<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2275
THE SEAGRAM COMPANY LTD.
(Exact name of registrant as specified in its charter)
Canada None
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1430 Peel Street, Montreal, Quebec, Canada H3A 1S9
(Address of principal executive offices) (Zip Code)
514-849-5271
(Registrant's telephone number, including area code)
No Change
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No __
As of October 31, 1998, there were 347,646,271 common shares
without nominal or par value issued and outstanding.
<PAGE> 2
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income and
Retained Earnings -
Quarter Ended
September 30, 1998 and 1997 1
Consolidated Balance Sheet -
September 30, 1998 and June 30, 1998 2
Consolidated Statement of Cash Flows -
Quarter Ended September 30, 1998 and 1997 3
Notes to Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit Index 17
<PAGE> 3
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(United States dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
QUARTER
ENDED SEPTEMBER 30,
1998 1997
---- ----
<S> <C> <C>
Revenues $ 2,247 $ 2,372
Cost of revenues 1,282 1,361
Selling, general and administrative expenses 786 751
--------- ---------
OPERATING INCOME 179 260
Interest, net and other 41 44
--------- ---------
138 216
Provision for income taxes 87 93
Minority interest 6 9
Equity earnings from unconsolidated companies 50 2
--------- ---------
Income from continuing operations 95 116
--------- ---------
Discontinued Tropicana Operations:
Income (loss) from discontinued operations (net
of taxes of $0 in 1998 and $17 in 1997) (3) 17
Gain on sale of discontinued operations (net of
taxes of $373) 1,072 --
--------- ---------
1,069 17
--------- ---------
NET INCOME 1,164 133
Retained earnings at beginning of period 8,268 8,259
Dividends paid (57) (59)
Shares purchased and retired -- (364)
--------- ---------
Retained earnings at end of period $ 9,375 $ 7,969
========= =========
Basic earnings per share $ 3.35 $ 0.37
========= =========
Diluted earnings per share $ 3.33 $ 0.37
========= =========
Dividends paid per share $ 0.165 $ 0.165
========= =========
Weighted average shares outstanding (thousands) 347,360 358,899
Dilutive potential common shares (thousands) 2,593 3,771
--------- ---------
Adjusted weighted average shares outstanding (thousands) 349,953 362,670
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(United States dollars in millions)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1998 1998
---- ----
<S> <C> <C>
ASSETS
Current Assets
Cash and short-term investments at cost $ 3,753 $ 1,174
Receivables, net 2,216 2,155
Inventories 2,734 2,555
Film costs, net of amortization 304 175
Deferred income taxes 294 282
Prepaid expenses and other current assets 683 630
-------- --------
TOTAL CURRENT ASSETS 9,984 6,971
-------- --------
Common stock of DuPont 925 1,228
Common stock of USAi 266 306
Film costs, net of amortization 1,292 1,272
Artists' contracts, advances and other entertainment assets 860 761
Property, plant and equipment, net 2,759 2,733
Investments in unconsolidated companies 3,836 3,437
Excess of cost over fair value of assets acquired 3,109 3,076
Deferred charges and other assets 651 661
Net assets of Tropicana discontinued operations -- 1,734
-------- --------
$ 23,682 $ 22,179
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings and indebtedness payable within one year $ 1,820 $ 1,653
Accrued royalties and participations 738 702
Payables and accrued liabilities 2,043 2,068
Income and other taxes 525 286
-------- --------
TOTAL CURRENT LIABILITIES 5,126 4,709
-------- --------
Long-term indebtedness 2,266 2,225
Accrued royalties and participations 453 421
Deferred income taxes 2,541 2,598
Other credits 1,044 995
Minority interest 1,923 1,915
Shareholders' Equity
Shares without par value (347,462,841 and 347,132,224 shares, 859 848
respectively)
Cumulative currency translation adjustments (382) (499)
Cumulative gain on equity securities, net of tax 477 699
Retained earnings 9,375 8,268
-------- --------
TOTAL SHAREHOLDERS' EQUITY 10,329 9,316
-------- --------
$ 23,682 $ 22,179
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(United States dollars in millions)
<TABLE>
<CAPTION>
QUARTER
ENDED SEPTEMBER 30,
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations $ 95 $ 116
------- -------
Adjustments to reconcile income from continuing operations to
net cash used
Depreciation and amortization of assets 75 71
Amortization of excess of cost over fair value of assets 26 31
acquired
Minority interest charged to income 6 9
Equity earnings from unconsolidated companies (greater) (48) 17
less than dividends received
Sundry (6) (7)
Changes in assets and liabilities
Receivables (45) (63)
Inventories (83) (12)
Film costs, net of amortization (153) (75)
Prepaid expenses and other current assets (44) (37)
Artists' contracts, advances and other entertainment (75) (25)
assets
Payables and accrued liabilities (78) (72)
Income and other taxes (135) 15
Deferred income taxes 52 (23)
Other credits (36) (41)
------- -------
(544) (212)
------- -------
Net cash used for operating activities (449) (96)
------- -------
INVESTING ACTIVITIES
Proceeds from sale of Tropicana 3,288 --
Capital expenditures (98) (77)
Investment in USANi LLC (231) --
Sundry investments (57) (33)
------- -------
Net cash provided by (used for) investing activities 2,902 (110)
------- -------
FINANCING ACTIVITIES
Dividends paid (57) (59)
Issuance of shares upon exercise of stock options and 11 8
conversion of LYONs
Shares purchased and retired -- (387)
Increase in long-term indebtedness 20 13
Increase in short-term borrowings and indebtedness payable 155 428
within one year ------- -------
Net cash provided by financing activities 129 3
------- -------
NET CASH PROVIDED BY (USED FOR) CONTINUING OPERATIONS 2,582 (203)
NET CASH (USED FOR) PROVIDED BY DISCONTINUED OPERATIONS (3) 26
------- -------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS $ 2,579 $ (177)
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in
accordance with the requirements of Form 10-Q and, therefore, do not include all
information and notes necessary for a presentation of results of operations,
financial position and cash flows in conformity with generally accepted
accounting principles. These statements should be read in conjunction with the
consolidated financial statements and related notes in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1998, as amended. In the
opinion of the Company, the unaudited interim financial statements include all
adjustments, comprising only normal recurring adjustments, necessary for a fair
presentation of operating results. Results of operations for the three months
are not necessarily indicative of those expected for the fiscal year.
Certain prior year amounts have been reclassified to conform with the current
year's presentation.
2. Sale of Discontinued Tropicana Operations
Discontinued Tropicana Operations is composed of the business of Tropicana
Products, Inc. and the Company's global fruit juice business ("Tropicana"). On
August 25, 1998, the Company completed the sale of Tropicana for $3,288 million
in cash, resulting in a pretax gain of $1,445 million ($1,072 million after tax)
reflected in Discontinued Tropicana Operations on the consolidated statement of
income and retained earnings. The operating results of Tropicana through August
25, 1998 are also included in Discontinued Tropicana Operations. Proceeds from
the sale will be used to partially fund the acquisition of PolyGram N.V.
("PolyGram") described in Note 3, which is expected to close in December 1998.
3. Acquisition of PolyGram
On November 4, 1998, the Company announced that it had commenced its previously
announced offer for all issued shares of PolyGram. The offer is subject to
several customary conditions, including that 95 percent of PolyGram's issued
share capital be tendered and the absence of defined materially adverse changes
or events. The offer and withdrawal rights will expire on December 4, 1998,
unless extended.
4. Investment in DuPont
At September 30, 1998, the Company owned 16.4 million shares of the outstanding
common stock of E.I. du Pont de Nemours and Company ("DuPont"). The Company
accounts for the investment at market value. The underlying historical book
value of the DuPont shares is $187 million.
5. Investment in USAi
At September 30, 1998, the Company owned 7.1 million shares of the outstanding
common stock of USA Networks, Inc. ("USAi"). The investment, which the Company
accounts for at market value ($138 million at September 30, 1998), has an
underlying cost of $142 million. At September 30, 1998, the Company also owned
6.4 million shares of USAi Class B common stock which is carried at its
historical cost of $128 million.
6. Comprehensive Income
Comprehensive income for the quarter ended September 30, 1998 was $1,059 million
comprised of net income of $1,164 million, foreign currency translation
adjustments of $117 million and unrealized holding losses on equity securities
of ($222) million (net of a tax benefit of $121 million). Comprehensive income
for the quarter ended September 30, 1997 was $174 million comprised of net
income of $133 million, foreign currency translation adjustments of ($48
million) and unrealized holding gains on equity securities of $89 million (net
of taxes of $48 million).
4
<PAGE> 7
7. Supplementary Financial Statement Information
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1998 1998
---- ----
(millions)
<S> <C> <C>
INVENTORIES
Beverages $ 2,361 $ 2,239
Materials, supplies and other 373 316
------- -------
$ 2,734 $ 2,555
======= =======
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, at cost $ 4,011 $ 3,911
Accumulated depreciation (1,252) (1,178)
------- -------
$ 2,759 $ 2,733
======= =======
</TABLE>
<TABLE>
<CAPTION>
QUARTER
ENDED SEPTEMBER 30,
1998 1997
---- ----
(millions)
<S> <C> <C>
EXCISE TAXES (included in revenues and cost of revenues) $183 $150
---- ----
</TABLE>
8. Long-Term Debt and Debt Guarantees
Joseph E. Seagram & Sons, Inc. ("JES"), the Company's principal U.S. spirits and
wine subsidiary, has outstanding debt securities guaranteed by the Company. JES
issued Liquid Yield Option Notes (LYONs), which are zero coupon notes with no
interest payments due until maturity, on March 5, 2006. Each $1,000 face amount
LYON may be converted, at the option of the holder, into 18.44 of the Company's
common shares (299,173 shares at September 30, 1998). The Company has guaranteed
the LYONs on a subordinated basis.
In addition, the Company has unconditionally guaranteed JES's 8 3/8% Debentures
due February 15, 2007, 7% Debentures due April 15, 2008, 8 7/8% Debentures due
September 15, 2011, 9.65% Debentures due August 15, 2018, and 9% Debentures due
August 15, 2021.
Summarized financial information for JES and its subsidiaries follows:
<TABLE>
<CAPTION>
QUARTER
ENDED SEPTEMBER 30,
1998 1997
---- ----
(millions)
<S> <C> <C>
Revenues $ 506 $ 491
Cost of revenues $ 320 $ 351
Income from continuing operations $ 40 $ 39
Discontinued Tropicana Operations $ - $ (6)
Net income $ 40 $ 33
</TABLE>
5
<PAGE> 8
Consolidated Balance Sheet information for JES follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1998 1998
---- ----
(millions)
<S> <C> <C>
Current assets $ 4,455 $ 1,821
Noncurrent assets 9,330 12,201
------- -------
$13,785 $14,022
======= =======
Current liabilities $ 1,090 $ 843
Noncurrent liabilities 3,585 3,922
Shareholder's equity 9,110 9,257
------- -------
$13,785 $14,022
======= =======
</TABLE>
9. Earnings Per Share and Common Shares
At September 30, 1998, there were 37,739,593 common shares potentially issuable
upon the conversion of the LYONs described in Note 8 and the exercise of
outstanding employee stock options. The dilutive effect on the Company's
earnings per share from the assumed issuance of these shares is reflected in
Diluted earnings per share on the income statement.
In the three months ended September 30, 1998, the Company issued 330,617 shares
upon the exercise of employee stock options and the conversion of LYONs.
6
<PAGE> 9
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The Company operates in two global business segments: spirits and wine, and
entertainment. The spirits and wine businesses are engaged principally in the
production and marketing of distilled spirits, wines, coolers, beers and mixers.
The entertainment company, Universal Studios, Inc. ("Universal"), produces and
distributes motion picture, television and home video products, and recorded
music; and operates theme parks and retail stores.
The analysis of total Company and business segment results is prepared in
accordance with U.S. generally accepted accounting principles ("GAAP") and
includes reported revenues and operating income. The discussion also includes
reported revenues and operating income for the three lines of business within
the entertainment segment: filmed entertainment, music and recreation and other.
The discussion will also include, as supplemental information, attributed
revenues and attributed earnings before interest, taxes, depreciation and
amortization ("EBITDA"). These amounts include the Company's proportionate share
of the revenues and EBITDA, respectively, of its unconsolidated companies.
Attributed revenues and EBITDA are non-GAAP financial metrics utilized by
management and are intended solely to provide additional information to
investors. The adjustment for unconsolidated companies eliminates the
proportionate share of the revenues or EBITDA of the unconsolidated companies to
reconcile to reported revenues or operating income.
The Company believes attributed revenues and EBITDA provide additional
information for understanding the underlying business results. The Company also
believes EBITDA is an appropriate measure of the Company's operating
performance, given the goodwill associated with the Company's acquisitions.
However, attributed revenues and EBITDA should be considered in addition to, not
as a substitute for, reported revenues, operating income, net income, cash flows
and other measures of financial performance in accordance with generally
accepted accounting principles.
7
<PAGE> 10
THE SEAGRAM COMPANY LTD.
(US$ IN MILLIONS EXCEPT PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
SEPTEMBER 30,
1998 1997
---- ----
<S> <C> <C>
Revenues
Spirits & Wine $ 1,021 $ 1,027
Entertainment
Filmed Entertainment 618 829
Music 420 335
Recreation & Other 188 181
------- -------
Total Entertainment 1,226 1,345
Total Reported Revenues $ 2,247 $ 2,372
======= =======
Operating Income
Spirits & Wine $ 114 $ 165
Entertainment
Filmed Entertainment 75 111
Music (10) (17)
Recreation & Other 14 22
------- -------
Total Entertainment 79 116
Corporate (14) (21)
------- -------
Total Operating Income 179 260
Interest, Net & Other 41 44
Provision for Income Taxes 87 93
Minority Interest Charge 6 9
Equity Earnings from Unconsolidated Companies 50 2
------- -------
NET INCOME BEFORE DISCONTINUED OPERATIONS 95 116
Discontinued Operations (3) 17
Gain on Sale of Discontinued Operations 1,072 --
------- -------
NET INCOME $ 1,164 $ 133
======= =======
EARNINGS PER SHARE - Basic
Income from Continuing Operations $ 0.27 $ 0.32
Income (loss) from Discontinued Operations (0.01) 0.05
Gain on sale of Discontinued Operations 3.09 --
------- -------
$ 3.35 $ 0.37
======= =======
EARNINGS PER SHARE - Diluted
Income from Continuing Operations $ 0.27 $ 0.32
Income (loss) from Discontinued Operations (0.01) 0.05
Gain on sale of Discontinued Operations 3.07 --
------- -------
$ 3.33 $ 0.37
======= =======
Net cash used for operating activities $ (449) $ (96)
Net cash provided by (used for) investing activities $ 2,902 $ (110)
Net cash provided by financing activities $ 129 $ 3
</TABLE>
8
<PAGE> 11
SUPPLEMENTAL FINANCIAL INFORMATION
(US$ IN MILLIONS EXCEPT PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
SEPTEMBER 30,
1998 1997
---- ----
<S> <C> <C>
Attributed Revenues
Spirits & Wine $ 1,039 $ 1,088
------- -------
Entertainment
Filmed Entertainment 1,025 1,036
Music 453 367
Recreation and Other 275 254
------- -------
Total Entertainment 1,753 1,657
------- -------
Total Attributed Revenues 2,792 2,745
Adjustment for unconsolidated companies (545) (373)
------- -------
Reported Revenues $ 2,247 $ 2,372
======= =======
Attributed EBITDA
Spirits & Wine $ 145 $ 192
Entertainment
Filmed Entertainment 171 158
Music 26 18
Recreation and Other 73 63
------- -------
Total Entertainment 270 239
------- -------
Total Attributed EBITDA 415 431
Adjustment for unconsolidated companies (123) (50)
Depreciation and amortization (101) (102)
Corporate (12) (19)
------- -------
Operating Income $ 179 $ 260
======= =======
</TABLE>
Reported revenues for the quarter ended September 30, 1998 declined five percent
to $2.2 billion, reflecting lower spirits and wine revenues in Asia Pacific and
at the Motion Picture group. Operating income, which excludes the equity
earnings of unconsolidated companies, decreased significantly to $179 million
due to lower spirits and wine results, primarily in Asia Pacific, and to
declines in Filmed Entertainment and Recreation and Other. Equity earnings from
unconsolidated companies increased from $2 million last year to $50 million this
year. The increase in equity earnings reflects the impact of owning
approximately 50 percent of USANi LLC this quarter compared with 50 percent of
USA Networks in the prior period, the acquisition in June 1998 of a 37.5 percent
interest in Port Aventura, S.A. ("Port Aventura") in Spain and improved
operating results at Loews Cineplex Entertainment Corporation ("Loews Cineplex")
as compared to Cineplex Odeon Corporation (owned in the prior period).
Attributed EBITDA declined four percent to $415 million on total attributed
revenues of $2.8 billion. The attributed EBITDA decline reflects a 13 percent
increase in EBITDA, to $270 million, for the entertainment segment, offset by a
24 percent decrease in the spirits and wine group's attributed EBITDA to $145
million from $192 million.
9
<PAGE> 12
Spirits and Wine
In the quarter ended September 30, 1998, the spirits and wine segment
contributed $1.02 billion to reported revenues and $114 million to operating
income versus $1.03 billion of reported revenues and $165 million of operating
income in the prior year.
Spirits and wine revenues were adversely affected by difficult market conditions
in Asia Pacific and the impact of unfavorable foreign exchange. Reported
revenues declined one percent, however, excluding the impact of unfavorable
foreign exchange, reported revenues would have increased three percent versus
the prior year. Operating income declined 31 percent. Excluding the impact of
unfavorable foreign exchange, operating income would have decreased 27 percent.
Reported revenues in Asia Pacific were down 19 percent reflecting lower sales in
many markets including Greater China and Duty Free. Operating income for Asia
Pacific declined 58 percent as demand shifted from imported products to less
expensive locally-produced spirits. In the Americas, reported revenues and
operating income were essentially flat; a slight increase in North America was
offset by a decline in Latin America which has been affected by political
instability and economic fall-out from Asia, particularly in Brazil and
Venezuela. Europe's first quarter reported revenues increased six percent due to
improvement in Germany, reflecting the stabilization of the classic Mumm Sekt
brand and the introduction of the Jules Mumm line extension. Despite the revenue
improvement, operating income for Europe declined by 12 percent reflecting
investment spending. Key markets in Europe, including Germany, Spain and the
U.K., performed well. Operating income as a percentage of reported revenues
declined from 16.1 percent to 11.2 percent reflecting the shortfall in Asia
Pacific where predominantly higher margin products are sold.
Since the Asian economic and currency crisis began to affect the Company's
operations in the second quarter of fiscal 1998, the comparisons between the
first quarter of fiscal 1998 and the first quarter of this year were difficult.
The Company presently anticipates that on a full fiscal year basis there will be
no further material adverse change in its spirits and wine results (as compared
to fiscal year 1998) due to the situation in Asia.
In the first quarter cost of goods sold as a percentage of reported revenues
increased to 51.3 percent from 50.0 percent. Selling, general and administrative
expenses as a percentage of reported revenues increased to 37.5 percent from
33.9 percent due to spending for Year 2000 remediation, increased information
systems expenses, and the timing of expenses. Total brand spending declined
three percent at constant exchange rates as a decline related to lower volume in
Asia was partially offset by increased spending in both North America and
Europe.
Spirits and wine case volumes decreased two percent in the quarter reflecting
the impact of market conditions in Asia on several of the Company's global
brands including Chivas Regal, Martell and Royal Salute. Mumm Sekt volumes were
strong with a 28 percent year-on-year increase due to the stabilization of the
classic Mumm Sekt brand and the introduction of the Jules Mumm line extension.
ABSOLUT VODKA, which is owned by V&S Vin & Sprit AB, rose 17 percent. Captain
Morgan volumes increased three percent but Crown Royal, which was impacted by
timing, declined three percent in the quarter.
The equity in earnings of unconsolidated companies improved from a loss of $3
million last year to break even this year. The unconsolidated companies are
located in Asia Pacific and are Kirin-Seagram Limited in Japan and Seagram
(Thailand) Limited. The first quarter ended September 30, 1997 also included
Doosan Seagram Co. Limited ("Doosan Seagram") in Korea. As a result of an
additional investment in Doosan Seagram at the end of June 1998, its results are
consolidated in the current year.
Attributed revenues were five percent weaker than last year at $1.04 billion.
Attributed EBITDA decreased 24 percent to $145 million. Excluding the impact of
unfavorable foreign exchange, attributed revenues would have decreased one
percent and attributed EBITDA would have decreased 21 percent versus last year.
10
<PAGE> 13
Entertainment
In the quarter ended September 30, 1998, entertainment contributed $1.2 billion
to reported revenues, nine percent less than the $1.3 billion contributed in the
prior year. Operating income decreased 32 percent to $79 million. The decline in
reported revenues and operating income was primarily due to lower motion picture
results, which more than offset the strong music results. Operating income as a
percentage of reported revenues decreased from 8.6 percent to 6.4 percent. Total
costs, which consist primarily of production and manufacturing costs,
distribution and selling expenses, artists' costs and participations, labor and
amortization, as a percentage of reported revenues increased from 91.4 percent
to 93.6 percent.
Equity in earnings from unconsolidated companies increased from $5 million last
year to $50 million this year. The increase in equity earnings reflects the
impact of owning approximately 50 percent of USANi LLC this year compared with
50 percent of USA Networks last year. In addition, the Company benefited from
the acquisition of a 37.5 percent interest in Port Aventura in Spain and
improved operating results at Loews Cineplex .
Attributed revenues, at $1.8 billion, were up six percent over the prior year.
Attributed EBITDA improved 13 percent, to $270 million.
Filmed Entertainment
In the first quarter, reported revenues and operating income decreased 25
percent and 32 percent respectively. The Motion Picture group reported revenues
declined because of the disappointing box office performance of first quarter
releases and difficult comparisons with the prior year's first quarter which
benefited from the carryover of The Lost World and Liar, Liar. International
Television results declined year on year due to start-up costs relating to the
new international channels, lower signing bonuses, and losses from USA
International (previously owned by USA Networks), and lower International
library results. Partially offsetting these declines, Motion Picture library
sales and profitability improved over last year largely due to the network
availability of The Lost World. In addition, Television library sales were up,
reflecting the sale of Murder, She Wrote to A&E.
The equity in earnings from unconsolidated companies improved from a loss of $3
million in the prior year to income of $28 million in the current year primarily
due to the impact of owning approximately 50 percent of USANi LLC this year
compared with 50 percent of USA Networks in the prior year. The unconsolidated
companies principally include USANi LLC, Loews Cineplex, United Cinemas
International Multiplex B.V., Cinema International Corporation N.V., Cinema
International B.V., Brillstein Grey Entertainment and United International
Pictures ("UIP").
Attributed revenues declined one percent as compared to the prior year while
attributed EBITDA increased eight percent to $171 million.
Music
In the first quarter reported revenues increased 25 percent and the operating
loss declined from $17 million to $10 million. The improved performance
primarily reflects growth in domestic labels. In particular, Geffen Records and
Interscope Records had significant year-on-year improvement. In the quarter, the
Music group had strong releases from Hole, Vince Gill, Rob Zombie, Trisha
Yearwood and Marilyn Manson, as well as the soundtrack from How Stella Got Her
Groove Back.
The equity in earnings from unconsolidated companies was flat year on year at $4
million. The unconsolidated companies principally include Universal Concerts
Canada and Universal/PACE Amphitheaters Group, L.P., which are both concert
joint ventures.
Attributed revenues increased 23 percent as compared to the prior year and
attributed EBITDA grew 44 percent to $26 million.
11
<PAGE> 14
Recreation and Other
Reported revenues for Recreation and Other increased four percent in the
quarter, while operating income declined $8 million. The increase in reported
revenues reflects the success of the Crash Bandicoot 2 video game, the
management fee earned from Port Aventura and improved sales by Spencer Gifts,
partially offset by the weakness of Universal Studios Hollywood. Attendance at
the theme park in Hollywood declined 15% in the quarter, largely due to the
impact of the Asian economic and currency crisis on tourism. The decline in
operating income was due primarily to the poor performance of Universal Studios
Hollywood.
The equity in earnings from unconsolidated companies increased from $4 million
in the prior year to $18 million in the current year. The increase was driven
primarily by the impact of the investment in Universal's Port Aventura. At
Universal Studios Florida results improved slightly despite a difficult
competitive environment. The unconsolidated companies principally include
Universal City Florida Partners, Universal City Development Partners, Port
Aventura, SEGA GameWorks L.L.C. and Interplay Entertainment Corp.
Attributed revenues increased eight percent over the prior year while attributed
EBITDA improved 16 percent to $73 million.
Corporate Expenses and Interest, Net and Other
Corporate expenses were $14 million in the current quarter as compared to $21
million in the prior year, primarily due to reduced costs associated with
certain stock-based compensation resulting from the decline in the market value
of the Company's shares during the quarter. Interest, net and other was $41
million, slightly below the prior year.
Net Income
Income from continuing operations was $95 million or $0.27 per share (basic and
diluted) in the quarter compared with $116 million or $0.32 per share (basic and
diluted) last year. During the quarter, the Company realized an after-tax gain
on the sale of Tropicana of $1.07 billion. Including this gain and the results
of Tropicana until it was sold on August 25, 1998, reported net income was
$1.164 billion or $3.35 per basic share or $3.33 per diluted share.
The effective income tax rate on continuing operations including earnings from
unconsolidated companies was 46 percent in the quarter compared with 43 percent
in the prior year reflecting reduced current year earnings in the relatively low
tax jurisdictions in Asia.
Liquidity and Capital Resources
Current assets were $10.0 billion at September 30, 1998 as compared to $7.0
billion at June 30, 1998 as a result of the receipt of the cash proceeds of $3.3
billion from the sale of Tropicana. Current liabilities at September 30, 1998
were $5.1 billion compared to $4.7 billion at June 30, 1998 due primarily to an
increase in income taxes payable resulting from the $1.4 billion pretax gain on
the sale of Tropicana. Shareholders' equity was $10.3 billion at September 30,
1998 compared to $9.3 billion at June 30, 1998. Net debt was $333 million
compared to $2.7 billion at June 30, 1998 reflecting an increase in cash and
short-term investments arising from the investment of the proceeds from the sale
of Tropicana.
Net cash of $449 million was used for operating activities in the three months
ended September 30, 1998, an increase of $353 million compared to the prior year
period, resulting primarily from additional investment in inventories and films
and the payment of income taxes in the quarter.
Cash provided by investing activities was $2.9 billion in the three months ended
September 30, 1998. The $3.3 billion proceeds from the Tropicana disposition
were partially offset by an additional investment in USANi LLC of $231 million
and capital expenditures of $98 million. In the prior year, cash used for
investing activities was $110 million, primarily for capital expenditures.
Financing activities in the three months ended September 30, 1998 provided $129
million as compared to $3
12
<PAGE> 15
million in the three months ended September 30, 1997.
Cash used for discontinued Tropicana operations to the disposition date of
August 25, 1998 was $3 million as compared to the $26 million of cash provided
by the discontinued Tropicana operations in the three months ended September 30,
1997.
The Company's working capital position is reinforced by available credit
facilities of more than $9.6 billion. These facilities are used to support the
Company's commercial paper borrowings and are available for general corporate
purposes. The acquisition of PolyGram will be partially financed through the
Company's recent sale of Tropicana, the after-tax proceeds of which were
approximately $2.9 billion. The Company expects to obtain the remaining funds
necessary for the acquisition from debt securities and/or commercial bank
borrowings and/or the issuance of commercial paper. The Company believes its
access to external capital resources together with internally-generated
liquidity will be sufficient to satisfy existing commitments and plans, and to
provide adequate financial flexibility.
Year 2000 Issue
The Company has a comprehensive program to address Year 2000 readiness in its
internal systems and with its customers and suppliers. The Company's program
addresses its most critical internal systems first and targets to have them Year
2000-compliant by July 1, 1999, the first day of the Company's fiscal year 2000.
These activities are intended to encompass all major categories of information
technology and non-information technology systems in use by the Company,
including manufacturing, sales, finance and human resources. The costs incurred
to date related to these programs have not been material. The Company currently
estimates that the total costs of its Year 2000 readiness programs, excluding
redeployed resources, will not exceed $50 million. The total cost estimate does
not include potential costs related to any customer or other claims or the costs
of internal software or hardware replaced in the normal course of business. The
total cost estimate is based on the current assessment of the Company's Year
2000 readiness needs and is subject to change as the program progresses.
The Company is communicating with its major customers, suppliers and financial
institutions to determine the extent to which the Company is vulnerable to those
third parties' failure to remedy their own Year 2000 issues. While some of the
Company's major suppliers and customers contacted have confirmed that they
anticipate being Year 2000-compliant on or before December 31, 1999, most of the
customers, suppliers and financial institutions contacted have only indicated
that they have Year 2000 readiness programs.
The Company currently expects that the Year 2000 issue will not pose significant
operational problems. However, delays in the implementation of new systems, a
failure to fully identify all Year 2000 dependencies in the Company's systems
and in the systems of its suppliers, customers and financial institutions, or a
failure of such third parties to adequately address their respective Year 2000
issues could have a material adverse effect on the Company's business, financial
condition and results of operations. Therefore, the Company's Year 2000 Program
includes the development of contingency plans for continuing operations in the
event such problems arise. However, there can be no assurance that such
contingency plans will be sufficient to handle all problems which may arise.
Cautionary Statement Concerning Forward-Looking Statements
The statements herein relating to matters that are not historical facts are
forward-looking statements that are not guarantees of future performance and
involve risks and uncertainties, including but not limited to future global
economic conditions, foreign exchange rates, the actions of competitors and
other factors beyond the control of the Company including, in the case of the
Year 2000 issue, the actions of customers, suppliers and financial institutions.
13
<PAGE> 16
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the proceedings before the Competition Directorate of the
Commission of the European Community (the "Commission") involving the exemption
of UIP from Article 85(1) of the Treaty of Rome with respect to UIP's theatrical
distribution activities within the European Union, as described on page 9 of the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, as
amended. The Commission held a two-day hearing on the matter on September 24 and
25, 1998, in Brussels.
Item 4. Submission of Matters to a Vote of Security Holders
A total of 277,100,214 common shares were voted at the Annual Meeting of
Shareholders on November 4, 1998 representing 79.75 percent of the shares
entitled to be voted. Business was transacted as follows:
1. Election of Directors: The persons listed below were elected to serve on the
Board of Directors until the next annual meeting. The vote tabulation with
respect to each person follows:
<TABLE>
<CAPTION>
VOTES VOTES CAST AGAINST
DIRECTOR CAST FOR OR WITHHELD
- -------- -------- -----------
<S> <C> <C>
Edgar M. Bronfman 275,587,969 1,512,245
The Hon. Charles R. Bronfman 275,593,611 1,506,603
Edgar Bronfman, Jr. 275,536,391 1,563,823
Samuel Bronfman II 275,602,811 1,497,403
Matthew W. Barrett 275,587,203 1,513,011
Laurent Beaudoin 275,539,850 1,560,364
Frank J. Biondi, Jr. 275,582,951 1,517,263
Richard H. Brown 275,605,555 1,494,659
The Hon. William G. Davis 275,581,319 1,518,895
Andre Desmarais 270,844,902 6,255,312
Barry Diller 275,568,219 1,531,995
Michele J. Hooper 275,607,809 1,492,405
David L. Johnston 275,546,731 1,553,483
The Hon. E. Leo Kolber 275,599,984 1,500,230
Marie-Josee Kravis 275,535,265 1,564,949
Robert W. Matschullat 275,609,730 1,490,484
Samuel Minzberg 275,588,510 1,511,704
John S. Weinberg 275,594,461 1,505,753
</TABLE>
2. Ratification of Independent Accountants: The proposal to ratify the
appointment of PricewaterhouseCoopers LLP as independent accountants to serve
until the next annual meeting was approved by a vote of 275,498,740 shares
for and 683,372 shares against, withheld, abstentions and broker nonvotes.
3. Approval of Amendment to 1996 Stock Incentive Plan: The proposal to approve
the Company's amendment to the 1996 Stock Incentive Plan was approved by a
vote of 192,713,467 shares for and 73,786,637 shares against, withheld,
abstentions and broker nonvotes.
14
<PAGE> 17
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The Exhibit Index filed with this Form 10-Q is on page 17.
(b) Current Reports on Form 8-K
1. A Current Report on Form 8-K dated July 20, 1998 was filed to report
under Item 5 and file under Item 7 (a) a press release announcing
the Company's agreement to sell Tropicana to PepsiCo, Inc. and the
Company's withdrawal of its previously filed registration statement
for a proposed public sale of Tropicana and (b) a definitive
agreement relating to such transaction.
2. A Current Report on Form 8-K dated August 4, 1998 was filed to
report under Item 5 and file under Item 7 reclassified financial
statements for the fiscal year ended June 30, 1997 to report
Tropicana as discontinued operations.
3. A Current Report on Form 8-K dated August 25, 1998, as amended, was
filed to report under Item 2 the completion of the sale of Tropicana
to PepsiCo, Inc. and to file under Item 7 proforma financial
statements that give effect to the sale of Tropicana, the
acquisition of PolyGram and certain other transactions, historical
Financial Statements of PolyGram and the press release relating to
the completion of the Tropicana transaction.
4. A Current Report on Form 8-K dated September 1, 1998, as amended,
was filed to report under Item 5 and file under Item 7 the Company's
consolidated financial statements for the fiscal year ended June 30,
1998.
15
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE SEAGRAM COMPANY LTD.
------------------------
(Registrant)
By: /s/ Neal B. Cravens
-------------------
Neal B. Cravens
Senior Vice President, Finance
(Principal Accounting Officer)
Dated: November 16, 1998
16
<PAGE> 19
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
10.1 Credit Agreement dated as of October 21, 1998 among Joseph E.
Seagram & Sons, Inc., as Borrower, The Seagram Company Ltd. and
J.E. Seagram Corp., as Guarantors, the Lenders Party thereto, The
Chase Manhattan Bank, as Administrative Agent, Citibank, N.A., as
Syndication Agent, and Bank of America NT & SA and Bank of
Montreal, as Co-Documentation Agents (incorporated by reference to
Exhibit 10.2 of the Registration Statement on Form S-4
(Registration No. 333-61535) of the Company).
10.2 Credit Agreement dated as of November 23, 1994, as amended
and restated as of October 21, 1998, among Joseph E. Seagram &
Sons, Inc., as Borrower, The Seagram Company Ltd. and J.E.
Seagram Corp., as Guarantors, the Lenders Party thereto, The
Chase Manhattan Bank, as Administrative Agent, Citibank, N.A., as
Syndication Agent, and Bank of Montreal, as Documentation Agent.
10.3 Credit Agreement dated as of December 21, 1994, as amended
and restated as of October 23, 1998, among The Seagram Company
Ltd., as Borrower, the Lenders Party thereto, and Bank of
Montreal, as Administrative Agent.
12(a) Computation of Ratio of Earnings to Fixed Charges - The Seagram
Company Ltd.
12(b) Computation of Ratio of Earnings to Fixed Charges - Joseph E.
Seagram & Sons, Inc.
27 Financial Data Schedule
17
<PAGE> 1
Exhibit 10.2
US$2,000,000,000 CREDIT AGREEMENT
dated as of November 23, 1994,
as amended and restated as of
October 21, 1998
among
JOSEPH E. SEAGRAM & SONS, INC.,
as Borrower
THE SEAGRAM COMPANY LTD. and J.E. SEAGRAM CORP.,
as Guarantors
The LENDERS Party Hereto
THE CHASE MANHATTAN BANK,
as Administrative Agent
CITIBANK, N.A.,
as Syndication Agent
and
BANK OF MONTREAL,
as Documentation Agent
CHASE SECURITIES INC.,
as Arranger
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions
SECTION 1.01. Defined Terms......................................................... 1
SECTION 1.02. Classification of Loans and Borrowings................................ 15
SECTION 1.03. Terms Generally ...................................................... 16
SECTION 1.04. Accounting Terms; GAAP................................................ 16
ARTICLE II
The Credits
SECTION 2.01. Commitments........................................................... 17
SECTION 2.02. Loans and Borrowings.................................................. 17
SECTION 2.03. Requests for Revolving Borrowings..................................... 18
SECTION 2.04. Competitive Bid Procedure............................................. 18
SECTION 2.05. Money Market Loans.................................................... 21
SECTION 2.06. Funding of Borrowings................................................. 22
SECTION 2.07. Interest Elections.................................................... 23
SECTION 2.08. Termination and Reduction of
Commitments....................................................... 24
SECTION 2.09. Repayment of Loans; Evidence of Debt.................................. 25
SECTION 2.10. Prepayment of Loans................................................... 26
SECTION 2.11. Fees.................................................................. 26
SECTION 2.12. Interest.............................................................. 27
SECTION 2.13. Alternate Rate of Interest............................................ 28
SECTION 2.14. Additional Interest on Eurodollar Loans;
Increased Costs..................................................... 29
SECTION 2.15. Break Funding Payments................................................ 30
SECTION 2.16. Taxes................................................................. 31
SECTION 2.17. Payments Generally; Pro Rata Treatment;
Sharing of Setoffs................................................ 33
SECTION 2.18. Mitigation Obligations; Termination or
Replacement of Lenders.............................................. 34
SECTION 2.19. Extension of Maturity Date............................................ 35
</TABLE>
<PAGE> 3
2
<TABLE>
<S> <C>
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers.................................................. 36
SECTION 3.02. Authorization; Enforceability......................................... 36
SECTION 3.03. Governmental Approvals; No Conflicts.................................. 37
SECTION 3.04. Financial Condition; No Material Adverse
Change............................................................. 37
SECTION 3.05. Properties............................................................ 37
SECTION 3.06. Litigation ........................................................... 37
SECTION 3.07. Compliance with Laws.................................................. 38
SECTION 3.08. Investment and Holding Company Status................................. 38
SECTION 3.09. ERISA................................................................. 38
SECTION 3.10. Disclosure............................................................ 38
SECTION 3.11. Regulation U and X.................................................... 38
SECTION 3.12. Pari Passu Ranking.................................................... 38
SECTION 3.13. Year 2000 ............................................................ 39
ARTICLE IV
Conditions
SECTION 4.01. Amendment Effective Date.............................................. 39
SECTION 4.02. Each Credit Event..................................................... 40
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other
Information........................................................ 41
SECTION 5.02. Notices of Material Events............................................ 42
SECTION 5.03. Existence; Conduct of Business........................................ 43
SECTION 5.04 Payment of Taxes...................................................... 43
SECTION 5.05. Maintenance of Insurance. ............................................ 43
SECTION 5.06. Books and Records; Inspection Rights.................................. 43
SECTION 5.07. Compliance with Laws.................................................. 44
SECTION 5.08. Use of Proceeds....................................................... 44
</TABLE>
<PAGE> 4
3
<TABLE>
<S> <C>
ARTICLE VI
Negative Covenants
SECTION 6.01. Liens and Sale and Lease-Back Transactions............................ 44
SECTION 6.02. Fundamental Changes................................................... 45
SECTION 6.03. Transactions with Affiliates.......................................... 46
SECTION 6.04. Restrictive Agreements................................................ 46
SECTION 6.05. Leverage Ratio........................................................ 47
SECTION 6.06. Interest Coverage Ratio............................................... 47
ARTICLE VII
Events of Default..................................................... 47
ARTICLE VIII
The Administrative Agent.............................................. 50
ARTICLE IX
Guarantee............................................................. 52
ARTICLE X
Miscellaneous
SECTION 10.01. Notices............................................................... 54
SECTION 10.02. Waivers; Amendments................................................... 54
SECTION 10.03. Expenses; Indemnity; Damage Waiver.................................... 55
SECTION 10.04. Successors and Assigns................................................ 56
SECTION 10.05. Survival.............................................................. 60
SECTION 10.06. Counterparts; Integration;
Effectiveness....................................................... 60
SECTION 10.07. Severability.......................................................... 61
SECTION 10.08. Right of Setoff....................................................... 61
SECTION 10.09. Governing Law; Jurisdiction; Consent
to Service of Process............................................... 61
SECTION 10.10. WAIVER OF JURY TRIAL.................................................. 62
SECTION 10.11. Headings.............................................................. 62
SECTION 10.12. Confidentiality....................................................... 62
SECTION 10.13. Interest Rate Limitation.............................................. 63
SECTION 10.14. Conversion of Currencies.............................................. 63
SECTION 10.15. Effect of Amendment and Restatement................................... 64
</TABLE>
SCHEDULES:
Schedule 2.01 -- Commitments
<PAGE> 5
4
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Simpson Thacher & Bartlett
Exhibit B-2 -- Form of Opinion of Goodman Phillips & Vineberg
Exhibit B-3 -- Form of Opinion of Barnes & Thornburg
<PAGE> 6
CREDIT AGREEMENT dated as of November 23,
1994, as amended and restated as of October 21, 1998,
among JOSEPH E. SEAGRAM & SONS, INC., THE SEAGRAM
COMPANY LTD., J.E. SEAGRAM CORP., the LENDERS party
hereto, THE CHASE MANHATTAN BANK, as Administrative
Agent, CITIBANK, N.A., as Syndication Agent, and BANK
OF MONTREAL, as Documentation Agent.
The parties hereto are parties to the Borrower Existing Credit
Agreement (such term and the other capitalized terms used herein having the
meanings hereinafter provided). The parties hereto desire to amend and restate
the Borrower Existing Credit Agreement in the form hereof. Accordingly, the
parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"364 Day Credit Agreement" means the Credit Agreement dated as
of October 21, 1998, among the Borrower, The Seagram Company Ltd., as guarantor,
J.E. Seagram Corp., as guarantor, the Lenders party thereto, The Chase Manhattan
Bank, as administrative agent, Citibank, N.A., as syndication agent, and Bank of
America NT & SA and Bank of Montreal, as co-documentation agents.
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Acquisition" means the acquisition by Seagram, directly
and/or through its Subsidiaries, of not less than 75% of the issued and
outstanding capital stock of Polygram from Philips Electronics N.V. and other
public stockholders for consideration consisting of common shares of Seagram and
cash payments.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day
<PAGE> 7
2
plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective from and
including the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
"Amendment Effective Date" means the date on which the
conditions specified in Section 4.01 are satisfied (or waived in accordance with
Section 10.02).
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate" means, for any day, with respect to any
Eurodollar Revolving Loan, or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "Eurodollar Spread" or "Facility Fee Rate", as the case may
be, based upon the ratings by Moody's and S&P, respectively, applicable on such
date to the Index Debt; provided, that (i) before the Maturity Date, on any date
when outstanding Loans (including Competitive Loans) exceed 50% of the aggregate
Commitments, or (ii) after the Maturity Date, on any date when outstanding Loans
exceed 50% of the aggregate Commitments in effect immediately prior to the
Maturity Date, the Eurodollar Spread otherwise applicable to all outstanding
Revolving Loans shall be increased by 0.075%:
<TABLE>
<CAPTION>
Eurodollar Facility Fee
Index Debt Ratings: Spread Rate
------------------------ ---------- ------------
<S> <C> <C>
Category 1
Greater than or equal to A-/A3 0.210% 0.090%
Category 2
BBB+/Baa1 0.250% 0.100%
Category 3
BBB/Baa2 0.275% 0.125%
Category 4
BBB-/Baa3 0.300% 0.150%
Category 5
BB+/Ba1 0.400% 0.225%
Category 6
Less than BB+/Ba1 0.500% 0.250%
</TABLE>
For purposes of the foregoing, (i) if either Moody's or S&P
shall not have in effect a rating for the Index Debt (other than by reason of
the circumstances referred to in the last sentence of this definition), then
such rating agency shall be deemed to have established a rating in Category 6;
(ii) if the
<PAGE> 8
3
ratings established or deemed to have been established by Moody's and S&P for
the Index Debt shall fall within different Categories, the Applicable Rate shall
be based on the higher of the two ratings unless one of the two ratings is two
or more Categories lower than the other, in which case the Applicable Rate shall
be determined by reference to the Category next below that of the higher of the
two ratings; and (iii) if the ratings established or deemed to have been
established by Moody's and S&P for the Index Debt shall be changed (other than
as a result of a change in the rating system of Moody's or S&P), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Rate shall apply during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of Moody's or S&P shall change, or if either such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the unavailability of ratings from such
rating agency and, pending the effectiveness of any such amendment, the
Applicable Rate shall be determined by reference to the rating most recently in
effect prior to such change or cessation. Notwithstanding the foregoing, if as
of the Effective Date any rating agency shall not have changed or affirmed its
rating of the Index Debt to give effect to the Acquisition, then such rating
agency shall be deemed to have in effect a rating in Category 3 until such
rating agency changes or affirms its rating of the Index Debt to give effect to
the Acquisition.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 10.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Attributable Debt" means, with respect to any Sale and
Lease-Back Transaction at any time of determination, the present value
(discounted at the interest rate assumed in making calculations in accordance
with FAS 13) of the total obligations of the Borrower, any Guarantor or any
Subsidiary, as lessee, for rental payments during the remaining term of the
lease included in such Sale and Lease-Back Transaction (including any period for
which such lease has been extended).
"Availability Period" means the period from and including the
Amendment Effective Date to but excluding the earlier of the Maturity Date and
the date of termination of the Commitments.
"Board" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrower" means Joseph E. Seagram & Sons, Inc., an
Indiana corporation.
<PAGE> 9
4
"Borrower Existing Credit Agreement" means the Credit
Agreement dated as of November 23, 1994, among the Borrower, J.E. Seagram Corp.,
as guarantor, The Chase Manhattan Bank (formerly Chemical Bank), as
administrative agent, Citibank, N.A., as syndication agent, Bank of Montreal, as
documentation agent, and the banks party thereto, as in effect immediately prior
to the Amendment Effective Date.
"Borrowing" means (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect or (b) a Competitive Loan or
group of Competitive Loans of the same Type made on the same date and as to
which a single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a
Revolving Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property or
moveable or immoveable property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
"Change in Control" means (a)(i) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof),
other than the Existing Controlling Interests, of shares representing more than
25% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of Seagram; and (ii) occupation of a majority of the
seats (other than vacant seats) on the board of directors by Persons who were
neither (A) nominated by the board of directors of Seagram nor (B) appointed by
directors so nominated; or (b) the failure of Seagram to own and control,
directly or through wholly-owned Subsidiaries, shares representing 100% of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Borrower.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date
<PAGE> 10
5
of this Agreement or (c) compliance by any Lender (or, for purposes of Section
2.14(b), by any lending office of such Lender or by such Lender's holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans or Competitive Loans.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans hereunder, expressed as an
amount representing the maximum aggregate amount of such Lender's Revolving
Credit Exposure hereunder, as such commitment may be (a) reduced from time to
time pursuant to Section 2.08 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 10.04. The
initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Commitment, as applicable. The initial aggregate amount of the Lenders'
Commitments is $2,000,000,000.
"Competitive Bid" means an offer by a Lender to make a
Competitive Loan in accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive
Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making
such Competitive Bid.
"Competitive Bid Request" means a request by the Borrower for
Competitive Bids in accordance with Section 2.04.
"Competitive Loan" means a Loan made pursuant to
Section 2.04.
"Consenting Lenders" has the meaning set forth in
Section 2.19(c).
"Consolidated Total Assets" means, with respect to any Person
at any time, the total assets of such Person and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which
constitutes an Event of Default or which upon notice, lapse of
<PAGE> 11
6
time (by way of the expiration of any applicable grace period or otherwise) or
both would, unless cured or waived, become an Event of Default.
"dollars" or "$" refers to lawful money of the United
States of America.
"EBITDA" means, with respect to any Person for any period, the
consolidated net income of such Person and its consolidated subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP, plus,
to the extent deducted in computing such consolidated net income for such
period, the sum (without duplication) of (a) income tax expense, (b) Interest
Expense, (c) depreciation and amortization expense, (d) extraordinary losses,
(e) non-recurring, non-cash charges; provided that if any such non-recurring,
non-cash charges result in cash payments in the future, such cash payments shall
be deducted from EBITDA in the period when paid, (f) non-recurring charges
relating to the acquisition and integration of Polygram in an aggregate amount
of up to $750,000,000 and (g) in the case of the consolidated EBITDA of Seagram
and its Subsidiaries, the EBITDA attributable to (i) the minority interests
existing on the date of this Agreement of Matsushita Electric Industrial Co.,
Ltd. and its subsidiaries ("Matsushita") in Subsidiaries of Seagram (the
"Existing Minority Investments") and (ii) minority interests in Subsidiaries of
Seagram acquired after the date of this Agreement by Matsushita to the extent
acquired in exchange for Existing Minority Investments and not attributable to
any new investments by Matsushita minus, to the extent added in computing such
consolidated net income for such period, the sum (without duplication) of (a)
consolidated interest income, (b) extraordinary gains and (c) non-recurring,
non-cash gains; provided that (a) EBITDA shall include any EBITDA attributable
to any investment accounted for by the "equity" method of accounting, but shall
exclude any income or loss attributable to any such investment to the extent
reflected in the consolidated net income of such Person and (b) for purposes of
calculating the Leverage Ratio for the quarters ended March 31, 1999, June 30,
1999 and September 30, 1999, the consolidated EBITDA of Seagram and its
Subsidiaries shall include the historical EBITDA of Polygram as if the
Acquisition had occurred on the first day of each such relevant period for
testing compliance with the Leverage Ratio.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower or either Guarantor, is treated
as a single employer under Section 414(b) or (c) of the Code or, solely for
purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a
single employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which
<PAGE> 12
7
the 30-day notice period is waived); (b) the existence with respect to any Plan
of an "accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section
412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower, either Guarantor or any of their ERISA Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by the Borrower, either Guarantor or any of their ERISA Affiliates from
the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower, either Guarantor or any of their ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower, either
Guarantor or any of their ERISA Affiliates of any notice, or the receipt by any
Multiemployer Plan from the Borrower, either Guarantor or any of their ERISA
Affiliates of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the LIBO Rate
"Event of Default" has the meaning assigned to such
term in Article VII.
"Excluded Taxes" means, with respect to the Administrative
Agent, any Lender or any other recipient of any payment to be made by or on
account of any obligation of the Borrower or a Guarantor hereunder, (a) income
or franchise taxes imposed on (or measured by) its net income by the United
States of America, or by the jurisdiction under the laws of which such recipient
is organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.18(b)), any withholding tax that (i) is in effect and would
apply to amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office) (other
than (A) any withholding tax imposed on any payment by Seagram and (B) any
withholding tax imposed on any payment by the Borrower or a Guarantor to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.16(a)), or (ii) is attributable to such Foreign Lender's
failure to comply with Section 2.16(e).
<PAGE> 13
8
"Existing Controlling Interests" means each Person (including,
in the case of such a Person that is a trust, the individual beneficiaries of
such trust and Affiliates and subsidiaries thereof) (other than Seagram's
directors and executive officers as a group) set forth in the Form S-4 as having
beneficial ownership as of June 30, 1998 (and prior to giving effect to the
Acquisition) of more than 10% of the outstanding shares of common stock of
Seagram and includes any combination of such Persons.
"Existing Minority Investments" has the meaning set
forth in the definition of EBITDA.
"Existing Maturity Date" has the meaning set forth in
Section 2.19(a).
"Extension Date" has the meaning set forth in
Section 2.19(a).
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer, assistant treasurer or controller of
the Borrower.
"Fixed Rate" means, with respect to any Competitive Loan
(other than a Eurodollar Competitive Loan), the fixed rate of interest per annum
specified by the Lender making such Competitive Loan in its related Competitive
Bid.
"Fixed Rate Loan" means a Competitive Loan bearing
interest at a Fixed Rate.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower or any Guarantor is
located. For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
"Form S-4" means the registration statement on Form S-4 of
Seagram filed with the Securities and Exchange Commission in connection with the
registration of the exchange offer for the shares of Polygram, as declared
effective by the Securities and Exchange Commission.
<PAGE> 14
9
"GAAP" means generally accepted accounting principles
in the United States of America.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Guarantors" means, collectively, Seagram and J.E.
Seagram Corp., a Delaware corporation.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"Indebtedness" of any Person means, all obligations of such
Person for borrowed money, including (a) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (b) all Guarantees by such Person of Indebtedness of
others, (c) all Capital Lease Obligations of such Person and (d) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances.
"Indemnified Taxes" means Taxes other than Excluded
Taxes.
"Index Debt" means senior, unsecured, long-term indebtedness
for borrowed money of Seagram that is not guaranteed by any other Person or
subject to any other credit enhancement.
<PAGE> 15
10
"Interest Election Request" means a request by the Borrower to
convert or continue a Revolving Borrowing in accordance with Section 2.07.
"Interest Coverage Ratio" means, for any period, the ratio of
(a) EBITDA for Seagram and its consolidated Subsidiaries for such period to (b)
Interest Expense for such period.
"Interest Expense" means, for any period, the interest expense
of Seagram and its consolidated Subsidiaries for such period, determined on an
consolidated basis in accordance with GAAP.
"Interest Payment Date" means (a) with respect to any ABR
Loan, the last day of each March, June, September and December, (b) with respect
to any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period and (c) with
respect to any Fixed Rate Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate
Borrowing with an Interest Period of more than 90 days' duration (unless
otherwise specified in the applicable Competitive Bid Request), each day prior
to the last day of such Interest Period that occurs at intervals of 90 days'
duration after the first day of such Interest Period, and any other dates that
are specified in the applicable Competitive Bid Request as Interest Payment
Dates with respect to such Borrowing.
"Interest Period" means (a) with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months (or, subject to availability, nine or twelve months) thereafter, as
the Borrower may elect, and (b) with respect to any Fixed Rate Borrowing, the
period (which shall not be less than 7 days or more than 360 days) commencing on
the date of such Borrowing and ending on the date specified in the applicable
Competitive Bid Request; provided, that (i) if any Interest Period would end on
a day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, in the case of a Eurodollar Borrowing only,
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and, in the case of a Revolving
Borrowing, thereafter shall be the effective date of the most recent conversion
or continuation of such Borrowing.
<PAGE> 16
11
"Lenders" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Leverage Ratio" means, with respect to the last day of any
fiscal quarter, the ratio of (a) Total Debt at such time to (b) EBITDA for
Seagram and its consolidated Subsidiaries for the most recent period of four
consecutive fiscal quarters of Seagram ended at such time.
"LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing on Page 3750 of the Telerate Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the average rate (rounded
upward, if necessary, to the next 1/16th of one percent) at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Reference Banks in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.
"Lien" means, with respect to any asset of a Person that is or
would be required to be reflected on a consolidated balance sheet of such
Person, (a) any mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest in, on or of such asset and (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset.
"Loans" means the loans (other than Money Market Loans) made
by the Lenders to the Borrower pursuant to this Agreement.
"Margin" means, with respect to any Competitive Loan bearing
interest at a rate based on the LIBO Rate, the marginal rate of interest, if
any, to be added to or subtracted from the LIBO Rate to determine the rate of
interest applicable to such Loan, as specified by the Lender making such Loan in
its related Competitive Bid.
"Material Adverse Effect" means a material adverse
effect on (a) the business, operations or condition (financial or
<PAGE> 17
12
otherwise), of Seagram and its Subsidiaries, taken as a whole, (b) the ability
of the Borrower or either Guarantor to perform any of its obligations under this
Agreement or (c) the rights of or benefits available to the Lenders under this
Agreement.
"Material Indebtedness" means Indebtedness (other than the
Loans and loans under the Seagram Existing Credit Agreement and the 364-Day
Credit Agreement), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower, the Guarantors and the Subsidiaries in an
aggregate principal amount exceeding $50,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the
Borrower, any Guarantor or any Subsidiary in respect of any Hedging Agreement at
any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower, such Guarantor or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
"Material Subsidiary" means, at any time, any Subsidiary (a)
the Consolidated Total Assets of which exceed 5% of the Consolidated Total
Assets of Seagram and its consolidated Subsidiaries as of the end of the most
recent fiscal quarter of Seagram ended at or prior to such time or (b) the
operating income of which exceeds 5% of the operating income of Seagram and its
consolidated Subsidiaries for the most recent period of four consecutive fiscal
quarters of Seagram at or prior to such time.
"Matsushita" has the meaning set forth in the
definition of EBITDA.
"Maturity Date" means June 14, 2001 (subject to extension as
provided in Section 2.19).
"Money Market Borrower" has the meaning set forth in
Section 2.05.
"Money Market Loan" means a loan made by a Lender to a Money
Market Borrower in accordance with Section 2.05.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Non-Extending Lender" has the meaning set forth in
Section 2.19(b).
"Obligations" has the meaning set forth in Article IX.
"Other Taxes" means any and all present or future stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
<PAGE> 18
13
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due
or are being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in compliance with
Section 5.04;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, servitudes, rights-of-way
and similar encumbrances on real or immoveable property imposed by law
or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of
the affected property or interfere with the ordinary conduct of
business of the Borrower or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Polygram" means Polygram N.V.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York
<PAGE> 19
14
City; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.
"Reference Banks" means Bank of America NT&SA, The
Chase Manhattan Bank and Citibank, N.A. or any other Person
hereafter appointed as a Reference Bank pursuant to
Section 2.12(g).
"Register" has the meaning set forth in Section 10.04.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having
Revolving Credit Exposures and unused Commitments representing more than 50% of
the sum of the total Revolving Credit Exposures and unused Commitments at such
time; provided that, for purposes of declaring the Loans to be due and payable
pursuant to Article VII, and for all purposes after the Loans become due and
payable pursuant to Article VII or the Commitments expire or terminate, the
outstanding Competitive Loans of the Lenders shall be included in their
respective Revolving Credit Exposures in determining the Required Lenders.
"Restricted Property Amount" has the meaning set forth
in Section 6.04.
"Revolving Credit Exposure" means, with respect to any Lender
at any time, the outstanding principal amount of such Lender's Revolving Loans
at such time.
"Revolving Loan" means a Loan made pursuant to
Section 2.03.
"Sale and Lease-Back Transaction" shall mean any arrangement,
directly or indirectly, with any Person whereby such Person shall sell or
transfer any property, real or personal, moveable or immoveable, used or useful
in its business, whether now owned or hereafter acquired, and thereafter rent or
lease such property or other property which it intends to use for substantially
the same purpose or purposes as the property being sold or transferred.
"Seagram" means The Seagram Company Ltd., a Canadian
corporation.
"Seagram Existing Credit Agreement" means the Credit Agreement
dated as December 21, 1994, among Seagram, Bank of Montreal, as administrative
agent, and the banks party thereto, as the same has been and may be amended and
in effect from time to time.
"S&P" means Standard & Poor's Ratings Service.
<PAGE> 20
15
"Statutory Reserve Rate" means, with respect to any Lender for
any Interest Period, the aggregate of the maximum reserve percentages applicable
for each day during such Interest Period (including any marginal, special,
emergency or supplemental reserves) expressed as a percentage established by the
Board to which such Lender is subject for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
The Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held by the parent or one
or more subsidiaries of the parent.
"Subsidiary" means a subsidiary of the Borrower or a
Guarantor, as the context requires.
"Substitute Lender" has the meaning set forth in
Section 2.19(b).
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Debt" means, at any date, all Indebtedness of Seagram
and its consolidated Subsidiaries at such date which at such time would be
required to be reflected as a liability on a consolidated balance sheet of
Seagram and its consolidated Subsidiaries prepared in accordance with GAAP.
"Transactions" means (a) the execution, delivery and
performance by the Borrower and each Guarantor of this Agreement, the borrowing
by the Borrower of Loans and the use of the proceeds thereof and (b) the
Acquisition.
"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the LIBO Rate, the Alternate Base
Rate or, in the case of a Competitive Loan or Borrowing, a Fixed Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings.
For purposes of this Agreement, Loans may be classified and
referred to by Class (e.g., a "Revolving Loan") or by Type (e.g.,
<PAGE> 21
16
a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan").
Borrowings also may be classified and referred to by Class (e.g., a "Revolving
Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type
(e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (e) the words "asset" and "property" shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights
and (f) the phrases "the date of this Agreement", "the date hereof", and phrases
of similar import, shall mean the date of this amendment and restatement.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
<PAGE> 22
17
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions
set forth herein, each Lender agrees to make Revolving Loans to the Borrower
from time to time during the Availability Period in an aggregate principal
amount that will not result in (a) the Revolving Credit Exposure plus the
aggregate principal amount of outstanding Money Market Loans of such Lender
exceeding such Lender's Commitment or (b) the sum of the total Revolving Credit
Exposures plus the aggregate principal amount of outstanding Competitive Loans
exceeding the total Commitments. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan
shall be made as part of a Borrowing consisting of Revolving Loans made by the
Lenders ratably in accordance with their respective Commitments. Each
Competitive Loan shall be made in accordance with the procedures set forth in
Section 2.04. The failure of any Lender to make any Loan required to be made by
it shall not relieve any other Lender of its obligations hereunder.
(b) Subject to Section 2.13, (i) each Revolving Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith, and (ii) each Competitive Borrowing shall be
comprised entirely of Eurodollar Loans or Fixed Rate Loans as the Borrower may
request in accordance herewith.
(c) At the commencement of each Interest Period for any
Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $5,000,000 and not less than $25,000,000. At the
time that each ABR Revolving Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$10,000,000; provided that an ABR Revolving Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Commitments. Each
Competitive Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. Borrowings of more than one
Type and Class may be outstanding at the same time; provided that there shall
not at any time be more than a total of 10 Eurodollar Revolving Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled (i) to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date or (ii) to request any Revolving Borrowing in
an aggregate amount that, after giving effect to actual repayments of Money
Market Loans on or prior to the date of such Borrowing, would result in any
Lender being unable to fund its pro rata share of such Borrowing based on the
aggregate Commitments then in effect.
<PAGE> 23
18
SECTION 2.03. Requests for Revolving Borrowings. To
request a Revolving Borrowing, the Borrower shall notify the Administrative
Agent of such request by telephone (a) in the case of a Eurodollar Borrowing,
not later than 12:00 noon, New York City time, three Business Days before the
date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later
than 12:00 noon, New York City time, one Business Day before the date of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing. Nothing contained herein shall be deemed to prohibit the
Borrower from requesting that multiple Borrowings be made on the same date.
SECTION 2.04. Competitive Bid Procedure. (a) Subject to the
terms and conditions set forth herein, from time to time during the Availability
Period the Borrower may request Competitive Bids and may (but shall not have any
obligation to) accept Competitive Bids and borrow Competitive Loans; provided
that the sum of the total Revolving Credit Exposures plus the aggregate
principal amount of outstanding Competitive Loans at any time shall not exceed
the total Commitments. To request Competitive Bids, the Borrower shall notify
the Administrative Agent of such request by telephone, in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, four
Business Days before the date of the proposed Borrowing and, in
<PAGE> 24
19
the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City
time, one Business Day before the date of the proposed Borrowing; provided that
the Borrower may submit up to (but not more than) three Competitive Bid Requests
on the same day, but a Competitive Bid Request shall not be made within five
Business Days after the date of any previous Competitive Bid Request, unless any
and all such previous Competitive Bid Requests shall have been withdrawn or all
Competitive Bids received in response thereto rejected. Each such telephonic
Competitive Bid Request shall be confirmed promptly by hand delivery or telecopy
to the Administrative Agent of a written Competitive Bid Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Competitive Bid Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be a Eurodollar Borrowing
or a Fixed Rate Borrowing;
(iv) the Interest Period to be applicable to such Borrowing,
which shall be a period contemplated by the definition of the term
"Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the Administrative Agent shall notify the Lenders of the details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to)
make one or more Competitive Bids to the Borrower in response to a Competitive
Bid Request. Each Competitive Bid by a Lender must be in a form approved by the
Administrative Agent and must be received by the Administrative Agent by
telecopy, in the case of a Eurodollar Competitive Borrowing, not later than 9:30
a.m., New York City time, three Business Days before the proposed date of such
Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than
9:30 a.m., New York City time, on the proposed date of such Competitive
Borrowing. Competitive Bids that do not conform substantially to the form
approved by the Administrative Agent may be rejected by the Administrative
Agent, and the Administrative Agent shall notify the Borrower and the applicable
Lender as promptly as practicable. Each Competitive Bid shall specify (i) the
principal amount (which shall be an integral multiple of $1,000,000 and which
may equal the entire principal amount of the Competitive Borrowing requested by
the Borrower) of the Competitive Loan or Loans that the Lender is willing to
make, (ii) the Competitive Bid Rate or Rates at which
<PAGE> 25
20
the Lender is prepared to make such Loan or Loans (expressed as a percentage
rate per annum in the form of a decimal to no more than four decimal places) and
(iii) the Interest Period applicable to each such Loan and the last day thereof.
(c) The Administrative Agent shall promptly notify the
Borrower by telecopy of the Competitive Bid Rate and the principal amount
specified in each Competitive Bid and the identity of the Lender that shall have
made such Competitive Bid.
(d) Subject only to the provisions of this paragraph, the
Borrower may accept or reject any Competitive Bid. The Borrower shall notify the
Administrative Agent by telephone, confirmed by telecopy in a form approved by
the Administrative Agent, whether and to what extent it has decided to accept or
reject each Competitive Bid, in the case of a Eurodollar Competitive Borrowing,
not later than 10:30 a.m., New York City time, three Business Days before the
date of the proposed Competitive Borrowing, and in the case of a Fixed Rate
Borrowing, not later than 10:30 a.m., New York City time, on the proposed date
of the Competitive Borrowing; provided that (i) the failure of the Borrower to
give such notice shall be deemed to be a rejection of each Competitive Bid,
(ii) the Borrower shall not accept a Competitive Bid made at a particular
Competitive Bid Rate if the Borrower rejects a Competitive Bid made at a lower
Competitive Bid Rate for the same Interest Period, (iii) the aggregate amount of
the Competitive Bids accepted by the Borrower shall not exceed the aggregate
amount of the requested Competitive Borrowing specified in the related
Competitive Bid Request, (iv) to the extent necessary to comply with clause
(iii) above, the Borrower may accept Competitive Bids at the same Competitive
Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at
such Competitive Bid Rate, shall be made pro rata in accordance with the amount
of each such Competitive Bid, and (v) except pursuant to clause (iv) above, no
Competitive Bid shall be accepted for a Competitive Loan unless the principal
amount of such Competitive Loan is an integral multiple of $1,000,000; provided
further that in calculating the pro rata allocation of acceptances of portions
of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to
clause (iv), the amounts shall be rounded to integral multiples of $1,000,000 in
a manner determined by the Borrower. A notice given by the Borrower pursuant to
this paragraph shall be irrevocable.
(e) The Administrative Agent shall promptly notify each
bidding Lender by telecopy whether or not its Competitive Bid has been accepted
(and, if so, the amount and Competitive Bid Rate so accepted), and each
successful bidder will thereupon become bound, subject to the terms and
conditions hereof, to make the Competitive Loan in respect of which its
Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such Competitive
Bid directly to the Borrower at least one quarter of an hour earlier than the
time by which the other Lenders are
<PAGE> 26
21
required to submit their Competitive Bids to the Administrative Agent pursuant
to paragraph (b) of this Section.
SECTION 2.05. Money Market Loans. (a) The Borrower and its
Subsidiaries (for purposes of this Section, each such Person is referred to
herein as a "Money Market Borrower") may at any time and from time to time
request any one or more of the Lenders to make offers to make Money Market Loans
to such Money Market Borrower on any Business Day during the Availability Period
in the manner set forth below. Each such Lender may, but shall have no
obligation to, make such offer, and the applicable Money Market Borrower may,
but shall have no obligation to, accept any such offer in the manner set forth
in this Section.
(b) In the event that a Money Market Borrower desires to
borrow a Money Market Loan from a Lender, a Money Market Borrower shall request
that such Lender provide a quotation to such Money Market Borrower of the terms
under which such Lender would be willing to provide such Money Market Loan.
(c) In the event that a Money Market Borrower elects to accept
a Lender's offer for a Money Market Loan, such Money Market Borrower shall
provide telephonic notice to such Lender of its election no later than 30
minutes after the time that such offer was received by such Money Market
Borrower. The failure of a Money Market Borrower to provide such notice of
acceptance in a timely manner shall be deemed to constitute a rejection of the
offer of such Lender. Any Money Market Loan to be made by a Lender pursuant to
this Section shall be made by the applicable Lender crediting an account
specified by the applicable Money Market Borrower with the amount of such
advance in same day funds promptly upon receipt of such Money Market Borrower's
timely acceptance of the offer of such Lender with respect to such Money Market
Loan.
(d) The Borrower agrees to forward to the Lender with respect
to a Money Market Loan written evidence of such Money Market Loan by providing,
on the date upon which such Money Market Loan is made, documents, in form and
substance acceptable to both the Borrower and such Lender, executed and
delivered by a duly authorized office of the applicable Money Market Borrower,
confirming the amount so borrowed, the rate of interest applicable thereto and
the maturity thereof (with such Money Market Loan being due and payable on such
date of maturity); provided that the failure of the Borrower to provide such
documents shall not impair the obligation of the applicable Money Market
Borrower to repay any Money Market Loan borrowed by it. All borrowings pursuant
to this Section shall bear interest at the rate quoted to the applicable Money
Market Borrower by the relevant Lender in its quotation described in clause (b)
above, regardless of any change in the interest rate between the time of quoting
and the time of borrowing.
(e) Upon the occurrence and during the continuance of an Event
of Default, each Lender that has Money Market Loans outstanding may declare its
Money Market Loans (with any
<PAGE> 27
22
applicable interest thereon) to be immediately due and payable without the
consent of, or notice to, any other Lender; provided that if such event is an
Event of Default specified in clause (i) or (j) of Article VII with respect to
the Borrower, such Lender's Money Market Loans (and any applicable interest
thereon) shall automatically become immediately due and payable.
(f) Each Lender that shall make a Money Market Loan pursuant
to this Section shall promptly notify the Administrative Agent of the amount and
term of such Money Market Loan.
(g) The Borrower and any Lender may at any time and from time
to time enter into written agreements that provide for procedures for soliciting
and extending Money Market Loans that differ from those specified in paragraphs
(b) and (c) of this Section. As between the Borrower and such Lender such
agreements shall supersede the provisions of such paragraphs to the extent
specified therein.
(h) Notwithstanding anything to the contrary contained herein,
Money Market Loans shall not be deemed extensions of credit hereunder and the
rights and obligations of the Borrower in respect of Money Market Loans shall
not be deemed rights and obligations of the Borrower hereunder; provided that
Money Market Loans shall be considered to be extensions of credit under this
Agreement for purposes of determining availability of Revolving Loans pursuant
to Section 2.01.
(i) In the event that the availability of any Lender's
Commitment has been reduced pursuant to Section 2.01 on account of Money Market
Loans made by it to a level that is insufficient to permit such Lender to lend
its ratable share of any Revolving Borrowing requested by the Borrower hereunder
(based upon the aggregate Commitments then in effect, regardless of the extent
to which utilized or available), the applicable Money Market Borrower shall
repay such Lender's Money Market Loans simultaneously with or prior to such
Revolving Borrowing (which repayment may be financed with the proceeds of such
Revolving Borrowing) by the amount necessary to cause its unused Commitment
(before giving effect to such Revolving Borrowing, but after giving effect to
the proposed application of the proceeds thereof to the repayment of Money
Market Loans) to be at least equal to its ratable share of such requested
Revolving Borrowing.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 1:00 p.m., New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Borrower maintained with the Administrative Agent in
New York City and designated by the Borrower in the applicable Borrowing Request
or Competitive Bid Request.
<PAGE> 28
23
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans; provided that the Administrative
Agent shall not seek such compensation from the Borrower unless such Lender has
not actually made its share of the Borrowing available to the Administrative
Agent within 3 Business Days after the relevant borrowing date. If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender's Loan included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing. This Section shall
not apply to Competitive Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Revolving Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
<PAGE> 29
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(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Revolving Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing.
SECTION 2.08. Termination and Reduction of Commitments.
(a) Unless previously terminated, the Commitments shall terminate on the
Maturity Date.
(b) The Borrower may at any time terminate, or from time to
time reduce, the Commitments; provided that (i) each reduction of the
Commitments shall be in an amount that is an integral multiple of $5,000,000 and
not less than $25,000,000 and (ii) the Borrower shall not terminate or reduce
the Commitments if, after giving effect to any concurrent prepayment of the
Loans in accordance with Section 2.10, (A) the sum of the total Revolving Credit
Exposures plus the aggregate principal amount of outstanding Competitive Loans
would exceed the total Commitments or (B) the Revolving Credit Exposure plus the
aggregate principal
<PAGE> 30
25
amount of outstanding Money Market Loans of any Lender would exceed such
Lender's Commitment.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan made by such Lender on the Maturity Date applicable to such
Lender and (ii) to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Competitive Loan made by such Lender on the
last day of the Interest Period applicable to such Loan.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
<PAGE> 31
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(e) Any Lender may request that Loans made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have
the right at any time and from time to time to prepay any Borrowing in whole or
in part, subject to prior notice in accordance with paragraph (b) of this
Section; provided that the Borrower shall not have the right to prepay any
Competitive Loan without the prior consent of the Lender thereof.
(b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 12:00 noon, New
York City time, three Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Revolving Borrowing, not later than 12:00 noon, New
York City time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.08, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.08. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.
SECTION 2.11. Fees. (a) The Borrower agrees to pay
to the Administrative Agent for the account of each Lender a facility fee, which
shall accrue at the Applicable Rate on the daily amount of the Commitment of
such Lender (whether used or unused) during the period from and including the
Amendment Effective Date to but excluding the date on which such Commitment
terminates; provided that, if such Lender continues to have any Loans
outstanding after its Commitment terminates, then such facility fee shall
continue to accrue on the daily outstanding principal amount of such Loans from
and including the date on which its Commitment terminates to but excluding the
date on which such Lender ceases to have any Loans outstanding. Accrued
<PAGE> 32
27
facility fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the date on which the Commitments
terminate, commencing on the first such date to occur after the date hereof;
provided that any facility fees accruing after the date on which the Commitments
terminate shall be payable on demand. All facility fees shall be computed on the
basis of a year of 365 days (or 366 days in a leap year) and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).
(b) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent for distribution, in
the case of facility fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.
SECTION 2.12. Interest. (a) The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest (i) in the case of a Eurodollar Revolving Loan, at the LIBO Rate for
the Interest Period in effect for such Borrowing plus the Applicable Rate, or
(ii) in the case of a Eurodollar Competitive Loan, at the LIBO Rate for the
Interest Period in effect for such Borrowing plus (or minus, as applicable) the
Margin applicable to such Loan.
(c) Each Fixed Rate Loan shall bear interest at the Fixed Rate
applicable to such Loan.
(d) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Loans as provided in paragraph (a) of this
Section.
(e) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Commitments; provided that (i) interest accrued pursuant
to paragraph (d) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Revolving Loan
<PAGE> 33
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prior to the end of the current Interest Period therefor, accrued interest on
such Loan shall be payable on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate
or, in accordance with paragraph (g) below, LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
(g) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Administrative Agent as contemplated hereby by 10:30
a.m., New York City time, on the day such quotations are required to be
furnished hereunder. If any Reference Bank does not furnish a timely quotation,
the Administrative Agent shall determine the relevant LIBO Rate on the basis of
the quotations, if any, furnished by the remaining Reference Banks and, in the
event that all Reference Banks fail to so furnish a quotation, on the basis of
such other information as the Administrative Agent in its sole discretion shall
deem appropriate. If any Reference Bank assigns all its Commitment and Revolving
Loans to an unaffiliated institution, the Administrative Agent shall, in
consultation with the Borrower, appoint another Lender to act as a Reference
Bank hereunder. If the Borrower replaces or removes a Lender (which is also a
Reference Bank) pursuant to the terms of this Agreement, the Administrative
Agent shall, in consultation with the Borrower, appoint a replacement Reference
Bank.
SECTION 2.13. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the LIBO Rate for such Interest
Period; or
(b) the Administrative Agent is advised by the Required
Lenders (or, in the case of a Eurodollar Competitive Loan, the Lender
that is required to make such Loan) that the LIBO Rate for such
Interest Period will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Loans (or its Loan)
included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances
<PAGE> 34
29
giving rise to such notice no longer exist, (i) any Interest Election Request
that requests the conversion of any Revolving Borrowing to, or continuation of
any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective, (ii) if
any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing
shall be made as an ABR Borrowing and (iii) any request by the Borrower for a
Eurodollar Competitive Borrowing shall be ineffective; provided that, (a) in the
case of such a notice with respect to a Eurodollar Competitive Loan, the
Borrower may (at its option) elect to borrow such Loan from such Lender, based
upon a LIBO Rate which is mutually agreed upon by the Borrower and such Lender
and (b) if the circumstances giving rise to such notice do not affect all the
Lenders, then requests by the Borrower for Eurodollar Competitive Borrowings may
be made to Lenders that are not affected thereby.
SECTION 2.14. Additional Interest on Eurodollar Loans;
Increased Costs. (a) The Borrower shall pay to each Lender, so long as such
Lender shall be required under regulations of the Board to maintain reserves
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, additional interest on the unpaid principal amount of each Loan of
such Lender during such periods as such Loan is a Eurodollar Loan, from the date
of such Loan until the principal amount of such Eurodollar Loan is paid in full,
at an interest rate per annum equal at all times to the remainder obtained by
subtracting (i) the LIBO Rate for the Interest Period for such Eurodollar Loan
from (ii) the rate obtained by dividing such LIBO Rate by a percentage equal to
100% minus the Statutory Reserve Rate applicable to such Lender for such
Interest Period, payable on each date on which interest is payable on such
Eurodollar Loan.
(b) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in additional interest pursuant to
paragraph (a) above); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans or Fixed
Rate Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan or Fixed Rate Loan (or of
maintaining its obligation to make any such Loan) or to reduce the amount of any
sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then (except to the extent that such cost or reduction
already is reflected in the LIBO Rate applicable to such Loan) the Borrower will
pay to such Lender such additional amount or amounts as will compensate such
Lender for such additional costs incurred or reduction suffered.
<PAGE> 35
30
(c) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(d) A certificate of a Lender setting forth the additional
interest or the amount or amounts necessary to compensate such Lender or its
holding company, as the case may be, as specified in paragraph (a), (b) or (c)
of this Section shall be delivered to the Borrower (accompanied by a reasonably
detailed description of the basis of such claim) and shall be conclusive absent
manifest error. In the case of paragraphs (b) and (c) above, the Borrower shall
pay such Lender the amount shown as due on any such certificate promptly
following receipt thereof.
(e) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the Borrower shall not
be required to compensate a Lender pursuant to this Section for any reserves,
increased costs or reductions incurred more than 270 days prior to the date that
such Lender notifies the Borrower of such event or the Change in Law giving rise
to such increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided further that, if the event or Change in Law
giving rise to such reserves, increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
(f) Notwithstanding the foregoing provisions of this Section,
a Lender shall not be entitled to compensation pursuant to this Section in
respect of any Competitive Loan if the Change in Law that would otherwise
entitle it to such compensation shall have been publicly announced prior to
submission of the Competitive Bid pursuant to which such Loan was made.
SECTION 2.15. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan or Fixed Rate Loan other than on
the last day of an Interest Period applicable thereto (including as a result of
an Event of Default), (b) the conversion of any Eurodollar Loan other than on
the last day of the Interest Period applicable thereto, (c) the failure to
borrow, convert, continue or prepay any Loan other than a Competitive Loan on
the date specified in any notice delivered pursuant hereto (regardless of
whether such notice may be revoked under Section 2.10(b) and is revoked in
accordance therewith), (d) the failure to borrow any Competitive Loan after
accepting the Competitive Bid to make such Loan, or (e) the assignment of any
<PAGE> 36
31
Eurodollar Loan or Fixed Rate Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.18, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION 2.16. Taxes. (a) Any and all payments by or on account
of any obligation of the Borrower or a Guarantor hereunder shall be made free
and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower or a Guarantor shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower or such Guarantor, as the case may be, shall make such deductions and
(iii) the Borrower or such Guarantor, as the case may be, shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrower and each Guarantor, as
applicable, shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
(c) The Borrower and each Guarantor, as applicable, shall
indemnify the Administrative Agent and each Lender, within 10 days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Administrative Agent or such Lender, as the case may be, on or with
respect to any payment by or on account of any obligation of the Borrower or a
Guarantor hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed
<PAGE> 37
32
or asserted by the relevant Governmental Authority. A certificate as to the
amount of such payment or liability delivered to the Borrower or such Guarantor,
as the case may be, by a Lender, or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower or a Guarantor to a Governmental Authority,
the Borrower or such Guarantor, as the case may be, shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrower or a Guarantor is located, or any treaty to which such jurisdiction is
a party, with respect to payments under this Agreement shall deliver to the
Borrower or such Guarantor, as applicable (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower or such Guarantor, as applicable, as will permit such
payments to be made without withholding or at a reduced rate; provided, that
such Foreign Lender has received written notice from the Borrower or such
Guarantor, as applicable, advising it of the availability of such exemption or
reduction and attaching all applicable documentation.
(f) If the Administrative Agent or a Lender determines, in its
reasonable discretion, that it has received a refund of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by the Borrower or a Guarantor
or with respect to which the Borrower or a Guarantor has paid additional amounts
pursuant to this Section 2.16, it shall pay over such refund to the Borrower or
applicable Guarantor (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower or applicable Guarantor under this
Section 2.16 with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the Borrower
or applicable Guarantor, upon the request of the Administrative Agent or such
Lender, agrees to repay the amount refunded to the Borrower or applicable
Guarantor (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This paragraph shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower, any Guarantor or any other Person.
<PAGE> 38
33
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing
of Setoffs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees, or of amounts payable under
Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without setoff or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York, except that payments pursuant to Sections 2.14,
2.15, 2.16 and 10.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower or either Guarantor pursuant to and in accordance
with the express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply).
<PAGE> 39
34
Notwithstanding the foregoing, no Lender which receives a payment of principal
or interest on its applicable Maturity Date shall be obligated to share such
payment with any Lender to whom an analogous payment is not then due and
payable. The Borrower and each Guarantor consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower or such Guarantor rights of setoff and counterclaim with
respect to such participation as fully as if such Lender were a direct creditor
of the Borrower or such Guarantor, as the case may be, in the amount of such
participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to 2.06(b) or 2.17(d), then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.18. Mitigation Obligations; Termination or
Replacement of Lenders. (a) If any Lender requests compensation under Section
2.14, or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section
2.16, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16,
as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
<PAGE> 40
35
(b) If any Lender requests compensation under Section 2.14
(other than paragraph (a) thereof) or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.16, or if any Lender defaults in its obligation
to fund Loans hereunder, then the Borrower may within 90 days of such event, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, (i) if no Default shall have occurred and be continuing, prepay (without
regard to any provisions hereof that require prepayments to be made ratably
among the Lenders) in full all Loans of such Lender, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and terminate the
Commitment of such Lender in full or (ii) require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 10.04), all its interests, rights and obligations under
this Agreement (other than any outstanding Competitive Loans held by it) to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (A) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (B) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans (other than
Competitive Loans), accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (C) in the case of any such assignment resulting from a claim
for compensation under Section 2.14 or payments required to be made pursuant to
Section 2.17, such assignment will result in a material reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
SECTION 2.19. Extension of Maturity Date. (a) The Borrower
may, by notice to the Administrative Agent (which shall promptly deliver a copy
to each of the Lenders) given not less than 60 days and not more than 90 days
prior to each anniversary of the Amendment Effective Date (each such
anniversary, an "Extension Date") request that the Lenders extend the Maturity
Date at any time in effect (the "Existing Maturity Date") for an additional
year. Each Lender shall, by notice to the Borrower and the Administrative Agent
given not later than the 30th day prior to such Extension Date, advise the
Borrower whether or not it agrees to such extension on the terms set forth in
such notice. Any Lender that has not so advised the Administrative Agent by such
day (or such later date as the Administrative Agent and the Borrower shall
otherwise agree) shall be deemed to have declined to agree to such extension.
(b) The Borrower shall have the right at any time thereafter,
to (i) require any Lender which shall have advised or been deemed to advise the
Borrower that it will not agree to an
<PAGE> 41
36
extension of the Existing Maturity Date (each a "Non-Extending Lender") to
transfer without recourse (in accordance with and subject to the restrictions
contained in Section 10.04) all its interests, rights and obligations under this
Agreement in respect of Commitments and Revolving Loans to one or more other
banks or financial institutions (any such bank or other financial institution
being called a "Substitute Lender"), which may include any Lender; provided that
such Substitute Lender, if not already a Lender hereunder, shall be subject to
the approval of the Borrower and the Administrative Agent (which approval shall
not be unreasonably withheld) and shall execute all such documentation as the
Administrative Agent shall specify to evidence its status as a Lender hereunder
or (ii) if no Default shall have occurred and be continuing, prepay (without
regard to any provisions hereof that require prepayments to be made ratably
among the Lenders) in full all Loans of a Non-Extending Lender, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and
terminate the Commitment of such Lender in full.
(c) The Existing Maturity Date for those Lenders (including
Substitute Lenders) consenting (the "Consenting Lenders") to an extension in
accordance with paragraph (a) or (b) above, as applicable, shall be
automatically extended for an additional year and the Commitment of each
Non-Extending Lender (after giving effect to each termination, transfer and
assignment pursuant to paragraph (b) above) shall either (i) terminate in
accordance with paragraph (b) above or (ii) remain in effect until the Existing
Maturity Date in effect prior to giving effect to any extension pursuant to this
Section.
(d) The decision to agree or withhold agreement to any
extension of the Existing Maturity Date hereunder shall be at the sole
discretion of each Lender.
ARTICLE III
Representations and Warranties
The Borrower and each of the Guarantors represents and
warrants to the Lenders that:
SECTION 3.01. Organization; Powers. The Borrower, each
Guarantor and each Material Subsidiary is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.
SECTION 3.02. Authorization; Enforceability. The
Transactions are within the Borrower's and each Guarantor's corporate powers and
have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement
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37
has been duly executed and delivered by the Borrower and each Guarantor and
constitutes a legal, valid and binding obligation of the Borrower and each
Guarantor, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally, subject to general principles of equity regardless
of whether considered in a proceeding in equity or at law and subject to any
applicable obligation of good faith contained in Section 1-203 of the Uniform
Commercial Code of the State of New York.
SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower, either Guarantor or any Material
Subsidiary or any order of any Governmental Authority, and (c) will not violate
or result in a default under any indenture, agreement or other instrument
binding upon the Borrower, either Guarantor or any Material Subsidiary or their
assets, or give rise to a right thereunder to require any payment to be made by
the Borrower, either Guarantor or any Material Subsidiary, except where such
violation or default, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders the consolidated
balance sheet and consolidated statements of income and retained earnings and of
cash flows for Seagram as of and for the fiscal year ended June 30, 1998,
reported on by Price Waterhouse, independent public accountants. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of Seagram and its consolidated
Subsidiaries as of such date and for such periods in accordance with GAAP.
(b) Since June 30, 1998, there has been no material adverse
change in the business, operations or condition (financial or otherwise), of
Seagram and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) The Borrower, each Guarantor and
each Material Subsidiary has good title to, or valid leasehold interests in, all
its real and personal property, except where any such failure, individually or
in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect.
(b) The Borrower, each Guarantor and each Material Subsidiary
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and
other intellectual property material to the business of Seagram and its
Subsidiaries, taken as a whole, and the use thereof by the Borrower, each
Guarantor and each Material Subsidiary does not infringe upon the rights of any
other Person, except for any such infringements that, individually
<PAGE> 43
38
or in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.06. Litigation. There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrower or either Guarantor, threatened
against or affecting the Borrower, either Guarantor or any Material Subsidiary
(a) as to which there is a reasonable possibility of an adverse determination
and that, if adversely determined, would reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect (other than those
matters disclosed in filings with the Securities and Exchange Commission) or (b)
that involve the validity or enforceability of this Agreement or the
Transactions.
SECTION 3.07. Compliance with Laws. The Borrower, each
Guarantor and each Material Subsidiary is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and, except where the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.08. Investment and Holding Company Status. Neither
the Borrower nor either Guarantor is (a) an "investment company" as defined in,
or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, would reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.10. Disclosure. Neither the Form S-4 on the date it
becomes effective, the Borrower's and the Guarantors' filings with the
Securities and Exchange Commission on the date filed nor any of the other
reports, financial statements, certificates or other information delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, the Borrower and the Guarantors represent only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
SECTION 3.11. Regulation U and X. The making of the Loans and
the use of the proceeds thereof will not violate Regulation U or X of the Board.
SECTION 3.12. Pari Passu Ranking. The obligations of the
Borrower and each Guarantor under this Agreement rank at least
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39
pari passu in priority of payment with all other unsecured Indebtedness of the
Borrower and each Guarantor, respectively.
SECTION 3.13. Year 2000. The computer and management
information systems of Seagram and its Subsidiaries will be programmed and/or
reprogrammed prior to December 31, 1999, such that the occurrence of January 1,
2000, will not cause malfunctions of such computer and management information
systems which would, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01. Amendment Effective Date. This amendment and
restatement shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders
and dated the Amendment Effective Date) of (i) Simpson Thacher &
Bartlett, counsel for the Borrower and the Guarantors, substantially in
the form of Exhibit B-1, (ii) Barnes & Thornburg, special Indiana
counsel for the Borrower, substantially in the form of B-2 and (iii)
Goodman Phillips & Vineberg, Canadian counsel for Seagram,
substantially in the form of B-3. The Borrower and the Guarantors
hereby request such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good
standing of the Borrower, each Guarantor, the authorization of the
Transactions and any other legal matters relating to the Borrower, the
Guarantors, this Agreement or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.
(d) The Acquisition shall have been consummated in accordance
with applicable law and in a manner and with consequences not
materially different from the description thereof in the Form S-4.
<PAGE> 45
40
(e) The Lenders shall have received a pro forma balance sheet
of Seagram as of June 30, 1998, and a pro forma consolidated income
statement of Seagram for the period from July 1, 1997, through June 30,
1998, after giving effect to the Transactions and the consummation of
the other transactions contemplated hereby as if they had occurred on
the date of such balance sheet and at the beginning of the period
covered by such income statement, respectively, and such balance sheet
and income statement shall not be materially inconsistent with the
information and projections previously provided to the Lenders.
(f) The Seagram Existing Credit Agreement shall have been
amended and restated in order to conform, to the reasonable
satisfaction of the Administrative Agent, the representations,
warranties, covenants, events of default, financial terms and certain
other terms of the Seagram Existing Credit Agreement to those of the
364-Day Agreement.
(g) The 364-Day Credit Agreement and the obligations to make
loans thereunder shall have become effective pursuant to Section 4.01
of the 364-Day Credit Agreement.
(h) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Amendment Effective
Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder.
The Administrative Agent shall notify the Borrower and the Lenders of the
Amendment Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, this amendment and restatement shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 3:00 p.m., New York City time, on
March 31, 1999.
SECTION 4.02. Each Credit Event. The obligation of each
Lender to make a Loan on the occasion of any Borrowing is subject to the
satisfaction of the following conditions:
(a) The representations and warranties of the Borrower and the
Guarantors set forth in this Agreement shall be true and correct in all
material respects on and as of the date of such Borrowing.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower and each Guarantor on the date thereof as to the matters specified
in paragraphs (a) and (b) of this Section.
<PAGE> 46
41
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, the Borrower and each Guarantor covenants and agrees with the
Lenders that:
SECTION 5.01. Financial Statements and Other Information.
The Borrower will furnish to the Administrative Agent and each Lender:
(a) within 120 days after the end of each fiscal year of
Seagram and the Borrower either (i) the Reports of Seagram and the
Borrower to the Securities and Exchange Commission on Form 10-K for
such year, or (ii) if such Report of Seagram or the Borrower shall not
be prepared for such year, such Person's audited consolidated balance
sheet and related statements of operations and retained earnings and of
cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all
reported on by PricewaterhouseCoopers or other independent public
accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material
respects the financial condition and results of operations of such
Person and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of Seagram and the Borrower either
(i) the Reports of Seagram and the Borrower to the Securities and
Exchange Commission on Form 10-Q for such quarter, or (ii) if such
Report of Seagram or the Borrower shall not be prepared for such
quarter, such Person's consolidated balance sheet and related
statements of operations and retained earnings and of cash flows as of
the end of and for such fiscal quarter and the then elapsed portion of
the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of
such Person and its consolidated Subsidiaries on a consolidated basis
in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of
the Borrower (i) certifying as to whether a Default has occurred and,
if a Default has
<PAGE> 47
42
occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections
6.05 and 6.06 and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited
financial statements referred to in Section 3.04 which has had a
material effect on the financial reporting of Seagram and its
Subsidiaries and, if any such change has occurred, specifying the
effect of such change on the financial statements accompanying such
certificate;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the
extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies
of all periodic reports and proxy statements filed by the Borrower, any
Guarantor or any Material Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities
exchange, or distributed by Seagram to its shareholders generally, as
the case may be; and
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower, any Guarantor or any of their Subsidiaries,
or compliance with the terms of this Agreement, as the Administrative
Agent or any Lender (acting through the Administrative Agent) may
reasonably request.
SECTION 5.02. Notices of Material Events. Upon obtaining
knowledge thereof, the Borrower will furnish to the Administrative Agent and
each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any Affiliate thereof that would
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, would reasonably be
expected to result in a Material Adverse Effect; and
<PAGE> 48
43
(d) any other development that results in, or would reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower and
each Guarantor will, and will cause each Material Subsidiary to, do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.02.
SECTION 5.04. Payment of Taxes. The Borrower and each
Guarantor will, and will cause each of its Subsidiaries to, pay its Tax
liabilities, that, if not paid, would reasonably be expected to result in a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) the Borrower, such Guarantor or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP and (c) the failure to make payment pending such contest would not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Insurance. The Borrower and each
Guarantor will, and will cause each Material Subsidiary to maintain, with
financially sound and reputable insurance companies, insurance against loss or
damage to its property in accordance with good business practice, or at the
option of Borrower or a Guarantor, in lieu of all or any part of such insurance,
maintain, or cause each Material Subsidiary to maintain, by means of adequate
insurance reserves currently set aside or maintained out of earnings or surplus,
a system of self-insurance with respect to such properties and against such
risks.
SECTION 5.06. Books and Records; Inspection Rights. The
Borrower and each Guarantor will, and will cause each of its Subsidiaries to,
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. The Borrower and each Guarantor will, and will cause each of its
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender (acting through the Administrative Agent), upon reasonable
prior notice, to visit and inspect its properties during normal business hours,
to examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and, during the continuance of
an Event of Default, independent accountants, all at such reasonable times and
as often as reasonably requested.
<PAGE> 49
44
SECTION 5.07. Compliance with Laws. The Borrower and each
Guarantor will, and will cause each Material Subsidiary to, comply with all
laws, rules, regulations and orders of any Governmental Authority applicable to
it or its property, except where the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will
be used only for general corporate purposes of Seagram and its Subsidiaries,
including for the financing of the Acquisition and/or the back up of commercial
paper (including commercial paper issued to provide initial financing for the
Acquisition).
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, the Borrower and each Guarantor covenants and agrees with the
Lenders that:
SECTION 6.01. Liens and Sale and Lease-Back Transactions. The
Borrower and each Guarantor will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues or
rights in respect of any thereof, or enter into any Sale and Lease-Back
Transaction involving real property, plant and equipment, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower, any
Guarantor or any Subsidiary existing on the date hereof; provided that
(i) such Lien shall not apply to any other property or asset of the
Borrower, any Guarantor or any Subsidiary and (ii) such Lien shall
secure only those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower, any Guarantor or any Subsidiary or
existing on any property or asset of any Person that becomes a
Subsidiary after the date hereof prior to the time such Person becomes
a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person
becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of the Borrower, any Guarantor or
any Subsidiary and (iii) such Lien shall secure only those obligations
which it secures on the date of such acquisition or the date such
Person becomes a Subsidiary, as the case may
<PAGE> 50
45
be and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof (other than to
capitalize accrued interest and fees thereon and any refinancing
costs);
(d) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower, any Guarantor or any Subsidiary (including,
without limitation, capital leases); provided that (i) such security
interests secure only Indebtedness incurred to acquire, construct or
improve such assets and the Indebtedness secured thereby is incurred
prior to or within 180 days after such acquisition or the completion of
such construction or improvement and (ii) such security interests shall
not apply to any other property or assets of the Borrower, any
Guarantor or any Subsidiary;
(e) Sale and Lease-Back Transactions involving real property,
plant and equipment to the extent that the aggregate Attributable Debt
on account of such Sale and Lease-Back Transactions, when added to (A)
the aggregate principal amount of Indebtedness secured at such time by
Liens permitted only pursuant to paragraph (f) of this Section and (B)
the Restricted Property Amount at such time under Section 6.04, does
not exceed 15% of the Consolidated Total Assets of Seagram at such
time; and
(f) other Liens to secure Indebtedness of the Borrower, the
Guarantors and the Subsidiaries; provided that the aggregate principal
amount of Indebtedness so secured, when added to (A) the aggregate
Attributable Debt of Sale and Lease-Back Transactions permitted only by
paragraph (e) of this Section and (B) the Restricted Property Amount at
such time under Section 6.04, does not exceed 15% of the Consolidated
Total Assets of Seagram at such time.
SECTION 6.02. Fundamental Changes. The Borrower and each
Guarantor will not merge into or consolidate with any other Person, or permit
any other Person to merge into or consolidate with it, or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing, (a) any Person may merge into
the Borrower or a Guarantor in a transaction in which the Borrower or such
Guarantor, as the case may be, is the surviving corporation or (b) the Borrower
or a Guarantor, as the case may be, may merge into Seagram or a wholly-owned
Subsidiary of Seagram in a transaction in which Seagram or such wholly-owned
Subsidiary is the surviving corporation; provided that Seagram or such
wholly-owned Subsidiary shall expressly assume all the duties and obligations of
the Borrower or such Guarantor, as the case may be, to be performed or observed
under this Agreement. Seagram will not, and will not permit any Subsidiary to,
sell, transfer, lease or otherwise dispose of (in one transaction or a series of
transactions) all or substantially all of the assets of Seagram and its
Subsidiaries, taken as a whole (in each case, whether now owned or hereafter
acquired).
<PAGE> 51
46
SECTION 6.03. Transactions with Affiliates. The Borrower and
each Guarantor will not, and will not permit any of their Material Subsidiaries
to, sell, lease or otherwise transfer any property or assets to, or purchase,
lease or otherwise acquire any property or assets from, or otherwise engage in
any other transactions with, any Affiliate of Seagram, except in the ordinary
course of business, at prices and on terms and conditions not less favorable to
the Borrower, such Guarantor or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties. For purposes of this Section
6.03, a Subsidiary shall be deemed not to be an Affiliate of Seagram.
SECTION 6.04. Restrictive Agreements. The Borrower and each
Guarantor will not, and will not permit any of its Material Subsidiaries to,
directly or indirectly, enter into, incur or permit to exist any agreement or
other arrangement that prohibits, restricts or imposes any condition upon (a)
the ability of the Borrower, any Guarantor or any Subsidiary to create, incur or
permit to exist any Lien upon any of its property or assets, or (b) the ability
of any Subsidiary to pay dividends or other distributions with respect to any
shares of its capital stock or to make or repay loans or advances to the
Borrower, any Guarantor or any other Subsidiary or to Guarantee Indebtedness of
the Borrower, any Guarantor or any other Subsidiary, except to the extent that
such prohibition, restriction or condition, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect;
provided that (i) the foregoing shall not apply to prohibitions, restrictions
and conditions imposed by applicable law or regulation or by this Agreement, the
Seagram Existing Credit Agreement or the 364-Day Credit Agreement, (ii) the
foregoing shall not apply to prohibitions, restrictions and conditions existing
on the date hereof (but shall apply to any amendment or modification expanding
the scope of any such prohibition, restriction or condition), (iii) the
foregoing shall not apply to customary prohibitions, restrictions and conditions
contained in agreements relating to the sale of property, assets or a Subsidiary
pending such sale, provided such prohibitions, restrictions and conditions apply
only to the property, assets or Subsidiary, as the case may be, that is to be
sold and such sale is not prohibited hereunder, (iv) clause (a) of the foregoing
shall not apply to prohibitions, restrictions and conditions arising in
connection with contractual arrangements relating to the acquisition, financing,
license, syndication, sale, transfer or other disposition of intellectual
property (including, without limitation, films, television programming and
music); provided that such prohibitions, restrictions and conditions apply only
to the specific assets which are subject to such contractual arrangements, (v)
clause (a) the foregoing shall not apply to prohibitions, restrictions and
conditions arising pursuant to contractual arrangements (other than arrangements
with respect to Indebtedness) relating to specific items of property entered
into in the ordinary course of business; provided that (x) such prohibitions,
restrictions and conditions apply only to such specific items of property which
are subject to such contractual arrangements and (y) if the aggregate amount of
property subject to such prohibitions, restrictions or
<PAGE> 52
47
conditions exceeds 5% of the Consolidated Total Assets of Seagram at any time,
the amount of such excess (the "Restricted Property Amount"), when added to (A)
the aggregate principal amount of Indebtedness secured by Liens permitted only
by paragraph (f) of Section 6.01 and (B) the aggregate amount of Attributable
Debt of Sale and Lease-Back Transactions permitted only by paragraph (e) of
Section 6.01 shall not exceed 15% of the Consolidated Total Assets of Seagram at
such time, (vi) clause (a) of the foregoing shall not apply to prohibitions,
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such prohibitions, restrictions or
conditions apply only to the property or assets securing such Indebtedness and
(vii) clause (a) of the foregoing shall not apply to customary provisions in
leases and other contracts restricting the assignment thereof.
SECTION 6.05. Leverage Ratio. The Leverage Ratio will not
exceed (a) 5.25 to 1.00 for the period from March 31, 1999 through September 30,
1999, (b) 4.50 to 1.00 for the period from October 1, 1999 through September 30,
2000 and (c) 3.50 to 1.00 thereafter.
SECTION 6.06. Interest Coverage Ratio. The Interest Coverage
Ratio for any period of four consecutive fiscal quarters of Seagram ending on
any date falling in the periods set forth below will not be less than (a) 2.50
to 1.00 for the period from and including March 31, 1999 through and including
March 31, 2000 and (b) 3.00 to 1.00 thereafter.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) the Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement, when and as the same
shall become due and payable, and such failure shall continue
unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower, any Guarantor or any Subsidiary in this
Agreement or any amendment or modification hereof or waiver hereunder,
or in any report, certificate, financial statement or other document
furnished pursuant to this Agreement or any amendment or modification
hereof or
<PAGE> 53
48
waiver hereunder, shall prove to have been incorrect in any
material respect when made or deemed made;
(d) the Borrower or any Guarantor shall fail to observe or
perform any covenant, condition or agreement contained in Section 5.02
(a) or 5.03 (with respect to the Borrower's existence) or in Article
VI;
(e) the Borrower or any Guarantor shall fail to observe or
perform any covenant, condition or agreement contained in this
Agreement (other than those specified in clause (a), (b) or (d) of this
Article), and such failure shall continue unremedied for a period of 30
days after notice thereof from the Administrative Agent to the Borrower
(which notice will be given at the request of any Lender);
(f) the Borrower, any Guarantor or any Subsidiary shall fail
to make any payment (after giving effect to any applicable grace
period) in respect of the principal or interest of Indebtedness under
either the Seagram Existing Credit Agreement or the 364-Day Credit
Agreement, when and as the same shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or the
Borrower, any Guarantor or any Subsidiary shall fail to repay the
principal of any Material Indebtedness upon its final maturity;
provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) any event or condition occurs that enables or permits
(with or without the giving of notice, the lapse of time or both) the
holder or holders of Indebtedness under either the Seagram Existing
Credit Agreement or the 364-Day Credit Agreement or any trustee or
agent on its or their behalf to cause such Indebtedness to become due,
or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity;
(i) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower, any
Guarantor or any Material Subsidiary or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower, any Guarantor or any
Material Subsidiary or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
<PAGE> 54
49
(j) the Borrower, any Guarantor or any Material Subsidiary
shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail
to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower, any
Guarantor or any Material Subsidiary or for a substantial part of its
assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(k) the Borrower, any Guarantor or any Material Subsidiary
shall become unable, admit in writing its inability or fail generally
to pay its debts as they become due;
(l) one or more judgments for the payment of money in an
aggregate amount in excess of $50,000,000 shall be rendered against the
Borrower, any Guarantor, any Material Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively
stayed, or any judgment creditor shall attach or levy upon any assets
of the Borrower, any Guarantor or any Material Subsidiary to enforce
any such judgment;
(m) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in liability
of the Borrower, the Guarantors and their Subsidiaries in an aggregate
amount exceeding $50,000,000 for all periods; or
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
or a Guarantor described in clause (i) or (j) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or
<PAGE> 55
50
other notice of any kind, all of which are hereby waived by the Borrower; and in
case of any event with respect to the Borrower or a Guarantor described in
clause (i) or (j) of this Article, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower, any Guarantor or any
Subsidiary or other Affiliate thereof as if it were not the Administrative Agent
hereunder.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 10.02), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower, either Guarantor or any of their Subsidiaries that is communicated to
or obtained by the bank serving as Administrative Agent or any of its Affiliates
in any capacity. The Administrative Agent shall not be liable for any action
taken or not taken by it with the consent or at the request of the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 10.02) or in the absence of its
own gross negligence or wilful misconduct. The Administrative Agent shall be
deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative
<PAGE> 56
51
Agent by the Borrower or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement, (ii)
the contents of any certificate, report or other document delivered hereunder or
in connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent reasonably selected by
the Administrative Agent and to the Related Parties of the Administrative Agent
and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may, on behalf of the Lenders, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. The appointment of any such successor shall be subject to the consent
of the Borrower (not to be unreasonably withheld). Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and
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52
become vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the Administrative Agent's resignation hereunder, the provisions of this
Article and Section 10.03 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Guarantee
In order to induce the Lenders to extend credit hereunder,
each Guarantor hereby irrevocably and unconditionally guarantees, as a primary
obligor and not merely as a surety, the obligations of the Borrower from time to
time under this Agreement with respect to the payment of (a) the principal of
and interest on the Loans when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise and (b) all other
monetary obligations of the Borrower hereunder (the "Obligations"). For the
avoidance of doubt, the obligations of the Borrower with respect to Money Market
Loans shall not constitute Obligations hereunder. Each Guarantor further agrees
that the due and punctual payment of the Obligations may be extended or renewed,
in whole or in part, without notice to or further assent from it, and that it
will remain bound upon its Guarantee hereunder notwithstanding any such
extension or renewal of any Obligation. The obligations of the Guarantors
hereunder shall be joint and several.
Each Guarantor waives presentment to, demand of payment from
and protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its obligations and notice of protest for nonpayment. The
obligations of each Guarantor hereunder shall not be affected by (a) the failure
of any Lender or the Administrative Agent to assert any claim or demand or to
enforce any right or remedy against the Borrower or the other Guarantor under
the provisions of this Agreement or otherwise;
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53
(b) any rescission, waiver, amendment or modification of any of the terms or
provisions of this Agreement or any other agreement; or (c) the failure of any
Lender to exercise any right or remedy against the Borrower or the other
Guarantor.
Each Guarantor further agrees that its agreement hereunder
constitutes a promise of payment when due (whether or not any bankruptcy or
similar proceeding shall have stayed the accrual or collection of any of the
Obligations or operated as a discharge thereof) and not merely of collection,
and waives any right to require that any resort be had by any Lender to any
balance of any deposit account or credit on the books of any Lender in favor of
the Borrower or any other Person.
The obligations of each Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever, by reason of the invalidity, illegality or
unenforceability of the Obligations, any impossibility in the performance of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Administrative Agent or any Lender to
assert any claim or demand or to enforce any remedy under this Agreement or any
other agreement, by any waiver or modification in respect of any thereof, by any
default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission which may or might in any manner or
to any extent vary the risk of either Guarantor or otherwise operate as a
discharge of either Guarantor or the Borrower as a matter of law or equity.
Each Guarantor further agrees that its obligations hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by the Administrative Agent or any Lender upon the
bankruptcy or reorganization of the Borrower or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which the Administrative Agent or any Lender may have at law or in
equity against either Guarantor by virtue hereof, upon the failure of the
Borrower to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or otherwise, each
Guarantor hereby promises to and will, upon receipt of written demand by the
Administrative Agent, forthwith pay, or cause to be paid, in cash the amount of
such unpaid Obligation.
Upon payment by either Guarantor of any Obligation, each
Lender shall, in a reasonable manner, assign to such Guarantor the amount of
such Obligation owed to it and so paid by such Guarantor, such assignment to be
pro tanto to the extent to which the Obligation in question was discharged by
such Guarantor, or make such disposition thereof as such Guarantor shall direct
<PAGE> 59
54
(all without recourse to any Lender and without any representation or warranty
by any Lender).
Upon payment by either Guarantor of any sums as provided
above, all rights of such Guarantor against the Borrower arising as a result
thereof by way of right of subrogation or otherwise shall in all respects be
subordinated and junior in right of payment to the prior indefeasible payment in
full of all the Obligations owed by the Borrower to the Lenders.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 375 Park Avenue, New York,
New York 10152, Attention of Vice President and Treasurer (Telecopy No.
(212) 572-7350);
(b) if to Seagram, to it at 1430 Peel Street, Montreal,
Quebec, H3A 1S9, Canada, Attention of Vice President and Treasurer
(Telecopy No. (514) 987-5221), with a copy to the Borrower;
(c) if to J.E. Seagram Corp., to it at 375 Park Avenue, New
York, New York 10152, Attention of Vice President and Treasurer
(Telecopy No. (212) 572-7350);
(d) if to the Administrative Agent, to The Chase Manhattan
Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th
Floor, New York, New York 10081, Attention of Janet Belden (Telecopy
No. (212) 552-5658), with a copy to The Chase Manhattan Bank, 270 Park
Avenue, New York 10017, Attention of Carol Ulmer (Telecopy No. (212)
270-5120);
(e) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 10.02. Waivers; Amendments. (a) No failure or delay
by the Administrative Agent or any Lender in exercising any right or power
hereunder shall operate as a waiver thereof,
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55
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent and the
Lenders hereunder are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower or a Guarantor therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower, each Guarantor and the Required Lenders or
by the Borrower, each Guarantor and the Administrative Agent, with the consent
of the Required Lenders; provided that no such agreement shall (i) increase the
Commitment of any Lender without the written consent of such Lender, (ii) reduce
the principal amount of any Loan or reduce the rate of interest thereon, or
reduce any fees payable hereunder, without the written consent of each Lender
directly affected thereby, (iii) postpone the scheduled date of payment of the
principal amount of any Loan, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender directly affected thereby, (iv) change Section 2.17(b) or
(c) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender , (v) release either
Guarantor from, or limit or condition, its obligations under Article IX, without
the written consent of each Lender, or (vi) change any of the provisions of this
Section or the definition of "Required Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent hereunder without the prior written consent of the
Administrative Agent.
SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrower shall promptly pay (i) all reasonable out-of-pocket expenses incurred
by the Administrative Agent and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, in connection
with the syndication of the credit facilities provided for herein, the
preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or
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56
thereby shall be consummated) and (ii) all reasonable out-of-pocket expenses
incurred by the Administrative Agent or any Lender, including the reasonable
fees, charges and disbursements of any counsel for the Administrative Agent or
any Lender, in connection with the enforcement or protection of its rights in
connection with this Agreement, including its rights under this Section, or in
connection with the Loans made hereunder, including all such out-of-pocket
expenses incurred during any workout or restructuring in respect of such Loans.
(b) The Borrower shall indemnify the Administrative Agent and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or the use of the proceeds therefrom, or (iii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses result from the gross negligence or wilful
misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Administrative
Agent, not later than 10 days after written demand therefor, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
SECTION 10.04. Successors and Assigns. (a) The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors
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57
and assigns permitted hereby, except that neither the Borrower nor any Guarantor
may assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower or a Guarantor without such consent shall be null
and void). Nothing in this Agreement, expressed or implied, shall be construed
to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (other than Competitive Loans) at the
time owing to it); provided that (i) except in the case of an assignment to a
Lender or an Affiliate of a Lender which is primarily engaged in the business of
originating or holding performing commercial loans or commitments in respect
thereof, each of the Borrower and the Administrative Agent must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld), (ii) except in the case of an assignment to a Lender or an Affiliate
of a Lender or an assignment of the entire remaining amount of the assigning
Lender's Commitment, the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $25,000,000 (and after giving effect thereto, the
assigning Lender must continue to have a Commitment of at least $25,000,000)
unless each of the Borrower and the Administrative Agent otherwise consent,
(iii) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender's rights and obligations under this Agreement,
except that this clause (iii) shall not apply to rights in respect of
outstanding Competitive Loans, (iv) the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, together
with a processing and recordation fee of $3,500, (except that no such fee shall
be payable with respect to any assignments made pursuant to Section 2.18 or
2.19),and (v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and provided further that
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (i) or (j) of Article VII has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
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58
covering all of the assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.14, 2.15, 2.16 and 10.03). Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this paragraph shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), any processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or,
the Administrative Agent, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first
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proviso to Section 10.02(b) that affects such Participant. Subject to paragraph
(f) of this Section, the Borrower agrees that each Participant shall be entitled
to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were
a Lender and had acquired its interest by assignment pursuant to paragraph (b)
of this Section, provided that such participant agrees to be subject to Section
2.18(b) as though it were a Lender. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.17(c)
as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.14 or 2.16 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.16 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.16(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
(h) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") of such Granting Lender, identified as such in writing from time to
time by the Granting Lender to the Administrative Agent and the Borrower, the
option to provide to the Borrower all or any part of any Loan that such Granting
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan, (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof and (iii) no
SPC or Granting Lender shall be entitled to receive any greater amount pursuant
to Section 2.14 or 2.16 than the Granting Lender would have been entitled to
receive had the Granting Lender not otherwise granted such SPC the option to
provide any Loan to the Borrower. The making of any Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender (and, if such Loan is a
Competitive Loan, shall be deemed to utilize the Commitments of all the Lenders)
to the same extent, and as if, such Loan were made by the Granting Lender. Each
party hereto hereby agrees that no SPC shall be liable, for so long as,
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and to the extent, the related Granting Lender makes such payment. Each party
hereto hereby acknowledges and agrees that no SPC shall have any voting rights
hereunder and that the voting rights attributable to any extensions of credit
made by an SPC shall be exercised only by the relevant Granting Lender. Each
Granting Lender shall serve as the administrative agent and attorney in fact for
its SPC and shall on behalf of its SPC: (i) receive any and all payments made
for the benefit of such SPC and (ii) give and receive all communications and
notices and take all actions hereunder to the extent, if any, such SPC shall
have any rights hereunder. To the extent a SPC shall have the right to receive
or give any such notice or take any such action in writing, it shall be signed
by its Granting Lender as administrative agent and attorney-in-fact for such SPC
and need not be signed by such SPC on its own behalf. The Borrower, the
Guarantors, the Administrative Agent and the Lenders may rely thereon without
any requirement that the SPC sign or acknowledge the same. In addition,
notwithstanding anything to the contrary contained in this Section 10.04, any
SPC may (i) with notice to, but without the prior written consent of, the
Borrower or the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to its Granting
Lender or to any financial institutions providing liquidity and/or credit
facilities to or for the account of such SPC to fund the Loans made by such SPC
or to support the securities (if any) issued by such SPC to fund such Loans and
(ii) disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of a surety,
guarantee or credit or liquidity enhancement to such SPC.
SECTION 10.05. Survival. All covenants, agreements,
representations and warranties made by the Borrower and each Guarantor herein
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid and so long as the
Commitments have not expired or terminated. The provisions of Sections 2.14,
2.15, 2.16 and 10.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination of the Commitments or
the termination of this Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness.
This Agreement may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original, but all
of which when taken
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together shall constitute a single contract. This Agreement and any separate
letter agreements with respect to fees payable to the Administrative Agent
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section
4.01, this Agreement shall become effective when it shall have been executed by
the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing and the Loans are due and payable, each Lender
and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other obligations at any time owing by such Lender or Affiliate to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff) which such Lender
may have.
SECTION 10.09. Governing Law; Jurisdiction; Consent to
Service of Process. (a) This Agreement shall be construed in accordance with
and governed by the law of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced
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in other jurisdictions by suit on the judgment or in any other manner provided
by law. Nothing in this Agreement shall affect any right that any party hereto
may otherwise have to bring any action or proceeding relating to this Agreement
against any other party hereto or its properties in the courts of any
jurisdiction.
(c) The Borrower and each Guarantor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 10.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 10.12. Confidentiality. Each of the Administrative
Agent and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) to the extent that such confidential
Information is directly relevant to the subject matter thereof, in connection
with the exercise of any remedies
<PAGE> 68
63
hereunder or any suit, action or proceeding relating to this Agreement or the
enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
and each Guarantor or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent or any Lender on a nonconfidential basis
from a source other than the Borrower or a Guarantor. For the purposes of this
Section, "Information" means all information received from or on behalf of
Seagram or any of its Subsidiaries relating to Seagram, any of its Subsidiaries
or any of their respective businesses or assets, other than any such information
that is available to the Administrative Agent or any Lender on a nonconfidential
basis prior to disclosure by Seagram or any of its Subsidiaries; provided that,
in the case of information received from (or on behalf of) Seagram or any of its
Subsidiaries after the date hereof, such information is clearly identified at
the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 10.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
SECTION 10.14. Conversion of Currencies. (a) If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum
owing hereunder in one currency into another currency, each party hereto agrees,
to the fullest extent that it may effectively do so, that the rate of exchange
used shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.
<PAGE> 69
64
(b) The obligations of Borrower and each Guarantor in respect
of any sum due to any party hereto or any holder of the obligations owing
hereunder (the "Applicable Creditor") shall, notwithstanding any judgment in a
currency (the "Judgment Currency") other than the currency in which such sum is
stated to be due hereunder (the "Agreement Currency"), be discharged only to the
extent that, on the Business Day following receipt by the Applicable Creditor of
any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor
may in accordance with normal banking procedures in the relevant jurisdiction
purchase the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, the Borrower or applicable
Guarantor, as applicable, agrees, as a separate obligation and notwithstanding
any such judgment, to indemnify the Applicable Creditor against such loss. The
obligations of the Borrower and each Guarantor contained in this Section 10.14
shall survive the termination of this Agreement and the payment of all other
amounts owing hereunder.
SECTION 10.15. Effect of Amendment and Restatement.
Upon the effectiveness of the amendment and restatement of the
Borrower Existing Credit Agreement in the form hereof pursuant to
Section 4.01:
(a) the Borrower Existing Credit Agreement (including all
Exhibits and Schedules thereto) will be amended and restated in its
entirety as set forth herein; and
(b) all Loans outstanding under the Borrower Existing Credit
Agreement as of the Amendment Effective date shall continue to remain
outstanding hereunder, without affecting the Interest Period of any
outstanding Borrowing;
provided that the amendment and restatement of the Borrower Existing Credit
Agreement in the form hereof shall not affect the Borrower's obligations accrued
in respect of any principal, interest, fees or other amounts under the Borrower
Existing Credit Agreement, or be deemed to evidence or constitute repayment of
all or any portion of any such obligations or liabilities. Unless and until the
Amendment Effective Date occurs as provided herein, the Borrower Existing Credit
Agreement shall remain in effect and shall not be affected by this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
JOSEPH E. SEAGRAM & SONS, INC.
by /s/ John R. Preston
-------------------------
Name:John R. Preston
Title:Vice President and
Treasurer
<PAGE> 70
65
THE SEAGRAM COMPANY LTD.
by /s/ John R. Preston
-------------------------
Name:John R. Preston
Title:Vice President and
Treasurer
J. E. SEAGRAM CORP.
by /s/ John R. Preston
-------------------------
Name:John R. Preston
Title:Vice President and
Treasurer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent
by /s/ Marian N. Schulman
-------------------------
Name:Marian N. Schulman
Title:Vice President
BANK OF MONTREAL, individually
and as Co-Documentation Agent
by /s/ Jeffrey N. Wieser
-------------------------
Name:Jeffrey N. Wieser
Title:Managing Director
CITIBANK, N.A., as Syndication
Agent
by /s/ Carolyn A. Kee
-------------------------
Name:Carolyn A. Kee
Title:Vice President
CITICORP USA, INC.
by /s/ Carolyn A. Kee
-------------------------
Name:Carolyn A. Kee
Title:Attorney-in-Fact
BANK OF AMERICA NT&SA,
individually and as Co-
Documentation Agent
by /s/ James T. Gilland
-------------------------
Name:James T. Gilland
Title:Senior Vice President
<PAGE> 71
66
BANQUE NATIONALE DE PARIS
by /s/ Richard L. Sted
-------------------------
Name:Richard L. Sted
Title:Senior Vice President
by /s/ Sophie Revillard Kaufman
-----------------------------
Name:Sophie Revillard Kaufman
Title:Vice President
DEUTSCHE BANK AG NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
by /s/ Stephan A. Wiedemann
-------------------------
Name:Stephan A. Wiedemann
Title:Director
by /s/ Hans-Josef Thiele
-------------------------
Name:Hans-Josef Thiele
Title:Director
DRESDNER BANK AG NEW YORK BRANCH
AND GRAND CAYMAN BRANCH
by /s/ J. Michael Leffler
-------------------------
Name:J. Michael Leffler
Title:Senior Vice President
by /s/ Laura G. Fazio
-------------------------
Name:Laura G. Fazio
Title:First Vice President
NATIONSBANK, N.A.
by /s/ James T. Gilland
-------------------------
Name:James T. Gilland
Title:Senior Vice President
<PAGE> 72
67
PARIBAS
by /s/ Duane Helkowski
-------------------------
Name:Duane Helkowski
Title:Vice President
by /s/ David I. Canavan
-------------------------
Name:David I. Canavan
Title:Director
ROYAL BANK OF CANADA
by /s/ David A.Barsalou
-------------------------
Name:David A. Barsalou
Title:Senior Manager
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
by /s/ Diana H. Imhof
-------------------------
Name:Diana H. Imhof
Title:Vice President
CIBC, INC.
by /s/ Katherine Bass
-------------------------
Name:Katherine Bass
Title:Executive Director
ABN AMRO BANK, N.V.
by /s/ Frances O'R. Logan
-------------------------
Name:Frances O'R. Logan
Title:Group Vice President
by /s/ William S. Bennett
-------------------------
Name:William S. Bennett
Title:Vice President
THE BANK OF NEW YORK
by /s/ Stephen M. Nettler
-------------------------
Name:Stephen M. Nettler
Title:Assistant Vice President
<PAGE> 73
68
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
by /s/ Michael C. Irwin
-------------------------
Name:Michael C. Irwin
Title:Vice President
CREDIT LYONNAIS NEW YORK BRANCH
by /s/ Vladimir Labun
-------------------------
Name:Vladimir Labun
Title:First Vice President-
Manager
CREDIT SUISSE FIRST BOSTON
by /s/ Joel Glodowski/
/s/ David Kratovil
-------------------------
Name:Joel Glodowski/
David Kratovil
Title:Managing Director/
Director
THE FUJI BANK, LIMITED
by /s/ Raymond Ventura
-------------------------
Name:Raymond Ventura
Title:Vice President &
Manager
MELLON BANK, N.A.
by /s/ Peyton R. Latimer
-------------------------
Name:Peyton R. Latimer
Title:Sr. Vice President
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
by /s/ Jon Bramwell
-------------------------
Name:Jon Bramwell
Title:Corporate Manager North
America
<PAGE> 74
69
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
by /s/ Jon Bramwell
-------------------------
Name:Jon Bramwell
Title:Corporate Manager
North America
THE SAKURA BANK, LIMITED
by /s/ Yasumasa Kikuchi
-------------------------
Name:Yasumasa Kikuchi
Title:Senior Vice President
THE SANWA BANK, LIMITED
by /s/ Dominic J. Sorresso
-------------------------
Name:Dominic J. Sorresso
Title:Vice President
SOCIETE GENERALE FINANCE
(IRELAND) LIMITED
by /s/ R. Wanless/
/s/ T. Leonard
-------------------------
Name:R. Wanless/T. Leonard
Title:Managing Director/
Account Manager
SUMITOMO BANK, LIMITED
by /s/ J. Bruce Meredith
-------------------------
Name:J. Bruce Meredith
Title:Senior Vice President
THE TORONTO-DOMINION BANK
by /s/ Warren Finlay
-------------------------
Name:Warren Finlay
Title:Manager Credit
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
by /s/ J. Kenneth Biegen
-------------------------
Name:J. Kenneth Biegen
Title:Vice President
<PAGE> 75
70
BANKBOSTON, N.A.
by /s/ William F. Hamilton
-------------------------
Name:William F. Hamilton
Title:Director
THE BANK OF NOVA SCOTIA
by /s/ James R. Trimble
-------------------------
Name:James R. Trimble
Title:Sr. Relationship
Manager
FIRST HAWAIIAN BANK
by /s/ Charles L. Jenkins
-------------------------
Name:Charles L. Jenkins
Title:Vice President &
Manager
THE FIRST NATIONAL BANK OF
CHICAGO
by /s/ Tom Dao
-------------------------
Name:Tom Dao
Title:Corporate Banking
Officer
LLOYDS BANK PLC
by /s/ David C. Rodway
-------------------------
Name:David C. Rodway
Title:Assistant Vice
President R156
by /s/ Paul D. Briamonte
-------------------------
Name:Paul D. Briamonte
Title:Director, Acquisition
& Project Finance, USA B374
THE ROYAL BANK OF SCOTLAND PLC
by /s/ D. Dougan
-------------------------
Name:D. Dougan
Title:Vice President
<PAGE> 76
71
INSTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
by /s/ Wendell Jones/
/s/ Ettore Viazzo
-------------------------
Name:Wendell Jones/
Ettore Viazzo
Title:Vice President/
Vice President
WELLS FARGO BANK
by /s/ Frieda Youlios/
/s/ Felynn C. Quilo
-------------------------
Name:Frieda Youlios/
Felynn C. Quilo
Title:Vice President/
Assistant Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
by /s/ Lucie L. Guernsey
-------------------------
Name:Lucie L. Guernsey
Title:Director
by /s/ Walter T. Duffy III
-------------------------
Name:Walter T. Duffy III
Title: Associate
<PAGE> 77
Schedule 2.01
<TABLE>
<CAPTION>
Institution Revolving Commitment
----------- --------------------
<S> <C>
The Chase Manhattan Bank $100,000,000
Bank of Montreal 100,000,000
Citicorp USA, Inc. 100,000,000
Bank of America NT&SA 75,000,000
Banque Nationale de Paris 75,000,000
Deutsche Bank AG New York
Branch and/or Cayman Islands
Branch 75,000,000
Dresdner Bank AG New York 75,000,000
Branch and Grand Cayman Branch
Nationsbank, N.A. 75,000,000
Paribas 75,000,000
Royal Bank of Canada 75,000,000
Morgan Guaranty Trust Company
of New York 70,000,000
CIBC, Inc. 65,000,000
ABN AMRO Bank, N.V. 60,000,000
The Bank of New York 60,000,000
Bank of Tokyo-Mitsubishi Trust
Company 60,000,000
Credit Lyonnais New York
Branch 60,000,000
Credit Suisse First Boston 60,000,000
The Fuji Bank Ltd. 60,000,000
Mellon Bank, N.A. 60,000,000
National Westminster Bank Plc 60,000,000
The Sakura Bank, Limited 60,000,000
The Sanwa Bank, Limited 60,000,000
Societe Generale Finance
(Ireland) Ltd. 60,000,000
The Sumitomo Bank, Limited 60,000,000
The Toronto-Dominion Bank 60,000,000
The Industrial Bank of Japan,
Limited, New York Branch 35,000,000
BankBoston, N.A. 25,000,000
The Bank of Nova Scotia 25,000,000
First Hawaiian Bank 25,000,000
The First National Bank of
Chicago 25,000,000
Lloyds Bank, Plc 25,000,000
The Royal Bank of Scotland plc 25,000,000
San Paolo Bank 25,000,000
Wells Fargo Bank 25,000,000
</TABLE>
<PAGE> 78
2
<TABLE>
<S> <C>
Westdeutsche Landesbank
Girozentrale, New York Branch 25,000,000
TOTAL COMMITMENTS $2,000,000,000
- -----------------
</TABLE>
<PAGE> 1
Exhibit 10.3
US$1,100,000,000 CREDIT AGREEMENT
dated as of December 21, 1994,
as amended and restated as of
October 23, 1998
among
THE SEAGRAM COMPANY LTD.,
as Borrower
The LENDERS Party Hereto
and
BANK OF MONTREAL,
as Administrative Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
Definitions
<S> <C> <C>
SECTION 1.01. Defined Terms......................................................... 1
SECTION 1.02. Classification of Loans and Borrowings................................ 15
SECTION 1.03. Terms Generally ...................................................... 15
SECTION 1.04. Accounting Terms; GAAP................................................ 16
ARTICLE II
The Credits
SECTION 2.01. Commitments........................................................... 16
SECTION 2.02. Loans and Borrowings.................................................. 17
SECTION 2.03. Requests for Revolving Borrowings..................................... 17
SECTION 2.04. Competitive Bid Procedure............................................. 18
SECTION 2.05. Money Market Loans.................................................... 20
SECTION 2.06. Funding of Borrowings................................................. 22
SECTION 2.07. Interest Elections.................................................... 23
SECTION 2.08. Termination and Reduction of
Commitments....................................................... 24
SECTION 2.09. Repayment of Loans; Evidence of Debt.................................. 25
SECTION 2.10. Prepayment of Loans................................................... 25
SECTION 2.11. Fees.................................................................. 26
SECTION 2.12. Interest.............................................................. 27
SECTION 2.13. Alternate Rate of Interest............................................ 28
SECTION 2.14. Additional Interest on Eurodollar Loans;
Increased Costs................................................... 29
SECTION 2.15. Break Funding Payments................................................ 30
SECTION 2.16. Taxes................................................................. 31
SECTION 2.17. Payments Generally; Pro Rata Treatment;
Sharing of Setoffs................................................ 32
SECTION 2.18. Mitigation Obligations; Termination or
Replacement of Lenders............................................ 34
SECTION 2.19. Extension of Maturity Date............................................ 35
</TABLE>
<PAGE> 3
2
ARTICLE III
<TABLE>
Representations and Warranties
<S> <C> <C>
SECTION 3.01. Organization; Powers.................................................. 36
SECTION 3.02. Authorization; Enforceability......................................... 36
SECTION 3.03. Governmental Approvals; No Conflicts.................................. 36
SECTION 3.04. Financial Condition; No Material Adverse
Change............................................................. 37
SECTION 3.05. Properties............................................................ 37
SECTION 3.06. Litigation ........................................................... 37
SECTION 3.07. Compliance with Laws.................................................. 37
SECTION 3.08. Investment and Holding Company Status................................. 38
SECTION 3.09. ERISA................................................................. 38
SECTION 3.10. Disclosure............................................................ 38
SECTION 3.11. Regulation U and X.................................................... 38
SECTION 3.12. Pari Passu Ranking.................................................... 38
SECTION 3.13. Year 2000 ............................................................ 38
ARTICLE IV
Conditions
SECTION 4.01. Amendment Effective Date.............................................. 38
SECTION 4.02. Each Credit Event..................................................... 40
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other
Information........................................................ 40
SECTION 5.02. Notices of Material Events............................................ 42
SECTION 5.03. Existence; Conduct of Business........................................ 42
SECTION 5.04 Payment of Taxes...................................................... 42
SECTION 5.05. Maintenance of Insurance. ............................................ 43
SECTION 5.06. Books and Records; Inspection Rights.................................. 43
SECTION 5.07. Compliance with Laws.................................................. 43
SECTION 5.08. Use of Proceeds....................................................... 43
</TABLE>
<PAGE> 4
3
<TABLE>
ARTICLE VI
Negative Covenants
<S> <C> <C>
SECTION 6.01. Liens and Sale and Lease-Back Transactions............................ 43
SECTION 6.02. Fundamental Changes................................................... 45
SECTION 6.03. Transactions with Affiliates.......................................... 45
SECTION 6.04. Restrictive Agreements................................................ 45
SECTION 6.05. Leverage Ratio........................................................ 46
SECTION 6.06. Interest Coverage Ratio............................................... 46
ARTICLE VII
Events of Default..................................................... 47
ARTICLE VIII
The Administrative Agent.............................................. 49
ARTICLE IX
[INTENTIONALLY OMITTED]............................................... 52
ARTICLE X
Miscellaneous
SECTION 10.01. Notices............................................................... 52
SECTION 10.02. Waivers; Amendments................................................... 52
SECTION 10.03. Expenses; Indemnity; Damage Waiver.................................... 53
SECTION 10.04. Successors and Assigns................................................ 54
SECTION 10.05. Survival.............................................................. 58
SECTION 10.06. Counterparts; Integration;
Effectiveness....................................................... 58
SECTION 10.07. Severability.......................................................... 59
SECTION 10.08. Right of Setoff....................................................... 59
SECTION 10.09. Governing Law; Jurisdiction; Consent
to Service of Process............................................... 59
SECTION 10.10. WAIVER OF JURY TRIAL.................................................. 60
SECTION 10.11. Headings.............................................................. 61
SECTION 10.12. Confidentiality....................................................... 61
SECTION 10.13. Interest Rate Limitation.............................................. 61
SECTION 10.14. Effect of Amendment and Restatement................................... 62
SECTION 10.15. Language.............................................................. 62
SECTION 10.16. Superior Force........................................................ 62
</TABLE>
SCHEDULES:
Schedule 2.01 -- Commitments
<PAGE> 5
4
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Simpson Thacher & Bartlett
Exhibit B-2 -- Form of Opinion of Goodman Phillips & Vineberg
<PAGE> 6
CREDIT AGREEMENT dated as of December 21,
1994, as amended and restated as of October 23, 1998,
among THE SEAGRAM COMPANY LTD., the LENDERS party
hereto and BANK OF MONTREAL, as Administrative Agent,
The parties hereto are parties to the Seagram Existing Credit
Agreement (such term and the other capitalized terms used herein having the
meanings hereinafter provided). The parties hereto desire to amend and restate
the Seagram Existing Credit Agreement in the form hereof. Accordingly the
parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this
Agreement, the following terms have the meanings specified below:
"364 Day Credit Agreement" means the Credit Agreement dated as
of October 21, 1998, among Joseph E. Seagram & Sons, Inc., the Borrower, as
guarantor, J.E. Seagram Corp., as guarantor, the Lenders party thereto, The
Chase Manhattan Bank, as administrative agent, Citibank, N.A., as syndication
agent, and Bank of America NT & SA and Bank of Montreal, as co-documentation
agents.
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Acquisition" means the acquisition by the Borrower, directly
and/or through its Subsidiaries, of not less than 75% of the issued and
outstanding capital stock of Polygram from Philips Electronics N.V. and other
public stockholders for consideration consisting of common shares of the
Borrower and cash payments.
"Administrative Agent" means Bank of Montreal, in its capacity
as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in
the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall
<PAGE> 7
2
be effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.
"Amendment Effective Date" means the date on which the
conditions specified in Section 4.01 are satisfied (or waived in accordance with
Section 10.02).
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate" means, for any day, with respect to any
Eurodollar Revolving Loan, or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "Eurodollar Spread" or "Facility Fee Rate", as the case may
be, based upon the ratings by Moody's and S&P, respectively, applicable on such
date to the Index Debt; provided, that (i) before the Maturity Date, on any date
when outstanding Loans (including Competitive Loans) exceed 50% of the aggregate
Commitments, or (ii) after the Maturity Date, on any date when outstanding Loans
exceed 50% of the aggregate Commitments in effect immediately prior to the
Maturity Date, the Eurodollar Spread otherwise applicable to all outstanding
Revolving Loans shall be increased by 0.075%:
Eurodollar Facility Fee
Index Debt Ratings: Spread Rate
Category 1
> = A-/A3 0.210% 0.090%
Category 2
BBB+/Baa1 0.250% 0.100%
Category 3
BBB/Baa2 0.275% 0.125%
Category 4
BBB-/Baa3 0.300% 0.150%
Category 5
BB+/Ba1 0.400% 0.225%
Category 6
<BB+/Ba1 0.500% 0.250%
For purposes of the foregoing, (i) if either Moody's or S&P
shall not have in effect a rating for the Index Debt (other than by reason of
the circumstances referred to in the last sentence of this definition), then
such rating agency shall be deemed to have established a rating in Category 6;
(ii) if the ratings established or deemed to have been established by Moody's
and S&P for the Index Debt shall fall within different Categories, the
Applicable Rate shall be based on the higher of the two
<PAGE> 8
3
ratings unless one of the two ratings is two or more Categories lower than the
other, in which case the Applicable Rate shall be determined by reference to the
Category next below that of the higher of the two ratings; and (iii) if the
ratings established or deemed to have been established by Moody's and S&P for
the Index Debt shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be effective as of the date
on which it is first announced by the applicable rating agency. Each change in
the Applicable Rate shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change. If the rating system of Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Rate shall be determined by
reference to the rating most recently in effect prior to such change or
cessation. Notwithstanding the foregoing, if as of the Effective Date any rating
agency shall not have changed or affirmed its rating of the Index Debt to give
effect to the Acquisition, then such rating agency shall be deemed to have in
effect a rating in Category 3 until such rating agency changes or affirms its
rating of the Index Debt to give effect to the Acquisition.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 10.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Attributable Debt" means, with respect to any Sale and
Lease-Back Transaction at any time of determination, the present value
(discounted at the interest rate assumed in making calculations in accordance
with FAS 13) of the total obligations of the Borrower or any Subsidiary, as
lessee, for rental payments during the remaining term of the lease included in
such Sale and Lease-Back Transaction (including any period for which such lease
has been extended).
"Availability Period" means the period from and including the
Amendment Effective Date to but excluding the earlier of the Maturity Date and
the date of termination of the Commitments.
"Board" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrower" means The Seagram Company Ltd., a Canadian
corporation.
"Borrowing" means (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in
<PAGE> 9
4
effect or (b) a Competitive Loan or group of Competitive Loans of the same Type
made on the same date and as to which a single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a
Revolving Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in Montreal, New York City or Toronto are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or
moveable or immoveable property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 (U.S.A.), as amended
from time to time and the rules of the Securities and Exchange Commission
thereunder as in effect on the date hereof), other than the Existing Controlling
Interests, of shares representing more than 25% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Borrower;
and (b) occupation of a majority of the seats (other than vacant seats) on the
board of directors by Persons who were neither (i) nominated by the board of
directors of the Borrower nor (ii) appointed by directors so nominated.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.14(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans or Competitive Loans.
"Code" means the Internal Revenue Code of 1986 (U.S.A.), as
amended from time to time.
<PAGE> 10
5
"Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans hereunder, expressed as an
amount representing the maximum aggregate amount of such Lender's Revolving
Credit Exposure hereunder, as such commitment may be (a) reduced from time to
time pursuant to Section 2.08 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 10.04. The
initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Commitment, as applicable. The initial aggregate amount of the Lenders'
Commitments is $1,100,000,000.
"Competitive Bid" means an offer by a Lender to make a
Competitive Loan in accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive
Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making
such Competitive Bid.
"Competitive Bid Request" means a request by the Borrower for
Competitive Bids in accordance with Section 2.04.
"Competitive Loan" means a Loan made pursuant to Section 2.04.
"Consenting Lenders" has the meaning set forth in Section
2.19(c).
"Consolidated Total Assets" means, with respect to any Person
at any time, the total assets of such Person and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time (by way of the expiration
of any applicable grace period or otherwise) or both would, unless cured or
waived, become an Event of Default.
"dollars" or "$" refers to lawful money of the United
States of America.
"EBITDA" means, with respect to any Person for any period, the
consolidated net income of such Person and its consolidated subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP, plus,
to the extent deducted in computing such consolidated net income for such
period, the sum (without duplication) of (a) income tax expense, (b) Interest
Expense, (c) depreciation and amortization expense,
<PAGE> 11
6
(d) extraordinary losses, (e) non-recurring, non-cash charges; provided that if
any such non-recurring, non-cash charges result in cash payments in the future,
such cash payments shall be deducted from EBITDA in the period when paid, (f)
non-recurring charges relating to the acquisition and integration of Polygram in
an aggregate amount of up to $750,000,000 and (g) in the case of the
consolidated EBITDA of the Borrower and its Subsidiaries, the EBITDA
attributable to (i) the minority interests existing on the date of this
Agreement of Matsushita Electric Industrial Co., Ltd. and its subsidiaries
("Matsushita") in Subsidiaries of the Borrower (the "Existing Minority
Investments") and (ii) minority interests in Subsidiaries of the Borrower
acquired after the date of this Agreement by Matsushita to the extent acquired
in exchange for Existing Minority Investments and not attributable to any new
investments by Matsushita minus, to the extent added in computing such
consolidated net income for such period, the sum (without duplication) of (a)
consolidated interest income, (b) extraordinary gains and (c) non-recurring,
non-cash gains; provided that (a) EBITDA shall include any EBITDA attributable
to any investment accounted for by the "equity" method of accounting, but shall
exclude any income or loss attributable to any such investment to the extent
reflected in the consolidated net income of such Person and (b) for purposes of
calculating the Leverage Ratio for the quarters ended March 31, 1999, June 30,
1999 and September 30, 1999, the consolidated EBITDA of the Borrower and its
Subsidiaries shall include the historical EBITDA of Polygram as if the
Acquisition had occurred on the first day of each such relevant period for
testing compliance with the Leverage Ratio.
"ERISA" means the Employee Retirement Income Security Act of
1974 (U.S.A.), as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any Plan
or
<PAGE> 12
7
Multiemployer Plan; or (g) the receipt by the Borrower or any of its ERISA
Affiliates of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any of its ERISA Affiliates of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the LIBO Rate
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Administrative
Agent, any Lender or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by Canada, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
Canada or any similar tax imposed by any other jurisdiction described in clause
(a) above and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 2.18(b)), any withholding
tax that (i) is in effect and would apply to amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) (other than any withholding tax imposed on any
payment by the Borrower to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to any
withholding tax pursuant to Section 2.16(a)), or (ii) is attributable to such
Foreign Lender's failure to comply with Section 2.16(e).
"Existing Controlling Interests" means each Person (including,
in the case of such a Person that is a trust, the individual beneficiaries of
such trust and Affiliates and subsidiaries thereof) (other than the Borrower's
directors and executive officers as a group) set forth in the Form S-4 as having
beneficial ownership as of June 30, 1998 (and prior to giving effect to the
Acquisition) of more than 10% of the outstanding shares of common stock of the
Borrower and includes any combination of such Persons.
"Existing Minority Investments" has the meaning set forth in
the definition of EBITDA.
"Existing Maturity Date" has the meaning set forth in
Section 2.19(a).
<PAGE> 13
8
"Extension Date" has the meaning set forth in
Section 2.19(a).
"FAS 13" means Financial Accounting Standard No. 13.
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer, assistant treasurer or controller of
the Borrower.
"Fixed Rate" means, with respect to any Competitive Loan
(other than a Eurodollar Competitive Loan), the fixed rate of interest per annum
specified by the Lender making such Competitive Loan in its related Competitive
Bid.
"Fixed Rate Loan" means a Competitive Loan bearing
interest at a Fixed Rate.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is domiciled.
"Form S-4" means the registration statement on Form S-4 of the
Borrower filed with the Securities and Exchange Commission in connection with
the registration of the exchange offer for the shares of Polygram, as declared
effective by the Securities and Exchange Commission.
"GAAP" means generally accepted accounting principles
in the United States of America.
"Governmental Authority" means any multinational, federal,
provincial, state, municipal or other government or any political subdivision
thereof, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
<PAGE> 14
9
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"Indebtedness" of any Person means, all obligations of such
Person for borrowed money, including (a) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (b) all Guarantees by such Person of Indebtedness of
others, (c) all Capital Lease Obligations of such Person and (d) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Index Debt" means senior, unsecured, long-term indebtedness
for borrowed money of the Borrower that is not guaranteed by any other Person or
subject to any other credit enhancement.
"Interest Coverage Ratio" means, for any period, the ratio of
(a) EBITDA for the Borrower and its consolidated Subsidiaries for such period to
(b) Interest Expense for such period.
"Interest Election Request" means a request by the Borrower to
convert or continue a Revolving Borrowing in accordance with Section 2.07.
"Interest Expense" means, for any period, the interest expense
of the Borrower and its consolidated Subsidiaries for such period, determined on
an consolidated basis in accordance with GAAP.
"Interest Payment Date" means (a) with respect to any ABR
Loan, the last day of each March, June, September and December, (b) with respect
to any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an
<PAGE> 15
10
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period and (c) with respect to any Fixed
Rate Loan, the last day of the Interest Period applicable to the Borrowing of
which such Loan is a part and, in the case of a Fixed Rate Borrowing with an
Interest Period of more than 90 days' duration (unless otherwise specified in
the applicable Competitive Bid Request), each day prior to the last day of such
Interest Period that occurs at intervals of 90 days' duration after the first
day of such Interest Period, and any other dates that are specified in the
applicable Competitive Bid Request as Interest Payment Dates with respect to
such Borrowing.
"Interest Period" means (a) with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months (or, subject to availability, nine or twelve months) thereafter, as
the Borrower may elect, and (b) with respect to any Fixed Rate Borrowing, the
period (which shall not be less than 7 days or more than 360 days) commencing on
the date of such Borrowing and ending on the date specified in the applicable
Competitive Bid Request; provided, that (i) if any Interest Period would end on
a day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, in the case of a Eurodollar Borrowing only,
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and, in the case of a Revolving
Borrowing, thereafter shall be the effective date of the most recent conversion
or continuation of such Borrowing.
"JES Existing Credit Agreement" means the Credit Agreement
dated as of November 23, 1994, among Joseph E. Seagram & Sons, as borrower, the
Borrower, as guarantor, J.E. Seagram Corp., as guarantor, The Chase Manhattan
Bank (formerly Chemical Bank), as administrative agent, Citibank, N.A., as
syndication agent, Bank of Montreal, as documentation agent, and the banks party
thereto, as the same has been and may be amended and in effect from time to
time.
"Lenders" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Leverage Ratio" means, with respect to the last day of
any fiscal quarter, the ratio of (a) Total Debt at such time to
<PAGE> 16
11
(b) EBITDA for the Borrower and its consolidated Subsidiaries for the most
recent period of four consecutive fiscal quarters of the Borrower ended at such
time.
"LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing on Page 3750 of the Telerate Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the average rate (rounded
upward, if necessary, to the next 1/16th of one percent) at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Reference Banks in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.
"Lien" means, with respect to any asset of a Person that is or
would be required to be reflected on a consolidated balance sheet of such
Person, (a) any mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest in, on or of such asset and (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset.
"Loans" means the loans (other than Money Market Loans) made
by the Lenders to the Borrower pursuant to this Agreement.
"Margin" means, with respect to any Competitive Loan bearing
interest at a rate based on the LIBO Rate, the marginal rate of interest, if
any, to be added to or subtracted from the LIBO Rate to determine the rate of
interest applicable to such Loan, as specified by the Lender making such Loan in
its related Competitive Bid.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations or condition (financial or otherwise), of the
Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Borrower
to perform any of its obligations under this Agreement or (c) the rights of or
benefits available to the Lenders under this Agreement.
"Material Indebtedness" means Indebtedness (other than the
Loans and loans under the JES Existing Credit Agreement and the 364-Day Credit
Agreement), or obligations in respect of one or
<PAGE> 17
12
more Hedging Agreements, of any one or more of the Borrower and the Subsidiaries
in an aggregate principal amount exceeding $50,000,000. For purposes of
determining Material Indebtedness, the "principal amount" of the obligations of
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
"Material Subsidiary" means, at any time, any Subsidiary (a)
the Consolidated Total Assets of which exceed 5% of the Consolidated Total
Assets of the Borrower and its consolidated Subsidiaries as of the end of the
most recent fiscal quarter of the Borrower ended at or prior to such time or (b)
the operating income of which exceeds 5% of the operating income of the Borrower
and its consolidated Subsidiaries for the most recent period of four consecutive
fiscal quarters of the Borrower at or prior to such time.
"Maturity Date" means June 14, 2001 (subject to extension as
provided in Section 2.19).
"Matsushita" has the meaning set forth in the
definition of EBITDA.
"Money Market Borrower" has the meaning set forth in
Section 2.05.
"Money Market Loan" means a loan made by a Lender to a Money
Market Borrower in accordance with Section 2.05.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Non-Extending Lender" has the meaning set forth in
Section 2.19(b).
"Other Taxes" means any and all present or future stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due
or are being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's and other like Liens imposed by
<PAGE> 18
13
law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, servitudes, rights-of-way
and similar encumbrances on real or immoveable property imposed by law
or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of
the affected property or interfere with the ordinary conduct of
business of the Borrower or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Polygram" means Polygram N.V.
"Prime Rate" means the annual rate of interest announced or
established by Bank of Montreal from time to time as being the reference rate
then in effect at its principal lending office in Canada for determining rates
of interest on Dollar commercial loans to Canadian residents in Canada; each
change in the Prime Rate shall be effective from and including the date such
change is publicly announced as being effective.
"Reference Banks" means Bank of Montreal, Royal Bank of
Canada and Citibank Canada or any other Person hereafter appointed
as a Reference Bank pursuant to Section 2.12(g).
"Register" has the meaning set forth in Section 10.04.
<PAGE> 19
14
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having
Revolving Credit Exposures and unused Commitments representing more than 50% of
the sum of the total Revolving Credit Exposures and unused Commitments at such
time; provided that, for purposes of declaring the Loans to be due and payable
pursuant to Article VII, and for all purposes after the Loans become due and
payable pursuant to Article VII or the Commitments expire or terminate, the
outstanding Competitive Loans of the Lenders shall be included in their
respective Revolving Credit Exposures in determining the Required Lenders.
"Restricted Property Amount" has the meaning set forth
in Section 6.04.
"Revolving Credit Exposure" means, with respect to any Lender
at any time, the outstanding principal amount of such Lender's Revolving Loans
at such time.
"Revolving Loan" means a Loan made pursuant to
Section 2.03.
"Sale and Lease-Back Transaction" shall mean any arrangement,
directly or indirectly, with any Person whereby such Person shall sell or
transfer any property, real or personal, moveable or immoveable, used or useful
in its business, whether now owned or hereafter acquired, and thereafter rent or
lease such property or other property which it intends to use for substantially
the same purpose or purposes as the property being sold or transferred.
"Seagram Existing Credit Agreement" means the Credit Agreement
dated as December 21, 1994, among the Borrower, Bank of Montreal, as
administrative agent, and the banks party thereto, as in effect immediately
prior to the Amendment Effective Date.
"S&P" means Standard & Poor's Ratings Service.
"Securities and Exchange Commission" means the
Securities and Exchange Commission of the United States of
America.
"Statutory Reserve Rate" means, with respect to any Lender for
any Interest Period, the aggregate of the maximum reserve percentages applicable
for each day during such Interest Period (including any marginal, special,
emergency or supplemental reserves) expressed as a percentage established by the
Board to which such Lender is subject for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
The Statutory Reserve Rate shall
<PAGE> 20
15
be adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held by the parent or one
or more subsidiaries of the parent.
"Subsidiary" means a subsidiary of the Borrower.
"Substitute Lender" has the meaning set forth in
Section 2.19(b).
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Debt" means, at any date, all Indebtedness of the
Borrower and its consolidated Subsidiaries at such date which at such time would
be required to be reflected as a liability on a consolidated balance sheet of
the Borrower and its consolidated Subsidiaries prepared in accordance with GAAP.
"Transactions" means (a) the execution, delivery and
performance by the Borrower of this Agreement, the borrowing by the Borrower of
Loans and the use of the proceeds thereof and (b) the Acquisition.
"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the LIBO Rate, the Alternate Base
Rate or, in the case of a Competitive Loan or Borrowing, a Fixed Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class
and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type
(e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar
Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and
<PAGE> 21
16
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible or corporeal and incorporeal
assets and properties, including cash, securities, accounts and contract rights
and (f) the phrases "the date of this Agreement", "the date hereof", and phrases
of similar import, shall mean the date of this amendment and restatement.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions
set forth herein, each Lender agrees to make Revolving Loans to the Borrower
from time to time during the Availability Period in an aggregate principal
amount that will not result in (a) the Revolving Credit Exposure plus the
aggregate principal amount of outstanding Money Market Loans of such Lender
exceeding such Lender's Commitment or (b) the sum of the total Revolving Credit
Exposures plus the aggregate principal amount of outstanding Competitive Loans
exceeding the total Commitments. Within the foregoing limits and subject to the
terms and
<PAGE> 22
17
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan
shall be made as part of a Borrowing consisting of Revolving Loans made by the
Lenders ratably in accordance with their respective Commitments. Each
Competitive Loan shall be made in accordance with the procedures set forth in
Section 2.04. The failure of any Lender to make any Loan required to be made by
it shall not relieve any other Lender of its obligations hereunder.
(b) Subject to Section 2.13, (i) each Revolving Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith, and (ii) each Competitive Borrowing shall be
comprised entirely of Eurodollar Loans or Fixed Rate Loans as the Borrower may
request in accordance herewith.
(c) At the commencement of each Interest Period for any
Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $5,000,000 and not less than $25,000,000. At the
time that each ABR Revolving Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$10,000,000; provided that an ABR Revolving Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Commitments. Each
Competitive Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. Borrowings of more than one
Type and Class may be outstanding at the same time; provided that there shall
not at any time be more than a total of 10 Eurodollar Revolving Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled (i) to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date or (ii) to request any Revolving Borrowing in
an aggregate amount that, after giving effect to actual repayments of Money
Market Loans on or prior to the date of such Borrowing, would result in any
Lender being unable to fund its pro rata share of such Borrowing based on the
aggregate Commitments then in effect.
SECTION 2.03. Requests for Revolving Borrowings. To request
a Revolving Borrowing, the Borrower shall notify the Administrative Agent of
such request by telephone (a) in the case of a Eurodollar Borrowing, not later
than 12:00 noon, Montreal time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00
noon, Montreal time, one Business Day before the date of the proposed Borrowing.
Each such telephonic Borrowing Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Borrowing Request in a form approved by the Administrative Agent and
signed by the Borrower. Each such telephonic and written Borrowing
<PAGE> 23
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Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing. Nothing contained herein shall be deemed to prohibit the
Borrower from requesting that multiple Borrowings be made on the same date.
SECTION 2.04. Competitive Bid Procedure. (a) Subject to the
terms and conditions set forth herein, from time to time during the Availability
Period the Borrower may request Competitive Bids and may (but shall not have any
obligation to) accept Competitive Bids and borrow Competitive Loans; provided
that the sum of the total Revolving Credit Exposures plus the aggregate
principal amount of outstanding Competitive Loans at any time shall not exceed
the total Commitments. To request Competitive Bids, the Borrower shall notify
the Administrative Agent of such request by telephone, in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., Montreal time, four Business
Days before the date of the proposed Borrowing and, in the case of a Fixed Rate
Borrowing, not later than 10:00 a.m., Montreal time, one Business Day before the
date of the proposed Borrowing; provided that the Borrower may submit up to (but
not more than) three Competitive Bid Requests on the same day, but a Competitive
Bid Request shall not be made within five Business Days after the date of any
previous Competitive Bid Request, unless any and all such previous Competitive
Bid Requests shall have been withdrawn or all Competitive Bids received in
response thereto rejected. Each such telephonic Competitive Bid Request shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Competitive Bid Request in a form approved by the Administrative Agent
and signed by the Borrower. Each such
<PAGE> 24
19
telephonic and written Competitive Bid Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be a Eurodollar Borrowing
or a Fixed Rate Borrowing;
(iv) the Interest Period to be applicable to such Borrowing,
which shall be a period contemplated by the definition of the term
"Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the Administrative Agent shall notify the Lenders of the details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to)
make one or more Competitive Bids to the Borrower in response to a Competitive
Bid Request. Each Competitive Bid by a Lender must be in a form approved by the
Administrative Agent and must be received by the Administrative Agent by
telecopy, in the case of a Eurodollar Competitive Borrowing, not later than 9:30
a.m., Montreal time, three Business Days before the proposed date of such
Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than
9:30 a.m., Montreal time, on the proposed date of such Competitive Borrowing.
Competitive Bids that do not conform substantially to the form approved by the
Administrative Agent may be rejected by the Administrative Agent, and the
Administrative Agent shall notify the Borrower and the applicable Lender as
promptly as practicable. Each Competitive Bid shall specify (i) the principal
amount (which shall be an integral multiple of $1,000,000 and which may equal
the entire principal amount of the Competitive Borrowing requested by the
Borrower) of the Competitive Loan or Loans that the Lender is willing to make,
(ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make
such Loan or Loans (expressed as a percentage rate per annum in the form of a
decimal to no more than four decimal places) and (iii) the Interest Period
applicable to each such Loan and the last day thereof.
(c) The Administrative Agent shall promptly notify the
Borrower by telecopy of the Competitive Bid Rate and the principal amount
specified in each Competitive Bid and the identity of the Lender that shall have
made such Competitive Bid.
(d) Subject only to the provisions of this paragraph, the
Borrower may accept or reject any Competitive Bid. The Borrower shall notify the
Administrative Agent by telephone,
<PAGE> 25
20
confirmed by telecopy in a form approved by the Administrative Agent, whether
and to what extent it has decided to accept or reject each Competitive Bid, in
the case of a Eurodollar Competitive Borrowing, not later than 10:30 a.m.,
Montreal time, three Business Days before the date of the proposed Competitive
Borrowing, and in the case of a Fixed Rate Borrowing, not later than 10:30 a.m.,
Montreal time, on the proposed date of the Competitive Borrowing; provided that
(i) the failure of the Borrower to give such notice shall be deemed to be a
rejection of each Competitive Bid, (ii) the Borrower shall not accept a
Competitive Bid made at a particular Competitive Bid Rate if the Borrower
rejects a Competitive Bid made at a lower Competitive Bid Rate for the same
Interest Period, (iii) the aggregate amount of the Competitive Bids accepted by
the Borrower shall not exceed the aggregate amount of the requested Competitive
Borrowing specified in the related Competitive Bid Request, (iv) to the extent
necessary to comply with clause (iii) above, the Borrower may accept Competitive
Bids at the same Competitive Bid Rate in part, which acceptance, in the case of
multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata
in accordance with the amount of each such Competitive Bid, and (v) except
pursuant to clause (iv) above, no Competitive Bid shall be accepted for a
Competitive Loan unless the principal amount of such Competitive Loan is an
integral multiple of $1,000,000; provided further that in calculating the pro
rata allocation of acceptances of portions of multiple Competitive Bids at a
particular Competitive Bid Rate pursuant to clause (iv), the amounts shall be
rounded to integral multiples of $1,000,000 in a manner determined by the
Borrower. A notice given by the Borrower pursuant to this paragraph shall be
irrevocable.
(e) The Administrative Agent shall promptly notify each
bidding Lender by telecopy whether or not its Competitive Bid has been accepted
(and, if so, the amount and Competitive Bid Rate so accepted), and each
successful bidder will thereupon become bound, subject to the terms and
conditions hereof, to make the Competitive Loan in respect of which its
Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such Competitive
Bid directly to the Borrower at least one quarter of an hour earlier than the
time by which the other Lenders are required to submit their Competitive Bids to
the Administrative Agent pursuant to paragraph (b) of this Section.
SECTION 2.05. Money Market Loans. (a) The Borrower and its
Subsidiaries (for purposes of this Section, each such Person is referred to
herein as a "Money Market Borrower") may at any time and from time to time
request any one or more of the Lenders to make offers to make Money Market Loans
to such Money Market Borrower on any Business Day during the Availability Period
in the manner set forth below. Each such Lender may, but shall have no
obligation to, make such offer, and the applicable Money Market Borrower may,
but shall have no obligation to, accept any such offer in the manner set forth
in this Section.
<PAGE> 26
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(b) In the event that a Money Market Borrower desires to
borrow a Money Market Loan from a Lender, a Money Market Borrower shall request
that such Lender provide a quotation to such Money Market Borrower of the terms
under which such Lender would be willing to provide such Money Market Loan.
(c) In the event that a Money Market Borrower elects to accept
a Lender's offer for a Money Market Loan, such Money Market Borrower shall
provide telephonic notice to such Lender of its election no later than 30
minutes after the time that such offer was received by such Money Market
Borrower. The failure of a Money Market Borrower to provide such notice of
acceptance in a timely manner shall be deemed to constitute a rejection of the
offer of such Lender. Any Money Market Loan to be made by a Lender pursuant to
this Section shall be made by the applicable Lender crediting an account
specified by the applicable Money Market Borrower with the amount of such
advance in same day funds promptly upon receipt of such Money Market Borrower's
timely acceptance of the offer of such Lender with respect to such Money Market
Loan.
(d) The Borrower agrees to forward to the Lender with respect
to a Money Market Loan written evidence of such Money Market Loan by providing,
on the date upon which such Money Market Loan is made, documents, in form and
substance acceptable to both the Borrower and such Lender, executed and
delivered by a duly authorized office of the applicable Money Market Borrower,
confirming the amount so borrowed, the rate of interest applicable thereto and
the maturity thereof (with such Money Market Loan being due and payable on such
date of maturity); provided that the failure of the Borrower to provide such
documents shall not impair the obligation of the applicable Money Market
Borrower to repay any Money Market Loan borrowed by it. All borrowings pursuant
to this Section shall bear interest at the rate quoted to the applicable Money
Market Borrower by the relevant Lender in its quotation described in clause (b)
above, regardless of any change in the interest rate between the time of quoting
and the time of borrowing.
(e) Upon the occurrence and during the continuance of an Event
of Default, each Lender that has Money Market Loans outstanding may declare its
Money Market Loans (with any applicable interest thereon) to be immediately due
and payable without the consent of, or notice to, any other Lender; provided
that if such event is an Event of Default specified in clause (i) or (j) of
Article VII with respect to the Borrower, such Lender's Money Market Loans (and
any applicable interest thereon) shall automatically become immediately due and
payable.
(f) Each Lender that shall make a Money Market Loan pursuant
to this Section shall promptly notify the Administrative Agent of the amount and
term of such Money Market Loan.
(g) The Borrower and any Lender may at any time and from time
to time enter into written agreements that provide for procedures for soliciting
and extending Money Market Loans that
<PAGE> 27
22
differ from those specified in paragraphs (b) and (c) of this Section. As
between the Borrower and such Lender such agreements shall supersede the
provisions of such paragraphs to the extent specified therein.
(h) Notwithstanding anything to the contrary contained herein,
Money Market Loans shall not be deemed extensions of credit hereunder and the
rights and obligations of the Borrower in respect of Money Market Loans shall
not be deemed rights and obligations of the Borrower hereunder; provided that
Money Market Loans shall be considered to be extensions of credit under this
Agreement for purposes of determining availability of Revolving Loans pursuant
to Section 2.01.
(i) In the event that the availability of any Lender's
Commitment has been reduced pursuant to Section 2.01 on account of Money Market
Loans made by it to a level that is insufficient to permit such Lender to lend
its ratable share of any Revolving Borrowing requested by the Borrower hereunder
(based upon the aggregate Commitments then in effect, regardless of the extent
to which utilized or available), the applicable Money Market Borrower shall
repay such Lender's Money Market Loans simultaneously with or prior to such
Revolving Borrowing (which repayment may be financed with the proceeds of such
Revolving Borrowing) by the amount necessary to cause its unused Commitment
(before giving effect to such Revolving Borrowing, but after giving effect to
the proposed application of the proceeds thereof to the repayment of Money
Market Loans) to be at least equal to its ratable share of such requested
Revolving Borrowing.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 1:00 p.m., Montreal time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Borrower maintained with the Administrative Agent in
Montreal and designated by the Borrower in the applicable Borrowing Request or
Competitive Bid Request.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the
<PAGE> 28
23
date of payment to the Administrative Agent, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans; provided that the Administrative Agent shall not seek such
compensation from the Borrower unless such Lender has not actually made its
share of the Borrowing available to the Administrative Agent within 3 Business
Days after the relevant borrowing date. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing. This Section shall
not apply to Competitive Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Revolving Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
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(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Revolving Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing.
SECTION 2.08. Termination and Reduction of Commitments.
(a) Unless previously terminated, the Commitments shall terminate on the
Maturity Date.
(b) The Borrower may at any time terminate, or from time to
time reduce, the Commitments; provided that (i) each reduction of the
Commitments shall be in an amount that is an integral multiple of $5,000,000 and
not less than $25,000,000 and (ii) the Borrower shall not terminate or reduce
the Commitments if, after giving effect to any concurrent prepayment of the
Loans in accordance with Section 2.10, (A) the sum of the total Revolving Credit
Exposures plus the aggregate principal amount of outstanding Competitive Loans
would exceed the total Commitments or (B) the Revolving Credit Exposure plus the
aggregate principal amount of outstanding Money Market Loans of any Lender would
exceed such Lender's Commitment.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction
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of the Commitments shall be permanent. Each reduction of the Commitments shall
be made ratably among the Lenders in accordance with their respective
Commitments.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan made by such Lender on the Maturity Date applicable to such
Lender and (ii) to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Competitive Loan made by such Lender on the
last day of the Interest Period applicable to such Loan.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have
the right at any time and from time to time to prepay any Borrowing in whole or
in part, subject to prior notice in accordance with paragraph (b) of this
Section; provided that the
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Borrower shall not have the right to prepay any Competitive Loan without the
prior consent of the Lender thereof.
(b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 12:00 noon,
Montreal time, three Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Revolving Borrowing, not later than 12:00 noon,
Montreal time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.08, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.08. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.
SECTION 2.11. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee, which shall
accrue at the Applicable Rate on the daily amount of the Commitment of such
Lender (whether used or unused) during the period from and including the
Effective Date to but excluding the date on which such Commitment terminates;
provided that, if such Lender continues to have any Loans outstanding after its
Commitment terminates, then such facility fee shall continue to accrue on the
daily outstanding principal amount of such Loans from and including the date on
which its Commitment terminates to but excluding the date on which such Lender
ceases to have any Loans outstanding. Accrued facility fees shall be payable in
arrears on the last day of March, June, September and December of each year and
on the date on which the Commitments terminate, commencing on the first such
date to occur after the date hereof; provided that any facility fees (other than
facility fees accruing on the outstanding principal amount of Special Term
Loans) accruing after the date on which the Commitments terminate shall be
payable on demand. All facility fees shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and shall be payable for the actual number
of days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
<PAGE> 32
27
(c) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent for distribution, in
the case of facility fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.
SECTION 2.12. Interest. (a) The Loans comprising
each ABR Borrowing shall bear interest at the Alternate Base Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest (i) in the case of a Eurodollar Revolving Loan, at the LIBO Rate for
the Interest Period in effect for such Borrowing plus the Applicable Rate, or
(ii) in the case of a Eurodollar Competitive Loan, at the LIBO Rate for the
Interest Period in effect for such Borrowing plus (or minus, as applicable) the
Margin applicable to such Loan.
(c) Each Fixed Rate Loan shall bear interest at the Fixed Rate
applicable to such Loan.
(d) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Loans as provided in paragraph (a) of this
Section.
(e) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Commitments; provided that (i) interest accrued pursuant
to paragraph (d) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion.
(f) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate
or, in accordance with paragraph (g) below, LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
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For purposes of the Interest Act (Canada), whenever any
interest together with all fees, charges and other amounts which are created as
interest under this Agreement is calculated using a rate based on a year of 360
days, such rate determined pursuant to such calculation, when expressed as an
annual rate, is equivalent to (x) the applicable rate based on a year of 360
days, (y) multiplied by the actual number of days in the calendar year in which
the period for which such interest is payable ends, and (z) divided by 360. The
rates of interest specified in this Agreement are nominal rates and all interest
payments and computations are to be made without allowance or deduction for
deemed reinvestment of interest.
(g) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Administrative Agent as contemplated hereby by 10:30
a.m., Montreal time, on the day such quotations are required to be furnished
hereunder. If any Reference Bank does not furnish a timely quotation, the
Administrative Agent shall determine the relevant LIBO Rate on the basis of the
quotations, if any, furnished by the remaining Reference Banks and, in the event
that all Reference Banks fail to so furnish a quotation, on the basis of such
other information as the Administrative Agent in its sole discretion shall deem
appropriate. If any Reference Bank assigns all its Commitment and Revolving
Loans to an unaffiliated institution, the Administrative Agent shall, in
consultation with the Borrower, appoint another Lender to act as a Reference
Bank hereunder. If the Borrower replaces or removes a Lender (which is also a
Reference Bank) pursuant to the terms of this Agreement, the Administrative
Agent shall, in consultation with the Borrower, appoint a replacement Reference
Bank.
SECTION 2.13. Alternate Rate of Interest. If prior to
the commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the LIBO Rate for such Interest
Period; or
(b) the Administrative Agent is advised by the Required
Lenders (or, in the case of a Eurodollar Competitive Loan, the Lender
that is required to make such Loan) that the LIBO Rate for such
Interest Period will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Loans (or its Loan)
included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a
<PAGE> 34
29
Eurodollar Borrowing shall be ineffective, (ii) if any Borrowing Request
requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as an
ABR Borrowing and (iii) any request by the Borrower for a Eurodollar Competitive
Borrowing shall be ineffective; provided that, (a) in the case of such a notice
with respect to a Eurodollar Competitive Loan, the Borrower may (at its option)
elect to borrow such Loan from such Lender, based upon a LIBO Rate which is
mutually agreed upon by the Borrower and such Lender and (b) if the
circumstances giving rise to such notice do not affect all the Lenders, then
requests by the Borrower for Eurodollar Competitive Borrowings may be made to
Lenders that are not affected thereby.
SECTION 2.14. Additional Interest on Eurodollar Loans;
Increased Costs. (a) Without limiting the other provisions hereof, the Borrower
shall pay to each Lender, so long as such Lender shall be required under
regulations of the Board to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities, additional interest
on the unpaid principal amount of each Loan of such Lender during such periods
as such Loan is a Eurodollar Loan, from the date of such Loan until the
principal amount of such Eurodollar Loan is paid in full, at an interest rate
per annum equal at all times to the remainder obtained by subtracting (i) the
LIBO Rate for the Interest Period for such Eurodollar Loan from (ii) the rate
obtained by dividing such LIBO Rate by a percentage equal to 100% minus the
Statutory Reserve Rate applicable to such Lender for such Interest Period,
payable on each date on which interest is payable on such Eurodollar Loan.
(b) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in additional interest pursuant to
paragraph (a) above); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans or Fixed
Rate Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan or Fixed Rate Loan (or of
maintaining its obligation to make any such Loan) or to reduce the amount of any
sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then (except to the extent that such cost or reduction
already is reflected in the LIBO Rate applicable to such Loan) the Borrower will
pay to such Lender such additional amount or amounts as will compensate such
Lender for such additional costs incurred or reduction suffered.
(c) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the
<PAGE> 35
30
capital of such Lender's holding company, if any, as a consequence of this
Agreement or the Loans made by such Lender to a level below that which such
Lender or such Lender's holding company could have achieved but for such Change
in Law (taking into consideration such Lender's policies and the policies of
such Lender's holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender such additional amount or amounts
as will compensate such Lender or such Lender's holding company for any such
reduction suffered.
(d) A certificate of a Lender setting forth the additional
interest or the amount or amounts necessary to compensate such Lender or its
holding company, as the case may be, as specified in paragraph (a), (b) or (c)
of this Section shall be delivered to the Borrower (accompanied by a reasonably
detailed description of the basis of such claim) and shall be conclusive absent
manifest error. In the case of paragraphs (b) and (c) above, the Borrower shall
pay such Lender the amount shown as due on any such certificate promptly
following receipt thereof.
(e) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the Borrower shall not
be required to compensate a Lender pursuant to this Section for any reserves,
increased costs or reductions incurred more than 270 days prior to the date that
such Lender notifies the Borrower of such event or the Change in Law giving rise
to such increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided further that, if the event or Change in Law
giving rise to such reserves, increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
(f) Notwithstanding the foregoing provisions of this Section,
a Lender shall not be entitled to compensation pursuant to this Section in
respect of any Competitive Loan if the Change in Law that would otherwise
entitle it to such compensation shall have been publicly announced prior to
submission of the Competitive Bid pursuant to which such Loan was made.
SECTION 2.15. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan or Fixed Rate Loan other than on
the last day of an Interest Period applicable thereto (including as a result of
an Event of Default), (b) the conversion of any Eurodollar Loan other than on
the last day of the Interest Period applicable thereto, (c) the failure to
borrow, convert, continue or prepay any Loan other than a Competitive Loan on
the date specified in any notice delivered pursuant hereto (regardless of
whether such notice may be revoked under Section 2.10(b) and is revoked in
accordance therewith), (d) the failure to borrow any Competitive Loan after
accepting the Competitive Bid to make such Loan, or (e) the assignment of any
Eurodollar Loan or Fixed Rate Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.18, then, in any such event,
<PAGE> 36
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the Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
LIBO Rate that would have been applicable to such Loan, for the period from the
date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert or continue, for the period
that would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.16. Taxes. (a) Any and all payments by or on account
of any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and
each Lender, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender, or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.
<PAGE> 37
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(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate; provided, that such Foreign
Lender has received written notice from the Borrower advising it of the
availability of such exemption or reduction and attaching all applicable
documentation.
(f) If the Administrative Agent or a Lender determines, in its
reasonable discretion, that it has received a refund of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by the Borrower or with respect
to which the Borrower has paid additional amounts pursuant to this Section 2.16,
it shall pay over such refund to the Borrower(but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 2.16 with respect to the Indemnified Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount refunded to the Borrower (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) to the Administrative
Agent or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority. This paragraph
shall not be construed to require the Administrative Agent or any Lender to make
available its tax returns (or any other information relating to its taxes which
it deems confidential) to the Borrower or any other Person.
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing
of Setoffs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees, or of amounts payable under
Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, Montreal time, on
the date when due, in immediately available funds, without setoff or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall
<PAGE> 38
33
be made to the Administrative Agent at its offices at First Canadian Place, 19th
Floor, Attention of Global Distribution Services Manager, Toronto, Ontario M5X
1A1, except that payments pursuant to Sections 2.14, 2.15, 2.16 and 10.03 shall
be made directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee
or participant, other than to the Borrower or any Subsidiary or Affiliate
thereof (as to which the provisions of this paragraph shall apply).
Notwithstanding the foregoing, no Lender which receives a payment of principal
or interest on its applicable Maturity Date shall be obligated to share such
payment with any Lender to whom an analogous payment is not then due and
payable. The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of setoff and counterclaim with respect to such
<PAGE> 39
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participation as fully as if such Lender were a direct creditor of the Borrower,
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to 2.06(b) or 2.17(d), then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.18. Mitigation Obligations; Termination or
Replacement of Lenders. (a) If any Lender requests compensation under Section
2.14, or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section
2.16, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16,
as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.14
(other than paragraph (a) thereof) or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.16, or if any Lender defaults in its obligation
to fund Loans hereunder, then the Borrower may within 90 days of such event, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, (i) if no Default shall have occurred and be continuing, prepay (without
regard to any provisions hereof that require prepayments to be made ratably
among the Lenders) in full all Loans of such Lender, accrued
<PAGE> 40
35
interest thereon, accrued fees and all other amounts payable to it hereunder and
terminate the Commitment of such Lender in full or (ii) require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 10.04), all its interests, rights and
obligations under this Agreement (other than any outstanding Competitive Loans
held by it) to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (A)
the Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (B) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans (other than Competitive Loans), accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (C) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.17, such assignment will result in a material
reduction in such compensation or payments. A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.
SECTION 2.19. Extension of Maturity Date. (a) The Borrower
may, by notice to the Administrative Agent (which shall promptly deliver a copy
to each of the Lenders) given not less than 60 days and not more than 90 days
prior to each anniversary of the Amendment Effective Date (each such
anniversary, an "Extension Date") request that the Lenders extend the Maturity
Date at any time in effect (the "Existing Maturity Date") for an additional
year. Each Lender shall, by notice to the Borrower and the Administrative Agent
given not later than the 30th day prior to such Extension Date, advise the
Borrower whether or not it agrees to such extension on the terms set forth in
such notice. Any Lender that has not so advised the Administrative Agent by such
day (or such later date as the Administrative Agent and the Borrower shall
otherwise agree) shall be deemed to have declined to agree to such extension.
(b) The Borrower shall have the right at any time thereafter,
to (i) require any Lender which shall have advised or been deemed to advise the
Borrower that it will not agree to an extension of the Existing Maturity Date
(each a "Non-Extending Lender") to transfer without recourse (in accordance with
and subject to the restrictions contained in Section 10.04) all its interests,
rights and obligations under this Agreement in respect of Commitments and
Revolving Loans to one or more other banks or financial institutions (any such
bank or other financial institution being called a "Substitute Lender"), which
may include any Lender; provided that such Substitute Lender, if not already a
Lender hereunder, shall be subject to the approval of the Borrower and the
Administrative Agent (which approval shall not be unreasonably withheld) and
shall execute all such documentation as
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the Administrative Agent shall specify to evidence its status as a Lender
hereunder or (ii) if no Default shall have occurred and be continuing, prepay
(without regard to any provisions hereof that require prepayments to be made
ratably among the Lenders) in full all Loans of a Non-Extending Lender, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder and
terminate the Commitment of such Lender in full.
(c) The Existing Maturity Date for those Lenders (including
Substitute Lenders) consenting (the "Consenting Lenders") to an extension in
accordance with paragraph (a) or (b) above, as applicable, shall be
automatically extended for an additional year and the Commitment of each
Non-Extending Lender (after giving effect to each termination, transfer and
assignment pursuant to paragraph (b) above) shall either (i) terminate in
accordance with paragraph (b) above or (ii) remain in effect until the Existing
Maturity Date in effect prior to giving effect to any extension pursuant to this
Section.
(d) The decision to agree or withhold agreement to any
extension of the Existing Maturity Date hereunder shall be at the sole
discretion of each Lender.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. The Borrower and each
Material Subsidiary is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions
are within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. This Agreement has
been duly executed and delivered by the Borrower and constitutes a legal, valid
and binding obligation of the Borrower, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally, subject to general
principles of equity regardless of whether considered in a proceeding in equity
or at law and subject to any applicable obligation of good faith.
SECTION 3.03. Governmental Approvals; No Conflicts.
The Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any
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Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any
Material Subsidiary or any order of any Governmental Authority, and (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon the Borrower or any Material Subsidiary or their assets,
or give rise to a right thereunder to require any payment to be made by the
Borrower or any Material Subsidiary, except where such violation or default,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders the consolidated
balance sheet and consolidated statements of income and retained earnings and of
cash flows for the Borrower as of and for the fiscal year ended June 30, 1998,
reported on by Price Waterhouse, independent public accountants. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Borrower and its consolidated
Subsidiaries as of such date and for such periods in accordance with GAAP.
(b) Since June 30, 1998, there has been no material adverse
change in the business, operations or condition (financial or otherwise), of the
Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) The Borrower and each Material
Subsidiary has good title to, or valid leasehold interests in, all its real and
personal property, except where any such failure, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
(b) The Borrower and each Material Subsidiary owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to the business of the Borrower and its
Subsidiaries, taken as a whole, and the use thereof by the Borrower and each
Material Subsidiary does not infringe upon the rights of any other Person,
except for any such infringements that, individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation. There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any Material Subsidiary (a) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, would
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than those matters disclosed in filings with the
Securities and Exchange Commission) or (b) that involve the validity or
enforceability of this Agreement or the Transactions.
<PAGE> 43
38
SECTION 3.07. Compliance with Laws. The Borrower and each
Material Subsidiary is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and, except where
the failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.08. Investment and Holding Company Status. The
Borrower is not (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 (U.S.A.) or (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935 (U.S.A.).
SECTION 3.09. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, would reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.10. Disclosure. Neither the Form S-4 on the date it
becomes effective, the Borrower's filings with the Securities and Exchange
Commission on the date filed nor any of the other reports, financial statements,
certificates or other information delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.11. Regulation U and X. The making of the Loans and
the use of the proceeds thereof will not violate Regulation U or X of the Board.
SECTION 3.12. Pari Passu Ranking. The obligations of the
Borrower under this Agreement rank at least pari passu in priority of payment
with all other unsecured Indebtedness of the Borrower.
SECTION 3.13. Year 2000. The computer and management
information systems of the Borrower and its Subsidiaries will be programmed
and/or reprogrammed prior to December 31, 1999, such that the occurrence of
January 1, 2000, will not cause malfunctions of such computer and management
information systems which would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
<PAGE> 44
39
ARTICLE IV
Conditions
SECTION 4.01. Amendment Effective Date. This amendment and
restatement shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders
and dated the Amendment Effective Date) of (i) Simpson Thacher &
Bartlett, counsel for the Borrower, substantially in the form of
Exhibit B-1 and (ii) Goodman Phillips & Vineberg, Canadian counsel for
the Borrower, substantially in the form of B-2. The Borrower hereby
requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good
standing of the Borrower, the authorization of the Transactions and any
other legal matters relating to the Borrower, this Agreement or the
Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel.
(d) The Acquisition shall have been consummated in accordance
with applicable law and in a manner and with consequences not
materially different from the description thereof in the Form S-4.
(e) The Lenders shall have received a pro forma balance sheet
of the Borrower as of June 30, 1998, and a pro forma consolidated
income statement of the Borrower for the period from July 1, 1997,
through June 30, 1998, after giving effect to the Transactions and the
consummation of the other transactions contemplated hereby as if they
had occurred on the date of such balance sheet and at the beginning of
the period covered by such income statement, respectively, and such
balance sheet and income statement shall not be materially inconsistent
with the information and projections previously provided to the
Lenders.
(f) The JES Existing Credit Agreement shall have been amended
and restated in order to conform, to the reasonable satisfaction of the
Administrative Agent, the representations, warranties, covenants,
events of default,
<PAGE> 45
40
financial terms and certain other terms of the JES Existing Credit
Agreement to those of the 364-Day Agreement.
(g) The 364-Day Credit Agreement and the obligations to make
loans thereunder shall have become effective pursuant to Section 4.01
of the 364-Day Credit Agreement.
(h) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Amendment Effective
Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder.
The Administrative Agent shall notify the Borrower and the Lenders of the
Amendment Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, this amendment and restatement shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 3:00 p.m., Montreal time, on March 31,
1999.
SECTION 4.02. Each Credit Event. The obligation of
each Lender to make a Loan on the occasion of any Borrowing is subject
to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrower set
forth in this Agreement shall be true and correct in all material
respects on and as of the date of such Borrowing.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, the Borrower covenants and agrees with the Lenders that:
<PAGE> 46
41
SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 120 days after the end of each fiscal year of the
Borrower either (i) the Report of the Borrower to the Securities and
Exchange Commission on Form 10-K for such year, or (ii) if such Report
of the Borrower shall not be prepared for such year, the Borrower's
audited consolidated balance sheet and related statements of operations
and retained earnings and of cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by PricewaterhouseCoopers or
other independent public accountants of recognized national standing
(without a "going concern" or like qualification or exception and
without any qualification or exception as to the scope of such audit)
to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower either (i) the
Report of the Borrower to the Securities and Exchange Commission on
Form 10-Q for such quarter, or (ii) if such Report of the Borrower
shall not be prepared for such quarter, the Borrower's consolidated
balance sheet and related statements of operations and retained
earnings and of cash flows as of the end of and for such fiscal quarter
and the then elapsed portion of the fiscal year, setting forth in each
case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of
footnotes;
(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of
the Borrower (i) certifying as to whether a Default has occurred and,
if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating compliance with
Sections 6.05 and 6.06 and (iii) stating whether any change in GAAP or
in the application thereof has occurred since the date of the audited
financial statements referred to in Section 3.04 which has had a
material effect on the financial reporting of the Borrower and its
Subsidiaries and, if any such change has occurred, specifying
<PAGE> 47
42
the effect of such change on the financial statements
accompanying such certificate;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the
extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies
of all periodic reports and proxy statements filed by the Borrower or
any Material Subsidiary with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case
may be; and
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any of its Subsidiaries, or compliance
with the terms of this Agreement, as the Administrative Agent or any
Lender (acting through the Administrative Agent) may reasonably
request.
SECTION 5.02. Notices of Material Events. Upon obtaining
knowledge thereof, the Borrower will furnish to the Administrative Agent and
each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any Affiliate thereof that would
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, would reasonably be
expected to result in a Material Adverse Effect; and
(d) any other development that results in, or would reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
<PAGE> 48
43
SECTION 5.03. Existence; Conduct of Business. The Borrower
will, and will cause each Material Subsidiary to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
6.02.
SECTION 5.04. Payment of Taxes. The Borrower will, and will
cause each of its Subsidiaries to, pay its Tax liabilities, that, if not paid,
would reasonably be expected to result in a Material Adverse Effect before the
same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest would not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. Maintenance of Insurance. The Borrower will, and
will cause each Material Subsidiary to maintain, with financially sound and
reputable insurance companies, insurance against loss or damage to its property
in accordance with good business practice, or at the option of Borrower, in lieu
of all or any part of such insurance, maintain, or cause each Material
Subsidiary to maintain, by means of adequate insurance reserves currently set
aside or maintained out of earnings or surplus, a system of self-insurance with
respect to such properties and against such risks.
SECTION 5.06. Books and Records; Inspection Rights. The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender (acting
through the Administrative Agent), upon reasonable prior notice, to visit and
inspect its properties during normal business hours, to examine and make
extracts from its books and records, and to discuss its affairs, finances and
condition with its officers and, during the continuance of an Event of Default,
independent accountants, all at such reasonable times and as often as reasonably
requested.
SECTION 5.07. Compliance with Laws. The Borrower will, and
will cause each Material Subsidiary to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds. The proceeds of the
Loans will be used only for general corporate purposes of the
<PAGE> 49
44
Borrower and its Subsidiaries, including for the financing of the Acquisition
and/or the back up of commercial paper (including commercial paper issued to
provide initial financing for the Acquisition).
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Liens and Sale and Lease-Back Transactions. The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues or rights in respect of
any thereof, or enter into any Sale and Lease-Back Transaction involving real
property, plant and equipment, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof; provided that (i) such Lien
shall not apply to any other property or asset of the Borrower or any
Subsidiary and (ii) such Lien shall secure only those obligations which
it secures on the date hereof and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on
any property or asset of any Person that becomes a Subsidiary after the
date hereof prior to the time such Person becomes a Subsidiary;
provided that (i) such Lien is not created in contemplation of or in
connection with such acquisition or such Person becoming a Subsidiary,
as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) such
Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as
the case may be and extensions, renewals and replacements thereof that
do not increase the outstanding principal amount thereof (other than to
capitalize accrued interest and fees thereon and any refinancing
costs);
(d) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary (including, without
limitation, capital leases); provided that (i) such security interests
secure only Indebtedness incurred to acquire, construct or improve such
assets and the Indebtedness secured thereby is incurred prior to or
within 180 days after such acquisition or the completion of such
<PAGE> 50
45
construction or improvement and (ii) such security interests
shall not apply to any other property or assets of the
Borrower or any Subsidiary;
(e) Sale and Lease-Back Transactions involving real property,
plant and equipment to the extent that the aggregate Attributable Debt
on account of such Sale and Lease-Back Transactions, when added to (A)
the aggregate principal amount of Indebtedness secured at such time by
Liens permitted only pursuant to paragraph (f) of this Section and (B)
the Restricted Property Amount at such time under Section 6.04, does
not exceed 15% of the Consolidated Total Assets of the Borrower at such
time; and
(f) other Liens to secure Indebtedness of the Borrower and the
Subsidiaries; provided that the aggregate principal amount of
Indebtedness so secured, when added to (A) the aggregate Attributable
Debt of Sale and Lease-Back Transactions permitted only by paragraph
(e) of this Section and (B) the Restricted Property Amount at such time
under Section 6.04, does not exceed 15% of the Consolidated Total
Assets of the Borrower at such time.
SECTION 6.02. Fundamental Changes. The Borrower will not merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or liquidate or dissolve, except that, if at the
time thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing, (a) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation or (b) the
Borrower may merge into a wholly-owned Subsidiary of the Borrower in a
transaction in which such wholly-owned Subsidiary is the surviving corporation;
provided that such wholly-owned Subsidiary shall expressly assume all the duties
and obligations of the Borrower to be performed or observed under this
Agreement. The Borrower will not, and will not permit any Subsidiary to, sell,
transfer, lease or otherwise dispose of (in one transaction or a series of
transactions) all or substantially all of the assets of the Borrower and its
Subsidiaries, taken as a whole (in each case, whether now owned or hereafter
acquired).
SECTION 6.03. Transactions with Affiliates. The Borrower will
not, and will not permit any of its Material Subsidiaries to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any Affiliate of the Borrower, except in the ordinary course
of business, at prices and on terms and conditions not less favorable to the
Borrower or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties. For purposes of this Section 6.03, a Subsidiary shall
be deemed not to be an Affiliate of the Borrower.
SECTION 6.04. Restrictive Agreements. The Borrower will not,
and will not permit any of its Material Subsidiaries to, directly or indirectly,
enter into, incur or permit to exist any
<PAGE> 51
46
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of the Borrower or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or
any Subsidiary, except to the extent that such prohibition, restriction or
condition, individually or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect; provided that (i) the foregoing shall not
apply to prohibitions, restrictions and conditions imposed by applicable law or
regulation or by this Agreement, the JES Existing Credit Agreement or the
364-Day Credit Agreement, (ii) the foregoing shall not apply to prohibitions,
restrictions and conditions existing on the date hereof (but shall apply to any
amendment or modification expanding the scope of any such prohibition,
restriction or condition), (iii) the foregoing shall not apply to customary
prohibitions, restrictions and conditions contained in agreements relating to
the sale of property, assets or a Subsidiary pending such sale, provided such
prohibitions, restrictions and conditions apply only to the property, assets or
Subsidiary, as the case may be, that is to be sold and such sale is not
prohibited hereunder, (iv) clause (a) of the foregoing shall not apply to
prohibitions, restrictions and conditions arising in connection with contractual
arrangements relating to the acquisition, financing, license, syndication, sale,
transfer or other disposition of intellectual property (including, without
limitation, films, television programming and music); provided that such
prohibitions, restrictions and conditions apply only to the specific assets
which are subject to such contractual arrangements, (v) clause (a) of the
foregoing shall not apply to prohibitions, restrictions and conditions arising
pursuant to contractual arrangements (other than arrangements with respect to
Indebtedness) relating to specific items of property entered into in the
ordinary course of business; provided that (x) such prohibitions, restrictions
and conditions apply only to such specific items of property which are subject
to such contractual arrangements and (y) if the aggregate amount of property
subject to such prohibitions, restrictions or conditions exceeds 5% of the
Consolidated Total Assets of the Borrower at any time, the amount of such excess
(the "Restricted Property Amount"), when added to (A) the aggregate principal
amount of Indebtedness secured by Liens permitted only by paragraph (f) of
Section 6.01 and (B) the aggregate amount of Attributable Debt of Sale and
Lease-Back Transactions permitted only by paragraph (e) of Section 6.01 shall
not exceed 15% of the Consolidated Total Assets of the Borrower at such time,
(vi) clause (a) of the foregoing shall not apply to prohibitions, restrictions
or conditions imposed by any agreement relating to secured Indebtedness
permitted by this Agreement if such prohibitions, restrictions or conditions
apply only to the property or assets securing such Indebtedness and (vii) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.
<PAGE> 52
47
SECTION 6.05. Leverage Ratio. The Leverage Ratio will not
exceed (a) 5.25 to 1.00 for the period from March 31, 1999 through September 30,
1999, (b) 4.50 to 1.00 for the period from October 1, 1999 through September 30,
2000 and (c) 3.50 to 1.00 thereafter.
SECTION 6.06. Interest Coverage Ratio. The Interest Coverage
Ratio for any period of four consecutive fiscal quarters of the Borrower ending
on any date falling in the periods set forth below will not be less than (a)
2.50 to 1.00 for the period from and including March 31, 1999 through March 31,
2000 and (b) 3.00 to 1.00 thereafter.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) the Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement, when and as the same
shall become due and payable, and such failure shall continue
unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in this Agreement or any
amendment or modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant
to this Agreement or any amendment or modification hereof or waiver
hereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02 (a) or 5.03
(with respect to the Borrower's existence) or in Article VI;
(e) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other
than those specified in clause (a), (b) or (d) of this Article), and
such failure shall continue unremedied for a period of 30 days after
notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);
<PAGE> 53
48
(f) the Borrower or any Subsidiary shall fail to make any
payment (after giving effect to any applicable grace period) in respect
of the principal or interest of Indebtedness under either the JES
Existing Credit Agreement or the 364-Day Credit Agreement, when and as
the same shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or the
Borrower or any Subsidiary shall fail to repay the principal of any
Material Indebtedness upon its final maturity; provided that this
clause (g) shall not apply to secured Indebtedness that becomes due as
a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;
(h) any event or condition occurs that enables or permits
(with or without the giving of notice, the lapse of time or both) the
holder or holders of Indebtedness under either the JES Existing Credit
Agreement or the 364-Day Credit Agreement or any trustee or agent on
its or their behalf to cause such Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity;
(i) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization, winding-up, arrangement, compromise, adjustment,
composition, protection or other relief in respect of the Borrower or
any Material Subsidiary or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Material
Subsidiary or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing
shall be entered;
(j) the Borrower or any Material Subsidiary shall (i)
voluntarily commence any proceeding, make an assignment for the general
benefit of creditors or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, (including the Bankruptcy and Insolvency Act (Canada) or
the Companies' Creditors Arrangement Act (Canada) as amended,
supplemented or replaced from time to time), insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the
Borrower or any Material Subsidiary or for a substantial part of its
assets,
<PAGE> 54
49
(iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(k) the Borrower or any Material Subsidiary shall become
unable, admit in writing its inability or fail generally to pay its
debts as they become due;
(l) one or more judgments for the payment of money in an
aggregate amount in excess of $50,000,000 shall be rendered against the
Borrower, any Material Subsidiary or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any judgment
creditor shall attach or levy upon any assets of the Borrower or any
Material Subsidiary to enforce any such judgment;
(m) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in liability
of the Borrower and their Subsidiaries in an aggregate amount exceeding
$50,000,000 for all periods; or
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (i) or (j) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (i) or (j) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
<PAGE> 55
50
ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 10.02), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.02) or in the absence of its own gross
negligence or wilful misconduct. The Administrative Agent shall be deemed not to
have knowledge of any Default unless and until written notice thereof is given
to the Administrative Agent by the Borrower or a Lender, and the Administrative
Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere
<PAGE> 56
51
herein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent reasonably selected by
the Administrative Agent and to the Related Parties of the Administrative Agent
and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may, on behalf of the Lenders, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. The appointment of any such successor shall be subject to the consent
of the Borrower (not to be unreasonably withheld). Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 10.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in
<PAGE> 57
52
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
[INTENTIONALLY OMITTED]
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 1430 Peel Street, Montreal,
Quebec, H3A 1S9, Canada, Attention of Vice President and Treasurer
(Telephone No. (514) 987-5226, Telecopy No. (514) 987-5221);
with a copy to: Joseph Seagrams & Sons, Inc., 375 Park
Avenue, New York, New York 10152, Attention of Treasury Services
(Telephone No. (212) 572-7875, Telecopy No. (212) 572-7350);
(b) if to the Administrative Agent, to Bank of Montreal, First
Canadian Place, 19th Floor, Attention of Global Distribution Services
Manager, Toronto, Ontario M5X 1A1 (Telephone No. (416) 867-5612,
Telecopy No. (416) 867- 5718);
(c) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any
<PAGE> 58
53
party hereto in accordance with the provisions of this Agreement shall be deemed
to have been given on the date of receipt.
SECTION 10.02. Waivers; Amendments. (a) No failure or delay by
the Administrative Agent or any Lender in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or by the Borrower
and the Administrative Agent, with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender directly affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan, or
any interest thereon, or any fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender directly affected
thereby, (iv) change Section 2.17(b) or (c) in a manner that would alter the pro
rata sharing of payments required thereby, without the written consent of each
Lender, or (v) change any of the provisions of this Section or the definition of
"Required Lenders" or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent
hereunder without the prior written consent of the Administrative Agent.
SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrower shall promptly pay (i) all reasonable out-of-pocket expenses incurred
by the Administrative Agent and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, in connection
with the syndication of the credit facilities provided
<PAGE> 59
54
for herein, the preparation and administration of this Agreement or any
amendments, modifications or waivers of the provisions hereof (whether or not
the transactions contemplated hereby or thereby shall be consummated) and (ii)
all reasonable out-of-pocket expenses incurred by the Administrative Agent or
any Lender, including the reasonable fees, charges and disbursements of any
counsel for the Administrative Agent or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made
hereunder, including all such out-of-pocket expenses incurred during any workout
or restructuring in respect of such Loans.
(b) The Borrower shall indemnify the Administrative Agent and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or the use of the proceeds therefrom, or (iii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses result from the gross negligence or wilful
misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Administrative
Agent, not later than 10 days after written demand therefor, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
<PAGE> 60
55
SECTION 10.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except that
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (other than Competitive Loans) at the
time owing to it); provided that (i) except in the case of an assignment to a
Lender or an Affiliate of a Lender which is primarily engaged in the business of
originating or holding performing commercial loans or commitments in respect
thereof, each of the Borrower and the Administrative Agent must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld), (ii) except in the case of an assignment to a Lender or an Affiliate
of a Lender or an assignment of the entire remaining amount of the assigning
Lender's Commitment, the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $25,000,000 (and after giving effect thereto, the
assigning Lender must continue to have a Commitment of at least $25,000,000)
unless each of the Borrower and the Administrative Agent otherwise consent,
(iii) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender's rights and obligations under this Agreement,
except that this clause (iii) shall not apply to rights in respect of
outstanding Competitive Loans, (iv) the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, together
with a processing and recordation fee of $3,500, (except that no such fee shall
be payable with respect to any assignments made pursuant to Section 2.18 or
2.19),and (v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and provided further that
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (i) or (j) of Article VII has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment
<PAGE> 61
56
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.14,
2.15, 2.16 and 10.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in Toronto, Ontario
a copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), any processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or,
the Administrative Agent, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
<PAGE> 62
57
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 10.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.14,
2.15 and 2.16 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section, provided that
such participant agrees to be subject to Section 2.18(b) as though it were a
Lender. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 10.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.17(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.14 or 2.16 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.16 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.16(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
(h) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") of such Granting Lender, identified as such in writing from time to
time by the Granting Lender to the Administrative Agent and the Borrower, the
option to provide to the Borrower all or any part of any Loan that such Granting
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan, (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof and (iii) no
SPC or Granting Lender shall be entitled to receive any greater amount pursuant
to Section 2.14 or 2.16 than the Granting Lender would have been entitled to
receive had the Granting Lender not otherwise granted such SPC the option to
provide any Loan to the Borrower. The making of any Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender (and, if such Loan is a
Competitive Loan, shall be deemed to utilize the Commitments of all the Lenders)
to the same extent,
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58
and as if, such Loan were made by the Granting Lender. Each party hereto hereby
agrees that no SPC shall be liable, for so long as, and to the extent, the
related Granting Lender makes such payment. In furtherance of the foregoing,
each party hereto hereby agrees that, prior to the date that is one year and one
day after the payment in full of all outstanding senior indebtedness of any SPC,
it will not institute against or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or similar proceedings under the laws of the United States or any
State thereof. Each party hereto hereby acknowledges and agrees that no SPC
shall have any voting rights hereunder and that the voting rights attributable
to any extensions of credit made by an SPC shall be exercised only by the
relevant Granting Lender. Each Granting Lender shall serve as the administrative
agent and attorney in fact for its SPC and shall on behalf of its SPC: (i)
receive any and all payments made for the benefit of such SPC and (ii) give and
receive all communications and notices and take all actions hereunder to the
extent, if any, such SPC shall have any rights hereunder. To the extent a SPC
shall have the right to receive or give any such notice or take any such action
in writing, it shall be signed by its Granting Lender as administrative agent
and attorney-in-fact for such SPC and need not be signed by such SPC on its own
behalf. The Borrower, the Guarantors, the Administrative Agent and the Lenders
may rely thereon without any requirement that the SPC sign or acknowledge the
same. In addition, notwithstanding anything to the contrary contained in this
Section 10.04, any SPC may (i) with notice to, but without the prior written
consent of, the Borrower or the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to its Granting Lender or to any financial institutions providing liquidity
and/or credit facilities to or for the account of such SPC to fund the Loans
made by such SPC or to support the securities (if any) issued by such SPC to
fund such Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of a surety, guarantee or credit or liquidity enhancement to such
SPC.
SECTION 10.05. Survival. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 10.03 and
Article VIII shall survive and remain in full
<PAGE> 64
59
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans, the expiration or termination of the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing and the Loans are due and payable, each Lender
and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other obligations at any time owing by such Lender or Affiliate to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff) which such Lender
may have.
SECTION 10.09. Governing Law; Jurisdiction; Consent to
Service of Process. (a) This Agreement shall be construed in
accordance with and governed by the law of the Province of Quebec
and the federal laws of Canada applicable therein.
(b) Each party hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Superior Court for the judicial
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district of Montreal, Province of Quebec, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
Quebec or, to the extent permitted by law, in such Canadian federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any party hereto may otherwise have to
bring any action or proceeding relating to this Agreement against any other
party hereto or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 10.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
(e) (i) If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder to a Lender or the
Administrative Agent in any currency (the "Original Currency") into another
currency (the "Other Currency"), the parties hereto agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures such Lender or the
Administrative Agent, as the case may be, could purchase the Original Currency
with the Other Currency on the Business Day preceding that on which final
judgment is paid or satisfied.
(ii) The obligations of the Borrower in respect of any sum due
in the Original Currency from it to any Lender or the Administrative Agent, as
the case may be, hereunder shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by such Lender or the Administrative Agent, as the case may be, of any
sum adjudged to be so due in such Other Currency, such Lender or the
Administrative Agent, as the case may be, may, in accordance with the normal
banking procedures, purchase the Original Currency with such Other Currency. If
the amount of the Original Currency so purchased is less than the sum originally
due to such Lender or the Administrative Agent, as the case may be, in the
Original Currency, the Borrower shall, as a separate
<PAGE> 66
61
obligation and notwithstanding any such judgment, indemnify such Lender or the
Administrative Agent, as the case may be, against such loss, and if the amount
of the Original Currency so purchased exceeds the sum originally due to such
Lender or the Administrative Agent, as the case may be, in the Original
Currency, such Lender or the Administrative Agent, as the case may be, shall
remit such excess to the Borrower.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 10.12. Confidentiality. Each of the Administrative
Agent and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) to the extent that such confidential
Information is directly relevant to the subject matter thereof, in connection
with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Administrative Agent or any Lender on a nonconfidential
basis from a source other than the Borrower. For the purposes of this Section,
"Information" means all information received from or on behalf of the Borrower
or any of its Subsidiaries relating to the Borrower, any of its Subsidiaries or
any of their respective businesses or assets,
<PAGE> 67
62
other than any such information that is available to the Administrative Agent or
any Lender on a nonconfidential basis prior to disclosure by the Borrower or any
of its Subsidiaries; provided that, in the case of information received from (or
on behalf of) the Borrower or any of its Subsidiaries after the date hereof,
such information is clearly identified at the time of delivery as confidential.
Any Person required to maintain the confidentiality of Information as provided
in this Section shall be considered to have complied with its obligation to do
so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 10.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
SECTION 10.14. Effect of Amendment and Restatement.
Upon the effectiveness of the amendment and restatement of the
Seagram Existing Credit Agreement in the form hereof pursuant to
Section 4.01:
(a) the Seagram Existing Credit Agreement (including all
Exhibits and Schedules thereto) will be amended and restated in its
entirety as set forth herein; and
(b) all Loans outstanding under the Seagram Existing Credit
Agreement as of the Amendment Effective date shall continue to remain
outstanding hereunder, without affecting the Interest Period of any
outstanding Borrowing;
provided that the amendment and restatement of the Seagram Existing Credit
Agreement in the form hereof shall not affect the Borrower's obligations accrued
in respect of any principal, interest, fees or other amounts under the Seagram
Existing Credit Agreement, or be deemed to evidence or constitute repayment of
all or any portion of any such obligations or liabilities. Unless and until the
Amendment Effective Date occurs as provided herein, the Seagram Existing Credit
Agreement shall remain in effect and shall not be affected by this Agreement.
<PAGE> 68
63
SECTION 10.15. Language. The parties confirm their desire that
this Agreement, together with all other documents, including notices, with
respect thereto be written in the English language. Les parties aux presentes
confirment leur volonte expresse que cette convention de meme que tous les
documents, y compris tout avis, s'y rattachant, soient rediges en anglais.
SECTION 10.16. Superior Force. The Borrower expressly assumes
all risks of superior force, such that it shall be bound to timely execute each
and every of its obligations under this agreement notwithstanding the existence
or occurrence of any event or circumstance constituting a superior force within
the meaning of Article 1693 of the Civil Code of Quebec.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
THE SEAGRAM COMPANY LTD.
by /s/ John R. Preston
-------------------------
Name:John R. Preston
Title:Vice President and
Treasurer
BANK OF MONTREAL, individually
and as Administrative Agent
by /s/ Jeffrey N. Wieser
-------------------------
Name:Jeffrey N. Wieser
Title:Managing Director
by /s/ Brian L. Banke
-------------------------
Name:Brian L. Banke
Title:Director
THE BANK NOVA SCOTIA
by /s/ David M. Torrey
-------------------------
Name:David M. Torrey
Title:Relationship Manager
<PAGE> 69
64
CANADIAN IMPERIAL BANK OF
COMMERCE
by /s/ Mauro Spagnolo
-------------------------
Name:Mauro Spagnolo
Title:Executive Director
by /s/ Doug Zinkiewich
-------------------------
Name:Doug Zinkiewich
Title:Executive Director
ROYAL BANK OF CANADA
by /s/ David Barsalou
-------------------------
Name:David Barsalou
Title:Senior Manager
THE TORONTO-DOMINION BANK
by /s/ Jean-Francois Godin
-------------------------
Name:Jean-Francois Godin
Title:Manager
by /s/ Yves Bergeron
-------------------------
Name:Yves Bergeron
Title:Associate Vice
President
BANK OF AMERICA CANADA
by /s/ Richard Hall
-------------------------
Name:Richard Hall
Title:Vice President
THE CHASE MANHATTAN BANK
by /s/ Marian N. Schulman
-------------------------
Name:Marian N. Schulman
Title:Vice President
<PAGE> 70
65
CITIBANK CANADA
by /s/ David R. Wingfelder
-------------------------
Name:David R. Wingfelder
Title:Vice President
BANQUE NATIONALE DE PARIS
(CANADA)
by /s/ Frank L. Shaw
-------------------------
Name:Frank L. Shaw
Title:
by /s/ Blaise Cloutier
-------------------------
Name:Blaise Cloutier
Title:
CREDIT SUISSE FIRST BOSTON CANADA
by /s/ W.M. McFarland
-------------------------
Name:W.M. McFarland
Title:Vice President
by /s/ Peter Chauvin
-------------------------
Name:Peter Chauvin
Title:Vice President
CREDIT LYONNAIS CANADA
by /s/ Alain Desrochers
-------------------------
Name:Alain Desrochers
Title:Assistant Vice-
President
by /s/ Jocelyn Cote
-------------------------
Name:Jocelyn Cote
Title:Vice-President
<PAGE> 71
66
DEUTSCHE BANK CANADA
by /s/ T.G. Leonard
-------------------------
Name:T.G. Leonard
Title:Vice President
by /s/ Donald J. Correia
-------------------------
Name:Donald J. Correia
Title:Vice President
HONGKONG BANK OF CANADA
by /s/ Bohdan Stasiw
-------------------------
Name:Bohdan Stasiw
Title:Account Manager
by /s/ Gary Wilson
-------------------------
Name:Gary Wilson
Title:Assistant Vice
President and Deputy
Manager
SANWA BANK CANADA
by /s/ Jeffrey Coleman
-------------------------
Name:Jeffrey Coleman
Title:Assistant Vice
President
SOCIETE GENERALE (CANADA)
by /s/ Jean-Claude Pepin
-------------------------
Name:Jean-Claude Pepin
Title:Managing Director
by /s/ Robert Page
-------------------------
Name:Robert Page
Title:Director
THE SUMITOMO BANK OF CANADA
by /s/ Alfred Lee
-------------------------
Name:Alfred Lee
Title:Vice President
<PAGE> 72
67
THE BANK OF TOKYO-MITSUBISHI
(CANADA)
by /s/ Amos W. Simpson
-------------------------
Name:Amos W. Simpson
Title:Vice President &
General Manager
by /s/ Daniel Sabbah
-------------------------
Name:Daniel Sabbah
Title:Assistant Vice
President
J.P. MORGAN (CANADA)
by /s/ John Maynard
-------------------------
Name:John Maynard
Title:Vice President and
Controller
ABN-AMRO BANK (CANADA)
by /s/ Robert Dupuis
-------------------------
Name:Robert Dupuis
Title:Vice President Credit
and Administration
by /s/ Charles Marien
-------------------------
Name:Charles Marien
Title:Vice President
FUJI BANK (CANADA)
by /s/ Daniel Lee
-------------------------
Name:Daniel Lee
Title:Senior Vice President
<PAGE> 73
68
PARIBAS
by /s/ Duane Helkowski
-------------------------
Name:Duane Helkowski
Title:Vice President
by /s/ Sean Reddington
-------------------------
Name:Sean Reddington
Title:Vice President
INDUSTRIAL BANK OF JAPAN
(CANADA)
by /s/ Campbell McLeish
-------------------------
Name:Campbell McLeish
Title:Senior Vice President
MELLON BANK CANADA
by /s/ Edgar L. McGrath
-------------------------
Name:Edgar L. McGrath
Title:Vice President
SAKURA BANK (CANADA)
by /s/ Toshio Ueda
-------------------------
Name:Toshio Ueda
Title:Executive Vice
President & C.F.O.
<PAGE> 74
Schedule 2.01
<TABLE>
<CAPTION>
Institution Commitment
----------- ----------
<S> <C>
Bank of Montreal $105,000,000
The Bank of Nova Scotia 100,000,000
Canadian Imperial Bank
of Commerce 100,000,000
The Toronto-Dominion
Bank 100,000,000
Royal Bank of Canada 100,000,000
Bank of America Canada 55,000,000
The Chase Manhattan
Bank 55,000,000
Citibank Canada 55,000,000
Banque Nationale de
Paris (Canada) 35,000,000
Credit Suisse First
Boston Canada 35,000,000
The Bank of Tokyo-
Mitsubishi (Canada) 30,000,000
Deutsche Bank Canada 30,000,000
Fuji Bank (Canada) 30,000,000
Mellon Bank Canada 30,000,000
Hongkong Bank of Canada 30,000,000
Sakura Bank Canada 30,000,000
Sanwa Bank Canada 30,000,000
The Sumitomo Bank of
Canada 30,000,000
ABN AMRO Bank (Canada) 20,000,000
Institution Commitment
Paribas 20,000,000
Credit Lyonnais Canada 20,000,000
The Industrial Bank of
Japan (Canada) 20,000,000
J.P. Morgan Canada 20,000,000
Societe Generale
(Canada) 20,000,000
TOTAL COMMITMENTS $1,100,000,000
</TABLE>
<PAGE> 1
Exhibit 12(a)
THE SEAGRAM COMPANY LTD.
and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Fiscal Fiscal
Quarter Ended Year Ended Year Ended
September 30, June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
(millions)
<S> <C> <C> <C> <C>
Income from continuing operations before tax $ 138 $ 216 $ 1,611 $ 726
Add (deduct):
Dividends from equity companies 2 19 56 107
Fixed charges 86 73 406 376
Interest capitalized, net of amortization -- (1) (2) (2)
------- ------- ------- -------
Earnings available for fixed charges $ 226 $ 307 $ 2,071 $ 1,207
------- ------- ------- -------
Fixed Charges:
Interest Expense $ 74 $ 60 $ 357 $ 326
Portion of rent expense deemed to represent
interest factor 13 13 49 50
------- ------- ------- -------
Fixed Charges $ 87 $ 73 $ 406 $ 376
------- ------- ------- -------
Ratio of Earnings to Fixed Charges 2.6x 4.2x 5.1x 3.2x
======= ======= ======= =======
</TABLE>
<PAGE> 1
Exhibit 12(b)
JOSEPH E. SEAGRAM & SONS, INC.
and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Fiscal Fiscal
Quarter Ended Year Ended Year Ended
September 30, June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
(millions)
<S> <C> <C> <C> <C>
Income from continuing operations before tax $ 62 $ 56 $ 18 $ 124
Add (deduct):
Dividends from equity companies 1 1 2 1
Fixed charges 30 44 182 172
Interest capitalized, net of amortization -- -- -- (1)
----- ----- ----- -----
Earnings available for fixed charges $ 93 $ 101 $ 202 $ 296
----- ----- ----- -----
Fixed charges:
Interest Expense $ 27 $ 41 $ 170 $ 159
Portion of rent expense deemed to represent
interest factor 3 3 12 13
----- ----- ----- -----
Fixed Charges $ 30 $ 44 182 $ 172
----- ----- ----- -----
Ratio of Earnings to Fixed Charges 3.1x 2.3x 1.1x 1.7x
===== ===== === =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE SEAGRAM COMPANY LTD. FOR THE QUARTER ENDED SEPTEMBER
30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 3,753
<SECURITIES> 0
<RECEIVABLES> 2,216
<ALLOWANCES> 0
<INVENTORY> 2,734
<CURRENT-ASSETS> 9,984
<PP&E> 4,011
<DEPRECIATION> (1,252)
<TOTAL-ASSETS> 23,682
<CURRENT-LIABILITIES> 5,126
<BONDS> 2,266
0
0
<COMMON> 859
<OTHER-SE> 9,470
<TOTAL-LIABILITY-AND-EQUITY> 23,682
<SALES> 0
<TOTAL-REVENUES> 2,247
<CGS> 1,282
<TOTAL-COSTS> 1,282
<OTHER-EXPENSES> 786
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 138
<INCOME-TAX> 87
<INCOME-CONTINUING> 95
<DISCONTINUED> 1,069
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,164
<EPS-PRIMARY> 3.35
<EPS-DILUTED> 3.33
</TABLE>
