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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ______ to _______
Commission File Number 1-11008
CATALINA MARKETING CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware 33-0499007
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
11300 9th Street North
St. Petersburg, Florida 33716-2329
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(813) 579-5000
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(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether 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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
At November 5, 1997, Registrant had outstanding 18,415,446 shares of
Common Stock.
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CATALINA MARKETING CORPORATION
INDEX
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income
for the three and six month periods ended
September 30, 1997 and 1996 3
Condensed Consolidated Balance Sheets at
September 30, 1997 and March 31, 1997 4
Condensed Consolidated Statements of Cash Flow
for the six month periods ended
September 30, 1997 and 1996 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
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CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(unaudited)
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Three Months Ended Six Months Ended
September 30, September 30,
----------------------------------- -------------------------------------
1997 1996 1997 1996
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Revenues $ 52,727 $ 41,618 $ 99,386 $ 79,745
Costs and Expenses:
Direct operating expenses 20,407 14,863 38,440 27,999
Selling, general and administrative 12,421 11,658 25,317 22,812
Depreciation and amortization 5,923 4,090 11,614 7,754
-------- -------- -------- --------
Total costs and expenses 38,751 30,611 75,371 58,565
-------- -------- -------- --------
Income From Operations 13,976 11,007 24,015 21,180
Interest Income (Expense) and Other (390) 341 (783) 573
-------- -------- -------- --------
Income Before Income Taxes and
Minority Interest 13,586 11,348 23,232 21,753
Income Taxes (5,342) (4,371) (9,351) (8,642)
Minority Interest in losses of subsidiaries
-- 212 -- 372
-------- -------- -------- --------
Net Income $ 8,244 $ 7,189 $ 13,881 $ 13,483
======== ======== ======== ========
Net Income Per Common and Common Equivalent Share
$ 0.43 $ 0.35 $ 0.73 $ 0.66
======== ======== ======== ========
Weighted Average Shares Outstanding 19,146 20,608 19,135 20,580
======== ======== ======== ========
</TABLE>
The accompanying Notes are an integral part of these consolidated financial
statements.
3
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CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
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September 30, March 31,
ASSETS 1997 1997
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Current Assets:
Cash and cash equivalents $ 2,769 $ 13,698
Accounts receivable, net 28,756 28,367
Deferred tax asset 10,094 7,467
Prepaid expenses and other current assets 12,403 12,217
--------- ---------
Total current assets 54,022 61,749
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Property and Equipment:
Property and equipment 148,791 142,163
Accumulated depreciation and amortization (82,406) (72,585)
--------- ---------
Property and equipment, net 66,385 69,578
========= =========
Purchased intangible assets, net 18,779 18,805
Other assets 4,652 4,564
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Total Assets $ 143,838 $ 154,696
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 10,686 $ 12,674
Accrued expenses 25,572 23,361
Deferred revenue 18,352 11,611
Short term borrowings 6,894 5,820
--------- ---------
Total current liabilities 61,504 53,466
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Deferred tax liability 3,903 3,423
Long term debt 2,517 869
--------- ---------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock; $0.01 par value; 5,000,000
authorized shares; none issued and outstanding -- --
Common stock; $0.01 par value; 50,000,000 and 30,000,000
authorized shares and 20,952,258 and 20,778,557 shares
issued at September 30, 1997 and
March 31, 1997, respectively 209 208
Paid-in capital 47,277 41,770
Cumulative translation adjustment 336 749
Retained earnings 98,095 84,214
Less common stock in treasury, at cost (2,575,885 and
1,172,408 shares at September 30, 1997 and March 31,
1997, respectively) (70,003) (30,003)
--------- ---------
Total stockholders' equity 75,914 96,938
--------- ---------
Total Liabilities and Stockholders' Equity $ 143,838 $ 154,696
========= =========
The accompanying Notes are an integral part of these consolidated financial
statements.
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CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(unaudited)
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Six Months Ended September 30,
------------------------------
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,881 $ 13,483
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 11,709 7,933
Minority interest -- (372)
Other (1,399) 494
Changes in operating assets and liabilities 6,792 5,024
--------- ---------
Net cash provided by operating activities 30,983 26,562
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (7,609) (16,329)
Purchase of investments, net of cash acquired (2,087) (12,048)
--------- ---------
Net cash used in investing activities (9,696) (28,377)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on credit facility 1,650 --
Proceeds from debt obligations 22,195 --
Principal payments on debt obligations (21,266) --
Proceeds from issuance of common and subsidiary stock 3,900 2,156
Tax benefit from exercise of non-qualified options and
disqualifying dispositions 1,516 276
Payment for repurchase of company common stock (40,000) (498)
--------- ---------
Net cash (used in) provided by financing activities (32,005) 1,934
--------- ---------
NET (DECREASE) INCREASE IN CASH (10,718) 119
Effect of exchange rate changes on cash (211) (3)
CASH, at end of prior period 13,698 25,778
========= =========
CASH, at end of current period $ 2,769 $ 25,894
========= =========
</TABLE>
5
The accompanying Notes are an integral part of these consolidated financial
statements.
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CATALINA MARKETING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Condensed Consolidated Financial Statements:
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position of the
Company as of September 30, 1997 and March 31, 1997, and the results of
operations for the three and six month periods ended September 30, 1997 and 1996
and cash flows for the six month periods ended September 30, 1997 and 1996.
The condensed consolidated financial statements include the accounts of the
Company and its wholly-owned and majority-owned subsidiaries. The second quarter
results of the majority owned foreign subsidiaries are included as of and for
the three and six month periods ended June 30, 1997 and 1996. All material
intercompany profits, transactions and balances have been eliminated. The
Company's investment in a non-majority owned company is accounted for on the
equity method.
These financial statements, including the condensed consolidated balance sheet
as of March 31, 1997, which has been derived from audited financial statements,
are presented in accordance with the requirements of Form 10-Q and consequently
may not include all disclosures normally required by generally accepted
accounting principles or those normally made in the Company's Annual Report on
Form 10-K. The accompanying condensed consolidated financial statements and
related notes should be read in conjunction with the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1997.
Note 2. Net Income Per Common and Common Equivalent Share:
Net income per common and common equivalent share is based on the weighted
average number of shares of common stock outstanding and dilutive common
equivalent shares using the treasury stock method.
Note 3: Stockholder Protection Agreement:
On May 8, 1997, the Company announced that it had adopted a Stockholder
Protection Plan. To implement this plan, the Company declared a dividend of one
Preferred Share Purchase Right on each outstanding share of the Company's common
stock. The dividend distribution was payable to stockholders of record on May
12, 1997. The rights will be exercisable for fractions of a share of the
Company's Series X Junior Participating Preferred Stock only if a person or
group acquires 15 percent or more of the Company's common stock or announces or
commences a tender offer for 15 percent or more of the common stock, except for
certain instances defined in the Stockholder Protection Plan.
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Note 4: Effect of SFAS No. 128, No. 130 and No. 131:
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS No. 128), effective for financial
statements issued for periods ending after December 15, 1997. The effect of the
adoption of SFAS No. 128 on the accompanying financial statements will be as
follows:
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THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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1997 1996 1997 1996
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Net Income (in thousands) $8,244 $7,189 $13,881 $13,483
PER SHARE AMOUNTS:
Earnings per share, as $ 0.43 $ 0.35 $ 0.73 $ 0.66
reported
Effect of SFAS No. 128 $ 0.02 $ 0.02 $ 0.03 $ 0.03
-------------------------------------------------
Basic Earnings per share $ 0.45 $ 0.37 $ 0.76 $ 0.69
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In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"(SFAS
No. 130) and No. 131, "Disclosures about Segments of an Enterprise and Related
Information"(SFAS No. 131).
SFAS No. 130 requires that an enterprise classify items of other comprehensive
income by their nature on the face of its financial statements and display the
accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet. SFAS No. 130 is effective for financial statements relating to periods
beginning after December 15, 1997.
SFAS No. 131 requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. SFAS No. 131 is
effective for financial statements relating to periods beginning after December
15, 1997.
The effects of SFAS No. 130 and SFAS No. 131 on the Company have not been
considered at this time.
Note 5: Credit Agreement:
On September 30, 1997, the Company terminated its existing $40 million credit
facility and entered into a new $150 million credit agreement (the Credit
Agreement) with a syndicate of commercial banks led by NationsBank, National
Association with Fleet National Bank as co-agent. The Credit Agreement makes
available (i) a $100 million revolving credit facility expiring September 30,
2000, (ii) a $10 million swing line facility expiring September 30, 2000, and
(iii) a $50 million 364 day line of credit facility expiring September 29, 1998
under which, the Company, at its option, may convert outstanding borrowings upon
expiration into a term loan with a maturity of September 30, 2000. The Company
may alternatively request, and the lenders have the option to provide, a renewal
of the line of credit on a revolving basis for additional periods of up to 364
days each. At no time may the aggregate principal balance
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exceed $150 million under the Credit Agreement. As of September 30, 1997, $1.7
million was outstanding thereunder.
The Credit Agreement provides that borrowings accrue interest on a variable
basis at (i) the London Interbank Offering Rate (LIBOR) (adjusted for any
reserve requirements in force) plus an applicable margin ranging from 50 to
162.5 basis points, or (ii) the base rate, defined in the Credit Agreement as
the greater of (a) the prime rate or (b) 50 basis points plus the federal funds
rate as defined in the Credit Agreement. In addition, the Credit Agreement
provides for unused facilities fees to accrue at a range of 12.5 to 37.5 basis
points per annum multiplied by the unused portions of the revolving credit and
line of credit facilities. The Credit Agreement is secured by the common stock
or equivalent of several Company subsidiaries, is guaranteed by several Company
subsidiaries, and contains certain financial covenants and other terms and
conditions.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
FISCAL 1998 COMPARED TO FISCAL 1997
The Company's revenues for the second quarter and first six months of fiscal
1998 increased 26.7 percent and 24.6 percent, respectively, compared with the
same periods in fiscal 1997. The increase in revenues is primarily due to a
greater distribution of Checkout Coupon incentives worldwide and, to a lesser
extent, revenues added by the acquisition by the Company on October 10, 1996 of
a 51 percent interest in a Japanese based outdoor media business. In the U.S.,
the Catalina Marketing Network printed 660 million and 1,257 million promotions
during the second quarter and first six months of fiscal 1998, respectively, up
15.0 percent and 14.8 percent compared to the same fiscal 1997 periods (574
million and 1,095 million promotions). The greater distribution of promotions is
attributable to the broader reach of the Catalina Marketing Network and
additional sales of category cycles. Catalina Marketing Services, operating the
Company's base business in the U.S., contributed approximately $43.4 million and
$83.4 million of revenues in the second quarter and first six months of fiscal
1998, respectively, up 15.0 percent and 14.2 percent over revenues of $37.7
million and $73.0 million in the comparable fiscal 1997 periods.
In the U.S., the Catalina Marketing Network was in 10,801 stores at September
30, 1997, which reach 142 million shoppers each week as compared to 10,470
stores reaching 136 million shoppers each week at September 30, 1996 and 10,745
stores reaching 144 million shoppers each week at March 31, 1997. The Health
Resources Network was in 1,477 pharmacies at September 30, 1997 as compared to
715 pharmacies at September 30, 1996 and 1,195 pharmacies at March 31, 1997.
Outside the U.S., the Catalina Marketing Network was in 913 stores at September
30, 1997, which reach 15 million shoppers each week as compared to 690 stores
reaching 14 million shoppers each week at September 30, 1996 and 941 stores
reaching 18 million shoppers each week at March 31, 1997. In the first six
months of fiscal 1998, the Company installed its Catalina Marketing Network in
56 stores (net of
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deinstallations) in the U.S. as compared to 704 stores in the comparable fiscal
1997 period. The Company also installed its Health Resources Network in 282
pharmacies in the first six months of fiscal 1998 as compared to 478 pharmacies
in the comparable fiscal 1997 period. Outside the U.S., the Company installed
272 stores in the first six months of fiscal 1998 as compared to 132 stores in
the comparable fiscal 1997 period. During the first six months of fiscal 1998,
the Company ceased operations in 300 stores in and around Mexico City.
Direct operating expenses consist of retailer fees, paper, sales commissions and
the expenses of operating and maintaining the Catalina Marketing Network
(primarily expenses relating to operations personnel and service offices),
provision for doubtful accounts and the direct expenses associated with
operating the outdoor media business in a majority-owned subsidiary in Japan
(purchased in October 1996). Direct operating expenses increased in absolute
terms to $20.4 million and $38.4 million for the second quarter and first six
months of fiscal 1998, respectively, from $14.9 million and $28.0 million in
comparable periods of fiscal 1997. Direct operating expenses in the first six
months of fiscal 1998 as a percentage of revenues increased to 38.7 percent from
35.1 percent in the comparable period of fiscal 1997. This increase in fiscal
1998 is principally attributable to the addition of the direct costs associated
with running the outdoor media business in Japan.
Selling, general and administrative expenses include personnel-related costs of
selling and administrative staff, overhead and new product development expenses.
Selling, general and administrative expenses for the second quarter and first
six months of fiscal 1998 were $12.4 million and $25.3 million, respectively,
compared to $11.7 million and $22.8 million for the same periods of fiscal 1997,
increases of 6.5 percent and 11.0 percent. The increases relate primarily to
higher costs associated with a larger sales force, and administrative expenses
of new business ventures and products. As a percentage of revenues, selling,
general and administrative expenses decreased 4.4 percent and 3.1 percent in the
second quarter and first six months of fiscal 1998, to 23.6 percent and 25.5
percent, respectively, from 28.0 percent and 28.6 percent for the comparable
periods of fiscal 1997. These decreases are principally due to the outdoor
media business in Japan, which typically has a higher percentage of direct
costs (as indicated above) and a smaller percentage of selling, general and
administrative expenses than the Company's other businesses, as well as the
cessation of the electronic clearing business on March 31, 1997.
Depreciation and amortization increased to $5.9 million and $11.6 million for
the second quarter and first six months of fiscal 1998 from $4.1 million and
$7.8 million for the comparable periods of fiscal 1997. Depreciation increased
due to the increase in fiscal 1997 capital expenditures associated with new
business ventures and data processing equipment.
Interest income (expense) and other decreased to $.4 million and $.8 million
expense for the second quarter and first six months of fiscal 1998 from $.3
million and $.6 million income for the comparable periods of fiscal 1997. The
decrease is primarily due to the Company incurring interest expense on
borrowings from its credit facility during the second quarter and first six
months of fiscal 1998.
The provision for income taxes increased to $9.3 million, 40.2 percent of income
before income taxes and minority interest, for the first six months of fiscal
1998, compared to $8.6
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million, 39.7 percent of income before income taxes and minority interest for
the same period of fiscal 1997. The Company's effective tax rate is higher than
the expected federal statutory tax rate due to state and foreign income taxes
and the inability to utilize currently losses of majority owned foreign
subsidiaries for tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital expenditures are store equipment and third-party
store installation costs, as well as data processing equipment for the Company's
central data processing facilities. Total store equipment and third-party store
installation costs range from $5,000 to $13,000 per store. During the first six
months of fiscal 1998 and 1997, the Company made capital expenditures of $7.6
million and $16.4 million, respectively. The pace of installations varies
depending on the timing of contracts entered into with retailers and the
scheduling of store installations by mutual agreement. During the first six
months of fiscal 1998, the Company had a slower pace of U.S. store installations
and spent $2.2 million less in data processing equipment and furniture and
fixtures compared to the comparable fiscal 1997 period. Management believes that
expenditures for capital equipment will remain between $25 million and $35
million annually for the foreseeable future.
During the first quarter of fiscal 1998, the Company purchased 1,403,477 shares
of its common stock for $40 million, initiating and completing a $40 million
share repurchase program approved by the Company's board as of March 31, 1997.
The Company may consider additional share repurchases from time to time.
During the first six months of fiscal 1998, the Company borrowed approximately
$27 million against its $40 million credit facility, $22 million of which was in
connection with the completion of the $40 million common stock repurchase
program referenced above, and $5 million of which was used to fund operations.
The Company repaid approximately $25.3 million during the same period, for a net
borrowing of $1.7 million on this facility during the first six months of fiscal
1998.
On September 30, 1997 the Company terminated its existing $40 million credit
facility and entered into a new credit agreement (the Credit Agreement) with a
syndicate of banks under which it may borrow up to $150 million, at variable
rates calculated with reference to the London Interbank Offering Rate (LIBOR) or
the higher of the bank prime rate or the Federal Funds rate plus 50 basis points
for certain advances. The Credit Agreement expires on September 30, 2000. As of
September 30, 1997, $1.7 million was outstanding thereunder.
The Company believes working capital generated by operations along with existing
credit facilities are sufficient for its overall capital requirements.
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on July 22, 1997.
The following members were elected as Class III members of the
Company's Board of Directors for the period ending as of the annual
meeting of stockholders in 2000:
Stephen I. D'Agostino
Thomas G. Mendell
Michael B. Wilson
The terms of the other directors of the Company continued after the
meeting. These directors are: George W. Off, Frank H. Barker, Patrick
W. Collins, Fredrick W. Beinecke, Tommy D. Greer, Helene Monat, and
Thomas W. Smith.
With regard to the proposal to approve an amendment to the Company's
Amended and Restated 1989 Stock Option Plan to increase by 1,250,000
the number of shares of common stock available for the grant of options
thereunder, 12,511,197 votes were cast in favor, 1,692,640 were cast
against, there were 8,411 abstentions, and the proposal was approved.
With regard to the proposal to approve an amendment to the Company's
Amended and Restated 1989 Stock Option Plan to provide for the
acceleration of options if an optionee's employment is terminated under
certain circumstances following a sale of the Company, 15,513,391 votes
were cast in favor, 1,003,073 were cast against, there were 129,533
abstentions, and the proposal was approved.
With regard to the proposal to ratify and approve the Company's
independent public accountants for fiscal 1998, 16,626,382 votes were
cast in favor, 12,426 were cast against, there were 7,189 abstentions,
and the proposal was approved.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
10.26 Credit Agreement dated as of September 30, 1997, by
and between the Registrant and NationsBank, National
Association, as agent and lender, and the other
lenders party thereto
15 Acknowledgment Letter
27 Financial Data Schedule (for SEC use only)
99 Review Report of Independent Certified Public
Accountants
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CATALINA MARKETING CORPORATION
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, Registrant's principal financial officer, thereunto duly
authorized.
November 6, 1997 CATALINA MARKETING CORPORATION
-----------------------------------
(Registrant)
/s/ Philip B. Livingston
-----------------------------------
Philip B. Livingston
Senior Vice President and
Chief Financial Officer
(Authorized officer of Registrant
and principal financial officer)
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EXHIBIT 10.26
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CREDIT AGREEMENT
by and among
CATALINA MARKETING CORPORATION
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION ,
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
September 30, 1997
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TABLE OF CONTENTS
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ARTICLE I Definitions and Terms
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1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE II The Credit Facilities
2.1. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.2. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.3. Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.4. Non-Conforming Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.5. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.6. Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.7. Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.8. Conversions and Elections of Subsequent Interest Periods . . . . . . . . . . . . . . . . 31
2.9. Increase and Decrease in Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.10. Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.11. Deficiency Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.12. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.13. Line of Credit Extension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.14. Swing Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE III Letters of Credit
3.1. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.2. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.3. Letter of Credit Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.4. Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IV Security
4.1. Facility Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.2. Stock Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.3. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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ARTICLE V Change in Circumstances
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5.1. Increased Cost and Reduced Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.2. Limitation on Types of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.3. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.4. Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.5. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.7. Replacement Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VI Conditions to Making Loans and Issuing Letters of Credit
6.1. Conditions of Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.2. Conditions of Revolving Loans, Line of Credit Loans and Letter of Credit . . . . . . . . 48
ARTICLE VII Representations and Warranties
7.1. Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2. Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.3. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.4. Subsidiaries and Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.5. Ownership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.6. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.7. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.9. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.10. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.11. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.12. Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.13. Patents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.14. No Untrue Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.15. No Consents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.16. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.17. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.18. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.19. Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.20. RICO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.21. Security Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE VIII Affirmative Convenants
<S> <C> <C>
8.1. Financial Reports, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.2. Maintain Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.3. Existence, Qualification, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.4. Regulations and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.6. True Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.7. Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.8. Observe all Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.9. Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.10. Covenants Extending to Other Persons . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.11. Officer's Knowledge of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.12. Suits or Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.13. Notice of Discharge of Hazardous Material or Environmental Complaint . . . . . . . . . . 60
8.14. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.15. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.16. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.17. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.18. Continued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.19. New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE IX Negative Covenants
9.1. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.2. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.4. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.5. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.6. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.7. Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.8. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.9. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.10. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.11. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.12. Dissolution, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.13. Prepayments, Etc. of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.14. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.15. Rate Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.16. Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE X Events of Default and Acceleration
<S> <C> <C>
10.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.2. Agent to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.3. Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.4. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.5. Allocation of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE XI The Agent
11.1. Appointment, Powers, and Immunities. . . . . . . . . . . . . . . . . . . . . . . . . . 76
11.2. Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
11.3. Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
11.4. Rights as Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
11.5. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
11.6. Non-Reliance on Agent and Other Lenders. . . . . . . . . . . . . . . . . . . . . . . . . 78
11.7. Resignation of Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.8. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.9. Security Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE XII Miscellaneous
12.1. Assignments and Participations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
12.3. Right of Set-off; Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.4. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.6. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.9. Indemnification; Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . 85
12.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.12. Agreement Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.13. Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.14. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.15. GOVERNING LAW; WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
EXHIBIT A Applicable Commitment Percentages . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Assignment and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized
Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D-1 Form of Borrowing Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
EXHIBIT D-2 Form of Borrowing Notice--Swing Line Loans . . . . . . . . . . . . . . . . . . . . D-3
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
EXHIBIT E Form of Interest Rate Selection Notice . . . . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F-1 Form of Revolving Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
EXHIBIT F-2 Form of Line of Credit Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
EXHIBIT F-3 Form of Swing Line Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
EXHIBIT G Form of Opinion of Borrower's Counsel . . . . . . . . . . . . . . . . . . . . . . . G-1
EXHIBIT H Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1
EXHIBIT I Form of Facility Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT J Form of Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-1
EXHIBIT K Form of LC Account Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . K-1
Schedule 7.4 Subsidiaries and Investments in Other Persons . . . . . . . . . . . . . . . . . . . S-1
Schedule 7.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Schedule 7.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Schedule 7.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Schedule 8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Schedule 9.8 Employee and Director Stock Option and Stock Purchase Plans . . . . . . . . . . . . S-6
</TABLE>
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 30, 1997 (the
"Agreement"), is made by and among CATALINA MARKETING CORPORATION, a Delaware
corporation having its principal place of business in St. Petersburg, Florida
(the "Borrower"), NATIONSBANK, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States, in its
capacity as a Lender ("NationsBank"), and each other financial institution
executing and delivering a signature page hereto and each other financial
institution which may hereafter execute and deliver an instrument of assignment
with respect to this Agreement pursuant to Section 12.1 (hereinafter such
financial institutions may be referred to individually as a "Lender" or
collectively as the "Lenders"), and NATIONSBANK, NATIONAL ASSOCIATION, a
national banking association organized and existing under the laws of the
United States, in its capacity as agent for the Lenders (in such capacity, and
together with any successor agent appointed in accordance with the terms of
Section 11.7, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower certain credit facilities in the maximum aggregate principal
amount at any time outstanding of $150,000,000, which shall include a line of
credit facility of up to $50,000,000 and a revolving credit facility of up to
$100,000,000, which shall include a letter of credit facility of up to
$5,000,000 for the issuance of standby and commercial letters of credit and a
swing line facility of up to $10,000,000, the proceeds of which shall be used
as provided in Section 2.12 hereof; and
WHEREAS, the Lenders are willing to make such revolving credit, line
of credit and letter of credit facilities available to the Borrower upon the
terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree
as follows:
<PAGE> 8
ARTICLE I
Definitions and Terms
I.1. Definitions. For the purposes of this Agreement, in addition
to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person, whether by purchase of such equity
interest or upon exercise of an option or warrant for, or conversion
of securities into, such equity interest, or (ii) assets of another
Person which constitute all or substantially all of the assets of such
Person or of a line or lines of business conducted by such Person.
"Advance" means a borrowing under the Revolving Credit
Facility or Line of Credit Facility consisting of a Base Rate Loan or
a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or
is under common control with the Borrower; or (ii) which beneficially
owns or holds 5% or more of any class of the outstanding voting stock
(or in the case of a Person which is not a corporation, 5% or more of
the equity interest) of the Borrower; or 5% or more of any class of
the outstanding voting stock (or in the case of a Person which is not
a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Borrower. The term "control" means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through ownership of voting stock, by contract or otherwise.
"Applicable Commitment Percentage" means, with respect to each
Lender that portion of the Total Credit Commitment (including its
Participations and its obligations hereunder to the Issuing Bank to
acquire Participations) allocable to such Lender (i) with respect to
Lenders as of the Closing Date, as set forth in Exhibit A and (ii)
with respect to any Person who becomes a Lender hereafter, as
reflected in each Assignment and Acceptance to which such Lender is a
party Assignee; provided that the Applicable Commitment Percentage of
each Lender shall be increased or decreased to reflect any assignments
to or by such Lender effected in accordance with Section 12.1.
"Applicable Lending Office" means, for each Lender and for
each Type of Loan, the "Lending Office" of such Lender (or of an
affiliate of such Lender) designated for such Type of Loan on the
signature pages hereof or such other office of such Lender (or an
affiliate of such Lender) as such Lender may from time to time specify
to the Agent and the Borrower by written notice in accordance with the
terms hereof as the office by which its Loans of such Type are to be
made and maintained.
<PAGE> 9
"Applicable Margin" means that percent per annum set forth
below, which shall be based upon the Consolidated Leverage Ratio for
the Four-Quarter Period most recently ended as specified below:
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------------------------
Tier Consolidated Leverage Ratio Applicable Margin
-----------------------------------------------------------------------------------
V Greater than 2.75 to 1.00 1.625%
-----------------------------------------------------------------------------------
IV Equal to or less than 2.75 to 1.00 1.250%
and greater than 2.25 to 1.00
-----------------------------------------------------------------------------------
III Equal to or less than 2.25 to 1.00 1.000%
and greater than 1.50 to 1.00
-----------------------------------------------------------------------------------
II Equal to or less than 1.50 to 1.00 0.750%
and greater than 0.75 to 1.00
-----------------------------------------------------------------------------------
I Equal to or less than 0.75 to 1.00 0.500%
-----------------------------------------------------------------------------------
</TABLE>
The Applicable Margin shall be established at the end of each fiscal quarter of
the Borrower (each, a "Determination Date"). Any change in the Applicable
Margin following each Determination Date shall be determined based upon the
computations set forth in the certificate furnished to the Agent pursuant to
Section 8.1(a)(ii) and Section 8.1(b)(ii), subject to review and approval of
such computations by the Agent, and shall be effective commencing on the date
following the date such certificate is received (or, if earlier, the date such
certificate was required to be delivered) until the date following the date on
which a new certificate is delivered or is required to be delivered, whichever
shall first occur; provided however, if the Borrower shall fail to deliver any
such certificate within the time period required by Section 8.1, then the
Applicable Margin shall be Tier V until the appropriate certificate is so
delivered. From the Closing Date to the first Determination Date, the
Applicable Margin shall be Tier II.
<PAGE> 10
"Applicable Unused Fee" means, with respect to the Line of
Credit Facility and the Revolving Credit Facility, that percent per
annum set forth below, which shall be based upon the Consolidated
Leverage Ratio for the Four-Quarter Period most recently ended as
specified below:
<TABLE>
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------
Tier Consolidated Leverage Ratio Applicable Unused Fee Applicable Unused Fee
for Line of Credit for Revolving Credit
-------------------------------------------------------------------------------------------------
V Greater than 2.75 to 1.00 0.300% 0.375%
-------------------------------------------------------------------------------------------------
IV Equal to or less than 2.75 to 1.00 0.250% 0.300%
and greater than 2.25 to 1.00
-------------------------------------------------------------------------------------------------
III Equal to or less than 2.25 to 1.00 0.200% 0.250%
and greater than 1.50 to 1.00
-------------------------------------------------------------------------------------------------
II Equal to or less than 1.50 to 1.00 0.150% 0.200%
and greater than 0.75 to 1.00
-------------------------------------------------------------------------------------------------
I Equal to or less than 0.75 to 1.00 0.125% 0.150%
-------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Unused Fee shall be established at the end of each
fiscal quarter of the Borrower (the "Determination Date"). Any change
in the Applicable Unused Fee following each Determination Date shall be
determined based upon the computations set forth in the certificate
furnished to the Agent pursuant to Section 8.1(a)(ii) and Section
8.1(b)(ii), subject to review and approval of such computations by the
Agent and shall be effective commencing on the date following the date
such certificate is received (or, if earlier, the date such certificate
was required to be delivered) until the date following the date on
which a new certificate is delivered or is required to be delivered,
whichever shall first occur; provided however, if the Borrower shall
fail to deliver any such certificate within the time period required by
Section 8.1, then the Applicable Unused Fee shall be Tier V until the
appropriate certificate is so delivered. From the Closing Date to the
first Determination Date, the Applicable Unused Fee shall be Tier II.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit,
or similar documentation, executed by the Borrower from time to time
and delivered to the Issuing Bank to support the issuance of Letters
of Credit.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B (with blanks appropriately filled
in) delivered to the Agent in connection with an assignment of a
Lender's interest under this Agreement pursuant to Section 12.1.
<PAGE> 11
"Authorized Representative" means any of the Chief Executive
Officer, the President, the Chief Financial Officer, the Treasurer or
the Corporate Controller of the Borrower or, with respect to financial
matters, the Chief Financial Officer or the Treasurer of the Borrower,
or any other Person expressly designated by the Board of Directors of
the Borrower (or the appropriate committee thereof) as an Authorized
Representative of the Borrower, as set forth from time to time in a
certificate in the form of Exhibit C.
"Base Rate" means, for any day, the rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus one-half of
one percent (0.5%) and (b) the Prime Rate for such day. Any change in
the Base Rate due to a change in the Prime Rate or the Federal Funds
Rate shall be effective on the effective date of such change in the
Prime Rate or Federal Funds Rate.
"Base Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan or Swing
Line Loan made either to (i) satisfy Reimbursement Obligations arising
from a drawing under a Letter of Credit or (ii) pay NationsBank in
respect of Swing Line Outstandings.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrower's Account" means a demand deposit account number
3750870862 or any successor account with the Agent, which may be
maintained at one or more offices of the Agent or an agent of the
Agent.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under (i) the Revolving
Credit Facility or the Line of Credit Facility or, (ii) a Swing Line
Loan, in the forms of Exhibits D-1 and D-2 respectively.
"Business Day" means, (i) with respect to any Base Rate Loan,
any day which is not a Saturday, Sunday or a day on which banks in the
States of New York and North Carolina are authorized or obligated by
law, executive order or governmental decree to be closed and, (ii)
with respect to any Eurodollar Rate Loan, any day which is a Business
Day, as described above, and on which the relevant international
financial markets are open for the transaction of business
contemplated by this Agreement in London, England, New York, New York
and Charlotte, North Carolina.
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries, for any period the sum of (without duplication) (i)
all expenditures (whether paid in cash
<PAGE> 12
or accrued as liabilities) by the Borrower or any Subsidiary during
such period for items that would be classified as "property, plant or
equipment" or comparable items on the consolidated balance sheet of the
Borrower and its Subsidiaries, including without limitation all
transactional costs incurred in connection with such expenditures
provided the same have been capitalized, excluding, however, the amount
of any Capital Expenditures paid for with proceeds of casualty
insurance as evidenced in writing and submitted to the Agent together
with any compliance certificate delivered pursuant to Section 8.1(a) or
(b), and (ii) with respect to any Capital Lease entered into by the
Borrower or its Subsidiaries during such period, the present value of
the lease payments due under such Capital Lease over the term of such
Capital Lease applying a discount rate equal to the interest rate
provided in such lease (or in the absence of a stated interest rate,
that rate used in the preparation of the financial statements described
in Section 8.1(a)), all the foregoing in accordance with GAAP applied
on a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other
than Persons owning thirty percent (30%) or more of the Voting
Stock of the Borrower on the Closing Date, either (A) becomes
the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act ), directly or indirectly, of Voting Stock of the
Borrower (or securities convertible into or exchangeable for
such Voting Stock) representing thirty percent (30%) or more
of the combined voting power of all Voting Stock of the
Borrower (on a fully diluted basis) or (B) otherwise has the
ability, directly or indirectly, to elect a majority of the
board of directors of the Borrower; or
(ii) during any period of up to 12 consecutive
months, commencing on the Closing Date, individuals who at the
beginning of such 12-month period were directors of the
Borrower shall cease for any reason (other than the death,
disability or retirement of an officer of the Borrower that is
serving as a director at such time so long as another officer
of the Borrower replaces such Person as a director) to
constitute a majority of the board of directors of the
Borrower.
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in Section 6.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
<PAGE> 13
"Collateral" means, collectively, all property of the
Borrower, any Subsidiary or any other Person in which the Agent or any
Lender is granted a Lien as security for all or any portion of the
Obligations under any Security Instrument.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of the Borrower and its
Subsidiaries referred to in Section 7.6(a).
"Consolidated EBITDA" means, with respect to the Borrower and
its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the sum of, without duplication, (i) Consolidated
Net Income (excluding (a) non-cash restructuring charges incurred in
the fourth fiscal quarter of 1997 in the amount of $1,430,000 in
connection with discontinuance of operations of Catalina Electronic
Clearing Services Inc. and (b) non-cash charges associated with
investments in an aggregate amount net of tax benefits not to exceed
$4,000,000 during the term of this Agreement), (ii) Consolidated
Interest Expense, (iii) taxes on income, (iv) amortization, and (v)
depreciation minus minority interest in losses of Subsidiaries or plus
minority interest in profits of Subsidiaries, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to the Borrower and its Subsidiaries for any Four-Quarter Period
ending on the date of computation thereof, the ratio of (i)
Consolidated EBITDA for such period less (without duplication) Capital
Expenditures for such period, to (ii) Consolidated Fixed Charges for
such period.
"Consolidated Fixed Charges" means, with respect to the
Borrower and its Subsidiaries for any Four- Quarter Period ending on
the date of computation thereof, the sum of, without duplication (i)
Consolidated Interest Expense, (ii) required principal payments of
Consolidated Funded Indebtedness having an original term (including
rights of renewal) of greater than one year, excluding in all events
Outstandings.
"Consolidated Funded Indebtedness" means, without duplication,
all Indebtedness for Money Borrowed and all Guaranties of the Borrower
and its Subsidiaries, all determined on a consolidated basis.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Borrower and its Subsidiaries, including without limitation (i) the
current amortized portion of debt discounts to the extent included in
gross interest expense, (ii) the current amortized portion of all fees
(including fees payable in respect of any Swap Agreement) payable in
connection with the incurrence of Indebtedness to the extent included
in gross interest expense and (iii)
<PAGE> 14
the portion of any payments made in connection with Capital Leases
allocable to interest expense, all determined on a consolidated basis
in accordance with GAAP applied on a Consistent Basis.
"Consolidated Leverage Ratio" means, as of the date of
computation thereof, the ratio of (i) the sum of (without duplication)
Consolidated Funded Indebtedness (determined as at such date) to (ii)
Consolidated EBITDA (for the Four-Quarter Period ending on (or most
recently ended prior to) such date).
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries (excluding payments received by the Borrower and its
Subsidiaries of (a) interest income, and (b) dividends and
distributions made in the ordinary course of their businesses by
Persons in which investment is permitted pursuant to this Agreement
and not related to an extraordinary event), less all operating and
non-operating expenses of the Borrower and its Subsidiaries including
taxes on income, all determined on a consolidated basis in accordance
with GAAP applied on a Consistent Basis; but excluding as income: (i)
net gains or losses on the sale, conversion or other disposition of
capital assets, (ii) net gains or losses on the acquisition,
retirement, sale or other disposition of capital stock and other
securities of the Borrower or its Subsidiaries, (iii) net gains or
losses on the collection of proceeds of life insurance policies, (iv)
any write-up of any asset, and (v) any other net gain or loss or
credit of an extraordinary nature as determined in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Total Assets" means, as of any date on which the
amount thereof is to be determined, the net book value of all assets
of the Borrower and its Subsidiaries as determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis.
"Consolidated Total Tangible Assets" means, as of any date on
which the amount thereof is to be determined, Consolidated Total
Assets minus intangible assets, including but not limited to goodwill,
patents, trademarks, tradenames and licenses and tangible assets of
Excluded Subsidiaries.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring
thereof, would be required) to be included in the financial statements
(including footnotes) of such Person in accordance with GAAP applied
on a Consistent Basis, including Statement No. 5 of the Financial
Accounting Standards Board, all Letters of Credit, Rate Hedging
Obligations and any obligation of such Person guaranteeing or in
effect guaranteeing any Indebtedness, dividend or other obligation of
any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including obligations of such Person however
incurred:
(1) to purchase such Indebtedness or other
obligation or any property
<PAGE> 15
or assets constituting security therefor;
(2) to advance or supply funds in any manner (i)
for the purchase or payment of such Indebtedness or other
obligation, or (ii) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor;
(3) to grant or convey any lien, security
interest, pledge, charge or other encumbrance on any property
or assets of such Person to secure payment of such
Indebtedness or other obligation;
(4) to lease property or to purchase securities
or other property or services primarily for the purpose of
assuring the owner or holder of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or other obligation; or
(5) otherwise to assure the owner of the
Indebtedness or such obligation of the primary obligor against
loss in respect thereof.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.8 hereof of a Eurodollar Rate Loan
of one Type as a Eurodollar Rate Loan of the same Type from one
Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a
conversion pursuant to Section 2.8 of one Type of Loan into another
Type of Loan.
"Cost of Acquisition" means, with respect to any Acquisition,
as at the date of entering into any agreement therefor, the sum of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of Borrower or any
Subsidiary to be transferred in connection therewith, (ii) the amount
of any cash and fair market value of other property (excluding property
described in clause (i) and the unpaid principal amount of any debt
instrument) given as consideration, (iii) the amount (determined by
using the face amount or the amount payable at maturity, whichever is
greater) of any Indebtedness incurred, assumed or acquired by the
Borrower or any Subsidiary in connection with such Acquisition, (iv)
all additional purchase price amounts in the form of earnouts and other
contingent obligations that should be recorded on the financial
statements of the Borrower and its Subsidiaries in accordance with
GAAP, (v) all amounts paid in respect of covenants not to compete,
consulting agreements that should be recorded on financial statements
of the Borrower and its Subsidiaries in accordance with GAAP, and other
affiliated contracts in connection with such Acquisition, (vi) the
aggregate fair market value of all other consideration given by the
Borrower or any Subsidiary in connection with such Acquisition, and
(vii) out of pocket transaction costs for the services and expenses of
attorneys, accountants and other consultants incurred in effecting such
transaction, and other similar transaction costs so
<PAGE> 16
incurred. For purposes of determining the Cost of Acquisition for any
transaction, (A) the capital stock of the Borrower shall be valued (I)
in the case of capital stock that is then designated as a national
market system security by the National Association of Securities
Dealers, Inc. ("NASDAQ") or is listed on a national securities
exchange, the average of the last reported bid and ask quotations or
the last prices reported thereon, and (II) with respect to shares that
are not freely tradeable, as determined by the Board of Directors of
the Borrower and, if requested by the Agent, determined to be a
reasonable valuation by the independent public accountants referred to
in Section 8.1(a), (B) the capital stock of any Subsidiary shall be
valued as determined by the Board of Directors of such Subsidiary and,
if requested by the Agent, determined to be a reasonable valuation by
the independent public accountants referred to in Section 8.1(a), and
(C) with respect to any Acquisition accomplished pursuant to the
exercise of options or warrants or the conversion of securities, the
Cost of Acquisition shall include both the cost of acquiring such
option, warrant or convertible security as well as the cost of
exercise or conversion.
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) above the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) above the Base Rate, (ii) with respect to Base Rate
Loans, at a rate of interest per annum which shall be two percent (2%)
above the Base Rate and (iii) in any case, the maximum rate permitted
by applicable law, if lower.
"Direct Foreign Subsidiary" means any Foreign Subsidiary of
the Borrower a majority of whose outstanding Voting Stock is owned
directly by the Borrower or a Domestic Subsidiary.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United
States of America.
"Domestic Subsidiary" means any direct or indirect Subsidiary
of the Borrower organized under the laws of the United States of
America or a state, province or territory thereof.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of
a Lender, and (iii) any other Person approved by the Agent and,
unless an Event of Default has occurred and is continuing at the time
any assignment is effected in accordance with Section 12.1, the
Borrower, each such approval not to be unreasonably withheld or delayed
by the Borrower or the Agent, as the case may be, and such approval to
be deemed given by the Borrower if no objection is received by the
assigning Lender and the Agent from the Borrower within five Business
Days after notice of such proposed assignment has been provided by the
assigning Lender to the Borrower; provided, however, that if the
<PAGE> 17
Borrower would be subject to any increased costs or any Taxes payable
under Article V as a result of any assignment to an Eligible Assignee,
the Borrower may in its sole discretion withold its consent; provided,
further, that neither the Borrower nor an affiliate of the Borrower
shall qualify as an Eligible Assignee.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized
under the laws of any state of the United States of America or
under the laws of any other nation, payable in the United
States of America, expressed to mature not later than 92 days
following the date of issuance thereof and rated in an
investment grade rating category of A-1 or better by S&P and
P-1 or better by Moody's;
(c) interest bearing demand or time deposits
issued by any Lender or certificates of deposit maturing
within one year from the date of issuance thereof and issued
by a bank or trust company organized under the laws of the
United States or of any state thereof having capital surplus
and undivided profits aggregating at least $400,000,000 and
being rated "A-1" or better by S&P or "P-1" or better by
Moody's;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in
obligations described in paragraphs (a) through (f) above, the
shares of which mutual funds are at all times rated "AAA" by
S&P;
(h) tax-exempt or taxable adjustable rate
preferred stock issued by a Person having a rating of its long
term unsecured debt of "A" or better by S&P or "A-2" or better
by Moody's; and
(i) asset-backed remarketed certificates of
participation representing a fractional undivided interest in
the assets of a trust, which certificates are rated at least
"A-1" by S&P and "P- 1" by Moody's.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of the Borrower or any of its ERISA Affiliates or is assumed
by the Borrower or any of its ERISA Affiliates in
<PAGE> 18
connection with any Acquisition or (ii) has at any time been
maintained for the employees of the Borrower or any current or former
ERISA Affiliate.
"Environmental Laws" means any federal, state or local
statute, law, ordinance, code, rule, regulation, order, decree, permit
or license regulating, relating to, or imposing liability or standards
of conduct concerning, any environmental matters or conditions,
environmental protection or conservation, including without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended; the Superfund Amendments and
Reauthorization Act of 1986, as amended; the Resource Conservation and
Recovery Act, as amended; the Toxic Substances Control Act, as
amended; the Clean Air Act, as amended; the Clean Water Act, as
amended; together with all regulations promulgated thereunder, and any
other "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any
Person or trade or business which is a member of a group which is
under common control with the Borrower, who together with the
Borrower, is treated as a single employer within the meaning of
Section 414(b) and (c) of the Code.
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered + Applicable Rate
----------------------
Rate 1- Reserve Requirement Margin
"Event of Default" means any of the occurrences set forth as
such in Section 10.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Excluded Subsidiary" means any of Catalina Information
Resources, Inc., Catalina Electronic Clearing Services, Inc., Catalina
Marketing of Mexico, Inc. and its Subsidiaries, and Catalina Marketing
of Iberia, Inc. so long as such entities either do not engage in
active business or engage in no active business other than winding up
their operations.
"Facility Guaranty" means each Guaranty and Suretyship
Agreement between one or more Guarantors and the Agent for the benefit
of the Lenders, delivered as of the
<PAGE> 19
Closing Date and otherwise pursuant to Section 8.19, as the same may
be amended, modified or supplemented.
"Facility Termination Date" means the date on which both the
Revolving Credit Termination Date and Line of Credit Termination Date
shall have occurred, no Letters of Credit shall remain outstanding and
the Borrower shall have fully, finally and irrevocably paid and
satisfied all Obligations.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
charged to the Agent (in its individual capacity) on such day on such
transactions as determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the
Borrower commencing on April 1 of each calendar year and ending on
March 31 of the following calendar year.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning, any Employee Benefit
Plan.
"Foreign Subsidiary" means any Subsidiary of the Borrower that
is not a Domestic Subsidiary.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Borrower and its Subsidiaries, taken together
as one accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public
Accountants or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state,
municipal, national or
<PAGE> 20
other governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any
entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any
government or any court, in each case whether associated with a state
of the United States, the United States, or a foreign entity or
government.
"Guaranties" means all obligations of the Borrower or any
Subsidiary directly or indirectly, or in effect, guaranteeing, any
Indebtedness or other obligation to pay money of any other Person.
"Guarantors" means, at any date, the Domestic Subsidiaries who
are parties to a Facility Guaranty at such date, which Subsidiaries as
at the Closing Date are Catalina Marketing Sales Corporation, Catalina
Marketing Retail Sales Corp., Catalina Marketing International, Inc.,
Catalina Marketing Worldwide, Inc., Catalina Marketing UK, Inc.,
Health Resource Publishing Company and Supermarkets Online, Inc.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic waste, substance or material
(including without limitation petroleum products, asbestos-containing
materials and lead), the generation, handling, storage,
transportation, disposal, treatment, release, discharge or emission of
which is subject to any Environmental Law.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property or arising under Rate
Hedging Obligations, all indebtedness secured by any Lien on the
property of such Person whether or not such indebtedness is assumed,
all liability of such Person by way of endorsements (other than for
collection or deposit in the ordinary course of business), all
Contingent Obligations, all Guaranties, that portion of obligations
with respect to Capital Leases and other items which in accordance with
GAAP is required to be classified as a liability on a balance sheet;
but excluding all accounts payable in the ordinary course of business
so long as payment therefor is due within one year; provided that in no
event shall the term Indebtedness include surplus and retained
earnings, lease obligations (other than pursuant to Capital Leases),
reserves for deferred income taxes and investment credits, other
deferred credits or reserves.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation all Capital Leases and the
deferred purchase price of any property or asset, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including conditional sales or similar title
retention agreements), other than trade payables incurred in the
ordinary course of business.
"Indirect Foreign Subsidiary" means any Foreign Subsidiary a
majority of whose Voting Stock is owned directly by a Foreign
Subsidiary.
<PAGE> 21
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the rate per
annum (rounded upwards, if necessary), to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for
any reason such rate is unavailable, the term "Interbank Offered Rate"
shall mean, with respect to any Eurodollar Rate Loan for the Interest
Period applicable thereto, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars
at approximately 11:00 A.M. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such
Interest Period, provided, however; if more than one rate is specified
on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
"Interest Period" means, for each Eurodollar Rate Loan, a
period commencing on the date such Eurodollar Rate Loan is made or
Converted and ending, at the Borrower's option, on the date one, two,
three or six months thereafter as notified to the Agent by the
Authorized Representative three (3) Business Days prior to the
beginning of such Interest Period; provided, that,
(i) if the Authorized Representative fails to
notify the Agent of the length of an Interest Period three (3)
Business Days prior to the first day of such Interest Period,
the Loan for which such Interest Period was to be determined
shall be deemed to be a Base Rate Loan as of the first day
thereof;
(ii) if an Interest Period for a Eurodollar Rate
Loan would end on a day which is not a Business Day, such
Interest Period shall be extended to the next Business Day
(unless such extension would cause the applicable Interest
Period to end in the succeeding calendar month, in which case
such Interest Period shall end on the next preceding Business
Day);
(iii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(iv) no Interest Period shall extend past the
Revolving Credit Termination Date in the case of Revolving
Loans and the Line of Credit Termination Date in the case of
Line of Credit Loans; and
(v) there shall not be more than eight (8)
Interest Periods in effect on any day.
<PAGE> 22
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Loan
or the Conversion of any Eurodollar Rate Loan into a Base Rate Loan or
the Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in
the form of Exhibit E.
"Issuing Bank" means initially NationsBank and thereafter any
Lender which is successor to NationsBank as issuer of Letters of
Credit under Article III.
"LC Account Agreement" means the LC Account Agreement
substantially in the form of Exhibit K attached hereto and dated as of
the date hereof between the Borrower and the Agent, as amended,
modified or supplemented from time to time.
"Letter of Credit" means a standby or commercial letter of
credit issued by the Issuing Bank for the account of the Borrower in
favor of a Person advancing credit or securing an obligation on behalf
of the Borrower.
"Letter of Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to acquire Participations in
respect of Letters of Credit and Reimbursement Obligations up to an
aggregate amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Letter of Credit
Commitment as the same may be increased or decreased from time to time
pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in
Article III hereof providing for the issuance by the Issuing Bank for
the account of the Borrower of Letters of Credit in an aggregate
stated amount at any time outstanding not exceeding the Total Letter
of Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters
of Credit plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Borrower and any
Subsidiary shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement, financing
lease, or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes.
"Line of Credit Commitment" means, with respect to each
Lender, the obligation
<PAGE> 23
of such Lender to make Line of Credit Loans to the Borrower in a
principal amount equal to such Lender's Applicable Commitment
Percentage of the Total Line of Credit Commitment.
"Line of Credit Facility" means the facility described in
Section 2.1(b) providing for Line of Credit Loans to the Borrower by
the Lenders in the original principal amount of the Total Line of
Credit Commitment.
"Line of Credit Loan" means a loan made pursuant to the Line
of Credit Facility in accordance with Section 2.1(b).
"Line of Credit Notes" means, collectively, the promissory
notes of the Borrower evidencing Line of Credit Loans executed and
delivered to the Lenders as provided in Section 2.5(b) substantially in
the form of Exhibit F-2.
"Line of Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of Line of Credit Loans
then outstanding and all interest accrued thereon.
"Line of Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
obligations pursuant to Section 10.1 upon the occurrence of an Event
of Default, or (iii) such date as the Borrower may voluntarily and
permanently terminate the Line of Credit Facility by payment in full
of all Line of Credit Outstandings.
"Loan" or "Loans" means any borrowing pursuant to an Advance
under the Revolving Credit Facility, including Swing Line Loans, or
the Line of Credit Facility.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the LC Account Agreement, the
Applications and Agreements for Letter of Credit, and all other
instruments and documents heretofore or hereafter executed or
delivered to or in favor of any Lender or the Agent in connection with
the Loans made and transactions contemplated under this Agreement, as
the same may be amended, supplemented or replaced from the time to
time.
"Loan Parties" means the Borrower and the Guarantors.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, prospects, operations or condition,
financial or otherwise, of the Borrower or any of its Subsidiaries,
(ii) the ability of any Loan Party to pay or perform its respective
obligations, liabilities and indebtedness under the Loan Documents as
such payment or performance becomes due in accordance with the terms
thereof, or (iii) the rights, powers and remedies of the Agent or any
Lender under any Loan Document or the validity, legality or
enforceability thereof.
<PAGE> 24
"Material Foreign Subsidiary" means any Direct Foreign
Subsidiary of the Borrower which (i) has total tangible assets equal
to or greater than five percent (5%) of Consolidated Total Tangible
Assets (calculated as of the most recent fiscal period with respect to
which the Agent shall have received financial statements required to
be delivered pursuant to Sections 8.1(a) or (b) (or if prior to
delivery of any financial statements pursuant to such Sections, then
calculated with respect to the Fiscal Year end financial statements
referenced in Section 7.6) (the "Required Financial Information")), or
(ii) has income equal to or greater than five percent (5%) of
Consolidated Net Income (calculated for the most recent Four-Quarter
Period for which the Agent has received the Required Financial
Information); provided, however, that notwithstanding the foregoing,
the term "Material Foreign Subsidiaries" shall mean Direct Foreign
Subsidiaries (other than Subsidiaries whose stock is pledged pursuant
to a Pledge Agreement) of the Borrower that together have (x) tangible
assets equal to or greater than thirty percent (30%) of Consolidated
Total Tangible Assets (calculated as described above) or (y) net
income equal to or greater than thirty percent (30%) of Consolidated
Net Income (calculated as described above); provided, further, that if
more than one combination of Direct Foreign Subsidiaries satisfies
such threshold, then those Direct Foreign Subsidiaries so determined
to be "Material Foreign Subsidiaries" shall be specified by the
Borrower; provided, however, the Borrower shall not, in any event, be
required to cause either Catalina-Pacific Media, LLC or Catalina
Marketing of France, Inc. to deliver a Facility Guaranty or to pledge
the stock of their Subsidiaries organized under the laws of Japan and
France, respectively, or otherwise comply with Section 8.19 until the
total income from operations of Japanese Subsidiaries or French
Subsidiaries, as the case may be, shall equal or exceed five percent
(5%) of Consolidated Net Income (calculated as described above) and
the Borrower shall not be required to pledge to the Agent any of the
stock of Catalina Marketing de Mexico, S.A. de C.V. so long as
Catalina Marketing de Mexico, S.A. de C.V. engages in no active
business other than the wind up of its operations.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
"Municipal Obligations" means general obligations issued by,
and supported by the full taxing authority of, any state of the United
States of America or of any municipal corporation or other public body
organized under the laws of any such state which are rated in the
highest investment rating category by both S&P and Moody's.
"NationsBank" means NationsBank, National Association.
<PAGE> 25
"NCMI" means NationsBanc Capital Markets, Inc. and its
successors.
"Notes" means, collectively, the Line of Credit Notes, the
Revolving Notes, and the Swing Line Note.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, (ii) the
Reimbursement Obligations and otherwise in respect of the Letters of
Credit, (iii) all liabilities of Borrower to any Lender which arise
under a Swap Agreement, and (iv) the payment and performance of all
other obligations, liabilities and Indebtedness of the Borrower to the
Lenders, the Agent or NCMI hereunder, under any one or more of the
other Loan Documents or with respect to the Loans.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings, Swing Line Outstandings, Line of Credit
Outstandings and Revolving Credit Outstandings on such date.
"Participation" means, (i) with respect to any Lender (other
than the Issuing Bank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the
rights and obligations of the Issuing Bank in respect of a Letter of
Credit issued by the Issuing Bank in accordance with the terms hereof
and (ii) with respect to any Lender (other than NationsBank) and a
Swing Line Loan, the extension of credit represented by the
participation of such Lender hereunder in the rights and obligations
of NationsBank in respect of a Swing Line Loan made by NationsBank in
accordance with the terms hereof.
"Partnership Interests" shall have the meaning therefore
provided in the Pledge Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Borrower
or any of its ERISA Affiliates or is assumed by the Borrower or any of
its ERISA Affiliates in connection with any Acquisition or (ii) has at
any time been maintained for the employees of the Borrower or any
current or former ERISA Affiliate.
"Person" means an individual, partnership, corporation, trust,
limited liability company, unincorporated organization, association,
joint venture or a government or agency or political subdivision
thereof.
<PAGE> 26
"Pledge Agreement" means, collectively (or individually as the
context may indicate), (i) the pledge agreements dated as of the date
hereof between the Borrower, certain Guarantors and the Agent for the
benefit of the Agent and the Lenders, and (ii) any additional Pledge
Agreement delivered to the Agent pursuant to Section 8.19 hereof, in
each case, substantially in the form of Exhibit J attached hereto, as
such Pledge Agreement may be amended, supplemented or replaced from
time to time.
"Pledged Stock" has the meaning given to such term in the
Pledge Agreement.
"Pledged Stock Ratio" means, as of the date of computation
thereof, the ratio of (i) (A) the consolidated tangible assets of the
Borrower and its Subsidiaries whose stock is pledged as Collateral to
(B) Consolidated Total Tangible Assets and (ii) (A) the consolidated
net income of the Borrower and its Subsidiaries whose stock is pledged
as Collateral to (B) Consolidated Net Income.
"Pledgor" means, at any date, the Borrower and the Guarantors
who are parties to a Pledge Agreement at such date.
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation
or other public body organized under the laws of any such state which
are rated, based on the escrow, in the highest investment rating
category by both S&P and Moody's and which have been irrevocably
called for redemption and advance refunded through the deposit in
escrow of Government Securities or other debt securities which are (i)
not callable at the option of the issuer thereof prior to maturity,
(ii) irrevocably pledged solely to the payment of all principal and
interest on such obligations as the same becomes due and (iii) in a
principal amount and bear such rate or rates of interest as shall be
sufficient to pay in full all principal of, interest, and premium, if
any, on such obligations as the same becomes due as verified by a
nationally recognized firm of certified public accountants.
"Prime Rate" means the per annum rate of interest established
from time to time by NationsBank as its prime rate, which rate may not
be the lowest rate of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of NationsBank,
presently located at Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such
other office and address as the Agent may from time to time designate.
"Rate Hedging Obligations" means any and all obligations of
the Borrower or any Subsidiary, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates applicable to such party's assets,
<PAGE> 27
liabilities or exchange transactions, including, but not limited to,
Dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or
collar protection agreements, forward rate currency or interest rate
options, puts, warrants and those commonly known as interest rate
"swap" agreements; and (ii) any and all cancellations, buybacks,
reversals, terminations or assignments of any of the foregoing.
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Regulatory Change" means any change effective after the
Closing Date in United States federal or state laws or regulations
(including Regulation D and capital adequacy regulations) or foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States federal or
state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy,
including those relating to "highly leveraged transactions," whether
or not having the force of law, and whether or not failure to comply
therewith would be unlawful and whether or not published or proposed
prior to the date hereof.
"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse the Issuing Bank and the Lenders to the extent of their
respective Participations (including by the receipt by the Issuing
Bank of proceeds of Loans pursuant to Section 3.2) for amounts
theretofore paid by the Issuing Bank pursuant to a drawing under such
Letter of Credit.
"Repurchase Agreement" means a repurchase agreement entered
into with any financial institution whose debt obligations or
commercial paper are rated "A" by either of S&P or Moody's or "A-1" by
S&P or "P-1" by Moody's.
"Required Lenders" means, as of any date, Lenders on such
Date having Credit Exposures (as defined below) aggregating more than
fifty percent (50%) of the aggregate Credit Exposures of all the
Lenders on such date. For purposes of the preceding sentence, the
amount of the "Credit Exposure" of each Lender shall be equal to the
aggregate principal amount of the Loans owing to such Lender plus the
aggregate unutilized amounts of such Lender's Revolving Credit
Commitment (without regard to any Swing Line Outstandings) plus the
aggregate unutilized amounts of such Lender's Line of Credit
Commitment plus the amount of such Lender's Applicable Commitment
Percentage of Letter of Credit Outstandings; provided that, (i) if any
Lender shall have failed to pay to the Issuing Bank its Applicable
Commitment Percentage of any drawing under any Letter of Credit
resulting in an outstanding Reimbursement Obligation, such Lender's
Credit Exposure attributable to Letters of Credit and Reimbursement
Obligations shall be deemed to be held by the Issuing Bank for
purposes of this definition
<PAGE> 28
and (ii) if any Lender shall have failed to pay to NationsBank its
Applicable Commitment Percentage of any Swing Line Loan, such Lender's
Credit Exposure attributable to all Swing Line Outstandings shall be
deemed to be held by NationsBank for purposes of this definition.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained
under regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) by member banks of
the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by reference to which
the Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include Eurodollar Rate
Loans. The Eurodollar Rate shall be adjusted automatically on and as
of the effective date of any change in the Reserve Requirement.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any
class of stock of Borrower or any of its Subsidiaries (other than
those payable or distributable solely to the Borrower or a Guarantor)
now or hereafter outstanding, except a dividend payable solely in
shares of a class of stock to the holders of that class; (b) any
redemption, conversion, exchange, retirement or similar payment,
purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock of the Borrower or any of its
Subsidiaries (other than those payable or distributable solely to the
Borrower or a Guarantor) now or hereafter outstanding; (c) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of
stock of the Borrower or any of its Subsidiaries now or hereafter
outstanding; and (d) any issuance and sale of capital stock of any
Subsidiary of the Borrower (or any option, warrant or right to acquire
such stock) other than to the Borrower or a Subsidiary.
"Revolving Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to make Revolving Loans to the
Borrower up to an aggregate principal amount at any one time
outstanding equal to such Lender's Applicable Commitment Percentage of
the Total Revolving Credit Commitment.
"Revolving Credit Facility" means the facility described in
Section 2.1(a) hereof providing for Loans to the Borrower by the
Lenders in the aggregate principal amount of the Total Revolving
Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Revolving Loans
then outstanding and all interest accrued thereon.
<PAGE> 29
"Revolving Credit Termination Date" means (i) September 30,
2000 or (ii) such earlier date of termination of Lenders' obligations
pursuant to Section 10.1 upon the occurrence of an Event of Default,
or (iii) such date as the Borrower may voluntarily and permanently
terminate the Revolving Credit Facility by payment in full of all
Revolving Credit Outstandings, Swing Line Outstandings and Letter of
Credit Outstandings and cancellation of all Letters of Credit.
"Revolving Loan" means any borrowing pursuant to an Advance
under the Revolving Credit Facility in accordance with Section 2.1(a).
"Revolving Notes" means, collectively, the promissory notes of
the Borrower evidencing Revolving Loans executed and delivered to the
Lenders as provided in Section 2.5(a) substantially in the form of
Exhibit F-1, with appropriate insertions as to amounts, dates and
names of Lenders.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc.
"Security Instruments" means, collectively, the Pledge
Agreement and all other agreements, instruments and other documents,
whether now existing or hereafter in effect, pursuant to which the
Borrower or any Subsidiary shall grant or convey to the Agent or the
Lenders a Lien in property as security for all or any portion of the
Obligations, as any of them may be amended, modified or supplemented
from time to time.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA
and which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including Contingent Obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Stated Termination Date" means September 29, 1998 or such
later date as the parties may agree pursuant to Section 2.13(a).
<PAGE> 30
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding voting stock or more than 50% of
all equity interests is owned directly or indirectly by the Borrower
and/or by one or more of the Borrower's Subsidiaries.
"Swap Agreement" means one or more agreements between the
Borrower and any Lender with respect to Indebtedness evidenced by any
or all of the Notes, on terms mutually acceptable to the Borrower and
such Lender, which agreements create Rate Hedging Obligations.
"Swing Line" means the revolving line of credit established
by NationsBank in favor of the Borrower pursuant to Section 2.14.
"Swing Line Loans" means loans made by NationsBank to the
Borrower pursuant to Section 2.14.
"Swing Line Note" means the promissory note of the Borrower
evidencing Swing Line Loans executed and delivered to NationsBank as
provided in Section 2.5(c).
"Swing Line Outstandings" means, as of any date of
determination, the aggregate principal amount of all Swing Line Loans
then outstanding.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4068(f) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or
condition which would constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (vi) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan; or (vii) the imposition of a Lien pursuant to Section 412 of the
Code or Section 302 of ERISA; or (viii) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan
under Section 4241 or Section 4245 of ERISA, respectively; or (ix) any
event or condition which results in the termination of a Multiemployer
Plan under Section 4041A of ERISA or the institution by the PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of
ERISA.
"Total Credit Commitment" means the sum of the Total Revolving
Credit Commitment and the Total Line of Credit Commitment.
<PAGE> 31
"Total Letter of Credit Commitment" means an amount not to
exceed $5,000,000.
"Total Line of Credit Commitment" means a principal amount
equal to $50,000,000, as reduced from time to time in accordance
with Section 2.7.
"Total Revolving Credit Commitment" means a principal amount
equal to $100,000,000, as reduced from time to time in accordance with
Section 2.7.,
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or
a Eurodollar Rate Loan).
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
I.2. Rules of Interpretation.
(a) All accounting terms not specifically defined herein
shall have the meanings assigned to such terms and shall be
interpreted in accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Florida
Uniform Commercial Code shall have the meaning given therein unless
otherwise defined herein, except to the extent that the Uniform
Commercial Code of another jurisdiction is controlling, in which case
such terms shall have the meaning given in the Uniform Commercial Code
of the applicable jurisdiction.
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references
herein to articles, sections, paragraphs, clauses, annexes,
appendices, exhibits and schedules are references to articles,
sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules in or to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of
such defined term, and all references to the masculine gender shall
include reference to the feminine or neuter gender, and vice versa, as
the context may require.
<PAGE> 32
(f) When used herein or in any other Loan Document, words
such as "hereunder", "hereto", "hereof" and "herein" and other words
of like import shall, unless the context clearly indicates to the
contrary, refer to the whole of the applicable document and not to any
particular article, section, subsection, paragraph or clause thereof.
(g) References to "including" means including without
limiting the generality of any description preceding such term, and
for purposes hereof the rule of ejusdem generis shall not be
applicable to limit a general statement, followed by or referable to
an enumeration of specific matters, to matters similar to those
specifically mentioned.
(h) All dates and times of day specified herein shall
refer to such dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the
opportunity to request) revisions to, the Loan Documents, and any rule
of construction that ambiguities are to be resolved against the
drafting party shall be inapplicable in the construing and
interpretation of the Loan Documents and all exhibits, schedules and
appendices thereto.
(j) Any reference to an officer of the Borrower or any
other Person by reference to the title of such officer shall be deemed
to refer to each other officer of such Person, however titled,
exercising the same or substantially similar functions.
(k) All references to any agreement or document as
amended, modified or supplemented, or words of similar effect, shall
mean such document or agreement, as the case may be, as amended,
modified or supplemented from time to time only as and to the extent
permitted therein and in the Loan Documents.
<PAGE> 33
ARTICLE II
The Credit Facilities
II.1. Loans.
(a) Revolving Credit Facility. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make Advances to
the Borrower under the Revolving Credit Facility from time to time from the
Closing Date until the Revolving Credit Termination Date on a pro rata basis as
to the total borrowing requested by the Borrower on any day determined by such
Lender's Applicable Commitment Percentage up to but not exceeding the Revolving
Credit Commitment of such Lender, provided, however, that the Lenders will not
be required and shall have no obligation to make any such Advance (i) so long
as a Default or an Event of Default has occurred and is continuing or (ii) if
the Agent has accelerated the maturity of any of the Notes as a result of an
Event of Default; provided further, however, that immediately after giving
effect to each such Advance, the principal amount of Revolving Credit
Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings
shall not exceed the Total Revolving Credit Commitment. Within such limits,
the Borrower may borrow, repay and reborrow under the Revolving Credit Facility
on a Business Day from the Closing Date until, but (as to borrowings and
reborrowings) not including, the Revolving Credit Termination Date; provided,
however, that (y) no Revolving Loan that is a Eurodollar Rate Loan shall be
made which has an Interest Period that extends beyond the Revolving Credit
Termination Date and (z) each Revolving Loan that is a Eurodollar Rate Loan
may, subject to the provisions of Section 2.7, be repaid only on the last day
of the Interest Period with respect thereto unless such payment is accompanied
by the additional payment, if any, required by Section 5.5.
(b) Line of Credit Facility. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make Advances to
the Borrower under the Line of Credit Facility from time to time from the
Closing Date until the Line of Credit Termination Date on a pro rata basis as
to the total borrowing requested by the Borrower on any day determined by such
Lender's Applicable Commitment Percentage up to but not exceeding the Line of
Credit Commitment of such Lender, provided, however, that the Lenders will not
be required and shall have no obligation to make any such Advance (i) so long
as a Default or an Event of Default has occurred and is continuing or (ii) if
the Agent has accelerated the maturity of any of the Notes as a result of an
Event of Default; provided further, however, that immediately after giving
effect to each such Advance, the principal amount of Line of Credit
Outstandings shall not exceed the Total Line of Credit Commitment. Within such
limits, the Borrower may borrow, repay and reborrow under the Line of Credit
Facility on a Business Day from the Closing Date until, but (as to borrowings
and reborrowings) not including, the Line of Credit Termination Date; provided,
however, that (y) no Line of Credit Loan that is a Eurodollar Rate Loan shall
be made which has an Interest Period that extends beyond the Line of Credit
Termination Date and (z) each Line of Credit Loan that is a Eurodollar Rate
Loan may, subject to the provisions of Section 2.7, be repaid only on the last
day of the Interest Period with respect thereto unless such payment is
accompanied by the additional payment, if any, required by
<PAGE> 34
Section 5.5.
(c) Amounts. Except as otherwise permitted by the
Lenders from time to time, the aggregate unpaid principal amount of the
Revolving Credit Outstandings plus Letter of Credit Outstandings plus Swing
Line Outstandings shall not exceed at any time the Total Revolving Credit
Commitment, and the aggregate unpaid principal amount of the Line of Credit
Outstandings shall not exceed the Total Line of Credit Commitment and, in the
event there shall be outstanding any such excess, the Borrower shall
immediately make such payments and prepayments as shall be necessary to comply
with this restriction. Each Revolving Loan and Line of Credit Loan hereunder,
other than Base Rate Refunding Loans, and each Conversion under Section 2.8,
shall be in an amount of at least $5,000,000, and, if greater than $5,000,000,
an integral multiple of $1,000,000.
(d) Advances. (i) An Authorized Representative shall
give the Agent (1) at least three (3) Business Days' irrevocable written notice
by telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Loan that is a Eurodollar Rate Loan (whether representing an additional
borrowing hereunder or the Conversion of a borrowing hereunder from Base Rate
Loans to Eurodollar Rate Loans) prior to 10:30 A.M. and (2) irrevocable written
notice by telefacsimile transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate insertions, effective upon
receipt, of each Loan (other than Base Rate Refunding Loans to the extent the
same are effected without notice pursuant to Section 2.1(d)(iv)) that is a Base
Rate Loan (whether representing an additional borrowing hereunder or the
Conversion of borrowing hereunder from Eurodollar Rate Loans to Base Rate
Loans) prior to 10:30 A.M. on the day of such proposed Revolving Loan. Each
such notice shall specify the amount of the borrowing, whether the Loan is a
Revolving Loan or a Line of Credit Loan, the Type of Loan (Base Rate or
Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan, the
Interest Period to be used in the computation of interest. Notice of receipt
of such Borrowing Notice or Interest Rate Selection Notice, as the case may be,
together with the amount of each Lender's portion of an Advance requested
thereunder, shall be provided by the Agent to each Lender by telefacsimile
transmission with reasonable promptness, but (provided the Agent shall have
received such notice by 10:30 A.M.) not later than 1:00 P.M. on the same day as
the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each
borrowing under this Section 2.1, each Lender shall, pursuant to the terms and
subject to the conditions of this Agreement, make the amount of the Advance or
Advances to be made by it on such day available by wire transfer to the Agent
in the amount of its pro rata share, determined according to such Lender's
Applicable Commitment Percentage of the Loan or Loans to be made on such day.
Such wire transfer shall be directed to the Agent at the Principal Office and
shall be in the form of Dollars constituting immediately available funds. The
amount so received by the Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Borrower by delivery of the proceeds
thereof to the Borrower's Account or otherwise as shall be directed in the
applicable Borrowing Notice by the Authorized Representative and reasonably
acceptable to
<PAGE> 35
the Agent.
(iii) The Borrower shall have the option to elect the duration of
the initial and any subsequent Interest Periods and to Convert the Loans in
accordance with Section 2.8. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, provided, however, there shall not be outstanding
at any one time Eurodollar Rate Loans having more than eight (8) different
Interest Periods. If the Agent does not receive a Borrowing Notice or an
Interest Rate Selection Notice giving notice of election of the duration of an
Interest Period or of Conversion of any Loan to or Continuation of a Loan as a
Eurodollar Rate Loan by the time prescribed by Section 2.1(c) or 2.8, the
Borrower shall be deemed to have elected to Convert such Segment to (or
Continue such Segment as) a Base Rate Loan until the Borrower notifies the
Agent in accordance with Section 2.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit, such drawing is honored by the Issuing Bank prior to the
Stated Termination Date, and the Borrower shall not immediately fully reimburse
the Issuing Bank in respect of such drawing, (A) provided that the conditions
to making a Revolving Loan as herein provided shall then be satisfied, the
Reimbursement Obligation arising from such drawing shall be paid to the Issuing
Bank by the Agent without the requirement of notice to or from the Borrower
from immediately available funds which shall be advanced as a Base Rate
Refunding Loan by each Lender under the Revolving Credit Facility in an amount
equal to such Lender's Applicable Commitment Percentage of such Reimbursement
Obligation, and (B) if the conditions to making a Revolving Loan as herein
provided shall not then be satisfied, each of the Lenders shall fund by payment
to the Agent (for the benefit of the Issuing Bank) in immediately available
funds the purchase from the Issuing Bank of their respective Participations in
the related Reimbursement Obligation based on their respective Applicable
Commitment Percentages of the Total Letter of Credit Commitment. If a drawing
is presented under any Letter of Credit in accordance with the terms thereof
and the Borrower shall not immediately reimburse the Issuing Bank in respect
thereof, then notice of such drawing or payment shall be provided promptly by
the Issuing Bank to the Agent and the Agent shall provide notice to each Lender
by telephone or telefacsimile transmission. If notice to the Lenders of a
drawing under any Letter of Credit is given by the Agent at or before 12:00
noon on any Business Day, each Lender shall, pursuant to the conditions
specified in this Section 2.1(d)(iv), either make a Base Rate Refunding Loan or
fund the purchase of its Participation in the amount of such Lender's
Applicable Commitment Percentage of such drawing or payment and shall pay such
amount to the Agent for the account of the Issuing Bank at the Principal Office
in Dollars and in immediately available funds before 2:30 P.M. on the same
Business Day. If notice to the Lenders of a drawing under a Letter of Credit
is given by the Agent after 12:00 noon on any Business Day, each Lender shall,
pursuant to the conditions specified in this Section 2.1(d)(iv), either make a
Base Rate Refunding Loan or fund the purchase of its Participation in the
amount of such Lender's Applicable Commitment Percentage of such drawing or
payment and shall pay such amount to the Agent for the account of the Issuing
Bank at the Principal Office in Dollars and in immediately available funds
before 12:00 noon on the next following Business Day. Any such Base Rate
Refunding Loan shall be advanced as, and shall Continue as, a Base Rate Loan
unless and until the Borrower Converts
<PAGE> 36
such Base Rate Loan in accordance with the terms of Section 2.8.
II.2. Payment of Interest. (a) The Borrower shall pay interest to
the Agent for the account of each Lender on the outstanding and unpaid
principal amount of each Loan made by such Lender for the period commencing on
the date of such Loan until such Loan shall be due at the then applicable Base
Rate for Base Rate Loans or applicable Eurodollar Rate for Eurodollar Rate
Loans, as designated by the Authorized Representative pursuant to Section 2.1;
provided, however, that if any amount shall not be paid when due (at maturity,
by acceleration or otherwise), all amounts outstanding hereunder shall bear
interest thereafter, until paid, at the Default Rate.
(b) Interest on each Loan shall be computed on the basis
of a year of 360 days and calculated in each case for the actual number of days
elapsed. Interest on each Loan shall be paid (i) quarterly in arrears on the
last Business Day of each March, June, September and December, commencing
September 30, 1997 for each Base Rate Loan, (ii) on the last day of the
applicable Interest Period for each Eurodollar Rate Loan and, if such Interest
Period extends for more than three (3) months, at intervals of three (3) months
after the first day of such Interest Period, and (iii) upon payment in full of
the principal amount of such Loan and termination of all commitments to make
Loans hereunder.
II.3. Payment of Principal. The principal amount of each Revolving
Loan shall be due and payable to the Agent for the benefit of each Lender in
full on the Revolving Credit Termination Date, or earlier as specifically
provided herein. The principal amount of each Line of Credit Loan shall be due
and payable to the Agent for the benefit of each Lender in full on the Line of
Credit Termination Date, or earlier as specifically provided herein. The
principal amount of any Base Rate Loan may be prepaid in whole or in part at
any time. The principal amount of any Eurodollar Rate Loan may be prepaid only
at the end of the applicable Interest Period unless the Borrower shall pay to
the Agent for the account of the Lenders the additional amount, if any,
required under Section 5.5. All prepayments of Loans made by the Borrower shall
be in the amount of $1,000,000 or such greater amount which is an integral
multiple of $500,000, or the amount equal to all Revolving Credit Outstandings
or Line of Credit Outstandings, or such other amount as necessary to comply
with Section 2.1(c) or Section 2.8.
II.4. Non-Conforming Payments. (a) Each payment of principal
(including any prepayment) and payment of interest and fees, and any other
amount required to be paid to the Lenders with respect to the Loans, shall be
made to the Agent at the Principal Office, for the account of each Lender, in
Dollars and in immediately available funds before 3:00 P.M. on the date such
payment is due. The Agent may, but shall not be obligated to, debit the amount
of any such payment which is not made by such time to any ordinary deposit
account, if any, of the Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately
available funds and prior to 3:00 P.M. to be a non-conforming payment. Any
such payment shall not be deemed to be received by the Agent until the later of
(i) the time such funds become available funds and (ii) the next
<PAGE> 37
Business Day. Any non-conforming payment may, at the option of the Agent,
constitute or become a Default or Event of Default. Interest shall continue to
accrue on any principal as to which a non-conforming payment is made until the
later of (x) the date such funds become available funds or (y) the next
Business Day at the Default Rate from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Notes
becomes due and payable on a day other than a Business Day, then such due date
shall be extended to the next succeeding Business Day unless provided otherwise
under clause (ii) of the definition of "Interest Period"; provided that
interest shall continue to accrue during the period of any such extension and
provided further, that in no event shall any such due date be extended beyond
the Revolving Credit Termination Date or Line of Credit Termination Date, as
the case may be.
II.5. Notes. (a) Revolving Loans made by each Lender shall be
evidenced by the Revolving Note payable to the order of such Lender in the
respective amount of its Applicable Commitment Percentage of the Revolving
Credit Commitment, which Revolving Note shall be dated the Closing Date or a
later date pursuant to an Assignment and Acceptance and shall be duly
completed, executed and delivered by the Borrower.
(b) Line of Credit Loans made by each Lender shall be
evidenced by the Line of Credit Note payable to the order of such Lender in the
respective amount of its Applicable Commitment Percentage of the Line of Credit
Commitment, which Line of Credit Note shall be dated the Closing Date or a
later date pursuant to an Assignment and Acceptance and shall be duly
completed, executed and delivered by the Borrower.
(c) Swing Line Loans made by NationsBank shall be evidenced
by the Swing Line Note payable to the order of NationsBank in the principal
amount of $10,000,000, which Swing Line Note shall be dated the Closing Date.
II.6. Pro Rata Payments. Except as otherwise provided herein, (a)
each payment on account of the principal of and interest on the Loans and the
fees described in Section 2.10 shall be made to the Agent for the account of
the Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by the Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in immediately available funds payments received in fully
collected, immediately available funds from the Borrower.
II.7. Reductions. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Agent, effective upon receipt, to permanently reduce the Total
Revolving Credit Commitment or the Total Line of Credit Commitment. The Agent
shall give each Lender, within one (1) Business Day of receipt of such notice,
telefacsimile notice, or telephonic notice (confirmed in writing), of such
reduction. Each such reduction shall be in the aggregate amount of $5,000,000
or such greater amount which is in
<PAGE> 38
an integral multiple of $1,000,000, or the entire remaining Total Revolving
Credit Commitment or Total Line of Credit Commitment, and shall permanently
reduce the Total Revolving Credit Commitment or Total Line of Credit
Commitment, as the case may be. Each reduction of the Total Revolving Credit
Commitment shall be accompanied by payment of the Revolving Loans to the extent
that the principal amount of Revolving Credit Outstandings plus Letter of
Credit Outstandings plus Swing Line Outstandings exceeds the Total Revolving
Credit Commitment after giving effect to such reduction, together with accrued
and unpaid interest on the amounts prepaid. Each reduction of the Total Line
of Credit Commitment shall be accompanied by payment of Line of Credit Loans to
the extent that the principal amount of Line of Credit Outstandings exceeds the
Total Line of Credit Commitment after giving effect to such reduction, together
with accrued and unpaid interest on the amounts prepaid. No such reduction
shall result in the payment of any Eurodollar Rate Loan other than on the last
day of the Interest Period of such Eurodollar Rate Loan unless such prepayment
is accompanied by amounts due, if any, under Section 5.5.
II.8. Conversions and Elections of Subsequent Interest Periods.
Provided that no Default or Event of Default shall have occurred and be
continuing and subject to the limitations set forth below and in Article V, the
Borrower may:
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M.
on any Business Day, Convert all or a part of Eurodollar Rate Loans under
either the Revolving Credit Facility or the Line of Credit Facility to Base
Rate Loans on the last day of the Interest Period for such Eurodollar Rate
Loans; and
(b) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M.
three (3) Business Days' prior to the date of such election or Conversion:
(i) elect a subsequent Interest Period for all or
a portion of Eurodollar Rate Loans under either the Revolving
Credit Facility or the Line of Credit Facility to begin on the
last day of the then current Interest Period for such
Eurodollar Rate Loans; and
(ii) Convert Base Rate Loans under either the
Revolving Credit Facility or the Line of Credit Facility to
Eurodollar Rate Loans on any Business Day.
Each election and Conversion pursuant to this Section 8 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in Sections 2.1, 2.3 and Article V. The Agent
shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. on the day such notice of election or Conversion
is received. All such Continuations or Conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.
<PAGE> 39
II.9. Increase and Decrease in Amounts. The amount of the Total
Revolving Credit Commitment which shall be available to the Borrower as
Advances shall be reduced by the aggregate amount of Outstanding Letters of
Credit and Outstanding Swing Line Loans.
II.10. Facility Fees.
(a) Revolving Credit Facility. For the period beginning on
the Closing Date and ending on the Revolving Credit Termination Date, the
Borrower agrees to pay to the Agent, for the pro rata benefit of the Lenders
based on their Applicable Commitment Percentages, an unused fee equal to the
Applicable Unused Fee for the Revolving Credit Facility multiplied by the
average daily amount by which the Total Revolving Credit Commitment exceeds the
sum of (i) Revolving Credit Outstandings without giving effect to Swing Line
Outstandings plus (ii) Letter of Credit Outstandings. Such fees shall be due
in arrears on the last Business Day of each March, June, September and December
commencing September 30,1997 to and on the Revolving Credit Termination Date.
Notwithstanding the foregoing, so long as any Lender fails to make available
any portion of its Revolving Credit Commitment when requested, such Lender
shall not be entitled to receive payment of its pro rata share of such fee
until such Lender shall make available such portion. Such fee shall be
calculated on the basis of a year of 360 days for the actual number of days
elapsed.
(b) Line of Credit Facility. For the period beginning on the
Closing Date and ending on the Line of Credit Termination Date, the Borrower
agrees to pay to the Agent, for the pro rata benefit of the Lenders based on
their Applicable Commitment Percentages, an unused fee equal to the Applicable
Unused Fee for the Line of Credit Facility multiplied by the average daily
amount by which the Total Line of Credit Commitment exceeds the aggregate
principal amount of Line of Credit Outstandings. Such fees shall be due in
arrears on the last Business Day of each March, June, September and December
commencing September 30,1997 to and on Line of Credit Termination Date.
Notwithstanding the foregoing, so long as any Lender fails to make available
any portion of its Line of Credit Commitment when requested, such Lender shall
not be entitled to receive payment of its pro rata share of such fee until such
Lender shall make available such portion. Such fee shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed.
II.11. Deficiency Advances. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to
make any Loan or fund its purchase of any Participation hereunder nor shall the
Revolving Credit Commitment or Line of Credit Commitment of any Lender
hereunder be increased as a result of such default of any other Lender.
Without limiting the generality of the foregoing, in the event any Lender shall
fail to advance funds to the Borrower under the Revolving Credit Facility or
Line of Credit Facility as herein provided, the Agent may in its discretion,
but shall not be obligated to, advance under the Revolving Note or Line of
Credit Note, as the case may be, in its favor as a Lender all or any portion of
such amount or amounts (each, a "deficiency advance") and shall thereafter be
entitled to payments of principal of and interest on such deficiency advance in
the same manner and at
<PAGE> 40
the same interest rate or rates to which such other Lender would have been
entitled had it made such advance under its Revolving Note or Line of Credit
Note, as the case may be; provided that, upon payment to the Agent from such
other Lender of the entire outstanding amount of each such deficiency advance,
together with accrued and unpaid interest thereon, from the most recent date or
dates interest was paid to the Agent by the Borrower on each Loan comprising
such deficiency advance at the interest rate per annum for overnight borrowing
by the Agent from the Federal Reserve Bank, then such payment shall be credited
against the applicable Note of the Agent in full payment of such deficiency
advance and the Borrower shall be deemed to have borrowed the amount of such
deficiency advance from such other Lender as of the most recent date or dates,
as the case may be, upon which any payments of interest were made by the
Borrower thereon.
II.12. Use of Proceeds. The proceeds of the Loans made pursuant to
this Agreement shall be used by the Borrower to finance a share repurchase
program (provided that all common stock repurchased is promptly retired and not
held in treasury stock), refinance existing debt, and for general working
capital needs and other corporate purposes.
II.13. Line of Credit Extension.
(a) Extension of Stated Termination Date. At the request of
the Borrower the Lenders may, in their sole discretion, elect to extend the
Stated Termination Date then in effect for additional periods of up to 364
days each; provided, however, that at no time shall the committed term of the
Line of Credit Facility exceed 364 days. The Borrower shall notify the Lenders
of its request for such an extension by delivering to the Agent and the Lenders
notice of such request signed by an Authorized Representative not more than
ninety (90) days nor less than sixty (60) days prior to the Stated Termination
Date then in effect. If the Lenders shall elect to so extend, the Agent shall
notify the Borrower in writing within sixty (60) days of its receipt of such
request for extension of the decision of the Lenders as to whether to extend
the Stated Termination Date. Failure by any Lender to respond to a request for
an extension shall constitute a refusal of such Lender to give its consent to
such extension. Failure by the Agent to give such notice shall constitute
refusal by the Lenders to extend the Stated Termination Date. In no event
shall the Stated Termination Date extend beyond the Revolving Credit
Termination Date.
(b) Term Loan Option. In the event the Borrower fails to
exercise its option to extend the Stated Termination Date or the Lenders fail
to consent to such extension, the Borrower shall have the option to convert the
Line of Credit Outstandings as of the Stated Termination Date into a term loan
in the original principal amount equal to such Line of Credit Outstandings (the
"Term Loan Option"). Line of Credit Loans so converted by the Borrower in
accordance with this subsection (b) shall be referred to as the "Term Loans".
The Term Loans shall mature on the Revolving Credit Termination Date. The Term
Loans may be comprised of Base Rate Loans and Eurodollar Rate Loans as the
Borrower may elect in accordance with the provisions hereof. The Term Loans
shall bear interest on the same terms as the Line of Credit Loans prior to
their conversion to Term Loans. Amounts repaid or prepaid on the Term Loans
may not be reborrowed. For purposes of this Agreement, in the event the
Borrower shall elect the Term Loan Option, then on and after the Line of Credit
Termination Date (i) references
<PAGE> 41
herein to the "Total Line of Credit Commitment" shall mean the aggregate
principal amount of the Term Loans as of the Line of Credit Termination Date
less all payments made with respect to the Term Loans hereunder, (ii)
references herein to "Line of Credit Commitment" shall mean, with respect to
each Lender, the obligation of such Lender to make Term Loans in a principal
amount equal to such Lender's Applicable Commitment Percentage of the aggregate
Term Loans and (iii) references herein to the "Line of Credit Termination Date"
shall mean the Term Loan Termination Date.
II.14. Swing Line. (a) Notwithstanding any other provision of this
Agreement to the contrary, in order to administer the Revolving Credit Facility
in an efficient manner and to minimize the transfer of funds between the Agent
and the Lenders, NationsBank shall make available Swing Line Loans to the
Borrower prior to the Revolving Credit Termination Date. NationsBank shall not
make any Swing Line Loan pursuant hereto (i) if to the actual knowledge of
NationsBank the Borrower is not in compliance with all the conditions to the
making of Revolving Loans set forth in this Agreement, (ii) if after giving
effect to such Swing Line Loan, the Swing Line Outstandings exceed $10,000,000,
or (iii) if after giving effect to such Swing Line Loan, the sum of the Swing
Line Outstandings, Revolving Credit Outstandings and Letter of Credit
Outstandings exceeds the Total Revolving Credit Commitment. Swing Line Loans
shall be limited to Base Rate Loans. The Borrower may borrow, repay and
reborrow under this Section 2.14. Unless notified to the contrary by
NationsBank, borrowings under the Swing Line shall be made in the minimum
amount of $100,000 or, if greater, in amounts which are integral multiples of
$50,000, or in the amount necessary to effect a Base Rate Refunding Loan, upon
written request by telefacsimile transmission, effective upon receipt, by an
Authorized Representative of the Borrower made to NationsBank not later than
12:30 P.M. on the Business Day of the requested borrowing. Each such Borrowing
Notice shall specify the amount of the borrowing and the date of borrowing, and
shall be in the form of Exhibit D-2, with appropriate insertions. Unless
notified to the contrary by NationsBank, each repayment of a Swing Line Loan
shall be in a minimum amount of $100,000 and an integral multiple of $50,000 in
excess thereof or the aggregate amount of all Swing Line Outstandings. If the
Borrower instructs NationsBank to debit any demand deposit account of the
Borrower in the amount of any payment with respect to a Swing Line Loan, or
NationsBank otherwise receives repayment, after 12:30 P.M. on a Business Day,
such payment shall be deemed received on the next Business Day.
(b) Swing Line Loans shall bear interest at the Base Rate, the
interest payable on Swing Line Loans is solely for the account of NationsBank,
and all accrued and unpaid interest on Swing Line Loans shall be payable on the
dates and in the manner provided in Sections 2.2(b) and 2.4 with respect to
interest on Base Rate Loans. The Swing Line Outstandings shall be evidenced by
the Note delivered to NationsBank pursuant to Section 2.5(c).
(c) Upon the making of a Swing Line Loan, each Lender shall be
deemed to have purchased from NationsBank a Participation therein in an amount
equal to that Lender's Applicable Commitment Percentage of such Swing Line
Loan. Upon demand made by NationsBank, each Lender shall, according to its
Applicable Commitment Percentage of such Swing Line Loan, promptly provide to
NationsBank its purchase price therefor in an amount
<PAGE> 42
equal to its Participation therein. Any Advance made by a Lender pursuant to
demand of NationsBank of the purchase price of its Participation shall be
deemed (i) provided that the conditions to making Revolving Loans shall be
satisfied, a Base Rate Refunding Loan under Section 2.1 until the Borrower
Converts such Base Rate Loan in accordance with the terms of Section 2.8, and
(ii) in all other cases, the funding by each Lender of the purchase price of
its Participation in such Swing Line Loan. The obligation of each Lender to so
provide its purchase price to NationsBank shall be absolute and unconditional
and shall not be affected by the occurrence of an Event of Default or any other
occurrence or event.
The Borrower, at its option and subject to the terms hereof, may
request an Advance pursuant to Section 2.1 in an amount sufficient to repay
Swing Line Outstandings on any date and the Agent shall provide from the
proceeds of such Advance to NationsBank the amount necessary to repay such
Swing Line Outstandings (which NationsBank shall then apply to such repayment)
and credit any balance of the Advance in immediately available funds in the
manner directed by the Borrower pursuant to Section 2.1(d)(ii). The proceeds
of such Advances shall be paid to NationsBank for application to the Swing Line
Outstandings and the Lenders shall then be deemed to have made Loans in the
amount of such Advances. The Swing Line shall continue in effect until the
Revolving Credit Termination Date, at which time all Swing Line Outstandings
and accrued interest thereon shall be due and payable in full.
<PAGE> 43
ARTICLE III
Letters of Credit
III.1. Letters of Credit. The Issuing Bank agrees, subject to the
terms and conditions of this Agreement, upon request of the Borrower to issue
from time to time for the account of the Borrower Letters of Credit upon
delivery to the Issuing Bank of an Application and Agreement for Letter of
Credit relating thereto in form and content acceptable to the Issuing Bank;
provided, that (i) the Letter of Credit Outstandings shall not exceed the Total
Letter of Credit Commitment and (ii) no Letter of Credit shall be issued if,
after giving effect thereto, Letter of Credit Outstandings plus Revolving
Credit Outstandings plus Swing Line Outstandings shall exceed the Total
Revolving Credit Commitment. No Letter of Credit shall have an expiry date
(including all rights of the Borrower or any beneficiary named in such Letter
of Credit to require renewal) or payment date occurring later than the earlier
to occur of one year after the date of its issuance or the fifth Business Day
prior to the Revolving Credit Termination Date.
III.2. Reimbursement.
(a) The Borrower hereby unconditionally agrees to pay to
the Issuing Bank immediately on demand at the Principal Office all amounts
required to pay all drafts drawn or purporting to be drawn under the Letters of
Credit and all reasonable expenses incurred by the Issuing Bank in connection
with the Letters of Credit, and in any event and without demand to place in
possession of the Issuing Bank (which shall include Advances under the
Revolving Credit Facility if permitted by Section 2.1 and Swing Line Loans if
permitted by Section 2.14) sufficient funds to pay all debts and liabilities
arising under any Letter of Credit. The Issuing Bank agrees to give the
Borrower prompt notice of any request for a draw under a Letter of Credit. The
Issuing Bank may charge any account the Borrower may have with it for any and
all amounts the Issuing Bank pays under a Letter of Credit, plus charges and
reasonable expenses as from time to time agreed to by the Issuing Bank and the
Borrower; provided that to the extent permitted by Section 2.1(d)(iv) and
Section 2.14, amounts shall be paid pursuant to Advances under the Revolving
Credit Facility or, if the Borrower shall elect, by Swing Line Loans. The
Borrower agrees to pay the Issuing Bank interest on any Reimbursement
Obligations not paid when due hereunder at the Base Rate plus two percent
(2.0%), or the maximum rate permitted by applicable law, if lower, such rate to
be calculated on the basis of a year of 360 days for actual days elapsed.
(b) In accordance with the provisions of Section 2.1(d),
the Issuing Bank shall notify the Agent of any drawing under any Letter of
Credit promptly following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall
automatically acquire on the date of issuance thereof, a Participation in the
liability of the Issuing Bank in respect of each Letter of Credit in an amount
equal to such Lender's Applicable Commitment Percentage of such liability, and
to the extent that the Borrower is obligated to pay the Issuing Bank under
Section
<PAGE> 44
3.2(a), each Lender (other than the Issuing Bank) thereby shall absolutely,
unconditionally and irrevocably assume, and shall be unconditionally obligated
to pay to the Issuing Bank as hereinafter described, its Applicable Commitment
Percentage of the liability of the Issuing Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in
its capacity as a Lender) shall, subject to the terms and
conditions of Article II, pay to the Agent for the account of
the Issuing Bank at the Principal Office in Dollars and in
immediately available funds, an amount equal to its Applicable
Commitment Percentage of any drawing under a Letter of Credit,
such funds to be provided in the manner described in Section
2.1(d)(iv).
(ii) Simultaneously with the making of each
payment by a Lender to the Issuing Bank pursuant to Section
2.1(d)(iv)(B), such Lender shall, automatically and without
any further action on the part of the Issuing Bank or such
Lender, acquire a Participation in an amount equal to such
payment (excluding the portion thereof constituting interest
accrued prior to the date the Lender made its payment) in the
related Reimbursement Obligation of the Borrower. The
Reimbursement Obligations of the Borrower shall be immediately
due and payable whether by Advances made in accordance with
Section 2.1(d)(iv), Swing Line Loans made in accordance with
Section 2.14, or otherwise.
(iii) Each Lender's obligation to make payment to
the Agent for the account of the Issuing Bank pursuant to
Section 2.1(d)(iv) and this Section 3.2(c), and the right of
the Issuing Bank to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance
whatsoever and shall be made without any offset, abatement,
withholding or reduction whatsoever. If any Lender is
obligated to pay but does not pay amounts to the Agent for the
account of the Issuing Bank in full upon such request as
required by Section 2.1(d)(iv) or this Section 3.2(c), such
Lender shall, on demand, pay to the Agent for the account of
the Issuing Bank interest on the unpaid amount for each day
during the period commencing on the date of notice given to
such Lender pursuant to Section 2.1(d) until such Lender pays
such amount to the Agent for the account of the Issuing Bank
in full at the interest rate per annum for overnight borrowing
by the Agent from the Federal Reserve Bank.
(iv) In the event the Lenders have purchased
Participations in any Reimbursement Obligation as set forth in
clause (ii) above, then at any time payment (in fully
collected, immediately available funds) of such Reimbursement
Obligation, in whole or in part, is received by Issuing Bank
from the Borrower, Issuing Bank shall promptly pay to each
Lender an amount equal to its Applicable Commitment Percentage
of such payment from the Borrower.
<PAGE> 45
(d) Promptly following the end of each calendar quarter,
the Issuing Bank shall deliver to the Agent a notice describing the aggregate
undrawn amount of all Letters of Credit at the end of such quarter. Upon the
request of any Lender from time to time, the Issuing Bank shall deliver to the
Agent, and the Agent shall deliver to such Lender, any other information
reasonably requested by such Lender with respect to each Letter of Credit
outstanding.
(e) The issuance by the Issuing Bank of each Letter of
Credit shall, in addition to the conditions precedent set forth in Article VI,
be subject to the conditions that such Letter of Credit be in such form and
contain such terms as shall be reasonably satisfactory to the Issuing Bank
consistent with the then current practices and procedures of the Issuing Bank
with respect to similar letters of credit, and the Borrower shall have executed
and delivered such other instruments and agreements relating to such Letters of
Credit as the Issuing Bank shall have reasonably requested consistent with such
practices and procedures and shall not be in conflict with any of the express
terms herein contained. All Letters of Credit shall be issued pursuant to and
subject to the Uniform Customs and Practice for Documentary Credits, 1993
revision, International Chamber of Commerce Publication No. 500 and all
subsequent amendments and revisions thereto.
(f) The Borrower agrees that Issuing Bank may, in its
sole discretion, accept or pay, as complying with the terms of any Letter of
Credit, any drafts or other documents otherwise in order which may be signed or
issued by an administrator, executor, trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, liquidator, receiver,
attorney in fact or other legal representative of a party who is authorized
under such Letter of Credit to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of
Section 12.9, the Borrower hereby agrees to indemnify and hold harmless the
Issuing Bank, each other Lender and the Agent from and against any and all
claims and damages, losses, liabilities, reasonable costs and expenses which
the Issuing Bank, such other Lender or the Agent may incur (or which may be
claimed against the Issuing Bank, such other Lender or the Agent) by any Person
by reason of or in connection with the issuance or transfer of or payment or
failure to pay under any Letter of Credit; provided that the Borrower shall not
be required to indemnify the Issuing Bank, any other Lender or the Agent for
any claims, damages, losses, liabilities, costs or expenses to the extent, but
only to the extent, (i) caused by the willful misconduct or gross negligence of
the party to be indemnified or (ii) caused by the failure of the Issuing Bank
to pay under any Letter of Credit after the presentation to it of a request for
payment strictly complying with the terms and conditions of such Letter of
Credit, unless such payment is prohibited by any law, regulation, court order
or decree. The indemnification and hold harmless provisions of this Section
3.2(g) shall survive repayment of the Obligations, occurrence of the Revolving
Credit Termination Date and expiration or termination of this Agreement.
(h) Without limiting Borrower's rights as set forth in
Section 3.2(g), the obligation of the Borrower to immediately reimburse the
Issuing Bank for drawings made under
<PAGE> 46
Letters of Credit and the Issuing Bank's right to receive such payment shall be
absolute, unconditional and irrevocable, and that such obligations of the
Borrower shall be performed strictly in accordance with the terms of this
Agreement and such Letters of Credit and the related Applications and Agreement
for any Letter of Credit, under all circumstances whatsoever, including the
following circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, the obligation supported by the Letter of
Credit or any other agreement or instrument relating thereto
(collectively, the "Related LC Documents");
(ii) any amendment or waiver of or any consent to
or departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense
(other than the defense of payment in accordance with the
terms of this Agreement) or other rights which the Borrower
may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), the
Agent, the Lenders or any other Person, whether in connection
with the Loan Documents, the Related LC Documents or any
unrelated transaction;
(iv) any breach of contract or other dispute
between the Borrower and any beneficiary or any transferee of
a Letter of Credit (or any persons or entities for whom such
beneficiary or any such transferee may be acting), the Agent,
the Lenders or any other Person;
(v) any draft, statement or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever; or
(vi) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or
agreed to by the Agent, with or without notice to or approval
by the Borrower in respect of any of Borrower's Obligations
under this Agreement.
III.3. Letter of Credit Facility Fees. The Borrower shall pay to the
Agent, (i) for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee on the aggregate amount available to be drawn on
each outstanding Letter of Credit at a rate equal to the Applicable Margin for
Eurodollar Rate Loans that are Revolving Credit Loans and (ii) for the Issuing
Bank, 0.125% based on the aggregate amount available to be drawn on each
outstanding Letter of Credit. Such fees shall be due with respect to each
Letter of Credit quarterly in arrears on the last day of each March, June,
September and December, the first such payment to be made on the first such
date occurring after the date of issuance of a Letter of Credit. The fees
described
<PAGE> 47
in this Section 3.3 shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed.
III.4. Administrative Fees. The Borrower shall pay to the Issuing
Bank such administrative fee and other fees, if any, in connection with the
Letters of Credit in such amounts and at such times as the Issuing Bank and the
Borrower shall agree from time to time.
<PAGE> 48
ARTICLE IV
Security
IV.1. Facility Guaranty. To guarantee the full and timely payment
and performance of all Obligations now existing or hereafter arising, the
Borrower shall cause the Facility Guaranty to be delivered by each Domestic
Subsidiary, other than Excluded Subsidiaries, and, until the conditions set
forth in the definition of Material Foreign Subsidiary are satisfied,
Catalina-Pacific Media, LLC and Catalina Marketing of France, Inc., in form and
substance reasonably acceptable to the Agent, on or before the Closing Date.
The Borrower hereby agrees to cause a Facility Guaranty to be delivered by any
hereafter acquired or created Domestic Subsidiary or upon any previously
existing Person becoming a Domestic Subsidiary pursuant to the terms of
Section 8.19 hereof.
IV.2. Stock Pledge. As security for the full and timely payment
and performance of (i) all Obligations now existing or hereafter arising and
(ii) certain Guarantors' obligations under the Guaranty Agreement, the Borrower
and each Subsidiary owning any Pledged Stock shall on or before the Closing
Date deliver to the Agent, in form and substance reasonably acceptable to the
Agent, the Pledge Agreement together with certificates representing such
Pledged Stock and stock powers duly executed in blank as may be required by the
Agent in accordance with the terms hereof and thereof. The Borrower shall not
be required to cause the pledge of the stock of Catalina-Pacific Media, LLC or
any Excluded Subsidiary. In addition to any Pledge Agreement required to be
delivered pursuant to Section 8.19 hereof, the Borrower and each Subsidiary
hereby agree to pledge to the Agent for the benefit of the Lenders (x) 100% of
the capital stock and related interests and rights of any Domestic Subsidiary
hereafter acquired or created and owned directly or indirectly by Borrower and
(y) 65% of the Voting Stock and 100% of the non-voting common stock and related
interests and rights of any Material Foreign Subsidiary owned by the Borrower
or any Domestic Subsidiary hereafter acquired or created and, in each case, to
deliver to the Agent a Pledge Agreement substantially in form and content
acceptable to the Agent within thirty (30) days of the acquisition or creation
of such Domestic Subsidiary or Material Foreign Subsidiary, as the case may be.
IV.3. Further Assurances. At the request of the Agent, the Borrower
will or will cause its Subsidiaries, as the case may be to execute, by its duly
authorized officers, alone or with the Agent, any certificate, instrument,
statement or document, or to procure any such certificate, instrument,
statement or document, or to take such other action (and pay all connected
costs) which the Agent reasonably deems necessary from time to time to create,
continue or preserve the liens and security interests in Collateral (and the
perfection and priority thereof) of the Agent contemplated hereby and by the
other Loan Documents.
<PAGE> 49
ARTICLE V
Change in Circumstances
V.1. Increased Cost and Reduced Return.
(a) Except with respect to Taxes (as defined in Section 5.6(a)), as to
which the provisions of Section 5.6 shall apply, if, after the date hereof, the
adoption of any applicable law, rule, or regulation, or any change in any
applicable law, rule, or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its Applicable Lending Office) with any request or
directive (whether or not having the force of law) of any such governmental
authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with respect to any
Eurodollar Rate Loans, its Note, or its obligation to make Eurodollar
Rate Loans, or change the basis of taxation of any amounts payable to
such Lender (or its Applicable Lending Office) under this Agreement or
its Note in respect of any Eurodollar Rate Loans (other than taxes of
the type described in clauses (i) through (iv) of Section 5.6(a));
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement (other
than the Reserve Requirement utilized in the determination of the
Eurodollar Rate) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the Revolving
Credit Commitment and Line of Credit Commitment of such Lender
hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Rate Loans or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Rate Loans, then the
Borrower shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction. If any Lender
requests compensation by the Borrower under this Section 5.1(a), the Borrower
may, by notice to such Lender (with a copy to the Agent), suspend the
obligation of such Lender to make or Continue Loans of the Type with respect to
which such compensation is requested, or to Convert Loans of any other Type
into Loans of such Type, until the event or condition giving rise to such
request ceases to be in effect (in which case the provisions of Section 5.4
shall be applicable); provided that such suspension
<PAGE> 50
shall not affect the right of such Lender to receive the compensation so
requested.
(b) Except with respect to Taxes, as to which the provisions of
Section 5.6 shall apply, if, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or regulation
regarding capital adequacy or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender as a
consequence of such Lender's obligations hereunder to a level below that which
such Lender or such corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its policies with
respect to capital adequacy), then from time to time upon demand the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which
will entitle such Lender to compensation pursuant to this Section 5.1 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to it. Any
Lender claiming compensation under this Section 5.1 shall furnish to the
Borrower and the Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the absence of
manifest error. In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
V.2. Limitation on Types of Loans. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall
be conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
<PAGE> 51
V.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrower thereof and such
Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert
other Types of Loans into Eurodollar Rate Loans shall be suspended until such
time as such Lender may again make, maintain, and fund Eurodollar Rate Loans
(in which case the provisions of Section 5.4 shall be applicable).
V.4. Treatment of Affected Loans. If the obligation of any Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to Section
5.1 or 5.3 hereof (Loans of such Type being herein called "Affected Loans" and
such Type being herein called the "Affected Type"), such Lender's Affected
Loans shall be automatically Converted into Base Rate Loans on the last day(s)
of the then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 5.3 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until
such Lender gives notice as provided below that the circumstances specified in
Section 5.1 or 5.3 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, and all Loans of such Lender that would
otherwise be Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 5.1 or 5.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 5.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit and Line of Credit Commitments.
V.5. Compensation. Upon the request of any Lender, the Borrower shall
pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
<PAGE> 52
(a) any payment, prepayment, or Conversion of a Eurodollar
Rate Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 10.1) on a date other
than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified
in Article VI to be satisfied) to borrow, Convert, Continue, or prepay
a Eurodollar Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this
Agreement.
V.6. Taxes. (a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present
or future taxes, duties, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each Lender
and the Agent, (i) franchise taxes, (ii) in addition to the taxes described in
clauses (i), (iii) and (iv) of this Section 5.6(a), any taxes (other than
withholding taxes) that would not be imposed but for a connection between the
Lender or the Agent and the jurisdiction imposing such taxes (other than a
connection arising solely by virtue of the activities of such Lender or the
Agent pursuant to or in respect of this Agreement or any other Loan Document),
(iii) any taxes imposed on or with respect to or measured by the Agent's or any
Lender's assets, income, receipts, gains, capital, net worth or profits, and
(iv) any taxes arising after the Closing Date solely as a result of or
attributable to a Lender changing its designated lending office after the
Lender becomes a party hereto (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings, and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable under this Agreement or any other
Loan Document to any Lender or the Agent, (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 5.6) such
Lender or the Agent receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law, and (iv) the
Borrower shall furnish to the Agent, at its address referred to in Section
12.2, the original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all stamp or
documentary taxes and any other excise or property taxes or charges or similar
levies (specifically excluding, without limitation, any Taxes of the type
described in clauses (i) and (iii) of Section 5.6(a)) which are imposed on the
execution or delivery of this Agreement or any other Loan Document (hereinafter
referred to as "Other Taxes").
(c) If the Borrower fails to pay any Taxes or Other Taxes
(collectively, "Indemnifiable Taxes") when due to the appropriate taxing
authority (as required by Section 5.6(a) or Section 5.6(b), respectively, the
Borrower agrees to indemnify each Lender and the
<PAGE> 53
Agent for the full amount of such Indemnifiable Taxes (including, without
limitation, any such Indemnifiable Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 5.6) paid by such Lender or
the Agent (as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, (x) on or prior to the date of its execution and delivery of
this Agreement in the case of each Lender listed on the signature pages hereof
and on or prior to the date on which it becomes a Lender in the case of each
other Lender, (y) on or prior to the date such Lender changes its Applicable
Lending Office, and (z) from time to time thereafter if requested in writing by
the Borrower or the Agent (but only so long as such Lender remains lawfully
able to do so), shall provide the Borrower and the Agent with (i) two properly
completed and duly executed copies of Internal Revenue Service Form 1001 or
4224, as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an income
tax treaty to which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) two properly completed and
duly executed copies of Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
and (iii) two properly completed and duly executed copies of any other form or
certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal Revenue Code),
certifying that such Lender is entitled to an exemption from or a reduced rate
of tax on payments pursuant to this Agreement or any of the other Loan
Documents. If a Lender who has delivered any of the forms referred to above on
or prior to the date it becomes a party to this Agreement determines that it
erroneously determined that it was able to deliver, or that it is unable
subsequently to submit to Borrower, any such form, or that it is required to
withdraw, cancel or modify any such form, such Lender shall promptly notify the
Borrower of such fact.
(e) For any period with respect to which a Lender has failed to
provide the Borrower and the Agent with the appropriate form pursuant to
Section 5.6(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to indemnification
under Section 5.6(a) or 5.6(b) with respect to Indemnifiable Taxes; provided,
however, that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Indemnifiable Taxes because
of its failure to deliver a form required hereunder, the Borrower shall take
such steps as such Lender shall reasonably request to assist such Lender to
recover such Indemnifiable Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Lender pursuant to this Section 5.6, then such Lender will
agree to use reasonable efforts to change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the reasonable judgment of such
Lender, is not otherwise disadvantageous to such Lender.
<PAGE> 54
(g) In the event that the Agent or any Lender receives a refund of, or
in respect of, any Taxes for which the Borrower has made any payments to or on
behalf of such Agent or Lender pursuant to this Section 5.6, such Agent or
Lender shall pay to the Borrower the amount of such refund as promptly as
practicable after the receipt thereof. In the event that the Agent or any
Lender realizes a Tax benefit (whether by way of a credit, deduction or
otherwise) in respect of any Taxes for which the Borrower has made any payments
to or on behalf of such Agent of Lender pursuant to this Section 5.6, such
Agent or Lender shall pay to the Borrower the amount of such Tax benefit as
promptly as practicable after the realization thereof. All determinations as to
the amount and timing of the receipt or realization of any such Tax refund or
Tax benefit shall be made by the relevant Agent or Lender in its sole good
faith discretion, it being understood and agreed, however, that such Agent or
Lender shall have a good faith obligation to seek or claim any such Tax refund
of Tax benefit upon the reasonable good faith request of the Borrower and at
the Borrower's sole cost and expense.
(h) Within thirty (30) days after the date of any payment of
Indemnifiable Taxes, the Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing such payment.
(i) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 5.6 shall survive the termination of the Revolving Credit and Line
of Credit Commitments and the payment in full of the Notes.
V.7. Replacement Banks. The Borrower may, in its sole discretion, on
ten (10) Business Days' prior written notice to the Agent and a Lender, cause a
Lender who has incurred increased costs or is unable to make Eurodollar Rate
Loans to (and such Lender shall) assign, pursuant to Section 12.1, all of its
rights and obligations under this Agreement to an Eligible Assignee designated
by the Borrower which is willing to become a Lender for a purchase price equal
to the outstanding principal amount of the Loans payable to such Lender plus
any accrued but unpaid interest on such Loans, any accrued but unpaid fees with
respect to such Lender's Revolving Credit Commitment and any other amount
payable to such Lender under this Agreement; provided, however, that any
expenses or other amounts which would be owing to such Lender pursuant to any
indemnification provision hereof (including, if applicable, Section 5.5) shall
be payable by the Borrower as if the Borrower had prepaid the Loans of such
Lender rather than such Lender having assigned its interest hereunder. The
assignee shall pay the applicable processing fee under Section 12.1.
<PAGE> 55
ARTICLE VI
Conditions to Making Loans and Issuing Letters of Credit
VI.1. Conditions of Initial Advance. The obligation of the Lenders
to make the initial Advance under the Revolving Credit Facility and the Line of
Credit Facility, and of the Issuing Bank to issue any Letter of Credit, and of
NationsBank to make any Swing Line Loan, is subject to the conditions precedent
that:
(a) the Agent shall have received on the Closing Date, in
form and substance satisfactory to the Agent and Lenders, the
following:
(i) executed originals of each of this Agreement,
the Notes, the initial Facility Guaranties, the Security
Instruments, the LC Account Agreement the other Loan
Documents, together with all schedules and exhibits thereto;
(ii) the written opinion or opinions with respect to
the Loan Documents and the transactions contemplated thereby
of special counsel to the Loan Parties dated the Closing
Date, addressed to the Agent and the Lenders and satisfactory
to the Agent, substantially in the form of Exhibit G;
(iii) resolutions of the boards of directors or
other appropriate governing body (or of the appropriate
committee thereof) of each Loan Party certified by its
secretary or assistant secretary as of the Closing Date,
approving and adopting the Loan Documents to be executed by
such Person, and authorizing the execution and delivery
thereof;
(iv) specimen signatures of the officers of each of
the Loan Parties executing the Loan Documents on behalf of
such Loan Party, certified by the secretary or assistant
secretary of such Loan Party;
(v) the charter documents of each of the Loan
Parties certified as of a recent date by the Secretary of
State of its state of organization;
(vi) the bylaws of each of the Loan Parties
certified as of the Closing Date as true and correct by its
secretary or assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of
formation of each of the Loan Parties as to the due existence
and good standing of such Person;
(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to
conduct business under assumed name, issued in respect of
each of the Loan Parties as of a recent date by the
<PAGE> 56
Secretary of State or comparable official of each
jurisdiction in which the failure to be qualified to do
business or authorized so to conduct business could have a
Material Adverse Effect;
(ix) notice of appointment of the initial
Authorized Representative(s);
(x) certificate of an Authorized Representative
dated the Closing Date demonstrating compliance with the
financial covenants contained in Sections 9.1(a) through
9.1(c) as of the most recent quarter end, substantially in
the form of Exhibit H;
(xi) an initial Borrowing Notice, if any, and, if
elected by the Borrower, Interest Rate Selection Notice;
(xii) all stock certificates evidencing Pledged
Stock and certificates, if any, evidencing ownership of
Partnership Interests, accompanied in each case by duly
executed stock powers (or other appropriate transfer
documents) in blank affixed thereto; and
(xiii) evidence that all fees payable by the
Borrower on the Closing Date to the Agent, NCMI and the
Lenders have been paid in full;
(xiv) Uniform Commercial Code search results showing
only those Liens as are acceptable to the Lenders; and
(xv) such other documents, instruments,
certificates and opinions as the Agent or any Lender may
reasonably request on or prior to the Closing Date in
connection with the consummation of the transactions
contemplated hereby; and
(b) In the good faith judgment of the Agent:
(i) there shall not have occurred or become known
to the Agent or the Lenders any event, condition, situation or
status since the date of the information contained in the
financial and business projections, budgets, pro forma data
and forecasts concerning the Borrower and its Subsidiaries
delivered to the Agent prior to the Closing Date that has had
or could reasonably be expected to result in a Material
Adverse Effect;
(ii) no litigation, action, suit, investigation or
other arbitral, administrative or judicial proceeding shall
be pending or threatened which could reasonably be likely to
result in a Material Adverse Effect;
(iii) the Loan Parties shall have received all
approvals, consents and waivers, and shall have made or given
all necessary filings and notices as shall be
<PAGE> 57
required to consummate the transactions contemplated hereby
without the occurrence of any default under, conflict with or
violation of (A) any applicable law, rule, regulation, order
or decree of any Governmental Authority or arbitral authority
or (B) any agreement, document or instrument to which any of
the Loan Parties is a party or by which any of them or their
properties is bound; and
(iv) the Agent and NCMI shall have completed all due
diligence with respect to the Borrower and its Subsidiaries
in scope and determination satisfactory to NationsBank and
NCMI in their sole discretion.
VI.2. Conditions of Revolving Loans, Line of Credit Loans and Letter
of Credit. The obligations of the Lenders to make any Revolving Loans and Line
of Credit Loans and the Issuing Bank to issue Letters of Credit and NationsBank
to make Swing Line Loans, hereunder on or subsequent to the Closing Date are
subject to the satisfaction of the following conditions:
(a) the Agent or, in the case of Swing Line Loans,
NationsBank shall have received a Borrowing Notice if required by
Article II;
(b) the representations and warranties of the Loan Parties
set forth in Article VII and in each of the other Loan Documents shall
be true and correct in all material respects on and as of the date of
such Advance, Swing Line Loan or Letter of Credit issuance or renewal,
with the same effect as though such representations and warranties had
been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in Section 7.6(a)(i)
shall be deemed to be those financial statements most recently
delivered to the Agent and the Lenders pursuant to Section 8.1 from
the date financial statements are delivered to the Agent and the
Lenders in accordance with such Section;
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments
and documents as it shall request;
(d) at the time of (and after giving effect to) each Advance,
Swing Line Loan or the issuance of a Letter of Credit, no Default or
Event of Default specified in Article X shall have occurred and be
continuing; and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal
balance of all outstanding Revolving Loans for each Lender
shall not exceed such Lender's Revolving Credit Commitment;
<PAGE> 58
(ii) a Line of Credit Loan, the aggregate principal
balance of all outstanding Line of Credit Loans for each
Lender shall not exceed such Lender's Line of Credit
Commitment;
(iii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding Participations
in Letters of Credit and Reimbursement Obligations (or in the
case of the Issuing Bank, its remaining interest after
deduction of all Participations in Letters of Credit and
Reimbursement Obligations of other Lenders) for each Lender
and in the aggregate shall not exceed, respectively, (X) such
Lender's Letter of Credit Commitment or (Y) the Total Letter
of Credit Commitment;
(iv) a Swing Line Loan, the Swing Line Outstandings
shall not exceed $10,000,000;
(v) a Revolving Loan, Swing Line Loan or a Letter of
Credit or renewal thereof, the sum of Letter of Credit
Outstandings plus Revolving Credit Outstandings plus Swing
Line Outstandings shall not exceed the Total Revolving Credit
Commitment; and
(vi) a Line of Credit Loan, all Line of Credit
Outstandings shall not exceed the Total Line of Credit
Commitment.
<PAGE> 59
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery
of the documents mentioned herein and the making of Loans), that:
VII.1. Organization and Authority
(a) The Borrower and each Subsidiary is a corporation duly
organized and validly existing under the laws of the jurisdiction of
its formation;
(b) The Borrower and each Subsidiary (x) has the requisite
power and authority to own its properties and assets and to carry on
its business as now being conducted and as contemplated in the Loan
Documents, and (y) is qualified to do business in every jurisdiction
in which failure so to qualify would have a Material Adverse Effect;
(c) The Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
(d) Each Subsidiary has the power and authority to execute,
deliver and perform the Facility Guaranty and each of the other Loan
Documents to which it is a party; and
(e) When executed and delivered, each of the Loan Documents
to which any Loan Party is a party will be the legal, valid and
binding obligation or agreement, as the case may be, of such Loan
Party, enforceable against such Loan Party in accordance with its
terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of
general principles of equity (whether considered in a proceeding at
law or in equity);
VII.2. Loan Documents. The execution, delivery and
performance by each Loan Party of each of the Loan Documents to which
it is a party:
(a) have been duly authorized by all requisite corporate
action (including any required shareholder approval) of such Loan
Party required for the lawful execution, delivery and performance
thereof;
(b) do not violate any provisions of (i) applicable law, rule
or regulation, (ii) any judgment, writ, order, determination, decree
or arbitral award of any Governmental
<PAGE> 60
Authority or arbitral authority binding on such Loan Party or its
properties, or (iii) the charter documents or bylaws of such Loan
Party;
(c) does not and will not be in conflict with, result in a
breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract, indenture, agreement or other instrument or
document to which such Loan Party is a party, or by which the
properties or assets of such Loan Party are bound; and
(d) does not and will not result in the creation or
imposition of any Lien upon any of the properties or assets of such
Loan Party or any Subsidiary except any Liens in favor of the Agent
and the Lenders created by the Security Instruments;
VII.3. Solvency. Each Loan Party is Solvent after giving effect to the
transactions contemplated by the Loan Documents;
VII.4. Subsidiaries and Stockholders. The Borrower has no Subsidiaries
other than those Persons listed as Subsidiaries in Schedule 7.4 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
Section 8.19; Schedule 7.4 states as of the date hereof the organizational form
of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and
the number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower or by
any such Subsidiary; the outstanding shares or other equity interests of each
such Subsidiary have been duly authorized and validly issued and are fully paid
and nonassessable; and Borrower and each such Subsidiary owns beneficially and
of record all the shares and other interests it is listed as owning in Schedule
7.4, free and clear of any Lien other than Liens permitted under Section 9.3;
VII.5. Ownership Interests. Borrower owns no interest in any Person
other than the Persons listed in Schedule 7.4, equity investments in Persons
not constituting Subsidiaries permitted under Section 9.6 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
Section 8.19;
VII.6. Financial Condition.
(a) The Borrower has heretofore furnished to each Lender an
audited consolidated and related consolidating balance sheet of the
Borrower and its Subsidiaries as at March 31, 1997 and the notes
thereto and the related consolidated statements of income,
stockholders' equity and cash flows for the Fiscal Year then ended as
examined and certified by Arthur Andersen LLP, and unaudited
consolidated and consolidating interim financial statements of the
Borrower and its Subsidiaries consisting of consolidated and
consolidating balance sheets and related consolidated and
consolidating
<PAGE> 61
statements of income, stockholders' equity and cash flows, in each
case without notes, for and as of the end of the three (3) month
period ending June 30, 1997. Except as set forth therein, such
financial statements (including the notes thereto) present fairly the
financial condition of the Borrower and its Subsidiaries as of the end
of such Fiscal Year and three (3) month period and results of their
operations and the changes in its stockholders' equity for the Fiscal
Year and interim period then ended, all in conformity with GAAP
applied on a Consistent Basis, subject however, in the case of
unaudited interim statements to year end audit adjustments;
(b) since March 31, 1997 there has been no material adverse
change in the condition, financial or otherwise, of the Borrower or
any of its Subsidiaries, taken as a whole, or in the businesses,
properties, performance, prospects or operations of the Borrower or
its Subsidiaries, taken as a whole, nor have such businesses or
properties been materially adversely affected as a result of any fire,
explosion, earthquake, accident, strike, lockout, combination of
workers, flood, embargo or act of God; and
(c) except as set forth in the financial statements referred
to in Section 7.6(a) or in Schedule 7.6 or permitted by Section 9.4,
neither Borrower nor any Subsidiary has incurred, other than in the
ordinary course of business, any material Indebtedness, Contingent
Obligation or other commitment or liability which remains outstanding
or unsatisfied;
VII.7. Title to Properties. The Borrower and each of its Subsidiaries
has good and marketable title to all its real and personal properties, subject
to no transfer restrictions or Liens of any kind, except for the transfer
restrictions and Liens described in Schedule 7.7 and Liens permitted by Section
9.3;
VII.8. Taxes. The Borrower and each of its Subsidiaries has filed or
caused to be filed all federal, state and local tax returns which are required
to be filed by it and, except for taxes and assessments being contested in good
faith by appropriate proceedings diligently conducted and against which
reserves reflected in the financial statements described in Section 7.6(a) and
satisfactory to the Borrower's independent certified public accountants have
been established, have paid or caused to be paid all taxes as shown on said
returns or on any assessment received by it, to the extent that such taxes have
become due;
VII.9 Other Agreements. Neither the Borrower nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions,
which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect; or
(b) in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any
agreement or instrument to which the Borrower or any Subsidiary is a
party, which default has, or if not remedied within
<PAGE> 62
any applicable grace period could reasonably be likely to have, a
Material Adverse Effect;
VII.10. Litigation. Except as set forth in Schedule 7.10, there is no
action, suit, or proceeding at law or in equity or by or before any
governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or affecting the Borrower or any Subsidiary or any properties or
rights of the Borrower or any Subsidiary or to the knowledge of the Borrower
any investigation pending or threatened, which could reasonably be likely to
have a Material Adverse Effect on the Borrower and its Subsidiaries, taken as a
whole;
VII.11. Martin Stock. The proceeds of the borrowings made hereunder
will be used by the Borrower only for the purposes expressly authorized herein.
Except as expressly authorized herein, none of such proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
stock or for the purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry margin stock or for any other purpose
which might constitute any of the Loans under this Agreement a "purpose credit"
within the meaning of said Regulation U or Regulation X (12 C.F.R. Part 224) of
the Board. Neither the Borrower nor any agent acting in its behalf has taken or
will take any action which might cause this Agreement or any of the documents
or instruments delivered pursuant hereto to violate any regulation of the Board
or to violate the Securities Exchange Act of 1934, as amended, or the
Securities Act of 1933, as amended, or any state securities laws, in each case
as in effect on the date hereof;
VII.12. Investment Company. No Loan Party is an "investment company,"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act
of 1940, as amended (15 U.S.C. ss. 80a-1, et seq.). The application of the
proceeds of the Loans and repayment thereof by the Borrower and the performance
by the Borrower and the other Loan Parties of the transactions contemplated by
the Loan Documents will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission
thereunder, in each case as in effect on the date hereof;
VII.13. Patents, Etc. The Borrower and each Subsidiary owns or has the
right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights necessary to or used in the conduct
of its businesses, without known conflict with any patent, license, franchise,
trademark, trade secret, trade name, copyright, other proprietary right of any
other Person;
VII.14. No Untrue Statement. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of any Loan Party in accordance with or pursuant to any Loan Document nor (b)
any statement, representation, or warranty (written or oral) provided or made
to the Agent by or on behalf of any Loan Party in connection with the
negotiation or preparation of the Loan Documents contains any
<PAGE> 63
misrepresentation or untrue statement of material fact or omits to state a
material fact necessary, in light of the circumstance under which it was made,
in order to make any such warranty, representation or statement contained
therein not misleading;
VII.15. No Consents, Etc. Neither the respective businesses or
properties of the Borrower or any Subsidiary, nor any relationship among the
Borrower or any Subsidiary and any other Person, nor any circumstance in
connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with,
any Governmental Authority or any other Person on the part of the Borrower as a
condition to the execution, delivery and performance of, or consummation of the
transactions contemplated by the Loan Documents, which, if not obtained or
effected, would be reasonably likely to have a Material Adverse Effect, or if
so, such consent, approval, authorization, filing, registration or
qualification has been duly obtained or effected, as the case may be;
VII.16. Employee Benefit Plans.
(a) The Borrower and each ERISA Affiliate is in material
compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder and in material compliance
with all Foreign Benefit Laws with respect to all Employee Benefit
Plans except for any required amendments for which the remedial
amendment period as defined in Section 401(b) of the Code has not yet
expired. Each Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, and each trust related to such
plan has been determined to be exempt under Section 501(a) of the
Code. No material liability has been incurred by the Borrower or any
ERISA Affiliate which remains unsatisfied for any taxes or penalties
with respect to any Employee Benefit Plan or any Multiemployer Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i)
engaged in a nonexempt prohibited transaction described in Section
4975 of the Code or Section 406 of ERISA affecting any of the Employee
Benefit Plans or the trusts created thereunder which could subject any
such Employee Benefit Plan or trust to a material tax or penalty on
prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA, (ii) incurred any accumulated funding deficiency with
respect to any Employee Benefit Plan, whether or not waived, or any
other liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due
and unpaid, (iii) failed to make a required contribution or payment to
a Multiemployer Plan, or (iv) failed to make a required installment or
other required payment under Section 412 of the Code, Section 302 of
ERISA or the terms of such Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer
Plan, and neither the Borrower nor
<PAGE> 64
any ERISA Affiliate has incurred any unpaid withdrawal liability with
respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under
each Employee Benefit Plan which is subject to Title IV of ERISA, did
not, as of the most recent valuation date for each such plan, exceed
the then current value of the assets of such Employee Benefit Plan
allocable to such benefits;
(e) To the best of the Borrower's knowledge, each Employee
Benefit Plan subject to Title IV of ERISA, maintained by the Borrower
or any ERISA Affiliate, has been administered in accordance with its
terms in all material respects and is in compliance in all material
respects with all applicable requirements of ERISA and other
applicable laws, regulations and rules;
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of the Borrower after
due inquiry, is threatened concerning or involving any Employee
Benefit Plan;
VII.17. No Default. As of the date hereof, there does not exist any
Default or Event of Default hereunder.
VII.18. Hazardous Materials. The Borrower and each Subsidiary is in
material compliance with all applicable Environmental Laws in all material
respects. Neither the Borrower nor any Subsidiary has received written notice
of any action, suit, proceeding or investigation which (i) alleges that
Borrower or any Subsidiary is not in compliance with applicable Environmental
Laws; (ii) seeks to suspend, revoke, or terminate any license, permit, or
approval necessary for the generation, handling, storage, treatment or disposal
of Hazardous Material, and which, if suspended, revoked or terminated would
have Material Adverse Effect; or (iii) seeks to impose on any property owned by
Borrower or any Subsidiary, a material restriction on the ownership, use,
occupancy, or transferability under applicable Environmental Laws, which
restriction would have Material Adverse Effect.
VII.19 Employment Matters. (a) None of the employees of the Borrower
or any Subsidiary is subject to any collective bargaining agreement and there
are no strikes, work stoppages, election or decertification petitions or
proceedings, unfair labor charges, equal opportunity proceedings, or other
material labor/employee related controversies or proceedings pending or, to the
best knowledge of the Borrower, threatened against the Borrower or any
Subsidiary or between the Borrower or any Subsidiary and any of its employees,
other than employee grievances arising in the ordinary course of business which
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect; and
<PAGE> 65
(b) Except to the extent a failure to maintain compliance would not
have a Material Adverse Effect, the Borrower and each Subsidiary is in
compliance in all respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without limitation those
pertaining to wages, hours, occupational safety and taxation and there is
neither pending or threatened any litigation, administrative proceeding nor, to
the knowledge of the Borrower, any investigation, in respect of such matters
which, if decided adversely, could reasonably be likely, individually or in the
aggregate, to have a Material Adverse Effect.
VII.20. RICO. Neither the Borrower nor any Subsidiary is engaged in or
has engaged in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal law,
racketeer influenced and corrupt organizations law, civil or criminal, or other
similar laws.
VII.21. Security Interests. Subject to the Agent taking such actions
as may be necessary to perfect its interest, the Pledge Agreement creates a
valid and perfected security interest in favor of the Agent, for the benefit of
the Lenders, in the Pledged Stock, subject to no other security interest, lien,
encumbrance or adverse claim of record noted in the stock record books (other
than restrictions on transfer imposed by applicable securities laws) and no
filings or recordations are necessary to perfect the security interests created
by the Pledge Agreement in the Pledged Stock other than such filings or
recordations as have already been made.
<PAGE> 66
ARTICLE VIII
Affirmative Covenants
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will
cause each Subsidiary to:
(a) As soon as practical and in any event within 95 days after the
end of each Fiscal Year of the Borrower, deliver or cause to be delivered to
the Agent and each Lender (i) a consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such Fiscal Year, and the notes thereto, and
the related consolidated statements of income, stockholders' equity and cash
flows, and the respective notes thereto, for such Fiscal Year, setting forth
comparative financial statements for the preceding Fiscal Year, all prepared in
accordance with GAAP applied on a Consistent Basis and containing, opinions of
Arthur Andersen LLP, or other such independent certified public accountants
selected by the Borrower and approved by the Agent, which are unqualified as to
the scope of the audit performed and as to the "going concern" status of the
Borrower and without any exception not acceptable to the Lenders, and (ii) a
certificate of an Authorized Representative demonstrating compliance with
Sections 9.1(a) through 9.1(c), Section 9.4(g), Section 9.6(f) and (g), and
Section 9.8 which certificate shall be in the form of Exhibit H;
(b) as soon as practical and in any event within 50 days after the end
of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
deliver to the Agent and each Lender (i) a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income, stockholders' equity and cash flows
for such fiscal quarter and for the period from the beginning of the then
current Fiscal Year through the end of such reporting period and setting forth
comparative statements for the comparative time period in the preceding Fiscal
Year, and accompanied by a certificate of an Authorized Representative to the
effect that such financial statements present fairly the financial position of
the Borrower and its Subsidiaries as of the end of such fiscal period and the
results of their operations and the changes in their financial position for
such fiscal period, in conformity with the standards set forth in Section
7.6(a) with respect to interim financial statements, and (ii) a certificate of
an Authorized Representative containing computations for such quarter
comparable to that required pursuant to Section 8.1(a)(ii);
(c) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent and each Lender a copy of (i) all regular
or special reports or effective registration statements which Borrower or any
Subsidiary shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) any proxy statement
distributed by the Borrower or any Subsidiary to its shareholders, bondholders
or the financial community in general, and (iii) any management letter
submitted to the Borrower by independent accountants in connection with any
annual, interim or special audit of the Borrower; and
<PAGE> 67
(d) not later than the last Business Day of each Fiscal Year, deliver
to the Agent and each Lender a capital and operating expense budget by fiscal
quarter as customarily prepared by management of the Borrower for its internal
use, setting forth the principal assumptions upon which such budgets are based
and consolidated financial projections for the Borrower and its Subsidiaries
for the next Fiscal Year, prepared in accordance with GAAP applied on a
Consistent Basis;
(e) promptly, from time to time, deliver or cause to be delivered to
the Agent and each Lender such other information regarding Borrower's and any
Subsidiary's operations, business affairs and financial condition as the Agent
or such Lender may reasonably request;
(f) promptly notify the Agent of the termination of any contract the
loss of which would have a Material Adverse Effect on the Borrower and its
Subsidiaries taken as a whole;
Subject to Section 12.14, the Agent and the Lenders are hereby
authorized to deliver a copy of any such financial or other information
delivered hereunder to the Lenders (or any affiliate of any Lender) or to the
Agent, to any Governmental Authority having jurisdiction over the Agent or any
of the Lenders pursuant to any written request therefor or in the ordinary
course of examination of loan files, or to any other Person who shall acquire
or consider the assignment of, or acquisition of any participation interest in,
any Obligation permitted by this Agreement;
VIII.2. Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens,
except those permitted under Section 9.3, all trademarks, trade names, patents,
copyrights, trade secrets, know-how, and other intellectual property and
proprietary information (or adequate licenses thereto), in each case as are
reasonably necessary to conduct its business as currently conducted or as
contemplated hereby, all in accordance with customary and prudent business
practices.
VIII.3. Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 9.7 and Section 9.12, do or cause to be done all things
necessary to preserve and keep in full force and effect its existence and all
material rights and franchises, and maintain its license or qualification to do
business as a foreign corporation and good standing in each jurisdiction in
which the failure to maintain such license or qualification would have a
Material Adverse Effect.
VIII.4. Regulations and Taxes. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien not otherwise
permitted under Section 9.3 against any of its properties except liabilities
being contested in good faith by appropriate proceedings diligently conducted
and against which adequate reserves acceptable to the Borrower's independent
certified public accountants have been established unless and until any Lien
resulting therefrom attaches to any of its property and becomes enforceable
against its creditors.
<PAGE> 68
VIII.5. Insurance. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly
situated, (b) maintain general public liability insurance at all times with
responsible insurance carriers against liability on account of damage to
persons and property and (c) maintain insurance under all applicable workers'
compensation laws (or in the alternative, maintain required reserves if
self-insured for workers' compensation purposes) such policies of insurance to
have such limits, deductibles, exclusions, co-insurance and other provisions
providing no less coverages than that specified in Schedule 8.5. Each of the
policies of insurance described in this Section 8.5 shall provide that the
insurer shall give the Agent not less than thirty (30) days' prior written
notice before any such policy shall be terminated, lapse or be altered in any
manner.
VIII.6. True Books. Keep true books of record and account in which
full, true and correct entries will be made of all of its dealings and
transactions, and set up on its books such reserves as may be required by GAAP
with respect to doubtful accounts and all taxes, assessments, charges, levies
and claims and with respect to its business in general, and include such
reserves in interim as well as year-end financial statements.
VIII.7. Right of Inspection. Subject to Section 12.14, permit any
Person designated by any Lender or the Agent to visit and inspect any of the
properties, corporate books and financial reports of the Borrower or any
Subsidiary and to discuss its affairs, finances and accounts with its principal
officers and independent certified public accountants, all at reasonable times,
at reasonable intervals and with reasonable prior notice.
VIII.8. Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of
any Governmental Authority with respect to the conduct of its business.
VIII.9. Governmental Licenses. Obtain and maintain all licenses,
permits, certifications and approvals of all applicable Governmental
Authorities which are material to the conduct of its business except those the
failure of which to maintain would not have a Material Adverse Effect.
VIII.10. Covenants Extending to Other Persons. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in Sections 8.2 through 8.9, and 8.18
inclusive.
VIII.11. Officer's Knowledge of Default. Upon any Authorized
Representative of the Borrower obtaining knowledge of any Default or Event of
Default hereunder or under any other obligation of the Borrower or any
Subsidiary to any Lender, or any event, development or occurrence which could
reasonably be expected to have a Material Adverse Effect, cause such Authorized
Representative to promptly notify the Agent of the nature thereof, the period
of existence thereof, and advise the Agent within three (3) Business Days what
action the Borrower or such Subsidiary proposes to take with respect thereto.
<PAGE> 69
VIII.12. Suits or Other Proceedings. Upon any Authorized
Representative of the Borrower obtaining knowledge of any litigation or other
proceedings being instituted against the Borrower or any Subsidiary, or any
attachment, levy, execution or other process being instituted against any
assets of the Borrower or any Subsidiary, making a claim or claims in an
aggregate amount greater than $2,000,000 not otherwise covered by insurance,
promptly deliver to the Agent written notice thereof stating the nature and
status of such litigation, dispute, proceeding, levy, execution or other
process.
VIII.13. Notice of Discharge of Hazardous Material or Environmental
Complaint. Promptly provide to the Agent true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or any Subsidiary relating to any (a) violation or
alleged violation by the Borrower or any Subsidiary of any applicable
Environmental Law; (b) release or threatened release by the Borrower or any
Subsidiary, or at any facility or property owned or leased or operated by the
Borrower or any Subsidiary, of any Hazardous Material, except where occurring
in compliance with applicable Environmental Laws; or (c) liability or alleged
liability of the Borrower or any Subsidiary for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials.
VIII.14. Environmental Compliance. If the Borrower or any Subsidiary
shall receive any letter, notice, complaint, order, directive, claim or
citation alleging that the Borrower or any Subsidiary has violated any
Environmental Law or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower
shall, within the time period permitted by the applicable Environmental Law or
the Governmental Authority responsible for enforcing such Environmental Law,
remove or remedy, or cause the applicable Subsidiary to remove or remedy, such
violation or release or satisfy such liability or shall be contesting in good
faith such letter, notice, complaint, order, directive, claim or citation.
VIII.15. Indemnification. Without limiting the generality of Section
12.9, the Borrower hereby agrees to indemnify and hold the Agent, the Lenders
and NCMI, and their respective officers, directors, employees and agents,
harmless from and against any and all claims, losses, penalties, liabilities,
damages and expenses (including assessment and cleanup costs and reasonable
attorneys' fees and disbursements) arising directly or indirectly from, out of
or by reason of (a) the violation of any Environmental Law by the Borrower or
any Subsidiary or with respect to any property owned, operated or leased by the
Borrower or any Subsidiary or (b) the handling, storage, treatment, emission or
disposal of any Hazardous Materials by or on behalf of the Borrower or any
Subsidiary or on or with respect to property owned or leased or operated by the
Borrower or any Subsidiary. The provisions of this Section 8.15 shall survive
the Facility Termination Date and expiration or termination of this Agreement.
VIII.16. Further Assurances. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the
<PAGE> 70
reasonable opinion of the Agent to carry out more effectively the provisions
and purposes of this Agreement, the Security Instruments and the other Loan
Documents.
VIII.17. Employee Benefit Plans.
(a) With reasonable promptness, and in any event within
thirty (30) days thereof, give notice to the Agent of (a) the
establishment of any new Pension Plan (which notice shall include a
copy of such plan), (b) the commencement of contributions to any
Employee Benefit Plan to which the Borrower or any of its ERISA
Affiliates was not previously contributing, (c) any material increase
in the benefits of any existing Employee Benefit Plan, (d) each
funding waiver request filed with respect to any Employee Benefit Plan
and all communications received or sent by the Borrower or any ERISA
Affiliate with respect to such request and (e) the failure of the
Borrower or any ERISA Affiliate to make a required installment or
payment under Section 302 of ERISA or Section 412 of the Code by the
due date;
(b) Promptly and in any event within fifteen (15) days of
becoming aware of the occurrence or forthcoming occurrence of any (a)
Termination Event or (b) nonexempt "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the Code,
in connection with any Pension Plan or any trust created thereunder,
deliver to the Agent a notice specifying the nature thereof, what
action the Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within
fifteen (15) days for purposes of clauses (a), (b) and (c), deliver to
the Agent copies of (a) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code, (b) all notices
received by the Borrower or any ERISA Affiliate of the PBGC's intent
to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan, (c) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by the
Borrower or any ERISA Affiliate with the Internal Revenue Service with
respect to each Pension Plan and (d) all notices received by the
Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant
to Section 4202 of ERISA. The Borrower will notify the Agent in
writing within five (5) Business Days of the Borrower or any ERISA
Affiliate obtaining knowledge or reason to know that the Borrower or
any ERISA Affiliate has filed or intends to file a notice of intent to
terminate any Pension Plan under a distress termination within the
meaning of Section 4041(c) of ERISA.
VIII.18. Continued Operations. Continue at all times to conduct its
business and engage principally in the same or similar line or lines of
business substantially as heretofore conducted.
<PAGE> 71
VIII.19. New Subsidiaries. Within thirty (30) days of the acquisition
or creation of any Domestic Subsidiary or Material Foreign Subsidiary, or upon
an existing Foreign Subsidiary becoming a Material Foreign Subsidiary, or upon
a group of Direct Foreign Subsidiaries meeting the threshold set forth in the
first proviso of the definition of Material Foreign Subsidiary, cause to be
delivered to the Agent for the benefit of the Lenders each of the following:
(a) in the case of a Domestic Subsidiary, a Facility Guaranty
executed by such Domestic Subsidiary substantially in the form of
Exhibit I;
(b) (i) in the case that such Subsidiary is directly owned by
the Borrower or a Domestic Subsidiary which has previously delivered a
Pledge Agreement, a revised Schedule I to the Pledge Agreement dated
the date hereof together with (x) stock certificates or other
appropriate evidence of ownership representing 100% of the capital
stock and related interests and rights of a Domestic Subsidiary owned
directly or indirectly by the Borrower or (y) 65% of the Voting Stock
and 100% of the non-voting common stock and related interests and
rights of any Material Foreign Subsidiary or group of Direct Foreign
Subsidiaries meeting the threshold set forth in the first proviso of
the definition of Material Foreign Subsidiary, and (z) duly executed
stock powers or powers of assignment in blank affixed thereto;
(ii) in the case that such Subsidiary is directly
owned by a Domestic Subsidiary which has not previously delivered a
Pledge Agreement, a Pledge Agreement substantially similar in form and
content to that executed and delivered by the Borrower on the Closing
Date, with appropriate revisions as to the identity of the pledgor and
securing Obligations of such Pledgor under its Facility Guaranty,
together with (x) stock certificates or other appropriate evidence of
ownership representing 100% of the capital stock and related interests
and rights of a Domestic Subsidiary owned directly or indirectly by
the Borrower or (y) 65% of the Voting Stock and 100% of the non-voting
common stock and related interests and rights of any Material Foreign
Subsidiary or group of Direct Foreign Subsidiaries meeting the
threshold set forth in the first proviso of the definition of Material
Foreign Subsidiary, and (z) duly executed stock powers or powers of
assignment in blank affixed thereto; or
(iii) Without limiting the provisions of Sections
8.19 (b)(i) and (ii) above or Section 4.2, it is the intent of the
parties hereto that not less than seventy percent (70%) of
Consolidated Total Tangible Assets and Consolidated Net Income shall
at all times be attributable to the assets and operations of the
Borrower and its Subsidiaries whose common stock is pledged as
Collateral. In the event that the Pledged Stock Ratio is less than
seventy percent (70%), then the Borrower shall promptly cause to be
executed and delivered such additional Security Instruments and
related documents required to meet this seventy (70%) threshold.
(c) in the case that such Subsidiary is a partnership that
has not issued
<PAGE> 72
certificates evidencing ownership of such partnership, the certificate
of Registrar of such partnership with respect to the registration of
the Lien on Partnership Interests;
(d) an opinion of counsel to the Subsidiary dated as of the
date of delivery of the Facility Guaranty and other Loan Documents
provided for in this Section 8.19 and addressed to the Agent and the
Lenders, in form and substance reasonably acceptable to the Agent
(which opinion may include assumptions and qualifications of similar
effect to those contained in the opinions of counsel delivered
pursuant to Section 6.1(a)), to the effect that:
(i) such Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its
formation, has the requisite power and authority to own its
properties and conduct its business as then owned and then
conducted and proposed to be conducted, and is duly qualified
to transact business and is in good standing as a foreign
corporation or partnership in each other jurisdiction in
which the character of the properties owned or leased, or the
business carried on by it, requires such qualification except
where the failure to so qualify would not have a Material
Adverse Effect;
(ii) the execution, delivery and performance of the
Facility Guaranty and other Loan Documents described in this
Section 8.19 to which the Borrower or such Subsidiary is a
signatory have been duly authorized by all requisite
corporate or partnership action (including any required
shareholder or partner approval), each of such agreements has
been duly executed and delivered and constitutes the valid
and binding agreement of the Borrower or such Subsidiary,
enforceable against the Borrower or such Subsidiary in
accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general
principles of equity (whether considered in a proceeding at
law or in equity);
(e) current copies of the charter documents, including
partnership agreements and certificate of limited partnership, if
applicable, and bylaws of such Subsidiary, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if
required by such charter documents, bylaws or by applicable law, of
the shareholders) of such Subsidiary authorizing the actions and the
execution and delivery of documents described in this Section 8.19.
<PAGE> 73
ARTICLE IX
Negative Covenants
Until the Obligations have been paid and satisfied in full, no Letters
of Credit remain outstanding and this Agreement has been terminated in
accordance with the terms hereof, unless the Required Lenders shall otherwise
consent in writing, the Borrower will not, nor will it permit any Subsidiary
to:
IX.1. Financial Covenants.
(a) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio as of the end of any Four-Quarter
Period be less than 2.00 to 1.00.
(b) Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio to exceed during the periods set forth below the ratio set forth
below opposite such period:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Period Consolidated Leverage Ratio
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Closing Date through March 30, 1998 3.00 to 1.00
------------------------------------------------------------------------------------------------------
March 31, 1998 through March 30, 1999 2.25 to 1.00
------------------------------------------------------------------------------------------------------
March 31, 1999 and thereafter 1.50 to 1.00
------------------------------------------------------------------------------------------------------
</TABLE>
(c) Pledged Stock Ratio. Permit at any time the Pledged Stock
Ratio to be less than seventy percent (70%).
IX.2. Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired are substantially the same or similar as
one or more line or lines of business conducted by the Borrower and its
Subsidiaries, (ii) no Default or Event of Default shall have occurred and be
continuing either immediately prior to or immediately after giving effect to
such Acquisition and (iii) the Person acquired shall be a Subsidiary, or be
merged into the Borrower or a wholly-owned Subsidiary, immediately upon
consummation of the Acquisition (or if assets are being acquired, the acquiror
shall be the Borrower or a wholly-owned Subsidiary), and (iv) if the Cost of
Acquisition shall exceed $15,000,000, the Required Lenders shall consent to
such Acquisition in their discretion.
IX.3. Liens. Incur, create or permit to exist any Lien, charge or
other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Subsidiary, other
than
<PAGE> 74
(a) Liens created under the Security Instruments in favor of
the Agent and the Lenders, and otherwise existing as of the date
hereof and as set forth in Schedule 7.7;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP
and which Liens may not be executed upon the property subject thereto;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
90 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP and which Liens may not be executed upon the property subject
thereto;
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges
or encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower
or any Subsidiary and which do not materially detract from the value
of the property to which they attach or materially impair the use
thereof to the Borrower or any Subsidiary;
(f) Liens on assets of Pacific Media KK securing Indebtedness
described in Section 9.4(f);
(g) Liens on assets of Subsidiaries securing Indebtedness
owed to the Borrower or a Guarantor; provided that if such Subsidiary
is a Guarantor or such Subsidiary's stock is Pledged Stock, the
promissory note evidencing such Indebtedness shall be pledged to the
Agent as security for the Obligations;
(h) Liens securing Indebtedness permitted under Section
9.4(h); and
(i) judgment Liens so long as (i) any such judgment is being
contested in
<PAGE> 75
good faith and execution has been effectively stayed or if not
effectively stayed, does not remain unstayed, undischarged, unbonded
or undismissed for a period of more than forty-five (45) days, (ii)
reserves acceptable to the Borrower's independent certified public
accountants have been established, and (iii) the aggregate amount of
all such judgments do not exceed at any time $1,000,000.
IX.4. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness of the Borrower, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth
in Schedule 7.6; provided, none of the instruments and agreements
evidencing or governing such Indebtedness shall be amended, modified
or supplemented after the Closing Date to change any terms of
subordination, repayment or rights of Conversion, put, exchange or
other rights from such terms and rights as in effect on the Closing
Date;
(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) Indebtedness arising from Rate Hedging Obligations
permitted under Section 9.15;
(e) intercompany Indebtedness for loans and advances made by
the Borrower or any Guarantor to the Borrower or any Guarantor,
provided that such intercompany Indebtedness is evidenced by a
promissory note or similar written instrument acceptable to the Agent
which provides that such Indebtedness is subordinated to obligations,
liabilities and undertakings of the holder or owner thereof under the
Loan Documents on terms acceptable to the Agent;
(f) Indebtedness in an aggregate outstanding amount at any
time of up to $25,000,000 of Pacific Media KK including any existing
indebtedness described on Schedule 7.6, fifty-one percent (51%) of the
principal amount of which may be guaranteed by the Borrower including
through indemnifications with respect to personal guarantees;
(g) additional unsecured Indebtedness for Money Borrowed of
Borrower or Guarantors not otherwise covered by clauses (a) through
(f) above, provided that the aggregate outstanding principal amount of
all such other Indebtedness permitted under this clause (g) shall in
no event exceed $7,500,000 at any time;
(h) Indebtedness incurred to purchase personal property
provided such Indebtedness is secured only by the property so acquired
and does not exceed the actual
<PAGE> 76
cost of such property and provided further that the total outstanding
amounts of all such Indebtedness shall not exceed at any time
$2,000,000;
(i) Indebtedness extending the maturity of, or renewing,
refunding or refinancing, in whole or in part, Indebtedness incurred
under clauses (a ), (d) and (f) of this Section 9.4, provided that the
terms of any such extension, renewal, refunding or refinancing
Indebtedness (and of any agreement or instrument entered into in
connection therewith) are no less favorable to the Agent and the
Lenders than the terms of the Indebtedness as in effect prior to such
action, and provided further that (1) the aggregate principal amount
of or interest rate or rates and fees payable on such extended,
renewed, refunded or refinanced Indebtedness shall not be materially
increased by such action, (2) the group of direct or contingent
obligors on such Indebtedness shall not be expanded as a result of any
such action, and (3) immediately before and immediately after giving
effect to any such extension, renewal, refunding or refinancing, no
Default or Event of Default shall have occurred and be continuing.
IX.5. Transfer of Assets. Sell, lease, transfer or otherwise dispose
of any assets of Borrower or any Subsidiary other than (a) dispositions of
inventory in the ordinary course of business, (b) dispositions of property that
is substantially worn, damaged, obsolete or, in the judgment of the Borrower,
no longer best used or useful in its business or that of any Subsidiary, (c)
transfers of assets necessary to give effect to merger or consolidation
transactions permitted by Section 9.7, and (d) the disposition of Eligible
Securities in the ordinary course of management of the investment portfolio of
the Borrower and its Subsidiaries.
IX.6. Investments. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that Borrower and Catalina Marketing
Worldwide, Inc. may maintain investments or invest in:
(a) securities of any Person acquired in an Acquisition
permitted hereunder;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set
forth in Schedule 7.4;
(d) accounts receivable arising and trade credit granted in
the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss;
(e) loans to or investments in Subsidiaries which are
Guarantors;
(f) (i) loans to or investments in, including purchase of
shares of,
<PAGE> 77
Subsidiaries other than Pacific Media KK which are not Guarantors and
(ii) purchase of shares of Subsidiaries which are Guarantors so long
as the aggregate amount loaned or invested does not exceed on a
non-cumulative basis (so that amounts not utilized in one Fiscal Year
may not be carried forward to a subsequent Fiscal Year) $10,000,000 in
any Fiscal Year;
(g) in addition to amounts set forth on Schedule 7.4, loans
to or investments in Pacific Media KK not to exceed an aggregate of
$10,000,000; and
(h) loans between the Borrower and the Guarantors described
in Section 9.4(e).
IX.7. Merger or Consolidation. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c)
liquidate, wind-up or dissolve or sell, transfer or lease or otherwise dispose
of all or a substantial part of its assets (other than sales permitted under
Section 9.5 (c) or as permitted by Section 9.12); provided, however, (i) any
Subsidiary of the Borrower may merge or transfer all or substantially all of
its assets into or consolidate with the Borrower or any wholly-owned Subsidiary
of the Borrower, and (ii) any other Person may merge into or consolidate with
the Borrower or any wholly-owned Subsidiary and any Subsidiary may merge into
or consolidate with any other Person in order to consummate an Acquisition
permitted by Section 9.2, provided further, that any resulting or surviving
entity shall execute and deliver such agreements and other documents, including
compliance with Section 8.19, and take such other action as the Agent may
require to evidence or confirm its express assumption of the obligations and
liabilities of its predecessor entities under the Loan Documents.
IX.8. Restricted Payments. Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing, except
(a) as permitted under Section 9.6 , (b) pursuant to employee and director
stock option or stock purchase plans existing on the Closing Date and described
on Schedule 9.8 hereto and employee and director stock option and stock
purchase plans and issuances of stock solely to the employees and directors of
Supermarkets Online, Inc., Health Resource Publishing Company and
Catalina-Pacific Media L.L.C. so long as the amount of stock and options made
available to employees and directors on a fully diluted basis does not exceed
thirty percent (30%) of the total shareholder's equity of any such company and
(c) that up to $120,000,000 in the aggregate may be used to repurchase shares
of the Borrower's common stock provided that all common stock repurchased is
promptly retired and not held in treasury stock.
IX.9. Transactions with Affiliates. Other than transactions permitted
under Sections 9.6 and 9.7, enter into any transaction after the Closing Date,
including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of the Borrower, except (a) that such Persons may render services to the
Borrower or its Subsidiaries for compensation at the same rates generally paid
by Persons engaged in the same or similar businesses for the same or similar
services, (b) that the Borrower or any Subsidiary may render services to such
Persons for compensation at the same rates generally charged by the Borrower or
such Subsidiary and (c) in either case in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's (or any
<PAGE> 78
Subsidiary's) business consistent with past practice of the Borrower and its
Subsidiaries and upon fair and reasonable terms no less favorable to the
Borrower (or any Subsidiary) than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate.
IX.10. Compliance with ERISA. With respect to any Pension Plan,
Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which
would result in a liability on the part of the Borrower or any ERISA
Affiliate to the PBGC; or
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to
Section 502(I) of ERISA or a tax pursuant to Section 4975 of the Code
may be imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer
Plan; or
(g) fail, or permit the Borrower or any ERISA Affiliate to
fail, to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the
Code, all applicable Foreign Benefit Laws and all other applicable
laws and the regulations and interpretations thereof.
IX.11. Fiscal Year. Change its Fiscal Year.
IX.12. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily
or involuntarily) or commence or suffer any proceedings seeking any such
winding up, liquidation or dissolution, except (i) in connection with a merger
or consolidation permitted pursuant to Section 9.7 and (ii) the liquidation or
dissolution in the ordinary course of business of Excluded Subsidiaries.
<PAGE> 79
IX.13. Prepayments, Etc. of Indebtedness. Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Indebtedness other than the Obligations.
IX.14. Change in Control. Cause, suffer or permit to exist or occur
any Change of Control.
IX.15. Rate Hedging Obligations. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to
Rate Hedging Obligations, except (i) pursuant to Swap Agreements or (ii) for
Rate Hedging Obligations incurred to limit risks of currency or interest rate
fluctuations to which the Borrower and its Subsidiaries are otherwise subject
by virtue of the operations of their businesses, and not for speculative
purposes.
IX.16. Negative Pledge Clauses. Enter into or cause, suffer or permit
to exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or
limits the ability of any of the Borrower or any Subsidiary to create, incur,
assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, provided that the Borrower
and any Subsidiary may enter into such an agreement in connection with property
subject to any Lien permitted by this Agreement and not released after the date
hereof, when such prohibition or limitation is by its terms effective only
against the assets subject to such Lien.
<PAGE> 80
ARTICLE X
Events of Default and Acceleration
X.1. Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan, Reimbursement Obligation or other
Obligation, when and as the same shall be due and payable whether
pursuant to any provision of Article II or Article III, at maturity,
by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan, Reimbursement Obligation or
other Obligation or of any fees or other amounts payable to any of the
Lenders or the Agent on the date on which the same shall be due and
payable; or
(c) if default shall be made in the performance or observance
of any covenant set forth in Section 8.7, 8.11, 8.12, 8.19 or Article
IX;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for 30 or more days after the earlier of receipt of notice of
such default by the Authorized Representative from the Agent (which
notice the Agent shall give on the request of any Lender), or if a
default shall be made in the performance or observance of, or shall
occur under, any covenant, agreement or provision contained in any of
the other Loan Documents (beyond any applicable grace period, if any,
contained therein) or in any instrument or document evidencing or
creating any obligation, guaranty, or Lien in favor of the Agent or
any of the Lenders or delivered to the Agent or any of the Lenders in
connection with or pursuant to this Agreement or any of the
Obligations, or if any Loan Document ceases to be in full force and
effect (other than by reason of any action by the Agent), or if
without the written consent of the Lenders, this Agreement or any
other Loan Document shall be disaffirmed or shall terminate, be
terminable or be terminated or become void or unenforceable for any
reason whatsoever (other than in accordance with its terms in the
absence of default or by reason of any action by the Lenders or the
Agent); or
(e) if there shall occur (i) a default, which is not waived,
in the payment of any principal, interest, premium or other amount
with respect to any Indebtedness or Rate Hedging Obligation (other
than the Loans and other Obligations) of the Borrower or any
<PAGE> 81
Subsidiary in an amount not less than $10,000,000 in the aggregate
outstanding, or (ii) a default, which is not waived, in the
performance, observance or fulfillment of any term or covenant
contained in any agreement or instrument under or pursuant to which
any such Indebtedness or Rate Hedging Obligation may have been issued,
created, assumed, guaranteed or secured by the Borrower or any
Subsidiary, or (iii) any other event of default as specified in any
agreement or instrument under or pursuant to which any such
Indebtedness or Rate Hedging Obligation may have been issued, created,
assumed, guaranteed or secured by the Borrower or any Subsidiary, and
such default or event of default referred to in clauses (i) through
(iii) shall continue for more than the period of grace, if any,
therein specified, or such default or event of default shall permit
the holder of any such Indebtedness (or any agent or trustee acting on
behalf of one or more holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of
fact contained in any Loan Document or in any writing, certificate,
report or statement at any time furnished to the Agent or any Lender
by or on behalf of the Borrower or any Subsidiary pursuant to or in
connection with any Loan Document, or otherwise, shall be false in any
material respect when given or shall fail to state a material fact; or
(g) if the Borrower or any Subsidiary shall be unable to pay
its debts generally as they become due; file a petition to take
advantage of any insolvency statute; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment of
a receiver, trustee, liquidator or conservator of itself or of the
whole or any substantial part of its property; file a petition or
answer seeking liquidation, reorganization or arrangement or similar
relief under the federal bankruptcy laws or any other applicable law
or statute; or
(h) if a court of competent jurisdiction shall enter an
order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any Subsidiary or of the
whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against the Borrower or
any Subsidiary seeking liquidation, reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state, which petition is not dismissed within sixty (60) days; or if,
under the provisions of any other law for the relief or aid of
debtors, a court of competent jurisdiction shall assume custody or
control of the Borrower or any Subsidiary or of the whole or any
substantial part of its properties, which control is not relinquished
within sixty (60) days; or if there is commenced against the Borrower
or any Subsidiary any proceeding or petition seeking reorganization,
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state which proceeding or petition remains undismissed for a period of
sixty (60) days; or if the Borrower or any Subsidiary takes any action
to indicate its consent to or approval of any such proceeding or
petition; or
<PAGE> 82
(i) if (i) one or more judgments or orders where the amount
not covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $1,000,000 is rendered against the Borrower
or any Subsidiary, or (ii) there is any attachment, injunction or
execution against any of the Borrower's or Subsidiaries' properties
for any amount in excess of $1,000,000 in the aggregate; and such
judgment, attachment, injunction or execution remains unpaid,
unstayed, undischarged, unbonded or undismissed for a period of
forty-five (45) days; or
(j) if the Borrower or any Subsidiary shall, other than in
the ordinary course of business (as determined by past practices),
suspend all or any part of its operations material to the conduct of
the business of the Borrower and its Subsidiaries, taken as a whole,
for a period of more than 60 days; or
(k) if the Borrower or any Subsidiary shall breach any of the
material terms or conditions of any agreement under which any Rate
Hedging Obligations permitted hereby is created and such breach shall
continue beyond any grace period, if any, relating thereto pursuant to
the terms of such agreement, or if the Borrower or any Subsidiary
shall disaffirm or seek to disaffirm any such agreement or any of its
obligations thereunder; or
(l) if there shall occur a Termination Event; or
(m) if there shall occur a Change in Control;
then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be
taken: (i) the Agent, with the consent of the Required
Lenders, may, and at the direction of the Required Lenders
shall, declare any obligation of the Lenders and the Issuing
Bank to make further Loans and Swing Line Loans or to issue
additional Letters of Credit terminated, whereupon the
obligation of each Lender to make further Loans, of
NationsBank to make further Swing Line Loans, and of the
Issuing Bank to issue additional Letters of Credit, hereunder
shall terminate immediately, and (ii) the Agent shall at the
direction of the Required Lenders, at their option, declare
by notice to the Borrower any or all of the Obligations to be
immediately due and payable, and the same, including all
interest accrued thereon and all other obligations of the
Borrower to the Agent and the Lenders, shall forthwith become
immediately due and payable without presentment, demand,
protest, notice or other formality of any kind, all of which
are hereby expressly waived, anything contained herein or in
any instrument evidencing the Obligations to the contrary
notwithstanding; provided, however, that notwithstanding the
above, if there shall occur an Event of Default under clause
(g) or (h) above, then the obligation of the Lenders to make
Loans, of NationsBank to make Swing Line Loans, and of the
<PAGE> 83
Issuing Bank to issue Letters of Credit hereunder shall
automatically terminate and any and all of the Obligations
shall be immediately due and payable without the necessity of
any action by the Agent or the Required Lenders or notice by
the Agent or the Lenders;
(B) The Borrower shall, upon demand of the Agent or
the Required Lenders, deposit cash with the Agent in an
amount equal to the amount of any Letter of Credit
Outstandings, as collateral security for the repayment of any
future drawings or payments under such Letters of Credit, and
such amounts shall be held by the Agent pursuant to the terms
of the LC Account Agreement; and
(C) the Agent and each of the Lenders shall have all
of the rights and remedies available under the Loan Documents
or under any applicable law.
X.2. Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or
in any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
X.3. Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right
or remedy shall be cumulative and shall be in addition to every other such
right or remedy contained herein and therein or now or hereafter existing at
law or in equity or by statute, or otherwise.
X.4. No Waiver. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
X.5. Allocation of Proceeds. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
Article X hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder, shall be applied by the Agent in the following order:
(a) amounts due to the Lenders pursuant to Sections 2.10,
3.3, 3.4 and 12.5;
(b) amounts due to the Agent pursuant to Section 11.8;
<PAGE> 84
(c) payments of interest on Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of
the LENDERS (with amounts payable in respect of Swing Line
Outstandings being included in such calculation and paid to
NationsBank);
(d) payments of principal of Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of
the Lenders (with amounts payable in respect of Swing Line
Outstandings being included in such calculation and paid to
NationsBank);
(e) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to Section 10.1(B);
(f) amounts due to the Lenders pursuant to Sections 3.2(g),
8.15 and 12.9;
(g) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the
Lenders;
(h) amounts due to any of the Lenders in respect of
Obligations consisting of liabilities under any Swap Agreement with
any of the Lenders on a pro rata basis according to the amounts owed;
and
(i) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable
law.
<PAGE> 85
ARTICLE XI
The Agent
X1.1. Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. The Agent (which term as used in this sentence and in
Section 11.5 and the first sentence of Section 11.6 hereof shall include its
affiliates and its own and its affiliates' officers, directors, employees, and
agents):
(a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee
or fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made
in or in connection with any Loan Document or any certificate or other
document referred to or provided for in, or received by any of them
under, any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Document, or
any other document referred to or provided for therein or for any
failure by any Loan Party or any other Person to perform any of its
obligations thereunder;
(c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of
any covenants or agreements by any Loan Party or the satisfaction of
any condition or to inspect the property (including the books and
records) of any Loan Party or any of its Subsidiaries or affiliates;
(d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted
to be taken by it under or in connection with any Loan Document,
except for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
XI.2. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) believed by it
to be genuine and correct and to have been signed, sent or made by or on behalf
of the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for any Loan Party), independent accountants, and
other experts
<PAGE> 86
selected by the Agent. The Agent may deem and treat the payee of
any Note as the holder thereof for all purposes hereof unless and until the
Agent receives and accepts an Assignment and Acceptance executed in accordance
with Section 12.1 hereof. As to any matters not expressly provided for by this
Agreement, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall
be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be binding on
all of the Lenders; provided, however, that the Agent shall not be required to
take any action that exposes the Agent to personal liability or that is
contrary to any Loan Document or applicable law unless it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking any such action.
XI.3. Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default
or Event of Default and stating that such notice is a "Notice of Default". In
the event that the Agent receives such a notice of the occurrence of a Default
or Event of Default, the Agent shall give prompt notice thereof to the Lenders.
The Agent shall (subject to Section 11.2 hereof) take such action with respect
to such Default or Event of Default as shall reasonably be directed by the
Required Lenders, provided that, unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of the
Lenders.
XI.4. Rights as a Lender. With respect to its Revolving Credit
Commitment and Line of Credit Commitment and the Loans made by it, NationsBank
(and any successor acting as Agent) in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. NationsBank (and any successor acting as Agent) and
its affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any Loan
Party or any of its Subsidiaries or affiliates as if it were not acting as
Agent, and NationsBank (and any successor acting as Agent) and its affiliates
may accept fees and other consideration from any Loan Party or any of its
Subsidiaries or affiliates for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
XI.5. Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Section 12.9 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with
their respective Revolving Credit and Line of Credit Commitments, for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys' fees), or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Agent (including by any Lender) in any way relating to or arising
out of any Loan Document or the transactions
<PAGE> 87
contemplated thereby or any action taken or omitted by the Agent under any Loan
Document; provided that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Person to be indemnified. Without limitation of the foregoing, each Lender
agrees to reimburse the Agent promptly upon demand for its ratable share of any
costs or expenses payable by the Borrower under Section 12.5, to the extent
that the Agent is not promptly reimbursed for such costs and expenses by the
Borrower. The agreements contained in this Section 11.5 shall survive payment
in full of the Loans and all other amounts payable under this Agreement.
XI.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Loan Parties and their Subsidiaries and decision
to enter into this Agreement and that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under the Loan Documents.
Except for notices, reports, and other documents and information expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition, or business of
any Loan Party or any of its Subsidiaries or affiliates that may come into the
possession of the Agent or any of its affiliates.
XI.7. Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent, and, so
long as there is no Default or Event of Default, such successor shall be
approved by the Borrower, which approval shall not be unreasonably withheld. If
no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor, such successor shall thereupon
succeed to and become vested with all the rights, powers, discretion,
privileges, and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article XI shall
continue in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as Agent.
XI.8. Fees. The Borrower agrees to pay to the Agent, for its
individual account, an annual Agent's administrative fee as from time to time
agreed to by the Borrower and Agent in writing.
XI.9. Security Trustee. The Agent shall be the "Security Trustee"
under any of those Pledge Agreements which are expressed to be governed by
English Law and shall accept without
<PAGE> 88
investigation, requisition or objection such title as any person may have to
the assets which are subject to the English Pledge Agreements and shall not (a)
be bound or concerned to examine or inquire into the title of any person; (b)
be liable for any defect or failure in the title of any person, whether such
defect or failure was known to it or might have been discovered upon
examination or inquiry and whether capable of remedy or not; (c) be liable for
any failure on its part to give notice of such Pledge Agreement to any third
party or otherwise perfect or register the security created by such Pledge
Agreement.
The Security Trustee shall hold the benefit of the English Pledge
Agreements upon trust for itself, the Lenders and the Agent. Upon the
appointment of any successor Security Trustee, the resigning Security Trustee
shall execute and deliver such documents and do such other acts and things as
may be necessary to vest in the successor Security Trustee all the rights,
title and interests vested in the resigning Security Trustee.
<PAGE> 89
ARTICLE XII
Miscellaneous
XII.1. Assignments and Participations. (a) Each Lender may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans, its Note, and its Revolving Credit Commitment and Line of Credit
Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this Agreement,
any such partial assignment shall be in an amount at least equal to $5,000,000
or an integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under this
Agreement and the Notes; and
(iv) the parties to such assignment shall execute and
deliver to the Agent for its acceptance an Assignment and Acceptance in the
form of Exhibit B hereto, together with any Note subject to such assignment and
a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement (other than the
rights set forth in Sections 12.5 and 12.9). Upon the consummation of any
assignment pursuant to this Section, the assignor, the Agent and the Borrower
shall make appropriate arrangements so that, if required, new Notes are issued
to the assignor and the assignee. If the assignee is not incorporated under the
laws of the United States of America or a state thereof, it shall deliver to the
Borrower and the Agent certification as to exemption from deduction or
withholding of Taxes in accordance with Section 5.6.
(b) The Agent shall maintain at its address referred to in Section
12.2 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Revolving Credit Commitment and Line of Credit Commitment of, and principal
amount of the Loans owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
<PAGE> 90
(c) Upon its receipt of an Assignment and Acceptance executed by
the parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit B
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(d) Each Lender may sell participations to one or more Persons in
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Revolving Credit Commitment, Line of Credit Commitment
and its Loans); provided, however, 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,
(iii) the participant shall be entitled to the benefit of the yield protection
provisions contained in Article V and the right of set-off contained in Section
12.3, and (iv) the Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Loans and its Note and to approve
any amendment, modification, or waiver of any provision of this Agreement (other
than amendments, modifications, or waivers decreasing the amount of principal of
or the rate at which interest is payable on such Loans or Note, extending any
scheduled principal payment date or date fixed for the payment of interest on
such Loans or Note, or extending its Revolving Credit Commitment or Line of
Credit Commitment). No sale of any participation hereunder shall give rise to
Taxes or increased costs payable by the Borrower under Section 5.6 hereof, or
otherwise increase or expose the Borrower to any obligation or liability
hereunder or reduce any rights or benefits to the Borrower hereunder.
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any portion of
its Loans and its Note to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.
(f) Subject to Section 12.14, any Lender may furnish any
information concerning the Borrower or any of its Subsidiaries in the possession
of such Lender from time to time to assignees and participants (including
prospective assignees and participants).
XII.2. Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day after
the day on which mailed, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address, telex number or telefacsimile number,
<PAGE> 91
as appropriate, set forth below or such other address or number as such party
shall specify by notice hereunder:
(a) if to the Borrower:
Catalina Marketing Corporation
11300 9th Street North
St. Petersburg, Florida 33716
Attn: Philip B. Livingston
Telephone: (813) 579-5000
Telefacsimile: (813) 579-5297
(b) if to the Agent:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-2374
Telefacsimile: (704) 386-9923
with a copy to:
NationsBank, National Association
400 North Ashley Drive, Second Floor
Tampa, Florida 33602
Attention: Miles Dearden, Corporate Finance
Telephone: (813) 224-5194
Telefacsimile: (813) 224-5948
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance;
(d) if to any other Loan Party, at the address set forth
on the signature page of the Facility Guaranty or
Security Instrument executed by such Loan Party, as
the case may be.
XII.3. Right of Set-off; Adjustments. (a) Upon the
<PAGE> 92
occurrence and during the continuance of any Event of Default, 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 indebtedness at any time owing by such Lender (or any of its
affiliates) to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement and the Note held by such Lender, irrespective of whether such Lender
shall have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Lender under this Section 12.3 are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender may have.
(b) If any Lender (a "benefitted Lender") shall at any time
receive any payment of all or part of the Loans owing to it, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in respect of
such other Lender's Loans owing to it, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loans owing to it, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. The Borrower agrees that any
Lender so purchasing a participation from a Lender pursuant to this Section 12.3
may, to the fullest extent permitted by law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Person were the direct creditor of the Borrower in the amount
of such participation.
XII.4. Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
commitment hereunder or the Borrower has continuing obligations hereunder unless
otherwise provided herein. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lenders or
any of them.
XII.5. Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Agent in connection with the syndication, preparation,
execution, delivery, administration, modification, and amendment of this
Agreement, the other Loan Documents, and the other
<PAGE> 93
documents to be delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for the Agent (including the cost of
internal counsel) with respect thereto and with respect to advising the Agent as
to its rights and responsibilities under the Loan Documents subject to the
limitations set forth in the commitment letter dated August 5, 1997. The
Borrower further agrees to pay on demand all costs and expenses of the Agent and
the Lenders, if any (including, without limitation, reasonable attorneys' fees
and expenses and the cost of internal counsel), in connection with the
enforcement (whether through negotiations, legal proceedings, or otherwise) of
the Loan Documents and the other documents to be delivered hereunder.
XII.6. Amendments and Waivers. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Required Lenders
(and, if Article XI or the rights or duties of the Agent are affected thereby,
by the Agent); provided that no such amendment or waiver shall, unless signed by
all the Lenders, (i) increase the Revolving Credit Commitments or Line of Credit
Commitments of the Lenders, (ii) reduce the principal of or rate of interest on
any Loan or any fees or other amounts payable hereunder, (iii) postpone any date
fixed for the payment of any scheduled installment of principal of or interest
on any Loan or any fees or other amounts payable hereunder or for termination of
any Revolving Credit Commitment or Line of Credit Commitment, (iv) change the
percentage of the Revolving Credit and Line of Credit Commitments or of the
unpaid principal amount of the Notes, or the number of Lenders, which shall be
required for the Lenders or any of them to take any action under this Section
12.6 or any other provision of this Agreement or (v) release any Guarantor or
all or any material portion of the Collateral; and provided, further, that no
such amendment or waiver that affects the rights, privileges or obligations of
NationsBank as provider of Swing Line Loans, shall be effective unless signed in
writing by NationsBank or that affects the rights, privileges or obligations of
the Issuing Bank as issuer of Letters of Credit, shall be effective unless
signed in writing by the Issuing Bank;
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent shall not be deemed
conclusive evidence that the Agent has obtained the written consent of the
Required Lenders. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.
XII.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
XII.8. Termination. The termination of this Agreement shall not
affect any rights of the
<PAGE> 94
Borrower, the Lenders or the Agent or any obligation of the Borrower, the
Lenders or the Agent, arising prior to the effective date of such termination,
and the provisions hereof shall continue to be fully operative until all
transactions entered into or rights created or obligations incurred prior to
such termination have been fully disposed of, concluded or liquidated and the
Obligations arising prior to or after such termination have been irrevocably
paid in full. The rights granted to the Agent for the benefit of the Lenders
under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the termination hereof (other than Obligations in
the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue) or the Borrower has furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and each
Lender with respect thereto. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until payment
in full of the Obligations unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment of all or any part of the
Obligations, any Lender is for any reason compelled to surrender such payment to
any Person because such payment is determined to be void or voidable as a
preference, impermissible setoff, a diversion of trust funds or for any other
reason, this Agreement shall continue in full force and the Borrower shall be
liable to, and shall indemnify and hold the Agent or such Lender harmless for,
the amount of such payment surrendered until the Agent or such Lender shall have
been finally and irrevocably paid in full. The provisions of the foregoing
sentence shall be and remain effective notwithstanding any contrary action which
may have been taken by the Agent or the Lenders in reliance upon such payment,
and any such contrary action so taken shall be without prejudice to the Agent or
the Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
XII.9. Indemnification; Limitation of Liability. (a) The Borrower
agrees to indemnify and hold harmless the Agent and each Lender and each of
their affiliates and their respective officers, directors, employees, agents,
and advisors (each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation, or proceeding or preparation of defense in
connection therewith) the Loan Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans, except to the
extent such claim, damage, loss, liability, cost, or expense is found in a
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 12.9 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
directors, shareholders or creditors or an Indemnified Party or any other Person
or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. The Borrower agrees not to
assert any claim against the Agent, any Lender, any of their affiliates, or any
of their respective directors, officers, employees, attorneys, agents, and
advisers, on any theory of liability, for special, indirect, consequential, or
punitive damages arising out of or otherwise
<PAGE> 95
relating to the Loan Documents, any of the transactions contemplated herein or
the actual or proposed use of the proceeds of the Loans.
(b) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 12.9 shall survive the payment in full of the Loans and all
other amounts payable under this Agreement.
XII.10. Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
XII.11. Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.
XII.12. Agreement Controls. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
XII.13. Usury Savings Clause. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, the
Borrower shall pay to the Agent an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid if
the Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which
<PAGE> 96
are presently in effect or, to the extent allowed by law, under such applicable
laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow.
XII.14. Confidentiality. The Agent and each Lender (each a "Lending
Party") agrees to keep confidential any information furnished or made available
to it by the Borrower pursuant to this Agreement that is marked confidential;
provided that nothing herein shall prevent any Lending Party from disclosing
such information (a) to any other Lending Party or any affiliate of any Lending
Party, or any officer, director, employee, agent, or advisor of any Lending
Party or affiliate of any Lending Party, (b) to any other Person if reasonably
incidental to the administration of the credit facility provided herein, (c) as
required by any law, rule, or regulation, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure by
any Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Agreement or any other Loan Document, and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.
XII.15. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE.
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
PINELLAS, STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY
SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWER
HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
<PAGE> 97
(c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER
PROVIDED IN SECTION 12.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED
FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA.
(d) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY
THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO
THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER
APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE
AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
[Signatures on following pages]
<PAGE> 98
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
made, executed and delivered by their duly authorized officers as of the day and
year first above written.
CATALINA MARKETING CORPORATION
WITNESS:
/s/ John Halek By: /s/ Bruce Valentine
- ------------------------- -----------------------
Name: Bruce Valentine
/s/ Lucy L. Tate Title: Treasurer
- -------------------------
Signature Page 1 of 1
<PAGE> 99
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By:/s/ Miles C. Dearden III
-------------------------------------
Name: Miles C. Dearden III
Title: Senior Vice President
NATIONSBANK, NATIONAL ASSOCIATION
By:/s/ Miles C. Dearden III
-------------------------------------
Name: Miles C. Dearden III
Title: Senior Vice President
Lending Office:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Herbert Boyd
Telephone: (704) 386-
Telefacsimile: (704) 386-
Wire Transfer Instructions:
NationsBank, National Association
ABA# 063100277
Account No.: 1366212163
Reference: Catalina Marketing
Attention: Corporate Credit Services
E-1
<PAGE> 100
FLEET NATIONAL BANK, as Documentation
Agent and as a Lender
By: /s/ Thomas J. Bullard
---------------------------
Name: Thomas J. Bullard
--------------------------
Title: Vice President
------------------------
Lending Office:
One Federal Street
MAOF 0320
Boston, Massachusetts 02110
Wire Transfer Instructions:
Fleet National Bank
Boston, Massachusetts 02110
ABA #011-000-138
Account #1510351-03156
Attention: Mike Araujo
E-2
<PAGE> 101
BARNETT BANK, N.A. PINELLAS
By: /s/ Michael S. Crowe
--------------------------
Name: Michael S. Crowe
-------------------------
Title: Senior Vice President
------------------------
Lending Office:
200 Central Avenue
Suite 1800
St. Petersburg, Florida 33701
Wire Transfer Instructions:
Barnett Bank, N.A.
Jacksonville, Florida
ABA #063000047
Account #01396-10231
Attention: Commercial Loan Operations
Reference: Catalina Marketing
E-3
<PAGE> 102
FIRST UNION NATIONAL BANK
By: /s/ Jorge Gonzales
--------------------------
Name: Jorge Gonzales
-------------------------
Title: Senior Vice President
-----------------------
Lending Office:
310 S. College Street, 5th Floor
Charlotte, North Carolina 28288-0737
Wire Transfer Instructions:
First Union National Bank
ABA #053-000-219
Account #2070482789126
Attention: Greg Fiato (704-383-9831)
(704-374-6537 - fax)
Reference: Catalina Marketing Corporation
E-4
<PAGE> 103
THE SUMITOMO BANK, LIMITED
By: /s/ Jeffrey N. Frost
----------------------------
Name: Jeffery N. Frost
---------------------------
Title: Vice President & Manager
--------------------------
Regional Credit (East)
By: /s/ Brian M. Smith
-----------------------------
Name: Brian M. Smith
----------------------------
Title: Senior Vice President &
Regional Manager (East)
----------------------------
Lending Office:
100 S. Ashley Drive
Suite 1780
Tampa, Florida 33602
Wire Transfer Instructions:
Sumitomo Bk Chgl
Chicago, Illinois
ABA #071001850
Account: Catalina
Attention: Loans Administration
E-5
<PAGE> 104
CREDIT LYONNAIS ATLANTA AGENCY
By: /s/ David M. Cawrse
------------------------------------
Name: David M. Cawrse
------------------------------------
Title: First Vice President & Manager
-----------------------------------
Lending Office:
303 Peachtree Street, N.E.
Suite 4400
Atlanta, Georgia 30308
Wire Transfer Instructions:
Credit Lyonnais New York Branch
New York, New York 10019
ABA #0260-0807-3
Account #01.24173.0001.00
Credit: Credit Lyonnais Atlanta Agency
Attention: Loan Servicing
Reference: Catalina
E-6
<PAGE> 105
COMERICA BANK
By: /s/ Martin G. Ellis
----------------------------
Name: Martin G. Ellis
----------------------------
Title: Vice President
----------------------------
Lending Office:
500 Woodward Avenue, 9th Floor
MC 3280
Detroit, Michigan 48275-3280
Wire Transfer Instructions:
Comerica Bank
ABA #072000096
Account #02-21585-90010
Attention: Commercial Loan Servicing
Reference: Catalina Marketing Corporation
E-7
<PAGE> 106
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: /s/ Philip A. Marsden
-----------------------------
Name: Philip A. Marsden
-----------------------------
Title: Senior Vice President
-----------------------------
Lending Office:
165 Broadway
New York, New York 10006
Wire Transfer Instructions:
Chase Manhattan Bank
ABA #021 000 021
Account: The Long-Term Credit Bank of Japan
New York Branch
Account #544-7-75066
E-8
<PAGE> 107
PNC BANK, KENTUCKY, INC.
By: /s/ Ralph M. Bowman
------------------------
Name: Ralph M. Bowman
------------------------
Title: Vice President
------------------------
Lending Office:
500 W. Jefferson Street
Louisville, Kentucky 40202
Wire Transfer Instructions:
PNC Bank, Kentucky, Inc.
Louisville, Kentucky
ABA #083000108
Account #3000991434
Attention: Commercial Loan Operations
Reference:Catalina
E-9
<PAGE> 108
EXHIBIT F-1
Form of Revolving Note
Promissory Note
(Revolving Loan)
$ Charlotte, North Carolina
- -------------------------
September 30, 1997
FOR VALUE RECEIVED, CATALINA MARKETING CORPORATION, a Delaware corporation
having its principal place of business located in St. Petersburg, Florida (the
"Borrower"), hereby promises to pay to the order of ___________________________
(the "Lender"), in its individual capacity, at the office of NATIONSBANK,
NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"), located at One
Independence Center, 101 North Tryon Street, NC1-001-15-04, Charlotte, North
Carolina 28255 (or at such other place or places as the Agent may designate in
writing) at the times set forth in the Credit Agreement dated as of September
30, 1997 among the Borrower, the financial institutions party thereto
(collectively, the "Lenders") and the Agent (the "Agreement" -- all capitalized
terms not otherwise defined herein shall have the respective meanings set forth
in the Agreement), in lawful money of the United States of America, in
immediately available funds, the principal amount of ___________ DOLLARS
($__________) or, if less than such principal amount, the aggregate unpaid
principal amount of all Revolving Loans made by the Lender to the Borrower
pursuant to the Agreement on the Revolving Credit Termination Date or such
earlier date as may be required pursuant to the terms of the Agreement, and to
pay interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates provided in Article II of
the Agreement. All or any portion of the principal amount of Loans may be
prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement or under the terms of the other Loan Documents executed in connection
with the Agreement, the then remaining principal amount and accrued but unpaid
interest shall bear interest which shall be payable on demand at the rates per
annum set forth in the proviso to Section 2.2 (a) of the Agreement. Further, in
the event of such acceleration, this Revolving Note shall become immediately due
and payable, without presentation, demand, protest or notice of any kind, all of
which are hereby waived by the Borrower.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.
Signature Page 1 of 3
<PAGE> 109
Interest hereunder shall be computed as provided in the Agreement.
This Revolving Note is one of the Revolving Notes referred to in the
Agreement and is issued pursuant to and entitled to the benefits and security of
the Agreement to which reference is hereby made for a more complete statement of
the terms and conditions upon which the Revolving Loans evidenced hereby were or
are made and are to be repaid. This Revolving Note is subject to certain
restrictions on transfer or assignment as provided in the Agreement.
This Revolving Note shall be governed by and construed in accordance with
the internal substantive laws of the State of Florida.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
protest, notice of protest, notice of dishonor, diligence or any other notices
or demands in connection with the enforcement of this Revolving Note.
Signature Page 2 of 3
<PAGE> 110
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
CATALINA MARKETING CORPORATION
WITNESS:
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
Signature Page 3 of 3
<PAGE> 111
EXHIBIT F-2
Form of Line of Credit Note
Promissory Note
(Line of Credit Loan)
$ Charlotte, North Carolina
-----------------------
September 30, 1997
FOR VALUE RECEIVED, CATALINA MARKETING CORPORATION, a Delaware corporation
having its principal place of business located in St. Petersburg, Florida (the
"Borrower"), hereby promises to pay to the order of ___________________________
(the "Lender"), in its individual capacity, at the office of NATIONSBANK,
NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"), located at One
Independence Center, 101 North Tryon Street, NC1-001-15-04, Charlotte, North
Carolina 28255 (or at such other place or places as the Agent may designate in
writing) at the times set forth in the Credit Agreement dated as of September
30, 1997 among the Borrower, the financial institutions party thereto
(collectively, the "Lenders") and the Agent (the "Agreement" -- all capitalized
terms not otherwise defined herein shall have the respective meanings set forth
in the Agreement), in lawful money of the United States of America, in
immediately available funds, the principal amount of _____________________
DOLLARS ($______________) or, if less than such principal amount, the aggregate
unpaid principal amount of all Line of Credit Loans made by the Lender to the
Borrower pursuant to the Agreement, and to pay interest from the date hereof on
the unpaid principal amount hereof, in like money, at said office, on the dates
and at the rates provided in Article II of the Agreement. All or any portion of
the principal amount of Loans may be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement or under the terms of the other Loan Documents executed in connection
with the Agreement, the then remaining principal amount hereof and accrued but
unpaid interest thereon shall bear interest which shall be payable on demand at
the rates per annum set forth in the proviso to Section 2.2(a) of the Agreement.
Further, in the event of such acceleration, this Line of Credit Note shall
become immediately due and payable, without presentation, demand, protest or
notice of any kind, all of which are hereby waived by the Borrower.
In the event this Line of Credit Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest due hereunder, all costs of collection, including reasonable
attorneys' fees, and interest thereon at the rates set forth above.
Signature Page 1 of 3
<PAGE> 112
Interest hereunder shall be computed as provided in the Agreement.
This Line of Credit Note is one of the Line of Credit Notes referred to in
the Agreement and is issued pursuant to and entitled to the benefits and
security of the Agreement to which reference is hereby made for a more complete
statement of the terms and conditions upon which the Line of Credit Loans
evidenced hereby were or are made and are to be repaid. This Line of Credit Note
is subject to certain restrictions on transfer or assignment as provided in the
Agreement.
This Line of Credit Note shall be governed by and construed in accordance
with the internal substantive laws of the State of Florida.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
protest, notice of protest, notice of dishonor, diligence or any other notices
or demands in connection with the enforcement of this Line of Credit Note.
Signature Page 2 of 3
<PAGE> 113
IN WITNESS WHEREOF, the Borrower has caused this Line of Credit Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.
CATALINA MARKETING CORPORATION
WITNESS:
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Signature Page 3 of 3
<PAGE> 114
EXHIBIT F-3
Form of Swing Line Note
Promissory Note
(Swing Line Loan)
$10,000,000 Charlotte, North Carolina
September 30, 1997
FOR VALUE RECEIVED, CATALINA MARKETING CORPORATION, a Delaware corporation
having its principal place of business located in St. Petersburg, Florida (the
"Borrower"), hereby promises to pay to the order of
NATIONSBANK, NATIONAL ASSOCIATION (the "Lender"), in its individual
capacity, at the office of NATIONSBANK, NATIONAL ASSOCIATION, as agent for the
Lenders (the "Agent"), located at One Independence Center, 101 North Tryon
Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place
or places as the Agent may designate in writing) at the times set forth in the
Credit Agreement dated as of September 30, 1997 among the Borrower, the
financial institutions party thereto (collectively, the "Lenders") and the Agent
(the "Agreement" -- all capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement), in lawful money of the
United States of America, in immediately available funds, the aggregate unpaid
principal amount of the Swing Line Loans made by the Lender to the Borrower
pursuant to the Agreement and to pay interest on the unpaid principal amount of
each such Swing Line Loan, in like money, at said office, for the period
commencing on the date of such Swing Line Loan until such Swing Line Loan shall
be paid in full, on the dates and at the rates provided in Article II of the
Agreement. All or any portion of the principal amount of Swing Line Loans may be
prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement or under the terms of the other Loan Documents executed in connection
with the Agreement, the then remaining principal amount of Loans and accrued but
unpaid interest thereon shall bear interest which shall be payable on demand at
the rates per annum set forth in the proviso to Section 2.2(a) of the Agreement.
Further, in the event of such acceleration, this Swing Line Note shall become
immediately due and payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
In the event any amount evidenced by this Swing Line Note is not paid when
due at any stated or accelerated maturity, the Borrower agrees to pay, in
addition to the principal and interest, all costs of collection, including
reasonable attorneys' fees, and interest due hereunder
Signature Page 1 of 3
<PAGE> 115
thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
This Swing Line Note is one of the Notes referred to in the Agreement and
is issued pursuant to and entitled to the benefits and security of the Agreement
to which reference is hereby made for a more complete statement of the terms and
conditions upon which the Swing Line Loans evidenced hereby were or are made and
are to be repaid. This Swing Line Note is subject to certain restrictions on
transfer or assignment as provided in the Agreement.
This Swing Line Note shall be governed by and construed in accordance with
the internal substantive laws of the State of Florida.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
protest, notice of protest, notice of dishonor, diligence or any other notices
or demands in connection with the enforcement of this Swing Line Note.
[remainder of page intentionally left blank]
Signature Page 2 of 3
<PAGE> 116
IN WITNESS WHEREOF, the Borrower has caused this Swing Line Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.
CATALINA MARKETING CORPORATION
WITNESS:
By:
- -------------------------- -----------------------
Name:
- -------------------------- -----------------------
Title:
----------------------
Signature Page 3 of 3
<PAGE> 117
EXHIBIT J
Form of Pledge Agreement
DOMESTIC SUBSIDIARIES PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as of
this __ day of _______, 199__ by and between CATALINA MARKETING WORLDWIDE, INC.,
a Delaware corporation (the "Subsidiary Pledgor"), CATALINA MARKETING
CORPORATION, a Delaware corporation (the "Borrower" and together with the
Subsidiary Pledgor the "Pledgors") and NATIONSBANK, NATIONAL ASSOCIATION, a
national banking association, as Agent (the "Agent" or "Secured Party") for each
of the lenders (the "Lenders") now or hereafter party to the Credit Agreement
(as defined below). All capitalized terms used but not otherwise defined herein
shall have the respective meanings assigned thereto in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide the Borrower with
revolving credit and letter of credit facilities pursuant to the terms of that
certain Credit Agreement dated as of September 30, 1997 among the Borrower, the
Agent and the Lenders (as from time to time amended, supplemented or restated,
the "Credit Agreement"); and
WHEREAS, the Subsidiary Pledgor is a wholly owned Subsidiary of the
Borrower and thus has a substantial financial interest in the Borrower; and
WHEREAS, as a condition precedent to entering into the Credit Agreement,
the Subsidiary Pledgor has entered into a certain Guaranty and Suretyship
Agreement dated September ___, 1997 (as from time to time amended, supplemented
or restated, the "Facility Guaranty") pursuant to which the Subsidiary Pledgor,
along with certain other Subsidiaries of the Borrower, has jointly and severally
guaranteed the payment and performance of the Guaranteed Obligations, as defined
therein; and
WHEREAS, as collateral security for payment and performance of the
Borrower's Obligations under the Credit Agreement and the Subsidiary Pledgor's
obligations under the Facility Guaranty, the Pledgors are willing to pledge and
grant to the Agent for the benefit of the Lenders a security interest in all the
issued and outstanding shares of capital stock owned by each of them and listed
on Schedule I hereto (the "Pledged Stock");
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
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<PAGE> 118
2. PLEDGE OF STOCK; OTHER COLLATERAL.
(A) As collateral security for the payment and performance of all debts,
obligations or liabilities now or hereafter existing, absolute or contingent, of
(1) all of the Borrower's Obligations under the Credit Agreement and (2) the
Guaranteed Obligations, as defined in the Facility Guaranty, of the Subsidiary
Pledgor (collectively, the "Secured Obligations"), and subject to Section 10
hereof, the Pledgor hereby pledges, collaterally assigns and grants to the Agent
for the benefit of the Secured Party a first priority security interest in the
Pledged Stock and all of the following:
a. all cash, securities, dividends, rights, and other property at
any time and from time to time declared or distributed in respect of or
in exchange for any or all of such Pledged Stock; and
b. all other property hereafter delivered to the Agent in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such property and all cash,
securities, interest, dividends, rights, and other property at any time
and from time to time declared or distributed in respect of or in exchange
for any or all of the Pledged Stock.
All such Pledged Stock, certificates, instruments, cash, securities, interest,
dividends, rights and other property referred to in this Section 1 are herein
collectively referred to as the "Collateral." All of the Pledged Stock is
currently owned by the Pledgor and represented by the stock certificates listed
on Schedule I hereto, which stock certificates, with stock powers duly executed
in blank by the Pledgor owning beneficially and of record such Pledged Stock,
are being delivered to the Agent simultaneously herewith.
(B) The Pledgor agrees to deliver all the Collateral to the Agent at such
location as the Agent shall from time to time designate by written notice
pursuant to Section 19 hereof for its custody at all times until termination of
this Agreement, together with such instruments of assignment and transfer as
requested by the Agent.
(C) All advances, charges, costs and expenses, including reasonable
attorneys' fees, incurred or paid by the Agent or any Lender in exercising any
right, power or remedy conferred by this Agreement, or in the enforcement
thereof, shall become a part of the Secured Obligations secured hereunder and
shall be paid to the Agent for the benefit of the Lenders by the Pledgor,
immediately upon demand therefor, with interest thereon until paid in full at
the Base Rate or, if an Event of Default has occurred and is continuing, at the
Default Rate.
3. STATUS OF PLEDGED STOCK. The Pledgor hereby represents and warrants to
the Agent for the benefit of the Lenders that (a) all of the shares of Pledged
Stock are validly issued and outstanding, fully paid and nonassessable and
constitute all of the issued and outstanding shares of capital stock of each
issuer thereof (the "Issuer") as listed on Schedule I, (b) the
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<PAGE> 119
Pledgor is the registered and record and beneficial owner of its Pledged Stock,
free and clear of all Liens, charges, equities, encumbrances and restrictions on
pledge or transfer (other than the pledge hereunder and applicable restrictions
pursuant to federal and state securities laws and Liens permitted under the
Credit Agreement), (c) it has full corporate power, legal right and lawful
authority to execute this Agreement and to pledge, assign and transfer its
Pledged Stock in the manner and form hereof, and (d) the pledge, assignment and
delivery of its Pledged Stock to the Agent for the benefit of the Lenders
pursuant to this Agreement creates or continues, as applicable, a valid and
perfected first priority security interest in such Pledged Stock, securing the
payment of the Secured Obligations, assuming continuous and uninterrupted
possession thereof by the Agent. Except as otherwise expressly provided herein
or in the Credit Agreement, none of the Pledged Stock (nor any interest therein
or thereto) shall be sold, transferred or assigned without the Agent's prior
written consent, which may be withheld for any reason. The Pledgor covenants
with the Agent for the benefit of the Lenders that it shall at all times cause
its Pledged Stock to be represented by the certificates now and hereafter
delivered to the Agent in accordance with Section 1 hereof and that it shall
cause each of the Issuers not to issue any capital stock, or securities
convertible into capital stock, at any time during the term of this Agreement
other than to the Borrower or another Guarantor who shall immediately pledge
such additional capital stock to the Agent on substantially identical terms as
are contained herein.
4. PRESERVATION AND PROTECTION OF COLLATERAL.
(A) The Agent shall be under no duty or liability with respect to the
collection, protection or preservation of the Collateral, or otherwise, beyond
the use of reasonable care in the custody and preservation thereof while in its
possession.
(B) The Pledgor agrees to pay when due all taxes, charges, Liens (except to
the extent otherwise permitted under the Credit Agreement) and assessments
against the Collateral, unless being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves have been
established in accordance with GAAP applied on a Consistent Basis. Upon the
failure of the Pledgor to so pay or contest such taxes, charges, Liens or
assessments (except to the extent permitted under the Credit Agreement), the
Agent at its option may pay or contest any of them (the Agent having the sole
right to determine the legality or validity and the amount necessary to
discharge such taxes, charges, Liens or assessments).
5. DEFAULT. Should the Pledgor fail to pay the Agent all Secured
Obligations as of the end of the Business Day on which such Secured Obligations
become due and payable and after the expiration of all grace or cure periods, if
any, and all extensions or waivers, if any, and should such failure continue, or
should any other Event of Default set forth in the Credit Agreement occur and be
continuing, or should the Pledgor fail otherwise to comply with the terms hereof
and such failure shall continue for 30 days (any of the foregoing an "Event of
Default"), the Agent is given full power and authority, then or at any time
thereafter, to sell, assign and deliver or collect the whole or any part of the
collateral, or any substitute therefor or any addition thereto, in one or more
sales, with or without any previous demands or demand of
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<PAGE> 120
performance or, to the extent permitted by law, notice or advertisement, in such
order as the Agent may elect; and any such sale may be made either at public or
private sale at the Agent's place of business or elsewhere, either for cash or
upon credit or for future delivery, at such price as the Agent may reasonably
deem fair; and the Agent may be the purchaser of any or all Collateral so sold
and hold the same thereafter in its own right free from any claim of the Pledgor
or right of redemption. Demands of performance, advertisements and presence of
property and sale and notice of sale are hereby waived to the extent permissible
by law. Any sale hereunder may be conducted by an auctioneer or any officer or
agent of the Agent. Pledgor recognizes that the Agent may be unable to effect a
public sale of the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
law, and may be otherwise delayed or adversely affected in effecting any sale by
reason of present or future restrictions thereon imposed by governmental
authorities, and that as a consequence of such prohibitions and restrictions the
Agent may be compelled (i) to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire the stock for their own account, for investment and not with a view
to the distribution or resale thereof, or (ii) to seek regulatory approval of
any proposed sale or sales, or (iii) to limit the amount of Collateral sold to
any Person or group. The Pledgor agrees and acknowledges that private sales so
made may be at prices and upon terms less favorable to Pledgor than if such
Collateral was sold either at public sales or at private sales not subject to
other regulatory restrictions, and that the Agent has no obligation to delay the
sale of any of the Collateral for the period of time necessary to permit the
Issuer of such Collateral to register or otherwise qualify them, even if such
Issuer would agree to register or otherwise qualify such Collateral for public
sale under the Securities Act or applicable state law. The Pledgor further
agrees, to the extent permitted by applicable law, that the use of private sales
made under the foregoing circumstances to dispose of the Collateral shall be
deemed to be dispositions in a commercially reasonable manner. The Pledgor
hereby acknowledges that a ready market may not exist for the Pledged Stock if
they are not traded on a national securities exchange or quoted on an automated
quotation system and agrees and acknowledges that in such event the Pledged
Stock may be sold for an amount less than a pro rata share of the fair market
value of the Issuer's assets minus its liabilities. In addition to the
foregoing, the Secured Party and the Lenders may exercise such other rights and
remedies as may be available under the Loan Documents, at law (including without
limitation the Uniform Commercial Code of the state of Florida) or in equity.
6. PROCEEDS OF SALE. The proceeds of the sale of any of the Collateral and
all sums received or collected from or on account of such Collateral shall be
applied to the payment of expenses incurred or paid by the Agent in connection
with any sale, transfer or delivery of the Collateral, to the payment of any
other costs, charges, reasonable attorneys' fees or expenses mentioned herein,
and to the payment of the Secured Obligations or any part thereof, all in such
order and manner as provided in Section 10.5 of the Credit Agreement. The Agent
shall, upon satisfaction in full of all such Secured Obligations, pay any
balance to the Pledgor.
7. PRESENTMENTS, ETC. The Agent shall not be under any duty or obligation
whatsoever to make or give any presentments, demands for performances, notices
of nonper-
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<PAGE> 121
formance, protests, notice of protest or notice of dishonor in connection with
any obligations or evidences of indebtedness held thereby as collateral, or in
connection with any obligations or evidences of indebtedness which constitute in
whole or in part the Secured Obligations secured hereunder.
8. ATTORNEY-IN-FACT. The Pledgor hereby appoints the Agent as the Pledgor's
attorney-in-fact for the purposes of carrying out the provisions of this
Agreement and taking any action and executing any instrument which the Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest; provided, that the Agent shall have
and may exercise rights under this power of attorney only upon the occurrence
and during the continuance of a Default or an Event of Default. Without limiting
the generality of the foregoing, upon the occurrence and during the continuance
of a Default or an Event of Default, the Agent shall have the right and power to
receive, endorse and collect all checks and other orders for the payment of
money made payable to the Pledgor representing any dividend, interest payment,
principal payment or other distribution payable or distributable in respect to
the Collateral or any part thereof and to give full discharge for the same.
9. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured Party, and
all obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(A) any lack of validity or enforceability of the Credit Agreement,
any other Loan Document or any other agreement or instrument relating to
any of the Secured Obligations;
(B) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Agreement, any
other Loan Document or any other agreement or instrument relating to any
of the Secured Obligations;
(C) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(D) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Secured Obligations or of this Agreement.
10. WAIVER BY THE PLEDGOR. The Pledgor waives (to the extent permitted by
applicable law) any right to require the Secured Party or any other obligee of
the Secured Obligations to (a) proceed against any Person or entity, (b)
proceed against or exhaust any collateral, or (c) pursue any other remedy in
its power; and waives (to the extent permitted by applicable law) any defense
arising by reason of any disability or other defense of any other
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<PAGE> 122
Person, or by reason of the cessation from any cause whatsoever of the liability
of any other Person or entity. Until the Facility Termination Date, the Pledgor
shall have no right of subrogation, and the Pledgor waives any right to enforce
any remedy which the Secured Party or any other obligee of the Secured
Obligations now has or may hereafter have against any other Person and waives
(to the extent permitted by applicable law) any benefit of and any right to
participate in any collateral or security whatsoever now or hereafter held by
the Agent for the benefit of the Lenders. Nothing contained herein shall limit
the right of the Pledgor to receive dividends and distributions with respect to
the Collateral so long as no Default or Event of Default has occurred and is
continuing.
The Agent may at any time deliver (without representation, recourse or
warranty) the Collateral or any part thereof to the Pledgor and the receipt
thereof by the Pledgor shall be a complete and full acquittance for the
Collateral so delivered, and the Secured Party shall thereafter be discharged
from any liability or responsibility therefor.
11. DIVIDENDS AND VOTING RIGHTS.
(A) All dividends and other distributions with respect to any of the
Pledged Stock shall be subject to the pledge hereunder except for dividends
permitted to be retained by the Pledgor under the Credit Agreement. So long as
no Default or Event of Default shall have occurred and be continuing, any such
dividends may be retained by the Pledgor free from any Liens hereunder.
Following the occurrence and during the continuance of any Default or Event of
Default, all dividends shall be promptly delivered to the Agent (together, if
the Agent shall request, with stock powers or instruments of assignment duly
executed in blank affixed to any capital stock or other negotiable document or
instrument so distributed) to be held, released or disposed of by it hereunder
or, at the option of the Agent, to be applied to the Secured Obligations hereby
secured as they become due.
(B) So long as no Default or Event of Default shall have occurred and be
continuing, the registration of the Collateral in the name of the Pledgor shall
not be changed and the Pledgor shall be entitled to exercise all voting and
other rights and powers pertaining to the Collateral for all purposes not
inconsistent with the terms hereof.
(C) Upon the occurrence and during the continuance of any Default or Event
of Default, at the option of the Agent, all rights of the Pledgor to receive and
retain dividends upon the Collateral shall cease and shall thereupon be vested
solely in the Agent for the benefit of the Lenders.
(D) Upon the occurrence and during the continuance of any Default or Event
of Default, at the option of the Agent, all rights of the Pledgor to exercise
the voting or consensual rights and powers which it is authorized to exercise
pursuant to subsection (b) above shall cease and the Agent may thereupon (but
shall not be obligated to), at its request, cause such Collateral to be
registered in the name of the Agent or its nominee or agent for the benefit of
the Lenders
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<PAGE> 123
and/or exercise such voting or consensual rights and powers as appertain to
ownership of such Collateral, and to that end the Pledgor hereby appoints the
Agent as its proxy, with full power of substitution, to vote and exercise all
other rights as a shareholder with respect to such Pledged Stock hereunder upon
the occurrence and during the continuance of any Default or Event of Default,
which proxy is coupled with an interest and is irrevocable prior to termination
of this Agreement, and the Pledgor hereby agrees to provide such further proxies
as the Agent may request; provided, however, that the Agent in its discretion
may from time to time refrain from exercising, and shall not be obligated to
exercise, any such voting or consensual rights or such proxy.
12. POWER OF SALE. Until the Facility Termination Date shall have occurred,
the power of sale and other rights, powers and remedies granted to the Agent for
the benefit of the Lenders hereunder shall continue to exist and may be
exercised by the Agent at any time and from time to time following the
occurrence and during the continuance of an Event of Default irrespective of the
fact that any Secured Obligations or any part thereof may have become barred by
any statute of limitations or that the liability of the Pledgor may have ceased.
13. OTHER RIGHTS. The rights, powers and remedies given to the Agent for
the benefit of the Lenders by this Agreement shall be in addition to all rights,
powers and remedies given to the Secured Party by virtue of any statute or rule
of law. Any forbearance or failure or delay by the Agent in exercising any
right, power or remedy hereunder shall not be deemed to be a waiver of such
right, power or remedy, and any single or partial exercise of any right, power
or remedy hereunder shall not preclude the further exercise thereof; and every
right, power and remedy of the Secured Party and the Lenders shall continue in
full force and effect until such right, power or remedy is specifically waived
by the Required Lenders by an instrument in writing.
14. FURTHER ASSURANCES. The Pledgor agrees at its own expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, financing statements, agreements and instruments, as the Agent may
at any time reasonably request in connection with the administration or
enforcement of this Agreement or related to the Collateral or any part thereof
or in order better to assure and confirm unto the Agent its rights, powers and
remedies for the benefit of the Lenders hereunder. The Pledgor hereby consents
and agrees that the Issuers of or obligors in respect of the Collateral shall be
entitled to accept the provisions hereof as conclusive evidence of the right of
the Agent, on behalf of the Lenders, to exercise its rights hereunder with
respect to the Collateral, notwithstanding any other notice or direction to the
contrary heretofore or hereafter given by the Pledgor or any other Person to any
of such Issuers or obligors.
15. BINDING AGREEMENT; ASSIGNMENT. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that (i) the Pledgor shall not be permitted to assign this Agreement or any
interest herein or in the Collateral, or any part thereof, or otherwise
pledge, encumber or grant any option with respect to the Collateral, or any part
thereof, or any
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cash or property held by the Agent as Collateral under this Agreement and (ii)
no Secured Party may assign this Agreement other than as permitted under the
Credit Agreement. All references herein to the Agent shall include any successor
thereof, each Lender and any other obligees from time to time of the
Obligations.
16. SEVERABILITY. In case any Lien, security interest or other right of the
Secured Party or any provision hereof shall be held to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
any other Lien, security interest or other right granted hereby or provision
hereof.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
18. TERMINATION. This Agreement and all obligations of the Pledgor
hereunder shall terminate without delivery of any instrument or performance of
any act by any party on the Facility Termination Date. Upon such termination of
this Agreement, the Agent shall, at the sole expense of the Pledgor, promptly
deliver to the Pledgor the certificates evidencing its shares of Pledged Stock
(and any other property received as a dividend or distribution or otherwise in
respect of such Pledged Stock), together with any cash then constituting the
Collateral, not then sold or otherwise disposed of in accordance with the
provisions hereof and take such further actions as may be necessary to effect
the same.
19. INDEMNIFICATION. The Pledgor hereby covenants and agrees to pay,
indemnify, and hold the Agent and each Lender harmless from and against any and
all other out-of-pocket liabilities, costs, expenses or disbursements of any
kind or nature whatsoever arising in connection with any claim or litigation by
any Person resulting from the execution, delivery, enforcement, performance and
administration of this Agreement or the Loan Documents, or the transactions
contemplated hereby or thereby, or in any respect relating to the Collateral or
any transaction pursuant to which the Pledgor has incurred any Secured
Obligation (all the foregoing, collectively, the "indemnified liabilities");
provided, however, that the Pledgor shall have no obligation hereunder with
respect to indemnified liabilities arising from the willful misconduct or gross
negligence of the Agent or any Lender. The agreements in this subsection shall
survive repayment of all Secured Obligations and termination or expiration of
this Agreement.
20. NOTICES. Any notice shall be conclusively deemed to have been received
by any party hereto and be effective on the day on which delivered to such party
(against receipt therefor) at the address set forth below or such other address
as such party shall specify to the other parties in writing (or, in the case of
telephonic notice or notice by telefacsimile (where the receipt of such message
is verified by return) expressly provided for hereunder, when received at such
telephone or telefacsimile number as may from time to time be specified in
written notice to the other parties hereto or otherwise received), or if sent
prepaid by certified or registered mail return receipt requested on the third
Business Day after the day on which mailed, or if sent
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<PAGE> 125
prepaid by a national overnight courier service, on the first Business Day after
the day on which delivered to such service against receipt therefor, addressed
to such party at said address:
(a) if to a Pledgor: Catalina Marketing Corporation
11300 9th Street North
St. Petersburg, Florida 33716
Attn: Philip B. Livingston
Telephone: (813) 579-5000
Telefacsimile: (813) 579-5297
(b) if to the Agent: NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-2374
Telefacsimile: (704) 386-9923
With a copy to: NationsBank, National Association
400 North Ashley Drive, Second Floor
Tampa, Florida 33602
Telephone: (813) 224-5194
Telefacsimile: (813) 224-5948
21. GOVERNING LAW; WAIVERS.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS EXECUTED,
AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE COUNTY OF PINELLAS, STATE OF FLORIDA,
UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER
TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT,
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<PAGE> 126
ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY
TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING.
(c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL
SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN
ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL
(POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY PROVIDED IN SECTION 19 OR BY
ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN
EFFECT IN THE STATE OF FLORIDA.
(d) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF SHALL PRECLUDE
ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY
PLACE WHERE ANY OTHER PARTY OR ANY OF SUCH PARTY'S PROPERTY OR ASSETS MAY
BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY
SUCH JURISDICTION, EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH
SUIT, ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS
WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR
OTHERWISE, MAY BE AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY AND EACH PARTY HEREBY WAIVES,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE
THAT EACH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
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<PAGE> 127
IN WITNESS WHEREOF, the parties have duly executed this Pledge Agreement on
the day and year first written above.
PLEDGORS:
CATALINA MARKETING CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
CATALINA MARKETING WORLDWIDE, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
PLEDGE AGREEMENT
Signature Page 1 OF 2
<PAGE> 128
AGENT:
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By:
---------------------------------------
Name: Miles C. Dearden III
Title: Senior Vice President
PLEDGE AGREEMENT
Signature Page 2 OF 2
<PAGE> 1
EXHIBIT 15
October 14, 1997
Catalina Marketing Corporation
11300 9th Street North
St. Petersburg, Florida 33716
Catalina Marketing Corporation:
We are aware that Catalina Marketing Corporation has incorporated, by reference
in its Registration Statement File Nos. 33-46793, 33-77100, 33-82456, 333-07525
and 333-13335, its Form 10-Q for the three-month and six-month periods ended
September 30, 1997, which includes our report dated October 14, 1997, covering
the unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933 (the Act), that report is not
considered a part of the registration statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
ARTHUR ANDERSEN LLP
/s/ WILLIAM J. MEURER
By
William J. Meurer
DMS
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,769
<SECURITIES> 0
<RECEIVABLES> 28,756
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 54,022
<PP&E> 148,791
<DEPRECIATION> 82,406
<TOTAL-ASSETS> 143,838
<CURRENT-LIABILITIES> 61,504
<BONDS> 2,517
0
0
<COMMON> 209
<OTHER-SE> 75,705
<TOTAL-LIABILITY-AND-EQUITY> 143,838
<SALES> 99,386
<TOTAL-REVENUES> 99,386
<CGS> 38,440
<TOTAL-COSTS> 75,371
<OTHER-EXPENSES> 783
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 23,232
<INCOME-TAX> 9,351
<INCOME-CONTINUING> 13,881
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,881
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
</TABLE>
<PAGE> 1
EXHIBIT 99
REVIEW REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Catalina Marketing Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of
Catalina Marketing Corporation (a Delaware corporation) as of September 30,
1997, and the related condensed consolidated statements of income for the
three-month and six-month periods ended September 30, 1997 and 1996, and the
condensed consolidated statements of cash flows for the six-month periods ended
September 30, 1997 and 1996. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of March 31, 1997, and the related
consolidated statements of income, stockholders' equity and cash flows for the
year then ended (not presented separately herein), and in our report dated April
18, 1997, we expressed an unqualified opinion on those financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of March 31, 1997, is fairly stated in all
material respects in relation to the consolidated balance sheet from which it
has been derived.
/s/ ARTHUR ANDERSEN LLP
Tampa, Florida,
October 14, 1997
