidiary, but only to the extent of the equity percentage ownership of the
Company in such Partially-Owned Restricted Subsidiary and (III) in the event the
aggregate portion of Consolidated EBITDA for any period attributable to
Partially-Owned Restricted Subsidiaries (the "Limited EBITDA Component") exceeds
an amount equal to 15% of the aggregate amount of Consolidated EBITDA of the
Company and its Restricted Subsidiaries for such period, the Limited EBITDA
Component (and accordingly Consolidated EBITDA), in each case, for such period,
shall be reduced such that the Limited EBITDA Component for such period equals
15% of the aggregate amount of such Consolidated EBITDA for such period.
"Consolidated Fixed Charges" shall mean, for any period, the
sum, without duplication, of the amounts for such period of (i) Consolidated
Interest Expense, plus consolidated cash Dividend expense payable in respect of
all Preferred Stock and common stock of the Company, (ii) provisions for taxes
based on income other than (x) changes in deferred taxes, (y) taxes on gains
resulting from sales of assets (other than sales in the ordinary course of
business) and (z) taxes on gains on extraordinary items, (iii) Consolidated
Capital Expenditures paid in cash, (iv) scheduled payments on Indebtedness for
borrowed money (including the Term Loans, the B Term Loans and the loans
outstanding under the Additional Credit Agreement and the 1999 Additional Credit
Agreement but excluding the Revolving Loans) and on the Non-Compete Notes (other
than, in the case of any payments referred to in this clause (iv), any interest
payments to the extent included in Consolidated Interest Expense), and (v) the
Net Maximum Exposure Reduction, if positive, for such period; all as determined
on a consolidated basis for the Company and its Restricted Subsidiaries;
provided that for purposes of this definition, fixed charges of the type
referred to in clauses (i)-(v) above of any Partially-Owned Restricted
Subsidiary shall be included in Consolidated Fixed Charges in an aggregate
amount equal to the percentage equity ownership of the Company in such
Partially-Owned Restricted Subsidiary multiplied by the fixed charges of the
type referred to above of such Partially-Owned Restricted Subsidiary for the
respective period.
"Consolidated Interest Expense" shall mean, for any period,
total interest expense (including that attributable to Capital Leases in
accordance with GAAP but excluding non-cash interest expenses) of the Company
and its Restricted Subsidiaries determined on a consolidated basis with respect
to all outstanding Indebtedness of the Company and its Restricted Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and net costs (i.e., costs minus benefits) under Interest Rate Protection
Agreements, but excluding, however, amortization of deferred financing costs to
the extent included in total interest expense, all as determined on a
consolidated basis; provided that for purposes of this definition, interest
expense of the type referred to above of any Partially-Owned Restricted
Subsidiary shall be included in Consolidated Interest Expense in an aggregate
amount equal to the percentage equity ownership of the
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Company in such Partially-Owned Restricted Subsidiary multiplied by the interest
expense of the type referred to above of such Partially-Owned Restricted
Subsidiary for the respective period.
"Contingent Obligations" shall mean as to any Person (i) any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) 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 (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof
and (ii) any Interest Rate Protection Agreement; provided, however, that the
term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Contribution Agreement" shall have the meaning provided in
Section 5.01(h).
"Conversion Value Amount" shall have the meaning set forth in
the definition of Permitted Restricted Subsidiary Conversion.
"Convertible Subordinated Debenture" shall mean the debenture
issued by the Canadian Borrower to K-III Directory Corporation, convertible into
shares of the Canadian Borrower's common stock at the option of K-III Directory
Corporation, as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
"Copyrights" shall have the meaning provided in
Section 6.14(a).
"Credit Documents" shall mean this Agreement, any Notes to the
extent issued, the Guaranties and the Contribution Agreement.
"Credit Event" shall mean the making of a Loan or the issuance
of a Letter of Credit.
"Credit Party" shall mean the Company, the Canadian Borrower
and each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
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"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Dividends" shall have the meaning provided in Section 8.07.
"Dollar Equivalent" shall mean, at any time of determination
thereof, the amount of U.S. Dollars which could be purchased with the same
amount of Canadian Dollars involved in such computation at the spot exchange
rate therefor as published in the New York edition of The Financial Times on the
date two Business Days prior to the date of any determination thereof for
purchase on such date, provided that if the New York edition of The Financial
Times is not published on such date, reference shall be made to such rate as set
forth in the most recently published New York edition of The Financial Times,
provided further, that if at any time the New York edition of The Financial
Times ceases to publish such exchange rates, the Dollar Equivalent shall be the
amount of U.S. Dollars which could be purchased with the amount of Canadian
Dollars involved in such computation at the spot rate therefor as quoted by the
Administrative Agent at approximately 11:00 A.M. (London time) on the date two
Business Days prior to the date of any determination thereof for purchase on
such date.
"EBITDA" shall mean, for any Restricted Subsidiary or
business, for any period, the portion of Consolidated EBITDA attributable to
such Restricted Subsidiary or business.
"Environmental Law" shall mean any federal, state, provincial
or local statute, law, rule, regulation, ordinance, code, policy or rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to the environment,
health, safety or Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder. Section references to ERISA are to ERISA as in effect
at the date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Company or any Subsidiary of the
Company would be deemed to be a "single employer" within the meaning of Section
414(b), (c), (m) or (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at
the rates provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest
Period for a Eurodollar Loan, (i) the arithmetic average (rounded to the nearest
1/100 of 1%) of the offered quotation to first-class banks in the interbank
Eurodollar market by each Reference Bank (or by the Canadian Lender in the case
of Canadian Dollar Loans) for U.S. dollar deposits (or Canadian Dollar deposits
in the case of Canadian Dollar Loans) of amounts in same day funds comparable to
the outstanding principal amount of the Eurodollar Loan of such Reference Bank
(or the Canadian
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Lender, as the case may be) for which an interest rate is then being determined
with maturities comparable to the Interest Period to be applicable to such
Eurodollar Loan, determined as of 10:00 A.M. (New York time) on the date which
is two Business Days prior to the commencement of such Interest Period divided
(and rounded upward to the next whole multiple of 1/16 of 1%) by (ii) a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D);
provided that if one or more of the Reference Banks fails to provide the
Administrative Agent with its aforesaid rate, then the Eurodollar Rate in
respect of Loans shall be determined based on the rate or rates provided to the
Administrative Agent by the other Reference Banks or Bank.
"Event of Default" shall have the meaning provided in Section
9.
"Excess Cash Flow" shall mean, for any period, the remainder
of (x) the sum of (i) Consolidated EBITDA for such period and (ii) the decrease,
if any, in Working Capital from the first day to the last day of such period,
minus (y) the sum of (i) the amount of Consolidated Fixed Charges for such
period (but in the case of Consolidated Capital Expenditures included therein,
only to the extent such expenditures are not financed by Indebtedness (other
than Loans hereunder)) and (ii) the increase, if any, in Working Capital from
the first day to the last day of such period, provided that in calculating the
amount referred to in clause (x)(ii) or (y)(ii) above, as the case may be, (A)
for any period during which the Company and/or any of its Restricted
Subsidiaries have consummated an Asset Sale pursuant to Section 8.02(c) or a
Permitted Acquisition, the portion of the change in Working Capital for such
period attributable to the entity or business sold or purchased shall be based
(x) in the case of an Asset Sale, on the change in Working Capital attributable
to the entity or business sold from the first day of such period to the date of
the consummation of such sale and (y) in the case of an acquisition, on the
change in Working Capital attributable to the entity or business acquired from
the date of consummation of such acquisition to the last day of such period and
(B) Working Capital shall only include the assets and liabilities of a
Partially-Owned Restricted Subsidiary to the extent of the percentage equity
interest of the Company in such Partially-Owned Restricted Subsidiary.
"Excess Cash Flow Amount" shall mean an amount which initially
shall be zero and which shall be (i) increased on the date of delivery of
Section 7.01 Financials in respect of the first three fiscal quarters in each
year of the Company (commencing with the fiscal quarter ended June 30, 1996) by
an amount (if positive) equal to 75% of Excess Cash Flow for the fiscal quarter
in respect of which such Section 7.01 Financials are delivered, provided that in
the event that Excess Cash Flow for the first and/or second fiscal quarter in
any fiscal year is negative, then for purposes of this clause (i) the Excess
Cash Flow for the third fiscal quarter in such fiscal year shall be deemed to be
reduced by the amount of such negative Excess Cash Flow for such first and/or
second quarter, and (ii) increased on the date of delivery of Section 7.01
Financials in respect of each fiscal year of the Company by an amount (if
positive) equal to 75% of the Excess Cash Flow for such fiscal year less an
amount (if any) equal to the aggregate amount by which
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the Excess Cash Flow Amount was increased pursuant to clause (i) above in
respect of the first, second and third quarters in such fiscal year.
"Excluded Domestic Restricted Subsidiary" shall mean any
Partially-Owned Restricted Subsidiary with respect to which the Company shall
have made a Non-Guarantor Designation in accordance with the provisions hereof.
"Excluded Foreign Restricted Subsidiaries" shall mean (i)
Daily Racing Form of Canada Ltd., a Canada corporation, (ii) Admirefruit
Limited, a U.K. corporation, (iii) Canadian Red Book, Inc., a Canada
corporation, (iv) the Canadian Borrower and (v) each Restricted Subsidiary of
the Company established, created or acquired after the Original Effective Date
which is incorporated in a jurisdiction outside the United States, except to the
extent the requirements set forth in clause (z) of 8.14(a), and Section 8.14(c),
are satisfied with respect to such Subsidiary.
"Existing Contingent Obligations" shall have the meaning
provided in Section 8.06(g).
"Existing Credit Agreements" shall mean and include each of
the Chase Revolving Credit Facility, the Chase Term Loan Facility and the BONY
Term Loan Facility.
"Existing Debt" shall have the meaning provided in Section
8.04(d).
"Existing Indebtedness Agreements" shall have the meaning
provided in Section 5.01(i).
"Existing Preferred Stock" shall include preferred stock of
the Company issued prior to the Restatement Effective Date and listed on Annex
VI hereto, without giving effect to any extension or replacement thereof, as the
same may be modified, supplemented or amended from time to time pursuant to the
terms hereof and thereof.
"Facing Fee" shall have the meaning provided in Section
3.01(c).
"Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to 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 for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean (i) all amounts payable pursuant to, or
referred to in, Section 3.01 and (ii) all other fees payable to the
Administrative Agent or any Bank as may be agreed to from time to time between
the Company and the Administrative Agent or such Bank, as the case may be.
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"Final Maturity Date" shall mean July 31, 2004.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time; it being understood
and agreed that determinations in accordance with GAAP for purposes of Section
8, including defined terms as used therein, are subject (to the extent provided
therein) to Section 12.07(a).
"Guarantor" shall mean the Company and each Subsidiary
Guarantor.
"Guaranty" shall mean the Company Guaranty and the Subsidiary
Guaranty.
"Hazardous Materials" shall mean (a) any petrochemical or
petroleum products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls, and radon gas; and (b) any chemicals, materials or substances defined
as or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "restricted hazardous materials," "extremely hazardous
wastes," "restrictive hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import, under any applicable
Environmental Law.
"Indebtedness" of any Person shall mean without duplication
(i) all indebtedness of such Person for borrowed money, (ii) the deferred
purchase price of assets or services payable to the sellers thereof or any of
such seller's assignees which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such Indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person and (vi) all obligations of such Person to pay a specified
purchase price for goods or services whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, provided that Indebtedness shall not
include (x) trade payables and accrued expenses, in each case arising in the
ordinary course of business and (y) any obligations under Interest Rate
Protection Agreements.
"Information Memorandum" shall mean the Confidential
Information Memorandum dated February, 1999 and distributed to the Banks prior
to the Restatement Effective Date.
"Initial Borrowing Date" shall mean May 31, 1996.
"Initial Tranche B Assumption Date" shall mean the date on
which the first Tranche B Assumption Agreement is delivered to the
Administrative Agent pursuant to Section 1.13 of this Agreement.
"Intellectual Property" shall have the meaning provided in
Section 6.14(b).
"Intercompany Loan" shall have the meaning provided in Section
8.05(c).
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"Interest Period" with respect to any Eurodollar Loan, shall
mean the interest period applicable thereto, as determined pursuant to Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedging agreement or other similar agreement or
arrangement designed to protect the Company or any of its Subsidiaries against
fluctuations in interest rates.
"KKR" shall mean Kohlberg Kravis Roberts & Co., a Delaware
limited partnership.
"Leasehold" of any Person means all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in
Section 3.01(b).
"Letter of Credit Issuer" shall mean Chase.
"Letter of Credit Outstandings" shall mean, at any time, the
sum of, without duplication, (i) the aggregate Stated Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings in
respect of all Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
"Leverage Ratio" shall have the meaning provided in Section
8.11.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Loan" shall mean each and every Loan made by any Bank
hereunder, including Term Loans, B Term Loans, Tranche A Revolving Loans,
Tranche B Revolving Loans, Canadian Dollar Loans and Swingline Loans.
"Mandatory Borrowing" shall have the meaning provided in
Section 1.01(e).
"Margin Stock" shall have the meaning provided in Regulation
U.
"Maximum Canadian Dollar Amount" shall mean $40,000,000.
"Maximum Exposure" shall mean, for any period, an amount equal
to the maximum amount of the sum of (i) the principal amount of all outstanding
Revolving Loans, (ii) the principal amount of all outstanding Swingline Loans,
(iii) the Dollar Equivalent of the principal
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amount of all outstanding Canadian Dollar Loans and (iv) the Letter of Credit
Outstandings, at any one time during such period.
"Maximum Swingline Amount" shall mean $40,000,000.
"Minimum Borrowing Amount" shall mean (i) for Term Loans,
$3,000,000; (ii) for B Term Loans, $3,000,000; (iii) for Revolving Loans,
$3,000,000; (iv) for Canadian Dollar Loans, Can. $50,000; and (v) for Swingline
Loans, $500,000.
"Minimum Retention Amount" shall mean, at any time,
$10,000,000 multiplied by a fraction (i) the numerator of which shall be the sum
of the outstanding Term Loans, and B Term Loans plus the Total Revolving Loan
Commitment at such time and (ii) the denominator of which shall be the sum of
$1,250,000,000 plus the Total Tranche B Revolving Loan Commitment at such time.
"Net Cash Proceeds" shall mean, with respect to any Asset
Sale, the Available Cash Proceeds resulting therefrom net of (a) cash expenses
of sale (including payment of principal, premium and interest of Indebtedness
specifically relating to the assets sold in such Asset Sale, relocation expenses
and severance and shutdown costs) and (b) taxes paid or payable as a result
thereof over and above the taxes which would otherwise have been payable in the
absence of such Asset Sale, provided that in the case of an Asset Sale by a
Partially-Owned Restricted Subsidiary, "Net Cash Proceeds" shall be the amount
as determined above in this definition multiplied by the percentage of the
capital stock of such Subsidiary owned, directly or indirectly, by the Company.
"Net Investments in Excluded Foreign Restricted Subsidiaries"
shall mean the remainder of (i) the sum of (x) the aggregate value of all
businesses, properties and assets transferred by the Company and/or its
Restricted Subsidiaries (other than Excluded Foreign Restricted Subsidiaries) to
Excluded Foreign Restricted Subsidiaries after the Original Effective Date, (y)
the aggregate outstanding principal amount of all Intercompany Loans made to
Excluded Foreign Restricted Subsidiaries by the Company and/or its Restricted
Subsidiaries (other than Excluded Foreign Restricted Subsidiaries) after the
Original Effective Date and (z) the aggregate amount of all investments by the
Company and its Restricted Subsidiaries (other than Excluded Foreign Restricted
Subsidiaries) in Excluded Foreign Restricted Subsidiaries after the Original
Effective Date, minus (ii) the sum of (x) the aggregate value of all businesses,
properties and assets transferred by Excluded Foreign Restricted Subsidiaries to
the Company and/or its Restricted Subsidiaries (other than Excluded Foreign
Restricted Subsidiaries) after the Original Effective Date and (y) the aggregate
amount of all cash dividends and other cash distributions on common stock paid
by Excluded Foreign Restricted Subsidiaries to the Company and its Restricted
Subsidiaries (other than Excluded Foreign Restricted Subsidiaries) after the
Original Effective Date.
"Net Maximum Exposure Reduction" shall mean, for any period,
the Maximum Exposure during such period less the sum of (i) the Total Revolving
Loan Commitment on the last day of such period, and (ii) an amount equal to the
aggregate amount of reductions to the
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Total Tranche A Revolving Loan Commitment and the Total Tranche B Revolving Loan
Commitment during such period pursuant to Section 3.03(e).
"1999 Additional Credit Agreement" shall mean the credit
agreement, dated as of March 11, 1999, among the Company, various lending
institutions, The Bank of New York and Bankers Trust Company, as Co-Syndication
Agents, The Bank of Nova Scotia, as Documentation Agent, and The Chase Manhattan
Bank, as Administrative Agent, as amended, modified, supplemented or extended
from time to time in accordance with the terms thereof and hereof.
"1999 Additional Facility Documents" shall mean and include
each of the documents and other agreements entered into by the Company or any of
its Subsidiaries in connection with the 1999 Additional Credit Agreement
(including, without limitation, the 1999 Additional Credit Agreement and any
guaranty or guaranties relating thereto), as in effect on the Restatement
Effective Date and as the same may be modified, supplemented or amended from
time to time pursuant to the terms hereof and thereof.
"Non-Compete Notes" shall mean the promissory notes issued by
K-III Holdings Corporation III pursuant to the Non-Competition Agreement, dated
as of June 17, 1991, among PRIMEDIA Holdings, Inc. (f/k/a K-III Holdings
Corporation III), News America Holdings Incorporated and the other parties
thereto in an aggregate principal amount not to exceed $50,000,000, as such
notes may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"Non-Defaulting Bank" shall mean each Bank other than a
Defaulting Bank.
"Non-Facility Letter of Credit Outstandings" shall mean, at
any time, the sum of (i) the aggregate maximum amount available to be drawn
(regardless of whether any conditions for drawing could then be met) under all
outstanding Non-Facility Letters of Credit and (ii) the aggregate amount of all
Non-Facility Unpaid Drawings.
"Non-Facility Letters of Credit" shall mean each letter of
credit (other than any Letter of Credit issued pursuant to this Agreement)
issued for the account of the Company or any of its Restricted Subsidiaries,
provided that the reimbursement obligations of the Company or such Restricted
Subsidiary with respect to such letter of credit may be secured only to the
extent permitted by Section 8.03(q).
"Non-Facility Unpaid Drawings" shall mean all amounts paid or
disbursed by the issuers of Non-Facility Letters of Credit which have not been
reimbursed.
"Non-Guarantor Designation" shall mean and include each of (x)
the designation by the Company of any newly created or acquired Partially-Owned
Restricted Subsidiary and (y) the redesignation of any existing Partially-Owned
Restricted Subsidiary which is a Subsidiary Guarantor, in each case, as an
Excluded Domestic Restricted Subsidiary by delivery of a written notice to the
Administrative Agent of such designation or redesignation, as the case may be;
provided that the Company may only make a Non-Guarantor Designation hereunder
if, at the
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time of such designation (i) no Default or Event of Default exists or would
result therefrom and (ii) the Company shall have determined, with respect to
such designation, that the Company and its Restricted Subsidiaries would have
been in compliance, on a Pro Forma Basis, with Sections 8.09, 8.10 and 8.11 of
this Agreement.
"Note" shall mean and include each promissory note, in the
form agreed by the Company and the Administrative Agent prior to the Original
Effective Date (or, in the case of B Term Loans, prior to the Restatement
Effective Date), to the extent issued pursuant to Section 1.05(b) hereof.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Administrative
Agent at 270 Park Avenue, New York, New York 10017, or such other office as the
Administrative Agent may designate to the Company and the Banks from time to
time.
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to the Administrative Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Credit Agreement" shall have the meaning provided in
the first Whereas clause of this Agreement.
"Original Effective Date" shall mean May 28, 1996.
"Original Final Maturity Date" shall mean June 30, 2004.
"Partially-Owned Restricted Subsidiary" shall mean any
Restricted Subsidiary of the Company to the extent that the Company and its
Wholly-Owned Restricted Subsidiaries shall own less than 100% of the capital
stock of such Restricted Subsidiary.
"Participant" shall have the meaning provided in Section
2.05(a).
"Payment Office" shall mean the office of the Administrative
Agent at 270 Park Avenue, New York, New York 10017, or such other office as the
Administrative Agent may designate to the Company and the Banks from time to
time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning provided in
Section 8.02(g).
"Permitted Amendments" shall mean, to any amendment or
supplement to or waiver of the documents governing or evidencing (x) any issue
of Indebtedness which does not (i) add, directly or indirectly, any new
covenant, event of default, collateral requirement or repay-
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ment requirement (including pursuant to any put arrangement), (ii) modify in any
manner materially adverse to the issuer or guarantors thereof any existing
covenant, event of default, collateral requirement or repayment requirement
(including any shortening or any amortization requirements), (iii) increase the
interest rate thereon or modify in any manner the time or manner of payment of
such interest (including any option or right to pay such interest in kind), (iv)
modify any of the subordination provisions or (v) contain any provision which,
in the opinion of the Administrative Agent, is materially adverse to the
interests of the Banks, (y) any issue of Preferred Stock which does not (i) add,
directly or indirectly, any new covenant, default, voting, redemption, exchange
or put provision, (ii) modify in any manner adverse to the issuer thereof any
existing covenant, default, voting, redemption, exchange or put provision, (iii)
increase the dividend rate thereon or modify in any manner the time or manner of
payment of such dividends (including any option or right to pay such dividends
in kind) or (iv) contain any provision which, in the opinion of the
Administrative Agent, is materially adverse to the interests of the Banks or (z)
the sole effect of which is to (i) delete covenants or events of default and/or
(ii) add to, or increase existing, exceptions to the covenants contained
therein, or waive any of the covenants contained therein or any rights of the
holders of such Indebtedness or Preferred Stock, as the case may be, set forth
therein.
"Permitted Liens" shall have the meaning provided in Section
8.03(c).
"Permitted Refinancing Debt" shall mean Indebtedness issued in
connection with a refinancing of any or all of the Existing Debt, the
Subordinated Exchange Debentures, any Additional Indebtedness or any other
Permitted Refinancing Debt; provided that (i) such Indebtedness has a longer
average life than the Indebtedness being refinanced and (ii) such Indebtedness,
and the agreements and other documents entered into by the Company and/or any of
its Restricted Subsidiaries in connection therewith shall contain terms and
conditions (including, without limitation, with respect to the obligor and
guarantors, if any, in respect of such Indebtedness, amortization schedules,
interest rates, redemption provisions, covenants, defaults, security, remedies
and, if the Indebtedness so refinanced is subordinated to any other Indebtedness
of the Company or its Restricted Subsidiaries, subordination provisions) not
materially less favorable to the Company and its Restricted Subsidiaries or to
the Banks than the terms and conditions of the Indebtedness so refinanced
(excluding, for purposes of this clause (ii), the impact of market conditions on
the interest rate and other economic terms).
"Permitted Replacement Preferred Stock" shall mean preferred
stock of the Company issued in connection with the replacement and cancellation
of any outstanding Preferred Stock; provided that such preferred stock and the
agreements, certificates of designation and other documents entered into by the
Company in connection therewith shall contain terms and conditions (including,
without limitation, dividend rates, pay-in-kind features, redemption provisions,
put rights, liquidation preferences, voting rights and exchange rights) not
materially less favorable to the Company or to the Banks than the terms and
conditions of the preferred stock being replaced (excluding the impact of market
conditions on the dividend rate and other economic terms), as such preferred
stock may be amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
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"Permitted Restricted Asset Sale" shall mean any sale,
transfer or other disposition by the Company or any of its Restricted
Subsidiaries (other than the Canadian Borrower) to any Unrestricted Subsidiary
of any asset (including, without limitation, any capital stock or other
securities of another Person, but excluding any sale, transfer or other
disposition by the Company of its capital stock) of the Company or such
Restricted Subsidiary; provided that the Company or such Restricted Subsidiary
shall only be permitted to effectuate a Permitted Restricted Asset Sale so long
as (i) no Default or Event of Default exists or would result therefrom, (ii) the
Company shall have delivered to the Administrative Agent the opinion of value of
an Appraisal Firm to the extent required by Section 8.02(c) and (iii) the
Company shall have, or shall have caused such Restricted Subsidiary to have,
complied with the other terms and conditions of Section 8.02(c) or (j), as the
case may be.
"Permitted Restricted Subsidiary Conversion" shall mean the
redesignation by the Company of a Restricted Subsidiary (other than the Canadian
Borrower) of the Company as an Unrestricted Subsidiary of the Company pursuant
to a written notice to the Administrative Agent and the Banks; provided that any
such redesignation of a Restricted Subsidiary as an Unrestricted Subsidiary
shall be deemed to constitute a sale of all of the assets of the respective
Restricted Subsidiary for all purposes of this Agreement; provided further, that
the Company shall only be permitted to effectuate a Permitted Restricted
Subsidiary Conversion so long as (i) no Default or Event of Default exists or
would result therefrom, (ii) the Company shall have delivered to the
Administrative Agent the opinion of value of management of the Company or, to
the extent required by Section 8.02(c), the Appraisal Firm required by such
Section (the value set forth in any such opinion, the "Conversion Value
Amount"), (iii) the Company shall have complied with the other terms and
conditions of Section 8.02(c) or (j), as the case may be, (iv) the Aggregate
Conversion Amount at such time, when added to the Unrestricted Subsidiary
Investment Amount at such time shall not exceed the Unrestricted Subsidiary
Investment Limit then in effect, and (v) the Company shall have determined, with
respect to such conversion, that the Company and its Restricted Subsidiaries
would have been in compliance, on a Pro Forma Basis, with Sections 8.09, 8.10
and 8.11 of this Agreement.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any multiemployer or single-employer plan,
as defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of) the Company, any
Restricted Subsidiary or an ERISA Affiliate, and each such plan for the five
year period immediately following the latest date on which the Company, any
Restricted Subsidiary or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Preferred Stock" shall mean and include the Existing
Preferred Stock and, once issued, any Additional Preferred Stock and any
Permitted Replacement Preferred Stock.
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"Prescribed Forms" shall mean such duly executed form(s) or
statement(s), and in such number of copies, which may, from time to time, be
prescribed by law and which, pursuant to applicable provisions of (a) an income
tax treaty between the United States and the country of residence of the Bank
providing the form(s) or statement(s), (b) the Code, or (c) any applicable rule
or regulation under the Code, permit the Company to make payments hereunder for
the account of such Bank free of deduction or withholding of income or similar
taxes.
"Prime Lending Rate" shall mean the rate which the
Administrative Agent announces from time to time as its prime commercial lending
rate, the Prime Lending Rate to change when and as such prime commercial lending
rate changes. The Prime Lending Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
The Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Pro Forma Basis" shall mean, with respect to each Affected
Transaction in connection with which any calculation of compliance with any
financial covenant or financial term is required, the calculation thereof on a
pro forma basis, for the Test Period ended on the last day of the most recently
ended fiscal quarter, determined as if (x) such Affected Transaction, each other
Affected Transaction effected by Company during the Affected Period and any
reduction of Consolidated Debt during such Affected Period effected with the
proceeds received by the Company and/or its Restricted Subsidiaries of (A) the
issuance of common equity by the Company or (B) the sale of the capital stock or
other ownership interest of the Company in an Unrestricted Subsidiary (to the
extent not otherwise included in Consolidated EBITDA), in each case, had
occurred on the first day of such Affected Period, and (y) with respect to any
Affected Transaction involving the issuance of Indebtedness or Preferred Stock,
such Indebtedness and/or Preferred Stock had remained outstanding at all times
during such Affected Period.
"Pro Rata Share" shall mean, for each Bank, (i) with respect
to Term Loans, the percentage obtained by dividing such Bank's outstanding Term
Loans (if any) by the aggregate of all outstanding Term Loans, (ii) with respect
to B Term Loans, the percentage obtained by dividing such Bank's outstanding B
Term Loans (if any) by the aggregate of all outstanding B Term Loans, (iii) with
respect to Tranche A Revolving Loans, the percentage obtained by dividing such
Bank's Tranche A Revolving Loan Commitment (if any) by the Total Tranche A
Revolving Loan Commitment and (iv) with respect to Tranche B Revolving Loans,
the percentage obtained by dividing such Bank's Tranche B Revolving Loan
Commitment (if any) by the Total Tranche B Revolving Loan Commitment; provided
that, if at any time of the determination of a Bank's "Pro Rata Share," any
Commitments under a Tranche under this Agreement shall have been terminated, Pro
Rata Share shall be calculated with reference to the amount of Loans outstanding
under such Tranche rather than such Commitments.
"Real Property" of any Person shall mean all of the right,
title and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Reference Banks" shall mean Chase, The Bank of New York and
Bankers Trust Company.
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"Register" shall have the meaning provided in Section 1.05(a).
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Remaining Net Cash Proceeds" shall mean, with respect to any
Asset Sale, at any time, an amount equal to the Net Cash Proceeds from such
Asset Sale theretofore received by the Company and/or its Restricted
Subsidiaries minus the portion, if any, of such Net Cash Proceeds theretofore
expended by the Company or any of its Restricted Subsidiaries in furtherance of
the purchase, construction or other acquisition of assets to be employed in,
and/or the capital stock of any Person engaged in, the Business.
"Replaced Bank" shall have the meaning provided in Section
1.10(c)(ii).
"Replacement Bank" shall have the meaning provided in Section
1.10(c)(ii).
"Replacement Canadian Parent" shall have the meaning provided
in Section 7.11.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan other than those events as to which the
30-day notice is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC
Regulation Section 2615.
"Required Banks" shall mean Non-Defaulting Banks whose
outstanding (a) Term Loans (or, if prior to the Initial Borrowing Date, Term
Loan Commitments), (b) B Term Loans and (c) outstanding Revolving Loan
Commitments (or, if after the Total Revolving Loan Commitment has been
terminated, outstanding Revolving Loans and Adjusted Percentages of Swingline
Loans, Dollar Equivalent of Canadian Dollar Loans and Letter of Credit
Outstandings) constitute at least 51% of the sum of (i) all outstanding Term
Loans (or, if prior to the Initial Borrowing Date, Term Loan Commitments) of
Non-Defaulting Banks plus (ii) all outstanding B Term Loans of Non-Defaulting
Banks plus (iii) the Adjusted Total Tranche A Commitment plus (iv) the Total
Tranche B Revolving Loan Commitment less the Tranche B Revolving Loan
Commitments of all Defaulting Banks (or, if after the Total Revolving Loan
Commitment has been terminated, the total outstanding Revolving Loans of
Non-Defaulting Banks and the aggregate Adjusted Percentages of all
Non-Defaulting Banks of the total outstanding Swingline Loans, Dollar Equivalent
of Canadian Dollar Loans and Letter of Credit Outstandings at such time).
"Restatement Effective Date" shall have the meaning provided
in Section 12.10.
"Restricted Subsidiaries" shall mean (x) all of the
Subsidiaries of the Company in existence on the Original Effective Date,
including, without limitation, the Canadian Borrower, (y) any Subsidiary owned
(directly or indirectly) by the Company that is created, established or
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acquired after the Original Effective Date and which does not constitute an
Unrestricted Subsidiary on the date of the creation, establishment and/or
acquisition thereof and (z) any Unrestricted Subsidiary of the Company to the
extent designated by the Company as a Restricted Subsidiary hereunder by written
notice to the Administrative Agent; provided that the Company shall only be
permitted to so designate a new Restricted Subsidiary so long as (i) no Default
or Event of Default exists or would result therefrom, (ii) at least 51% of the
capital stock of such newly-designated Restricted Subsidiary is owned by the
Company or one or more Wholly-Owned Restricted Subsidiaries and all of the
applicable provisions of Section 8.14 shall have been complied with in respect
of such newly-designated Restricted Subsidiary, (iii) the Company shall have
determined, with respect to such designation, that the Company and its
Restricted Subsidiaries would have been in compliance, on a Pro Forma Basis,
with Sections 8.09, 8.10 and 8.11 of this Agreement and (iv) such Unrestricted
Subsidiary is permitted to be designated a Restricted Subsidiary pursuant to the
Senior Note Documents; provided further, that, at the time of any Permitted
Restricted Subsidiary Conversion or the sale of 100% of the capital stock owned
by the Company or any Restricted Subsidiary of a Restricted Subsidiary to an
Unrestricted Subsidiary pursuant to a Permitted Restricted Asset Sale, the
Restricted Subsidiary so converted or sold shall no longer constitute a
Restricted Subsidiary hereunder.
"Revolving Loan" shall have the meaning provided in Section
1.01(c).
"Revolving Loan Commitment" shall mean each Tranche A
Revolving Loan Commitment and each Tranche B Revolving Loan Commitment with the
Revolving Loan Commitment of any Bank at any time to equal the sum of its
Tranche A Revolving Loan Commitment and Tranche B Revolving Loan Commitment at
such time.
"Scheduled A Commitment Reduction" shall have the meaning
provided in Section 3.03(b).
"Scheduled A Commitment Reduction Date" shall have the meaning
provided in Section 3.03(b).
"Scheduled B Commitment Reduction" shall have the meaning
provided in Section 3.03(c).
"Scheduled B Commitment Reduction Date" shall have the meaning
provided in Section 3.03(c).
"Scheduled BTL Repayment" shall have the meaning provided in
Section 4.02(g).
"Scheduled BTL Repayment Date" shall have the meaning provided
in Section 4.02(g).
"Scheduled TL Repayment" shall have the meaning provided in
Section 4.02(c).
"Scheduled TL Repayment Date" shall have the meaning provided
in Section 4.02(c).
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"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 7.01 Financials" shall mean the financial statements
delivered, or to be delivered, pursuant to Section 7.01(a) or (b).
"Senior Note Documents" shall mean and include each of the
documents and other agreements entered into by the Company or any of its
Subsidiaries (including, without limitation, the indentures pursuant to which
each issuance of the Senior Notes are issued and any guaranty or guaranties
relating thereto) relating to the issuance by the Company of any Senior Notes,
as in effect on the Initial Borrowing Date and as the same may be modified,
supplemented or amended from time to time pursuant to the terms hereof and
thereof.
"Senior Notes" shall mean and include the Company's (x) 7-5/8%
Senior Secured Notes due 2008, (y) 10-1/4% Senior Notes due 2004 and (z) 8-1/2%
Senior Notes due 2006, in each case, as in effect on the Restatement Effective
Date and as the same may be modified, supplemented or amended from time to time
pursuant to the terms hereof and thereof.
"Senior Preferred Stock" shall mean the Company's $2.875
Senior Exchangeable Preferred Stock, as in effect on the Initial Borrowing Date
and as the same may be modified, supplemented or amended from time to time
pursuant to the terms hereof and thereof.
"Series B Preferred Stock" shall mean the Company's $11.625
Series B Exchangeable Preferred Stock, as in effect on the Initial Borrowing
Date and as the same may be modified, supplemented or amended from time to time
pursuant to the terms hereof and thereof.
"Series C Preferred Stock" shall mean the Company's Series C
Exchangeable Preferred Stock, as in effect on the Initial Borrowing Date and as
the same may be modified, supplemented or amended from time to time pursuant to
the terms hereof and thereof.
"Shareholders Agreement" shall mean the Shareholders
Agreement, dated as of March 9, 1994 among all holders of the capital stock of
the Canadian Borrower, as amended to the Initial Borrowing Date and as further
amended, modified or supplemented from time to time in accordance with the terms
hereof and thereof.
"Specified Change of Control Event" shall mean a Change of
Control Event of the type described in clause (a) of the definition thereof.
"Stated Amount" of each Letter of Credit shall mean the
maximum amount available to be drawn thereunder (regardless of whether any
conditions for drawing could then be met).
"Subordinated Exchange Debentures" shall mean and include the
Company's (x) 11-1/2% Subordinated Debentures due 2004, (y) 11-5/8% Class B
Subordinated Exchange Debentures due 2005 and (z) 10% Subordinated Exchange
Debentures due 2008, in each case, in
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the form delivered to the Banks on the Initial Borrowing Date and as the same
may be modified, supplemented or amended from time to time pursuant to the terms
hereof and thereof.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time, provided that the
Canadian Borrower shall be deemed to be a Subsidiary of the Company for all
purposes.
"Subsidiary Guarantor" shall mean (i) each Restricted
Subsidiary in existence on the Initial Borrowing Date (other than Excluded
Foreign Restricted Subsidiaries) and (ii) each Restricted Subsidiary of the
Company formed after the Initial Borrowing Date and each Excluded Domestic
Restricted Subsidiary designated as such by the Company, in each case, which has
executed and delivered a counterpart of the Subsidiary Guaranty to the
Administrative Agent on behalf of the Banks, provided that any such Restricted
Subsidiary which is a Partially-Owned Restricted Subsidiary shall cease to
constitute a Subsidiary Guarantor to the extent the Company shall have made a
Non-Guarantor Designation with respect to such Subsidiary in accordance with the
terms hereof.
"Subsidiary Guaranty" shall have the meaning provided in
Section 5.01(e)(i).
"Swingline Expiry Date" shall mean the date which is five
Business Days prior to the Original Final Maturity Date.
"Swingline Loan" shall have the meaning provided in Section
1.01(d).
"Taxes" shall have the meaning provided in Section 4.04.
"Term Loan" shall have the meaning provided in Section
1.01(a).
"Term Loan Commitment" shall mean, with respect to each Bank,
the amount set forth opposite such Bank's name in Annex I hereto directly below
the column entitled "Term Loan Commitment," as same may be reduced from time to
time pursuant to Sections 3.03 and/or 9.
"Term Loan Facility Percentage" shall mean, at any time, a
fraction (expressed as a percentage) the numerator of which is equal to the
aggregate principal amount of all Term Loans outstanding at such time and the
denominator of which is equal to the sum of (w) the Total Tranche A Revolving
Loan Commitment at such time, (x) the Total Tranche B Revolving Loan Commitment
at such time, (y) the aggregate principal amount of Term Loans then outstanding
and (z) the Additional Facility Amount at such time; provided that if at any
time of the determination of Term Loan Facility Percentage, the Total Tranche A
Revolving Loan Commitment
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and/or the Total Tranche B Revolving Loan Commitment shall have terminated, the
Term Loan Facility Percentage shall be calculated based upon the aggregate
principal amount of Tranche A Revolving Loans or Tranche B Revolving Loans, as
the case may be, then outstanding.
"Test Period" shall mean the four consecutive fiscal quarters
of the Company then last ended.
"Total B Term Loan Commitment" shall mean, at any time, the
sum of the B Term Loan Commitments of each of the Banks.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the
sum of the Total Tranche A Revolving Loan Commitment and the Total Tranche B
Revolving Loan Commitment.
"Total Term Loan Commitment" shall mean, at any time, the sum
of the Term Loan Commitments of each of the Banks.
"Total Tranche A Revolving Loan Commitment" shall mean, at any
time, the sum of the Tranche A Revolving Loan Commitments of each of the Banks.
"Total Tranche B Revolving Loan Commitment" shall mean, at any
time, the sum of the Tranche B Revolving Loan Commitments of each of the Banks.
"Total Unutilized Tranche A Revolving Loan Commitment" shall
mean, at any time, (i) the Total Tranche A Revolving Loan Commitment at such
time less (ii) the sum of the aggregate principal amount of all Tranche A
Revolving Loans and Swingline Loans at such time, the Dollar Equivalent of the
aggregate principal amount of Canadian Dollar Loans at such time plus the Letter
of Credit Outstandings at such time.
"Total Unutilized Tranche B Revolving Loan Commitment" shall
mean, at any time, the Total Tranche B Revolving Loan Commitment at such time
less the aggregate principal amount of all Tranche B Revolving Loans at such
time.
"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being six separate Tranches,
i.e., the Term Loans, the B Term Loans, the Tranche A Revolving Loans, the
Tranche B Revolving Loans, the Swingline Loans and the Canadian Dollar Loans.
0
"Tranche A Facility Percentage" shall mean, at any time, a
fraction (expressed as a percentage) the numerator of which is the Total Tranche
A Revolving Loan Commitment at such time and the denominator of which is equal
to the sum of (w) the Total Tranche A Revolving Loan Commitment at such time,
(x) the Total Tranche B Revolving Loan Commitment at such time, (y) the
aggregate principal amount of Term Loans then outstanding
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and (z) the Additional Facility Amount at such time; provided that if at any
time of the determination of Tranche A Facility Percentage, the Total Tranche A
Revolving Loan Commitment and/or the Total Tranche B Revolving Loan Commitment
shall have terminated, Tranche A Facility Percentage shall be calculated based
upon the aggregate principal amount of Tranche A Revolving Loans or Tranche B
Revolving Loans, as the case may be, then outstanding.
"Tranche A Percentage" shall mean at any time for each Bank
the percentage obtained by dividing such Bank's Tranche A Revolving Loan
Commitment (if any) by the Total Tranche A Revolving Loan Commitment; provided
that at any time when the Total Tranche A Revolving Loan Commitment shall have
been terminated, each Bank's Tranche A Percentage shall be the percentage
obtained by dividing such Bank's Tranche A Revolving Loan Commitment (if any)
immediately prior to such termination by the Total Tranche A Revolving Loan
Commitment immediately prior to such termination.
"Tranche A Revolving Loan" shall have the meaning provided in
Section 1.01(b).
"Tranche B Assumption Agreement" shall mean and include each
Tranche B Assumption Agreement in the form of Exhibit B attached hereto executed
in accordance with Section 1.13 hereof.
"Tranche A Revolving Loan Commitment" shall mean, with respect
to each Bank, the amount set forth opposite such Bank's name in Annex I hereto
directly below the column entitled "Tranche A Revolving Loan Commitment", as
same may be reduced from time to time pursuant to Sections 3.02, 3.03 and/or 9.
"Tranche B Assumption Date" shall mean and include the Initial
Tranche B Assumption Date and each Additional Tranche B Assumption Date.
"Tranche B Facility Percentage" shall mean, at any time, a
fraction (expressed as a percentage) the numerator of which is the Total Tranche
B Revolving Loan Commitment at such time and the denominator of which is equal
to the sum of (w) the Total Tranche A Revolving Loan Commitment at such time,
(x) the Total Tranche B Revolving Loan Commitment at such time, (y) the
aggregate principal amount of Term Loans then outstanding and (z) the Additional
Facility Amount at such time; provided that if at any time of the determination
of Tranche B Facility Percentage, the Total Tranche A Revolving Loan Commitment
and/or the Total Tranche B Revolving Loan Commitment shall have terminated,
Tranche B Facility Percentage shall be calculated based upon the aggregate
principal amount of Tranche A Revolving Loans or Tranche B Revolving Loans, as
the case may be, then outstanding.
"Tranche B Revolving Loan" shall have the meaning provided in
Section 1.01(c).
"Tranche B Revolving Loan Commitment" shall mean, with respect
to each Bank, initially zero, as same may be increased from time to time
pursuant to Section 1.13 and reduced from time to time pursuant to Sections
3.02, 3.03 and/or 9.
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"Type" shall mean any type of Loan determined with respect to
the interest option applicable thereto, i.e., a Base Rate Loan or Eurodollar
Loan.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York.
"Unfunded Current Liability" of any Plan shall mean the
amount, if any, by which the actuarial present value of the accumulated plan
benefits under such Plan as of the close of its most recent plan year exceeds
the fair market value of the assets allocable thereto, each determined in
accordance with Statement of Financial Accounting Standards No. 87, based upon
the actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan.
"Unpaid Drawing" shall have the meaning provided in Section
2.04(a).
"Unrestricted Subsidiary" shall mean (i) any Subsidiary of the
Company that is formed or acquired after the Original Effective Date, which is
funded through loans, advances and/ or capital contributions as permitted by,
and in compliance with, Section 8.05(d), provided that at the time of the
initial loan, advance or capital contribution by the Company or any Restricted
Subsidiary to such Subsidiary (x) the Company designates such Subsidiary as an
Unrestricted Subsidiary in a written notice to the Administrative Agent and (y)
such Subsidiary and the Company shall have entered into a tax sharing agreement
in form and substance reasonably satisfactory to the Required Banks, (ii) any
Restricted Subsidiary of the Company redesignated as an Unrestricted Subsidiary
pursuant to a Permitted Restricted Subsidiary Conversion and any Restricted
Subsidiary sold to an Unrestricted Subsidiary pursuant to a Permitted Restricted
Asset Sale, in each case to the extent consummated in accordance with the terms
of the respective definitions thereof and Section 8.02(c) or 8.02(j), as the
case may be, and (iii) each Subsidiary of an Unrestricted Subsidiary; provided
that, at the time of any designation of the type described in clause (z) of the
definition of "Restricted Subsidiary," the Subsidiary so designated shall no
longer constitute an Unrestricted Subsidiary hereunder.
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"Unrestricted Subsidiary Investment Amount" shall have the
meaning provided in Section 8.05(d).
"Unrestricted Subsidiary Investment Limit" shall mean, at any
time, the sum of (i) $200,000,000, (ii) the Excess Cash Flow Amount at such
time, (iii) an amount equal to all cash or other payments received by the
Company and its Restricted Subsidiaries from Unrestricted Subsidiaries from
dividends or distributions after the Original Effective Date (provided that for
purposes of this clause (iii), cash and other payments received by a
Partially-Owned Restricted Subsidiary shall be added to the Unrestricted
Subsidiary Investment Limit only to the extent of the equity percentage
ownership of the Company in such Partially-Owned Restricted Subsidiary), plus
(iv) an amount equal to the aggregate net proceeds received by the Company from
the issuance of equity securities of the Company after the Original Effective
Date, provided that if the net proceeds from any such equity issuance are not
utilized to make a loan or advance to, or a cash capital contribution in, an
Unrestricted Subsidiary pursuant to Section 8.05(d) within 30 days following the
date of such equity issuance, then the net proceeds from such equity issuance
shall no longer be added to the Unrestricted Subsidiary Investment Limit.
"U.S. Dollars" and "$" shall mean freely transferable lawful
money of the United States of America.
"Voting Trust Agreement" shall mean the Voting Trust
Agreement, dated as of March 9, 1994 among all holders of the capital stock of
the Canadian Borrower, as amended to the Initial Borrowing Date and as further
amended, modified or supplemented from time to time in accordance with the terms
hereof and thereof.
"Wholly-Owned Restricted Subsidiary" shall mean any Restricted
Subsidiary of the Company which is not a Partially-Owned Restricted Subsidiary.
"Working Capital" shall mean the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, telecopier device, telegraph
or cable.
SECTION 11. The Administrative Agent.
11.01 Appointment. Each Bank hereby irrevocably designates and
appoints Chase as Administrative Agent of such Bank and to act as specified
herein and in the other Credit Documents, and each such Bank hereby irrevocably
authorizes Chase as the Administrative Agent for such Bank, to take such action
on its behalf under the provisions of this Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent agrees to act as such upon the
express conditions contained in this Section 11. Notwithstanding any provision
to the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein or
in the other Credit Documents, or any fiduciary relationship with any Bank, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Administrative Agent. The provisions of this Section 11 are solely for the
benefit of the Administrative Agent and the Banks, and neither the Company nor
any of its Subsidiaries shall have any rights as a third party beneficiary of
any of the provisions hereof. In performing its functions and duties under this
Agreement, the Administrative Agent shall act solely as agent of the Banks and
the Administrative Agent neither assumes and nor shall it be deemed to have
assumed any obligation or relationship of agency or trust with or for the
Company or any of its Subsidiaries.
11.02 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement or any other Credit Document 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 selected by it with reasonable care except to the extent
otherwise required by Section 11.03.
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11.03 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or the
other Credit Documents (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by the Company, any
of its Subsidiaries or any of their respective officers contained in this
Agreement or the other Credit Documents 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
Credit Document or for any failure of the Company or any of its Subsidiaries or
any of their respective officers to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be under any obligation to any
Bank to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or the other
Credit Documents, or to inspect the properties, books or records of the Company
or any of its Subsidiaries. The Administrative Agent shall not be responsible to
any Bank for the effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other Credit Document or
for any representations, warranties, recitals or statements made herein or
therein or made in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents in
connection herewith or therewith furnished or made by the Administrative Agent
to the Banks or by or on behalf of either Borrower to the Administrative Agent,
or any Bank or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Loans or of
the existence or possible existence of any Default or Event of Default.
11.04 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,
cablegram, telegram, 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
Company), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks 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 the other Credit Documents in
accordance with a request of the Required Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Banks.
11.05 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 actually received notice
from a Bank or the Company referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a "notice
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of default." In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall give prompt notice thereof to the Banks. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks; 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 Banks.
11.06 Non-Reliance on Administrative Agent and Other Banks.
Each Bank expressly acknowledges that neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Company or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Bank. Each Bank
represents to the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, assets, operations, property, financial
and other condition, prospects and creditworthiness of the Company and its
Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Administrative Agent or any other Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Company and its Subsidiaries. The Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of the Company or any of its
Subsidiaries which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
11.07 Indemnification. The Banks agree to indemnify the
Administrative Agent in its capacity as such ratably according to their
respective "percentages" (which shall equal, for each Non-Defaulting Bank, that
percentage determined by dividing (i) the sum of (x) such Bank's Tranche A
Revolving Loan Commitment, (y) such Bank's Tranche B Revolving Loan Commitment
and (z) the outstanding principal amount of such Bank's Term Loans and B Term
Loans by (ii) the sum of (x) the Adjusted Total Tranche A Commitment, (y) the
Total Tranche B Revolving Loan Commitment less the Tranche B Revolving Loan
Commitment of each Defaulting Bank and (z) the total aggregate principal amount
of Term Loans and B Term Loans less any outstanding Term Loans and B Term Loans
of Defaulting Banks, it being understood and agreed that references herein to
Tranche A Revolving Loan Commitments and Tranche B Revolving Loan Commitments
(as well as to the Adjusted Total Tranche A Commitment and Total Tranche B
Revolving Loan Commitment) at a time when any such Commitment has been
terminated shall be references to such terminated Commitment as in effect
immediately prior to such termination), from and against any and all
liabilities, obligations, losses, damages, penalties,
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actions, judgments, suits, costs, reasonable expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against the Administrative Agent in its capacity as such in any way
relating to or arising out of this Agreement or any other Credit Document, or
any documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted to be taken by the
Administrative Agent under or in connection with any of the foregoing, but only
to the extent that any of the foregoing is not paid by the Company or any of its
Subsidiaries; provided that no Bank shall be liable to the Administrative Agent
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Administrative
Agent. If and to the extent any amount paid to the Administrative Agent is
subsequently recovered by the Administrative Agent against the Company or any of
its Subsidiaries, the Administrative Agent shall promptly pay to each Bank to
the extent such Bank paid the Administrative Agent, its "percentage" of the
amount so recovered. If any indemnity furnished to the Administrative Agent for
any purpose shall, in the opinion of the Administrative Agent be insufficient or
become impaired, the Administrative Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished. The agreements in this Section 11.07 shall survive the
payment of all Obligations.
11.08 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its respective affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Company and
its Subsidiaries as though the Administrative Agent were not the Administrative
Agent hereunder. With respect to the Loans made by it and all Obligations owing
to it, the Administrative Agent shall have the same rights and powers under this
Agreement as any Bank and may exercise the same as though it were not the
Administrative Agent, and the terms "Bank" and "Banks" shall include the
Administrative Agent in its individual capacity.
11.09 Holders. The Administrative Agent may deem and treat the
payee of any Note which has been issued hereunder as the owner thereof for all
purposes hereof unless and until a written notice of the assignment, transfer or
endorsement thereof, as the case may be, shall have been filed with the
Administrative Agent. Any request, authority or consent of any Person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any such Note shall be conclusive and binding on any subsequent
holder, transferee, assignee or indorsee, as the case may be, of such Note or of
any Note or Notes issued in exchange therefor.
11.10 Resignation of the Administrative Agent; Successor
Agent. The Administrative Agent may resign as the Administrative Agent upon 20
days' notice to the Banks. Upon the resignation of the Administrative Agent, the
Required Banks shall appoint from among the Banks a successor Administrative
Agent for the Banks subject to prior approval by the Company (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 include such successor agent effective upon its
appointment, and the resigning
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Administrative Agent's rights, powers and duties as the 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. After
the resignation of the Administrative Agent hereunder, the provisions of this
Section 11 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.
SECTION 12. Miscellaneous.
12.01 Payment of Expenses, etc. The Company agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent
(including, without limitation, the reasonable fees and disbursements of White &
Case LLP) in connection with the negotiation, preparation, execution and
delivery of the Credit Documents and the documents and instruments referred to
therein and any amendment, waiver or consent relating thereto and in connection
with the Administrative Agent's syndication efforts with respect to this
Agreement; (ii) pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent, the Letter of Credit Issuer and each of the Banks in
connection with the enforcement of the Credit Documents and the documents and
instruments referred to therein and, after an Event of Default shall have
occurred and be continuing, the protection of the rights of the Administrative
Agent, the Letter of Credit Issuer and each of the Banks thereunder (including,
without limitation, the reasonable fees and disbursements of counsel (including
in-house counsel) for the Administrative Agent, the Letter of Credit Issuer and
for each of the Banks); (iii) pay and hold each of the Banks harmless from and
against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to such Bank) to pay such taxes;
and (iv) indemnify the Administrative Agent, the Letter of Credit Issuer and
each Bank, its officers, directors, employees, representatives and agents from
and hold each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not the Administrative Agent, the Letter of Credit
Issuer or any Bank is a party thereto) related to the entering into and/or
performance of any Credit Document or the use of the proceeds of any Loans or
Letter of Credit hereunder or the consummation of any other transactions
contemplated in any Credit Document including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
12.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, each
Bank (including to the extent such Bank is, or is deemed to be, the holder of a
funded participation in any Swingline Loan, Canadian Dollar Loan, and/or Letter
of Credit) is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to the Company or any
of its Subsidiaries or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply
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any and all deposits (general or special) and any other Indebtedness at any time
held or owing by such Bank (including, without limitation, by branches and
agencies of such Bank wherever located) to or for the credit or the account of
any Credit Party against and on account of the Obligations and liabilities of
such Credit Party to such Bank under this Agreement or under any of the other
Credit Documents, including, without limitation, all interests in Obligations of
such Credit Party purchased by such Bank pursuant to Section 12.06(b), and all
other claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured.
12.03 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including facsimile communication) and mailed, facsimilied or delivered, if to
a Borrower, at the address specified opposite its signature below or in the
other relevant Credit Documents, as the case may be; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, facsimilied or
cabled or sent by overnight courier, and shall be effective when received.
12.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided that neither Borrower may
assign or transfer any of its respective rights or obligations hereunder without
the prior written consent of the Banks. Each Bank may at any time grant
participations in any of its rights hereunder to another financial institution;
provided further, that, in the case of any such participation, the participant
shall not have any rights under this Agreement or any of the other Credit
Documents (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank in
favor of the participant relating thereto) and all amounts payable by either
Borrower hereunder shall be determined as if such Bank had not sold such
participation, except that the participant shall be entitled to receive the
additional amounts under Sections 1.10, 1.11, 2.06 and 4.04 of this Agreement
to, and only to, the extent that such Bank would be entitled to such benefits if
the participation had not been entered into or sold; and provided further, that
no Bank shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan in which such
participant is participating (it being understood that any waiver of an
installment on, or the application of any prepayment or the method of
application of any prepayment to the amortization of the Loans shall not
constitute an extension of the final scheduled maturity date), or reduce the
rate or extend the time of payment of interest or Fees thereon (except in
connection with a waiver of the applicability of any post-default increase in
interest rates), or reduce the principal amount thereof, or increase such
participant's participating interest in any Commitment over the amount thereof
then in effect (it being understood that a waiver of any Default or Event of
Default or of a mandatory reduction in the Total Commitment shall not constitute
a change in the terms of any Commitment and that an increase in any Commitment
shall be permitted without the consent of any participant if such participant's
participation is not increased as a
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result thereof), (ii) release the Company from the Company Guaranty or release
all or substantially all of the Subsidiary Guarantors from the Subsidiary
Guaranty (in each case except as expressly provided in the Credit Documents) or
(iii) in each case consent to the assignment or transfer by the Company, the
Canadian Borrower or any other Subsidiaries of the Company of any of its rights
and obligations under this Agreement or any other Credit Document except in
accordance with the terms hereof and thereof.
(b) Notwithstanding the foregoing, (x) any Bank may assign all
or a portion of its Loans and/or Commitment and its rights and obligations
hereunder to its parent corporation and/or any affiliate of such Bank which is
at least 50% owned by such Bank and/or its parent company and/or, in the case of
B Term Loans, an "Approved Fund" and (y) with the consent of the Administrative
Agent and the Company, and, in the case of any assignment of Tranche A Revolving
Loans and/or Tranche A Revolving Loan Commitments, of the Canadian Lender and
the Letter of Credit Issuer (which consents in each case shall not be
unreasonably withheld or delayed, it being understood that the Company may
withhold its consent if the result of any such assignment is that the assigning
Bank and/or the assignee Bank will not have a pro rata exposure in this
Agreement and the Additional Credit Agreement), any Bank may assign all or a
portion of its Loans and/or Commitments and its rights and obligations hereunder
to one or more commercial banks, other Persons who invest in commercial loan
facilities or other financial institutions (including one or more Banks). No
assignment pursuant to the immediately preceding sentence shall (x) to the
extent such transaction represents an assignment pursuant to clause (y) of the
preceding sentence (other than an assignment to a Bank), be in an aggregate
amount less than the minimum of $10,000,000 (or such lesser amount than
$10,000,000 as constitutes the assigning Bank's entire Commitment and
outstanding Loans or such lesser amount than $10,000,000 as may be approved by
the Administrative Agent and the Borrower ) or (y) so long as no Default or
Event of Default then exists, reduce the Loans and Commitments of the assigning
Bank to an aggregate amount less than the Minimum Retention Amount unless the
same are reduced to $0. If any Bank so sells or assigns all or a part of its
rights hereunder, any reference in this Agreement or the other Credit Documents
to such assigning Bank shall thereafter refer to such Bank and to the respective
assignee Bank to the extent of their respective interests and the respective
assignee Bank shall have, to the extent of such assignment (unless otherwise
provided therein), the same rights and benefits as it would if it were such
assigning Bank. Each assignment pursuant to this Section 12.04(b) shall be
effected by the assigning Bank and the assignee Bank executing an Assignment and
Assumption Agreement substantially in the form of Exhibit G (appropriately
completed). At the time of any such assignment, (i) Annex I shall be deemed to
be amended to reflect the Commitments and outstanding Loans of the respective
assignee Bank (which shall result in a direct reduction to the respective
Commitments of the assigning Bank) and of the other Banks, (ii) the
Administrative Agent shall record such assignment and the resultant effects
thereof on the Loans and/or Commitments of the assigning Bank and the assignee
Bank in the Register and (iii) the Administrative Agent shall receive from the
assigning Bank and/or the assignee Bank at the time of each assignment (other
than an assignment pursuant to clause (x) of the first sentence of this Section
12.04(b)) the payment of a nonrefundable assignment fee in an aggregate amount
of $3,000 with respect to each such assignment (provided that in the event of
simultaneous assignments relating to this Agreement and the Additional Credit
Agreement, the fees for such assignments shall total $3,000). Each
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Bank and the Company agree to execute such documents (including, without
limitation, amendments to this Agreement and the other Credit Documents) as
shall be necessary to effect the foregoing. Promptly following any assignment
pursuant to this Section 12.04(b), the assigning Bank shall promptly notify the
Company thereof. Nothing in this Section 12.04(b) shall prevent or prohibit any
Bank from pledging its Loans or, if issued, Notes hereunder to a Federal Reserve
Bank in support of borrowings made by such Bank from such Federal Reserve Bank
or prevent any Bank which is an Approved Fund from, at any time, pledging all or
any portion of its Loans to its trustee or representative; provided, however,
that no such pledge shall release any Bank from its obligations hereunder or
substitute such Federal Reserve Bank, trustee or representative for such Bank as
a party hereto. Notwithstanding anything to the contrary contained herein, the
Canadian Dollar Loans may be assigned to the Banks as contemplated by Section
1.01(g). Except as specifically provided in the immediately preceding sentence
and in Section 1.01(g), the Canadian Lender shall not assign any portion of its
rights or obligations hereunder in respect of the Canadian Dollar Loans, except
an assignment of all of its rights and obligations in respect of such Canadian
Dollar Loans to one commercial bank or other financial institution acceptable to
the Administrative Agent, the Company and the Canadian Borrower.
(c) Notwithstanding any other provisions of this Section
12.04, no transfer or assignment of the interests or obligations of any Bank
hereunder or any grant of participations therein shall be permitted if such
transfer, assignment or grant would require the Company to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of any
State.
12.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Administrative Agent, the Letter of Credit Issuer or any Bank in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between either Borrower and the Administrative
Agent, the Letter of Credit Issuer or any Bank shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent, the Letter of Credit Issuer or any Bank would otherwise have. No notice
to or demand on either Borrower in any case shall entitle such Borrower to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent, the Letter of
Credit Issuer or the Banks to any other or further action in any circumstances
without notice or demand.
12.06 Payments Pro Rata. (a) The Administrative Agent agrees
that promptly after its receipt of each payment from or on behalf of a Borrower
in respect of any Obligations of such Borrower hereunder, it shall, except as
otherwise provided in this Agreement, distribute such payment to the Banks
(other than any Bank that has consented in writing to waive its pro rata share
of such payment) pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
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(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings or Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the respective Borrower to such Banks in such amount as shall result in a
proportional participation by all of the Banks in such amount; provided that if
all or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 12.06(a) and (b) shall be subject to
the express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
12.07 Calculations; Computations. (a) The financial statements
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Company to the Banks); provided that except as otherwise specifically
provided herein, all computations determining compliance with Section 8,
including definitions used therein, shall utilize accounting principles and
policies in effect at the time of the preparation of, and in conformity with
those used to prepare, the December 31, 1997 historical financial statements
delivered to the Banks pursuant to Section 6.10(a); provided further, that in
the event that the Accounting Standards Executive Committee of the AICPA adopts
the statement of position (substantially in the proposed form as of the Original
Effective Date) relating to computer software developed or obtained for internal
use, and the Company's independent auditors concur with such accounting change
as it relates to the presentation of the Company's financial statements, then
compliance with Section 8 will thereafter be determined giving effect to such
statement of position.
(b) All computations of interest (other than interest on Base
Rate Loans) and Fees hereunder shall be made on the actual number of days
elapsed over a year of 360 days. All computations of interest on Base Rate Loans
hereunder shall be made on the actual number of days elapsed over a year of 365
days.
12.08 Governing Law; Submission to Jurisdiction; Venue. (a)
THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the
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Southern District of New York, and, by execution and delivery of this Agreement,
each Borrower hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Borrower hereby further irrevocably waives any claim that any such
courts lack jurisdiction over such Borrower, and agrees not to plead or claim,
in any legal action or proceeding with respect to this Agreement or any other
Credit Document brought in any of the aforesaid courts, that any such court
lacks jurisdiction over such Borrower. Each Borrower irrevocably consents to the
service of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such Borrower, at
its address for notices pursuant to Section 12.03, such service to become
effective 30 days after such mailing. Each Borrower hereby irrevocably waives
and agrees not to plead or claim in any action or proceeding commenced hereunder
or under any other Credit Document that service of process was in any way
invalid or ineffective. The Company hereby represents and warrants that its
chief executive office is located at 745 Fifth Avenue, New York, New York 10151,
and the Company hereby further agrees that it shall not move its chief executive
office unless it shall give the Administrative Agent not less than 30 days'
prior written notice of its intention so to do. The Company agrees that (x)
prior to moving its chief executive office outside New York City and (y) and if
for any reason any designee, appointee and agent previously appointed pursuant
to this sentence shall cease to be available to act as such, the Company shall
designate a designee, appointee and agent or replacement designee, appointee and
agent, as the case may be, in New York City on the terms and for the purposes of
this provision satisfactory to the Administrative Agent. Nothing herein shall
affect the right of the Administrative Agent, any Bank or the holder of any Note
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against either Borrower in any other
jurisdiction.
(b) Each Borrower hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
12.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A
complete set of counterparts executed by all the parties hereto shall be lodged
with the Company and the Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on
the date (the "Restatement Effective Date") on which (i) each Borrower, the
Administrative Agent, the Required Banks (as defined in the Original Credit
Agreement) and each Bank that has a B Term Loan Commitment shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Administrative Agent at its Notice Office or, in the case of the
Banks, shall have given to the Administrative Agent telephonic (confirmed in
writing), written or facsimile notice (actually received) at such office that
the same has been signed and mailed to it and (ii) the conditions contained in
Section 5.01 are met to the satisfaction of the
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Administrative Agent and the Required Banks (determined immediately after the
occurrence of the Restatement Effective Date). Unless the Administrative Agent
has received actual notice from any Bank that the conditions contained in
Section 5.01 have not been met to its satisfaction, upon the satisfaction of the
condition described in clause (i) of the immediately preceding sentence and upon
the Administrative Agent's good faith determination that the conditions
described in clause (ii) of the immediately preceding sentence have been met,
then the Restatement Effective Date shall have been deemed to have occurred,
regardless of any subsequent determination that one or more of the conditions
thereto have not been met (although the occurrence of the Restatement Effective
Date shall not release the Company from any liability for failure to satisfy one
or more the applicable conditions contained in Section 5.01). The Administrative
Agent will give the Borrower and each Bank prompt written notice of the
occurrence of the Restatement Effective Date.
12.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
12.12 Amendment or Waiver. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by each Borrower and the Required Banks; provided that no such
change, waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) affected thereby, (i) extend any Scheduled A
Commitment Reduction Date, any Scheduled B Commitment Reduction Date, any
Scheduled TL Repayment Date, any Scheduled BTL Repayment Date or reduce the
amount of any Scheduled A Commitment Reduction, any Scheduled B Commitment
Reduction, any Scheduled TL Repayment or Scheduled BTL Repayment (or any
mandatory repayment arising as a result of any such Scheduled A Commitment
Reduction or any such Scheduled B Commitment Reduction) or extend the final
scheduled maturity of any Loan (it being understood that any waiver of the
application of any prepayment of or the method of application of any prepayment
to the amortization of the Loans shall not constitute any such extension), or
reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any post-default increase in interest
rates) or Fees thereon, or reduce the principal amount thereof, or increase the
Commitments of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
repayment or reduction in the Total Commitment shall not constitute a change in
the terms of any Commitment of any Bank), (ii) release the Company from the
Company Guaranty or release all or substantially all of the Subsidiary
Guarantors from the Subsidiary Guaranty (in each case except as expressly
provided in the Credit Documents), (iii) amend, modify or waive any provision of
this Section, or Section 1.10, 1.11, 2.06, 4.04, 9.01, 11.07, 12.01, 12.02,
12.04, 12.06 or 12.07(b), (iv) reduce the percentage specified in, or otherwise
modify, the definition of, Required Banks, (v) increase the Maximum Canadian
Dollar Amount or (vi) consent to the assignment or transfer by any Credit Party
of any of its rights and obligations under this Agreement or any other Credit
Document except in accordance with the terms hereof or thereof. No provision of
Section 2 or 11 may be amended without the consent of the Letter of Credit
Issuer or the Administrative
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Agent. No provision relating to Canadian Dollar Loans may be amended without the
consent of the Canadian Lender.
12.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 11.07 or 12.01, shall
survive the execution and delivery of this Agreement and the making and
repayment of the Loans and the satisfaction of all other Obligations.
12.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or affiliate of
such Bank, provided, that the Borrowers shall not be responsible for costs
arising under Sections 1.10, 1.11, 2.06 or 4.04 resulting from any such transfer
(other than a transfer pursuant to Section 1.12) to the extent such costs would
not otherwise be applicable to such Bank in the absence of such transfer.
12.15 Confidentiality. Each of the Banks agrees that it will
use its best efforts not to disclose without the prior consent of the Company
(other than to its employees, auditors, counsel or other professional advisors
and to affiliates or to another Bank if the Bank or such Bank's holding or
parent company in its sole discretion determines that any such party should have
access to such information) any information with respect to the Company or any
of its Subsidiaries which is furnished pursuant to this Agreement and which is
designated by the Company to the Banks in writing as confidential, provided that
any Bank may disclose any such information (a) as has become generally available
to the public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state, provincial or Federal regulatory
body having or claiming to have jurisdiction over such Bank or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation, the National
Association of Insurance Commissioners or similar organizations (whether in the
United States or elsewhere) or their successors, (c) as may be required or
appropriate in response to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to such Bank, and (e) to any prospective transferee in connection
with any contemplated transfer of any of the Loans and/or Commitments or any
interest herein by such Bank, provided that such prospective transferee agrees
to be bound by the provisions of this Section.
12.16 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
* * *
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
Address:
745 Fifth Avenue PRIMEDIA INC.
New York, NY 10151
Telephone No.: (212) 745-0101 By:__________________________
Telecopier No.: (212) 745-0199 Douglas B. Smith
Attention: Beverly Chell, Esq. Title: VP, Treasurer
c/o PRIMEDIA Inc. CANADIAN SAILINGS INC.
745 Fifth Avenue
New York, NY 10151
Telephone No.: (212) 745-0101 By:______________________
Telecopier No.: (212) 745-0199 Douglas B. Smith
Attention: Beverly Chell, Esq. Title: VP, Treasurer
THE CHASE MANHATTAN BANK
Individually and as
Administrative Agent
By:______________________
Title:
BANKERS TRUST COMPANY,
Individually and as
Co-Syndication Agent
By:______________________
Title:
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THE BANK OF NEW YORK,
Individually and as
Co-Syndication Agent
By:______________________
Title:
THE BANK OF NOVA SCOTIA,
Individually, as Canadian Lender
and as Documentation Agent
By:______________________
Title:
BANK OF AMERICA NT&SA
By:______________________
Title:
NATIONSBANK OF TEXAS, N.A.
By:______________________
Title:
FLEET NATIONAL BANK
By:______________________
Title:
MARINE MIDLAND BANK
By:______________________
Title:
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SOCIETE GENERALE, NEW YORK BRANCH
By:______________________
Title:
THE INDUSTRIAL BANK OF
JAPAN, LIMITED
By:______________________
Title:
ROYAL BANK OF CANADA
By:______________________
Title:
CIBC INC.
By:______________________
Title:
LTCB TRUST COMPANY
By:______________________
Title:
MELLON BANK, N.A.
By:______________________
Title:
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THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By:______________________
Title:
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By:______________________
Title:
THE SAKURA BANK, LIMITED,
NEW YORK BRANCH
By:______________________
Title:
TORONTO DOMINION (NEW YORK), INC.
By:______________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:______________________
Title:
BANK OF MONTREAL,
CHICAGO BRANCH
By:______________________
Title:
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CREDIT AGRICOLE INDOSUEZ
By:______________________
Title:
By:______________________
Title:
STB DELAWARE FUNDING TRUST I
By:______________________
Title:
UNION BANK OF CALIFORNIA, N.A.
By:______________________
Title:
SUMMIT BANK
By:______________________
Title:
MERRILL LYNCH SENIOR FLOATING
RATE FUND
By:______________________
Title:
DEBT STRATEGIES FUND II, INC.
By:______________________
Title:
DEBT STRATEGIES FUND III, INC.
By:______________________
Title:
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BANK OF HAWAII
By:______________________
Title:
PARIBAS
By:______________________
Title:
NATEXIS BANQUE BFCE
By:______________________
Title:
CREDIT SUISSE FIRST BOSTON
By:______________________
Title:
By:______________________
Title:
MERITA BANK, Plc
By:______________________
Title:
FIRST UNION NATIONAL BANK
By:______________________
Title:
-109-
<PAGE>
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
By:______________________
Title:
ALLSTATE INSURANCE COMPANY
By:______________________
Title:
By:______________________
Title:
ALLSTATE LIFE INSURANCE COMPANY
By:______________________
Title:
By:______________________
Title:
DLJ CAPITAL FUNDING, INC.
By:______________________
Title:
FRANKLIN FLOATING RATE TRUST
By:______________________
Title:
GENERAL ELECTRIC CAPITAL
CORP.
By:______________________
Title:
-110-
<PAGE>
KZH HIGHLAND-2 LLC
By:______________________
Title:
KZH CYPRESSTREE-1 LLC
By:______________________
Title:
KZH SOLEIL-2 LLC
By:______________________
Title:
KZH III LLC
By:______________________
Title:
KZH IV LLC
By:______________________
Title:
METROPOLITAN LIFE INSURANCE
COMPANY
By:______________________
Title:
NEW YORK LIFE INSURANCE COMPANY
By:______________________
Title:
-111-
<PAGE>
OCTAGON LOAN TRUST
by Octagon Credit Investors,
as Manager
By:______________________
Title:
KZH LANGDALE LLC
By:______________________
Title:
RIGGS BANK, N.A.
By:______________________
Title:
SENIOR DEBT PORTFOLIO
by Boston Management &
Research as Investment Advisor
By:______________________
Title:
CRESCENT/MACH I PARTNERS, L.P.
By:______________________
Title:
KZH CRESCENT LLC
By:______________________
Title:
KZH CRESCENT-2 LLC
By:______________________
Title:
-112-
<PAGE>
KZH CRESCENT-3 LLC
By:______________________
Title:
VAN KAMPEN PRIME RATE
INCOME TRUST
By:______________________
Title:
-113-
<PAGE>
ANNEX I
LIST OF BANKS
-------------
<TABLE>
<CAPTION>
Tranche A Tranche B
Revolving Loan Revolving Loan Term Loan B Term Loan
Bank Commitment Commitment Commitment Commitment
---- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
The Chase Manhattan Bank $60,000,000 $26,500,000* $2,500,000 $63,000,000
Bank of America NT&SA 36,000,000 10,000,000* 2,000,000 10,000,000
Nationsbank of Texas, N.A. 24,000,000 10,000,000* 8,000,000
The Bank of New York 45,000,000 15,000,000* 15,000,000 10,000,000
The Bank of Nova Scotia 33,000,000 17,000,000* 11,000,000 5,000,000
Bankers Trust Company 33,666,667 19,833,333* 6,000,000
Fleet National Bank 30,000,000 15,000,000* 10,000,000
General Electric 32,000,000 13,000,000
Royal Bank of Canada 30,000,000 10,000,000
The Industrial Bank of Japan, Ltd. 36,000,000 2,000,000
Union Bank of California, N.A. 27,000,000 11,500,000 5,000,000
Societe Generale, 27,000,000 9,000,000
New York Branch
CIBC, Inc. 24,000,000 8,000,000
Marine Midland Bank 24,000,000 8,000,000
The Long-Term Credit Bank of Japan, Ltd. 24,000,000 8,000,000
The Mitsubishi Trust and Banking 24,000,000 8,000,000
Corporation
</TABLE>
-114-
<PAGE>
<TABLE>
<CAPTION>
Tranche A Tranche B
Revolving Loan Revolving Loan Term Loan B Term Loan
Bank Commitment Commitment Commitment Commitment
---- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Toronto Dominion Bank, 13,000,000 15,000,000* 2,000,000 15,000,000
New York Branch
Bank of Montreal, 15,000,000 10,000,000* 5,000,000
Chicago Branch
Credit Lyonnais 21,000,000 7,000,000
The Sakura Bank, Ltd. 18,000,000 6,000,000
Credit Agricole Indosuez 15,000,000 5,000,000
Credit Suisse First Boston 9,000,000 10,000,000* 3,000,000
Mellon Bank 15,000,000 5,000,000
The Dai-Ichi Kangyo Bank, Ltd. 13,500,000 4,500,000
STB Delaware Funding 15,000,000 5,000,000
Trust I
Summit Bank 15,000,000 5,000,000
Merrill Lynch Senior Floating Rate Fund 12,000,000 4,000,000 10,000,000
Debt Strategies Fund II 4,000,000
Debt Strategies Fund III 1,000,000
Bank of Hawaii 9,000,000 3,000,000
Paribas 9,000,000 3,000,000
Merita Bank, Plc . 9,000,000 3,000,000
Natexis Banque BFCE 8,333,333 1,666,667*
Riggs Bank, N.A. 9,000,000 3,000,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Tranche A Tranche B
Revolving Loan Revolving Loan Term Loan B Term Loan
Bank Commitment Commitment Commitment Commitment
---- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
First Union National Bank 9,000,000 3,000,000
The Sanwa Bank Ltd. 9,000,000 3,000,000
Van Kampen Prime Rate 15,000,000
Income Trust
Donaldson, Lufkin & Jenrette Capital 6,000,000 2,000,000
Funding
KZH III LLC 4,000,000
KZH IV LLC 3,000,000
Octagon Loan Trust 25,000,000
Crescent / Mach I Partners, L.P. 3,000,000
KZH Crescent LLC 3,500,000
KZH Crescent-2 LLC 5,000,000
KZH Crescent-3 LLC 3,500,000
KZH Highland-2 LLC 10,000,000
Metropolitan Life Insurance Company 10,000,000
KZH-Soleil-2 LLC 20,000,000
Allstate Insurance Company 4,500,000
Allstate Life Insurance Company 5,500,000
Franklin Floating Rate Trust 10,000,000
New York Life Insurance Company 10,000,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Tranche A Tranche B
Revolving Loan Revolving Loan Term Loan B Term Loan
Bank Commitment Commitment Commitment Commitment
---- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
KZH Langdale LLC 5,000,000
KZH-CypressTree-1 LLC 5,000,000
Total $750,000,000 $150,000,000* $250,000,000 $250,000,000
============ ============ ============ ============
</TABLE>
* Pursuant to Tranch B Assumption Agreements, dated May 20, 1997.
<PAGE>
ANNEX II
--------
BANK ADDRESSES
--------------
Bank Address
---- -------
The Chase Manhattan Bank. 270 Park Avenue
New York, New York 10017
Telephone No.: (212) 270-3116
Telecopier No.: (212) 270-1063
Attention: Ayman Zameli
Bankers Trust Company One Bankers Trust Plaza
New York, New York 10006
Telephone No.: (212) 250-1724
Telecopier No.: (212) 250-7218
Attention: Gregory Shefrin
The Bank of New York 1 Wall Street
16th Floor
New York, New York 10286
Telephone No.: (212) 635-8608
Telecopier No.: (212) 635-8595
Attention: Ted Ryan
Bank of Nova Scotia One Liberty Plaza,
26th Floor
New York, New York 10006
Telephone No.: (212) 225-5042
Telecopier No.: (212) 225-5090
Attention: Vincent Fitzgerald
Canadian Notice Office and Canadian
Payment Office:
International Banking Division
Loan Administration and Agency Services
44 Kings Street West, 14th Floor
Toronto, Ontario
Canada M5H 1H1
Telephone No.: (416) 866-5901/2816/4089
Telecopier No.: (416) 866-5991
Attention: Wallace Yeung/
Nancy Buccat/Nancy Tong
<PAGE>
Annex II
Page 2
Bank of America NT&SA 335 Madison Avenue
5th Floor
New York, New York 10017
Telephone No.: (212) 503-7980
Telecopier No.: (212) 503-7173
Attention: Thomas J. Kane
NationsBank of Texas, N.A. Bank of America
Entertainment/Media Group
335 Madison Avenue
New York, NY 10017
Telephone No.: (212) 503-7980
Telecopier No.: (212) 503-7173
Attention: Thomas J. Kane
Fleet National Bank 75 State Street
Boston, Massachusetts 02109
Telephone No.: (617) 346-5579
Telecopier No.: (617) 346-4346
Attention: Chris Swindell
General Electric Capital Corp. 201 High Ridge Road
Stamford, CT 06927
Telephone No.: (203) 961-2993
Telecopier No.: (203) 316-7978
Attention: David Rich
Royal Bank of Canada One Financial Square
New York, New York 10005-3531
Telephone No.: (212) 428-6288
Telecopier No.: (212) 428-6460
Attention: Barbara Meijer
The Industrial Bank of 1251 Avenue of the Americas
Japan, Limited 32nd Floor
New York, New York 10020-1104
Telephone No.: (212) 282-3514
Telecopier No.: (212) 282-4486
Attention: Jonathan Rabinowitz
<PAGE>
Annex II
Page 3
Union Bank of California, N.A. 445 South Figueroa Street
15th Floor
Los Angeles, California 90071
Telephone No.: (213) 236-5812
Telecopier No.: (213) 236-5747
Attention: Michael K. McShane
Societe Generale, New York 1221 Avenue of the Americas
Branch New York, New York 10020
Telephone No.: (212) 278-6852
Telecopier No.: (212) 278-6240
Attention: Elaine Khalil
Senior Debt Portfolio 24 Federal Street
by Boston Management & 6th Floor
Research as Investment Manager Boston, Massachusetts 02110
Telephone No.: (617) 348 0193
Telecopier No.: (617) 695-9594
Attention: Craig P. Russ
CIBC Inc. 425 Lexington Avenue
8th Floor
New York, New York 10017
Telephone No.: (212) 856-3676
Telecopier No.: (212) 856-3558
Attention: Karen Kiskorna
Marine Midland Bank, 140 Broadway
c/o HSBC Securities, Inc. 5th Floor
New York, New York 10005
Telephone No.: (212) 658-2200
Telecopier No.: (212) 658-2586
Attention: Susan Lefevre
LTCB Trust Company 165 Broadway
49th Floor
New York, New York 10006
Telephone No.: (212) 335-4453
Telecopier No.: (212) 608-2371
Attention: Hisao Inagawa
<PAGE>
Annex II
Page 4
The Mitsubishi Trust and 520 Madison Avenue
Banking Corporation 26th Floor
New York, New York 10022
Telephone No.: (212) 891-8425
Telecopier No.: (212) 644-6825
Attention: Paul Arzouian
Toronto Dominion (New York), 31 West 52nd Street
Inc. New York, New York 10019
Telephone No.: (212) 827-6928
Telecopier No.: (212) 262-1928
Attention: Christina Bau
with a copy to:
909 Fannin
Suite 1700
Houston, Texas 77010
Telephone No.: (713) 653-8234
Telecopier No.: (713) 951-9921
Attention: Lynn Chasin
Bank of Montreal, 430 Park Avenue
Chicago Branch New York, New York 10022
Telephone No.: (212) 605-1438
Telecopier No.: (212) 605-1648
Attention: Naghmeh Hashemifard
Credit Lyonnais 1301 Avenue of the Americas
New York Branch New York, New York 10019
Telephone No.: (212) 261-7896
Telecopier No.: (212) 459-3176
Attention: Anne Legoulven
The Sakura Bank, Limited, 101 Park Avenue
New York Branch New York, New York 10017
Telephone No.: (212) 909-4552
Telecopier No.: (212) 909-4599
Attention: Arifumi Hirata
Credit Agricole Indosuez 520 Madison Avenue
New York, New York 10022
Telephone No.: (212) 418-7077
Telecopier No.: (212) 418-2288
Attention: Janet Alexander
<PAGE>
Annex II
Page 5
Credit Suisse First Boston 5 World Trade Center
8th Floor
New York, New York 10048
Telephone No.: (212) 322-1634
Telecopier No.: (212) 335-0593
Attention: Patti Matos
Mellon Bank, N.A. One Mellon Bank Center
Room 4440
Pittsburgh, Pennsylvania 15258-0001
Telephone No.: (412) 234-3753
Telecopier No.: (412) 234-6375
Attention: Paul F. Noel
The Dai-Ichi Kangyo Bank, Ltd., One World Trade Center
New York Branch Suite 4911
New York, New York 10048
Telephone No.: (212) 432-6648
Telecopier No.: (212) 488-8955
Attention: Christopher Fahey
STB Delaware Funding Trust I 527 Madison Avenue
New York, New York 10022
Telephone No.: (212) 326-0537
Telecopier No.: (212) 326-0564
Attention: Suraj Bhatia
Summit Bank 25 East Salem Street
Hackensack, New Jersey 07602
Telephone No.: (201) 646-6189
Telecopier No.: (201) 343-6723
Attention: Bruce Gray
Merrill Lynch Senior Floating 800 Scudders Mill Road
Rate Fund Area 2C
Plainsboro, New Jersey 08536
Telephone No.: (609) 282-3102
Telecopier No.: (609) 282-3542
Attention: Jill Montanye
<PAGE>
Annex II
Page 6
Debt Strategies Fund II, Inc. 800 Scudders Mill Road
Area 1B
Plainsboro, New Jersey 08536
Telephone No.: (609) 282-2055
Telecopier No.: (609) 282-2756
Attention: Joseph Matteo / Janet S. Hansen
Debt Strategies Fund III, Inc. 800 Scudders Mill Road
Area 1B
Plainsboro, New Jersey 08536
Telephone No.: (609) 282-2055
Telecopier No.: (609) 282-2756
Attention: Joseph Matteo / Janet S. Hansen
Bank of Hawaii 1850 North Central Avenue
Suite 400
Phoenix, Arizona 85004
Telephone No.: (602) 257-2485
Telecopier No.: (602) 257-2235
Attention: Eric Pelletier
Paribas 787 Seventh Avenue
New York, New York 10019
Telephone No.: (212) 841-2389
Telecopier No.: (212) 841-2369
Attention: William Schink
Merita Bank Plc. 437 Madison Avenue
New York, New York 10022
Telephone No.: (212) 318-9561
Telecopier No.: (212) 421-4420
Attention: Frank Maffei
Natexis Banque BFCE 645 5th Avenue
New York, New York 10022
Telephone No.: (212) 872-5029
Telecopier No.: (212) 872-5045
Attention: Cynthia Sachs
Riggs Bank, N.A. 808 17th Street N.W.
10th Floor
Washington, D.C. 20006
Telephone No.: (202) 835-5918
Telecopier No.: (202) 835-5977
Attention: Perry DeLuca
<PAGE>
Annex II
Page 7
First Union National Bank 1339 Chestnut Street
PA 4829
Philadelphia, PA 19107
Telephone No.: (215) 786-7668
Telecopier No.: (215) 786-7721
Attention: James Brooks
The Sanwa Bank, Limited, Park Avenue Plaza
New York Branch 55 East 52nd Street
New York, New York 10055
Telephone No.: (212) 339-6201
Telecopier No.: (212) 754-1304
Attention: Stephen C. Small
Van Kampen Prime Rate One Parkview Plaza
Income Trust 5th Floor
Oakbrook Terrace, Illinois 60181
Telephone No.: (630) 684-6438
Telecopier No.: (630) 684-6741
Attention: Jeffrey Maillet
DLJ Capital Funding, Inc. 277 Park Avenue
9th Floor
New York, New York 10172
Telephone No.: (212) 892-5475
Telecopier No.: (212) 892-5286
Attention: Don Pollard
KZH III LLC c/o The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Telephone No.: (212) 946-7575
Telecopier No.: (212) 946-7776
Attention: Virginia Conway
KZH IV LLC c/o The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Telephone No.: (212) 946-7575
Telecopier No.: (212) 946-7776
Attention: Virginia Conway
<PAGE>
Annex II
Page 8
Octagon Credit Investors 380 Madison Avenue
New York, New York 10017
Telephone No.: (212) 622-3064
Telecopier No.: (212) 622-3797
Attention: Andrew Gordon
Crescent/Mach I Partners, L.P. TCW Asset Management Company
200 Park Avenue
Suite 2200
New York, New York 10166
Telephone No.: (212) 771-4000
Telecopier No.: (212) 771-4159
Attention: Mark L. Gold
With copies to:
Crescent/Mach I Partners, L.P.
c/o State Street Bank & Trust Co.
Two International Place
Boston, Massachusetts 02110
Telephone No.: (617) 664-5015
Telecopier No.: (617) 664-5368
Attention: Elizabeth Kennedy
KZH Crescent LLC c/o The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Telephone No.: (212) 946-7575
Telecopier No.: (212) 946-7776
Attention: Virginia Conway
KZH Crescent-2 LLC c/o The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Telephone No.: (212) 946-7575
Telecopier No.: (212) 946-7776
Attention: Virginia Conway
<PAGE>
Annex II
Page 9
KZH Crescent-3 LLC c/o The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Telephone No.: (212) 946-7575
Telecopier No.: (212) 946-7776
Attention: Virginia Conway
KZH Highland-2 LLC c/o The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Telephone No.: (212) 946-7575
Telecopier No.: (212) 946-7776
Attention: Virginia Conway
Metropolitan Life Insurance 334 Madison Avenue
Company Convent Station, New Jersey 07961
Telephone No.: (973) 254-3206
Telecopier No.: (973) 254-3032
Attention: Jim Dingler
KZH Soleil-2 LLC c/o The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Telephone No.: (212) 946-7575
Telecopier No.: (212) 946-7776
Attention: Virginia Conway
Allstate Insurance Company 3075 Sanders Road
Suite G3A
Northbrook, Illinois 60062
Telephone No.: (847) 402-2370
Telecopier No.: (847) 402-3092
Attention: Mary Ann Hawley
Allstate Life Insurance Company 3075 Sanders Road
Suite G3A
Northbrook, Illinois 60062
Telephone No.: (847) 402-2370
Telecopier No.: (847) 402-3092
Attention: Mary Ann Hawley
<PAGE>
Annex II
Page 10
Franklin Floating Rate Trust 777 Mariners Island Boulevard
San Mateo, California 94404
Telephone No.: (650) 312-3091
Telecopier No.: (650) 312-3346
Attention: Chauncey Lufkin
New York Life Insurance 51 Madison Avenue
Company Room 206
New York, New York 10010
Telephone No.: (212) 576-7628
Telecopier No.: (212) 576-6752
Attention: Tom Knoff
KZH Langdale LLC c/o The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Telephone No.: (212) 946-7575
Telecopier No.: (212) 946-7776
Attention: Virginia Conway
KZH CypressTree-1 LLC c/o The Chase Manhattan Bank
450 West 33rd St.
15th Floor
New York, New York 10001
Telephone No.: (212) 946-7575
Telecopier No.: (212) 946-7776
Attention: Virginia Conway
<PAGE>
ANNEX III
---------
SUBSIDIARIES
------------
<PAGE>
ANNEX IV
--------
LIENS
-----
<PAGE>
ANNEX V
-------
PART A. EXISTING DEBT
-------------
[To include existing Senior Notes and Non-Compete Notes]
PART B. EXISTING CONTINGENT OBLIGATIONS
-------------------------------
<PAGE>
ANNEX VI
--------
EXISTING PREFERRED STOCK
<PAGE>
ANNEX C-1
---------
FORM OF NOTICE OF BORROWING
---------------------------
[Date]
The Chase Manhattan Bank,
as Administrative Agent for the
Banks party to the Credit Agreement
referred to below
270 Park Avenue
New York, New York 10017
Attention: ____________________
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, dated as of
May 24, 1996, as amended and restated as of March ___, 1999 (as further amended,
modified or supplemented from time to time, the "Credit Agreement," the terms
defined therein being used herein as therein defined), among PRIMEDIA Inc.,
certain Banks from time to time party thereto, The Bank of New York and Bankers
Trust Company, as Co-Syndication Agents, The Bank of Nova Scotia, as
Documentation Agent, and you, as Administrative Agent for such Banks, and hereby
gives you irrevocable notice, pursuant to Section 1.03 of the Credit Agreement,
that the undersigned hereby requests a Borrowing under the Credit Agreement, and
in that connection sets forth below the information relating to such Borrowing
(the "Proposed Borrowing") as required by Section 1.03 of the Credit Agreement:
(xvii) The Business Day of the Proposed Borrowing is
________, 19__.1
(xviii) The aggregate principal amount of the Proposed
Borrowing is $________.
(xix) The Proposed Borrowing is to consist of [Term Loans][B
Term Loans][Tranche A Revolving Loans][Tranche B Revolving
Loans][Swingline Loans][Canadian Dollar Loans].
(xx) The Proposed Borrowing is to consist of [Base Rate
Loans] [Eurodollar Loans].
- --------
1 A Notice of Borrowing must be given at least one Business Day prior to the
date of the Proposed Borrowing in the case of Base Rate Loans and three
Business Days prior to the date of the Proposed Borrowing in the case of
Eurodollar Loans.
<PAGE>
Annex C-1
Page2
[(xxi) The initial Interest Period for the Proposed Borrowing
is ___ months.]2
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in the Credit
Agreement or the other Credit Documents are and will be true and
correct in all material respects, before and after giving effect to the
Proposed Borrowing and to the application of the proceeds thereof, as
though made on and as of such date, unless stated to relate to a
specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of
such earlier date; and
(B) no Default or Event of Default has occurred and is
continuing, or would result from such Proposed Borrowing or from the
application of the proceeds thereof.
Very truly yours,
PRIMEDIA INC.
By ________________________________
Title:
FORM OF TRANCHE B ASSUMPTION AGREEMENT
[Letterhead of Bank]
_____________, 199__
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
re Tranche B Revolving Loan Commitment
----------------------------------------
- --------
2 To be included for a Proposed Borrowing of Eurodollar Loans.
<PAGE>
Exhibit 10.4
AMENDMENT
AMENDMENT (this "Amendment"), dated as of March 11, 1999, among PRIMEDIA
Inc., a Delaware corporation (f/k/a K-III Communications Corporation and
hereinafter called the "Company"), the financial institutions listed on the
signature pages hereto, The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, The Bank of Nova Scotia, as Documentation Agent and The
Chase Manhattan Bank, as Administrative Agent under the $250,000,000 Credit
Agreement referred to below. All capitalized terms used herein and not otherwise
defined herein shall have the respective meanings provided such terms in the
$250,000,000 Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, the Company, various lending institutions (the "Banks") party
thereto, The Bank of New York and Bankers Trust Company, as Co-Syndication
Agents, The Bank of Nova Scotia, as Documentation Agent and The Chase Manhattan
Bank, as Administrative Agent, are parties to a Credit Agreement, dated as of
May 24, 1996 (as amended, modified or supplemented through the date hereof, the
"$250,000,000 Credit Agreement");
WHEREAS, the Company has requested, and the Banks party hereto are willing
(subject to the terms and conditions hereof), to amend the $250,000,000 Credit
Agreement as provided herein;
NOW, THEREFORE, in consideration of the foregoing, the agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, it is agreed:
1. Section 7.03(p) of the $250,000,000 Credit Agreement is hereby deleted
in its entirety, and the following shall be inserted in lieu thereof:
"(p) (i) Liens created under the Additional Credit Agreement and the
other Additional Facility Documents, and (ii) Liens created under the 1999
Additional Credit Agreement and the other 1999 Additional Facility
Documents; and"
2. Section 7.04(b) of the $250,000,000 Credit Agreement is hereby deleted
in its entirety, and the following shall be inserted in lieu thereof:
"(b) (i) Indebtedness incurred pursuant to the Additional Credit
Agreement and the other Additional Facility Documents and (ii)
Indebtedness incurred pursuant to the 1999 Additional Credit Agreement and
the other 1999 Additional Facility Documents;".
<PAGE>
3. Section 7.04(j) of the $250,000,000 Credit Agreement is hereby amended
by inserting immediately after the word "incurred" appearing in the fifth line
thereof, and immediately after the word "incurred" appearing in the seventh line
thereof, the word "directly".
4. Section 7.06(c) of the $250,000,000 Credit Agreement is hereby deleted
in its entirety, and the following shall be inserted in lieu thereof:
"(c) Contingent Obligations pursuant to the Additional Facility
Documents and the 1999 Additional Facility Documents;".
5. Section 7.10 of the $250,000,000 Credit Agreement, entitled "Interest
Coverage Ratio", is hereby amended by deleting the table contained in such
Section and inserting the following table in lieu thereof:
Period Ratio
------ -----
Effective Date to and including 1.80 to 1.00
December 31, 1999
January 1, 2000 to and including 2.00 to 1.00
December 31, 2000
January 1, 2001 to and including 2.25 to 1.00
December 31, 2001
January 1, 2002 and thereafter 2.50 to 1.00
6. Section 7.11 of the $250,000,000 Credit Agreement, entitled "Leverage
Ratio", is hereby amended by deleting the table contained in such Section and
inserting the following table in lieu thereof:
Period Ratio
------ -----
Effective Date to and including 6.00 to 1.00
December 31, 1999
January 1, 2000 to and including 5.50 to 1.00
December 31, 2000
January 1, 2001 to and including 5.00 to 1.00
December 31, 2001
January 1, 2002 and thereafter 4.50 to 1.00
-2-
<PAGE>
7. Section 9 of the $250,000,000 Credit Agreement, entitled "Definitions",
is hereby amended by (i) adding, in the appropriate alphabetical order, the
following definitions:
"1999 Additional Credit Agreement" shall mean the Credit
Agreement, dated as of March 11, 1999, among the Company, various lending
institutions, The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, The Bank of Nova Scotia, as Documentation Agent,
and The Chase Manhattan Bank, as Administrative Agent, as amended,
modified, supplemented or extended from time to time.
"1999 Additional Facility Documents" shall mean and include
each of the documents and other agreements entered into by the Company or
any of its Subsidiaries in connection with the 1999 Additional Credit
Agreement (including, without limitation, the 1999 Additional Credit
Agreement and any guaranty or guaranties relating thereto), as modified,
supplemented or amended from time to time;
and (ii) inserting in the ninth line of the definition of "Consolidated Fixed
Charges", after the words "outstanding under the Additional Credit Agreement",
the words "and the 1999 Additional Credit Agreement".
8. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
9. This Amendment shall become effective on the date (the "Amendment
Effective Date") when the Company and the Required Banks shall have signed a
copy of this Amendment (whether the same or different copies) and shall have
delivered (including by way of facsimile transmission) the same to the
Administrative Agent.
10. From and after the Amendment Effective Date, all references in the
$250,000,000 Credit Agreement and each of the Credit Documents to the Agreement,
Credit Agreement and/or $250,000,000 Credit Agreement shall be deemed to be
references to the $250,000,000 Credit Agreement after giving
effect to this Amendment.
11. In order to induce the Banks to enter into this Consent, the Company
hereby (i) represents and warrants that each of the representations and
warranties contained in Section 5 of the $250,000,000 Credit Agreement will be
true and correct in all material respects on the Amendment Effective Date and
(ii) represents and warrants that there exists no Default or Event of Default on
the Amendment Effective Date.
12. This Amendment is limited as specified and shall not constitute a
consent to, modification, acceptance or waiver of any other provision of the
$250,000,000 Credit Agreement or any other Credit Document.
13. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Company and the Administrative Agent.
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
PRIMEDIA INC.
By
-----------------------------------
Douglas B. Smith
Title: VP, Treasurer
THE CHASE MANHATTAN
BANK, Individually
and as Administrative Agent
By
-----------------------------------
Title:
<PAGE>
BANKERS TRUST COMPANY,
Individually and as
Co-Syndication Agent
By
-----------------------------------
Title:
THE BANK OF NEW YORK,
Individually and as
Co-Syndication Agent
By
-----------------------------------
Title:
THE BANK OF NOVA SCOTIA,
Individually and as
Documentation Agent
By
-----------------------------------
Title:
BANK OF AMERICA NT & SA
By
-----------------------------------
Title:
NATIONSBANK OF TEXAS, N.A.
By
-----------------------------------
Title:
FLEET NATIONAL BANK
By
-----------------------------------
Title:
<PAGE>
GENERAL ELECTRIC CAPITAL CORP.
By
-----------------------------------
Title:
ROYAL BANK OF CANADA
By
-----------------------------------
Title:
THE INDUSTRIAL BANK OF
JAPAN, LIMITED
By
-----------------------------------
Title:
UNION BANK OF CALIFORNIA, N.A.
By
-----------------------------------
Title:
SOCIETE GENERALE, NEW YORK BRANCH
By
-----------------------------------
Title:
SENIOR DEBT PORTFOLIO,
by Boston Management & Research
as Investment Advisor
By
-----------------------------------
Title:
<PAGE>
CIBC INC.
By
-----------------------------------
Title:
MARINE MIDLAND BANK
By
-----------------------------------
Title:
LTCB TRUST COMPANY
By
-----------------------------------
Title:
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By
-----------------------------------
Title:
TORONTO DOMINION (NEW YORK),
INC.
By
-----------------------------------
Title:
BANK OF MONTREAL,
CHICAGO BRANCH
By
-----------------------------------
Title:
<PAGE>
CREDIT LYONNAIS
NEW YORK BRANCH
By
-----------------------------------
Title:
THE SAKURA BANK, LIMITED,
NEW YORK BRANCH
By
-----------------------------------
Title:
CREDIT AGRICOLE INDOSUEZ
By
-----------------------------------
Title:
By
-----------------------------------
Title:
CREDIT SUISSE FIRST BOSTON
By
-----------------------------------
Title:
By
-----------------------------------
Title:
MELLON BANK, N.A.
By
-----------------------------------
Title:
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By
-----------------------------------
Title:
STB DELAWARE FUNDING TRUST I
By
-----------------------------------
Title:
SUMMIT BANK
By
-----------------------------------
Title:
MERRILL LYNCH SENIOR FLOATING RATE
FUND
By
-----------------------------------
Title:
BANK OF HAWAII
By
-----------------------------------
Title:
PARIBAS
By
-----------------------------------
Title:
By
-----------------------------------
Title:
<PAGE>
MERITA BANK, Plc
By
-----------------------------------
Title:
NATEXIS BANQUE BFCE
By
-----------------------------------
Title:
RIGGS BANK, N.A.
By
-----------------------------------
Title:
FIRST UNION NATIONAL BANK
By
-----------------------------------
Title:
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
By
-----------------------------------
Title:
DLJ CAPITAL FUNDING
By
-----------------------------------
Title:
<PAGE>
Exhibit 10.5
================================================================================
CREDIT AGREEMENT
among
PRIMEDIA INC.,
VARIOUS LENDING INSTITUTIONS,
THE BANK OF NEW YORK
and
BANKERS TRUST COMPANY,
as Co-Syndication Agents,
THE BANK OF NOVA SCOTIA,
as Documentation Agent
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
------------------------------------------
Dated as of March 11, 1999
------------------------------------------
$150,000,000
================================================================================
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 1. Amount and Terms of Credit........................................................................1
1.01 Commitments........................................................................................1
1.02 Minimum Borrowing Amounts, etc.....................................................................1
1.03 Notice of Borrowing................................................................................1
1.04 Disbursement of Funds..............................................................................2
1.05 Register...........................................................................................2
1.06 Conversions........................................................................................3
1.07 Pro Rata Borrowings................................................................................3
1.08 Interest...........................................................................................3
1.09 Interest Periods...................................................................................4
1.10 Increased Costs, Illegality, etc...................................................................5
1.11 Compensation.......................................................................................7
1.12 Change of Lending Office...........................................................................8
SECTION 2. Fees; Commitments.................................................................................8
2.01 Fees...............................................................................................8
2.02 Voluntary Reduction of Commitments.................................................................8
2.03 Termination of Commitments.........................................................................9
SECTION 3. Payments..........................................................................................9
3.01 Voluntary Prepayments..............................................................................9
3.02 Mandatory Repayments...............................................................................9
3.03 Method and Place of Payment.......................................................................10
3.04 Net Payments......................................................................................10
<PAGE>
SECTION 4. Conditions Precedent.............................................................................11
4.01 Execution of Agreement............................................................................11
4.02 No Default; Representations and Warranties........................................................11
4.03 Opinions of Counsel...............................................................................12
4.04 Corporate Proceedings.............................................................................12
4.05 Subsidiary Guaranty...............................................................................12
4.06 Notice of Borrowing...............................................................................12
4.07 Payment of Fees, etc..............................................................................12
4.08 Contribution Agreement............................................................................12
4.09 Existing Indebtedness Agreements..................................................................13
4.10 The Amended and Restated Credit Agreement.........................................................13
SECTION 5. Representations, Warranties and Agreements.......................................................13
5.01 Corporate Status..................................................................................13
5.02 Corporate Power and Authority.....................................................................13
5.03 No Violation......................................................................................14
5.04 Litigation........................................................................................14
5.05 Use of Proceeds; Margin Regulations...............................................................14
5.06 Governmental Approvals............................................................................14
5.07 Investment Company Act............................................................................15
5.08 Public Utility Holding Company Act................................................................15
5.09 True and Complete Disclosure......................................................................15
5.10 Financial Statements; Financial Condition.........................................................15
5.11 Tax Returns and Payments..........................................................................16
5.12 Compliance with ERISA.............................................................................16
5.13 Subsidiaries......................................................................................17
5.14 Intellectual Property.............................................................................17
5.15 Compliance with Statutes, etc.....................................................................18
SECTION 6. Affirmative Covenants............................................................................18
6.01 Information Covenants.............................................................................18
6.02 Books, Records and Inspections....................................................................20
6.03 Payment of Taxes..................................................................................20
6.04 Corporate Franchises..............................................................................20
6.05 Compliance with Statutes, etc.....................................................................20
6.06 ERISA.............................................................................................21
6.07 End of Fiscal Years; Fiscal Quarters..............................................................21
6.08 Use of Proceeds...................................................................................21
6.09 Ownership of Subsidiaries.........................................................................21
6.10 Maintenance of Corporate Separateness.............................................................21
<PAGE>
SECTION 7. Negative Covenants..............................................................................22
7.01 Changes in Business...............................................................................22
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc............................................22
7.03 Liens.............................................................................................25
7.04 Indebtedness......................................................................................26
7.05 Advances, Investments and Loans...................................................................28
7.06 Contingent Obligations............................................................................30
7.07 Dividends, etc....................................................................................30
7.08 Transactions with Affiliates......................................................................32
7.09 Fixed Charge Coverage Ratio.......................................................................33
7.10 Interest Coverage Ratio...........................................................................33
7.11 Leverage Ratio....................................................................................33
7.12 Issuance of Stock.................................................................................33
7.13 Modifications of Certain Agreements, etc..........................................................33
7.14 Limitation on the Creation of Subsidiaries; Redesignation of Partially-Owned Restricted
Subsidiaries....................................................................................34
SECTION 8. Events of Default...............................................................................35
8.01 Payments..........................................................................................35
8.02 Representations, etc..............................................................................35
8.03 Covenants.........................................................................................35
8.04 Default Under Other Agreements....................................................................35
8.05 Bankruptcy, etc...................................................................................36
8.06 ERISA.............................................................................................36
8.07 Subsidiary Guaranty...............................................................................37
8.08 Judgments.........................................................................................37
8.09 Ownership.........................................................................................37
SECTION 9. Definitions.....................................................................................38
SECTION 10. The Administrative Agent.......................................................................58
10.01 Appointment......................................................................................58
10.02 Delegation of Duties.............................................................................58
10.03 Exculpatory Provisions...........................................................................58
10.04 Reliance by Administrative Agent.................................................................59
10.05 Notice of Default................................................................................59
10.06 Non-Reliance on Administrative Agent and Other Banks.............................................60
10.07 Indemnification..................................................................................60
10.08 Administrative Agent in Its Individual Capacity..................................................61
10.09 Holders..........................................................................................61
10.10 Resignation of the Administrative Agent; Successor Agent.........................................61
SECTION 11. Miscellaneous..................................................................................61
11.01 Payment of Expenses, etc..........................................................................61
<PAGE>
11.02 Right of Setoff...................................................................................62
11.03 Notices...........................................................................................62
11.04 Benefit of Agreement..............................................................................63
11.05 No Waiver; Remedies Cumulative....................................................................64
11.06 Payments Pro Rata.................................................................................64
11.07 Calculations; Computations........................................................................65
11.08 Governing Law; Submission to Jurisdiction; Venue..................................................65
11.09 Counterparts......................................................................................66
11.10 Effectiveness.....................................................................................66
11.11 Headings Descriptive..............................................................................67
11.12 Amendment or Waiver...............................................................................67
11.13 Survival..........................................................................................67
11.14 Domicile of Loans.................................................................................67
11.15 Confidentiality...................................................................................67
11.16 Waiver of Jury Trial..............................................................................68
</TABLE>
<PAGE>
ANNEX I List of Banks
ANNEX II Bank Addresses
ANNEX III Subsidiaries
ANNEX IV Liens
ANNEX V Existing Debt/Existing Contingent Obligations
ANNEX VI Existing Preferred Stock
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Opinion of Simpson, Thacher & Bartlett
EXHIBIT B-2 Form of Opinion of Beverly C. Chell, Esq.
EXHIBIT B-3 Form of Opinion of White & Case LLP
EXHIBIT C Form of Officer's Certificate
EXHIBIT D Form of Subsidiary Guaranty
EXHIBIT E Form of Contribution Agreement
EXHIBIT F Form of Assignment and Assumption Agreement
EXHIBIT G Form of Subsidiary Assumption Agreement
<PAGE>
CREDIT AGREEMENT, dated as of March 11, 1999, among PRIMEDIA INC., a
Delaware corporation (the "Company"), the lending institutions listed from time
to time on Annex I hereto (each a "Bank" and, collectively, the "Banks"), THE
BANK OF NEW YORK and BANKERS TRUST COMPANY, as Co-Syndication Agents, THE BANK
OF NOVA SCOTIA, as Documentation Agent and THE CHASE MANHATTAN BANK, as
Administrative Agent (the "Administrative Agent"). Unless otherwise defined
herein, all capitalized terms used herein and defined in Section 9 are used
herein as so defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein set forth, the
Banks are willing to make available the credit facility provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 COMMITMENTS. Subject to and upon the terms and conditions herein set
forth, each Bank severally agrees at any time and from time to time on and after
the Effective Date and prior to the Final Maturity Date, to make a revolving
loan or revolving loans (each a "Loan" and, collectively, the "Loans") to the
Company, which Loans (i) shall, at the option of the Company, be Base Rate Loans
or Eurodollar Loans, PROVIDED that all Loans made as part of the same Borrowing
shall, unless otherwise specifically provided herein, consist of Loans of the
same Type, (ii) may be repaid and reborrowed in accordance with the provisions
hereof, (iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which equals the Revolving Loan Commitment of such
Bank at such time.
1.02 MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount of each
Borrowing shall not be less than the Minimum Borrowing Amount. More than one
Borrowing may be incurred on any day, PROVIDED that at no time shall there be
outstanding more than 5 Borrowings of Eurodollar Loans.
1.03 NOTICE OF BORROWING. (a) Whenever the Company desires to incur Loans
hereunder, it shall give the Administrative Agent at its Notice Office, prior to
12:00 Noon (New York time), at least three Business Days' prior written notice
(or telephonic notice promptly confirmed in writing) of each Borrowing of
Eurodollar Loans and at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans to be incurred hereunder. Each such notice (each a "Notice of Borrowing"),
except as otherwise expressly provided in Section 1.10, shall be irrevocable,
and, in the case of each written notice and each confirmation of telephonic
notice, shall be in the form of Exhibit A, appropriately completed to specify
(i) the aggregate principal amount of the Loans to be made pursuant to such
Borrowing, (ii) the date of such Borrowing (which shall be a Business Day) and
(iii) whether the respective Borrowing shall consist of Base Rate Loans or
Eurodollar Loans and,
<PAGE>
if Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall promptly give each Bank which is required to make
Loans pursuant to the Borrowing specified in the respective Notice of Borrowing
written notice (or telephonic notice promptly confirmed in writing) of each
proposed Borrowing, of such Bank's proportionate share thereof, if any, and of
the other matters covered by the Notice of Borrowing.
(a) Without in any way limiting the obligation of the Company to confirm in
writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the
Administrative Agent, in good faith to be from the chairman, a vice chairman,
the president, a vice president, a treasurer, an assistant treasurer or the
director of treasury operations of the Company. In each such case, the Company
hereby waives the right to dispute the Administrative Agent's record of the
terms of such telephonic notice.
1.04 DISBURSEMENT OF FUNDS. No later than 1:00 P.M. (New York time) on the
date specified in each Notice of Borrowing, each Bank will make available its
Pro Rata Share of each Borrowing requested to be made on such date in the manner
provided below. All such amounts shall be made available to the Administrative
Agent in U.S. Dollars and immediately available funds at the Payment Office and
the Administrative Agent promptly will make available to the Company by
depositing to its account at the Payment Office the aggregate of the amounts so
made available in the type of funds received. Unless the Administrative Agent
shall have been notified by any Bank prior to the date of Borrowing that such
Bank does not intend to make available to the Administrative Agent its portion
of the Borrowing or Borrowings to be made on such date, the Administrative Agent
may assume that such Bank has made such amount available to the Administrative
Agent on such date of Borrowing, and the Administrative Agent, in reliance upon
such assumption, may (in its sole discretion and without any obligation to do
so) make available to the Company a corresponding amount. If such corresponding
amount is not in fact made available to the Administrative Agent by such Bank
and the Administrative Agent has made available same to the Company, the
Administrative Agent shall be entitled to recover such corresponding amount from
such Bank. If such Bank does not pay such corresponding amount forthwith upon
the Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify the Company, and the Company shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent shall
also be entitled to recover from the Bank or the Company, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Company to the date such corresponding amount is recovered by the Administrative
Agent, at a rate per annum equal to (x) if paid by such Bank, the overnight
Federal Funds rate or (y) if paid by the Company, the then applicable rate of
interest, calculated in accordance with Section 1.08, for the Loans. Nothing
herein shall be deemed to relieve any Bank from its obligation to fulfill its
commitments hereunder or to prejudice any rights which the Company may have
against any Bank as a result of any failure by such Bank to make Loans
hereunder.
1.05 REGISTER. (a) The Administrative Agent shall maintain a register for
the recordation of the Revolving Loan Commitments of the Banks from time to time
and the
-2-
<PAGE>
principal amount of the Loans owing to each Bank (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error. The Register shall be available for inspection by the Company or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.
(b) The Company hereby agrees to provide a Note, promptly upon the request
of any Bank, to the extent such Bank has requested such Note in connection with
any pledge or assignment by such Bank of any or all of its Loans hereunder to a
Federal Reserve Bank.
1.06 CONVERSIONS. The Company shall have the option to convert on any
Business Day all or a portion at least equal to the applicable Minimum Borrowing
Amount of the outstanding principal amount of the Loans into a Borrowing or
Borrowings of another Type of Loan; PROVIDED that (i) no such partial conversion
of a Borrowing of Eurodollar Loans shall reduce the outstanding principal amount
of the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may not be converted
into Eurodollar Loans if a Default or Event of Default is in existence and the
Administrative Agent and/or the Required Banks have notified the Company that
such a conversion will not be permitted as a result thereof and (iii) Borrowings
of Eurodollar Loans resulting from this Section 1.06 shall be limited in number
as provided in Section 1.02. Each such conversion shall be effected by the
Company by giving the Administrative Agent at its Notice Office, prior to 12:00
Noon (New York time), at least three Business Days (or one Business Day in the
case of a conversion into Base Rate Loans) prior written notice (or telephonic
notice promptly confirmed in writing) (each a "Notice of Conversion") specifying
the Loans to be so converted, the Type of Loans to be converted into and, if to
be converted into a Borrowing of Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each Bank
prompt notice of any such proposed conversion affecting any of its Loans.
1.07 PRO RATA BORROWINGS. All Borrowings of Loans under this Agreement
shall be made by the Banks PRO RATA on the basis of their Revolving Loan
Commitments. It is understood that no Bank shall be responsible for any default
by any other Bank of its obligation to make Loans hereunder and that each Bank
shall be obligated to make the Loans to be made by it hereunder, regardless of
the failure of any other Bank to make its Loans hereunder.
1.08 INTEREST. (a) The unpaid principal amount of each Base Rate Loan shall
bear interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Margin plus the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear interest
from the date of the Borrowing thereof until maturity (whether by acceleration
or otherwise) at a rate per annum which shall at all times be the Applicable
Margin plus the relevant Eurodollar Rate.
(c) Overdue principal and, to the extent permitted by law, overdue interest
in respect of each Loan shall bear interest at a rate per annum equal to the
Base Rate in effect from time to time plus the sum of (i) 2% and (ii) the
Applicable Margin for Base Rate Loans; PROVIDED
-3-
<PAGE>
that principal in respect of Eurodollar Loans shall bear interest after the same
becomes due (whether by acceleration or otherwise) until the end of the
applicable Interest Period for such Eurodollar Loan at a per annum rate equal to
2% in excess of the rate of interest applicable on the due date therefor.
(d) Interest shall accrue from and including the date of any Borrowing to
but excluding the date of any repayment thereof and shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on the last Business Day of
each March, June, September and December, (ii) in respect of each Eurodollar
Loan, on the last day of each Interest Period applicable thereto and, in the
case of an Interest Period in excess of three months, on each date occurring at
three month intervals after the first day of such Interest Period and (iii) in
respect of each Loan, on any prepayment or conversion (on the amount prepaid or
converted), at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance with
Section 11.07(b).
(f) The Administrative Agent, upon determining the interest rate for any
Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify the
Company and the Banks thereof.
1.09 INTEREST PERIODS. At the time the Company gives a Notice of Borrowing
or Notice of Conversion in respect of the making of, or conversion into, a
Borrowing of Eurodollar Loans (in the case of the initial Interest Period
applicable thereto) or prior to 12:00 Noon (New York time) on the third Business
Day prior to the expiration of an Interest Period applicable to a Borrowing of
Eurodollar Loans, it shall have the right to elect by giving the Administrative
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Company, be a one, two, three, six or, if available to each of
the Banks (as determined by each such Bank in good faith based on prevailing
conditions in the interbank Eurodollar market on any date of determination
thereof), nine or twelve month period. Notwithstanding anything to the contrary
contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar Loans shall
commence on the date of such Borrowing (including the date of any conversion
from a Borrowing of Base Rate Loans) and each Interest Period occurring
thereafter in respect of such Borrowing shall commence on the day on which the
next preceding Interest Period applicable thereto expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of such calendar
month;
(iii) if any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day, PROVIDED that if any Interest Period would otherwise expire on a day which
is not a Business Day but is a
-4-
<PAGE>
day of the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond the Final Maturity Date; and
(v) no Interest Period may be elected at any time when a Default or Event
of Default is then in existence and the Administrative Agent and/or the Required
Banks have notified the Company that such an election will not be permitted as a
result thereof.
If upon the expiration of any Interest Period, the Company has failed to
elect a new Interest Period to be applicable to the respective Borrowing of
Eurodollar Loans as provided above, or a Default or an Event of Default then
exists and the Administrative Agent and/or the Required Banks have given the
notice referred to in clause (v) above, the Company shall be deemed to have
elected to convert such Borrowing into a Borrowing of Base Rate Loans effective
as of the expiration date of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in the
case of clause (i) below, the Administrative Agent or (y) in the case of clauses
(ii) and (iii) below, any Bank, shall have determined (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest Period
that, by reason of any changes arising after the date of this Agreement
affecting the interbank Eurodollar market, adequate and fair means do not exist
for ascertaining the applicable interest rate on the basis provided for in the
definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or reductions
in the amounts received or receivable hereunder with respect to any Eurodollar
Loans because of (x) any change since the date of this Agreement in any
applicable law, governmental rule, regulation, guideline, order or request
(whether or not having the force of law), or in the interpretation or
administration thereof and including the introduction of any new law or
governmental rule, regulation, guideline, order or request such as, for example,
but not limited to, (A) a change since the Effective Date in the basis of
taxation of payment to any Bank of the principal of or interest on the Loans or
any other amounts payable hereunder (except for changes with respect to Taxes
and those taxes described in clauses (x) and (y) of the proviso in the second
sentence of Section 4.04) or (B) a change since the Effective Date in official
reserve requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the Eurodollar Rate
and/or (y) other circumstances affecting such Bank, the interbank Eurodollar
market or the position of such Bank in such market; or
(iii) at any time since the Effective Date, that the making or continuance
of any Eurodollar Loan has become unlawful by compliance by such Bank in good
faith with any law, governmental rule, regulation, guideline or order (or would
conflict with any such governmental rule, regulation, guideline or order not
having the force of law but with which such Bank customarily complies even
though the failure to comply therewith would not be unlawful), or has
-5-
<PAGE>
become impracticable as a result of a contingency occurring after the Effective
Date which materially and adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within 10 Business Days of
the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Company and (except in the case of clause (i)) to
the Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Company and the Banks that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Company with respect to Eurodollar Loans which have not yet been incurred shall
be deemed rescinded by the Company, (y) in the case of clause (ii) above, the
Company agrees to pay to such Bank, upon written demand therefor (accompanied by
the written notice referred to below), such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the additional
amounts owed to such Bank, showing the basis for the calculation thereof,
submitted to the Company by such Bank shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) and (z) in the case of clause
(iii) above, the Company shall take one of the actions specified in Section
1.10(b) as promptly as possible and, in any event, within the time period
required by law.
(b) At any time that any Eurodollar Loan is affected by the circumstances
described in Section 1.10(a)(ii) or (iii), the Company may (and in the case of a
Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the Company shall)
either (i) if the affected Eurodollar Loan is then being made pursuant to a
Borrowing, cancel said Borrowing by giving the Administrative Agent telephonic
notice (confirmed promptly in writing) thereof promptly (but in any event no
later than the later of (x) the Business Day next preceding the date of such
Borrowing and (y) one Business Day after the Company was notified by a Bank
pursuant to Section 1.10(a)(ii) or (iii)), or (ii) if the affected Eurodollar
Loan is then outstanding, upon at least three Business Days' notice to the
Administrative Agent, require the affected Bank to convert each such Eurodollar
Loan into a Base Rate Loan (which conversion, in the case of the circumstances
described in Section 1.10(a)(iii), shall occur no later than the last day of the
Interest Period then applicable to such Eurodollar Loan (or such earlier date as
shall be required by applicable law)); PROVIDED that if more than one Bank is
affected at any time, then all affected Banks must be treated the same pursuant
to this Section 1.10(b).
(c) (i) If any Bank shall have determined that after the Effective Date,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or
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assets as a consequence of its commitments or obligations hereunder to a level
below that which such Bank could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy), then from time to time, within 15 days after demand by such
Bank (with a copy to the Administrative Agent), accompanied by the notice
referred to in the last sentence of this clause (i), the Company shall pay to
such Bank such additional amount or amounts as will compensate such Bank for
such reduction. Each Bank, upon determining in good faith that any additional
amounts will be payable pursuant to this Section 1.10(c), will give prompt
written notice thereof to the Company, which notice shall set forth the basis of
the calculation of such additional amounts, although the failure to give any
such notice shall not release or diminish the Company's obligations to pay
additional amounts pursuant to this Section 1.10(c).
(ii) If (x) any Bank becomes a Defaulting Bank or otherwise defaults in its
obligations to make Loans, (y) any Bank has notified the Company that one of its
Eurodollar Loans is affected by the circumstances described in Section
1.10(a)(ii) or (iii), or (z) any Bank is owed increased costs or other amounts
under Section 1.10(c)(i) or 3.04 and, in the case of such clause (y) or (z),
compensation or other action with respect to such event is not otherwise
requested generally by the other Banks, the Company shall have the right, if no
Default or Event of Default then exists and, in the case of a Bank described in
clause (y) or (z) above, such Bank has not changed its applicable lending office
with the effect of eliminating such increased cost, to replace such Bank (the
"Replaced Bank") with another commercial bank or banks or other financial
institutions (collectively, the "Replacement Bank") reasonably acceptable to the
Administrative Agent, PROVIDED that (i) at the time of any replacement pursuant
to this Section 1.10(c)(ii), the Replacement Bank shall enter into one or more
assignment agreements pursuant to Section 11.04(b) hereof (and with all fees
payable pursuant to said Section 11.04(b) to be paid by the Replacement Bank)
pursuant to which the Replacement Bank shall acquire all of the Revolving Loan
Commitments and outstanding Loans of the Replaced Bank and, in connection
therewith, shall pay to the Replaced Bank in respect thereof an amount equal to
the sum of (a) an amount equal to the principal of, and all accrued interest on,
all outstanding Loans of the Replaced Bank and (b) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Bank pursuant to
Section 2.01 hereof and (ii) all obligations of the Company owing to the
Replaced Bank (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Bank concurrently with such
replacement. Upon the execution of the respective assignment documentation
pursuant to clause (i) above and the payment of amounts referred to in clauses
(i) above and (ii) above, the Replacement Bank shall become a Bank or Banks
hereunder, as the case may be, and the Replaced Bank shall cease to constitute a
Bank hereunder, except with respect to indemnification provisions (including,
without limitation, Sections 1.10, 1.11, 3.04, 10.07 and 11.01 of this
Agreement) under this Agreement, which shall survive as to such Replaced Bank.
1.11 COMPENSATION. The Company agrees to compensate each Bank, upon its
written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds
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required by such Bank to fund its Eurodollar Loans but excluding loss of
anticipated profit with respect to any Loans) which such Bank may sustain: (i)
if for any reason (other than a default by such Bank or the Administrative
Agent) a Borrowing of Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by the Company or deemed withdrawn pursuant to Section 1.10(a)); (ii)
if any repayment, prepayment or conversion of any Eurodollar Loans occurs on a
date which is not the last day of an Interest Period applicable thereto; (iii)
if any prepayment of any Eurodollar Loans is not made on any date specified in a
notice of prepayment given by the Company; or (iv) as a consequence of (x) any
other default by the Company to repay its Loans when required by the terms of
this Agreement or (y) an election made pursuant to Section 1.10(b). Calculation
of all amounts payable to a Bank under this Section 1.11 shall be made as though
that Bank had actually funded its relevant Eurodollar Loan through the purchase
of a Eurodollar deposit bearing interest at the Eurodollar Rate in an amount
equal to the amount of that Loan, having a maturity comparable to the relevant
Interest Period and through the transfer of such Eurodollar deposit from an
offshore office of that Bank to a domestic office of that Bank in the United
States of America; PROVIDED, HOWEVER, that each Bank may fund each of its
Eurodollar Loans in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this Section 1.11.
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that, upon the occurrence
of any event giving rise to the operation of Section 1.10(a)(ii) or (iii),
Section 1.10(c)(i) or 3.04 with respect to such Bank, it will, if requested by
the Company, use reasonable efforts (subject to overall policy considerations of
such Bank) to designate another lending office for any Loans affected by such
event; PROVIDED that such designation is made on such terms that in the sole
judgment of such Bank, such Bank and its lending office suffer no economic,
legal or regulatory disadvantage, with the object of avoiding the consequences
of the event giving rise to the operation of any such Section. Nothing in this
Section 1.12 shall affect or postpone any of the obligations of the Company or
the right of any Bank provided in Sections 1.10 or 3.04.
SECTION 2. FEES; COMMITMENTS.
2.01 FEES. (a) The Company agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment a
commitment fee (the "Commitment Fee") for the period from the Effective Date to
but not including the date the Total Revolving Loan Commitment has been
terminated, computed at a per annum rate equal to the Applicable Commitment Fee
Percentage on the daily average Aggregate Unutilized Revolving Loan Commitment
of such Non-Defaulting Bank. Accrued Commitment Fees shall be due and payable
quarterly in arrears on the last Business Day of March, June, September and
December of the year following the Effective Date and the date upon which the
Total Revolving Loan Commitment is terminated.
(b) The Company shall pay to the Administrative Agent, for its own account,
such other fees as have been agreed to in writing by the Company and the
Administrative Agent.
(c) All computations of Fees shall be made in accordance with Section
11.07(b).
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2.02 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three Business Days'
prior written notice (or telephonic notice promptly confirmed in writing) to the
Administrative Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Banks), the Company shall have the right,
without premium or penalty, to terminate or partially reduce the Total
Unutilized Revolving Loan Commitment; PROVIDED that (x) any such termination or
partial reduction shall apply to proportionately and permanently reduce the
Revolving Loan Commitment of each of the Banks, (y) any partial reduction
pursuant to this Section 2.02 shall be in the amount of at least $2,000,000, (z)
the reduction to the Total Unutilized Revolving Loan Commitment shall in no case
be in an amount which would cause the Revolving Loan Commitment of any Bank to
be reduced (as required by the preceding clause (x)) by an amount which exceeds
the remainder of the Aggregate Unutilized Revolving Loan Commitment of such Bank
as in effect immediately before giving effect to such reduction.
2.03 TERMINATION OF COMMITMENTS. The Total Revolving Loan Commitment (and
the Revolving Loan Commitment of each Bank) shall terminate in its entirety on
the earlier of (i) the date which is the earlier of (x) 30 days after any date
on which a Specified Change of Control Event occurs and (y) the date on which
any Senior Notes or any other Indebtedness of the Company or its Restricted
Subsidiaries are required to be repurchased, redeemed or prepaid as a result of
any such Specified Change of Control Event and (ii) the Final Maturity Date.
SECTION 3. PAYMENTS.
3.01 VOLUNTARY PREPAYMENTS. The Company shall have the right to prepay the
Loans incurred by it, in whole or in part, without premium or penalty except as
otherwise provided in this Agreement, from time to time on the following terms
and conditions: (i) the Company shall give the Administrative Agent at the
Notice Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, the amount of such prepayment and
(in the case of Eurodollar Loans) the specific Borrowing(s) pursuant to which
made, which notice shall be given by the Company prior to 12:00 Noon (New York
time) at least two Business Days prior to the date of such prepayment, which
notice shall promptly be transmitted by the Administrative Agent to each of the
Banks; (ii) each partial prepayment of any Borrowing shall be in an aggregate
principal amount of at least $1,000,000 and, if greater, in an integral multiple
of $500,000, PROVIDED that no partial prepayment of Eurodollar Loans made
pursuant to a Borrowing shall reduce the aggregate principal amount of the Loans
outstanding pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount applicable thereto; and (iii) each prepayment in respect of any
Loans made pursuant to a Borrowing shall be applied PRO RATA among such Loans;
PROVIDED that at the Company's election in connection with any prepayment of
Loans pursuant to this Section 3.01, such prepayment shall not be applied to any
Loans of a Defaulting Bank.
3.02 MANDATORY REPAYMENTS. (a) If on any date the aggregate outstanding
principal amount of Loans made by Non-Defaulting Banks (in each case after
giving effect to all other repayments thereof on such date) exceeds the Adjusted
Total Commitment as then in effect, the Company shall repay on such date the
principal of Loans of Non-Defaulting Banks in an aggregate amount equal to such
excess.
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(b) If on any date the aggregate outstanding principal amount of Loans made
by any Defaulting Bank exceeds the Revolving Loan Commitment of such Defaulting
Bank, the Company shall repay the Loans of such Defaulting Bank in an amount
equal to such excess.
(c) Notwithstanding anything to the contrary contained in this Agreement,
all then outstanding Loans under this Agreement shall be repaid in full on the
Final Maturity Date.
(d) With respect to each repayment of Loans required by this Section 3.02,
the Company may designate the Types of Loans which are to be repaid and the
specific Borrowing(s) pursuant to which made; provided that (i) Eurodollar Loans
may be designated for repayment pursuant to this Section 3.02 only on the last
day of an Interest Period applicable thereto unless all Eurodollar Loans with
Interest Periods ending on such date of required repayment and all Base Rate
Loans have been paid in full; (ii) each repayment of any Loans made pursuant to
a Borrowing shall be applied PRO RATA among such Loans; (iii) notwithstanding
the provisions of the preceding clause (ii), no repayment of Revolving Loans
pursuant to Section 3.02(a) shall be applied to the Revolving Loans of a
Defaulting Bank; and (iv) repayments of Revolving Loans of Defaulting Banks
pursuant to Section 3.02(b) shall be applied PRO RATA among such Revolving
Loans. In the absence of a designation by the Company as described in the
preceding sentence, the Administrative Agent shall, subject to the above, make
such designation in its sole discretion with a view, but no obligation, to
minimize breakage costs owing under Section 1.11.
3.03 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically provided
herein, all payments under this Agreement shall be made to the Administrative
Agent for the ratable account of the Banks entitled thereto (based on each
Bank's Pro Rata Share, if any), no later than 1:00 P.M. (New York time) on the
date when due and shall be made in immediately available funds and in lawful
money of the United States of America at the Payment Office. Any payments under
this Agreement which are made later than 1:00 P.M. (New York time) shall be
deemed to have been made on the next succeeding Business Day; PROVIDED, HOWEVER,
that to the extent that the Administrative Agent shall have received any payment
under this Agreement after 1:00 P.M. (New York time) on a Business Day, the
Administrative Agent shall use its best efforts to distribute such payment as
promptly as practicable on such date to the Banks (other than any Bank that has
consented in writing to waive its PRO RATA share of such payment) PRO RATA based
upon their respective shares, if any, of the Obligations with respect to which
such payment was received, and to the extent that any such Bank receives its
portion of such payment from the Administrative Agent on such same date by a
time satisfactory to such Bank, such payment to such Bank shall be deemed to
have been made on such date. Whenever any payment to be made hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
3.04 NET PAYMENTS. All payments made by the Company hereunder will be made
without setoff, counterclaim or other defense. Promptly upon notice from any
Bank to the Company, the Company agrees to pay, prior to the date on which
penalties attach thereto, all
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present and future income, stamp and other taxes, levies, or costs and charges
whatsoever imposed, assessed, levied or collected on or in respect of a Loan
solely as a result of the interest rate being determined by reference to the
Eurodollar Rate, and/or the provisions of this Agreement relating to the
Eurodollar Rate, and/or the recording, registration, notarization or other
formalization of any thereof and/or any payments of principal, interest or other
amounts made on a Loan when the interest rate is determined by reference to the
Eurodollar Rate (all such taxes, levies, costs and charges being herein
collectively called "Taxes"); PROVIDED that Taxes shall not include (x) taxes
imposed on or measured by the overall net income or receipts of the
Administrative Agent or any Bank by the United States of America or any
political subdivision or taxing authority thereof or therein or (y) taxes on or
measured by the overall net income of any foreign office, branch or subsidiary
of the Administrative Agent or that Bank by any foreign country or subdivision
thereof in which the Administrative Agent's or that Bank's office, branch or
subsidiary is doing business. The Company agrees to also pay such additional
amounts equal to increases in taxes payable by that Bank described in the
foregoing proviso which increases arise solely from the receipt by that Bank of
payments made by the Company described in the immediately preceding sentence of
this Section 3.04. Promptly after the date on which payment of any such Tax is
due pursuant to applicable law, the Company will, at the request of that Bank,
furnish to that Bank evidence, in form and substance satisfactory to that Bank,
that the Company has met its obligation under this Section 3.04. The Company
agrees to indemnify each Bank against, and reimburse each Bank on demand for,
any Taxes, as reasonably determined by that Bank in its good faith. Such Bank
shall provide the Company with appropriate receipts for any payments or
reimbursements made by the Company pursuant to this Section 3.04.
Notwithstanding the foregoing, the Company shall be entitled, to the extent it
is required to do so by law, to deduct or withhold and pay to the appropriate
taxing authority within the time prescribed by applicable law (and shall not be
required to make payments as otherwise required in this Section on account of
such deductions or withholdings) income or other similar taxes imposed by the
United States of America from interest, fees or other amounts payable hereunder
for the account of the Administrative Agent or any Bank other than the
Administrative Agent or any Bank (i) who is a U.S. Person for Federal income tax
purposes or (ii) who has the Prescribed Forms on file with the Company for the
applicable year to the extent deduction or withholding of such taxes is not
required as a result of the filing of such Prescribed Forms, provided that if
the Company shall so deduct or withhold any such taxes, it shall provide a
statement to the Administrative Agent and such Bank, setting forth the amount of
such taxes so deducted or withheld, the applicable rate and any other
information or documentation which the Administrative Agent or such Bank may
reasonably request for assisting the Administrative Agent or such Bank to obtain
any allowable credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which the Administrative Agent or such Bank is
subject to tax.
SECTION 4. CONDITIONS PRECEDENT. The obligation of each Bank to make each
Loan to the Company hereunder is subject, at the time of the making of each such
Loan (except as otherwise hereinafter indicated), to the satisfaction of the
following conditions:
4.01 EXECUTION OF AGREEMENT. On or prior to the Initial Borrowing Date,
this Agreement shall have been executed and delivered in accordance with Section
11.10.
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4.02 NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of the making
of each Loan and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents in effect at such time shall
be true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such Loan,
unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date.
4.03 OPINIONS OF COUNSEL. On the Effective Date, the Administrative Agent
shall have received opinions, addressed to each of the Banks and dated the
Effective Date, (i) from Simpson, Thacher & Bartlett, special counsel to the
Credit Parties, which opinion shall cover the matters contained in Exhibit B-1
and such other matters incident to the transactions contemplated herein as the
Administrative Agent may reasonably request, (ii) from Beverly C. Chell, Esq.,
counsel to the Credit Parties, which opinion shall cover the matters contained
in Exhibit B-2 and such other matters incident to the transactions contemplated
herein as the Administrative Agent may reasonably request, and (iii) from White
& Case LLP, special counsel to the Administrative Agent, which opinion shall
cover the matters contained in Exhibit B-3.
4.04 CORPORATE PROCEEDINGS. (a) On the Effective Date, the Administrative
Agent shall have received from the Company and each Subsidiary Guarantor, a
certificate, dated the Effective Date, signed by the chairman, a vice chairman,
the president, any vice-president or the treasurer of such Person, and attested
to by the secretary or any assistant secretary of such Person, in the form of
Exhibit C with appropriate insertions and, to the extent required, together with
copies of the Certificate of Incorporation, By-Laws and the resolutions of such
Person referred to in such certificate, and the foregoing shall be satisfactory
to the Administrative Agent.
(b) On the Effective Date, all corporate and legal proceedings and all
instruments and agreements in connection with the transactions contemplated by
this Agreement and the other Credit Documents shall be reasonably satisfactory
in form and substance to the Administrative Agent, and the Administrative Agent
shall have received all information and copies of all certificates, documents
and papers, including good standing certificates and any other records of
corporate proceedings and governmental approvals, if any, which the
Administrative Agent reasonably may have requested in connection therewith, such
documents and papers, where appropriate, to be certified by proper corporate or
governmental authorities.
4.05 SUBSIDIARY GUARANTY. On the Effective Date, each Subsidiary Guarantor
shall have duly authorized, executed and delivered a guaranty in the form of
Exhibit D hereto (as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof, the "Subsidiary Guaranty"), and
the Subsidiary Guaranty shall be in full force and effect.
4.06 NOTICE OF BORROWING. The Administrative Agent shall have received a
Notice of Borrowing satisfying the requirements of Section 1.03 with respect to
any Borrowing of Revolving Loans.
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4.07 PAYMENT OF FEES, ETC. On the Effective Date, all costs, fees and
expenses, and all other compensation contemplated by this Agreement, due to the
Administrative Agent or the Banks shall have been paid to the extent due.
4.08 CONTRIBUTION AGREEMENT. On the Effective Date, the Subsidiary
Guarantors shall have entered into a contribution agreement in the form of
Exhibit E hereto (as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof, the "Contribution Agreement"), and
the Contribution Agreement shall be in full force and effect.
4.09 EXISTING INDEBTEDNESS AGREEMENTS. On or prior to the Initial Borrowing
Date, there shall have been delivered to (or made available for review by) the
Banks copies, certified (in the case of those delivered) as true and correct by
an appropriate officer of the Company making such delivery, of all agreements
evidencing or relating to the Existing Debt or the Existing Contingent
Obligations with respect to Indebtedness for borrowed money (collectively, the
"Existing Indebtedness Agreements").
4.10 THE AMENDED AND RESTATED CREDIT AGREEMENT. On or prior to the Initial
Borrowing Date, the Restatement Effecting Date under (and as defined in) the
Amended and Restated Credit Agreement shall have occurred.
The acceptance of the benefits of each Loan shall constitute a
representation and warranty by the Company to each of the Banks that all of the
applicable conditions specified above exist as of the date of such Loan. All of
the certificates, legal opinions and other documents and papers referred to in
this Section 4, unless otherwise specified, shall be delivered to the
Administrative Agent at its Notice Office for the account of each of the Banks
and in sufficient counterparts for each of the Banks and shall be reasonably
satisfactory in form and substance to the Administrative Agent.
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to induce
the Banks to enter into this Agreement and to make the Loans provided for
herein, the Company makes the following representations and warranties to, and
agreements with, the Banks, all of which shall survive the execution and
delivery of this Agreement, the making of the Loans (with the making of each
Loan on and after the Initial Borrowing Date being deemed to constitute a
representation and warranty that the matters specified in this Section 5 are
true and correct in all material respects on and as of the Initial Borrowing
Date and as of the date of each such Loan, unless stated to relate to a specific
earlier date):
5.01 CORPORATE STATUS. The Company and each of its Restricted Subsidiaries
(i) is a duly organized and validly existing corporation under the laws of the
jurisdiction of its organization and has the corporate power and authority to
own its property and assets and to transact the business in which it is engaged
and presently proposes to engage, (ii) is in good standing under the laws of the
jurisdiction of its organization and (iii) is duly qualified and is authorized
to do business and is in good standing in all jurisdictions where it is required
to be so qualified, except, in the cases of clauses (ii) and (iii) above, for
such failures to be in good standing and failures to be so qualified which, in
the aggregate, would not have a material
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adverse effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole.
5.02 CORPORATE POWER AND AUTHORITY. Each of the Company and each of its
Restricted Subsidiaries has the corporate power and authority to execute,
deliver and carry out the terms and provisions of the Credit Documents to which
it is a party and has taken all necessary corporate action to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party. Each of the Company and each of its Restricted Subsidiaries has duly
executed and delivered each Credit Document to which it is a party and each such
Credit Document constitutes the legal, valid and binding obligation of such
Person enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
5.03 NO VIOLATION. Neither the execution, delivery or performance by the
Company or any of its Restricted Subsidiaries of the Credit Documents to which
it is a party nor compliance by them with the terms and provisions thereof, nor
the consummation of the transactions contemplated therein (i) will contravene in
any material respect any applicable provision of any law, statute, rule or
regulation, or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of the Company or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or other
material agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which any of them or any of their respective property or assets
is bound or to which it may be subject or (iii) will violate any provision of
the Certificate of Incorporation or By-Laws of the Company or any of its
Subsidiaries.
5.04 LITIGATION. There are no actions, suits or proceedings pending, or, to
the best knowledge of the Company, threatened, with respect to the Company or
any of its Subsidiaries (i) that are likely to have a material adverse effect on
the condition (financial or otherwise), operations, assets, liabilities or
prospects of the Company and its Restricted Subsidiaries taken as a whole or
(ii) that could reasonably be expected to have a material adverse effect on the
rights or remedies of the Banks or the Administrative Agent or on the ability of
the Company or of the Subsidiary Guarantors, taken as a whole, in either case,
to perform its or their respective obligations hereunder and under the other
Credit Documents to which it is or they are, or will be, a party.
5.05 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of all Loans
shall be used for general corporate and working capital purposes of the Company
and its Subsidiaries (including, without limitation, to finance Permitted
Acquisitions and refinance Senior Notes).
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(b) Neither the making of any Loan hereunder, nor the use of the proceeds
thereof, will violate the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System and no part of the proceeds of any Loan
will be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock, PROVIDED that the Company
may use the proceeds of Loans to purchase Margin Stock in compliance with
Regulations T, U and X, so long as at the time of the making of such Loan, and
after giving effect thereto, not more than 25% of the value of the assets
subject to the provisions of Section 7 of the Company, or of the Company and its
Restricted Subsidiaries on a consolidated basis, shall constitute Margin Stock.
5.06 GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required in
connection with (i) the execution, delivery and performance of any Credit
Document or (ii) the legality, validity, binding effect or enforceability of any
Credit Document, except those which have been obtained or made or those the
absence of which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on either (x) the condition
(financial or otherwise), operations, assets, liabilities or prospects of the
Company and its Restricted Subsidiaries taken as a whole or (y) the rights or
remedies of the Banks or the Administrative Agent or on the ability of the
Company or of the Subsidiary Guarantors, taken as a whole, in either case, to
perform its or their respective obligations hereunder and under the other Credit
Documents to which it is or they are, or will be, a party.
5.07 INVESTMENT COMPANY ACT. Neither the Company nor any of its Restricted
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
5.08 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor any of its
Restricted Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.09 TRUE AND COMPLETE DISCLOSURE. (a) All factual information (taken as a
whole) heretofore or contemporaneously furnished by the Company or any of its
Subsidiaries in writing to the Administrative Agent and/or any Bank on or before
the Initial Borrowing Date (including, without limitation, (i) the Information
Memorandum and (ii) all information contained in the Credit Documents) for
purposes of or in connection with this Agreement or any transaction contemplated
herein is true and complete in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to state
any material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided, it being understood and agreed that for purposes of
this Section 5.09(a), such factual information shall not include projections and
pro forma financial information.
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(b) The projections and pro forma financial information contained in the
factual information referred to in paragraph (a) above were based on good faith
estimates and assumptions believed by such Persons to be reasonable at the time
made, it being recognized by the Banks that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
5.10 FINANCIAL STATEMENTS; FINANCIAL CONDITION. (a) The consolidated
balance sheets of the Company and its Subsidiaries as at December 31, 1997 and
September 30, 1998 and the related consolidated statements of income and cash
flows of the Company and its Subsidiaries for the fiscal year or nine-month
period, as the case may be, ended as of said dates, which, in the case of the
December 31, 1997 statements, have been examined by Deloitte & Touche,
independent certified public accountants, who delivered an unqualified opinion
in respect thereof, present fairly the financial position of the Company and its
Subsidiaries at the dates of said statements and the results for the period
covered thereby. All such financial statements have been prepared in accordance
with GAAP consistently applied except to the extent provided in the notes to
said financial statements (subject, in the case of the September 30, 1998
statements, to normal year-end audit adjustments).
(b) Since December 31, 1997 and after giving effect to the incurrence of
Indebtedness hereunder and the other transactions contemplated hereby, there has
been no material adverse change in the condition (financial or otherwise),
operations, assets, liabilities or prospects of the Company and its Restricted
Subsidiaries taken as a whole (other than any change in general economic
conditions or any change in conditions affecting the Business generally).
5.11 TAX RETURNS AND PAYMENTS. Each of the Company and each of its
Restricted Subsidiaries has filed all Federal income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and has
paid all Federal taxes and assessments shown to be due on such returns and all
other material taxes and assessments, domestic and foreign, in each case payable
by it which have become due, other than those not yet delinquent and except for
those contested in good faith and for which adequate reserves have been provided
in accordance with GAAP.
5.12 COMPLIANCE WITH ERISA. As of the Effective Date, there are no Plans
and neither the Company nor any of its Restricted Subsidiaries nor any ERISA
Affiliate has incurred any unpaid material liability or reasonably expects to
incur any material liability with respect to any "employee pension benefit plan"
(as defined in Section 3(2) of ERISA) covered by Title IV of ERISA. As of the
date of each subsequent Loan, each Plan is in substantial compliance with ERISA
and the Code; no Reportable Event has occurred with respect to a Plan; no Plan
is insolvent or in reorganization; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; neither the Company nor any of its Restricted
Subsidiaries nor any ERISA Affiliate has incurred or reasonably expects to incur
any liability to or on account of a Plan pursuant to ERISA or the Code; no
proceedings have been
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instituted by the PBGC to terminate any Plan; no condition exists which presents
a material risk to the Company, any of its Restricted Subsidiaries or any ERISA
Affiliate of incurring a liability to or on account of a Plan pursuant to ERISA
or the Code; no lien imposed under the Code or ERISA on the assets of the
Company, any of its Restricted Subsidiaries or any ERISA Affiliate exists or is
likely to arise on account of any Plan; and the Company and its Restricted
Subsidiaries do not maintain or contribute to any "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA), which provides benefits to retired
employees (other than as required by Section 601 of ERISA) where, with respect
to any of the foregoing representations in this Section 5.12, the liability for
or the lien which could arise as a result of, the particular circumstance or
event which is the subject of the representation, would be reasonably likely to
result in a material adverse effect on the condition (financial or otherwise),
operations, assets, liabilities or prospects of the Company and its Restricted
Subsidiaries taken as a whole. Using actuarial assumptions and computation
methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the
aggregate liabilities of the Company, its Restricted Subsidiaries and ERISA
Affiliates to all Plans which are "multiemployer plans" (as defined in Section
4001(a)(3) of ERISA) (each a "Multiemployer Plan") in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan would not be reasonably likely to be an amount that could result in a
material adverse effect on the condition (financial or otherwise), operations,
assets, liabilities or prospects of the Company and its Restricted Subsidiaries
taken as a whole. Notwithstanding anything in this Section 5.12 to the contrary,
all representations and warranties made with respect to any Plan which is a
Multiemployer Plan shall be made to the best knowledge of the Company.
5.13 SUBSIDIARIES. On the Effective Date, the corporations listed on Annex
III under the name of the Company are the only Subsidiaries of the Company.
Annex III correctly sets forth, as of the Effective Date, the percentage
ownership (direct and indirect) of the Company in each class of capital stock of
each of its Subsidiaries and also identifies the direct owner thereof.
5.14 INTELLECTUAL PROPERTY. (a) The Company and each of its Restricted
Subsidiaries owns, or is licensed or otherwise authorized to sell, distribute,
use or exploit, all material copyrights, literary works, texts and other works
of authorship fixed in any tangible medium of expression necessary for the
present conduct of its business ("Copyrights"), except to the extent that the
failure to own or obtain licenses or authorizations with respect to any of the
foregoing, individually or in the aggregate, would not have a material adverse
effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole.
(b) The Company and each of its Restricted Subsidiaries owns or is licensed
to use all the patents, trademarks, permits, service marks, trade names,
technology, know-how and formulas, or rights with respect to the foregoing,
necessary for the present conduct of its business, except to the extent that the
failure to own or obtain licenses with respect to any of the foregoing,
individually or in the aggregate, would not have a material adverse effect on
the condition (financial or otherwise), operations, assets, liabilities or
prospects of the Company and
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its Restricted Subsidiaries taken as a whole (together with the Copyrights,
"Intellectual Property").
(c) All Intellectual Property is protected in all material respects under
the laws of the United States relating to such Intellectual Property and has
been duly and properly registered or filed with or issued by the appropriate
governmental offices and jurisdictions for such registrations, filings or
issuances, except to the extent that the failure to make or obtain such
registrations, filings or issuances would not have a material adverse effect on
the condition (financial or otherwise), operations, assets, liabilities or
prospects of the Company and its Restricted Subsidiaries taken as a whole.
(d) No material claim has been asserted by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property. The use of such Intellectual
Property by the Company or its Restricted Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements as do not,
individually or in the aggregate, give rise to any liabilities on the part of
the Company and its Restricted Subsidiaries that are material to the Company and
its Restricted Subsidiaries taken as a whole.
5.15 COMPLIANCE WITH STATUTES, ETC. The Company and each of its Restricted
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including compliance with all applicable Environmental Laws
with respect to any Real Property and the requirements of any permits issued
under such Environmental Laws with respect to any such Real Property or the
operations of the Company or any of its Subsidiaries), except such
noncompliances as would not, in the aggregate, have a material adverse effect on
the condition (financial or otherwise), operations, assets, liabilities or
prospects of the Company and its Restricted Subsidiaries taken as a whole.
SECTION 6. AFFIRMATIVE COVENANTS. The Company hereby covenants and agrees
that on the Effective Date and thereafter for so long as this Agreement is in
effect and until the Revolving Loan Commitments have terminated, no Notes are
outstanding and the Loans together with interest, Fees and all other Obligations
are paid in full:
6.01 INFORMATION COVENANTS. The Company will furnish to each Bank:
(a) ANNUAL FINANCIAL STATEMENTS. Within 100 days after the close of each
fiscal year of the Company, the consolidated balance sheets of each of (A) the
Company and its Subsidiaries and of (B) the Company and its Restricted
Subsidiaries, as at the end of such fiscal year and, in each case, the related
consolidated statements of income and retained earnings and of cash flows for
such fiscal year, setting forth for such fiscal year, in comparative form, the
corresponding figures for the preceding fiscal year and, in the case of the
figures with respect to the Company and its Restricted Subsidiaries the
corresponding figures from the budget for such fiscal year delivered pursuant to
Section 6.01(c); all of which shall be examined by Deloitte & Touche or such
other independent certified public accountants of recognized national standing
as
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shall be acceptable to the Administrative Agent, whose opinion shall not be
qualified as to the scope of audit or as to the status of the Company and its
Subsidiaries or of the Company and its Restricted Subsidiaries, as the case may
be, as a going concern, together with a certificate of such accounting firm
stating that in the course of its regular audit of the business of the Company
and its Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, no Default or Event of Default which has occurred
and is continuing has come to its attention or, if such a Default or Event of
Default has come to its attention a statement as to the nature thereof (provided
that in no event shall such accountants be liable as a result of this Agreement
by reason of any failure to obtain knowledge of any Default or Event of Default
that would not be disclosed in the course of their audit examination).
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event
within 50 days after the close of each of the first three quarterly accounting
periods in each fiscal year of the Company (beginning with the quarterly
accounting period ending March 31, 1999) and, at the sole option of the Company,
at any time prior to 100 days after the close of the fourth quarterly accounting
period in each fiscal year, the consolidated balance sheet of each of (A) the
Company and its Subsidiaries and of (B) the Company and its Restricted
Subsidiaries, as at the end of such quarterly period and the related
consolidated statements of income and retained earnings and of cash flows for
such quarterly period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly period; all of which shall be in reasonable
detail and certified by the chief financial officer or other Authorized Officer
of the Company that they fairly present the financial condition of the Company
and its Subsidiaries or of the Company and its Restricted Subsidiaries, as the
case may be, as of the dates indicated and the results of their operations and
changes in their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end audit adjustments.
(c) BUDGETS; ETC. Not more than 90 days after the commencement of each
fiscal year of the Company, budgets of the Company and its Restricted
Subsidiaries in reasonable detail for each of the four fiscal quarters of such
fiscal year setting forth Consolidated EBITDA and consolidated sales and setting
forth, with appropriate discussion, the principal assumptions upon which such
budgets are based.
(d) OFFICER'S CERTIFICATES. At the time of the delivery of the financial
statements provided for in Section 6.01(a) and (b), a certificate of the chief
financial officer, controller or chief accounting officer of the Company (i) to
the effect that no Default or Event of Default exists or, if any Default or
Event of Default does exist, specifying the nature and extent thereof, which
certificate shall set forth the calculations required to establish whether the
Company and its Subsidiaries were in compliance with the provisions of Sections
7.04(c), 7.05(d), 7.07 and Sections 7.09 through and including 7.11, as at the
end of such fiscal quarter or year, as the case may be and (ii) setting forth
the calculations demonstrating (A) with respect to each Affected Transaction
consummated during the most recently ended fiscal quarter, that the Company was
in compliance, on a PRO FORMA Basis, with Sections 7.09, 7.10 and 7.11 and (B)
with respect to each business sold (or deemed sold) pursuant to Section 7.02(c)
hereof, compliance by the Company with clause (iii) of such Section 7.02(c). In
addition, at the time of the delivery of the financial statements provided for
in Section 6.01(a) and (b), a certificate of the chief financial
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officer, controller or chief accounting officer of the Company setting forth the
amount of, and calculations required to establish the amount of, Excess Cash
Flow for the respective fiscal year or quarter.
(e) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event within
three Business Days after any officer of the Company obtains knowledge thereof,
notice of (x) the occurrence of any event which constitutes a Default or Event
of Default, which notice shall specify the nature thereof, the period of
existence thereof and what action the Company proposes to take with respect
thereto and (y) the commencement of, or threat of, or any significant
development in, any litigation or governmental proceeding pending against the
Company or any of its Subsidiaries which is likely to have a material adverse
effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole, or the ability of the Company or of the Subsidiary Guarantors, taken as
a whole, in either case, to perform its or their respective obligations
hereunder or under any other Credit Document.
(f) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of each report
or "management letter" submitted to the Company or any of its Subsidiaries by
its independent accountants in connection with any annual, interim or special
audit made by them of the books of the Company or any of its Subsidiaries.
(g) OTHER INFORMATION. Promptly upon transmission thereof, copies of any
filings and registrations with, and reports to, the SEC by the Company or any of
its Subsidiaries and, with reasonable promptness, such other information or
documents (financial or otherwise) as the Administrative Agent on its own behalf
or on behalf of the Required Banks may reasonably request from time to time.
6.02 BOOKS, RECORDS AND INSPECTIONS. The Company will, and will cause each
of its Restricted Subsidiaries to, permit, upon notice to the chief financial
officer or other Authorized Officer of the Company, officers and designated
representatives of the Administrative Agent or the Required Banks to visit and
inspect any of the properties or assets of the Company and any of its Restricted
Subsidiaries in whomsoever's possession, and to examine the books of account of
the Company and any of its Restricted Subsidiaries and discuss the affairs,
finances and accounts of the Company and of any of its Restricted Subsidiaries
with, and be advised as to the same by, their officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or the Required Banks may desire.
6.03 PAYMENT OF TAXES. The Company will pay and discharge, and will cause
each of its Restricted Subsidiaries to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which
material penalties attach thereto, and all lawful claims for sums that have
become due and payable which, if unpaid, might become a Lien not otherwise
permitted under Section 7.03(a) or charge upon any properties of the Company or
any of its Restricted Subsidiaries; PROVIDED that neither the Company nor any of
its Restricted Subsidiaries
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shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP.
6.04 CORPORATE FRANCHISES. The Company will do, and will cause each of its
Restricted Subsidiaries to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its rights,
franchises, licenses, permits and Intellectual Property rights except to the
extent its failures to do so would not, in the aggregate, have a material
adverse effect on the condition (financial or otherwise), operations, assets,
liabilities or prospects of the Company and its Restricted Subsidiaries taken as
a whole; PROVIDED, HOWEVER, that any transaction permitted by Section 7.02 will
not constitute a breach of this Section 6.04.
6.05 COMPLIANCE WITH STATUTES, ETC. The Company will, and will cause each
of its Restricted Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls) other than those the non-compliance with which would not have a
material adverse effect on the condition (financial or otherwise), operations,
assets, liabilities or prospects of the Company and its Restricted Subsidiaries
taken as a whole or on the ability of the Company or of the Subsidiary
Guarantors, taken as a whole, in either case, to perform its or their
obligations hereunder or under any other Credit Document.
6.06 ERISA. As soon as possible and, in any event, within 30 days after the
Company, any of its Restricted Subsidiaries or any ERISA Affiliate knows or
could reasonably be expected to know of the occurrence of any of the following
and where it could reasonably be expected that a material liability of the
Company and its Restricted Subsidiaries and ERISA Affiliates, taken as a whole,
could result in connection therewith, the Company will deliver to each of the
Banks a certificate of the chief financial officer or other Authorized Officer
of the Company setting forth details as to such occurrence and such action, if
any, which the Company, such Restricted Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by the Company, such Restricted Subsidiary, such
ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with
respect thereto: that a Reportable Event has occurred; that an accumulated
funding deficiency has been incurred or an application is reasonably likely to
be or has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required installment
payments) or an extension of any amortization period under Section 412 of the
Code with respect to a Plan; that a Plan has been or is reasonably likely to be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan has an Unfunded Current Liability giving rise to a lien under
ERISA or the Code; that proceedings are reasonably likely to be or have been
instituted to terminate a Plan; that a proceeding has been instituted pursuant
to Section 515 of ERISA to collect a delinquent contribution to a Plan; or that
the Company, any of its Restricted Subsidiaries or any ERISA Affiliate will or
is reasonably likely to incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
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with respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code
or Section 409 or 502(i) or 502(1) of ERISA. At the request of any Bank, the
Company will deliver to such Bank a complete copy of the annual report (Form
5500) of each Plan required to be filed with the Internal Revenue Service.
6.07 END OF FISCAL YEARS; FISCAL QUARTERS. The Company will, for financial
reporting purposes, cause (i) each of its, and each of its Subsidiaries', fiscal
years to end on December 31 of each year and (ii) each of its, and each of its
Subsidiaries', fiscal quarters to end on March 31, June 30, September 30 and
December 31 of each year.
6.08 USE OF PROCEEDS. All proceeds of the Loans shall be used as provided
in Section 5.05.
6.09 OWNERSHIP OF SUBSIDIARIES. The Company will, at all times, maintain,
directly or indirectly, ownership of at least a majority of the capital stock of
its Restricted Subsidiaries, except to the extent 100% of the capital stock
owned by the Company or any Restricted Subsidiary of any such Restricted
Subsidiary is sold, transferred or disposed of in a transaction permitted by
Section 7.02(c) or (j) or any such Restricted Subsidiary is merged, consolidated
or liquidated in a transaction permitted by Section 7.02(e), PROVIDED that the
Company shall not be required to own a majority of the capital stock of Canadian
Sailings Inc. so long as the Company continues to hold at least as much of such
capital stock as is held on the Effective Date.
6.10 MAINTENANCE OF CORPORATE SEPARATENESS. The Company will, and will
cause each of its Subsidiaries to, satisfy customary corporate formalities,
including the holding of regular board of directors' and shareholders' meetings
and the maintenance of corporate offices and records. Neither the Company nor
any Restricted Subsidiary shall make any payment to a creditor of any
Unrestricted Subsidiary in respect of any liability of such Unrestricted
Subsidiary, and no bank account of an Unrestricted Subsidiary shall be
commingled with any bank account of the Company or any of its Restricted
Subsidiaries. Any financial statements distributed to any creditors of an
Unrestricted Subsidiary shall clearly establish the separateness of such
Unrestricted Subsidiary from the Company and its Restricted Subsidiaries.
Finally, neither the Company nor any of its Subsidiaries shall take any action,
or conduct its affairs in a manner, which is likely to result in the corporate
existence of any Unrestricted Subsidiary which is a direct Subsidiary of the
Company or any Restricted Subsidiary being ignored by any court of competent
jurisdiction, or in the assets and liabilities of the Company or any Restricted
Subsidiary being substantively consolidated with those of any Unrestricted
Subsidiary in a bankruptcy, reorganization or other insolvency proceeding.
SECTION 7. NEGATIVE COVENANTS. The Company hereby covenants and agrees that
as of the Effective Date, and thereafter for so long as this Agreement is in
effect and until the Revolving Loan Commitments have terminated, no Notes are
outstanding and the Loans, together with interest, Fees and all other
Obligations are paid in full:
7.01 CHANGES IN BUSINESS. The Company will not, and will not permit any of
its Restricted Subsidiaries to, engage in any businesses other than Businesses,
PROVIDED that the
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Company and its Restricted Subsidiaries may engage in businesses other than a
Business so long as the businesses engaged in by the Company and its Restricted
Subsidiaries, taken as a whole, consist substantially of Businesses.
7.02 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The Company
will not, and will not permit any of its Restricted Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its property or
assets, or enter into any partnerships, joint ventures or sale-leaseback
transactions, or purchase or otherwise acquire (in one or a series of related
transactions) any part of the property or assets (other than purchases or other
acquisitions of inventory, materials and equipment (and, to the extent
consistent with industry practices, other tangible and intangible assets) in the
ordinary course of business) of any Person, except that the following shall be
permitted:
(a) any sale, transfer or other disposition of (x) inventory in the
ordinary course of business or (y) any other tangible or intangible asset in the
ordinary course of business of the Company and/or its Restricted Subsidiaries;
(b) the advances, investments and loans permitted pursuant to Section 7.05;
(c) Asset Sales constituting the disposition of a business (including,
without limitation, to the extent permitted in this Section 7.02(c), sales of
the capital stock of a Restricted Subsidiary but excluding sales of the stock of
an Unrestricted Subsidiary); PROVIDED that (i) no Default or Event of Default
exists at such time or would exist immediately after giving effect thereto; (ii)
such sale, transfer or disposition (or deemed sale, transfer or disposition
pursuant to any Permitted Restricted Subsidiary Conversion) (x) is for fair
market value, as determined in good faith by management of the Company (or, in
the case of any Permitted Restricted Subsidiary Conversion or Permitted
Restricted Asset Sale, to the extent requested by the Administrative Agent or
the Required Banks, as determined by a written opinion of value reasonably
satisfactory to the Administrative Agent by an Appraisal Firm) and (y) except in
the case of a Permitted Restricted Subsidiary Conversion otherwise permitted
pursuant to the terms hereof, results in consideration in the form of cash,
promissory notes issued by the respective purchaser and/or other assets,
PROVIDED that, to the extent any such other assets are received by the Company
and/or its Restricted Subsidiaries in connection with any such Asset Sale, (I)
the market value of such other assets, when added to the aggregate amount of
other consideration received in connection with such Asset Sale, shall equal or
exceed the market value of the assets so sold (such value to be set forth, to
the extent requested by the Administrative Agent or the Required Banks, in a
written opinion of value reasonably satisfactory to the Administrative Agent by
an Appraisal Firm) and (II) such assets are permitted to be acquired by the
Company or any of its Restricted Subsidiaries pursuant to Section 7.02(g) at the
time of consummation of such Asset Sale (both before and after giving effect to
such Asset Sale); (iii) the businesses sold (or deemed sold pursuant to any
Permitted Restricted Subsidiary Conversion) by the Company and/or its Restricted
Subsidiaries pursuant to this Section 7.02(c) in any fiscal year of the Company
shall not, in the aggregate, have EBITDA in the immediately preceding fiscal
year in an amount in excess of 25% of the Consolidated EBITDA of the Company and
its Restricted
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Subsidiaries for such preceding fiscal year, determined on a PRO FORMA basis as
if (A) any dispositions (or deemed dispositions pursuant to any Permitted
Restricted Subsidiary Conversion) consummated during such preceding fiscal year
had been consummated on the first day of such preceding fiscal year and (B) any
acquisitions consummated after the beginning of such preceding fiscal year but
prior to the date of any proposed Asset Sale pursuant to this Section 7.02(c)
had been consummated on the first day of such preceding fiscal year; and (iv) to
the extent such sale, transfer or disposition constitutes a sale, transfer or
disposition of less than 100% of the capital stock of any Restricted Subsidiary
of the Company, after giving effect to such sale, transfer or disposition, the
Company shall own at least a majority of the capital stock of such Restricted
Subsidiary;
(d) Asset Sales constituting the disposition of the capital stock owned by
the Company and its Restricted Subsidiaries of Unrestricted Subsidiaries;
(e) any Restricted Subsidiary may be merged or consolidated with or into,
or be liquidated into, the Company or any other Restricted Subsidiary of the
Company, or all or any part of its business, properties and assets may be
conveyed, leased, sold or otherwise transferred to the Company or any other
Restricted Subsidiary, PROVIDED that (v) in any such merger or consolidation
involving the Company, the Company shall be the surviving corporation, (w) no
Default or Event of Default exists or would exist after giving effect thereto,
(x) no Excluded Foreign Restricted Subsidiary or Excluded Domestic Restricted
Subsidiary may be the surviving corporation of any such merger or consolidation
(other than, in the case of an Excluded Foreign Restricted Subsidiary, a merger
or consolidation with another Excluded Foreign Restricted Subsidiary and other
than, in the case of an Excluded Domestic Restricted Subsidiary, a merger or
consolidation with another Excluded Domestic Restricted Subsidiary), (y) no
businesses, properties or assets may be transferred to Excluded Foreign
Restricted Subsidiaries if after giving effect to such transfer the Net
Investments in Excluded Foreign Restricted Subsidiaries would exceed $30,000,000
and (z) to the extent any business, properties or assets are transferred to
Excluded Domestic Restricted Subsidiaries in connection with any such merger or
consolidation the Company shall have determined, with respect to such
transaction, that the Company and its Restricted Subsidiaries would have been in
compliance, on a PRO FORMA Basis, with Sections 7.09, 7.10 and 7.11 of this
Agreement;
(f) the Company and/or its Restricted Subsidiaries may lease real or
personal property (so long as such lease does not create Capitalized Lease
Obligations except as otherwise permitted by Section 7.04);
(g) so long as no Default or Event of Default exists or would result
therefrom, the Company and its Restricted Subsidiaries may acquire assets, the
capital stock of, or other ownership interests in, any Person (any such
acquisition permitted by this clause (g), a "Permitted Acquisition"); PROVIDED
that (A) after giving effect to any such acquisition, the Company and its
Restricted Subsidiaries shall be in compliance with Section 7.01 hereof; (B) the
Company shall have determined, with respect to such acquisition, that, on a PRO
Forma Basis, the Company and its Restricted Subsidiaries would have been in
compliance with Sections 7.09, 7.10 and 7.11 of this Agreement; and (C) to the
extent that such acquisition is of the capital stock
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of or other ownership interest in another Person (such Person, the "Acquired
Entity"), (I) such acquisition must be of at least a majority of such capital
stock or of such ownership interests, such Person shall constitute a Restricted
Subsidiary and all of the applicable provisions of Section 7.14 shall have been
complied with in respect of such Restricted Subsidiary and (II) the Board of
Directors or other governing body of the Acquired Entity shall not have
indicated, either publicly or privately to the Company or any of its Restricted
Subsidiaries, its opposition to the consummation by the Company or such
Subsidiary of such acquisition;
(h) the Company and its Restricted Subsidiaries may sell or discount, in
each case without recourse, accounts receivable arising in the ordinary course
of business, but only in connection with the compromise or collection thereof;
(i) Capital Expenditures by the Company and/or its Restricted Subsidiaries
made in the ordinary course of business; and
(j) the Company and its Restricted Subsidiaries may sell assets (and may
effect Permitted Restricted Subsidiary Conversions) other than in the ordinary
course of business, so long as (x) each such asset is sold (or deemed sold
pursuant to any Permitted Restricted Subsidiary Conversion) at fair market
value, as determined in good faith by management of the Company; (y) each such
sale (or deemed sale pursuant to any Permitted Restricted Subsidiary Conversion)
results in consideration in the form of cash, promissory notes issued by the
respective purchaser and/or other assets, PROVIDED that, to the extent any such
other assets are received by the Company and/or its Restricted Subsidiaries in
connection with any such asset sale, (I) the market value of such other assets,
when added to the aggregate amount of other consideration received in connection
with such asset sale, shall equal or exceed the market value of the assets so
sold and (II) such assets are permitted to be acquired by the Company or any of
its Restricted Subsidiaries pursuant to Section 7.02(g) at the time of
consummation of such asset sale (both before and after giving effect to such
asset sale); and (z) the aggregate value of all assets so sold (or deemed sold
pursuant to any Permitted Restricted Subsidiary Conversion) by the Company and
its Restricted Subsidiaries in any fiscal year shall not exceed $25,000,000.
7.03 LIENS. The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Company or its Restricted Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Company or any of its Restricted Subsidiaries) or assign any right to receive
income, except:
(a) Liens for taxes not yet due or Liens for taxes being contested in good
faith and by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP;
(b) Liens in respect of property or assets of the Company or any of its
Restricted Subsidiaries imposed by law which were incurred in the ordinary
course of business and which have not arisen to secure Indebtedness for borrowed
money, such as carriers', warehousemen's
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and mechanics' Liens, statutory landlord's Liens, and other similar Liens
arising in the ordinary course of business, and which either (x) do not in the
aggregate materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of the
Company or its Restricted Subsidiaries or (y) are being contested in good faith
by appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such Lien;
(c) Liens in existence on the Effective Date which are listed, and the
property subject thereto described, in Annex IV, without giving effect to any
extensions or renewal thereof ("Permitted Liens");
(d) Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default under Section 8.08;
(e) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the ordinary
course of business (exclusive of obligations in respect of the payment for
borrowed money);
(f) leases or subleases granted to third Persons not interfering in any
material respect with the business of the Company or any of its Restricted
Subsidiaries;
(g) easements, rights-of-way, restrictions, minor defects or irregularities
in title and other similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business of the Company or any
of its Restricted Subsidiaries;
(h) Liens arising from UCC financing statements regarding leases permitted
by this Agreement;
(i) purchase money Liens securing payables arising from the purchase by the
Company or any of its Restricted Subsidiaries of any equipment or goods in the
normal course of business, PROVIDED that such payables shall not constitute
Indebtedness;
(j) any interest or title of a lessor or sublessor under any lease
permitted by this Agreement;
(k) Liens created pursuant to Capital Leases permitted pursuant to Section
7.04(c);
(l) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of custom duties in connection with the importation of
goods so long as such Liens attach only to the imported goods;
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(m) Liens on assets acquired (or owned by a Restricted Subsidiary acquired)
after the Effective Date securing Indebtedness permitted under Section 7.04(g),
PROVIDED that at the time of such acquisition the value of the assets subject to
such Liens does not exceed 10% of the total value of the assets so acquired, or
of the assets of the Restricted Subsidiary so acquired, as the case may be;
(n) Liens arising out of consignment or similar arrangements for the sale
of goods entered into by the Company or any of its Restricted Subsidiaries in
the ordinary course of business;
(o) Liens created under this Agreement and/or the other Credit Documents;
(p) Liens created under the Existing Credit Agreements and the other
Existing Facility Documents; and
(q) Liens not otherwise permitted hereunder which secure Indebtedness,
Contingent Obligations or other obligations (in each case permitted hereunder)
not exceeding (as to the Company and its Restricted Subsidiaries) $20,000,000 in
the aggregate at any time outstanding.
7.04 INDEBTEDNESS. The Company will not, and will not permit any of its
Restricted Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other Credit
Documents;
(b) Indebtedness incurred pursuant to the Existing Credit Agreements and
the other Existing Facility Documents;
(c) Capitalized Lease Obligations of the Company and its Restricted
Subsidiaries; PROVIDED that the aggregate Capitalized Lease Obligations under
all Capital Leases outstanding at any one time shall not exceed $50,000,000;
(d) Existing Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the Effective Date and listed on Part A of Annex V hereto
("Existing Debt"), without giving effect to any subsequent extension, renewal or
refinancing thereof except pursuant to Section 7.04(i);
(e) Indebtedness to the extent permitted pursuant to Section 7.05(c);
(f) Indebtedness evidenced by the Subordinated Exchange Debentures after
the issuance thereof in an aggregate principal amount not to exceed $500,000,000
at any time outstanding;
(g) Indebtedness of a Restricted Subsidiary acquired after the Effective
Date (or Indebtedness assumed at the time of an acquisition of an asset securing
such Indebtedness),
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PROVIDED that (i) such Indebtedness was not incurred in connection with or in
anticipation of such acquisition and (ii) at the time of such acquisition such
Indebtedness does not exceed 10% of the total value of the assets of the
Restricted Subsidiary so acquired, or of the asset so acquired, as the case may
be;
(h) additional Indebtedness of the Company and its Restricted Subsidiaries
not otherwise permitted hereunder; PROVIDED that (A) in no event shall the final
maturity of such Indebtedness occur prior to the ECA Maturity Date, (B) in no
event shall such Indebtedness have a shorter average life than the Loans under
and as defined in the Existing Credit Agreements, (C) in no event shall such
Indebtedness contain terms and conditions (including, without limitation, with
respect to the obligor and guarantors, if any, in respect of such Indebtedness,
prepayment and redemption provisions, covenants, defaults, security, remedies
and, if applicable, subordination provisions) materially less favorable to the
Company and its Restricted Subsidiaries or to the Banks than the terms and
conditions of (I) in the case of Indebtedness issued to the public or in
accordance with Rule 144A or similar rule under the Securities Act of 1933, as
amended, the Senior Notes, (II) in the case of other senior Indebtedness, this
Agreement and the other Credit Documents, and (III) in the case of other
Indebtedness, similar Indebtedness of the Company then outstanding or if no
similar Indebtedness of the Company is then outstanding, the Senior Notes (in
each case excluding the impact of market conditions on the interest rate and
other economic terms) and (D) the Company shall have determined, with respect to
the incurrence of such Indebtedness, that the Company and its Restricted
Subsidiaries would have been in compliance, on PRO FORMA Basis, with Sections
7.09, 7.10 and 7.11 of this Agreement (any Indebtedness issued pursuant to this
Section 7.04(h), "Additional Indebtedness"), PROVIDED FURTHER that, the
aggregate principal amount of any such Additional Indebtedness incurred directly
by the Subsidiary Guarantors (taken as a whole), when added to the aggregate
principal amount of Indebtedness incurred directly by the Subsidiary Guarantors
(taken as a whole) pursuant to Section 7.04(j), shall not exceed $300,000,000 at
any time outstanding;
(i) Indebtedness of the Company and its Restricted Subsidiaries
constituting Permitted Refinancing Debt; and
(j) additional Indebtedness of the Company and its Restricted Subsidiaries
(including, but not limited to, Non-Facility Letter of Credit Outstandings) not
exceeding in an aggregate principal amount at any one time outstanding an amount
equal to $150,000,000, PROVIDED that the aggregate principal amount of such
Indebtedness incurred directly by the Subsidiary Guarantors (taken as a whole),
when added to the aggregate principal amount of Additional Indebtedness incurred
directly by the Subsidiary Guarantors (taken as a whole) pursuant to Section
7.04(h), shall not exceed $300,000,000 at any time outstanding.
7.05 ADVANCES, INVESTMENTS AND LOANS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, except:
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(a) the Company and its Restricted Subsidiaries may invest in cash and Cash
Equivalents;
(b) the Company or any of its Restricted Subsidiaries may acquire and hold
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms
of the Company or such Restricted Subsidiary, as the case may be;
(c) the Company may make intercompany loans and advances to any Restricted
Subsidiary, and any Restricted Subsidiary may make intercompany loans and
advances to any other Restricted Subsidiary or the Company (collectively,
"Intercompany Loans"), PROVIDED that (i) no Intercompany Loan may be made to an
Excluded Foreign Restricted Subsidiary at any time if after giving effect to
such Intercompany Loan the Net Investments in Excluded Foreign Restricted
Subsidiaries would exceed $30,000,000, and (ii) no such Intercompany Loan may be
made by the Company or a Wholly-Owned Restricted Subsidiary to an Excluded
Domestic Restricted Subsidiary;
(d) so long as no Default or Event of Default exists or would result
therefrom, the Company and its Restricted Subsidiaries may make loans and
advances of cash to, or cash capital contributions in, any Unrestricted
Subsidiary of the Company; PROVIDED that (i) the sum of (A) the aggregate amount
of capital contributions made in, plus the aggregate principal amount of loans
or advances outstanding at any one time made to, Unrestricted Subsidiaries after
the ECA Effective Date pursuant to this clause (d) (such amount, the
"Unrestricted Subsidiary Investment Amount") plus (B) the Aggregate Conversion
Amount at such time, shall not exceed the Unrestricted Subsidiary Investment
Limit then in effect, and (ii) the Unrestricted Subsidiary receiving cash
proceeds from such loan, advance or contribution shall utilize the entire amount
of cash so received to effectuate an acquisition of assets or capital stock of a
Person not an affiliate of the Company and its Subsidiaries (other than pursuant
to a Permitted Restricted Subsidiary Conversion or a Permitted Restricted Asset
Sale) or to develop the Business and to finance the working capital needs of
such Unrestricted Subsidiary;
(e) the Company and its Restricted Subsidiaries shall be permitted to (i)
make Permitted Acquisitions, (ii) engage in any transaction to the extent
permitted by Section 7.02(e) and (iii) acquire and hold promissory notes issued
by the purchasers of assets sold in accordance with Section 7.02(c) or 7.02(j);
(f) the Company and any of its Restricted Subsidiaries may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;
(g) the Company or any Subsidiary Guarantor may acquire capital stock or
other equity securities (or warrants, rights or options with respect thereto)
issued by any other Restricted Subsidiary;
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(h) Interest Rate Protection Agreements permitted by Section 7.06(d) shall
be permitted;
(i) investments by the Company or Restricted Subsidiaries in (x) Subsidiary
Guarantors, PROVIDED that if the Subsidiary Guarantor in which such investment
is made is a newly-formed Subsidiary or a Partially-Owned Restricted Subsidiary
newly designated as a Subsidiary Guarantor pursuant to Section 7.14(b)(x), all
of the applicable provisions of Section 7.14 shall have been satisfied with
respect to such Restricted Subsidiary, (y) Excluded Domestic Restricted
Subsidiaries, PROVIDED that, the Company shall have determined, in connection
with any such investment, that the Company and its Restricted Subsidiaries would
have been in compliance, on a PRO FORMA Basis, with Sections 7.09, 7.10 and 7.11
of this Agreement and (z) in Excluded Foreign Restricted Subsidiaries, PROVIDED
that no investment in an Excluded Foreign Restricted Subsidiary may be made at
any time if after giving effect to such investment the Net Investments in
Excluded Foreign Restricted Subsidiaries would exceed $30,000,000;
(j) the Company and its Restricted Subsidiaries may make loans and advances
to officers, employees and agents in the ordinary course of business (i)
constituting travel advances or (ii) otherwise equal in the aggregate for the
Company and its Restricted Subsidiaries, in the case of all loans and advances
pursuant to this clause (ii), to no more than $10,000,000 at any one time
outstanding less the principal amount of all Contingent Obligations then
outstanding pursuant to Section 7.06(h);
(k) the Company may acquire obligations of, or make loans or advances to,
one or more management investors in connection with such management investors'
acquisition of shares of capital stock of the Company, PROVIDED that (x) the
aggregate amount of cash actually advanced to all such management investors by
the Company and its Restricted Subsidiaries shall not exceed $10,000,000 at any
time, and (y) the aggregate principal amount of all such obligations, loans and
advances shall not exceed $25,000,000 at any one time outstanding; and
(l) advances, investments and loans not otherwise permitted hereunder with
an aggregate cost or principal amount, as the case may be, not to exceed
$25,000,000 at any time outstanding.
7.06 CONTINGENT OBLIGATIONS. The Company will not, and will not permit any
of its Restricted Subsidiaries to, contract, create, incur, assume or suffer to
exist any Contingent Obligations, except:
(a) any Subsidiary Guarantor may become liable as guarantor with respect to
any Indebtedness, obligation or liability of the Company or any other Subsidiary
Guarantor to the extent that such Indebtedness, obligation or liability is
otherwise permitted by this Agreement, PROVIDED that a Subsidiary Guarantor (x)
may not guaranty any Subordinated Exchange Debentures and (y) may only guaranty
Permitted Refinancing Debt if and to the extent either (A) it guarantied the
indebtedness refinanced thereby or (B) such Subsidiary Guarantor would have
guarantied the indebtedness refinanced thereby if it had been a Subsidiary of
the Company while such indebtedness was outstanding;
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(b) Contingent Obligations pursuant to the Subsidiary Guaranty;
(c) Contingent Obligations pursuant to the Existing Facility Documents;
(d) Contingent Obligations under Interest Rate Protection Agreements with
respect to the Loans, loans incurred under the Additional Credit Agreement or
any other floating rate Indebtedness of the Company and its Restricted
Subsidiaries otherwise permitted by this Agreement;
(e) Contingent Obligations pursuant to the Contribution Agreement;
(f) Contingent Obligations of the Company outstanding on the Effective Date
and listed on Part B of Annex V hereto ("Existing Contingent Obligations"),
without giving effect to any subsequent extension, renewal or refinancing
thereof;
(g) the Company may become liable as guarantor with respect to any
Indebtedness, obligation or liability of any Subsidiary Guarantor to the extent
that such Indebtedness, obligation or liability is otherwise permitted by this
Agreement;
(h) the Company and its Restricted Subsidiaries may guaranty in the
ordinary course of business loans and advances to officers, employees and agents
so long as the aggregate principal amount of the loans and advances so
guaranteed does not exceed $10,000,000 less the principal amount of all loans
and advances outstanding pursuant to Section 7.05(j); and
(i) additional Contingent Obligations (including, without limitation,
Contingent Obligations consisting of Non-Facility Letters of Credit and
reimbursement obligations with respect thereto) not otherwise permitted
hereunder not exceeding (for the Company and all of its Restricted Subsidiaries)
in aggregate principal amount at any time outstanding an amount equal to the
lesser of (x) $30,000,000 and (y) when added to the aggregate principal amount
of Indebtedness outstanding under Section 7.04(j) at such time, $150,000,000.
7.07 DIVIDENDS, ETC. The Company will not, and will not permit any of its
Restricted Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in capital stock of such Person) or return any capital to, its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any warrants for
or options or stock appreciation rights in respect of any of such shares), or
set aside any funds for any of the foregoing purposes, and the Company will not
permit any of its Restricted Subsidiaries to purchase or otherwise acquire for
consideration any shares of any class of the capital stock of the Company or any
other Subsidiary, as the case may be, now or hereafter outstanding (or any
options or warrants or stock appreciation rights issued by such Person with
respect to its capital stock) (all of the foregoing "Dividends"), except that:
(a) the Company may pay regularly accruing dividends on each issuance of
Preferred Stock through the issuance of additional shares of such Preferred
Stock, PROVIDED that
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the Company may pay such regularly accruing dividends on its Preferred Stock in
cash so long as no Default or Event of Default exists at such time or would
result therefrom;
(b) any Subsidiary of the Company may pay Dividends to the Company or to
any Wholly-Owned Restricted Subsidiary of the Company;
(c) any Partially-Owned Restricted Subsidiary may pay cash Dividends to its
stockholders, PROVIDED that the Company and its Restricted Subsidiaries must
receive at least their proportionate share of any Dividends paid by such
Subsidiary;
(d) so long as no Default or Event of Default exists at such time or would
result therefrom (x) the Company may issue its Subordinated Exchange Debentures
in exchange for its Senior Preferred Stock in accordance with the terms thereof,
(y) the Company may issue its Subordinated Exchange Debentures in exchange for
its Series B Preferred Stock in accordance with the terms thereof and (z) the
Company may issue its Subordinated Exchange Debentures in exchange for its
Series C Preferred Stock in accordance with the terms thereof, PROVIDED that in
each such case, the Company shall have determined, with respect to such
issuance, that the Company and its Restricted Subsidiaries would have been in
compliance, on a PRO FORMA Basis, with Sections 7.09, 7.10 and 7.11 of this
Agreement;
(e) the Company may exchange shares of its common stock in replacement for
shares of outstanding Preferred Stock;
(f) the Company may issue Permitted Replacement Preferred Stock so long as
either (x) such stock is issued in exchange for or (y) all of the proceeds from
such issuance are used to redeem or repurchase, shares of outstanding Preferred
Stock;
(g) the Company may redeem or repurchase shares of its common stock from
management investors; PROVIDED that (x) no Default or Event of Default is then
in existence or would arise therefrom and (y) the aggregate amount of all cash
paid in respect of all such shares and equity interests so redeemed or
repurchased does not exceed the sum of (i) $5,000,000 in any fiscal year or
$15,000,000 in the aggregate after the Effective Date and (ii) the amount of
cash proceeds received by the Company in respect of the issuance of common
equity to management investors on or after the Effective Date;
(h) the Company and its Subsidiaries may enter into transactions permitted
under Section 7.05(g);
(i) the Company and its Restricted Subsidiaries may acquire the capital
stock of Unrestricted Subsidiaries in accordance with the provisions of this
Agreement;
(j) so long as no Default or Event of Default exists at such time or would
result therefrom, the Company may redeem or repurchase shares of its Preferred
Stock at a price equal to the liquidation preference thereof plus accrued but
unpaid dividends thereon and any applicable premium with respect thereto in
exchange for, or with the proceeds of, Additional Preferred Stock and/or
Indebtedness incurred under Sections 7.04(h) and/or 7.04(j) (it being
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understood and agreed that such redemption and/or repurchase need not occur
contemporaneously with the issuance of such Additional Preferred Stock or
Indebtedness);
(k) so long as no Default or Event of Default exists at such time or would
result therefrom, the Company may declare and pay cash Dividends to the holders
of its common stock (including, without limitation, repurchases of shares of its
common stock), PROVIDED that (x) the aggregate amount of cash Dividends paid
pursuant to this clause (k) during any fiscal year of the Company does not
exceed $25,000,000 and (y) the Company shall have determined, in connection with
such Dividend, that the Company and its Restricted Subsidiaries would have been
in compliance, on a PRO FORMA Basis, with Sections 7.09, 7.10 and 7.11 of this
Agreement; and
(l) the Company may pay additional cash Dividends to the holders of its
common stock so long as (x) no Default or Event of Default exists at such time
or would result therefrom, (y) the Leverage Ratio at such time is less than
4.00:1.00 and (z) the Company shall have determined, in connection with such
Dividend, that the Company and its Restricted Subsidiaries would have been in
compliance, on a PRO FORMA Basis, with Sections 7.09, 7.10 and 7.11 of this
Agreement.
7.08 TRANSACTIONS WITH AFFILIATES. The Company will not, and will not
permit any of its Restricted Subsidiaries to, enter into any transaction or
series of transactions, whether or not in the ordinary course of business, with
any Affiliate (other than the Company or any Restricted Subsidiary) other than
on terms and conditions substantially as favorable to the Company or such
Restricted Subsidiary as would be obtainable by the Company or such Restricted
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than an Affiliate; PROVIDED that (i) the Company may pay management and
transaction fees to KKR or its affiliates which have been disclosed in writing
to the Banks prior to the Effective Date; (ii) the payment of transaction fees
to KKR for the rendering of financial advice and services in connection with
acquisitions, dispositions and financings by the Company and its Restricted
Subsidiaries in amounts which are in accordance with past practices shall be
permitted; (iii) loans and advances to officers, employees and agents in the
ordinary course of business shall be permitted; (iv) customary fees may be paid
to non-officer directors of the Company and/or its Restricted Subsidiaries; (v)
the loans, advances and contributions made (or deemed made) in Unrestricted
Subsidiaries in compliance with Section 7.05(d) shall be permitted; and (vi)
transactions specifically permitted by the provisions of this Agreement to occur
between the Company, its Restricted Subsidiaries and their respective Affiliates
shall be permitted to the extent so otherwise specifically permitted.
7.09 FIXED CHARGE COVERAGE RATIO. The Company will not permit the ratio of
(i) Consolidated EBITDA of the Company and its Restricted Subsidiaries to (ii)
Consolidated Fixed Charges of the Company and its Restricted Subsidiaries, for
any Test Period, to be less than 1.05 to 1.0.
7.10 INTEREST COVERAGE RATIO. The Company will not permit the ratio of (i)
Consolidated EBITDA of the Company and its Restricted Subsidiaries to (ii)
Consolidated
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Interest Expense of the Company and its Restricted Subsidiaries for any Test
Period to be less than 1.80:1.00.
7.11 LEVERAGE RATIO. The Company will not permit the ratio (the "Leverage
Ratio") of (i) Consolidated Debt of the Company and its Restricted Subsidiaries
at any date of determination thereof to (ii) Consolidated EBITDA of the Company
and its Restricted Subsidiaries for the Test Period then last ended, to exceed,
at any time, 6.00:1.00.
7.12 ISSUANCE OF STOCK. The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, issue, sell, assign,
pledge or otherwise encumber or dispose of any shares of its or such Restricted
Subsidiary's preferred or preference stock or other redeemable equity securities
(or warrants, rights or options to acquire shares of any of the foregoing)
except:
(a) in the case of shares of capital stock of the Company and its
Restricted Subsidiaries, to the extent permitted by Section 7.02, 7.03, 7.05,
7.07 or 7.13(b);
(b) issuances by Restricted Subsidiaries to the Company or to Wholly-Owned
Restricted Subsidiaries; and
(c) issuances by the Company of additional preferred stock not otherwise
permitted hereunder; PROVIDED that (A) in no event shall such preferred stock
contain any provision requiring mandatory redemption or permitting any put with
respect to all or any portion of such stock prior to the ECA Maturity Date, (B)
in no event shall such preferred stock contain terms and conditions (including,
without limitation, pay-in-kind features, liquidation preferences, voting rights
and exchange rights) materially less favorable to the Company and its Restricted
Subsidiaries or to the Banks than the terms and conditions of the Existing
Preferred Stock (excluding the impact of market conditions on the dividend rate
and other economic terms) and (C) the Company shall have determined, in
connection with such issuance, that the Company and its Restricted Subsidiaries
would have been in compliance, on a PRO FORMA Basis, with Sections 7.09, 7.10
and 7.11 of this Agreement, PROVIDED that, for purposes of the calculation of
compliance with Section 7.09, the ratio set forth in Section 7.09 shall be
deemed to equal 1.25 to 1.0 (any Preferred Stock issued pursuant to this Section
7.12(c), "Additional Preferred Stock").
7.13 MODIFICATIONS OF CERTAIN AGREEMENTS, ETC. The Company will not, and
will not permit any of its Subsidiaries to: (a) after the issuance thereof,
amend or modify (or permit the amendment or modification of) any of the terms or
provisions of the Senior Notes, the Existing Facility Documents, the Preferred
Stock, the Subordinated Exchange Debentures, any Additional Indebtedness, any
Permitted Refinancing Debt or any agreement related to any of the foregoing
other than pursuant to a Permitted Amendment and/or (b) make (or give any notice
in respect thereof) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due) or exchange of any Subordinated Exchange
Debentures, or any Permitted Refinancing Debt (to the extent issued to refinance
Subordinated Exchange Debentures), PROVIDED that the Subordinated Exchange
Debentures and any Permitted Refinancing Debt previously issued to refinance
same may be (i)
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refinanced with (A) Additional Indebtedness (to the extent that such Additional
Indebtedness would have qualified as Permitted Refinancing Debt in respect
thereof if it had been issued contemporaneously with such refinancing) and/or
Permitted Refinancing Debt or (B) the proceeds from a common equity issuance by
the Company or an issuance by the Company of Additional Preferred Stock, in each
case, after the Effective Date or (ii) exchanged for Additional Preferred Stock
or non-redeemable common equity of the Company (it being understood and agreed
that any refinancing of such Indebtedness need not occur contemporaneously with
the issuance of such Additional Indebtedness, Additional Preferred Stock and/or
common equity). In addition, the Company will not, and will not permit any of
its Restricted Subsidiaries to, agree to modify, supplement, amend, rescind or
otherwise alter the terms, conditions or provisions of its Certificate of
Incorporation (including, without limitation, by the filing of any certificate
of designation) or its By-Laws in any material respect, other than such
modifications, supplements or amendments that would not materially adversely
affect the interests of the Banks under this Agreement or the other Credit
Documents.
7.14 LIMITATION ON THE CREATION OF SUBSIDIARIES; REDESIGNATION OF
PARTIALLY-OWNED RESTRICTED SUBSIDIARIES. (a) Notwithstanding anything to the
contrary contained in this Agreement, the Company shall not, and shall not
permit any Subsidiary to, establish, create or acquire after the Effective Date
any Subsidiary unless (w) such Subsidiary is an Unrestricted Subsidiary; (x)
such Subsidiary is an Excluded Foreign Restricted Subsidiary; (y) such
Subsidiary is a Partially-Owned Restricted Subsidiary and at the time of
creation or acquisition thereof, the Company shall have made a Non-Guarantor
Designation with respect to such Partially-Owned Restricted Subsidiary in
accordance with the terms hereof or (z) such Subsidiary is a Restricted
Subsidiary (other than a Restricted Subsidiary of the type described in clauses
(x) or (y) above) and each such new Restricted Subsidiary becomes a party to the
Subsidiary Guaranty by executing a Subsidiary Assumption Agreement in the form
of Exhibit G hereto.
(b) At any time and from time to time, (x) the Company may redesignate any
Excluded Domestic Restricted Subsidiary as a Subsidiary Guarantor by giving
notice thereof to the Administrative Agent and by causing such Subsidiary to
become a party to the Subsidiary Guaranty by executing a Subsidiary Assumption
Agreement in the form of Exhibit G hereto, and (y) the Company may redesignate
any Subsidiary Guarantor which is a Partially-Owned Restricted Subsidiary as an
Excluded Domestic Restricted Subsidiary by making a Non-Guarantor Designation
with respect to such Subsidiary in accordance with the terms hereof.
(c) At the time of the creation of any Subsidiary described in clause (z)
of Section 7.14(a) and at the time of any redesignation pursuant to clause (x)
of Section 7.14(b), each such new Subsidiary Guarantor shall execute and
deliver, or cause to be executed and delivered, in each case to the extent not
previously executed and delivered, all other relevant documentation of the type
described in Section 4 as such new Subsidiary Guarantor would have had to
deliver if such new Restricted Subsidiary had been a Restricted Subsidiary and a
Subsidiary Guarantor on the Effective Date.
(d) Notwithstanding anything to the contrary contained in this Section 7.14
or elsewhere in this Agreement, in no event shall any Subsidiary of the Company
guaranty any
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Indebtedness of the Company or any Wholly-Owned Subsidiary unless such
Subsidiary is a party to the Subsidiary Guaranty; PROVIDED that, to the extent
not prohibited by Section 7.04 hereof, (x) Excluded Foreign Restricted
Subsidiaries may guaranty Indebtedness of other Excluded Foreign Restricted
Subsidiaries and (y) Unrestricted Subsidiaries may guaranty Indebtedness of
other Unrestricted Subsidiaries.
7.15 LIMITATION ON PAYMENTS UNDER THE NON-COMPETE NOTES. The Company will
not, and will not permit any of its Subsidiaries to, make any payment
representing the principal of, or interest on, any Non-Compete Note at any time
when any Default or Event of Default exists or would exist immediately after
giving effect to such payment.
SECTION 8. EVENTS OF DEFAULT. Upon the occurrence of any of the following
specified events (each an "Event of Default"):
8.01 PAYMENTS. (a) The Company shall (i) default in the payment when due of
any principal of the Loans or (ii) default, and such default shall continue for
five or more days, in the payment when due of any interest on the Loans or any
Fees or any other amounts owing hereunder or under any other Credit Document or
(b) any Subsidiary Guarantor shall default in the payment when due of any amount
in respect of any payment of the type described in clause (a)(ii) above pursuant
to the Subsidiary Guaranty, and such default shall continue for five or more
days; or
8.02 REPRESENTATIONS, ETC. Any representation, warranty or statement made
by the Company or any Subsidiary Guarantor herein or in any other Credit
Document or in any statement or certificate delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or
8.03 COVENANTS. The Company shall (a) default in the due performance or
observance by it of any term, covenant or agreement contained in Section 6.08 or
7, or (b) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in Section 8.01, 8.02 or
clause (a) of this Section 8.03) contained in this Agreement and such default
shall continue unremedied for a period of at least 30 days after notice to the
defaulting party by the Administrative Agent or the Required Banks; or
8.04 DEFAULT UNDER OTHER AGREEMENTS. (a) The Company or any of its
Restricted Subsidiaries shall (i) default in any payment with respect to any
Indebtedness or Contingent Obligation (other than the Obligations) beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness or Contingent Obligation was created or (ii) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or Contingent Obligation 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 Contingent Obligation (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness or Contingent Obligation to become due
prior to its stated maturity; or (b) any Indebtedness or Contingent Obligation
(other than the Obligations) of the Company or any of its Restricted
Subsidiaries shall be declared to be due and payable, or shall be
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required to be prepaid other than by a regularly scheduled required prepayment
or as a mandatory prepayment (unless such required prepayment or mandatory
prepayment results from a default thereunder or an event of the type that
constitutes an Event of Default), prior to the stated maturity thereof, PROVIDED
that it shall not constitute an Event of Default pursuant to clause (a) or (b)
of this Section 8.04 unless the principal amount of any one issue of such
Indebtedness or Contingent Obligation exceeds $7,500,000 or the aggregate amount
of all such Indebtedness and Contingent Obligations referred to in clauses (a)
and (b) above exceeds $15,000,000 at any one time; or
8.05 BANKRUPTCY, ETC. The Company or any of its Restricted Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the Company or any of its Restricted Subsidiaries and the petition is
not controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Company or any of its Restricted Subsidiaries; or the Company or any of its
Restricted Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company or any of its Restricted Subsidiaries; or there
is commenced against the Company or any of its Restricted Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or the Company or
any of its Restricted Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Company or any of its Restricted Subsidiaries suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or the Company or any
of its Restricted Subsidiaries makes a general assignment for the benefit of
creditors; or any corporate action is taken by the Company or any of its
Restricted Subsidiaries for the purpose of effecting any of the foregoing; or
8.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding standard
required for any plan year or part thereof or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code; any Plan is, shall have been or is likely to be terminated or the
subject of termination proceedings under ERISA; any Plan shall have an Unfunded
Current Liability; or the Company, any Restricted Subsidiary or any ERISA
Affiliate has incurred or is likely to incur a liability to or on account of a
Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code; or the
Company or any Restricted Subsidiary has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans (as defined
in Section 3(1) of ERISA) which provide benefits to retired employees (other
than as required by Section 601 of ERISA); and (b) there shall result from any
such event or events the imposition of a lien, the granting of a security
interest, or a liability or a material risk of incurring a liability, on the
part of the Company, any of its Restricted Subsidiaries or any ERISA Affiliate,
which lien, security interest or liability will have a material adverse effect
on
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the condition (financial or otherwise), operations, assets, liabilities or
prospects of the Company and its Restricted Subsidiaries taken as a whole; or
8.07 SUBSIDIARY GUARANTY. (a) The Subsidiary Guaranty or any provision
thereof shall cease to be in full force and effect, or any Subsidiary Guarantor
thereunder or any Person acting on behalf of such Subsidiary Guarantor shall
deny or disaffirm such Subsidiary Guarantor's obligations under such Subsidiary
Guaranty or (b) except as otherwise provided in Section 8.01(b), any Subsidiary
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to the
Subsidiary Guaranty, PROVIDED that in the case of Section 13 of the Subsidiary
Guaranty, if the default constitutes a failure to perform or comply with any
provision, covenant or agreement contained in Section 6 (other than Section
6.08) of this Agreement, such default shall continue unremedied for a period of
at least 30 days after notice to the defaulting Subsidiary Guarantor by the
Administrative Agent or the Required Banks; or
8.08 JUDGMENTS. One or more judgments or decrees shall be entered against
the Company or any of its Restricted Subsidiaries involving a liability of
$8,000,000 or more in the case of any one such judgment or decree or $20,000,000
or more in the aggregate for all such judgments and decrees for the Company and
its Restricted Subsidiaries (not paid or to the extent not covered by insurance)
and any such judgments or decrees shall not have been vacated, discharged or
stayed or bonded pending appeal within 60 days from the entry thereof; or
8.09 OWNERSHIP. A Change of Control Event shall have occurred;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Banks, by written notice to the Company, take any or all
of the following actions, without prejudice to the rights of the Administrative
Agent or any Bank to enforce its claims against the Company, except as otherwise
specifically provided for in this Agreement (PROVIDED that if an Event of
Default specified in Section 8.05 shall occur with respect to the Company, the
result which would occur upon the giving of written notice by the Administrative
Agent as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Revolving Loan
Commitment (or the unutilized portion thereof) terminated, whereupon the
Revolving Loan Commitment of each Bank (or the unutilized portion thereof) shall
forthwith terminate immediately and any Commitment Fees shall forthwith become
due and payable without any other notice of any kind; and (ii) declare the
principal of and any accrued interest in respect of all Loans and all
obligations owing hereunder to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company.
SECTION 9.. DEFINITIONS. As used herein, the following terms shall have the
meanings herein specified unless the context otherwise requires. Defined terms
in this Agreement shall include in the singular number the plural and in the
plural the singular:
"Additional Indebtedness" shall have the meaning provided in Section
7.04(h).
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"Additional Preferred Stock" shall have the meaning provided in Section
7.12(c).
"Adjusted Total Commitment" shall mean at any time the Total Revolving Loan
Commitment less the aggregate Revolving Loan Commitments of all Defaulting
Banks.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 10.10.
"Affected Period" shall mean, with respect to each Affected Transaction,
the period commencing on the date occurring twelve months prior to the last day
of the then most recently ended fiscal quarter of the Company and ending on the
date such Affected Transaction is consummated.
"Affected Transaction" shall mean and include each of the following: (i)
any transfer of assets to an Excluded Domestic Restricted Subsidiary in
connection with a transaction permitted pursuant to Section 7.02(e), (ii) any
Permitted Acquisition, (iii) any incurrence of Additional Indebtedness, (iv) any
investment in an Excluded Domestic Restricted Subsidiary pursuant to Section
7.05(d), (v) any issuance of Subordinated Exchange Debentures, (vi) the payment
of any Dividend as permitted by Section 7.07(k) or (l), (vii) any issuance of
Additional Preferred Stock, (viii) any Permitted Restricted Subsidiary
Conversion or Non-Guarantor Designation and (ix) any designation of an
Unrestricted Subsidiary as a Restricted Subsidiary pursuant to the definition of
"Restricted Subsidiaries."
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Aggregate Conversion Amount" shall mean, at any time, the sum of the
Conversion Value Amount with respect to each Permitted Restricted Subsidiary
Conversion consummated after the ECA Effective Date but on or prior to the date
of determination thereof.
"Aggregate Unutilized Revolving Loan Commitment" with respect to any Bank
at any time shall mean such Bank's Revolving Loan Commitment at such time less
the aggregate outstanding principal amount of all Revolving Loans made by such
Bank.
"Agreement" shall mean this Credit Agreement, as the same may be from time
to time modified, amended and/or supplemented.
"Amended and Restated Credit Agreement" shall mean the Amended and Restated
Credit Agreement, dated as of May 24, 1996 and amended and restated as of March
11, 1999, among the Company, Canadian Sailings Inc., a Canada corporation,
various lending
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institutions, The Bank of Nova Scotia, as the Canadian lender, The Bank of New
York and Bankers Trust Company, as Co-Syndication Agents, The Bank of Nova
Scotia, as Documentation Agent, and The Chase Manhattan Bank, as Administrative
Agent, as amended, modified, supplemented or extended from time to time in
accordance with the terms thereof.
"Applicable Commitment Fee Percentage" shall mean 0.375%.
"Applicable Margin" shall mean, at any time, (a) with respect to Base Rate
Loans, 0.75% and (b) with respect to Eurodollar Loans, 1.75%.
"Appraisal Firm" shall mean an independent appraisal firm (which may be an
investment banking firm of national recognition) selected by, and at the expense
of, the Company and reasonably satisfactory to the Administrative Agent.
"Asset Sale" shall mean any sale, transfer or other disposition by the
Company or any of its Restricted Subsidiaries to any Person other than the
Company or any Restricted Subsidiary of any asset (including, without
limitation, any capital stock or other securities of another Person, but
excluding any sale, transfer or other disposition by the Company of its capital
stock) of the Company or such Restricted Subsidiary, including, without
limitation, a Permitted Restricted Asset Sale and any sale, transfer or other
disposition deemed made pursuant to a Permitted Restricted Subsidiary Conversion
(other than (x) any sale, transfer or disposition of Cash Equivalents and (y)
any sale, transfer or disposition permitted by Section 7.02(a), (e) or (h).
"Authorized Officer" shall mean any officer of the Company designated as
such in writing to the Administrative Agent by the Company, in each case to the
extent reasonably acceptable to the Administrative Agent.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been retracted) of
a Bank to make available its portion of any Borrowing or (ii) a Bank having
notified the Administrative Agent and/or the Company that it does not intend to
comply with the obligations under Section 1.01(a) or 1.01(b), in the case of
either (i) or (ii) as a result of the appointment of a receiver or conservator
with respect to such Bank at the direction or request of any regulatory agency
or authority.
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
"Base Rate" at any time shall mean the higher of (x) the rate which is 1/2
of 1% in excess of the Federal Funds Effective Rate and (y) the Prime Lending
Rate as in effect from time to time.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
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"Borrowing" shall mean a borrowing of Loans from all Banks on a given date
(or resulting from conversions on a given date), in each case, as required by
the provisions of this Agreement, being of a single Type of Loans and having, in
the case of Eurodollar Loans, the same Interest Period, PROVIDED that Base Rate
Loans incurred pursuant to Section 1.10(b) shall be considered part of any
related Borrowing of Eurodollar Loans.
"Business" shall mean and include the communications, information,
education, publishing and/or media businesses.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the City of New York a legal holiday or a day on which banking institutions
are authorized by law or other governmental actions to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between banks
in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Expenditures" shall mean, for any period, any expenditures
(whether paid in cash or accrued as liabilities and including in all events all
amounts expended or capitalized under Capital Leases) by any Person during that
period that, in conformity with GAAP, are or are required to be included in the
property, plant or equipment reflected in the balance sheet of such Person.
"Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under Capital
Leases of the Company or any of its Restricted Subsidiaries in each case taken
at the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers acceptances of (x) any Bank, (y)
any commercial bank of recognized standing having capital and surplus in excess
of $500,000,000 or (z) any bank whose short-term commercial paper rating from
Standard & Poor's Ratings Group ("S&P") is at least A-2 or the equivalent
thereof or from Moody's Investors Service, Inc. ("Moody's") is at least P-2 or
the equivalent thereof (any such bank or Bank, an "Approved Bank"), in each case
with maturities of not more than one year from the date of acquisition, (iii)
commercial paper issued by any Approved Bank or by the parent company of any
Approved Bank and commercial paper issued by, or guaranteed by, any industrial
or financial company with a short-term commercial paper rating of at least A-2
or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long term unsecured debt
rating of at least A or A2, or the equivalent
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of each thereof, from S&P or Moody's, as the case may be, and in each case
maturing within one year after the date of acquisition, (iv) marketable direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either S&P or
Moody's and (v) investments in money market funds substantially all the assets
of which are comprised of securities of the types described in clauses (i)
through (iv) above.
"Change of Control Event" shall mean (a) any "Change of Control" or similar
term as defined in the indentures governing the terms of the Senior Notes as in
effect on the Effective Date or in any agreement governing any Indebtedness
incurred pursuant to Section 7.04(f), (h), (i) or (j), (b) KKR or one or more
Affiliates of KKR shall cease to own (directly or indirectly) at least 25% on a
fully diluted basis of the economic and voting interest in the Company's common
stock or (c) any Person or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 , as amended) becomes the
"beneficial owner" (as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of more of the voting common stock of the Company than that
owned (directly or indirectly) by KKR and its Affiliates.
"Chase" shall mean The Chase Manhattan Bank or any successor thereto by
merger.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Commitment Fee" shall have the meaning provided in Section 2.01(a).
"Company" shall have the meaning provided in the first paragraph of this
Agreement.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all Capital Expenditures by the Company and its Restricted
Subsidiaries at such time determined on a consolidated basis.
"Consolidated Current Assets" shall mean, at any time, the current assets
(other than cash and Cash Equivalents, and deferred income taxes to the extent
included in current assets) of the Company and its Restricted Subsidiaries at
such time determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any time, the current
liabilities of the Company and its Restricted Subsidiaries determined on a
consolidated basis, but excluding (i) all short-term Indebtedness for borrowed
money, (ii) the current portion of any long-term Indebtedness of the Company or
its Restricted Subsidiaries, (iii) deferred income taxes, (iv) liabilities
arising from cash overdrafts, and (v) liabilities arising from the honoring by a
bank or
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other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business, provided that such
liabilities are extinguished within three Business Days of their incurrence; in
each case to the extent included in current liabilities.
"Consolidated Debt" shall mean all Indebtedness of the Company and its
Restricted Subsidiaries, determined on a consolidated basis, other than
Indebtedness owing by the Company to any of its Restricted Subsidiaries or by
any of the Company's Restricted Subsidiaries to the Company or any other
Restricted Subsidiary of the Company, PROVIDED that, for purposes of this
definition, (x) only the principal amount of Indebtedness outstanding under the
Non-Compete Notes issued as of the date of determination (net of the amount of
any reduction to the amounts owed under such Non-Compete Notes made in
accordance with the terms of the Non-Competition Agreement referred to in the
definition of Non-Compete Notes) shall be included and (y) Indebtedness of any
Partially-Owned Restricted Subsidiary shall be included in Consolidated Debt in
an aggregate amount equal to the percentage equity ownership of the Company in
such Partially-Owned Restricted Subsidiary multiplied by the aggregate
Indebtedness of such Partially-Owned Restricted Subsidiary.
"Consolidated EBITDA" shall mean, for any period, (A) the sum (without
duplication) of the amounts for such period of (i) the net income (or loss) of
the Company and its Restricted Subsidiaries on a consolidated basis for such
period taken as a single accounting period, PROVIDED that, except as provided in
clauses (I) through (III) below, there shall be excluded from Consolidated
EBITDA (x) the net income (or loss) of all Unrestricted Subsidiaries and all
Partially-Owned Restricted Subsidiaries for such period and (y) all cash or
other payments received during such period by the Company and its Restricted
Subsidiaries from any Unrestricted Subsidiaries from dividends or distributions
(including tax sharing payments), in each case to the extent otherwise included,
(ii) provisions for taxes based on income, (iii) Consolidated Interest Expense,
(iv) amortization or write-off of deferred financing costs, (v) losses on sales
of assets (excluding sales in the ordinary course of business) and other
extraordinary losses, (vi) non-cash amounts charged as compensation for "phantom
stock" arrangements, (vii) all non-cash interest expense not included in the
foregoing clause (vi), (viii) depreciation expense and (ix) amortization
expense, in the case of each of clauses (ii) through (ix) above to the extent
deducted in determining net income (or loss) pursuant to clause (i) above for
such period, LESS (B) the amount for such period of gains on sales of assets
(excluding sales in the ordinary course of business) and other extraordinary
gains, in each case, to the extent included in determining net income (or loss)
pursuant to clause (A)(i) above for such period, all as determined on a
consolidated basis; PROVIDED, HOWEVER, that (I) for purposes of Section 7.11,
(1) there shall be included in determining Consolidated EBITDA for any period
(x) the net income (or loss) of any person, business, property or asset (other
than an Unrestricted Subsidiary) acquired and not subsequently sold or otherwise
disposed of (but not including the net income (or loss) of any related person,
business, property or assets to the extent not so acquired) by the Company or
one of its Restricted Subsidiaries during such period (each such person,
business, property or asset acquired and not subsequently disposed of, an
"Acquired Entity or Business"), and the net income (or loss) of any Unrestricted
Subsidiary that is converted into a Restricted Subsidiary during such period
(each, a "Converted Restricted
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Subsidiary"), in each case based on the actual net income (or loss) of such
Acquired Entity or Business or Converted Restricted Subsidiary for the entire
period (including the portion thereof occurring prior to such acquisition or
conversion) and (y) an increase in respect of each Acquired Entity or Business
acquired during such period equal to the cost adjustment amount applicable to
the relevant period determined by the Company to represent the savings secured
by the Company in connection with its reduction of salary and other employment
expenses and lease and other contractual expenses with respect to such Acquired
Entity or Business and (2) there shall be excluded in determining Consolidated
EBITDA for any period the net income (or loss) of any person, business, property
or asset (other than an Unrestricted Subsidiary) sold or disposed of by the
Company or one of its Restricted Subsidiaries during such period (each such
person, business, property or asset so sold or disposed of, a "Sold Entity or
Business"), and the net income (or loss) of any Restricted Subsidiary that is
converted into an Unrestricted Subsidiary during such period (each, a "Converted
Unrestricted Subsidiary"), in each case based on the actual net income (or loss)
of such Sold Entity or Business or Converted Unrestricted Subsidiary for the
entire period (including the portion thereof occurring prior to such sale,
disposition or conversion), (II) for purposes of this definition, subject to
clause (III) below, there shall be included or excluded any of the items
described in the above clauses (A) and (B) attributable to a Partially-Owned
Restricted Subsidiary, but only to the extent of the equity percentage ownership
of the Company in such Partially-Owned Restricted Subsidiary and (III) in the
event the aggregate portion of Consolidated EBITDA for any period attributable
to Partially-Owned Restricted Subsidiaries (the "Limited EBITDA Component")
exceeds an amount equal to 15% of the aggregate amount of Consolidated EBITDA of
the Company and its Restricted Subsidiaries for such period, the Limited EBITDA
Component (and accordingly Consolidated EBITDA), in each case, for such period,
shall be reduced such that the Limited EBITDA Component for such period equals
15% of the aggregate amount of such Consolidated EBITDA for such period.
"Consolidated Fixed Charges" shall mean, for any period, the sum, without
duplication, of the amounts for such period of (i) Consolidated Interest
Expense, plus consolidated cash Dividend expense payable in respect of all
Preferred Stock and common stock of the Company, (ii) provisions for taxes based
on income other than (x) changes in deferred taxes, (y) taxes on gains resulting
from sales of assets (other than sales in the ordinary course of business) and
(z) taxes on gains on extraordinary items, (iii) Consolidated Capital
Expenditures paid in cash, (iv) scheduled payments on Indebtedness for borrowed
money (including the term loans outstanding under the Existing Credit Agreements
but excluding the revolving loans outstanding under the Existing Credit
Agreements) and on the Non-Compete Notes (other than, in the case of any
payments referred to in this clause (iv), any interest payments to the extent
included in Consolidated Interest Expense), and (v) the Net Maximum Exposure
Reduction, if positive, for such period; all as determined on a consolidated
basis for the Company and its Restricted Subsidiaries; PROVIDED that for
purposes of this definition, fixed charges of the type referred to in clauses
(i)-(v) above of any Partially-Owned Restricted Subsidiary shall be included in
Consolidated Fixed Charges in an aggregate amount equal to the percentage equity
ownership of the Company in such Partially-Owned Restricted Subsidiary
multiplied by the fixed charges of the type referred to above of such
Partially-Owned Restricted Subsidiary for the respective period.
"Consolidated Interest Expense" shall mean, for any period, total interest
expense (including that attributable to Capital Leases in accordance with GAAP
but excluding non-cash interest expenses) of the Company and its Restricted
Subsidiaries determined on a consolidated basis with respect to all outstanding
Indebtedness of the Company and its Restricted Subsidiaries, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net costs
(I.E., costs minus benefits) under Interest Rate Protection Agreements, but
excluding, however, amortization of deferred financing costs to the extent
included in total interest expense, all as determined on a consolidated basis;
PROVIDED that for purposes of this definition, interest expense of the type
referred to above of any Partially-Owned Restricted Subsidiary shall be included
in Consolidated Interest Expense in an aggregate amount equal to the percentage
equity ownership of the Company in such Partially-Owned Restricted Subsidiary
multiplied by the interest expense of the type referred to above of such
Partially-Owned Restricted Subsidiary for the respective period.
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"Contingent Obligations" shall mean as to any Person (i) any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) 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 (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof and (ii) any Interest
Rate Protection Agreement; PROVIDED, HOWEVER, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Contribution Agreement" shall have the meaning provided in Section 4.08.
"Conversion Value Amount" shall have the meaning set forth in the
definition of Permitted Restricted Subsidiary Conversion.
"Copyrights" shall have the meaning provided in Section 5.14(a).
"Credit Documents" shall mean this Agreement, any Notes to the extent
issued, the Subsidiary Guaranty and the Contribution Agreement.
"Credit Party" shall mean the Company and each Subsidiary Guarantor.
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"Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank Default
is in effect.
"Dividends" shall have the meaning provided in Section 7.07.
"EBITDA" shall mean, for any Restricted Subsidiary or business, for any
period, the portion of Consolidated EBITDA attributable to such Restricted
Subsidiary or business.
"ECA Maturity Date" shall mean July 31, 2004 (I.E., the Final Maturity Date
under and as defined in the Amended and Restated Credit Agreement).
"ECA Effective Date" shall mean May 28, 1996 (I.E., the Original Effective
Date under and as defined in the Amended and Restated Credit Agreement).
"Effective Date" shall have the meaning provided in Section 11.10.
"Environmental Law" shall mean any federal, state, provincial or local
statute, law, rule, regulation, ordinance, code, policy or rule of common law
now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to the environment, health, safety
or Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder. Section references to ERISA are to ERISA as in effect at the
date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Company or any Subsidiary of the Company would be
deemed to be a "single employer" within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for a
Eurodollar Loan, (i) the arithmetic average (rounded to the nearest 1/100 of 1%)
of the offered quotation to first-class banks in the interbank Eurodollar market
by each Reference Bank for U.S. dollar deposits of amounts in same day funds
comparable to the outstanding principal amount of the Eurodollar Loan of such
Reference Bank for which an interest rate is then being determined with
maturities comparable to the Interest Period to be applicable to such Eurodollar
Loan, determined as of 10:00 A.M. (New York time) on the date which is two
Business Days prior to the commencement of such Interest Period divided (and
rounded upward to the next whole multiple
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of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then stated maximum
rate of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D); PROVIDED that if one or more of the Reference Banks fails to
provide the Administrative Agent with its aforesaid rate, then the Eurodollar
Rate in respect of Loans shall be determined based on the rate or rates provided
to the Administrative Agent by the other Reference Banks or Bank.
"Event of Default" shall have the meaning provided in Section 8.
"Excess Cash Flow" shall mean, for any period, the remainder of (x) the sum
of (i) Consolidated EBITDA for such period and (ii) the decrease, if any, in
Working Capital from the first day to the last day of such period, minus (y) the
sum of (i) the amount of Consolidated Fixed Charges for such period (but in the
case of Consolidated Capital Expenditures included therein, only to the extent
such expenditures are not financed by Indebtedness (other than Loans hereunder))
and (ii) the increase, if any, in Working Capital from the first day to the last
day of such period, PROVIDED that in calculating the amount referred to in
clause (x)(ii) or (y)(ii) above, as the case may be, (A) for any period during
which the Company and/or any of its Restricted Subsidiaries have consummated an
Asset Sale pursuant to Section 7.02(c) or a Permitted Acquisition, the portion
of the change in Working Capital for such period attributable to the entity or
business sold or purchased shall be based (x) in the case of an Asset Sale, on
the change in Working Capital attributable to the entity or business sold from
the first day of such period to the date of the consummation of such sale and
(y) in the case of an acquisition, on the change in Working Capital attributable
to the entity or business acquired from the date of consummation of such
acquisition to the last day of such period and (B) Working Capital shall only
include the assets and liabilities of a Partially-Owned Restricted Subsidiary to
the extent of the percentage equity interest of the Company in such
Partially-Owned Restricted Subsidiary.
"Excess Cash Flow Amount" shall mean an amount which initially shall be
zero and which shall be (i) increased on the date of delivery of Section 6.01
Financials in respect of the first three fiscal quarters in each year of the
Company (commencing with the fiscal quarter ended June 30, 1996) by an amount
(if positive) equal to 75% of Excess Cash Flow for the fiscal quarter in respect
of which such Section 6.01 Financials are delivered, PROVIDED that in the event
that Excess Cash Flow for the first and/or second fiscal quarter in any fiscal
year is negative, then for purposes of this clause (i) the Excess Cash Flow for
the third fiscal quarter in such fiscal year shall be deemed to be reduced by
the amount of such negative Excess Cash Flow for such first and/or second
quarter, and (ii) increased on the date of delivery of Section 6.01 Financials
in respect of each fiscal year of the Company by an amount (if positive) equal
to 75% of the Excess Cash Flow for such fiscal year LESS an amount (if any)
equal to the aggregate amount by which the Excess Cash Flow Amount was increased
pursuant to clause (i) above in respect of the first, second and third quarters
in such fiscal year.
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"Excluded Domestic Restricted Subsidiary" shall mean any Partially-Owned
Restricted Subsidiary with respect to which the Company shall have made a
Non-Guarantor Designation in accordance with the provisions hereof.
"Excluded Foreign Restricted Subsidiaries" shall mean (i) Daily Racing Form
of Canada Ltd., a Canada corporation, (ii) Admirefruit Limited, a U.K.
corporation, (iii) Canadian Red Book, Inc., a Canada corporation, (iv) Canadian
Sailings Inc., a Canada corporation and (v) each Restricted Subsidiary of the
Company established, created or acquired after the Effective Date which is
incorporated in a jurisdiction outside the United States, except to the extent
the requirements set forth in clause (z) of 7.14(a), and Section 7.14(c), are
satisfied with respect to such Subsidiary.
"Existing Contingent Obligations" shall have the meaning provided in
Section 7.06(f).
"Existing Credit Agreements" shall mean and include each of the Amended and
Restated Credit Agreement and the $250,000,000 Credit Agreement.
"Existing Facility Documents" shall mean and include each of the documents
and other agreements entered into by the Company or any of its Subsidiaries in
connection with the Existing Credit Agreements (including, without limitation,
the Existing Credit Agreements and any guaranty or guaranties relating thereto),
as in effect on the Effective Date and as the same may be modified, supplemented
or amended from time to time pursuant to the terms hereof and thereof.
"Existing Debt" shall have the meaning provided in Section 7.04(d).
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 4.10.
"Existing Preferred Stock" shall include preferred stock of the Company
issued prior to the Effective Date and listed on Annex VI hereto, without giving
effect to any extension or replacement thereof, as the same may be modified,
supplemented or amended from time to time pursuant to the terms hereof and
thereof.
"Federal Funds Effective Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to 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 for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean (i) all amounts payable pursuant to, or referred to in,
Section 2.01 and (ii) all other fees payable to the Administrative Agent or any
Bank as may be agreed to
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from time to time between the Company and the Administrative Agent or such Bank,
as the case may be.
"Final Maturity Date" shall mean December 30, 1999.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time; it being understood and agreed
that determinations in accordance with GAAP for purposes of Section 7, including
defined terms as used therein, are subject (to the extent provided therein) to
Section 11.07(a).
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous wastes,"
"restrictive hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import, under any applicable
Environmental Law.
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller's
assignees which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person, (iii) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (v) all Capitalized Lease Obligations of such Person and (vi) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, I.E., take-or-pay and similar
obligations, PROVIDED that Indebtedness shall not include (x) trade payables and
accrued expenses, in each case arising in the ordinary course of business and
(y) any obligations under Interest Rate Protection Agreements.
"Information Memorandum" shall mean the Confidential Information Memorandum
dated February, 1999 and distributed to the Banks prior to the Effective Date.
"Initial Borrowing Date" shall mean the date on or after the Effective Date
upon which the initial Borrowing of Loans hereunder occurs.
"Intellectual Property" shall have the meaning provided in Section 5.14(b).
"Intercompany Loan" shall have the meaning provided in Section 7.05(c).
"Interest Period" with respect to any Eurodollar Loan, shall mean the
interest period applicable thereto, as determined pursuant to Section 1.09.
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"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement designed to
protect the Company or any of its Subsidiaries against fluctuations in interest
rates.
"KKR" shall mean Kohlberg Kravis Roberts & Co., a Delaware limited
partnership.
"Leasehold" of any Person means all of the right, title and interest of
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"Leverage Ratio" shall have the meaning provided in Section 7.11.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Loan" shall have the meaning provided in Section 1.01.
"Margin Stock" shall have the meaning provided in Regulation U.
"Maximum Exposure" shall have the meaning provided in the Existing Credit
Agreements.
"Minimum Borrowing Amount" shall mean $3,000,000.
"Minimum Retention Amount" shall mean, at any time, $5,000,000 multiplied
by a fraction (i) the numerator of which shall be the Total Revolving Loan
Commitment at such time and (ii) the denominator of which shall be $150,000,000.
"Net Investments in Excluded Foreign Restricted Subsidiaries" shall mean
the remainder of (i) the sum of (x) the aggregate value of all businesses,
properties and assets transferred by the Company and/or its Restricted
Subsidiaries (other than Excluded Foreign Restricted Subsidiaries) to Excluded
Foreign Restricted Subsidiaries after the ECA Effective Date, (y) the aggregate
outstanding principal amount of all Intercompany Loans made to Excluded Foreign
Restricted Subsidiaries by the Company and/or its Restricted Subsidiaries (other
than Excluded Foreign Restricted Subsidiaries) after the ECA Effective Date and
(z) the aggregate amount of all investments by the Company and its Restricted
Subsidiaries (other than Excluded Foreign Restricted Subsidiaries) in Excluded
Foreign Restricted Subsidiaries after the ECA Effective Date, minus (ii) the sum
of (x) the aggregate value of all businesses, properties and assets transferred
by Excluded Foreign Restricted Subsidiaries to the Company and/or its Restricted
Subsidiaries (other than Excluded Foreign Restricted Subsidiaries) after the ECA
Effective Date and (y) the aggregate amount of all cash dividends and other cash
distributions on common stock paid by Excluded Foreign Restricted Subsidiaries
to the Company and its
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Restricted Subsidiaries (other than Excluded Foreign Restricted Subsidiaries)
after the ECA Effective Date.
"Net Maximum Exposure Reduction" shall have the meaning provided therefor
in the Existing Credit Agreements.
"Non-Compete Notes" shall mean the promissory notes issued by K-III
Holdings Corporation III pursuant to the Non-Competition Agreement, dated as of
June 17, 1991, among K-III Holdings Corporation III, News America Holdings
Incorporated and the other parties thereto in an aggregate principal amount not
to exceed $50,000,000, as such notes may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting Bank.
"Non-Facility Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate maximum amount available to be drawn (regardless of
whether any conditions for drawing could then be met) under all outstanding
Non-Facility Letters of Credit and (ii) the aggregate amount of all Non-Facility
Unpaid Drawings.
"Non-Facility Letters of Credit" shall mean each letter of credit (other
than any letter of credit issued pursuant to the Existing Credit Agreements)
issued for the account of the Company or any of its Restricted Subsidiaries,
PROVIDED that the reimbursement obligations of the Company or such Restricted
Subsidiary with respect to such letter of credit may be secured only to the
extent permitted by Section 7.03(q).
"Non-Facility Unpaid Drawings" shall mean all amounts paid or disbursed by
the issuers of Non-Facility Letters of Credit which have not been reimbursed.
"Non-Guarantor Designation" shall mean and include each of (x) the
designation by the Company of any newly created or acquired Partially-Owned
Restricted Subsidiary and (y) the redesignation of any existing Partially-Owned
Restricted Subsidiary which is a Subsidiary Guarantor, in each case, as an
Excluded Domestic Restricted Subsidiary by delivery of a written notice to the
Administrative Agent of such designation or redesignation, as the case may be;
PROVIDED that the Company may only make a Non-Guarantor Designation hereunder
if, at the time of such designation (i) no Default or Event of Default exists or
would result therefrom and (ii) the Company shall have determined, with respect
to such designation, that the Company and its Restricted Subsidiaries would have
been in compliance, on a PRO FORMA Basis, with Sections 7.09, 7.10 and 7.11 of
this Agreement.
"Note" shall mean and include each promissory note, in the form agreed by
the Company and the Administrative Agent prior to the Effective Date, to the
extent issued pursuant to Section 1.05(b) hereof.
"Notice of Borrowing" shall have the meaning provided in Section 1.03(a).
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"Notice of Conversion" shall have the meaning provided in Section 1.06.
"Notice Office" shall mean the office of the Administrative Agent at 1
Chase Manhattan Plaza, New York, New York 10081, or such other office as the
Administrative Agent may designate to the Company and the Banks from time to
time.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Administrative Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.
"Partially-Owned Restricted Subsidiary" shall mean any Restricted
Subsidiary of the Company to the extent that the Company and its Wholly-Owned
Restricted Subsidiaries shall own less than 100% of the capital stock of such
Restricted Subsidiary.
"Payment Office" shall mean the office of the Administrative Agent at 270
Park Avenue, New York, New York 10017, or such other office as the
Administrative Agent may designate to the Company and the Banks from time to
time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning provided in Section 7.02(g).
"Permitted Amendments" shall mean, to any amendment or supplement to or
waiver of the documents governing or evidencing (x) any issue of Indebtedness
which does not (i) add, directly or indirectly, any new covenant, event of
default, collateral requirement or repayment requirement (including pursuant to
any put arrangement), (ii) modify in any manner materially adverse to the issuer
or guarantors thereof any existing covenant, event of default, collateral
requirement or repayment requirement (including any shortening or any
amortization requirements), (iii) increase the interest rate thereon or modify
in any manner the time or manner of payment of such interest (including any
option or right to pay such interest in kind), (iv) modify any of the
subordination provisions or (v) contain any provision which, in the opinion of
the Administrative Agent, is materially adverse to the interests of the Banks,
(y) any issue of Preferred Stock which does not (i) add, directly or indirectly,
any new covenant, default, voting, redemption, exchange or put provision, (ii)
modify in any manner adverse to the issuer thereof any existing covenant,
default, voting, redemption, exchange or put provision, (iii) increase the
dividend rate thereon or modify in any manner the time or manner of payment of
such dividends (including any option or right to pay such dividends in kind) or
(iv) contain any provision which, in the opinion of the Administrative Agent, is
materially adverse to the interests of the Banks or (z) the sole effect of which
is to (i) delete covenants or events of default and/or (ii) add to, or increase
existing, exceptions to the covenants contained therein, or waive any of the
covenants contained therein or any rights of the holders of such Indebtedness or
Preferred Stock, as the case may be, set forth therein.
"Permitted Liens" shall have the meaning provided in Section 7.03(c).
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"Permitted Refinancing Debt" shall mean Indebtedness issued in connection
with a refinancing of any or all of the Existing Debt, the Subordinated Exchange
Debentures, any Additional Indebtedness or any other Permitted Refinancing Debt;
PROVIDED that (i) such Indebtedness has a longer average life than the
Indebtedness being refinanced and (ii) such Indebtedness, and the agreements and
other documents entered into by the Company and/or any of its Restricted
Subsidiaries in connection therewith shall contain terms and conditions
(including, without limitation, with respect to the obligor and guarantors, if
any, in respect of such Indebtedness, amortization schedules, interest rates,
redemption provisions, covenants, defaults, security, remedies and, if the
Indebtedness so refinanced is subordinated to any other Indebtedness of the
Company or its Restricted Subsidiaries, subordination provisions) not materially
less favorable to the Company and its Restricted Subsidiaries or to the Banks
than the terms and conditions of the Indebtedness so refinanced (excluding, for
purposes of this clause (ii), the impact of market conditions on the interest
rate and other economic terms).
"Permitted Replacement Preferred Stock" shall mean preferred stock of the
Company issued in connection with the replacement and cancellation of any
outstanding Preferred Stock; PROVIDED that such preferred stock and the
agreements, certificates of designation and other documents entered into by the
Company in connection therewith shall contain terms and conditions (including,
without limitation, dividend rates, pay-in-kind features, redemption provisions,
put rights, liquidation preferences, voting rights and exchange rights) not
materially less favorable to the Company or to the Banks than the terms and
conditions of the preferred stock being replaced (excluding the impact of market
conditions on the dividend rate and other economic terms), as such preferred
stock may be amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
"Permitted Restricted Asset Sale" shall mean any sale, transfer or other
disposition by the Company or any of its Restricted Subsidiaries (other than
Canadian Sailings Inc.) to any Unrestricted Subsidiary of any asset (including,
without limitation, any capital stock or other securities of another Person, but
excluding any sale, transfer or other disposition by the Company of its capital
stock) of the Company or such Restricted Subsidiary; PROVIDED that the Company
or such Restricted Subsidiary shall only be permitted to effectuate a Permitted
Restricted Asset Sale so long as (i) no Default or Event of Default exists or
would result therefrom, (ii) the Company shall have delivered to the
Administrative Agent the opinion of value of an Appraisal Firm to the extent
required by Section 7.02(c) and (iii) the Company shall have, or shall have
caused such Restricted Subsidiary to have, complied with the other terms and
conditions of Section 7.02(c) or (j), as the case may be.
"Permitted Restricted Subsidiary Conversion" shall mean the redesignation
by the Company of a Restricted Subsidiary (other than Canadian Sailings Inc.) of
the Company as an Unrestricted Subsidiary of the Company pursuant to a written
notice to the Administrative Agent and the Banks; PROVIDED that any such
redesignation of a Restricted Subsidiary as an Unrestricted Subsidiary shall be
deemed to constitute a sale of all of the assets of the respective Restricted
Subsidiary for all purposes of this Agreement; PROVIDED FURTHER, that the
Company shall only be permitted to effectuate a Permitted Restricted Subsidiary
Conversion so long as (i) no Default or Event of Default exists or would result
therefrom, (ii) the Company shall have delivered to the
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Administrative Agent the opinion of value of management of the Company or, to
the extent required by Section 7.02(c), the Appraisal Firm required by such
Section (the value set forth in any such opinion, the "Conversion Value
Amount"), (iii) the Company shall have complied with the other terms and
conditions of Section 7.02(c) or (j), as the case may be, (iv) the Aggregate
Conversion Amount at such time, when added to the Unrestricted Subsidiary
Investment Amount at such time shall not exceed the Unrestricted Subsidiary
Investment Limit then in effect, and (v) the Company shall have determined, with
respect to such conversion, that the Company and its Restricted Subsidiaries
would have been in compliance, on a PRO FORMA Basis, with Sections 7.09, 7.10
and 7.11 of this Agreement.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan, as defined in
Section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute of) the Company, any Restricted Subsidiary
or an ERISA Affiliate, and each such plan for the five year period immediately
following the latest date on which the Company, any Restricted Subsidiary or an
ERISA Affiliate maintained, contributed to or had an obligation to contribute to
such plan.
"Preferred Stock" shall mean and include the Existing Preferred Stock and,
once issued, any Additional Preferred Stock and any Permitted Replacement
Preferred Stock.
"Prescribed Forms" shall mean such duly executed form(s) or statement(s),
and in such number of copies, which may, from time to time, be prescribed by law
and which, pursuant to applicable provisions of (a) an income tax treaty between
the United States and the country of residence of the Bank providing the form(s)
or statement(s), (b) the Code, or (c) any applicable rule or regulation under
the Code, permit the Company to make payments hereunder for the account of such
Bank free of deduction or withholding of income or similar taxes.
"Prime Lending Rate" shall mean the rate which the Administrative Agent
announces from time to time as its prime commercial lending rate, the Prime
Lending Rate to change when and as such prime commercial lending rate changes.
The Prime Lending Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer. The Administrative
Agent may make commercial loans or other loans at rates of interest at, above or
below the Prime Lending Rate.
"PRO FORMA Basis" shall mean, with respect to each Affected Transaction in
connection with which any calculation of compliance with any financial covenant
or financial term is required, the calculation thereof on a PRO FORMA basis, for
the Test Period ended on the last day of the most recently ended fiscal quarter,
determined as if (x) such Affected Transaction, each other Affected Transaction
effected by Company during the Affected Period and any reduction of Consolidated
Debt during such Affected Period effected with the proceeds received by the
Company and/or its Restricted Subsidiaries of (A) the issuance of common equity
by the Company or (B) the sale of the capital stock or other ownership interest
of the Company in an
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Unrestricted Subsidiary (to the extent not otherwise included in Consolidated
EBITDA), in each case, had occurred on the first day of such Affected Period,
and (y) with respect to any Affected Transaction involving the issuance of
Indebtedness or Preferred Stock, such Indebtedness and/or Preferred Stock had
remained outstanding at all times during such Affected Period.
"PRO RATA Share" shall mean, for each Bank, the percentage obtained by
dividing such Bank's Revolving Loan Commitment by the Total Revolving Loan
Commitment, PROVIDED that, if at any time of the determination of a Bank's "Pro
Rata Share", any Revolving Loan Commitments under this Agreement shall have been
terminated, Pro Rata Share shall be calculated with reference to the amount of
Revolving Loans outstanding rather than such Revolving Loan Commitments.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Reference Banks" shall mean Chase, The Bank of New York and Bankers Trust
Company.
"Register" shall have the meaning provided in Section 1.05(a).
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"Replaced Bank" shall have the meaning provided in Section 1.10(c)(ii).
"Replacement Bank" shall have the meaning provided in Section 1.10(c)(ii).
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC
Regulation Section 2615.
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
Revolving Loan Commitments (or after the termination thereof, the then total
outstanding Revolving Loans) constitute at least 51% of the Adjusted Total
Commitment (or after the termination thereof, the then total outstanding
Revolving Loans of Non-Defaulting Banks).
"Restricted Subsidiaries" shall mean (x) all of the Subsidiaries of the
Company in existence on the Effective Date, including, without limitation,
Canadian Sailings Inc., (y) any Subsidiary owned (directly or indirectly) by the
Company that is created, established or acquired after the Effective Date and
which does not constitute an Unrestricted Subsidiary on the date of the
creation, establishment and/or acquisition thereof and (z) any Unrestricted
Subsidiary of the
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Company to the extent designated by the Company as a Restricted Subsidiary
hereunder by written notice to the Administrative Agent; PROVIDED that the
Company shall only be permitted to so designate a new Restricted Subsidiary so
long as (i) no Default or Event of Default exists or would result therefrom,
(ii) at least 51% of the capital stock of such newly-designated Restricted
Subsidiary is owned by the Company or one or more Wholly-Owned Restricted
Subsidiaries and all of the applicable provisions of Section 7.14 shall have
been complied with in respect of such newly-designated Restricted Subsidiary,
(iii) the Company shall have determined, with respect to such designation, that
the Company and its Restricted Subsidiaries would have been in compliance, on a
PRO FORMA Basis, with Sections 7.09, 7.10 and 7.11 of this Agreement and (iv)
such Unrestricted Subsidiary is permitted to be designated a Restricted
Subsidiary pursuant to the Senior Note Documents; PROVIDED FURTHER, that, at the
time of any Permitted Restricted Subsidiary Conversion or the sale of 100% of
the capital stock owned by the Company or any Restricted Subsidiary of a
Restricted Subsidiary to an Unrestricted Subsidiary pursuant to a Permitted
Restricted Asset Sale, the Restricted Subsidiary so converted or sold shall no
longer constitute a Restricted Subsidiary hereunder.
"Revolving Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I hereto directly below the
column entitled "Revolving Loan Commitment", as same may be reduced from time to
time pursuant to Sections 2.02, 2.03 and/or 8.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Section 6.01 Financials" shall mean the financial statements delivered, or
to be delivered, pursuant to Section 6.01(a) or (b).
"Senior Note Documents" shall mean and include each of the documents and
other agreements entered into by the Company or any of its Subsidiaries
(including, without limitation, the indentures pursuant to which each issuance
of the Senior Notes are issued and any guaranty or guaranties relating thereto)
relating to the issuance by the Company of any Senior Notes, as in effect on the
Effective Date and as the same may be modified, supplemented or amended from
time to time pursuant to the terms hereof and thereof.
"Senior Notes" shall mean and include the Company's (x) 7-5/8% Senior
Secured Notes due 2008, (y) 10-1/4% Senior Notes due 2004 and (z) 8-1/2% Senior
Notes due 2006, in each case, as in effect on the Effective Date and as the same
may be modified, supplemented or amended from time to time pursuant to the terms
hereof and thereof.
"Senior Preferred Stock" shall mean the Company's $2.875 Senior
Exchangeable Preferred Stock, as in effect on the Effective Date and as the same
may be modified, supplemented or amended from time to time pursuant to the terms
hereof and thereof.
"Series B Preferred Stock" shall mean the Company's $11.625 Series B
Exchangeable Preferred Stock, as in effect on the Effective Date and as the same
may be modified, supplemented or amended from time to time pursuant to the terms
hereof and thereof.
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"Series C Preferred Stock" shall mean the Company's Series C Exchangeable
Preferred Stock, as in effect on the Effective Date and as the same may be
modified, supplemented or amended from time to time pursuant to the terms hereof
and thereof.
"Specified Change of Control Event" shall mean a Change of Control Event of
the type described in clause (a) of the definition thereof.
"Subordinated Exchange Debentures" shall mean and include the Company's (x)
11-1/2% Subordinated Debentures due 2004, (y) 11-5/8% Class B Subordinated
Exchange Debentures due 2005 and (z) 10% Subordinated Exchange Debentures due
2008, in each case, in the form delivered to the Banks on the Effective Date and
as the same may be modified, supplemented or amended from time to time pursuant
to the terms hereof and thereof.
"Subsidiary" of any Person shall mean and include (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time, PROVIDED that
Canadian Sailings Inc. shall be deemed to be a Subsidiary of the Company for all
purposes.
"Subsidiary Guarantor" shall mean (i) each Restricted Subsidiary in
existence on the Effective Date (other than Excluded Foreign Restricted
Subsidiaries) and (ii) each Restricted Subsidiary of the Company formed after
the Effective Date and each Excluded Domestic Restricted Subsidiary designated
as such by the Company, in each case, which has executed and delivered a
counterpart of the Subsidiary Guaranty to the Administrative Agent on behalf of
the Banks, PROVIDED that any such Restricted Subsidiary which is a
Partially-Owned Restricted Subsidiary shall cease to constitute a Subsidiary
Guarantor to the extent the Company shall have made a Non-Guarantor Designation
with respect to such Subsidiary in accordance with the terms hereof.
"Subsidiary Guaranty" shall have the meaning provided in Section 4.05.
"Taxes" shall have the meaning provided in Section 3.04.
"Test Period" shall mean the four consecutive fiscal quarters of the
Company then last ended.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving Loan
Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time, the
Total Revolving Loan Commitment at such time less the aggregate principal amount
of all Revolving Loans at such time.
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$250,000,000 Credit Agreement" shall mean the Credit Agreement, dated as of
May 24, 1996, among the Company, various lending institutions, The Bank of New
York and Bankers Trust Company, as Co-Syndication Agents, The Bank of Nova
Scotia, as Documentation Agent, and The Chase Manhattan Bank, as Administrative
Agent, as amended, modified, supplemented or extended from time to time in
accordance with the terms thereof.
"Type" shall mean any type of Loan determined with respect to the interest
option applicable thereto, I.E., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
New York.
"Unfunded Current Liability" of any Plan shall mean the amount, if any, by
which the actuarial present value of the accumulated plan benefits under such
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"Unrestricted Subsidiary" shall mean (i) any Subsidiary of the Company that
is formed or acquired after the Effective Date, which is funded through loans,
advances and/ or capital contributions as permitted by, and in compliance with,
Section 7.05(d), PROVIDED that at the time of the initial loan, advance or
capital contribution by the Company or any Restricted Subsidiary to such
Subsidiary (x) the Company designates such Subsidiary as an Unrestricted
Subsidiary in a written notice to the Administrative Agent and (y) such
Subsidiary and the Company shall have entered into a tax sharing agreement in
form and substance reasonably satisfactory to the Required Banks, (ii) any
Restricted Subsidiary of the Company redesignated as an Unrestricted Subsidiary
pursuant to a Permitted Restricted Subsidiary Conversion and any Restricted
Subsidiary sold to an Unrestricted Subsidiary pursuant to a Permitted Restricted
Asset Sale, in each case to the extent consummated in accordance with the terms
of the respective definitions thereof and Section 7.02(c) or 7.02(j), as the
case may be, and (iii) each Subsidiary of an Unrestricted Subsidiary; PROVIDED
that, at the time of any designation of the type described in clause (z) of the
definition of "Restricted Subsidiary," the Subsidiary so designated shall no
longer constitute an Unrestricted Subsidiary hereunder.
"Unrestricted Subsidiary Investment Amount" shall have the meaning provided
in Section 7.05(d).
"Unrestricted Subsidiary Investment Limit" shall mean, at any time, the sum
of (i) $200,000,000, (ii) the Excess Cash Flow Amount at such time, (iii) an
amount equal to all cash or other payments received by the Company and its
Restricted Subsidiaries from Unrestricted Subsidiaries from dividends or
distributions after the ECA Effective Date (PROVIDED that for purposes of this
clause (iii), cash and other payments received by a Partially-Owned Restricted
Subsidiary shall be added to the Unrestricted Subsidiary Investment Limit only
to the extent of the equity percentage ownership of the Company in such
Partially-Owned Restricted Subsidiary), PLUS (iv) an amount equal to the
aggregate net proceeds received by the Company from the
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issuance of equity securities of the Company after the ECA Effective Date,
PROVIDED that if the net proceeds from any such equity issuance are not utilized
to make a loan or advance to, or a cash capital contribution in, an Unrestricted
Subsidiary pursuant to Section 7.05(d) within 30 days following the date of such
equity issuance, then the net proceeds from such equity issuance shall no longer
be added to the Unrestricted Subsidiary Investment Limit.
"U.S. Dollars" and "$" shall mean freely transferable lawful money of the
United States of America.
"Wholly-Owned Restricted Subsidiary" shall mean any Restricted Subsidiary
of the Company which is not a Partially-Owned Restricted Subsidiary.
"Working Capital" shall mean the excess of Consolidated Current Assets over
Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.
SECTION 10. THE ADMINISTRATIVE AGENT.
10.01 APPOINTMENT. Each Bank hereby irrevocably designates and appoints
Chase as Administrative Agent of such Bank and to act as specified herein and in
the other Credit Documents, and each such Bank hereby irrevocably authorizes
Chase as the Administrative Agent for such Bank, to take such action on its
behalf under the provisions of this Agreement and the other Credit Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
The Administrative Agent agrees to act as such upon the express conditions
contained in this Section 10. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in the other
Credit Documents, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
The provisions of this Section 10 are solely for the benefit of the
Administrative Agent and the Banks, and neither the Company nor any of its
Subsidiaries shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Administrative Agent shall act solely as agent of the Banks and the
Administrative Agent neither assumes and nor shall it be deemed to have assumed
any obligation or relationship of agency or trust with or for the Company or any
of its Subsidiaries.
10.02 DELEGATION OF DUTIES. The Administrative Agent may execute any of its
duties under this Agreement or any other Credit Document 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
selected by it with reasonable care except to the extent otherwise required by
Section 10.03.
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10.03 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or the other Credit
Documents (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the Company, any of
its Subsidiaries or any of their respective officers contained in this Agreement
or the other Credit Documents 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 Credit Document or for
any failure of the Company or any of its Subsidiaries or any of their respective
officers to perform its obligations hereunder or thereunder. The Administrative
Agent shall not be under any obligation to any Bank to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or the other Credit Documents, or to inspect the
properties, books or records of the Company or any of its Subsidiaries. The
Administrative Agent shall not be responsible to any Bank for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any other Credit Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Administrative Agent to the Banks or by or on behalf of
the Company to the Administrative Agent, or any Bank or be required to ascertain
or inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or as to the use
of the proceeds of the Loans or of the existence or possible existence of any
Default or Event of Default.
10.04 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, cablegram,
telegram, 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
Company), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks 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 the other Credit Documents in
accordance with a request of the Required Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Banks.
10.05 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 actually received notice from a
Bank or the Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice
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of default." In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall give prompt notice thereof to the Banks. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks; 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 Banks.
10.06 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS. Each Bank
expressly acknowledges that neither the Administrative Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Company or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Bank. Each Bank
represents to the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, assets, operations, property, financial
and other condition, prospects and creditworthiness of the Company and its
Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Administrative Agent or any other Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Company and its Subsidiaries. The Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of the Company or any of its
Subsidiaries which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.07 INDEMNIFICATION. The Banks agree to indemnify the Administrative
Agent in its capacity as such ratably according to their respective
"percentages" (which shall equal, for each Non-Defaulting Bank, that percentage
determined by dividing such Bank's Revolving Loan Commitment by the Adjusted
Total Commitment, it being understood and agreed that references to Revolving
Loan Commitments (as well as to the Adjusted Total Commitment) at a time when
any such Revolving Loan Commitment (or Adjusted Total Commitment) has been
terminated shall be references to such terminated Revolving Loan Commitment (or
Adjusted Total Commitment, as the case may be) as in effect immediately prior to
such termination), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, reasonable
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against the Administrative
Agent in its capacity as such in any way relating to or arising out of this
Agreement or any other Credit Document, or any documents contemplated by or
referred to herein or the transactions contemplated hereby or any action taken
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or omitted to be taken by the Administrative Agent under or in connection with
any of the foregoing, but only to the extent that any of the foregoing is not
paid by the Company or any of its Subsidiaries; PROVIDED that no Bank shall be
liable to the Administrative Agent for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the gross negligence or
willful misconduct of the Administrative Agent. If and to the extent any amount
paid to the Administrative Agent is subsequently recovered by the Administrative
Agent from the Company or any of its Subsidiaries, the Administrative Agent
shall promptly pay to each Bank to the extent such Bank paid the Administrative
Agent, its "percentage" of the amount so recovered. If any indemnity furnished
to the Administrative Agent for any purpose shall, in the opinion of the
Administrative Agent be insufficient or become impaired, the Administrative
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this Section 10.07 shall survive the payment of all Obligations.
10.08 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The Administrative
Agent and its respective affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Company and its Subsidiaries
as though the Administrative Agent were not the Administrative Agent hereunder.
With respect to the Loans made by it and all Obligations owing to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Bank and may exercise the same as though it were not the Administrative
Agent, and the terms "Bank" and "Banks" shall include the Administrative Agent
in its individual capacity.
10.09 HOLDERS. The Administrative Agent may deem and treat the payee of any
Note which has been issued hereunder as the owner thereof for all purposes
hereof unless and until a written notice of the assignment, transfer or
endorsement thereof, as the case may be, shall have been filed with the
Administrative Agent. Any request, authority or consent of any Person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any such Note shall be conclusive and binding on any subsequent
holder, transferee, assignee or indorsee, as the case may be, of such Note or of
any Note or Notes issued in exchange therefor.
10.10 RESIGNATION OF THE ADMINISTRATIVE AGENT; SUCCESSOR AGENT. The
Administrative Agent may resign as the Administrative Agent upon 20 days' notice
to the Banks. Upon the resignation of the Administrative Agent, the Required
Banks shall appoint from among the Banks a successor Administrative Agent for
the Banks subject to prior approval by the Company (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 include such successor agent effective upon its
appointment, and the resigning Administrative Agent's rights, powers and duties
as the 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. After the resignation of the Administrative Agent
hereunder, the provisions of this Section 10 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.
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SECTION 11. MISCELLANEOUS.
11.01 PAYMENT OF EXPENSES, ETC. The Company agrees to: (i) whether or not
the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent (including, without
limitation, the reasonable fees and disbursements of White & Case LLP) in
connection with the negotiation, preparation, execution and delivery of the
Credit Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto and in connection with the
Administrative Agent's syndication efforts with respect to this Agreement; (ii)
pay all reasonable out-of-pocket costs and expenses of the Administrative Agent
and each of the Banks in connection with the enforcement of the Credit Documents
and the documents and instruments referred to therein and, after an Event of
Default shall have occurred and be continuing, the protection of the rights of
the Administrative Agent and each of the Banks thereunder (including, without
limitation, the reasonable fees and disbursements of counsel (including in-house
counsel) for the Administrative Agent and for each of the Banks); (iii) pay and
hold each of the Banks harmless from and against any and all present and future
stamp and other similar taxes with respect to the foregoing matters and save
each of the Banks harmless from and against any and all liabilities with respect
to or resulting from any delay or omission (other than to the extent
attributable to such Bank) to pay such taxes; and (iv) indemnify the
Administrative Agent and each Bank, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not the Administrative
Agent or any Bank is a party thereto) related to the entering into and/or
performance of any Credit Document or the use of the proceeds of any Loans
hereunder or the consummation of any other transactions contemplated in any
Credit Document including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
11.02 RIGHT OF SETOFF. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default, each Bank is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Company or any of its Subsidiaries or
to any other Person, any such notice being hereby expressly waived, to set off
and to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Bank (including, without
limitation, by branches and agencies of such Bank wherever located) to or for
the credit or the account of any Credit Party against and on account of the
Obligations and liabilities of such Credit Party to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations of such Credit Party purchased by such
Bank pursuant to Section 11.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
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11.03 NOTICES. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
facsimile communication) and mailed, facsimilied or delivered, if to the
Company, at the address specified opposite its signature below or in the other
relevant Credit Documents, as the case may be; if to any Bank, at its address
specified for such Bank on Annex II hereto; or, at such other address as shall
be designated by any party in a written notice to the other parties hereto. All
such notices and communications shall be mailed, facsimilied or cabled or sent
by overnight courier, and shall be effective when received.
11.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; PROVIDED that the Company may assign or transfer
any of its respective rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder to another financial institution; PROVIDED FURTHER, that,
in the case of any such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the participant's
rights against such Bank in respect of such participation to be those set forth
in the agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Company hereunder shall be determined as
if such Bank had not sold such participation, except that the participant shall
be entitled to receive the additional amounts under Sections 1.10, 1.11 and 3.04
of this Agreement to, and only to, the extent that such Bank would be entitled
to such benefits if the participation had not been entered into or sold; and
PROVIDED FURTHER, that no Bank shall transfer, grant or assign any participation
under which the participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Credit Document except to the extent such
amendment or waiver would (i) extend the final scheduled maturity of any Loan in
which such participant is participating (it being understood that any waiver of
an installment on, or the application of any prepayment or the method of
application of any prepayment to the amortization of the Loans shall not
constitute an extension of the final scheduled maturity date), or reduce the
rate or extend the time of payment of interest or Fees thereon (except in
connection with a waiver of the applicability of any post-default increase in
interest rates), or reduce the principal amount thereof, or increase such
participant's participating interest in any Revolving Loan Commitment over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Total Revolving Loan
Commitment shall not constitute a change in the terms of any Revolving Loan
Commitment and that an increase in any Revolving Loan Commitment shall be
permitted without the consent of any participant if such participant's
participation is not increased as a result thereof), (ii) release all or
substantially all of the Subsidiary Guarantors from the Subsidiary Guaranty
(except as expressly provided in the Credit Documents) or (iii) in each case
consent to the assignment or transfer by the Company or any other Subsidiaries
of the Company of any of its rights and obligations under this Agreement or any
other Credit Document except in accordance with the terms hereof and thereof.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or a portion
of its Loans and/or Revolving Loan Commitment and its rights and obligations
hereunder to its parent corporation and/or any affiliate of such Bank which is
at least 50% owned by such Bank and/or
-64-
<PAGE>
its parent company and (y) with the consent of the Administrative Agent and the
Company (which consents shall not be unreasonably withheld) any Bank may assign
all or a portion of its Loans and/or Revolving Loan Commitment and its rights
and obligations hereunder to one or more commercial banks or other financial
institutions (including one or more Banks). No assignment pursuant to the
immediately preceding sentence shall (x) to the extent such transaction
represents an assignment to an institution other than one or more Banks
hereunder, be in an aggregate amount less than the minimum of $5,000,000 or (y)
so long as no Default or Event of Default then exists, reduce the Revolving Loan
Commitments and/or Term Loans of the assigning Bank to an aggregate amount less
than the Minimum Retention Amount unless the same are reduced to $0. If any Bank
so sells or assigns all or a part of its rights hereunder, any reference in this
Agreement or the other Credit Documents to such assigning Bank shall thereafter
refer to such Bank and to the respective assignee Bank to the extent of their
respective interests and the respective assignee Bank shall have, to the extent
of such assignment (unless otherwise provided therein), the same rights and
benefits as it would if it were such assigning Bank. Each assignment pursuant to
this Section 11.04(b) shall be effected by the assigning Bank and the assignee
Bank executing an Assignment and Assumption Agreement substantially in the form
of Exhibit F (appropriately completed). At the time of any such assignment,
Annex I shall be deemed to be amended to reflect the Revolving Loan Commitments
of the respective assignee Bank (which shall result in a direct reduction to the
respective Revolving Loan Commitments of the assigning Bank) and of the other
Banks, (ii) the Administrative Agent shall record such assignment and the
resultant effects thereof on the Loans and/or Revolving Loan Commitments of the
assigning Bank and the assignee Bank in the Register and (iii) the
Administrative Agent shall receive from the assigning Bank and/or the assignee
Bank at the time of each assignment the payment of a nonrefundable assignment
fee in an aggregate amount of $3,000 with respect to each such assignment
(provided that in the event of simultaneous assignments relating to this
Agreement and the Additional Credit Agreement, the fees for such assignments
shall total $3,000). Each Bank and the Company agree to execute such documents
(including, without limitation, amendments to this Agreement and the other
Credit Documents) as shall be necessary to effect the foregoing. Promptly
following any assignment pursuant to this Section 11.04(b), the assigning Bank
shall promptly notify the Company thereof. Nothing in this Section 11.04(b)
shall prevent or prohibit any Bank from pledging its Loans or, if issued, Notes
hereunder to a Federal Reserve Bank in support of borrowings made by such Bank
from such Federal Reserve Bank.
(c) Notwithstanding any other provisions of this Section 11.04, no transfer
or assignment of the interests or obligations of any Bank hereunder or any grant
of participations therein shall be permitted if such transfer, assignment or
grant would require the Company to file a registration statement with the SEC or
to qualify the Loans under the "Blue Sky" laws of any State.
11.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
the Administrative Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Company and the Administrative Agent or any Bank shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document
-65-
<PAGE>
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Administrative Agent or any Bank would otherwise have. No
notice to or demand on the Company in any case shall entitle the Company to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or the Banks to
any other or further action in any circumstances without notice or demand.
11.06 PAYMENTS PRO RATA. (a) The Administrative Agent agrees that promptly
after its receipt of each payment from or on behalf of the Company in respect of
any Obligations of the Company hereunder, it shall, except as otherwise provided
in this Agreement, distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its PRO RATA share of such payment) PRO
RATA based upon their respective shares, if any, of the Obligations with respect
to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations of the Company
to such Banks in such amount as shall result in a proportional participation by
all of the Banks in such amount; PROVIDED that if all or any portion of such
excess amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 11.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
11.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by the Company
to the Banks); PROVIDED that except as otherwise specifically provided herein,
all computations determining compliance with Section 7, including definitions
used therein, shall utilize accounting principles and policies in effect at the
time of the preparation of, and in conformity with those used to prepare, the
December 31, 1997 historical financial statements delivered to the Banks
pursuant to Section 6.10(a); PROVIDED FURTHER, that in the event that the
Accounting Standards Executive Committee of the AICPA adopts the statement of
position (substantially in the proposed form as of the Original Effective Date)
relating to computer software developed or obtained for internal use, and the
Company's
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<PAGE>
independent auditors concur with such accounting change as it relates to the
presentation of the Company's financial statements, then compliance with Section
8 will thereafter be determined giving effect to such statement of position.
(b) All computations of interest (other than interest on Base Rate Loans)
and Fees hereunder shall be made on the actual number of days elapsed over a
year of 360 days. All computations of interest on Base Rate Loans hereunder
shall be made on the actual number of days elapsed over a year of 365 days.
11.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. (a) THIS AGREEMENT
AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding with respect
to this Agreement or any other Credit Document may be brought in the courts of
the State of New York or of the United States for the Southern District of New
York, and, by execution and delivery of this Agreement, the Company hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Company hereby
further irrevocably waives any claim that any such courts lack jurisdiction over
the Company, and agrees not to plead or claim, in any legal action or proceeding
with respect to this Agreement or any other Credit Document brought in any of
the aforesaid courts, that any such court lacks jurisdiction over the Company.
The Company irrevocably consents to the service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Company, at its address for notices pursuant to Section
11.03, such service to become effective 30 days after such mailing. The Company
hereby irrevocably waives and agrees not to plead or claim in any action or
proceeding commenced hereunder or under any other Credit Document that service
of process was in any way invalid or ineffective. The Company hereby represents
and warrants that its chief executive office is located at 745 Fifth Avenue, New
York, New York 10151, and the Company hereby further agrees that it shall not
move its chief executive office unless it shall give the Administrative Agent
not less than 30 days' prior written notice of its intention so to do. The
Company agrees that (x) prior to moving its chief executive office outside New
York City and (y) and if for any reason any designee, appointee and agent
previously appointed pursuant to this sentence shall cease to be available to
act as such, the Company shall designate a designee, appointee and agent or
replacement designee, appointee and agent, as the case may be, in New York City
on the terms and for the purposes of this provision satisfactory to the
Administrative Agent. Nothing herein shall affect the right of the
Administrative Agent, any Bank or the holder of any Note to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Company in any other jurisdiction.
(b) The Company hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or
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<PAGE>
claim in any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
11.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts executed by all the parties hereto shall be lodged with the Company
and the Administrative Agent.
11.10 EFFECTIVENESS. This Agreement shall become effective on the date (the
"Effective Date") on which the Company, the Administrative Agent and each of the
Banks shall have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent at its Notice Office
or, in the case of the Banks, shall have given to the Administrative Agent
telephonic (confirmed in writing), written or facsimile notice (actually
received) at such office that the same has been signed and mailed to it. The
Administrative Agent will give the Company and each Bank prompt written notice
of the occurrence of the Effective Date.
11.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
11.12 AMENDMENT OR WAIVER. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Company and the Required Banks; PROVIDED that no such change,
waiver, discharge or termination shall, without the consent of each Bank (other
than a Defaulting Bank) affected thereby, (i) extend the final scheduled
maturity of any Loan (it being understood that any waiver of the application of
any prepayment of or the method of application of any prepayment to the
amortization of the Loans shall not constitute any such extension), or reduce
the rate or extend the time of payment of interest (other than as a result of
waiving the applicability of any post-default increase in interest rates) or
Fees thereon, or reduce the principal amount thereof, or increase the Revolving
Loan Commitments of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
repayment or reduction in the Total Revolving Loan Commitment shall not
constitute a change in the terms of any Commitment of any Bank), (ii) release
all or substantially all of the Subsidiary Guarantors from the Subsidiary
Guaranty (except as expressly provided in the Credit Documents) and (iii) amend,
modify or waive any provision of this Section, or Section 1.10, 1.11, 3.04,
8.01, 10.07, 11.01, 11.02, 11.04, 11.06 or 11.07(b), (iv) reduce the percentage
specified in, or otherwise modify, the definition of, Required Banks, or (v)
consent to the assignment or transfer by any Credit Party of any of its rights
and obligations under this Agreement or any other Credit Document except in
accordance with the terms hereof or thereof. No provision of Section 11 may be
amended without the consent of the Administrative Agent.
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<PAGE>
11.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 3.04, 10.07 or 11.01, shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans and the satisfaction of all other Obligations.
11.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans at, to
or for the account of any branch office, subsidiary or affiliate of such Bank,
provided, that the Company shall not be responsible for costs arising under
Sections 1.10, 1.11 or 3.04 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent such costs would not otherwise
be applicable to such Bank in the absence of such transfer.
11.15 CONFIDENTIALITY. Each of the Banks agrees that it will use its best
efforts not to disclose without the prior consent of the Company (other than to
its employees, auditors, counsel or other professional advisors, to affiliates
or to another Bank if the Bank or such Bank's holding or parent company in its
sole discretion determines that any such party should have access to such
information) any information with respect to the Company or any of its
Subsidiaries which is furnished pursuant to this Agreement and which is
designated by the Company to the Banks in writing as confidential, PROVIDED that
any Bank may disclose any such information (a) as has become generally available
to the public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state, provincial or Federal regulatory
body having or claiming to have jurisdiction over such Bank or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States or elsewhere) or their successors,
(c) as may be required or appropriate in response to any summons or subpoena or
in connection with any litigation, (d) in order to comply with any law, order,
regulation or ruling applicable to such Bank, and (e) to any prospective
transferee in connection with any contemplated transfer of any of the Loans
and/or Revolving Loan Commitments or any interest herein by such Bank, PROVIDED
that such prospective transferee agrees to be bound by the provisions of this
Section.
11.16 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
* * *
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
Address:
745 Fifth Avenue
New York, NY 10151 PRIMEDIA INC.
Telephone No.: (212) 745-0101
Telecopier No.: (212) 745-0199 By
Attention: Beverly Chell, Esq. -----------------------------------
Title:
THE CHASE MANHATTAN
BANK, Individually
and as Administrative Agent
By
-----------------------------------
Title:
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<PAGE>
BANKERS TRUST COMPANY,
Individually and as
Co-Syndication Agent
By
-----------------------------------
Title:
THE BANK OF NEW YORK,
Individually and as
Co-Syndication Agent
By
-----------------------------------
Title:
THE BANK OF NOVA SCOTIA,
Individually, as Canadian Lender
and as Documentation Agent
By
-----------------------------------
Title:
BANK OF AMERICA NT&SA
By
-----------------------------------
Title:
NATIONSBANK OF TEXAS, N.A.
By
-----------------------------------
Title:
UNION BANK OF CALIFORNIA
By
-----------------------------------
Title:
-71-
<PAGE>
SOCIETE GENERALE, NEW YORK
BRANCH
By
-----------------------------------
Title:
BANK OF MONTREAL, CHICAGO BRANCH
By
-----------------------------------
Title:
BANK OF HAWAII
By
-----------------------------------
Title:
PNC BANK, NATIONAL ASSOCIATION
By
-----------------------------------
Title:
-72-
<PAGE>
ANNEX I
LIST OF BANKS
Bank Revolving Loan
---- Commitment
----------
The Chase Manhattan Bank $ 20,000,000
Bank of America NT&SA 20,000,000
The Bank of New York 20,000,000
The Bank of Nova Scotia 20,000,000
Bankers Trust Company 20,000,000
Union Bank of California, N.A. 10,000,000
Societe Generale, New York Branch 10,000,000
Bank of Montreal, Chicago Branch 10,000,000
Bank of Hawaii 10,000,000
PNC Bank, National Association 10,000,000
Total $150,000,000
============
<PAGE>
ANNEX II
BANK ADDRESSES
--------------
Bank Address
- ---- -------
The Chase Manhattan Bank, N.A. 270 Park Avenue
New York, New York 10017
Telephone No.: (212) _______
Telecopier No.: (212) _______
Attention:
Bankers Trust Company One Bankers Trust Plaza
New York, New York 10006
Telephone No.: (212) 250-1724
Telecopier No.: (212) 250-7218
Attention: Gregory Shefrin
The Bank of New York 1 Wall Street
16th Floor
New York, New York 10286
Telephone No.: (212) 635-8608
Telecopier No.: (212) 635-8595
Attention: Ted Ryan
Bank of Nova Scotia One Liberty Plaza,
26th Floor
New York, New York 10006
Telephone No.: (212) 225-5042
Telecopier No.: (212) 225-5090
Attention: Vincent Fitzgerald
Canadian Notice Office and Canadian
Payment Office:
International Banking Division
Loan Administration and Agency Services
44 Kings Street West, 14th Floor
Toronto, Ontario
Canada M5H 1H1
Telephone No.: (416) 866-5901/2816/4089
Telecopier No.: (416) 866-5991
Attention: Wallace Yeung/
Nancy Buccat/Nancy Tong
<PAGE>
Bank of America NT&SA 335 Madison Avenue
5th Floor
New York, New York 10017
Telephone No.: (212) 503-7980
Telecopier No.: (212) 503-7173
Attention: Thomas J. Kane
NationsBank of Texas, N.A. Bank of America
Entertainment/Media Group
335 Madison Avenue
New York, New York 10017
Telephone No.: (212) 503-7980
Telecopier No.: (212) 503-7173
Attention: Thomas J. Kane
Union Bank of California, N.A. 445 South Figueroa Street
15th Floor
Los Angeles, California 90071
Telephone No.: (213) 236-5812
Telecopier No.: (213) 236-5747
Attention: Michael K. McShane
Societe Generale, 1221 Avenue of the Americas
New York Branch New York, New York 10020
Telephone No.: (212) 278-6852
Telecopier No.: (212) 278-6240
Attention: Elaine Khalil
Bank of Montreal, 430 Park Avenue
Chicago Branch New York, New York 10022
Telephone No.: (212) 605-1438
Telecopier No.: (212) 605-1648
Attention: Naghmeh Hashemifard
Bank of Hawaii 1850 North Central Avenue
Suite 400
Phoenix, Arizona 85004
Telephone No.: (602) 257-2485
Telecopier No.: (602) 257-2235
Attention: Eric Pelletier
PNC Bank, National Association 1600 Market Street
21st Floor
Philadelphia, Pennsylvania 19103
Telephone No.: (215) 585-5165
Telecopier No.: (215) 585-6680
Attention: John Iadanza
<PAGE>
ANNEX III
SUBSIDIARIES
------------
<PAGE>
ANNEX IV
LIENS
-----
<PAGE>
ANNEX V
PART A. EXISTING DEBT
[To include existing Senior Notes and Non-Compete Notes]
PART B. EXISTING CONTINGENT OBLIGATIONS
<PAGE>
ANNEX VI
EXISTING PREFERRED STOCK
------------------------
<PAGE>
EXHIBIT A
FORM OF NOTICE OF BORROWING
---------------------------
[Date]
The Chase Manhattan Bank,
as Administrative Agent for the
Banks party to the Credit Agreement
referred to below
270 Park Avenue
New York, New York 10017
Attention: ____________________
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, dated as of March 11, 1999
(as amended, modified or supplemented from time to time, the "Credit Agreement,"
the terms defined therein being used herein as therein defined), among PRIMEDIA
Inc., certain Banks from time to time party thereto, The Bank of New York and
Bankers Trust Company, as Co-Syndication Agents, The Bank of Nova Scotia, as
Documentation Agent, and you, as Administrative Agent for such Banks, and hereby
gives you irrevocable notice, pursuant to Section 1.03 of the Credit Agreement,
that the undersigned hereby requests a Borrowing under the Credit Agreement, and
in that connection sets forth below the information relating to such Borrowing
(the "Proposed Borrowing") as required by Section 1.03 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ________, 19__.1
(ii) The aggregate principal amount of the Proposed Borrowing is
$_____________.
(iii) The Proposed Borrowing is to consist of [Base Rate Loans]
[Eurodollar Loans].
[(iv) The initial Interest Period for the Proposed Borrowing is ___
months.]2
- ----------
1 A Notice of Borrowing must be given at least one Business Day prior to the
date of the Proposed Borrowing in the case of Base Rate Loans and three
Business Days prior to the date of the Proposed Borrowing in the case of
Eurodollar Loans.
2 To be included for a Proposed Borrowing of Eurodollar Loans.
<PAGE>
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit Agreement or
the other Credit Documents are and will be true and correct in all material
respects, before and after giving effect to the Proposed Borrowing and to the
application of the proceeds thereof, as though made on and as of such date,
unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date; and
(B) no Default or Event of Default has occurred and is continuing, or would
result from such Proposed Borrowing or from the application of the proceeds
thereof.
Very truly yours,
PRIMEDIA Inc.
By
----------------------------
Title:
<PAGE>
EXHIBIT B-1
[FORM OF OPINION OF SIMPSON, THACHER & BARTLETT]
<PAGE>
EXHIBIT B-2
[FORM OF OPINION OF BEVERLY C. CHELL, ESQ.,
COUNSEL TO THE CREDIT PARTIES]
<PAGE>
EXHIBIT B-3
__________, 19___
To: The Administrative Agent and various lending
institutions (collectively, the "Banks") party
to the Credit Agreement referred to below
Re: Credit Agreement, dated as March 11, 1999 (the "Credit Agreement"), among
PRIMEDIA Inc. (the "Borrower"), the Banks, The Bank of New York and Bankers
Trust Company, as Co-Syndication Agents, The Bank of Nova Scotia, as
Documentation Agent, and The Chase Manhattan Bank, as Administrative Agent
(the "Administrative Agent") for the Banks
Ladies and Gentlemen:
We have acted as special counsel to the Administrative Agent under the
Credit Agreement in connection with the execution and delivery of the Credit
Agreement. This opinion is delivered to you pursuant to Section 4.03(iii) of the
Credit Agreement. Unless otherwise defined herein, all capitalized terms used
herein shall have the respective meanings set forth in the Credit Agreement.
In connection with this opinion, we have examined the originals, or
certified, conformed or reproduction copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinions hereinafter expressed. In stating our opinion, we have assumed
the genuineness of all signatures on original or certified copies, the
authenticity of documents submitted to us as originals and the conformity to
original or certified copies of all copies submitted to us as certified or
reproduction copies.
We have also assumed, for purposes of the opinions expressed herein, that
the parties to the Credit Agreement have the corporate power and authority to
enter into and perform the Credit Agreement and that the Credit Agreement has
been duly authorized, executed and delivered by each such party.
<PAGE>
Exhibit B-3
Page 2
Based upon the foregoing, and subject to the limitations set
forth herein, we are of the opinion that the Credit Agreement constitutes the
legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by equity principles (regardless of
whether enforcement is sought in equity or at law).
We have not been requested to render and, with your
permission, we express no opinion as to the applicability to the obligations of
the Borrower under the Credit Agreement of Section 548 of the Bankruptcy Code
and Article 10 of the New York Debtor & Creditor Law relating to fraudulent
transfers and obligations.
This opinion is limited to the federal law of the United
States of America and the laws of the State of New York.
Very truly yours,
<PAGE>
EXHIBIT C
[NAME OF COMPANY OR SUBSIDIARY GUARANTOR]
Officers' Certificate
I, the undersigned, [Chairman/Vice Chairman/President/Vice-President] of
[NAME OF THE COMPANY OR SUBSIDIARY GUARANTOR], a corporation organized and
existing under the laws of _______________ (the "Company"), DO HEREBY CERTIFY on
behalf of the Company that:
1. This Certificate is furnished pursuant to Section 4.04 of the Credit
Agreement, dated as of March 11, 1999 among PRIMEDIA Inc., the Banks from time
to time party thereto, The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, The Bank of Nova Scotia, as Documentation Agent, and The
Chase Manhattan Bank, as Administrative Agent (such Credit Agreement, as in
effect on the date of this Certificate, being herein called the "Credit
Agreement"). Unless otherwise defined herein capitalized terms used in this
Certificate shall have the meanings assigned to those terms in the Credit
Agreement.
2. The persons named below have been duly elected, have duly qualified and,
as of and at all times since _____________3 (to and including the date hereof)
have been officers of the Company, holding the respective offices below set
opposite their names, and the signatures below set opposite their names are
their genuine signatures.
NAME4 OFFICE SIGNATURE
----- ------ ---------
---------- ---------- ----------
---------- ---------- ----------
3. Attached hereto as Exhibit A is a certified copy of the Certificate of
Incorporation of the Company as filed with the relevant state governmental
authority on the date indicated on such copy, together with all amendments
thereto adopted through the date hereof.
4. Attached hereto as Exhibit B is a true and correct copy of the By-Laws
of the Company as in effect on _______, together with all amendments thereto
adopted through the date hereof.
5. Attached hereto as Exhibit C is a true and correct copy of resolutions
duly adopted by the Board of
- ----------
3 Insert a date prior to the time of any corporate action relating to the
Credit Agreement.
4 Include name, office and signature of each officer who will sign any Credit
Document, including the officer who will sign the certification at the end
of this certificate.
<PAGE>
Directors of the Company by unanimous written consent of the Board of Directors
of the Company, which resolutions have not been revoked, modified, amended or
rescinded and are still in full force and effect. Except as attached hereto as
Exhibit C, no resolutions have been adopted by the Board of Directors of the
Company which deal with the execution, delivery or performance of any of the
Credit Documents.
[6. The Subordinated Exchange Debentures have not been issued as of the
date hereof.
7. The Company currently has no direct or indirect Unrestricted
Subsidiaries.]5
[8.] On the date hereof, the representations and warranties contained in
the Credit Agreement or the other Credit Documents are true and correct in all
material respects, both before and after giving effect to each Revolving Loan to
be made on the date hereof and the application of the proceeds thereof, unless
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date.
[9.] On the date hereof, no Default or Event of Default has occurred and is
continuing or would result from the Revolving Loans to be made on the date
hereof or from the application of the proceeds thereof.
[10.] I know of no proceeding for the dissolution or liquidation of the
Company or threatening its existence.
- ----------
5 Insert paragraphs 6 and 7 in Certificate for K-III Communications
Corporation only.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
_____________, 19__.
[Name of Company]
-------------------------------
Name:
Title:
I, the undersigned, [SECRETARY/ASSISTANT SECRETARY] of the Company, DO HEREBY
CERTIFY that:
1. [Insert name of Person making the above certifications] is the duly
elected and qualified ___________ of the Company and the signature above is
[his/her] genuine signature.
2. The certifications made by [name] in items 2, 3, 4 and 5 above are true
and correct.
3. I know of no proceeding for the dissolution or liquidation of the
Company or threatening its existence.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
____________, 19__.
[Name of Company]
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT D
SUBSIDIARY GUARANTY
GUARANTY, dated as of _________, 19_____, made by the undersigned (each a
"Guarantor" and together with any other entity that becomes a party hereto
pursuant to Section 26 hereof, the "Guarantors"). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement (as hereinafter
defined) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, PRIMEDIA Inc. (the "Company"), various financial institutions (the
"Banks"), The Bank of New York and Bankers Trust Company, as Co-Syndication
Agents, The Bank of Nova Scotia, as Documentation Agent, and The Chase Manhattan
Bank, as Administrative Agent (the "Administrative Agent"), have entered into a
Credit Agreement, dated as of March 11, 1999 (as amended, modified or
supplemented from time to time, the "Credit Agreement"), providing for the
making of Loans as contemplated therein (the Banks, the Co-Syndication Agents,
the Documentation Agent and the Administrative Agent herein called the "Bank
Creditors");
WHEREAS, on the date hereof the Company is a party to certain Interest Rate
Protection Agreements with one or more Banks and/or an affiliate of one or more
Banks and in the future the Company may enter into one or more additional
Interest Rate Protection Agreements with one or more Banks and/or an affiliate
of one or more Banks (any such Bank or affiliate of a Bank party to any such
Interest Rate Protection Agreement (even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason) and their
subsequent assigns, if any, herein called an "Interest Rate Protection
Creditor", and all Interest Rate Protection Creditors, together with the Bank
Creditors, collectively herein called the "Creditors");
WHEREAS, the Company owns, directly or indirectly, 100% of the capital
stock of each Guarantor;
WHEREAS, it is a condition precedent to the making of Loans under the
Credit Agreement that each Guarantor shall have executed and delivered this
Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans
by the Company under the Credit Agreement and, accordingly, desires to execute
this Guaranty in order to satisfy the conditions described in the preceding
paragraph and to induce the Banks to make Loans to the Company;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each
<PAGE>
Exhibit D
Page 2
Guarantor hereby makes the following representations and warranties to the
Creditors and hereby covenants and agrees with each Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably and unconditionally,
guarantees (i) to the Bank Creditors the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of (x) the
principal of and interest on the Loans made to (and to the extent issued, the
Notes issued by) the Company under the Credit Agreement and (y) all other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Company to the Bank Creditors under the Credit Agreement (including,
without limitation, indemnities, Fees and interest thereon) now existing or
hereafter incurred under, arising out of or in connection with the Credit
Agreement or any other Credit Document and the due performance and compliance
with the terms of the Credit Documents by the Company (all such principal,
interest, liabilities and obligations being herein collectively called the
"Credit Agreement Obligations") and (ii) to each Interest Rate Protection
Creditor the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities owing by the Company under any Interest Rate
Protection Agreements, whether now in existence or hereafter arising, and the
due performance and compliance by the Company with all terms, conditions and
agreements contained therein (all such obligations and liabilities being herein
collectively called the "Interest Rate Protection Obligations", and together
with the Credit Agreement Obligations, collectively, the "Guaranteed
Obligations"). Each Guarantor understands, agrees and confirms that the
Creditors may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against each Guarantor without proceeding against any other
Guarantor or the Company, against any security for the Guaranteed Obligations,
or under any other guaranty covering all or a portion of the Guaranteed
Obligations. All payments by each Guarantor under this Guaranty shall be made on
the same basis as payments by the Company under Sections 3.03 and 3.04 of the
Credit Agreement.
2. Additionally, each Guarantor, jointly and severally, unconditionally and
irrevocably, guarantees the payment of any and all Guaranteed Obligations of the
Company to the Creditors whether or not due or payable by the Company upon the
occurrence in respect of the Company of any of the events specified in Section
8.05 of the Credit Agreement, and unconditionally and irrevocably, jointly and
severally, promises to pay such Guaranteed Obligations to the Creditors, or
order, on demand, in lawful money of the United States.
3. The liability of each Guarantor hereunder is exclusive and independent
of any security for or other guaranty of the indebtedness of the Company whether
executed by such Guarantor, any other Guarantor, any other guarantor or by any
other party, and the liability of each Guarantor hereunder shall not be affected
or impaired by (a) any direction as to application of payment by the Company or
by any other party, (b) any other continuing or other guaranty, undertaking or
maximum liability of a guarantor or of any other party as to the indebtedness of
the Company, (c) any payment on or in reduction of any such other guaranty or
undertaking, (d) any dissolution, termination or increase, decrease or change in
personnel by the Company or (e) any payment made to any Creditor on the
indebtedness which any Creditor repays the Company
<PAGE>
Exhibit D
Page 3
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding.
4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor or the Company, and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor, any other
guarantor or the Company and whether or not any other Guarantor, any other
guarantor or the Company be joined in any such action or actions. Each Guarantor
waives, to the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof. Any
payment by the Company or other circumstance which operates to toll any statute
of limitations as to the Company shall operate to toll the statute of
limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this Guaranty and
notice of any liability to which it may apply, and waives promptness, diligence,
presentment, demand of payment, protest, notice of dishonor or nonpayment of any
such liabilities, suit or taking of other action by the Administrative Agent or
any other Creditor against, and any other notice to, any party liable thereon
(including such Guarantor or any other guarantor).
6. Any Creditor may at any time and from time to time without the consent
of, or notice to, any Guarantor, without incurring responsibility to such
Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise deal
with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against the Company
or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Company to creditors of such Company;
<PAGE>
Exhibit D
Page 4
(e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Company to the Creditors regardless of what
liabilities of the Company remain unpaid;
(f) consent to or waive any breach of, or any act, omission or default
under, any of the Interest Rate Protection Agreements, the Credit Documents
or any of the instruments or agreements referred to therein, or otherwise
amend, modify or supplement any of the Interest Rate Protection Agreements,
the Credit Documents or any of such other instruments or agreements; and/or
(g) act or fail to act in any manner referred to in this Guaranty
which may deprive such Guarantor of its right to subrogation against the
Company to recover full indemnity for any payments made pursuant to this
Guaranty.
7. No invalidity, irregularity or unenforceability of all or any part of
the Guaranteed Obligations or of any security therefor shall affect, impair or
be a defense to this Guaranty, and this Guaranty shall be primary, absolute and
unconditional notwithstanding the occurrence of any event or the existence of
any other circumstances which might constitute a legal or equitable discharge of
a surety or guarantor except payment in full of the Guaranteed Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any Guarantor
in any case shall entitle such Guarantor to any other further notice or demand
in similar or other circumstances or constitute a waiver of the rights of any
Creditor to any other or further action in any circumstances without notice or
demand. It is not necessary for any Creditor to inquire into the capacity or
powers of the Company or any of their Subsidiaries or the officers, directors,
partners or agents acting or purporting to act on their behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
9. Any indebtedness of the Company now or hereafter held by any Guarantor
is hereby subordinated to the indebtedness of the Company to the Creditors; and
such indebtedness of the Company to any Guarantor, if the Administrative Agent,
after an Event of Default has occurred, so requests, shall be collected,
enforced and received by such Guarantor as trustee for the Creditors and be paid
over to the Creditors on account of the indebtedness of the Company to the
Creditors, but without affecting or impairing in any manner the liability of
such Guarantor under the other provisions of this Guaranty. Prior to the
transfer by any Guarantor of any note or negotiable instrument evidencing any
indebtedness of the Company to such Guarantor, such Guarantor shall mark such
note or negotiable instrument with a legend that the
<PAGE>
Exhibit D
Page 5
same is subject to this subordination. Without limiting the generality of the
foregoing, each Guarantor hereby agrees with the Creditors that it will not
exercise any right of subrogation which it may at any time otherwise have as a
result of this Guaranty (whether contractual, under Section 509 of the
Bankruptcy Code or otherwise) until the Total Revolving Loan Commitment has
terminated and all Guaranteed Obligations have been irrevocably paid in full in
cash.
10. (a) Each Guarantor waives any right (except as shall be required by
applicable statute and cannot be waived) to require the Creditors to (A) proceed
against the Company, any other Guarantor, any other guarantor or any other
party, (B) proceed against or exhaust any security held from the Company, any
other Guarantor, any other guarantor or any other party or (C) pursue any other
remedy in the Creditors' power whatsoever. Each Guarantor waives any defense
based on or arising out of any defense of the Company, any other Guarantor, any
other guarantor or any other party other than payment in full of the Guaranteed
Obligations, including without limitation any defense based on or arising out of
the disability of the Company, any other Guarantor, any other guarantor or any
other party, or the unenforceability of the Guaranteed Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of the
Company other than payment in full of the Guaranteed Obligations. The Creditors
may, at their election, foreclose on any security held by the Administrative
Agent or the other Creditors by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent such sale is permitted by applicable law), or exercise any other right or
remedy the Creditors may have against the Company or any other party, or any
security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. Each Guarantor waives any defense arising out of any such election
by the Creditors, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of such Guarantor
against the Company or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Company's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
11. The Creditors agree that this Guaranty may be enforced only by the
action of the Administrative Agent acting upon the instructions of the Required
Banks and that no Creditor shall have any right individually to seek to enforce
or to enforce this Guaranty, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent for the benefit of the
Creditors upon the terms of this Guaranty. The Creditors further agree that this
Guaranty may not be enforced against any director, officer, employee or
stockholder of any Guarantor.
<PAGE>
Exhibit D
Page 6
12. In order to induce the Banks to make Loans pursuant to the Credit
Agreement, and in order to induce the Interest Rate Protection Creditors to
execute, deliver and perform the Interest Rate Protection Agreements, each
Guarantor represents, warrants and covenants that:
(a) Such Guarantor and each of its Restricted Subsidiaries (i) is a
duly organized and validly existing corporation under the laws of the
jurisdiction of its incorporation and has the corporate power and authority
to own its property and assets and to transact the business in which it is
engaged and presently proposes to engage (ii) is in good standing under the
laws of the jurisdiction of its organization and (iii) is duly qualified
and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified, except, in the case
of clauses (ii) and (iii) above, for such failures to be in good standing
and failures to be so qualified which, in the aggregate, would not have a
material adverse effect on the condition (financial or otherwise),
operations, assets, liabilities or prospects of the Company and its
Restricted Subsidiaries taken as a whole.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and has
taken all necessary corporate action to authorize the execution, delivery
and performance by it of this Guaranty. Such Guarantor has duly executed
and delivered this Guaranty, and this Guaranty constitutes the legal, valid
and binding obligation of such Guarantor enforceable in accordance with its
terms, except to the extent that the enforceability hereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty, nor compliance by it with the terms and provisions
hereof, (i) will contravene in any material respect any applicable
provision of any law, statute, rule or regulation or any order, writ,
injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of such
Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or
other material agreement or instrument to which such Guarantor or any of
its Subsidiaries is a party or by which it or any of its property or assets
is bound or to which it may be subject or (iii) will violate any provision
of the Certificate of Incorporation or By-Laws of such Guarantor or any of
its Subsidiaries.
(d) No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the
execution, delivery and performance of this Guaranty, or (ii) the
<PAGE>
Exhibit D
Page 7
legality, validity, binding effect or enforceability of this Guaranty,
except those which have been obtained or made.
13. Each Guarantor covenants and agrees that on and after the date hereof
and until the termination of the Total Revolving Loan Commitment and all
Interest Rate Protection Agreements and when no Note remains outstanding and all
Guaranteed Obligations have been paid in full, such Guarantor shall take, or
will refrain from taking, as the case may be, all actions that are necessary to
be taken or not taken so that no violation of any provision, covenant or
agreement contained in Section 6 or 7 of the Credit Agreement, and so that no
Event of Default, is caused by the actions of such Guarantor or any of its
Subsidiaries.
14. The Guarantors hereby jointly and severally agree to pay all reasonable
out-of-pocket costs and expenses (x) of each Creditor in connection with the
enforcement of this Guaranty and, after an Event of Default shall have occurred
and be continuing, the protection of such Creditor's rights hereunder and (y) of
the Administrative Agent in connection with any amendment, waiver or consent
relating hereto (including, without limitation, the reasonable fees and
disbursements of counsel (including in-house counsel) employed by any of the
Creditors or by the Administrative Agent, as the case may be).
15. This Guaranty shall be binding upon each Guarantor and its successors
and assigns and shall inure to the benefit of the Creditors and their successors
and assigns.
16. Neither this Guaranty nor any provision hereof may be changed, waived,
discharged or terminated except with the written consent of the Required Banks
(or to the extent required by Section 11.12 of the Credit Agreement, with the
written consent of each Bank) and each Guarantor affected thereby (it being
understood that the addition or release of any Guarantor hereunder shall not
constitute a change, waiver, discharge or termination affecting any Guarantor
other than the Guarantor so added or released).
17. Each Guarantor acknowledges that an executed (or conformed) copy of
each of the Credit Documents has been made available to its principal executive
officers and such officers are familiar with the contents thereof.
18. In addition to any rights now or hereafter granted under applicable law
(including, without limitation, Section 151 of the New York Debtor and Creditor
Law) and not by way of limitation of any such rights, upon the occurrence and
during the continuance of an Event of Default (such term to mean and include any
"Event of Default" as defined in the Credit Agreement or any payment default
under any Interest Rate Protection Agreement continuing after any applicable
grace period), each Creditor is hereby authorized at any time or from time to
time, without notice to any Guarantor or to any other Person, any such notice
being expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other indebtedness at any time held or
owing by such Creditor to or for the credit or the account of such Guarantor,
against and on account of the obligations and liabilities of such Guarantor to
such Creditor under this Guaranty, irrespective of whether or not such Creditor
shall have made any demand hereunder and although said obligations, liabilities,
deposits or claims, or any of them, shall be contingent or unmatured.
<PAGE>
Exhibit D
Page 8
19. All notices, requests, demands or other communications pursuant hereto
shall be deemed to have been duly given or made when delivered to the Person to
which such notice, request, demand or other communication is required or
permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Bank Creditor, as provided in the Credit Agreement, (ii)
in the case of any Guarantor, at its address set forth opposite its signature
below and (iii) in the case of any Interest Rate Protection Creditor, at such
address as such Interest Rate Protection Creditor shall have specified in
writing to the Guarantors; or in any case at such other address as any of the
Persons listed above may hereafter notify the others in writing.
20. If claim is ever made upon any Creditor for repayment or recovery of
any amount or amounts received in payment or on account of any of the Guaranteed
Obligations and any of the aforesaid payees repays all or part of said amount by
reason of (a) any judgment, decree or order of any court or administrative body
having jurisdiction over such payee or any of its property or (b) any settlement
or compromise of any such claim effected by such payee with any such claimant
(including the Company), then and in such event each Guarantor agrees that any
such judgment, decree, order, settlement or compromise shall be binding upon
such Guarantor, notwithstanding any revocation hereof or of any other instrument
evidencing any liability of the Company, and such Guarantor shall be and remain
liable to the aforesaid payees hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by any
such payee.
21. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE CREDITORS AND OF
THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to
this Guaranty or any other Credit Document may be brought in the courts of the
State of New York or of the United States of America for the Southern District
of New York, and, by execution and delivery of this Guaranty, each Guarantor
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts and hereby irrevocably
waives any right it may have to object to the laying of venue of any such action
or proceeding in the aforesaid courts and hereby further irrevocably waives and
agrees not to plead or claim that any such action or proceeding has been brought
in an inconvenient forum. Each Guarantor irrevocably consents to the service of
process in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to each Guarantor at its address
set forth opposite its signature below; such service to become effective 30 days
after such mailing. Each Guarantor hereby irrevocably waives and agrees not to
plead or claim in any action or proceeding commenced hereunder or under any
other Credit Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any of the Creditors to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Guarantor in any other
jurisdiction.
22. In the event that (x) all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 7.02 of the Credit Agreement (or such sale or other
disposition has been approved in writing by the
<PAGE>
Exhibit D
Page 9
Required Banks (or all Banks if required by Section 11.12 of the Credit
Agreement)) and the proceeds of such sale, disposition or liquidation are
applied in accordance with the provisions of the Credit Agreement, to the extent
applicable, or (y) the Company designates any Guarantor which is a
Partially-Owned Restricted Subsidiary as an Excluded Domestic Restricted
Subsidiary by making a Non-Guarantor Designation with respect to such Guarantor
in accordance with the terms of the Credit Agreement, such Guarantor shall be
released from this Guaranty and this Guaranty shall, as to each such Guarantor
or Guarantors, terminate, and have no further force or effect (it being
understood and agreed that the sale of any Person that owns, directly or
indirectly, the capital stock of any Guarantor shall be deemed to be a sale of
such Guarantor for the purposes of this Section 22).
23. This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Guarantors and the Administrative
Agent.
24. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
25. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense.
26. At each time that (x) each Restricted Subsidiary of the Company is
formed or acquired after the Initial Borrowing Date except, with respect to any
newly formed or acquired Partially-Owned Restricted Subsidiary, to the extent
the Company shall have made a Non-Guarantor Designation as to such
Partially-Owned Restricted Subsidiary or (y) any Excluded Domestic Restricted
Subsidiary is designated by the Company as a Subsidiary Guarantor, in each case,
in accordance with the terms of the Credit Agreement, it shall (unless otherwise
agreed in writing by the Required Banks, or to the extent required by Section
11.12 of the Credit Agreement, by all of the Banks) upon execution of a
counterpart of this Guaranty or of a Subsidiary Assumption Agreement become a
Guarantor for all purposes of this Guaranty.
* * *
<PAGE>
Exhibit D
Page 10
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed
and delivered as of the date first above written.
<TABLE>
<CAPTION>
Address for Each Guarantor
- --------------------------
<S> <C>
745 Fifth Avenue AMERICAN GUIDANCE SERVICE, INC.
New York, New York 10151 AMERICAN HEAT VIDEO PRODUCTIONS, INC.
Attention: Beverly Chell, Esq. THE APARTMENT GUIDE OF NASHVILLE, INC.
ARGUS PUBLISHERS CORPORATION
Telephone No.: (212) 745-0101 BACON'S INFORMATION, INC.
Telecopier No.: (212) 745-0199 BANKERS CONSULTING COMPANY
BOWHUNTER MAGAZINE, INC.
CAMBRIDGE RESEARCH GROUP, LTD.
CANOE & KAYAK, INC.
CARDINAL BUSINESS MEDIA, INC.
CARDINAL BUSINESS MEDIA HOLDINGS, INC.
CHANNEL ONE COMMUNICATIONS CORP.
CLIMBING, INC.
COMMCORP, LLC
COVER CONCEPTS MARKETING SERVICES, LLC
COWLES BUSINESS MEDIA, INC.
COWLES ENTHUSIAST MEDIA, INC.
COWLES HISTORY GROUP, INC.
CSK PUBLISHING COMPANY INCORPORATED
CUMBERLAND PUBLISHING, INC.
THE ELECTRONICS SOURCE BOOK, INC.
EXCELLENCE IN TRAINING CORPORATION
FILMS FOR THE HUMANITIES & SCIENCES, INC.
FUNK & WAGNALLS YEARBOOK CORP.
GARETH STEVENS, INC.
GO LO ENTERTAINMENT, INC.
GUINN COMMUNICATIONS, INC.
HAAS PUBLISHING COMPANIES, INC.
HEALTH & SCIENCES NETWORK, INC.
HORSE & RIDER, INC.
INTERMODEL PUBLISHING COMPANY, LTD.
IDTN LEASING CORPORATION
INDUSTRIAL TRAINING SYSTEMS CORPORATION
INTELLICHOICE, INC.
KITPLANES ACQUISITION COMPANY
LAW ENFORCEMENT TELEVISION NETWORK, INC.
LIFETIME LEARNING SYSTEMS, INC.
LITTLE ROCK APARTMENT GUIDE, INC.
LOCKERT JACKSON & ASSOCIATES, INC.
<PAGE>
Exhibit D
Page 11
LOW RIDER PUBLISHING GROUP, INC.
MADDUX PUBLISHING, INC.
MCMULLEN ARGUS PUBLISHING, INC.
MEMPHIS APARTMENT GUIDE, INC.
MIRAMAR COMMUNICATIONS, INC.
PICTORAL, INC.
PLAZA COMMUNICATIONS, INC.
PRIMEDIA HOLDINGS III INC.
PRIMEDIA INFORMATION INC.
PRIMEDIA INTERTEC CORPORATION
PRIMEDIA MAGAZINES INC.
PRIMEDIA MAGAZINE FINANCE INC.
PRIMEDIA REFERENCE INC.
PRIMEDIA SPECIAL INTEREST PUBLICATIONS INC.
PRIMEDIA VENTURES, INC.
PRIMEDIA WORKPLACE LEARNING, INC.
QWIZ, INC.
R.E.R. PUBLISHING CORPORATION
RETAILVISION, INC.
SIMBA INFORMATION
SOUTHWEST ART, INC.
SYMBOL OF EXCELLENCE PUBLISHERS, INC.
TEL-A-TRAIN, INC.
THE VIRTUAL FLYSHOP, INC.
TI-IN ACQUISITION CORPORATION
TSECRP, INC.
VEGETARIAN TIMES, INC.
WEEKLY READER CORPORATION
WESCOTT COMMUNICATIONS MICHIGAN, INC.
WESTCOTT ECI, INC.
WESTERN EMPIRE PUBLICATIONS, INC.
</TABLE>
By
-------------------------------
Title
Accepted and Agreed to:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By
-----------------------------------
Title:
<PAGE>
EXHIBIT E
CONTRIBUTION AGREEMENT
----------------------
CONTRIBUTION AGREEMENT, dated as of _______, 19___, among each of the
Subsidiary Guarantors (as defined in the Credit Agreement referred to below) of
PRIMEDIA Inc. (the "Company") listed on the signature pages hereto (each a
"Guarantor" and together with any other entity that becomes a party hereto
pursuant to Section 11 hereof, the "Guarantors"). As used herein, the term
"Contributor" shall mean each of the Guarantors required to make any payment to
any other Guarantor pursuant to Section 1 of this Contribution Agreement. Except
as otherwise defined herein, capitalized terms used herein and not otherwise
defined shall have the meaning assigned to those terms in the Credit Agreement
(as hereinafter defined).
W I T N E S S E T H :
WHEREAS, the Company, various lending institutions from time to time party
thereto (the "Banks"), The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, The Bank of Nova Scotia, as Documentation Agent, and The
Chase Manhattan Bank, as Administrative Agent, have entered into a Credit
Agreement, dated as of March 11, 1999 (as amended, modified or supplemented from
time to time, the "Credit Agreement"), providing for the making of Revolving
Loans as contemplated therein;
WHEREAS, it is a condition precedent to the making of Loans under the
Credit Agreement that each Guarantor shall have executed and delivered the
Subsidiary Guaranty;
WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans
by the Company under the Credit Agreement and, accordingly, each Guarantor has
executed and delivered the Subsidiary Guaranty in order to satisfy the condition
precedent described in the preceding paragraph and to induce the Banks to make
Loans to the Company;
WHEREAS, pursuant to the Subsidiary Guaranty, each of the Guarantors has
agreed unconditionally and irrevocably, and jointly and severally, to guaranty
as primary obligor and not merely as surety the Guaranteed Obligations (as
defined in the Subsidiary Guaranty); and
WHEREAS, the Guarantors wish to enter into this Contribution Agreement to
effect an equitable sharing of the Guaranteed Obligations;
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. CONTRIBUTION. At any time a payment in respect of the Guaranteed
Obligations is made under the Subsidiary Guaranty, the right of contribution, if
any, of each Guarantor against each Contributor shall be determined as provided
in the immediately following
<PAGE>
Exhibit E
Page 2
sentence, with the right of contribution of each Guarantor to be revised and
restated as of each date on which a payment (a "Relevant Payment") is made on
the Guaranteed Obligations under the Subsidiary Guaranty. At any time that a
Relevant Payment is made by a Guarantor that results in the aggregate payments
made by such Guarantor in respect of the Guaranteed Obligations to and including
the date of the Relevant Payment exceeding such Guarantor's Contribution
Percentage (as hereinafter defined) of the aggregate payments made by all
Guarantors in respect of the Guaranteed Obligations to and including the date of
the Relevant Payment (such excess, the "Aggregate Excess Amount"), each such
Guarantor shall have a right of contribution against each Contributor who has
made payments in respect of the Guaranteed Obligations to and including the date
of the Relevant Payment in an aggregate amount less than such Contributor's
Contribution Percentage of the aggregate payments made to and including the date
of the Relevant Payment by all Guarantors in respect of the Guaranteed
Obligations (the aggregate amount of such deficit, the "Aggregate Deficit
Amount") in an amount equal to (x) a fraction the numerator of which is the
Aggregate Excess Amount of such Guarantor and the denominator of which is the
Aggregate Excess Amount of all Guarantors multiplied by (y) the Aggregate
Deficit Amount of such Contributor. A Guarantor's right of contribution, if any,
pursuant to the preceding sentences shall arise at the time of each computation,
subject to adjustment to the time of any subsequent computation; PROVIDED, that
no Guarantor may take any action to enforce such right until the Guaranteed
Obligations have been paid in full and the Total Revolving Loan Commitment has
been terminated, it being expressly recognized and agreed by all parties hereto
that any Guarantor's right of contribution arising pursuant to this Contribution
Agreement against any Contributor shall be expressly junior and subordinate to
such Contributor's obligations and liabilities in respect of the Guaranteed
Obligations and any other obligations owing under the Subsidiary Guaranty. As
used in this Agreement, (i) each Contributor's "Contribution Percentage" shall
mean the percentage obtained by dividing (x) the Adjusted Net Worth of such
Contributor by (y) the aggregate Adjusted Net Worth of all Guarantors; (ii) the
"Adjusted Net Worth" of each Guarantor shall mean the greater of (x) the Net
Worth of such Guarantor or (y) zero; and (iii) the "Net Worth" of each Guarantor
shall mean the amount by which the fair salable value of such Guarantor's assets
on the Initial Borrowing Date exceeds its existing debts and other liabilities
(including contingent liabilities, but without giving effect to (1) any
Guaranteed Obligations arising under the Subsidiary Guaranty, (2) the
obligations of such Guarantor in respect of the Additional Facility Documents,
(3) any obligations arising under Article 10 of the respective indentures
governing the terms of the Senior Notes and (4) any obligations of such
Guarantor in respect of the Company's other Indebtedness for borrowed money), in
each case after giving effect to the transactions occurring on the Initial
Borrowing Date.
2. NO OTHER CONTRIBUTION OR SUBROGATION RIGHTS. All parties hereto
recognize and agree that, except for any right of contribution arising pursuant
to Section 1, each Guarantor who makes any payment in respect of the Guaranteed
Obligations shall have no right of contribution or subrogation against any other
Guarantor in respect of such payment, any such right of contribution or
subrogation arising under law or otherwise being expressly waived by all
Guarantors.
<PAGE>
Exhibit E
Page 3
3. CONTRIBUTION RIGHT AS AN ASSET. Each of the Guarantors recognizes and
acknowledges that the rights to contribution arising hereunder shall constitute
an asset in favor of the party entitled to such contribution. In this
connection, each Guarantor has the right to waive its contribution right against
any other Guarantor to the extent that after giving effect to such waiver such
Guarantor would remain solvent, in the determination of the Required Banks.
4. AMENDMENT OR WAIVER. Any provision of this Contribution Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the parties hereto and consented to by the Required Banks.
5. BENEFIT OF AGREEMENT. The provisions of this Contribution Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. To the extent any such successor shall be a
successor to all or part of the assets of a Guarantor, such successor shall also
constitute a Guarantor, with a Contribution Percentage equal to the Contribution
Percentage of the predecessor corporation or as otherwise consented to by the
Required Banks.
6. PRESERVATION OF RIGHTS. This Contribution Agreement shall not limit any
right which any Guarantor may have against any other Person which is not a party
hereto.
7. TERMINATION. This Contribution Agreement, as it may be amended,
supplemented or otherwise modified from time to time, shall remain in effect and
shall not be terminated as to any Guaranteed Obligation until such Guaranteed
Obligation has been discharged or otherwise satisfied in accordance with the
laws of the State of New York.
8. GOVERNING LAW. THIS CONTRIBUTION AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
9. COUNTERPARTS. This Contribution Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
10. EFFECTIVENESS. This Contribution Agreement shall become effective upon
execution hereof by each such party and delivery of executed counterparts hereof
by them to the Administrative Agent.
11. ADDITIONAL GUARANTORS. At each time that (x) each Restricted Subsidiary
of the Company is formed or acquired after the Initial Borrowing Date except,
with respect to any newly formed or acquired Partially-Owned Restricted
Subsidiary, to the extent the Company shall have made a Non-Guarantor
Designation as to such Partially-Owned Restricted Subsidiary or (y) any Excluded
Domestic Restricted Subsidiary is designated by the Company as a Subsidiary
Guarantor, in each case, in accordance with the terms of the Credit Agreement,
it
<PAGE>
Exhibit E
Page 4
shall upon execution of a counterpart hereof or of a Subsidiary Assumption
Agreement become a Guarantor for all purposes of this Contribution Agreement.
* * *
<PAGE>
Exhibit E
Page 5
IN WITNESS WHEREOF, the parties hereto have caused this Contribution
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
AMERICAN GUIDANCE SERVICE, INC.
AMERICAN HEAT VIDEO PRODUCTIONS, INC.
THE APARTMENT GUIDE OF NASHVILLE, INC.
ARGUS PUBLISHERS CORPORATION
BACON'S INFORMATION, INC.
BANKERS CONSULTING COMPANY
BOWHUNTER MAGAZINE, INC.
CAMBRIDGE RESEARCH GROUP, LTD.
CANOE & KAYAK, INC.
CARDINAL BUSINESS MEDIA, INC.
CARDINAL BUSINESS MEDIA HOLDINGS, INC.
CHANNEL ONE COMMUNICATIONS CORP.
CLIMBING, INC.
COMMCORP, LLC
COVER CONCEPTS MARKETING SERVICES, LLC
COWLES BUSINESS MEDIA, INC.
COWLES ENTHUSIAST MEDIA, INC.
COWLES HISTORY GROUP, INC.
CSK PUBLISHING COMPANY INCORPORATED
CUMBERLAND PUBLISHING, INC.
THE ELECTRONICS SOURCE BOOK, INC.
EXCELLENCE IN TRAINING CORPORATION
FILMS FOR THE HUMANITIES & SCIENCES, INC.
FUNK & WAGNALLS YEARBOOK CORP.
GARETH STEVENS, INC.
GO LO ENTERTAINMENT, INC.
GUINN COMMUNICATIONS, INC.
HAAS PUBLISHING COMPANIES, INC.
HEALTH & SCIENCES NETWORK, INC.
HORSE & RIDER, INC.
INTERMODEL PUBLISHING COMPANY, LTD.
IDTN LEASING CORPORATION
INDUSTRIAL TRAINING SYSTEMS CORPORATION
INTELLICHOICE, INC.
KITPLANES ACQUISITION COMPANY
LAW ENFORCEMENT TELEVISION NETWORK, INC.
LIFETIME LEARNING SYSTEMS, INC.
LITTLE ROCK APARTMENT GUIDE, INC.
LOCKERT JACKSON & ASSOCIATES, INC.
LOW RIDER PUBLISHING GROUP, INC.
MADDUX PUBLISHING, INC.
<PAGE>
Exhibit E
Page 6
MCMULLEN ARGUS PUBLISHING, INC.
MEMPHIS APARTMENT GUIDE, INC.
MIRAMAR COMMUNICATIONS, INC.
PICTORAL, INC.
PLAZA COMMUNICATIONS, INC.
PRIMEDIA HOLDINGS III INC.
PRIMEDIA INFORMATION INC.
PRIMEDIA INTERTEC CORPORATION
PRIMEDIA MAGAZINES INC.
PRIMEDIA MAGAZINE FINANCE INC.
PRIMEDIA REFERENCE INC.
PRIMEDIA SPECIAL INTEREST PUBLICATIONS INC.
PRIMEDIA VENTURES, INC.
PRIMEDIA WORKPLACE LEARNING, INC.
QWIZ, INC.
R.E.R. PUBLISHING CORPORATION
RETAILVISION, INC.
SIMBA INFORMATION
SOUTHWEST ART, INC.
SYMBOL OF EXCELLENCE PUBLISHERS, INC.
TEL-A-TRAIN, INC.
THE VIRTUAL FLYSHOP, INC.
TI-IN ACQUISITION CORPORATION
TSECRP, INC.
VEGETARIAN TIMES, INC.
WEEKLY READER CORPORATION
WESCOTT COMMUNICATIONS MICHIGAN, INC.
WESTCOTT ECI, INC.
WESTERN EMPIRE PUBLICATIONS, INC.
By
---------------------------------
Title:
<PAGE>
EXHIBIT F
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
-------------------------------------------
DATE: ________, 19__
Reference is made to the Credit Agreement described in Item 2 of Annex I
annexed hereto (as such agreement may hereafter be amended, modified or
supplemented from time to time, the "Credit Agreement"). Unless otherwise
defined in Annex I attached hereto, all capitalized terms shall have their
respective meanings as set forth in the Credit Agreement. _____________ (the
"Assignor") and ______________ (the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without recourse
and without representation or warranty (other than as expressly provided
herein), and the Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obligations under the Credit
Agreement as of the date hereof which represents the percentage interest
specified in Item 4 of Annex I (the "Assigned Share") of all of the outstanding
rights and obligations under the Credit Agreement including, without limitation,
with respect to the Assigned Share of the Total Revolving Loan Commitment and
all rights and obligations with respect to the Assigned Share of the Loans.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any liens or security interests; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any Subsidiary Guarantor or the performance or observance by the
Borrower or any Subsidiary Guarantor of any of its obligations under the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement and the other Credit Documents, together with copies of the financial
statements referred to therein and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Assumption Agreement; (ii) agrees that it will,
independently and without reliance upon the Administrative Agent, the Assignor
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (iii) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Credit Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; [and] (iv) agrees that it will
<PAGE>
Exhibit F
Page 2
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Bank[; and (v)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement or such other documents as
are necessary to indicate that all such payments are subject to such taxes at a
rate reduced by an applicable tax treaty].6
4. Following the execution of this Assignment and Assumption Agreement by
the Assignor and the Assignee, an executed original hereof (together with all
attachments) will be delivered to the Administrative Agent. The effective date
of this Assignment and Assumption Agreement shall be the date of execution
hereof by the Assignor and the Assignee and the consent hereto by the
Administrative Agent and the Company, and receipt by the Administrative Agent of
the nonrefundable assignment fee referred to in Section 11.04(b) of the Credit
Agreement, unless a later date is otherwise specified in Item 5 of Annex I
hereto (the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a Bank thereunder and
under the other Credit Documents and (ii) the Assignor shall, to the extent
provided in this Assignment and Assumption Agreement, relinquish its rights and
be released from its obligations under the Credit Agreement and the other Credit
Documents.
6. It is agreed that the Assignee shall be entitled to (x) all interest on
the Assigned Share of the Loans at the rates specified in Item 6 of Annex I; and
(y) all Commitment Fees on the Assigned Share of the Total Revolving Loan
Commitment at the rate specified in Item 7 of Annex I; which, in each case,
accrue on and after the Settlement Date, such interest and Commitment Fees, to
be paid by the Administrative Agent directly to the Assignee. It is further
agreed that all payments of principal made on the Assigned Share of the Loans
which occur on and after the Settlement Date will be paid directly by the
Administrative Agent to the Assignee. Upon the Settlement Date, the Assignee
shall pay to the Assignor an amount specified by the Assignor in writing which
represents the Assigned Share of the principal amount of the respective Loans
made by the Assignor pursuant to the Credit Agreement which are outstanding on
the Settlement Date, net of any closing costs, and which are being assigned
hereunder. The Assignor and the Assignee shall make all appropriate adjustments
in payments under the Credit Agreement for periods prior to the Settlement Date
directly between themselves on the Settlement Date.
- ----------
6 If the Assignee is organized under the laws of a jurisdiction outside the
United States.
<PAGE>
Exhibit F
Page 3
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
* * *
<PAGE>
Exhibit F
Page 4
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution also being made
on Annex I hereto.
[NAME OF ASSIGNOR],
as Assignor
By____________________________
Title:
[NAME OF ASSIGNEE],
as Assignee
By____________________________
Title:
<PAGE>
ANNEX I
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. The Borrower: PRIMEDIA Inc.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of March 11, 1999, among PRIMEDIA Inc., the
Banks from time to time party thereto, The Bank of New York and Bankers
Trust Company, as Co-Syndication Agents, The Bank of Nova Scotia, as
Documentation Agent, and The Chase Manhattan Bank, as Administrative Agent.
3. Date of Assignment and Assumption Agreement:
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
Outstanding Revolving Loan
Principal of Loans Commitment
------------------ ----------
<S> <C> <C>
a. Aggregate Amount for all Banks $______ $______
b. Assigned Share ______% ______%
c. Amount of Assigned Share $______ $______
</TABLE>
5. Settlement Date:
6. Rate of Interest to
the Assignee: As set forth in Section 1.08 of the Credit Agreement
(unless otherwise agreed to by the Assignor and the
Assignee)7
[7. Commitment Fees As set forth in Section 2.01(a) of the Credit
Agreement (unless otherwise agreed to by the Assignor
and the Assignee)]8
- ----------
7 The Company and the Administrative Agent shall direct the entire amount of
the interest to the Assignee at the rate set forth in Section 1.08 of the
Credit Agreement, with the Assignor and Assignee effecting any agreed upon
sharing of interest through payments by the Assignee to the Assignor.
8 The Company and the Administrative Agent shall direct the entire amount of
the Commitment Fees to the Assignee at the rate set forth in Section
2.01(a) of the Credit Agreement, with the Assignor and the Assignee
effecting any agreed upon sharing of Commitment Fees through payment by the
Assignee to the Assignor.
<PAGE>
Page 2
8. Notice:
ASSIGNOR:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Attention:
Telephone:
Telecopier:
Reference:
Payment Instructions:
ASSIGNOR:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Attention:
Reference:
ASSIGNEE:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Attention:
Reference:
<PAGE>
Page 3
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By By
------------------------ --------------------------
------------------------ --------------------------
(Print Name and Title) (Print Name and Title)
<PAGE>
FORM OF SUBSIDIARY ASSUMPTION AGREEMENT
---------------------------------------
SUBSIDIARY ASSUMPTION AGREEMENT (the "Agreement") dated as of _________,
_____, by _______________, a _________ corporation (the "New Restricted
Subsidiary"). Unless otherwise defined herein, capitalized terms used herein and
defined in the Credit Agreement referred to below are used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, PRIMEDIA Inc. (the "Company"), various financial institutions
party thereto, The Bank of New York and Bankers Trust Company, as Co-Syndication
Agents, The Bank of Nova Scotia, as Documentation Agent, and The Chase Manhattan
Bank, as Administrative Agent, have entered into an Credit Agreement dated as of
March 11, 1999 (as amended through the date hereof, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, each Wholly-Owned
Restricted Subsidiary of the Company (other than Excluded Foreign Restricted
Subsidiaries) has entered into a Subsidiary Guaranty, dated as of _________,
19____ (as amended through the date hereof, the "Subsidiary Guaranty");
WHEREAS, in connection with the Credit Agreement, each Wholly-Owned
Restricted Subsidiary of the Company (other than Excluded Foreign Restricted
Subsidiaries) has entered into a Contribution Agreement, dated as of _________,
19___ (as amended through the date hereof, the "Contribution Agreement" and
together with the Subsidiary Guaranty, the "Subsidiary Documents");
WHEREAS, on _________, ____, the New Restricted Subsidiary was
[[newly-formed/acquired] as a [___%] directly owned Subsidiary of
_______________, a ___________ corporation][an Excluded Domestic Restricted
Subsidiary [__%] directly owned by ______________, a ______________ corporation,
that has been designated by the Company as a Subsidiary Guarantor in accordance
with the terms of the Credit Agreement];
WHEREAS, pursuant to Section 7.14 of the Credit Agreement, the New
Restricted Subsidiary desires to become a party to the Subsidiary Documents; and
WHEREAS, the New Restricted Subsidiary desires to execute and deliver this
Agreement in order to become a party to each of the Subsidiary Documents;
NOW, THEREFORE, IT IS AGREED:
1. SUBSIDIARY GUARANTY. By executing and delivering this Agreement, the New
Restricted Subsidiary hereby becomes a party to the Subsidiary Guaranty as a
"Guarantor" thereunder, and hereby expressly assumes all obligations and
liabilities of a "Guarantor" thereunder. The New Restricted Subsidiary hereby
makes each of the representations and
<PAGE>
Page ii
warranties contained in Section 12 of the Subsidiary Guaranty on the date
hereof, after giving effect to this Agreement.
2. CONTRIBUTION AGREEMENT. By executing and delivering this Agreement, the
New Restricted Subsidiary hereby becomes a party to the Contribution Agreement
as a "Guarantor" thereunder, and hereby expressly assumes all obligations and
liabilities of a "Guarantor" thereunder.
3. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
* * *
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
[NEW RESTRICTED SUBSIDIARY]
By___________________________
Title:
ACKNOWLEDGED:
THE CHASE MANHATTAN BANK,
as Administrative Agent for the Banks
By_______________________________________
Title:
<PAGE>
Exhibit 10.13
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of February 5,
1998 between PRIMEDIA Inc., a Delaware corporation ("PRIMEDIA")
and KKR 1996 Fund L.P., a Delaware limited partnership ("KKR 2996")
I. STOCK SALE TO KKR 1996
1.1 Purchase of Common Stock.
Subject to all of the terms and conditions of this Agreement, KKR
1996 hereby agrees to purchase from PRIMEDIA, and PRIMEDIA agrees to sell to KKR
1996, 16,666,667 shares of PRIMEDIA common stock, par value $.01 per share ("KKR
1996 Shares"), for $12 per share, for an aggregate purchase price of
$200,000,004 (the "Purchase Price"). Such purchase shall be made 20 days after
an information statement regarding the purchase has been sent to the
stockholders of PRIMEDIA pursuant to Rule 14c-2 promulgated under the Securities
Exchange Act of 1934, as amended, or the earliest business day thereafter upon
which PRIMEDIA receives clearance of the purchase under the Hart-Scott-Rodino
Antitrust Improvements Act. The closing of the purchase will take place at the
offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York
10017. At the closing KKR 1996 will pay to PRIMEDIA the Purchase Price, in
immediately available funds, against its receipt of duly executed stock
certificates, representing the KKR 1996 Shares, registered in the name of KKR
1996 on the books of Primedia.
<PAGE>
2
1.2 Management Rights. After the Closing and for so long as the
purchaser owns any equity or debt securities of PRIMEDIA, KKR 1996 shall have
the right to elect at least one member of the Board of Directors to PRIMEDIA.
KKR 1996 shall also have at all times after the closing the right to (i) inspect
and copy books and records of PRIMEDIA; (ii) visit and inspect the PRIMEDIA
properties; (iii) receive financial statements, operating reports and budgets of
PRIMEDIA; (iv) receive materials sent to the PRIMEDIA Board of Directors; and
(v) consult with and provide non-binding advice to PRIMEDIA management on
significant corporate actions.
II. PURCHASER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1 Investment Intention. KKR 1996 represents and warrants that it
is purchasing the KKR 1996 Shares solely for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution of any thereof. KKR 1996 agrees that it will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
any of the KKR 1996 Shares (or solicit any offers to buy, purchase, or otherwise
acquire or take a pledge of any of the Shares), except in compliance with the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
thereunder.
2.2 Legends. The certificate (or certificates) representing the KKR
1996 Shares shall bear the following legend (until such time as subsequent
transfers thereof are no longer restricted in accordance with the Act):
<PAGE>
3
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT OR LAWS OR THE RULES AND REGULATIONS
THEREUNDER."
2.3 Federal Securities Laws Matters. KKR 1996 represents that it is
familiar with Release No. 5226 issued by the Securities and Exchange Commission
(the "SEC") under the Act, it has consulted with its counsel with regard
thereto, and it is fully aware of the position of the SEC limiting the resale to
the public of any of the KKR 1996 Shares.
2.4 Compliance with Rule 144. If any of the KKR 1996 Shares are
disposed of in accordance with Rule 144 under the Act, KKR 1996 shall deliver to
PRIMEDIA at or prior to the time of such disposition an executed copy of Form
144 (if required by Rule 144) and such other documentation as PRIMEDIA may
reasonably require in connection with such sale.
2.5 Ability to Bear Risk. KKR 1996 represents and warrants that (a)
the financial situation of KKR 1996 is such that it can afford to bear the
economic risk of holding the unregistered KKR 1996 Shares for an indefinite
period and (b) it can afford to suffer the complete loss of its investment in
the KKR 1996 Shares.
2.6 Access to Information; Evaluation of Risks. KKR
1996 represents and warrants that (a) it understands and has taken cognizance of
all the risk factors related to the purchase of the KKR 1996 Shares, (b) it has
received and carefully reviewed information regarding the business of PRIMEDIA
and has been granted the opportunity to ask questions of, and receive
<PAGE>
4
answers from, representatives of PRIMEDIA concerning the terms and conditions of
the purchase of the KKR 1996 Shares and to obtain any additional information
which it deems necessary to verify the accuracy or completeness of the
information furnished to it and (c) its knowledge and experience in financial
and business matters is such that it is capable of evaluating the risks of the
investment in the KKR 1996 Shares.
III. RULE 144
PRIMEDIA agrees that it will use its best efforts to file in a
timely manner all reports required to be filed by it pursuant to the Securities
Exchange Act of 1934, as amended, and, upon request of KKR 1996 or a transferee
of KKR 1996 Shares, will furnish KKR 1996 with such information as may be
necessary to enable KKR 1996 to effect routine sales pursuant to Rule 144 under
the Act.
IV. REGISTRATION RIGHTS
KKR 1996 will have such rights to have the KKR 1996 Shares
registered under the Act as may be provided in any Registration Rights Agreement
entered into by KKR 1996, PRIMEDIA and other holders or purchasers of shares of
Common Stock of PRIMEDIA on or after the date hereof.
V. MISCELLANEOUS
5.1 Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified mail,
return receipt requested,
<PAGE>
5
postage prepaid, to the parties to this Agreement at the following addresses or
to such other address as either party to this Agreement shall specify by notice
to the other:
if to PRIMEDIA, to it at:
PRIMEDIA Inc.
745 Fifth Avenue
New York, NY 10151
Attention: Beverly Chell, Esq.
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Gary I. Horowitz, Esq.
if to KKR 1996, to it at:
KKR 1996 Fund L.P.
9 West 57th Street
New York, NY 10019
Attention: Perry Golkin
With a copy to:
Latham & Watkins
885 Third Avenue
New York, NY 10022
Attention: Scott Bowie, Esq.
All such notices and communications shall be deemed to have been received on the
date of delivery or on the third business day after the mailing thereof.
5.2 Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Except as provided in Article V, nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective
<PAGE>
6
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
5.3 Waiver. Either party hereto may by written notice to the other
(a) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (b) waive compliance with any of the
conditions or covenants of the other contained in this Agreement; and (c) waive
or modify performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained herein. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach and no failure by any party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
5.4 Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by KKR 1996 and PRIMEDIA.
5.5 Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by
<PAGE>
7
reason hereof shall be assignable by PRIMEDIA or KKR 1996 without the prior
written consent of the other party.
5.6 Expenses. PRIMEDIA agrees that, whether or not the transactions
contemplated by this Agreement are consummated, PRIMEDIA will pay or cause to be
paid all costs and expenses arising in connection with the preparation,
execution, administration and enforcement of, and the preservation of rights
under, this Agreement, including, without limitation:
(a) all taxes (other than taxes based on income), fees or other
charges which may be payable in connection with the sale or purchase of
the KKR 1996 Shares pursuant to this Agreement;
(b) all expenses incurred by KKR 1996 in connection with the
maintenance of its books and records, preparation of tax returns and
delivery of tax information to its partners;
(c) an allocable portion of certain expenses incurred by KKR 1996
in connection with its organization in an amount not to exceed $10,000 in
the aggregate, including, without limitation, legal fees; and
(d) all reasonable travel and other out-of-pocket expenses of the
general partner of KKR 1996 incurred in connection with KKR 1996's
ownership of the KKR 1996 Shares.
In addition, after consummation of the transactions contemplated by this
Agreement and so long as KKR 1996 owns any shares of common stock acquired
pursuant to this Agreement, PRIMEDIA will reimburse KKR 1996 or the general
partner of KKR 1996 for all
<PAGE>
8
costs incurred in transmitting information regarding PRIMEDIA to the limited
partners of KKR 1996 or in distributing dividends or other distributions
received from PRIMEDIA to the limited partners of KKR 1996.
5.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, PRIMEDIA agrees to indemnify and hold harmless KKR 1996,
its limited and general partners and its affiliates (and the partners, members,
directors, officers, affiliates and controlling persons of each of the
foregoing) (each a "KKR 1996 Indemnitee") from and against any liabilities,
obligations, losses, damages, deficiencies, obligations, fines and assessments,
penalties, actions, judgments, suits, claims, costs, injuries, demands,
proceedings, investigations, arbitrations (including shareholder claims,
actions, injuries, demands, suits, judgments, proceedings, investigations or
arbitrations) and disbursements, including, without limitation, accountant's and
attorney's fees and expenses incurred by a KKR 1996 Indemnitee before or after
the date of this Agreement and arising out of, resulting from, or relating to
(i) the operations of PRIMEDIA, (ii) KKR 1996's purchase and/or ownership of the
KKR 1996 Shares or (iii) any litigation to which a KKR 1996 Indemnitee is made a
party in its capacity as a shareholder or owner (or a partner, member, director,
officer, affiliate or controlling person of a shareholder or owner) of
securities of PRIMEDIA.
5.8 Limited Liability of Partners. Notwithstanding any other
provision of this Agreement, neither the general
<PAGE>
9
partner nor the limited partners nor any future general or limited partner of
KKR 1996 shall have any personal liability for performance of any obligation of
KKR 1996 under this Agreement in excess of the respective capital contribution
of such general partner and limited partners to KKR 1996.
5.9 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
5.10 Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
5.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
<PAGE>
10
IN WITNESS WHEREOF, PRIMEDIA and KKR 1996 have executed this
Agreement as of the day and year first above written.
PRIMEDIA INC.
By: /s/ Beverly C. Chell
----------------------------------
Name: Beverly C. Chell
Title: Vice Chairman
KKR 1996 FUND L.P.
By: KKR Associates 1996 L.P.
Its General Partner
By: KKR 1996 GP LLC
By: /s/ Perry Golkin
-----------------------------
Member
<PAGE>
Exhibit 10.15
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of
February 5, 1998 is made and entered into by PRIMEDIA Inc., formerly K-III
Communications Corporation, a Delaware corporation (the "Company"), KKR 1996
Fund L.P., a Delaware limited partnership ("KKR 1996"), Publishing Associates,
L.P., a Delaware limited partnership ("Publishing Associates"), MA Associates,
L.P., a Delaware limited partnership ("MA Associates"), FP Associates, L.P., a
Delaware limited partnership ("FP Associates"), Magazine Associates, L.P., a
Delaware limited partnership ("Magazine Associates"), KKR Partners II, L.P., a
Delaware limited partnership ("Partners"), and Channel One Associates, L.P., a
Delaware limited partnership ("Channel One Associates").
1. Background. (a) Pursuant to a Securities Purchase Agreement,
dated as of February 5, 1998 (the "Stock Purchase Agreement"), between the
Company and KKR 1996, the Company has sold to KKR 1996 an aggregate of
16,666,667 shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), at a purchase price of $12 per share, for an aggregate purchase
price of $200,000,004.
(b) The Company and Channel One Associates are parties to a
Registration Rights Agreement dated as of March 1, 1995. This Amended and
Restated Registration Rights amends and restates such agreement in its entirety.
(c) The Company, Publishing Associates, MA Associates, FP
Associates, Magazine Associates and Partners are parties to an Amended and
Restated Registration Rights Agreement dated as of December 31, 1993. This
Amended and Restated Registration Rights Agreement amends and restates such
agreement in its entirety.
2. Definitions. As used in this Agreement, the following capitalized
terms shall have the following respective meanings:
Exchange Act - The Securities Exchange Act of 1934, as amended.
Holder - Any party hereto (other than the Company) and any holder of
Registrable Securities who agrees in writing to be bound by the provisions of
this Agreement.
Person - Any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization or government or
any department or agency thereof.
Registrable Securities - Any Common Stock issued or issuable to any
party to this Amended and Restated Registration Rights Agreement (other than the
Company) and any Common Stock
<PAGE>
2
which may be issued or distributed in respect of such Common Stock by way of
stock dividend or stock split or other distribution, recapitalization or
reclassification. As to any particular Registrable Securities, once issued such
Securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such Securities shall have become
effective under the Securities Act and such Securities shall have been disposed
of in accordance with such registration statement, (ii) they shall have been
distributed to the public pursuant to Rule 144 or 144A (or any successor
provisions) under the Securities Act, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act or any state securities or blue sky law then in force, or (iv)
they shall have ceased to be outstanding.
Registration Expenses - Any and all expenses incident to performance
of or compliance with this Agreement, including, without limitation, (i) all SEC
and stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses of complying with
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses, (iv) all fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange pursuant to clause (viii) of Section 5,
(v) the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits and/or "cold
comfort" letters required by or incident to such performance and compliance,
(vi) the reasonable fees and disbursements of one counsel selected by the
Holders of a majority of the Registrable Securities being registered to
represent all Holders of the Registrable Securities being registered in
connection with each such registration, and (vii) any fees and disbursements of
underwriters customarily paid by the issuers or sellers of securities, including
liability insurance if the Company so desires or if the underwriters so require,
and the reasonable fees and expenses of any special experts retained in
connection with the requested registration, but excluding underwriting discounts
and commissions and transfer taxes, if any.
Securities Act - The Securities Act of 1933, as amended.
SEC - The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
3. Incidental Registrations.
<PAGE>
3
(a) Right to Include Registrable Securities. If the Company at any
time after the date hereof proposes to register its Common Stock under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), whether or not for sale for
its own account, pursuant to a registration statement on which it is permissible
to register Registrable Securities for sale to the public under the Securities
Act, it will each such time give prompt written notice to all Holders of
Registrable Securities of its intention to do so and of such Holders' rights
under this Section 3. Upon the written request of any such Holder made within 15
days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder), the Company
will use its best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by the Holders thereof; provided, that (i) if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), and (ii) if such registration involves an underwritten offering, all
Holders of Registrable Securities requesting to be included in the Company's
registration must sell their Registrable Securities to the underwriters selected
by the Company on the same terms and conditions as apply to the Company, with
such differences, including any with respect to indemnification and liability
insurance, as may be customary or appropriate in combined primary and secondary
offerings. If a registration requested pursuant to this Section 3(a) involves an
underwritten public offering, any Holder of Registrable Securities requesting to
be included in such registration may elect, in writing prior to the effective
date of the registration statement filed in connection with such registration,
not to register such securities in connection with such registration.
(b) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 3.
(c) Priority in Incidental Registrations. If a registration pursuant
to this Section 3 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the amount of securities
requested to be included in such registration exceeds the amount which can be
sold in such offering, so as to be likely to have an adverse effect on such
offering as contemplated by the Company (including the price at which the
Company proposes to sell such securities),
<PAGE>
4
then the Company will include in such registration (i) first, 100% of the
securities the Company proposes to sell, (ii) second, to the extent of the
amount of Registrable Securities requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, the amount of Registrable Securities which
the Holders have requested to be included in such registration, such amount to
be allocated pro rata among all requesting Holders on the basis of the relative
number of shares of Registrable Securities then held by each such Holder
(provided that any Registrable Securities thereby allocated to any such Holder
that exceed such Holder's request will be reallocated among the remaining
requesting Holders in like manner).
4. Registration on Request.
(a) Request by Holders. Upon the written request of any Holder or
Holders who, in the aggregate, own at least 15% of the Registrable Securities
then outstanding that the Company effect the registration under the Securities
Act of all or part of such Holder's or Holders' Registrable Securities and
specifying the intended method of disposition thereof, the Company will promptly
give written notice of such requested registration to all other Holders of
Registrable Securities, and thereupon will, as expeditiously as possible, use
its best efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Holder or Holders; and
(ii) all other Registrable Securities which the Company has been
requested to register by any other Holder thereof by written request given
to the Company within 15 days after the giving of such written notice by
the Company (which request shall specify the intended method of
disposition of such Registrable Securities),
so as to permit the disposition (in accordance with the intended method thereof
as aforesaid) of the Registrable Securities so to be registered; provided, that,
unless Holders of a majority of the Registrable Securities consent thereto in
writing, the Company shall not be obligated to file a registration statement
relating to any registration request under this Section 4(a) (i) unless the
aggregate requests by the Holder or Holders for such registration cover at least
15% of the number of Registrable Securities then outstanding or (ii) (other than
a registration statement on Form S-3 or any successor or similar short-form
registration statement) within a period of nine months after the effective date
of any other registration statement relating to (A) any registration request
under this Section 4(a) which was not effected on Form S-3 (or any successor or
similar short-form registration statement) or (B) any registration effected
under Section 3, or (iii) if with respect thereto, the managing underwriter, the
SEC, the Securities Act or the rules and
<PAGE>
5
regulations thereunder, or the form on which the registration statement is to be
filed, would require the conduct of an audit other than the regular audit
conducted by the Company at the end of its fiscal year, in which case the filing
may be delayed until the completion of such regular audit (unless the Holders of
the Registrable Securities to be registered agree to pay the expenses of the
Company in connection with such an audit other than the regular audit).
(b) Registration Statement Form. If any registration requested
pursuant to this Section 4 which is proposed by the Company to be effected by
the filing of a registration statement on Form S-3 (or any successor or similar
short-form registration statement) shall be in connection with an underwritten
public offering, and if the managing underwriter shall advise the Company in
writing that, in its opinion, the use of another form of registration statement
is of material importance to the success of such proposed offering, then such
registration shall be effected on such other form.
(c) Expenses. The Company will pay all Registration Expenses in
connection with the first 20 registrations of Registrable Securities pursuant to
this Section 4 upon the written request of any of the Holders. All expenses for
any subsequent registrations of Registrable Securities pursuant to this Section
4 shall be paid pro rata by the Company and all other Persons (including the
Holders) participating in such registration on the basis of the relative number
of shares of Common Stock of each such Person included in such registration.
(d) Effective Registration Statement. A registration requested
pursuant to this Section 4 will not be deemed to have been effected unless it
has become effective; provided, that if, within 180 days after it has become
effective, the offering of Registrable Securities pursuant to such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court, such registration will be
deemed not to have been effected.
(e) Selection of Underwriters. If a requested registration pursuant
to this Section 4 involves an underwritten offering, the Company shall have the
right to select the investment banker or bankers and managers to administer the
offering; provided, however, that such investment banker or bankers and managers
shall be satisfactory to Holders of a majority of the Registrable Securities and
which the Company has been requested to register.
(f) Priority in Requested Registrations. If a requested registration
pursuant to this Section 4 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company which are not Registrable Securities)
<PAGE>
6
exceeds the number which can be sold in such offering, the Company will include
in such registration only the Registrable Securities requested to be included in
such registration. In the event that the number of Registrable Securities
requested to be included in such registration exceeds the number which, in the
opinion of such managing underwriter, can be sold, the number of such
Registrable Securities to be included in such registration shall be allocated
pro rata among all requesting Holders on the basis of the relative number of
shares of Registrable Securities then held by each such Holder (provided that
any shares thereby allocated to any such Holder that exceed such Holder's
request shall be reallocated among the remaining requesting Holders in like
manner). In the event that the number of Registrable Securities requested to be
included in such registration is less than the number which, in the opinion of
the managing underwriter, can be sold, the Company may include in such
registration the securities the Company proposes to sell up to the number of
securities that, in the opinion of the underwriter, can be sold.
(g) Additional Rights. If the Company at any time grants to any
other holders of Common Stock any rights to request the Company to effect the
registration under the Securities Act of any such shares of Common Stock on
terms more favorable to such holders than the terms set forth in this Section 4,
the terms of this Section 4 shall be deemed amended or supplemented to the
extent necessary to provide the Holders such more favorable rights and benefits.
5. Registration Procedures. If and whenever the Company is required
to use its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the Company
will, as expeditiously as possible:
(i) prepare and, in any event within 120 days after the end of the
period within which a request for registration may be given to the
Company, file with the SEC a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective; provided, however, that the Company may
discontinue any registration of its securities which is being effected
pursuant to Section 3 at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for a period not in excess of 180 days and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of
<PAGE>
7
disposition by the seller or sellers thereof set forth in such
registration statement; provided, that before filing a registration
statement or prospectus, or any amendments or supplements thereto, the
Company will furnish to one counsel selected by the Holders of a majority
of the Registrable Securities covered by such registration statement to
represent all Holders of Registrable Securities covered by such
registration statement, copies of all documents proposed to be filed,
which documents will be subject to the review of such counsel;
(iii) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement
(including each preliminary prospectus and summary prospectus), in
conformity with the requirements of the Securities Act, and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities by such seller;
(iv) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by
such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction where, but for the requirements of this clause (iv), it
would not be obligated to be so qualified, to subject itself to taxation
in any such jurisdiction, or to consent to general service of process in
any such jurisdiction;
(v) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) notify each seller of any such Registrable Securities covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in clause (ii) of this Section 5, of the
Company's becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to
<PAGE>
8
make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such seller,
prepare and furnish to such seller a reasonable number of copies of an
amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing;
(vii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable (but not more than eighteen
months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of
the Securities Act and the rules and regulations promulgated thereunder;
(viii) use its best efforts to list such Registrable Securities on
any securities exchange on which the Common Stock is then listed, if such
Registrable Securities are not already so listed and if such listing is
then permitted under the rules of such exchange, and to provide a transfer
agent and registrar for such Registrable Securities covered by such
registration statement not later than the effective date of such
registration statement;
(ix) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions as sellers of a
majority of such Registrable Securities or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
(x) obtain a "cold comfort" letter or letters from the Company's
independent public accountants in customary form and covering matters of
the type customarily covered by "cold comfort" letters as the seller or
sellers of a majority of such Registrable Securities shall reasonably
request (provided that Registrable Securities constitute at least 25% of
the securities covered by such registration statement); and
(xi) make available for inspection by any seller of such Registrable
Securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply
<PAGE>
9
all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company with such
information regarding such seller and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in clause (vi) of this Section 5, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 5, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in clause (ii) of this
Section 5 shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to clause (vi) of this
Section 5 and including the date when each seller of Registrable Securities
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by clause (vi) of this Section
5.
6. Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any securities of the Company under the Securities Act pursuant to Section 3
or 4, the Company will, and it hereby does, indemnify and hold harmless, to the
extent permitted by law, the seller of any Registrable Securities covered by
such registration statement, each affiliate of such seller and their respective
directors and officers or general and limited partners (and the partners,
members, directors, officers, affiliates and controlling Persons of each of the
foregoing) each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act
(collectively, the "Indemnified Parties"), against any and all losses, claims,
damages or liabilities, joint or several, and expenses to which any such
Indemnified Party may become subject under the Securities Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Indemnified Party is a party
thereto) arise out of or are based upon (a) any untrue statement or alleged
<PAGE>
10
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, or (b) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and the
Company will reimburse such Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, liability, action or proceeding; provided, that the
Company shall not be liable to any Indemnified Party in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information with respect to such seller furnished to the Company by such
seller for use in the preparation thereof; and provided, further, that the
Company will not be liable to any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, under the
indemnity agreement in this Section 6(a) with respect to any preliminary
prospectus or the final prospectus or the final prospectus as amended or
supplemented, as the case may be, to the extent that any such loss, claim,
damage or liability of such underwriter or controlling Person results from the
fact that such underwriter sold Registrable Securities to a person to whom there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the final prospectus (including any documents incorporated by reference
therein) or of the final prospectus as then amended or supplemented (including
any documents incorporated by reference therein), whichever is most recent, if
the Company has previously furnished copies thereof to such underwriter. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any other Indemnified Party and shall
survive the transfer of such securities by such seller.
(b) Indemnification by the Seller. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed in accordance with Section 5 herein, that the Company shall have received
an undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 6) the Company and all other prospective sellers or any underwriter, as
the case may be, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary,
final or summary prospectus contained therein, or
<PAGE>
11
any amendment or supplement, if such statement or alleged statement or omission
or alleged omission was made in reliance upon and in conformity with written
information with respect to such seller or underwriter furnished to the Company
by such seller or underwriter for use in the preparation of such registration
statement, preliminary, final or summary prospectus or amendment or supplement,
or a document incorporated by reference into any of the foregoing. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any of the prospective sellers, or any of
their respective affiliates, directors, officers or controlling Persons and
shall survive the transfer of such securities by such seller.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 6, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that the failure of the
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof, the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that specified
in the preceding subdivisions of this Section 6 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
Securities Act.
<PAGE>
12
(e) Non-Exclusivity. The obligations of the parties under this
Section 6 shall be in addition to any liability which any party may otherwise
have to any other party.
7. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this Section 7, the Company may deregister
under Section 12 of the Exchange Act if it then is permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder.
8. Miscellaneous.
(a) Other Investors. The Company may enter into agreements with
other purchasers of Common Stock who are then employees of the Company or any of
its subsidiaries making them parties hereto (and thereby giving them all of the
rights, preferences and privileges of an original party (other than the Company)
hereto) with respect to additional shares of Common Stock (the "Supplemental
Agreements"); provided that, pursuant to any such Supplemental Agreement, such
purchaser expressly agrees to be bound by all of the terms, conditions and
obligations of this Agreement as if such purchaser were an original party (other
than the Company) hereto; and further provided that such purchaser shall not
obtain any right to request registration under Section 4 hereof. All shares of
Common Stock issued or issuable pursuant to such Supplemental Agreements by such
purchasers shall be deemed to be Registrable Securities.
(b) Holdback Agreement. If any such registration shall be in
connection with an underwritten public offering, each Holder of Registrable
Securities agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, of any equity securities of
the Company, or of any security convertible into or exchangeable or exercisable
for any equity security of the Company (in each case, other than as part of such
underwritten public offering), within 7 days before or 90 days (or such lesser
period as the managing underwriters may permit) after the effective date of such
registration, and the Company hereby also so agrees and agrees to
<PAGE>
13
cause each other holder of any equity security, or of any security convertible
into or exchangeable or exercisable for any equity security, of the Company
purchased from the Company (at any time other than in a public offering) to so
agree.
(c) Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding. Each Holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 8(c), whether or not such Registrable
Securities shall have been marked to indicate such consent.
(d) Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent Holder of any Registrable
Securities, subject to the provisions contained herein.
(e) Notices. All notices and other communications provided for
hereunder shall be in writing and shall be sent by first class mail, telex,
telecopier or hand delivery:
(i) if to the Company, to:
Primedia Inc.
745 Fifth Avenue
New York, New York 10151
Attention: Beverly C. Chell, Esq.
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
22nd Floor
New York, New York 10017-3909
Attention: Gary I. Horowitz, Esq.
<PAGE>
14
(ii) if to MA Associates, FP Associates, Magazine Associates,
Publishing Associates, Channel One Associates, or KKR 1996,
to:
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
Suite 4250
New York, New York 10019
Attention: Perry Golkin
With a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022
Attention: Scott Bowie, Esq.
(iii) if to Partners, to:
KKR Partners II, L.P.
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
Suite 4250
New York, New York 10019
Attention: Perry Golkin
With a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022
Attention: Scott Bowie, Esq.
(iv) if to any other holder of Registrable Securities, to the
address of such other holder as shown in the books and records
of the Company, or to such other address as any of the above
shall have designated in writing to all of the other above.
All such notices and communications shall be deemed to have been given or made
(1) when delivered by hand, (2) five business days after being deposited in the
mail, postage prepaid, (3) when telexed, answer-back received or (4) when
telecopied, receipt acknowledged.
(f) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
<PAGE>
15
(g) Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
(i) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed therein. The parties to this Agreement hereby
agree to submit to the jurisdiction of the courts of the State of New York in
any action or proceeding arising out of or relating to this Agreement.
(j) Specific Performance. The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States or any state thereof, in
addition to any other remedy to which they may be entitled at law or equity.
<PAGE>
16
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
PRIMEDIA CORPORATION
By: Beverly C. Chell
--------------------------------------
Title: Vice Chairman
KKR 1996 FUND L.P.
By: KKR Associates 1996 L.P.
Its General Partner
By: KKR 1996 GP LLC
By: /s/ Perry Golkin
--------------------------------------
A Member
MA ASSOCIATES, L.P.
By: KKR Associates, L.P. Its General
Partner
By: /s/ Perry Golkin
--------------------------------------
A General Partner
FP ASSOCIATES, L.P.
By: KKR Associates, L.P. Its General
Partner
By: /s/ Perry Golkin
--------------------------------------
A General Partner
MAGAZINE ASSOCIATES, L.P.
By: KKR Associates, L.P. Its General
Partner
By: /s/ Perry Golkin
--------------------------------------
A General Partner
<PAGE>
17
PUBLISHING ASSOCIATES, L.P.
By: KKR Associates, L.P. Its General
Partner
By: /s/ Perry Golkin
--------------------------------------
A General Partner
CHANNEL ONE ASSOCIATES, L.P.
By: KKR Associates, L.P. Its General
Partner
By: /s/ Perry Golkin
--------------------------------------
A General Partner
KKR PARTNERS II, L.P.
By: KKR Associates, L.P. Its General
Partner
By: /s/ Perry Golkin
--------------------------------------
A General Partner
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Description: FY 1998 FDS for PRIMEDIA, Inc.
</LEGEND>
<CIK> 0000884382
<NAME> PRIMEDIA, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 24,538
<SECURITIES> 0
<RECEIVABLES> 284,441
<ALLOWANCES> 37,303
<INVENTORY> 41,254
<CURRENT-ASSETS> 347,142
<PP&E> 283,290
<DEPRECIATION> 135,632
<TOTAL-ASSETS> 3,041,074
<CURRENT-LIABILITIES> 581,187
<BONDS> 1,928,892
557,841
0
<COMMON> 984,154
<OTHER-SE> (1,064,893)
<TOTAL-LIABILITY-AND-EQUITY> 3,041,074
<SALES> 1,573,573
<TOTAL-REVENUES> 1,573,573
<CGS> 367,466
<TOTAL-COSTS> 367,466
<OTHER-EXPENSES> 1,087,950
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 144,442
<INCOME-PRETAX> (37,736)
<INCOME-TAX> 0
<INCOME-CONTINUING> (37,736)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,736)
<EPS-PRIMARY> (.71)
<EPS-DILUTED> (.71)
</TABLE>
